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California Real Estate Declared ‘Essential’… What Does This Mean in the Real World?

May 12, 2020

California Real Estate Declared Essential

The California real estate market got a boost recently, when it was reclassified as an “essential” industry.  Since March 20th face-to-face real estate sales have been non-existent.  As a result, and coupled with the economic anxieties, local house hunters in Sonoma County, Santa Clara, San Mateo, and San Francisco Counties (as well as the rest of California) have been hesitant to pursue any real estate deals.  But as of May 4, the new ruling allows occupied homes can be shown as long as the seller is not present.

This certainly does not mean “business-as-usual”, but homes may be shown following local and state regulations.  In general, that means only 2 buyers + their 1 agent may be present (no kids, no friends, no parents) and the 2 buyers must already live in the same household.  Many “virtual open houses” are popping up as well, to provide more options to interested Home Buyers.

It is the opinion of most real estate agents that May will be transitional and June more normal.

But what about after the “shelter-in-place” order? What will the market look like then?  Once we are through this period, which appears may be June 1st or so, there will be some challenges that linger for a while but this is where creativity comes into play from talented Realtors and motivated Home Buyers.

We will get through this.  Homes will sell again (maybe a little differently), but as with other past disasters, we will work with what we have.  We are fortunate that this pandemic didn’t happen in the 1980’s!  No internet or other digital resources would have brought the real estate market to a dead stand still.  With creative ways to communicate and share information online, it really is just a transition to newer ways of listing and selling real estate!

Sun Pacific Mortgage is deeply grateful to all the devoted first- responders and dedicated doctors and nurses who put their lives on the line everyday for us.  We haven’t forgotten the brave grocery store workers and others who have kept our tables full during these stressful times.  You are all our heroes.  Stay safe and stay strong!

We continue to provide our alternative financing services for real estate needs. Don’t hesitate to see what we can help you and/or a client with by visiting our website at www.Sunpacificmortgage.com

Recently Funded – Bringing Heroes to Financing

May 7, 2020

Recently Funded – Bringing Heroes To Financing

Our Loans Can Be The Hero You Need

If you or your client are in need of some heroic alternative financing for any real estate transactions, we are here to help.

As we continue to satisfy our multitudes of investors by tightening-up borrower qualifications with lower Loan To Values and slightly increased rates, we are staying busy providing short-term Hard Money loans to those in need.

Here are last week’s loans approved by some of our Investors – shown by location and LTV. This should give you an idea of the lower LTVs which can be financed by our office at this time:

Torrance – 64% LTV
Bakersfield – 58% LTV
Oakland – 45% LTV
Willits, CA – 54% LTV
Santa Barbara – 37% LTV 2nd
San Diego – 54% LTV
San Francisco – 59% LTV

Call us today at 707-523-2099 with your scenarios or questions.  We will quickly let you know what we can do for you and/or your clients.

Recently Funded By Us

Location:  Palo Alto, Santa Clara County
Finance Program:  Primary Residence Temporary Refinance
Loan Size:  $760,000
Days to Close:  21
Reason Came To Us:   Poor credit and trying to pay off taxes and construction debt.

Location:  Los Angeles, Los Angeles County
Finance Program:  Primary Residence Temporary Refinance
Loan Size:  $428,000
Days to Close:  29
Reason Came To Us: Inherited home with reverse mortgage and needed to refinance.

Location:  Belmont, San Mateo County
Finance Program:  Primary Residence Refinance for Business Purpose
Loan Size:  $500,000
Days to Close:  26
Reason Came To Us: To pay off credit card debt and launch new career.

Location:  Kings Beach, Placer County
Finance Program: Commercial Property Refinance for Business Purpose
Loan Size:  $825,000
Days to Close:  28
Reason Came To Us: Self-employed with difficult to prove income.

