Buying Revolution

FHA HAS JUST INCREASED THEIR LOAN LIMIT IN KING AND SNOHOMISH COUNTIES

TO $567,500! This is up over $200K from the previous loan limit. This will allow for much better pricing than JUMBO loans up to $567,500.

Can you imagine a JUMBO scenario where the borrower doesn't need to show
any seasoned assets and only has to make a 3% down payment, -which can be money contributed from any family member AND their interest rate would be 5.625% on a 30yr?? (today's rate) This is almost a FULL point better than a JUBMO, non-conforming 30yr fixed!

UNREAL. .we will be seeing MANY more FHA loans in the following years to come.

Also to help BOTH Buyers and Sellers.  I have a special program that give the commission back to the buyer looking for any type of Real Estate.  Thats right, you find the property and I will write and negotiatie the contract and then see it through to the end.  North West RE will keep $2,500 and the rest will go to YOU!   for Sellers I have a Flat Fee listing for $2,500. You will get your property listed on the MLS and Full a Service, completely Marketed listing. Best of all you pay nothing till your home sell.

Feel free to call me with any questions.

Scott Doppke
425-208-5468
Investing Realtor
NW-RE

Buying Rental Property - Avoid Seller's Tricks

Be careful when buying rental property. We stayed at a motel for a week one winter. The bill showed twice what it should have, but since I already paid the correct amount in cash, I thought nothing of it. When we noticed that the lobby and swimming pool were unheated, we thought it was frugality. Only a year later, when I read a news story about a new owner struggling to make the motel work, did I realize what was going on.

The owner had been planning to sell. To prepare, she was using the two most basic ways to inflate the appraised value: decrease expenses and increase reported income. By stopping repairs and quietly adding $100 in income every day, she may have shown $45,000 more net income for the year. At a .08 capitalization rate, that means the appraisal would come in $562,000 higher than it should have. Oops! The poor guy who overpaid!

Do you want to avoid a mistake like that when buying rental property? You need to watch for tricks like these. You also have to understand the basics of appraising income property.

It starts with the capitalization rate, or "cap rate." If investors in an area expect a return of 8% on assets, the cap rate is .08. Net income before debt service is divided by this to arrive at the value of a property. I explain this further in another article, but the primary point here is to remember that every dollar of extra income shown will increase the appraised value by $12.50 with a cap rate of .08, or by $10, if the cap rate is .10.

Sellers Dirty Tricks

If sellers of rental properties increase the net by honest means, then the property should sell for more. Unfortunately, there are many dishonest ways, both legal and fraudulent, that are sometimes used. Unlike sellers of houses, who may cover foundation cracks with plaster, the tricks used by sellers of income properties aren't about appearance. They are about income and expenses.

Income can be inflated by showing you the "pro forma," or projected income, instead of the actual rents collected. Ask for the actual figures, and check to see that none of the apartments listed as occupied are actually vacant. Also, be sure that none of the income is from one time events, like the sale of something.

Income from vending machines is a gray area. Smart investors subtract this from the net income before applying the cap rate, then add back the value of the machines themselves. If laundry machines make $6,000, for example, that would add $75,000 to the appraised value (.08 cap rate), if included. Since they are easily replaceable, adding the $10,000 replacement cost instead makes more sense.

Hiding expenses is the most common of seller's tricks. Paying for repairs off the books, or just avoiding necessary repairs for a year, can dramatically increase the net income. Demand an accounting of all expenditures. If a number in an expense category is suspicious, replace it with your own best guess.

Analyse each of the following, verifying the figures as much as possible, and substituting your own guesses if they are too suspect: vacancy rates, advertising, cleaning, maintenance, repairs, management fees, supplies, taxes, insurance, utilities, commissions, legal fees and any other expenses. This is how you make buying rental property safe.

Buying Rental Properties - Some Tips

Buying rental properties can be a great way to build your wealth. However, as in most real estate investment, it is sometimes difficult to know if you've found a good deal - especially the first time. Here are some things to look for to be sure that rental is a great investment.

<P>1. Location. If traffic is heavier, rentals are easier to rent. A sign will often pull more response than an ad in the paper. If it is a nice locale, it will usually rent faster. This is also true of places close to amenities.

<P>2. Numbers. Run the numbers. Get every last expense figured into your calculations, and be sure that you will have positive cash flow from the start.

<P>3. High home prices. Look in towns with high home prices, as this creates rental demand. What do people do when they can't afford to buy? They rent.

<P>4. Low maintenance buildings. Avoid cedar-shake roofs, and wood-sided buildings. Look beyond current expenses to how much maintenance the building will need. Low maintenance means less headaches and more profits.

