Dallas: A Place to Call Home
This was a guest post submitted by Ed Doss, if you would like to write a guest post for our blog please email jeremy[at]yaerd.org.
After years of abandoning city life and retreating to the suburbs, Dallasites are reversing the trend and beginning to move back to the city.
This is good news to Mayor Tom Leppert and his City Council team. They’re giving their former residents a warm welcome and making a firm commitment to make their experience the second time around much better, with promises and commitments of improved services and support – some of the reasons they may have fled to the suburbs in the first place.
There’s every reason to believe Mayor Leppert.
Dallas knows its future is in the hands of the young professionals, empty nesters and even the retirees, who realize that living close to their job, their kids, or state-of-the-art medical facilities will enhance their quality of life. Suburbia was not all that it was cracked up to be for these individuals, with clogged and congested highways, constant yard work and increasing taxes. Although they may have initially made some lifestyle concessions in return for the affordable housing they found in the suburbs, the housing market in Dallas is changing. There are plenty of affordable and luxurious condos and custom homes in Dallas on the market, all at incredibly low prices and within a stone’s throw from all of the amenities Dallas has to offer. In addition, if the opportunity exists to build a home from scratch, the architectural advances in the past few years have made a custom designed house an affordable possibility. So what could be better than moving back to the city in a new, custom home that is built to your individual and personalized specifications – and within your budget?
Moving back to Dallas is a no brainer for many individuals. Initially, many residents fled the city for the outlying areas of the metroplex because they were tired of the hectic pace of city life. They also were seduced by low home prices in up-and-coming neighborhoods, as far out as Grapevine, Plano or Mansfield. But now, the economic climate is changing. The suburbs are becoming what the city used to be, and relocating back to Dallas is a practical idea that isn’t as insane as it seems. A quick analysis of the situation makes a few things perfectly clear: there’s no better time to trade in your suburban lifestyle than now. There’s no better time to sell your home in the suburbs and see about building a custom home in the city.
If you still need some convincing, consider this: According to statistics from the Department of Labor, Dallas has one of the highest rates of new job creation in the country. Why live in Colleyville and commute to Dallas when you could live in Dallas and be close enough to walk to work?
Other reasons cited for moving back to the city include:
A carefree lifestyle
Less traffic and a shorter commute
Very little or no lawn care
Restaurants that are just a short walk away, for those enjoying gastronomic pleasures
Leisure activities (movies, plays, museums, concerts, sports, etc.)
Quality educational facilities
Excellent health care
Researchers at the Urban Land Institute also claim that the trend of moving back to the city could continue for the next 15 years, with boomers and young professionals the most likely to relocate.
So if you’re tired of the hassles of suburban living and want to trade in traffic and tree maintenance for affordable luxury and convenience, think about cashing out on your pricey home in the country and investing in a dream house in the city. Custom builders can help you design and build a home that has all the features that you’ve ever wanted … all within your budget, and probably with some cash left over for some luxury expenditures.
So get ready to sell the lawn mower and pack up the pots and pans. The home of your dreams awaits you in Dallas.
Palladium Custom Homes
14902 Preston Road
Dallas, TX 75254
The Good, the Bad & the Ugly on the Nation’s Housing Market
Let’s start with the good about the national real estate market. According to an annual report on the state of the nation’s housing markets from the Joint Center for Housing Studies of Harvard University is optimistic about medium- to long-term prospects, estimating that unless there’s a serious, prolonged economic decline or a marked cutback in immigration, the nation will gain 14.4 million new households between 2010 and 2020, compared with 12.6 million between 1995 and 2005. That type of population growth translates to increased demand for housing and certain to swing the cycle back upwards in time. 
Now the Bad & the Ugly - the reality is in the short term the current housing slump is far from over and is shaping up to be the worst in decades.
How bad is the down cycle we are in? (The Ugly) The Harvard report noted that sales of existing homes fell 13 percent in 2007 to 4.9 million, and sales of new homes were down 26 percent to 776,000, the lowest level since 1996. The 500,000 unsold new single-family homes available in early 2008 was down from a mid-2006 peak of more than 570,000, but the slower rate of sales translates into an 11 month supply — an overhang not seen since the 1970s. A supply of more than six months is considered a buyer’s market.