Los Angeles First Quarter Report

April 28, 2020

Los Angeles First Quarter Report

As we entered this unchartered territory in the first quarter of 2020, the real estate market reflected some unevenness. Results for this past quarter in Los Angeles County were location and market specific. Looking at various communities within the whole of the county we find these statistics:

  • Properties on the market moved quicker in the more desirable Westside neighborhoods because of historically low mortgage rates and average sales prices declining.
  • Strong sales in the Hills showed a 43% increase from last year. In fact, Beverley Hills had a 120% increase in activity over last year. It appears that buyers were taking advantage of a 6% decrease in average single-family home prices to $2.8M
  • Some communities on the East Side saw average sales prices for single-family homes increase compared to the first quarter of last year, while days on the market decreased by 27% from last year’s first quarter. Pasadena and San Gabriel had sale price increases of 7 and 30 percent, respectively. In the La Cresenta//Glendale/ Montrose/Sparr Heights markets, condominium sales were extremely strong.
  • Overall, Metro Los Angeles saw a strong 25% increase over last year’s sales activity. Downtown LA and Hollywood condominium sales showed a dramatic increase of 75% compared to last year’s first quarter and days on the market were down 16% for Downtown.
  • South Bay’s home sales activity was mixed. Overall, they declined by 2% year-over-year, with the exceptions being Hermosa Beach with a 41% activity increase, Rancho Palos Verdes at 32% and Playa Vista at 75% increase. Home prices were relatively flat except for Playa Vista where the average sale price hit $2.7M, a 45% gain.

What this picture will look like for the 2nd Quarter of 2020 is anyone’s guess. If virtual tours and digital conferencing continue, we may be seeing some leveling out of the market, but not a significant decline.

If you are unable to qualify for a conventional home loan and are looking for financing during these stressful times, look no further than Sun Pacific Mortgage. Although we are physically located in Northern California, at least half of our clients come from Southern California. We successfully handle all our business remotely, either online or by phone. Give us a call at 707-523-2099 or send us your questions and/or scenarios through our website email forms.  Let’s see if we can help ease some of your stress during this unprecedented time.

Sonoma County Real Estate Report for March

April 21, 2020

Sonoma County Real Estate Report For March

In examining the March real estate market results, it is important to recognize that there is a time-lag of 3-6 weeks between a listing coming on the market and an offer being accepted.  With this in mind, almost all the sales data we have as of the first week in April reflects the market before the shelter-in-place went into effect. For all the Bay Area counties March median sales remained quite strong.

According to Realtor.com, March real estate statistics for Sonoma County read like this:

Median List Price:  $715,400 (up 7.6% over last year)

Median Listing Price per Sq.Ft.:  $406.

Median Sales Price:  $636,000

Average Sales Price:  $776,202

Median Days on the Market:  46 (trending down since last month)

Number Sold:  251 (up 4.1% from February)

Active Properties:  667 (as of April 5)

Other statistics from various sources:

  • Median sales price for single-family homes rose 6.6% year-over-year and 3.1% compared to last March.
  • Sales rose 2.9% year-over-year
  • Single-family homes pending totaled 348
  • Median sales price for condos was up 16.2% year-over-year, but condo sales were down 10.9% compared to last March
  • Condos are selling in 59 days
  • Days of inventory for homes is now 80

Spring is usually the most active selling season and often sees the highest median sales prices of the calendar year.  Give the rapidly changing socio-economic factors in play due to the present pandemic, experts are hesitant to predict how this season will play out.

The good news is that realtors and lenders have found creative avenues around the shelter-in-place restrictions.  They are utilizing all the digital and video media available from Zoom to Skype and every platform in-between. Virtual tours are still happening, listings have been going into contract, and escrows continue to be executed.  We are a resilient community that has weathered both fires and floods, and we will weather this hardship, too.

Stay calm, breathe, and carry on…this, too, will pass and we will all come out stronger.

Real Estate is an “Essential” Business

April 14, 2020

Real Estate Is An Essential Business

With strict regulations in place regarding self-distancing, what is to become of the real estate market? While California real estate sales is now deemed an “essential” industry, it does not mean back to business as usual.  All realtors still need to follow health guidelines and each city and county can stipulate what that looks like for their community.

