When my mother decided to remodel her home and add a second story, I was able to convince her to take some simple steps now so that she can plan to age in place, in her own home.

Some easy updates now would make her home elegant and comfortable for an able-bodied and active person. And even though she’s active, there are those days when she has balance issues, her arthritis flares up, or her back hurts, limiting her mobility and desire to stand. So adding these convenient design elements now will allow her to seamlessly ease into her golden years at home, without the institutional look.

The kitchen was a perfect place to add some simple changes to make the kitchen accessible and convenient. My mom loves to cook and bake, but standing is sometimes difficult for long periods of time, and we wanted to prepare for a time when her mobility becomes decreased. Her mobility might change down the road, but her love for being in the kitchen will never change!

For the kitchen sink, we installed a brand new Touch faucet by Delta. This wonderful faucet turns on and off with a touch to the nozzle – no handles to mess with. Great for salmonella hands after handling a chicken, or anyone who has difficulty with arthritis and struggles to turn faucet handles. This would be convenient now, and down the road.

We added a workstation in the kitchen that was lower so she could sit and prepare food. We put a cute stool, upholstered in outdoor fabric for easy cleaning, where she can sit and chop or mix, for those days where she can’t stand for long periods of time. And down the road, it will be extremely convenient for cooking in her golden years as well. We placed it within access to the sink, so down the road she can have the option of lowering the sink as well.

We lowered the height of her microwave so that she wouldn’t have to reach up too far to pull food out, or struggle with the buttons being too high.

Dishwashers with drawers, instead of the traditional ones, are much more convenient and reduce the amount of bending the user has to do. This was a great solution for my mom who finds bending difficult now and then. Even the simple act of raising the height of a dishwasher can be a tremendous help to those with limited mobility.

Roll-out shelves and drawers were installed to help her reach items in the back much more easily, instead of bending and reaching. Instead of knobs on the cabinets, we installed old-fashioned pulls that are elegant and chic; these are very easy to use if one has arthritis or difficulty opening a cabinet or drawer by grabbing onto a knob.

The refrigerator had to be replaced, so we selected one that has the freezer on the bottom with the pull-out drawer. My mom doesn’t use the freezer as often, so it’s much more convenient for her have the refrigerator part on top. Now she doesn’t have to bend down to get items out.

Fatigue is a common issue for anyone who stands at their kitchen counters too long. But throw in decreased mobility, arthritis or back problems, and standing at the kitchen counter can be a real problem. For my mom’s kitchen, we installed cork floors that are not only non-skid and safe, but they are soft and give beneath your feet. An added bonus, cork floors are also green!

These simple adjustments to make my mom’s home convenient and accessible to her in her golden years, are also easy changes that make her home comfortable now. Preparing the home for years to come has become less institutional and can look chic and elegant. My mom’s visitors would not notice the subtle amenities we’ve added during this remodel , but her daily life will be much more convenient.

In addition to the presentation of the keys, the introduction of the families and the official ribbon cuttings on each residence, the dedication also acknowledged the contributions of the hundreds of volunteers who worked on the houses, the corporations which donated funds and materials as well as the companies whose workers donated thousands of hours on the homes. The list of those who had contributed went on for pages and pages in the program. More than 1200 construction volunteers put in more than 14,800 hours of work on these four homes alone.
Interestingly, in attendance were many owners of homes formerly built by SGV Habitat for Humanity who had worked on these homes as volunteers. Of the 43 homes this group has built since its founding in 1990, all are still owned by the original families and none have gone into foreclosure. The group is currently working on 11 more homes on Kenwood Street in Glendale and will still start on a renovation program of 5 homes in Temple City to be called “Brush with Kindness.”

In her remarks, Monrovia Mayor Mary Ann Lutz welcomed the new Monrovians to the community and also thanked all of those who had worked tirelessly on the project. She called the houses “the homes that love built.”
Those new Monrovians are Mario and Jeanine Del Grosso and their children Logan, Wyatt and Gwenneth, Antonio and Irma Nava and their children Daniela, Valeria and Anthony, Raymond and Sonia Quiroz and their children Raymond Jr., Carolina, Julian, Grace and Olga, and Marco and Sandra Naccarati and their sons Marcos and Daniel.

Because there was a 10% down payment, there is almost 3 years of seasoning (the buyer has been making monthly payments for almost 3 years), and we’re only buying a partial (only the next 60 payments), which keeps the risk acceptably low.