Is the glass half full or half empty? Well that depends on which side of the fence you are on, If your a developer sitting with standing inventory in the wrong market you may feel your glass isn’t just half empty it’s bone dry. Even if you are a developer who followed leading indicators and cut production early or moved into stronger markets with better fundamentals you may feel that due to the current credit crisis your glass is at best half empty.
Same thing if you’re an investor who jumped late into a sellers market and threw fundamentals out the window and followed the incentives, media and hype in 2005 to option arm hell. If however you are investor who did not buy into the speculation understood fundamentals and leading indicators, you are now on the sidelines with opportunities abound and some low lying fruit ready for picking, just be sure to pick your markets and micro markets carefully and stick to the fundamentals.
Robert Stec
YAERD.org Advisory Board Member
YAERD.org is looking for real estate professionals to write about their local markets and have their articles published on the Blog of our top ranked Investment Real Estate site. Collaborate with the YAERD.org community and help us learn about the Good the Bad and The Ugly of your local markets. We want to know where the problems are and over supplies in your markets are as well as where the real opportunities are in the micro markets of your local area. Send an Article Proposal to freeinfo[at]YAERD.org
Investment & Second Home Lending Alert
Freddie Mac (officially the Federal Home Loan Mortgage Corporation) announced that on all loans delivered after August 8, 2008 it plans to restrict financing to second-home and investment real estate purchasers who have “individual or joint-ownership” interests in multiple properties. In the case of second-home buyers, they will be ineligible for new mortgages through Freddie Mac if they have ownership interests in more than a total of four properties securing debt, including the one they propose to finance.
Many of the following loan types are about to feel credit restrictions: 
•Mortgages to borrowers with scant information at the three national credit bureaus.
•Loans with anything less than full documentation of borrower income, credit and assets.
•Mortgages for certain second-home purchases.
•Cash-out refinancing
•Investment loan applications for a buyer who owns at least three other rental properties.
•Adjustable-rate mortgages where the first occurs within 60 months after closing.
•Short-term construction loans that convert to permanent mortgages.
These tighter guidelines include rental houses, rental condos and other investment properties, these properties will be ineligible if the borrower has ownership stakes in a total of four units. Previously, Freddie allowed investors to own up to 10 rental properties carrying mortgages.
Freddie Mac also announced new reductions in refinancings where the property had secured a “cash-out” refinancing in the prior six months. The company defines a cash-out as any refinancing where the replacement loan balance exceeds the previous balance by 5 percent or more. Recently, according to the company’s quarterly surveys, more than 80 percent of refinancings involved equity-depleting cash-outs.
Freddie Mac indirectly finances one out of every six homes in the US. The NYSE Company is a shareholder-owned, government-sponsored enterprise that, along with sister Fannie Mae, creates liquidity in the residential mortgage market by guaranteeing, purchasing, securitizing, and investing in such loans. The company, which is prohibited from originating loans, buys conventional residential mortgages from mortgage bankers, transferring risk from them and allowing them to provide mortgages to those who otherwise wouldn’t qualify. www.FreddieMac.com
Meanwhile, private mortgage insurers, who provide loss coverage for lenders and investors on loans where down payments are less than 20 percent, also are rolling back a variety of products, especially in areas they define as distressed or declining. For instance Genworth Financial one of the largest insurers, recently told lenders that it no longer will consider applications for second-home purchases anywhere in Florida after May 5. Also as of that date, Genworth will not touch cash-out refis, investment properties, non-traditional credit applications, construction/permanent loans or adjustable-rate mortgages with initial adjustments within the first five years in all “declining/distressed” markets.