“Necessity is the Mother of inventions”, but with regard to the situation we face today in the midst of Covid-19, it could be rephrased to read:  “If necessity is the Mother of Invention, than adversity must surely be the Father of Re-invention.”  In keeping with this philosophy, realtors across California have devised old and new ways to stay in touch with their clients and pursue their business, maybe not in the usual way, but still successfully.

Among the ways realtors and clients have been able to communicate is through a virtual tour.  Utilizing this tool, a realtor agrees on a specific day to walk through the prospective home with his/her buyer via a video app.  (Prior to this exercise, all would need to agree on the app to be used that would be the most comfortable for the buyer.) While “showing” the home, the realtor would comment on the features in each room that are noteworthy and could possibly be overlooked, e.g. high ceilings.  Finally, when the realtor has returned to his/her car, there should be a discussion regarding the overall feeling for the property and any specific questions the client might have.

Among the other tools realtors can employ are the old standbys of email, text, phone calls and video calls.  With the latter, be sure that your client is using the same platform you use. Maybe when we are on the other end of this pandemic, we will find these tools to be valuable enough to keep

Bottom line:  Stay calm and breath!  This won’t last forever, and our clients will appreciate whatever efforts you make on their behalf during this time of crisis.  Homes will still need to be bought and sold when we see the end of this.

What is a Good Return on Real Estate Investment?

April 7, 2020

Brian Babb Xbwhrt87Mq0 Unsplash There Is No Question That Investing In Real Estate Can Be Profitable. However, It Is Important To Be Realistic And That You Keep Your Goals Achievable.

There is no question that investing in real estate can be profitable. However, it is important to be realistic and that you keep your goals achievable.

First of all, you need to keep in mind that you will not make a profit overnight.  Secondly, you need to understand that the location of your property will play a critical role in determining how successful you are, and thirdly, the return on your investment also depends on how much money you have to further invest in fixing up the property or keep up with the maintenance.

When it comes to real estate, the primary focus of real estate investor should be on the return on investment. If it is too low, the investment may not be a good idea, but if the return on investment is high, your real estate property could be profitable for a long time, says House Match Real Estate Sales & Property Management.

One of the main reasons why some people fail to make profits in real estate is because they have little or no idea about the return of investment or set unrealistic expectations. But if you have a property that is in a good location and the maintenance costs or upkeep is at a minimum, there are formulas you can use to calculate the return on your investment.

Here are some ways to measure your return on real estate investment:

1. The one percent rule

Eugene Chystiakov C3Iwi6Amexm Unsplash There Is No Question That Investing In Real Estate Can Be Profitable. However, It Is Important To Be Realistic And That You Keep Your Goals Achievable.

The easiest way to determine how much money you will make is to use the one percent rule. As per this quick rule, your monthly gross rental income should be at least 1% of your investment.

For example, if you bought an investment property for $500,000, the monthly rental should be at least $5,000. Over 12 months, this equals to $60,000 and even after accounting for all usual expenses, you will still have 6-8% leftover. That can be considered a good return on investment.

2. The capitalization rate

Markus Spiske 2Vmcpbur6W8 Unsplash There Is No Question That Investing In Real Estate Can Be Profitable. However, It Is Important To Be Realistic And That You Keep Your Goals Achievable.

Another formula that is widely used to calculate the profitability of real estate investment is the cap rate. This is basically the ratio of the net income of the investment property to the purchase price.

For example you invest in a home that is worth $250,000 and rent it out for $1,500 a month. After deducting the maintenance fees, you are left with a net monthly income of $1,000 or $12K over 12 months.

The cap rate, in this case, will be $12,000/$250,000 or 4.8%. Whether this a good rate of investment depends on the location of your property, tenant stability, and how much maintenance is required. In general, experts indicate that a cap rate of about 5% is desirable and the higher, the better.

3. Cash on Cash (CoC) return

William Iven Damhwsryp9C Unsplash There Is No Question That Investing In Real Estate Can Be Profitable. However, It Is Important To Be Realistic And That You Keep Your Goals Achievable.

Another metric that is also used to calculate profitability from real estate investment is the Cash on Cash (CoC) return. Unlike the capitalization rate, CoC calculates the 12 months returns on your investment based on net income and cash investment.

