South LA Investment Property Webinar - 3.22.2012

transcript

Investment PropertyWebinar

Aviva LomeliAgent

Redfin Southern Los Angeles

A Little Bit About What We DoRedfin is a brokerage that’s using technology and a customer-service focus to change the real estate game in the consumer’s favor. • What: a brokerage• How we are different:

• Technology• Customer-service

• Why: we want to change the gameConsidering… Looking… Buying…

To Buy or Not to Buy

Why You Should Buy a Home• You have a family and need room to grow• You expect to stay put for 5 or more years• You want a home that is difficult to rent• You’re handy & and ready to invest• You’ve saved up a down payment

Considering… Looking… Buying…

Why You Shouldn’t Buy a Home• You don’t have a good reason like family or schools• You can’t afford the down payment• You can rent for much less• You plan on moving soon• You’re worried about job security

Working With Redfin is Different• Service

• Advocates: client-satisfaction bonuses, not commissions• Transparency: informed decisions• Best Agents: The right home for the right price

• No obligation• Switch Redfin agents• Pause and re-start your search any time• Tour on your schedule and pace

• Refund• You get up some of the commission

• The Best Results• Service: 97% would recommend us to a friend

How Commissions Work

How Our Team Works

AGENTResponsible for your successWrites your offerHandles negotiations

FIELD AGENTTakes you to see homesSee 50+ homes a week

TRANSACTION COORDINATORPrepares paperworkWorks with escrow

TOUR COORDINATORSchedules tours

Make Sure She’s a Good Fit

See alldeals & reviews

Click here when you

decide

Investment 101

Overview

Two Different Strategies

1. Buy and Flip

2. Buy and Hold

Buy and Flip• Buy at Courthouse Auction

• Completely as-is• May not have seen the interior – unknown

condition • Come with a cashier’s check!• No Title Insurance

• Buy on the Open Market• REO or Short Sale• Mostly as-is• Will have clear title and Title Insurance

Buy and Flip• Typical mark up is about $100,000• Investment of about $10,000 to $20,000

in renovations• Commission & Fees about $15,000 -

$20,000• High risk: title, condition, tenants

Affording a property to flip• Buy with Cash

• Buy with a Hard Money Loan• A Hard Money Loan is a short term loan (6

months to 1 year)• Rates are 10%+ with 2 points+• Based only on the property, not the borrower• Typically they will finance ~65% of the value,

sometimes more• Certain hard money lenders will finance

renovations up to 80% and require that they pay the contractor directly for the repairs.

Buy and Hold• Buy at auction, or on the open market

(REO, Short Sale, or Standard Sale)• Any property type (Condo, Single Family,

Units)• Buy to occupy or to rent out

Buy and Hold Financing*Below are based on 30 yr fixed, 740 credit score, and $417,000 or less loan amount)

Owner Occupied Loan:• Single Family: 5% down minimum, 4.0%• 2 to 4 Units: 20% down minimum, 4.25%• FHA, 3.5% down, similar rates• FHA 203k – Rehab loan

Non-owner Occupied Loan:• Single Family: 20% down minimum, 4.375%• 2 to 4 Units: 25% down minimum, 4.625%

Local Recommended Lenders

*In no way does Redfin benefit financially from recommending lenders –we just think they’re great lenders!

Break even or Positive Cash Flow• Income

• rental income, parking/garage income, laundry income

• Check ads in the neighborhood to determine market rent

• Expenses• PITI, HOA dues, landscaping, utilities,

vacancies, move in/move out expenses

What is best for me?• Determine your risk tolerance• Evaluate your finances• It’s OK to start small even with 3.5% down!

What to do now?• Go visit an auction at the Courthouse:

12720 Norwalk Blvd, Norwalk, CA 90650, Thursdays 10:00am - ?

• Talk with a lender; traditional financing or hard money

• Talk with an real estate agent about buying and/or selling

Check out our local pages!

Questions?

Email: aviva.lomeli@redfin.com

South LA Investment Property Webinar - 3.22.2012

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