<P>5. Good rental history. Ask to see the rental history. Note how long residents are staying on average, and how well they pay on time.

<P>6. Below market rents. Buying rental properties with below-market rents means you get to raise rents. Raising rents means you imediately raise the value, because rental property values are based on income.

<P>7. Complies with zoning and fire codes. Have it inspected, and ask local officials if there are any problems.

<P>8. Less than 20 years old. This is somewhat arbitrary, but if you limit your search to newer buildings, you will be less likely to have building code and maintenance problems.

<P>9.Owner/manager that is out of state. These properties are often the best deals, because it is tough to manage a property from far away. An out of state seller is often more concerned with a quick sale than a high price.

<P>10. Neighborhood is stable or improving. Stable is okay, but if you can buy in a neighborhood that is improving, you'll rent the units more easily, and therefore get automatic appreciation in value with time.

Buying Real Estate That's Not For Sale

Buying real estate can start with a look in the newspaper, a visit to a broker, or a search online. These are all good ways to find your next investment property. You're looking at the same properties as every other investor, of course, so it's not always easy to beat the competition to a great buy.

A better way to find good real estate investments is to look for properties that aren't yet for sale, and make an offer. I bought my first home this way. I put an ad in the paper stating what I was looking for, and soon had a call from an old couple that had been thinking about selling. I bought their place at a good price, and they saved a broker's commission.

Buying investment real estate that isn't for sale starts with a three step search process. First decide what you are looking for. Single family rentals or apartment buildings? Then start looking for properties that fit your criteria. Then contact the owners.

Buying Real Estate From Non-Sellers

Don't limit yourself to "fixer-uppers" or other "problem" properties that seem more likely to have owners willing to sell. Many owners of investment real estate have thought of selling, so you can start with almost any building you like.  You never know beforehand if or why a landlord is ready to call it quits. You find out by asking.

Tact is necessary here. Call the owner and tell him you're an investor, not a broker. Let him know that you like what you see. Tell him you can have an offer ready in a week if he's interested. If he's not interested, thank him politely and hang up, but send him your card or a letter. Many investors have bought from owners that changed their minds.

If there is some interest, explain that you are an investor, so your offer will have to be based on your return on investment. This means you'll need to see the books. Specifically, you'll need to see the rent roll, listing the units and what they rent for, plus current occupancy, and operating expenses for the last year.

Have a confidentiality agreement ready before you call. Let the owner know that you'll sign it and deliver it to him before you see the books. He may not want to let the tenants know he's thinking of selling, so inspecting the units may have to wait until you make an offer. Just make an acceptable inspection a contingency in the offer.

Why buy investment properties this way? No competition and no sales commission means you may get a better price. Also, instead of waiting for that perfect property to be listed for sale, you just find it now. Why wait until it's for sale before buying real estate?

Buying property in Spain! Got all necessary information?

Did you know that Spain is the largest country in Europe after France but with just over 40,400,000 people, it is one the least densely populated!

Did you know that over 1.2 million foreigners have chosen to settle and buy properties in Spain, which attracts more than 52 million visitors each year!

Did you know that 640,000 new homes were built in 2004, a higher number than Germany, France and Italy combined. Predictions show that another 2 million homes will have to be built over the next 6 years to meet the demand for Spanish property! 

It is not simply Flamenco or Bull Fighting or the San Fermin Festival or lots and lots of bright sunshine that is attracting more and more tourists and tempting people to settle in Spain from around the world.

Even if we ignore that Spain, for last thousand years or so, is the cultural center of the Europe, she has much more to offer to the world’s citizens, many of whom are looking for Spanish villas for sale.

The local Spanish developers had something different in their mind, the majority of the apartments or properties are bought for the good financial returns a buoyant market returns.

There are around 2,750,0000 empty flats around the country and most of them are not even for rent. Owing to this problem, a good number of Spaniards are not finding homes to live in though construction is one of largest employment sector there.

Never the less, the situation is changing. The government is trying to fix this problem by clamping down on planning permissions, although these measures for reform only started recently this will serve to build a financially secured Spain in future.

Currently those who invested in the past have largely disappeared and the houses and flats are now being owned by overseas clients and Spaniards who are buying them as relocation properties or holiday homes.

In any case the situation for foreign buyers is as lucrative as it is precarious. The Spanish property business, like any other business in any corner of the world, has attracted a number of middlemen, who, unfortunately, are as always eager make a fast ‘buck’ with prospective buyers. Experience has shown that when a person is trying to buy some property from a broker he or she runs the risk of overpaying and even fake buying. It is not always possible for an outsider to know the full history of these agents and we should not forget the old saying ‘seeing is believing’.

