Heath's Blog

The days are getting shorter already! But today was a beautiful day on Cape Cod! There were leaf peepers here on the Cape, trying to see as much of New England as one trip would allow.

I had some Italians (real ones, not just from the North End) in yesterday asking about how to get to the Vineyard. And there was a broker in from Colorado checking out the Cape. Today, others came from off Cape just to enjoy the off season on Cape Cod.

One tourist told me that the Avis rental agent at Logan Airport said they are renting 1200 cars a day just at their locations.  Thats a lot of leaf lookers!

50 Years ago did they have the same problems we have today?

Here's a 10 minute cartoon that was made 50 years ago. It is a fast history lesson that is just as applicable today as it was 50 years ago. Free enterprise, government involvement, freedom, and other things are addressed.

It tries to explain capitalism, success, and development. "The American System" is being hoodwinked by "Dr. Ism". When you drink his juice, you lose "The American System".

Could the Mortgage Companies do this? 
Instead of foreclosing on a property, what if they re-write the loan in the following way:
1) keep the principle amount the same.
2) lower the rate to today's lower rate.
3) and amortize for 40 years.

Why would they?
1)A) principle of the note stays the same for the future payoff.
1)B) Keeping the principle the same means that the borrower needs to stay in the property until the market re-appreciates to the value of the principle to avoid selling at a loss. 
This means more people will stay put, and at the same time, be able to pay for their house.
2) and 3) will make the payments easier to afford.

More Why would they?
Most loans are paid off by sale or refinance within the first 7 years of the loan. 
By making the payments affordable, but keeping the principle amount as is, the loans will perform longer and mitigate much of the loss.

Good for the owner of the property (of course):
$100,000 @ 10% = $877/month on a 30 year amort. 
$100,000 @ 6% = $550/month on a 40 year amort.
This allows a reduction of $327/month in payments, but keeps the principal to be paid, and extends the life of the debt.

Better than foreclosure for the Investor?
The future values are dramatically lower for the second loan, but ONLY if they go to final payment. 
In reality, they will both be paid off by the seventh year based on average ownership statistics.
That would mean a "loss" of  about $45,000* on paper versus an actual loss in the event of an actual foreclosure.  *(the 7 year FV of the 10% note - FV 6% note = $194,871.71-$150,363.03 = +-$45,000)

A foreclosure loss may include:
- 12-24 months of no payment ($877 x 24 = -$21,000)
- legal fees (-$4000)
- broker fees (up to -$6000)
- loss of value of this property and other properties in the neighborhood (-$15,000 min)
- REO staff increases (-$10,000)
$21 + 4 + 6 + 15 + 10 = more than $56,000 in actual loss over 2 years

By re-writing the note, the Investor reduces their loss:
The "new note" performs over the next 84 months instead of costing actual money over the next 24 months.
84 x $550 = $46,200 that the note returns over the next 24 months as it performs versus $0 during 24 month foreclosure.
$46,200 - 45,000 = $1,200 positive  OR  Straight $56,000 loss over the next 2 years.  

Other useful benefits include:
Property values do not decline as dramatically as when many foreclosures take over a market.
The loss numbers get much larger much faster when the face loan value increases. 

Could they do this if they wanted to? Legally?  Some have said there is no incentive for a bank to do this. I thought banks used math?  What do you think? Would it work? Is it good for them? Is it good for real estate?

If you are renting on December 1, 2009 you just lost $8000. Here's why!

People who have not owned a home in the last three years are called First Time Buyers by the US Government.  Those First Time Buyers can get $8000 IF they close on a property before December 1, 2009.  So how much house can a renter buy?

One of the old calculators I use shows how much real estate a person with the following income levels might be able to purchase.

The numbers below are as follows: Annual Income (AI), Monthly Income (MI), Maximum Monthly Payment (MMP), Other Monthly Debts (OMD), Price of a Property per Interest Rate of 5%, 6%, and 7% (NOTE: These are ONLY estimates for conversation.)

(With 5% down)
20,000 (AI)    1667 (MI)     467 (MMP)     133 (OMD)     at 5%   66K    at 6%  61.5K     at 7%  56.9K
30,000(AI)     2500 (MI)     700 (MMP)     200 (OMD)     at 5%  100K   at 6%  92.2K     at 7%  85.2K
40,000(AI)     3333 (MI)     933 (MMP)     267 (OMD)     at 5%  133K   at 6%  123K      at 7%  113K

Another method I use is to compare a current rental payment with a mortgage payment at the same amount. For example, if the rent being paid is $900/month, I divide the 900 by 6 and get 150.  That indicates that someone paying a rent of $900 per month could possibly pay a mortgage on a $150,000 property. 

Here is how I used math to get that: First, 6 is the interest rate multiplier when calculating interest on a loan with a 6% interest rate. So, I could multiply six by loan amounts until I get 900. 100 x 6 = 600; 125 x 6 = 750. 150 x 6 = 900.  (Note: you leave off the last 3 zeros of the loan amount for this type of calculation.) 

Or, I can "reverse" the same equation and use the monthly rent amount divided by the interest rate multiplier which then equals the loan amount. This liiks like; 900 / 6 = 150.

Of course other variables will affect the purchase ability of a buyer.  Things like credit score, amount of down payment, and the total of the other debts the buyer has, and the condition of the property, are some of the major ones.  First Time Buyers (people who have not owned a home in the last 3 years) have a major advantage right now, because the US Government will provide you with $8000 of down payment money.  But you have to find a house quickly and close before the end of November 2009!  Call a broker and get started! You only have $8000 and your own home to lose!