What if the Payors had credit scores over 700?  Ka-ching . . .

The note holder / seller would be walking away with several thousand dollars more if they had been helping their Payors improve their credit scores over the last several months before trying to sell their note.

The note I am buying / brokering is secured by a property in Alaska, but the principles apply anywhere.

Lots of people have credit scores that have really taken a beating over the last couple of years.  That won’t stop them from buying property with owner financing, but with better credit scores, they could greatly expand their opportunities for buying because prospective sellers would have notes they would feel good about holding or selling.

In fact, here in our local market, I could buy a properly structured note without any seasoning, meaning I could buy it for a reasonable discount right after it was created if I was involved in underwriting the transaction (putting the deal together) right from the start.

The whole credit scoring system is a just a game, but if you don’t know the rules, you can’t possibly hope to win, and it will cost you a lot of money and lost opportunities whether you’re a buyer, or a note holder.

I’ve recently become friends with a guy who is making a profound difference by helping people quickly and dramatically improve their credit scores, even if they have foreclosures, short sales or bankruptcies on their record.

His name is Phil Tirone, and I’ve asked him to be a guest on my blog at http://notequeen.com.  He’ll be sharing the ‘right’ way to do credit repair.  A lot of credit repair companies inadvertently do their clients damage because they don’t really understand the nuances involved.

We all need to know how to get and keep the highest credit score possible, it can save us thousands, but if you fit in any of these categories, you really need to pay attention to his message:

* buyers (even if you’re buying with seller financing, a higher credit score will dramatically increase the numbers and types of properties you can buy)
* sellers who are thinking of carrying paper for a buyer(s) with poor credit
* note holders who are preparing to sell all or part of their note

In the meantime, feel free to check him out at 7 Steps to a 720 Credit Score.  He’s written a book you’ll really want to get ahold of, and you can learn more at http://www.7stepsto720.com

Always consult with your CPA, tax attorney and/or financial advisor before selling property or paper.

Dawn Rickabaugh is a RE Broker, Owner Financing Coach and Note Buyer.  www.NoteQueen.com  626.292.1875

He said:

“What I’m trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future . . . then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime.”

He has a point . . . if interest rates rise even slightly, it will greatly increase the cost of owning a home, and REO properties are being snatched up quickly with multiple offers in some areas, leading many to be sure that we are at the bottom.

But are we?

How much more inventory can the market absorb, especially if interest rates start wiggling?  Foreclosures aren’t a thing of the past, and banks have been holding back, trying not to flood and drown whole neighborhoods.

I recently read that before the end of this year, 10% of homes across the nation will be ‘underwater.’  Even jumbo housing loans are going bad . . . delinquencies are up to 9.6%.  A high end Realtor friend of mine in Palm Springs confirmed that things are REALLY bad out there.

Apparently, even the Mortgage Bankers Association is officially WAY underwater on its Washington headquarters.  Not only did the group buy at the peak of the bubble, but borrowed a lot to do it.  Of the $79 million they paid, all but $5 million was financed.

I smell a ‘strategic default’ brewing . . . oh, don’t worry, it’s not unethical for large corporations.  If you’re big business or government, walking away from obligations you can’t pay is simply a sound financial decision.  For you and I, it’s proof that we lack moral fiber.

At the end of the day, real estate has to be priced so that regular people can really afford them without extreme financial manipulations, and in general, consumers are in a funk . . . they have more debt, less income, fewer jobs, and less access to credit.

There’s no doubt that opportunities are out there.  In some areas, investment properties actually cash flow with a 10-20% down payment!  Amazing!

But I still have this uneasy feeling that there are some sideswipes coming down the pipeline that no one is really talking about.
It may be a great time to buy, but make sure you aren’t stretching to do it, and that you’ll be able to make your house payment even if your income temporarily decreases for a few months.  And for heaven’s sake, don’t get a variable interest rate!

Regardless of what happens with prices and interest rates, there will always be opportunities with seller financed properties.

Many investors I know are picking up properties by offering prices that sellers can easily swallow (even in today’s market where unrealistic sellers abound), but they’re getting killer terms . . . how does 0% interest sound?

It’s just that nifty little dance between property and paper.

Over the past several months he’s been receiving all kinds of questions and complaints from his short sale agents about trouble with second lien holders.  Read the full article, written by CNBC Real Estate Reporter, Diana Olick, at: http://www.cnbc.com/id/34877347.