PMI Group, another high-volume insurer, banned cash-out refis, limited-documentation loans and all mortgages secured by investment properties in “distressed” markets. In non-distressed areas, cash-out refis on second homes and rental houses no longer are not eligible for coverage, nor are interest-only loans on investment real estate and all mortgages on properties containing three to four units. PMI boosted minimum credit score requirements for “jumbo” loans nationwide to a 700 FICO and will require at least 10 percent down. MGIC, the largest private mortgage insurer, recently eliminated coverage nationwide of “option-ARM” loans that have scheduled or potential negative amortization features that increase, rather than reduce, borrowers’ principal monthly debt. In the boom years, option-ARMs were wildly popular in major metro markets. Many mortgage insurers will no longer insure cash-out refis using limited documentation, temporary rate buy-downs on investment real estate and non-traditional credit applications to buy second homes.
The investor loan marketplace is rapidly changing; YAERD.org and our partners are committed to working with the investor and lender communities to continually provide investor grade loan products in spite of tighter credit restrictions. Many investor groups are ignoring these changes and leading investors into real estate deals without having financing in place and wasting investors’ time and resources in the process.
For Lenders reading this alert the YAERD.org network is continually looking to expand our base of approved lenders for our national investor network. If you have unique investor and second home financing offering such as portfolio or private offerings we want to hear about your specific programs. 1-877-YAERD-70 ext 3 or email freeinfo[at]yaerd.org with your specific investor loan program and guidelines.
Robert Stec
YAERD.org Advisory Board Member
Better Presidential Candidate for Real Estate Investors?
Our country is obviously facing a plethora of issues ranging from the economy, the war, climate change, and immigration. I’d like to focus in on what these two candidates are planning to do with our taxes.
The Tax Policy Center (non-partisan joint venture of the Urban Institute and Brookings Institution) made a breakdown that demonstrates how the average tax bill would change in 2009 depending if McCain’s or Obama’s tax plans are implemented.
The two plans aren’t too different for the average investor, but the investors who have been in the game for a long time and have a large cash flow (and those who are trying to get there) will see a noticeable change in taxes due. So who is the better candidate for your real estate investment portfolio?
http://www.taxpolicycenter.org/taxtopics/election_issues_matrix.cfm
Jeremy Quinn
YAERD.org Advisory Board Member
jeremy[at]yaerd.org
561-210-5636
Summer Madness
Play this while you read…
I thought I’d queue up Summer Madness by Kool and the Gang for ya…..Nearly everyone has had a summer to remember, where alcohol flowed like water and at the time things couldn’t be more perfect. That’s basically what has happened to our country’s housing industry. We were “drunk” on greed doing cash-out refinances, HELOCs, multiple flips and speculating like crazy. Now it’s the morning time and we are experiencing the worst hang over of our lives.
Some speculators saw their net worth grow into the millions in 2005 are now worth very little to nothing. I still have these “investors” call every week looking for a cash-back deal to keep their ship afloat. Now is the time where investors have to make smart decisions because one bad decision can be detrimental to your portfolio.
This housing correction will probably be the worst that we will ever see in our lifetime. Not only is there a large supply in most markets, but now the question is can you qualify for a home loan due to the credit crunch. Although people are still out there preaching fools’ gold I still truly believe this is a good time to buy in certain markets, if the deal makes sense for you and your portfolio.
We need to get back to the basics with real estate investing in this country. Adding positive cash flow property to your portfolio is always a good idea, especially to hedge your money against current and rising inflation. It goes back to the old saying “it takes money to make money”. Choosing your team carefully and your properties will be critical to your success.
Skyler Moore
YAERD.org Investor Relations & Project Management
Skyler [at] yaerd.org
312-265-8417
Skyler Moore’s First Blog Post
Hello YAERD community. My name is Skyler Moore and I work on project qualification and investor relations, so if you ever want to know more about a project, or how to get started with YAERD, I am only a phone call away 312-265-8417.
My goal is to bring the best projects out there to YAERD members. My interest is the investor, not the developer. I work one on one with every level of investor. If it’s your first investment property great, let’s figure out what your goals are with your real estate portfolio. You have a large amount of equity and want to get into commercial real estate, perfect, let’s determine what fits your current portfolio the best.