The Spanish property market changes frequently, before buying property in Spain a cautious buyer should primarily try to gather all relevant information regarding the property and the-then market scenario. A good place for research is always the internet where there are plenty of good helpful sites on buying property in Spain.

Buying Property in Spain - Glossary

Buying Property in Spain

Although any expatriate intending to buy property in Spain would be advised to use the professional services of an estate agent and a translator and must legalise the transaction before a Public Notary, the following glossary of terms commonly used either to describe properties in Spain or during the transaction  process is a useful aid for non-Spanish speakers.


Abogado - Lawyer<br>
Actos Juridicos Documentados (AJD) - Stamp duty<br>
Adosado - Semi-detached house <br>
Agencia Inmobiliaria - Estate Agent<br>
Agencia Tributaria - Tax office<br>
A.P.I. (Agente de la Propiedad Inmobiliaria) - Officially licensed estate agent<br>
Aire acondicionado - Air conditioning <br>
Aparcamiento - Parking <br>
Apartamento - Apartment <br>
Arras - Small payment given to the seller to guarantee that the property transaction will be completed within an agreed time limit.<br>
Asesor Fiscal - Financial Advisor<br>
Aval - Loan underwriter<br>
Ayuntamiento - Town hall<br>
Balcón - Balcony <br>
Baño - Bath/WC <br>
Caja de Ahorros - Savings bank <br>
Calefacción central - Central heating <br>
Campo - Countryside <br>
Casita - Cottage <br>
Chalet - Villa <br>
Cocina - Kitchen <br>
Comedor - Dining room <br>
Compra - Buying<br>
Compra-Venta - Promise to Purchase <br>
Contract Comunidad de propietarios - Comunity of property owners <br>
Constructor - Builder <br>
Copia Simple - Copy of the Mortgage Deeds<br>
Cuarto de Baño - Bathroom <br>
Cuotas de comunidad - Community fees<br><br>
Cuenta de Banco - Bank account<br>
Documento privado - Private document<br>
Documento público - Public document<br>
Dormitorio - Bedroom <br>
Ducha - Shower <br>
Duplex    - Apartment over two floors <br>
Edificio - Building <br>
Escritura - Deeds of ownership <br>
Finca - Farm house or small estate <br>
Garaje - Garage <br>
Habitación - Room <br>
Hacienda - Tax office<br>
Hipoteca - Mortgage I.B.I Rates <br>
Inmobiliaria/agente - Estate agent
IVA - VAT <br>
Jardín - Garden <br>
Ladrillo - Brick <br>
Libre de cargas - Debt free <br>
Licencia de obra - Building permission<br>
Licencia de Ocupación - License to occupy a property<br>
Metros cuadrados - Square metres <br>
N.I.E. - Identity Number for Foreigners <br>
Notario - Notary Records legal documents and transactions<br>
Nota Simple - Certificate from Land Registry <br>
Obra nueva - Document certifying a new building <br>
Oferta vinculante - Bank document specifying mortgage conditions <br>
Pago en efectivo - Cash payment <br>
Parcela - Lot or plot <br>
Piscina - Swimming pool <br>
Piso - Apartment <br>
Plan Parcial - Town hall plan for building plots<br>
Playa - Beach <br>
Plusvalía - Municipal Capital gains tax on sale of property <br>
Poder - Power of Attorney <br>
Préstamo - Loan <br>
Pueblo - Town or village <br>
Registro de la Propiedad - Land Registry <br>
Representante fiscal - Foreigner's official tax representative <br>
Residencia - Residency permit <br>
Residente - Resident <br>
Sala, salon - Lounge <br>
Se vende - For sale <br>
Se alquila - For Rent <br>
Solar - Lot for building <br>
Solana - Utility Room <br>
Sótano - Basement <br>
Tarjeta de Banco - Bank card <br>
Techo - Roof <br>
Teja - Roof tile <br>
Terraza - Terrace<br>
Terreno - Land plot <br>
Tipo de interés - Interest rate <br>
Título de propiedad - Property ownership deeds<br>
Trastero - Storeroom <br>
Venta - Selling <br>
Vista de mar - Sea view<br>

Buying Property in Spain

Every year many thousands of properties in Spain are sold to foreign investors. What is the attraction? Firstly the country has a great climate and that is particularly appealing to those people living under the grey skies of northern Europe. Getting there is both quick and relatively cheap. A flight from London in the United Kingdom to Malaga on the south coast of Spain takes only a little over two hours. It is possible to get some very cheap flights with either one of the well known budget airlines or by picking up a spare seat on one of the hundreds of charters that fly to Spain every day.