Brandt has apparently documented at least 200 agents that have had trouble with Citi Mortgage, JP Morgan Chase, Bank of America and other large banks, and a friend of mine recently told me the same thing.

She works tirelessly to help troubled home owners.  She spends countless hours working with the lenders to get short sales approved so people can move on with their lives, and then is asked for most of her commission at the closing table by these . . . banks (to be politically correct, because I was actually thinking of other descriptive words).

Since there’s no equity to cover many second mortgages in a foreclosure/short sale situation, they’re typically getting very little at the closing table.   So, they got this bright idea . . . why not soak it from the agents or the buyer, and have them pay a little cash on the side?

All off the books, of course, like a mangy drug deal, because if the first lien holder knew this was going on, they would definitely cancel the transaction and just take the property to foreclosure to wipe the 2nd off completely.

A HUD specialist commented that this is clearly illegal and a violation of RESPA.  So far, there aren’t any active investigations, though . . .

But why would there be?  I mean, big banks are ‘too big to fail,’ so we’re rescuing them with taxpayer dollars anyway . . . why would we care that the poor beggars are grabbing for a little more?  Just look the other way, George . . .

All the new mortgage regulations that are effective as of January 1st are cumbersome and ultimately misguided and damaging to the consumer, but probably well-intentioned (never mind that the original fraud was perpetuated by the Fed and the fiscal policy established in Washington and on Wall Street that allowed the mortgage debacle in the first place).

It reminds me of the massive increase in airport security imposed on millions of average citizens after the “authorities” allow a known terrorist suspect to board a plane.

But it’s a good plan, really . . . orchestrate disaster, create fear, ask the trembling masses to give up a few civil liberties in exchange for “safety.”  Baa baa black sheep, have you any wool?

But back to the short sale conversation . . . wow.  In the early days of short sales, I literally burned myself out working on hundreds of short sale transactions, and I know several successful agents now that won’t even touch them.

If anyone ever asks me to help them with a short sale listing, I hire a professional company who specializes in short sale negotiation so my client has the best possible outcome, and I’m not being asked (at least to my face) for my grocery money by some starving financial behemoth.

Dawn Rickabaugh is a RE Broker, Owner Financing Coach and Note Buyer. Reach her at (626) 292.1875 or www.notequeen.com. Always consult with your CPA, tax attorney and/or financial advisor before selling property or paper.

Andy Bencosme, Managing Broker at CENTURY 21 Village Inc. recently congratulated Linda Johnson, veteran real estate agent for her new certification of SFR (Short sales And Foreclosure Resource.) Johnson has been with Village her entire career with Village has helped buyers & sellers not only in the foothill communities but also the outlying areas.

For many real estate professionals, short sales and foreclosures are the new “traditional” real estate transaction. Johnson said, “As a dedicated real estate agent, I am qualified to guide my clients in buying or selling a home and believe in using my skills in finance, contracts, negotiation and marketing to their best advantage. “A few of the reasons that Linda is so successful is that she knows the neighborhoods, schools, marketing conditions, zoning regulations and local economy” remarked Bencosme.

There’s a real estate broker in Whittier that runs a traditional sales business, but also runs a tightly knit real estate investment group that uses seller financing techniques to acquire property. He recently stumbled onto my website and we’ve been chatting ever since.

Because he’s well-versed in creative ways to move property, he’s getting a listing that most agents wouldn’t, because he has more ways to help them meet their objectives. Here’s part of an email he sent his client recently:

“Happy new year! I thought that I would send you a link to the listing around the corner. They started off at $525k and now they are down to $509k. It’s been a month+ and no offers.

Offering seller financing may get her property sold. I am working with another seller who is selling his property to his tenant. I’m working with both parties and the ONLY way they pull this off is with seller financing.

So, if you, at the very least, offer/market seller financing, you will get a lot more interest, and in order to get the price you want, I don’t think that there is any question that that is what needs to happen.”

Then this response from the attorney/seller:

“Thanks. I would like to talk things over with you and see what we can accomplish with my mother’s house. In terms of seller financing – yes we can consider that.

With a down payment, then we could consider carrying back a note with probably a high enough interest rate that we could subsequently discount and sell that note.

Perhaps the best thing to do is to simply list the property at our asking price and indicate that sellers will consider some form of financing. We’ll get a feel for what people are willing to do, and let them come to us with proposals to which we can counter with all sorts of creative financing methods.”