I take project qualification seriously and only promote projects that I would consider investing in and have visited. When a developer approaches YAERD with their projects (handfuls do daily), I go through and analyze the numbers (my degree is in finance). Do they make sense? After evaluation if I still like the project, I fly out to further view the project. I want to see first hand what they have built and the quality of the property, meet the developer in person, the lenders in person, property managers in person, areas where they are pulling renters from, etc. This takes a lot of the guess work out for the investor and I can speak with authority on the project.
Some of our projects may or may not be right for your portfolio depending on your own financial situation. YAERD is unique by being able to offer our members anything they need from financing (I will post more about this in the future, as investor financing is becoming more difficult everyday), single family homes, multi family, or triple net leases and all at NO COST to you. We will never charge you a transaction or membership fee. Make us a part of your personal financial army to meet your goals.
I currently manage our GO Zone project (www.gozonegateway.com) and travel around to other prospective YAERD offerings (a lot of projects and markets do not make sense at this time as they are still on the down swing). I look forward to speaking with you and helping you build a successful and profitable real estate portfolio.
Skyler Moore
YAERD.org Investor Relations & Project Management
Skyler [at] yaerd.org
312-265-8417
What does the Press know about Real Estate Cycles?
With all the press written about real estate I remain astounded to hear very little specific discussion about real estate economics & market cycles – the simple fact is that in a given market and for a given asset class valuations go up and valuations go down over time. This is the way it has always been, and will always continue to be.
I agree with those who suggest that it’s for the most part foolish to try and predict precisely when changes in the cycle will occur, but you can absolutely track the data and the leading indicators market by market so one can note the changes and trends as they’re happening.
A big part of my future posts for the YAERD.org blog will be to track real estate market data, analyze it thoughtfully, and hopefully help investors make better decisions. I am also from time to time going to call out some of the so called real estate economic gurus out there as well as help you avoid the economic hit men (more on that topic later) that routinely take advantage of the public. What makes me qualified to do so you may ask? Well I am not sure I am any more or less qualified than some of the media pundits trying to interpret data, some times correctly but more often that not I see these media experts giving very misguided analysis.
In terms of my qualification, I do have an undergraduate degree in Economics and have done some post graduate work in the field. In and of itself, that doesn’t amount to a hill of beans but combined with my experience working with developers and investors in markets throughout the U.S and internationally I do at least have a unique perspective and hope to periodically offer my two cents on these topics.
Robert Stec
YAERD.org Advisory Board Member
Technorati
GO Zone? Huh? What the heck is that?
Unless you have been living in a cave for the last year I’m sure you have at least heard about the GO Zone. In short, the GO Zone is probably the best tax shelter this generation has ever witnessed. After Hurricane Katrina destroyed much of the Gulf Coast in August of 2005 Congress passed the Gulf Opportunity Zone Act (GO Zone Act). This Act was meant to spur rebuilding in the Gulf Coast and it is laden with all kinds of tax breaks. While there are many features to the GO Zone Act we are only concerned about the ones that affect the real estate investor.
The feature we find so advantageous is the first year 50% Bonus Depreciation. This allows the real estate investor who places a property into rental service in the GO Zone some serious tax deductions. How serious you ask? Serious enough that some of our investors are able to OFFSET ALL OF THEIR TAXABLE INCOME.
We are so excited about the GO Zone that we have invested hundreds of hours learning about it and ferreting out the best investment opportunities. We even decided to launch a separate website dedicated to it.
Interested in learning more about the GO Zone and GO Zone investing opportunities? Visit our GO Zone site at http://www.gozonegateway.com.
Jeremy Quinn
YAERD.org Advisory Board Member
Our Blog Debuts
Hello YAERD.org community. We are proud to introduce to you the YAERD.org Real Estate Investing Blog. We will be using this highly effective tool to keep you (the real estate investor) informed and educated. From the latest news to law changes, from breaking into the hottest real estate markets and projects to educating you on what a Cap Rate is. We look forward to it!
Jeremy Quinn
YAERD.org Advisory Board Member
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