There is a wide selection of property to choose from both in type and numbers. Consideration of the following points will help to narrow the search. Size of the property, the garden and the number of rooms required. People planning to emigrate with children should check out what schooling is available locally. Consider the local health & social services. Choose between a built up area or open countryside. How near is the beach, a town, the shops, the bars and restaurants, public transport, its frequency and what time does it stop in the evening?

Many developers looking to improve their own cash flow will offer property for sale off plan. The potential buyer may be able to view a show home but in many cases they are literally shown a development plan or a scale model. An initial deposit is payable followed by several stage payments. A couple of advantages, if property prices rise between purchase and the completion of the project the buyer will own a property worth more than they have paid for it. Secondly, most developers will allow the buyer some say in style and design of both the inside and outside of the house. The down side is the amount of time buyers will have to wait until the development is completed, often in excess of 12 months. And of course they don't know what they are getting for their money until the property is completed.

The cheapest property available in a finished state is likely to be an apartment. These are often on an urbanizacion or housing estate that will often include other types of property such as townhouses and villas. These small communities will include a pool and landscaped gardens. Some kind of security is often employed either in the shape of guards or CCTV cameras. A community charge is payable to cover these facilities. A word of caution. Many of these properties are let to holidaymakers during the summer months. Some to English people with children. The noise these guys make while on holiday has to be heard to be believed. If it's not the kids during the day it's their drunken parents in the early hours of the morning.

A detached, purpose built villa offers more privacy and seclusion but it will cost more than a comparative property within a community.

Buyers looking for a more of the Spanish experience should look at properties within an established town or village. Many of these properties look small but are surprisingly spacious once inside.

A Finca is a property standing on a plot of land in the countryside. It may be a tumbledown farmhouse or a just completed villa. Many fincas have a good deal of land and this may have fruit orchards or olive groves.

Finding the right property should be no more than a question of looking. Once a decision has been made on the location and the type of property it is time to talk to the estate agent. Make certain this person is registered with the authorities and holds a license. Many estate agents have a background in time share developments so the hard sell can be expected. Any claims made by agents should, wherever possible, be substantiated by an independent source.

Any offers to purchase a property should be made in writing and include the following: The price, how it is to be paid and in what currency. The amount of the deposit, to ensure the property is withdrawn from the market, and when it is to be paid. The completion date. Who is responsible for the payment of which taxes. And a detailed list of what is included in the price, furniture, fixtures and fittings and a proviso that all systems, air conditioning, etc. are in good working order. It is vital that this is done in conjunction with a solicitor. Many English speaking solicitors are to be found throughout Spain. No document provided by an estate agent or others should be signed without a solicitor having prior site of it. This cannot be stressed enough.

When an offer is accepted the solicitor should firstly make a check with the land registry. If all is well a private contract binding both parties to the deal is prepared. Following that is the preparation of the public deeds (Escritura de Compraventa) which must be signed before a Spanish notary. Upon completion the solicitor will fax the title deed to the local land register confirming the identity of the new owner and ensuring that the property cannot be sold a second time.

There are certain charges involved with yearly maintenance of the property and these may include, community fees, electricity, real estate tax, rubbish collection charges, water. If the property generates rental income the owner will be liable
for property income and wealth tax. The estate agent should be able to provide this information.

A mortgage application in Spain is relatively straightforward. The following original documents need to be shown, passport, if employed, the last three months payslips and if self employed, accounts of the last 3 years, an accountant's reference, and tax returns.

A further 10% of the agreed price will have to be found to cover additional fees that include: Legal fees of approximately 1%, Notary and Land Registry Fees of approximately 1%, Title Deed Tax of 0.5%. A Valia tax, payable on any increase in land value may be payable. On a new construction IVA tax is levied at 7%. It is charged at the full rate of 16% for purchases of land. Purchases of used property are subject to a transfer tax and this like the IVA comes in at 7%.

People planning to move to Spain for a period in excess of 6 months must apply for residency. Spanish property owners' who do not have residency should appoint a financial representative and they must be resident in Spain. This can be a lawyer or tax adviser or to save a few Euros a neighbour or friend. It is to this person that all correspondence regarding the property will be sent.

Consider appointing a gestor or legal representative. They will look after all the paperwork and in Spain there's plenty of it to look after. There's that residency to begin with. People planing to work will need a work permit. If opening a business they can assist with the licenses and permits that will be required. They will also advise on the import of pets, cars, furniture and electrical goods. And they can sort out pension payments in Spain.