You can feel how fluid this attorney’s attitude is because he understands the dance between property and paper.

OK, maybe he’ll need to carry paper to attract someone willing to pay his price, but he’ll walk away with cash at closing anyway if he decides to sell the note after it’s created.

How much he’ll be able to sell the note for will depend entirely on how he engineers the transaction. Because I work in the discounted note business, I’m frequently asked to consult on seller carry backs, because I know how they need to be structured to achieve the desired objectives.

If he doesn’t end up getting at least a 20% down payment from the buyer, he’ll probably want to create two notes, with the 1st being no more than 80% LTV (loan-to-value). That way, after a bit of seasoning (and assuming the buyer’s credit is decent), he’ll be able to sell for a reasonable discount.

If he wants to preserve more of his asset (take less of a discount), and wants to sell the note right after he creates it, he’ll probably want to create a smaller 1st and keep a slightly larger 2nd for cash flow.

It’s exciting to stumble across real estate professionals who get the seller financing conversation, because they can generally create better results for their clients, especially those with high-end homes and commercial properties to sell.

Always consult with your CPA, tax attorney and/or financial advisor before selling property or paper.

Dawn Rickabaugh is a RE Broker, Owner Financing Coach and Note Buyer. www.NoteQueen.com 626.292.1875

Let’s pretend that you have a nice juicy note you’re trying to sell . . . you got a 20% down payment from a buyer who had a 700 FICO, the loan amount was $100,000 at 12% interest.  Fully amortized over 20 years, you’re supposed to be enjoying $1,101.09 a month.

Wow, isn’t that great?  Wouldn’t you be able to sell that baby for a nice fat price?  C’mon . . . with an average discount, someone’s looking to bag a 15% return, for heaven’s sake!

Yeah . . . unless the payments don’t come in on time.  You could have a 42.9% interest rate, but it doesn’t matter, the return is irrelevant if the money isn’t flowing.

When someone buys a note (or if you are holding a note for retirement income) the most important thing they want to know is how likely it is that future payments will continue to be paid as agreed.

Most note buyers (the ones that will give you the best price) are not buying  hoping they’ll get a chance to foreclose and own the property.  They just want a predictable return.

That’s why payment history is so important to document.

Now, if you’ve got a note that’s in default, the only people who will buy it are the ones that wouldn’t mind owning the property securing the note, and they’ll ask you to take a really steep discount for rescuing you from the foreclosure scenario.

Smart tip:  Have a note servicing company service your note if you’re too ADHD to keep flawless records yourself.

Document when the payments come in, keep copies of cancelled checks and bank statements so you won’t have any trouble proving that you’ve got a ‘performing asset.’

And it’s really not a bad idea to have your note serviced by a third party note servicing company.  It’s not expensive, and your payment history is flawless, which is very handy when you go to sell your note.  They also file any relevant documents for you, such as 1098s and 1099s.

This excerpt is taken from “Seller Financing on Steroids: Pumping Paper for Power, Peace and Profits,” a guide that can be downloaded for free at: www.NoteQueen.com.

So, over the last 7 weeks we’ve covered the 7 biggest mistakes sellers make when they carry paper, and how to avoid them.

The markets continue to be unpredictable, so it’s important for buyers and sellers to be equipped with alternative, but safe ways to continue to put winning real estate solutions together.

And if you’re a real estate professional, wouldn’t you like to put or keep more transactions together?  We can do our part to keep the cogs greased in our economy, and preserve the dream of home ownership by helping buyers buy and sellers sell, regardless of market conditions.

Always consult with your CPA, tax attorney and/or financial advisor before selling property or paper.

Dawn Rickabaugh is a RE broker with expertise in seller financing and RE notes (trust deeds).  www.NoteQueen.com  626.641.3931

A couple I talked to recently had a one year old note that they were trying to sell.  Not only were the terms of the note difficult to understand, but it failed to include a late payment charge, and didn’t have a due on sale clause.

“But yes!” they insisted, “see right here in the escrow instructions?  It definitely states that the late payment fee for missed payments is 6%.”

Well, it’s comforting that you had great intentions, but apparently escrow failed to incorporate your instructions into the note documents, and you didn’t notice!  Oops.