Happy real estate buying! 

$550,000,000! That is Five Hundred and Fifty MILLION Dollars! In A Down Economy! For Construction!

Well it must be a good project! Plymouth Rock Studios announced today that it has secured a $550 million construction loan from a Florida company called Prosperity International. Now the Plymouth Rock Studios can close on the Waverly Oaks Golf Course and begin building! "Building what?," you ask.

The high tech complex will consist of 14 sound stages, a 10-acre back lot, production and post-production facilities, a theater and amenity (shops/entertainment) village. Producers will now be able to make movies and television shows from start to finish at one site in southeastern MA! 

If you haven't looked at MAss real estate lately, now is a good time to start!

I was sent this video by a soldier who is training to use technology for war purposes. Real Estate is not the only business that has been affected by technology - the business of war has also. There is a huge advantage of those who have the technology.

Here is a Video Showing Wartime Technology. It is an overhead surveillance of multiple people with weapons being tracked from far away. The armed squad does not survive to inflict any damage.

There is no gore in the video, but the seriousness of war is made very clear.

http://bit.ly/3Yl1KZ

The Video is titled: 5 Armed Insurgents Meet 3 Hellfire Missiles, Ah-64 Gunship kills 5 armed insurgents with 3 Hellfire missles at night in Iraq

Here on Cape Cod, the 102 Fighter Wing has been re-tasked into the 102 Intelligence Wing. The overhead surveillance seen in this video will be happening from more places all over the world.

Thank you, to all those who serve in the military and who are keeping those rockets far from here.

How often should you move the dryer and vacuum around the laundry room - even the walls? The professionals say twice a year. Maybe if you plan to do it twice a year you will get it done once. This is in addition to removing the vent hose to clean the lint build up in it.

Electric dryers and gas dryers should be cleaned more often when there are a large number of loads being done.  Do you at least clean the lint screen when you put a new load in? That can reduce the time it takes to dry a load.

Cleaning your dryer is not only a good for keeping you home safe from fire hazards, it can help with energy efficiency, too.

Happy listing and selling real estate!

Hollywood East, the brain child of some experienced movie executives from Californiahas secured their construction financing! What does this mean? JOBS JOBS JOBS!!!

Not only are there construction jobs coming soon, but the 14 sound stages, 10 acre back lot, production facilities, offices, hotels, and shopping area will bring in more than 2000 jobs after construction. When you add the ancillary businesses and opportunities that will come to this area as supporting jobs, there could be as many a 20,000 new jobs.

Coupled with the new interest from notable people who want to have a home to use while they are doing business at the new studios, it's a beautiful day on Cape Cod!

See:

http://bit.ly/19yNcZ for the video of the signing.

http://bit.ly/3tLi3K to learn what Plymouth Rock Studios and Hollywood East are.

Happy listing and selling real estate!

The World Health Organization has decided that the acceptable level of Radon in a property is now 2.7 pCL/l instead of 4.0 pCL/l. This means that MOST of the US is now a Zone 1. The old Radon map of the US currently shows three zones with Zone 1 indicating possible levels of Radon exceeding the 4.0 range, zone 2 ranges from 2 to 4 pCL/l and Zone 3 are the areas of less than 2.

So the new map, when it is redone, will indicate 2 zones: areas of over 2.7 and all the other areas.

If you want to see a map you can find one here.

Happy listing and selling real estate.

Recently, when I was at the "Family Day" at Otis AFB in Bourne, MA, I found some information that may be helpful to National Guard families. One of the volunteers mentioned that there are benefits available to the families of National Guard service men and women that sometimes get over looked.  So here are the places that the information is available.

Here are some links to thesites with information.   Encourage anyone you know who is serving to look over the sites to see if there are benefits and/or entitlements that they might have missed.

Locating an ID Card facility near you:
http://www.dmdc.osd.mil/rsl/owa/home

Current Pay and Allownce tables:
http://dod.mil/militarypay     http://mypay.dfas.mil/mypay

Thrift Savings Plan:
http://www.tsp.gov

Survivor Benefit Plan:
http://www.defenselink.mil/militarypay/survivor/sbp/index.html

VA Life Insurance:
http://www.insurance.va.gov

Army Emergency Relief:
http://www.aerhq.org

Air Force Aid Society:
http://www.afas.org

Air Force Legal help:
http://hqja.jag.af.mil

Army Legal Help:
http://www.jacnet.army.mil/legal

Uniformed Services Employment and Reemployment Rights Act:
http://www.dol.gov/vets

Employer Support of the Reserve and Guard:
http://www.esgr.com

Health Care:
http://www.tricare.mil
http://www.tricaredentalprogram.com

Montgomery GI Bill:
http://www.gibill.va.gov

Defense Activity for Non-Traditional Educational Support:
http://www.dantes.doded.mil

Service Members Opportunity Colleges:
http://www.soc.aascu.org

Survivors' and Dependents' Education Assistance Program:
http://www.gibill.va.gov/pamphlets/CH35/CH35_Pamphlet_General.htm

National Guard Family Program:
http://www.guardfamily.org

Find a local Family Assistance Center:
http://www.guardfamily.org/Public/Application/ResourceFinderSearch.aspx

Chaplain:
chaplain@ngb.ang.af.mil
http://www.ngb.ang.af.mil

Morale, Welfare and Recreation:
Air Force      http://www-p.afsv.af.mil/default.htm
Army             http://www.armywmr.com

Space Available Travel:
http://www.transcom.mil

Commissary:
http://www.commisaries.com

Exchange:
http://www.aafes.com