HEADS’ UP: escrow companies, title companies, real estate professionals, accountants and attorneys do not necessarily know much about putting together a strong note and calculating the numbers correctly; and unless they regularly buy and sell notes in the secondary market, they may not understand the financial significance of how the transaction is structured.  That’s why it’s crucial that you work with a seller financing specialist/note broker when you’re putting your owner financing deal together]

Without a late payment provision, you have no way of covering yourself for financial losses when you have a Payor that regularly pays late.

Without a due on sale clause, the property could be sold and you could be receiving payments from someone you haven’t had the chance to underwrite (determine if they’re a good risk or not).  Also, what if interest rates are higher?  Wouldn’t you like the chance to improve your return?

Smart tip: Make sure your note includes a late payment fee, and make sure the note and deed contain the due on sale (acceleration or alienation) clause.

You’ll have to check with the guidelines in your state, but usually a 6% late fee with a 10-15 day grace period is acceptable.

Put the due on sale clause in both the note and security instrument (deed of trust or mortgage).  It might sound something like this:

“If the trustor shall sell, convey or alienate said property, or any part thereof, or any interest therein, or shall be divested of his title in any manner or way, whether voluntarily or involuntarily, without the written consent of the beneficiary being first had and obtained, beneficiary shall have the right, at its option, to declare any indebtedness or obligations secured hereby, irrespective of the maturity date specified in any note evidencing the same, immediately due and payable.”

Also, if it’s permitted by law, include a prepayment penalty if you’re trying to defer capital gains and don’t want to be paid off early.  Generally things are more regulated for residential properties that serve as the Payor’s primary residence.  It’s usually easy to enforce a prepayment penalty on investment and commercial properties.

This excerpt is taken from “Seller Financing on Steroids: Pumping Paper for Power, Peace and Profits,” a guide that can be downloaded for free at: www.NoteQueen.com.

Always consult with your CPA, tax attorney and/or financial advisor before selling property or paper.

Dawn Rickabaugh is a RE broker with expertise in seller financing and RE notes (trust deeds).  www.NoteQueen.com  626.641.3931

Because of the Time Value of Money (TVM), which says that money to be received sooner is more valuable than money to be received later, it can seem like putting in a 5 year balloon is a good thing.  No need to wait 30 long years for payoff, right?

In previous markets, this made a lot of sense.  The market was going up, and financing was cheap and easy to get.  It was simple to refinance.  But now it’s a different story, isn’t it?

A balloon only adds value to a note when there’s a clear and obvious exit strategy, which means easy, available and cheap financing laying around for the Payor to scoop up (or evidence that they have the cash to pay it off).

So, you have this balloon . . . what’s going to happen 5 years down the road if property values have decreased?  What if interest rates are high?  What if something has happened to the buyer’s (Payor’s) credit score?

They probably won’t be able to refinance and pay you off, so now you’re stuck with either restructuring the note, or foreclosing and taking the property back.

Most note buyers these days buy a note with a balloon anticipating that they’ll end up restructuring the loan and extending the repayment period, which decreases the return (which means they’ll need to buy it at a steeper discount than you would normally think, based on the calculations of your nifty little HP).

Smart tip:  Fully amortize your note over the shortest time period possible . . .

Can the buyer afford a 15-year amortization?  Or a 20?  When a note is fully amortizing (meaning it’s completely paid off by the end of the term), we don’t have to worry about the buyer’s future ability to refinance a balloon payment.

If you’re going to ask for a balloon, push it out to 7, 10, or 12 years.  The longer we have for the real estate and credit markets to stabilize, the better.

Investors will think . . . “OK, things are not great now, but I’m pretty sure in 10-12 years the market will have recovered and we’ll be in a better situation.  By then, this Payor should have no trouble refinancing, especially since the principal balance on the note will be a lot smaller.”

Another idea is to ask for Stepped Payments.  This is where the interest rate remains the same, but the monthly payment due from the buyer increases by a certain amount or percentage every year.  This leads to a faster pay down of the loan balance.

Stepped Payments also provide seniors, who are often on fixed finances at retirement, a stream of income that helps them deal with inflation, and the reduced buying power that their money will have with each passing year.

P.S.  Avoid ‘interest-only’ loans . . . no one wants to buy them!

This excerpt is taken from “Seller Financing on Steroids: Pumping Paper for Power, Peace and Profits,” a guide that can be downloaded for free at: www.NoteQueen.com.

Always consult with your CPA, tax attorney and/or financial advisor before selling property or paper.

Dawn Rickabaugh is a RE broker with expertise in seller financing and RE notes (trust deeds).  www.NoteQueen.com  626.641.3931