For example, you obtain a loan of $300,000 with $60,000 down payment. The monthly rent is $1500, and your operating costs are $4,000. The CoC is as follows:

12x $1500-$4000/$60,000 – 23.3%

But on the other hand, let us assume you paid cash for the property: a sum of $300,000 instead of a mortgage.  The CoC, in this case, would be 12 x 1500-4000/$300,000= 4.6%. The reason for this variation is because CoC depends on how you finance the property. Most real estate investment experts suggest that a CoC between 8-12% is good.

4. Return on investment (ROI)

Kelly Sikkema M98Nrbuzbpc Unsplash There Is No Question That Investing In Real Estate Can Be Profitable. However, It Is Important To Be Realistic And That You Keep Your Goals Achievable.

Measuring the ROI allows you to assess the efficiency of the investment. This is the gold standard of assessing profitability when investing in real estate.

For example, you buy a real estate property for $500,000 and pay an additional $20,000 for things like closing fees, lawyer fees, and the initial home insurance. You rent out the property at $3,000 a month. In this case, the ROI will be as follows:

12 x$3000/$500,000 + $20,000 = 6.9%

Most experts suggest that an ROI between 7-15% is good, but others insist that it should be higher than 20%.

The calculation of the profitability of a real estate investment is just one part of the story. The things that matter include the location of the property, size, type of tenants, and the approximate maintenance and repair costs.

If you own a beach resort, you will never be short of tenants, but if you have a property in a crime-infested area, not only will you have difficulty in finding tenants, but these tenants may not look after your property very well.

It is important to do your groundwork well and choose the property with a great deal of thought. If you do your homework, there should not be any reason why you cannot make a profit.

The Covid-19 Virus and Its Impact on California Real Estate

March 31, 2020

The Covid 19 Virus And Its Impact On California Real Estate

One of the burning questions facing all Californians today is: with Californians self-distancing and “hunkering down” for the immediate future, what will the impact be on our real estate market and investments?  While this pandemic is causing an economic downturn, it hasn’t yet affected home values and most economist are still optimistic with regards to the real estate market in general.

Real estate sales, rentals and leasing are a $445 billion industry in California and has been a major driver in personal wealth for property owners over the past decade.

Seeing the effect of the pandemic on the world economy naturally raises questions regarding other markets, like real estate.  Experts have made clear that an economic slowdown does not equal a housing crisis, nor does it mean a repeat of the 2008 debacle.  There were other economic issues at work during that recession that have been resolved by laws that were enacted since.

What we may be seeing is a longer wait for homes to sell once they hit the market and there may be some lowering of prices, but no major crash is predicted by the experts.  California housing demand remains strong and technology makes it easier to perform real estate shopping and buying online. Some adjustments we might be seeing are that viewing houses and inspections may be done more by appointment and with hyper vigilance for sanitizing, but it will not be impossible.

While we home-bound, this time would be good time for potential buyers to get their paperwork together for pre-approval, and for sellers to get their disclosures completed and begin the decluttering process.  Sellers can also line up the pre-sale inspections and necessary photographs so this time at home is not wasted.

Here at Sun Pacific Mortgage, we are a family-owned and operated business, providing alternative financing needs for over 3 decades.  During these unprecedented times we still continue to provide our services to you! Our loan programs could be the answer to solving your real estate funding problems when other lending institutions are short- handed.  We specialize in fast, short-term mortgages.

Give us a call at 707-5323-2099.  We can handle all the necessary paperwork via phone call and email.  Stay well!

Homeownership and Tax Breaks

March 24, 2020

Homeownership And Tax Breaks

Besides the wealth accumulation that property appreciation affords, tax breaks are another way homeowners benefit from their real estate investments.  Here are some facts that set the record straight on the tax advantages of homeownership:

  1. Mortgage Interest:  Homeowners with a mortgage that went into effect before December 15, 2017, can deduct interest on loans up to $1 million.  For mortgages that went into effect after that date, only the interest on the first $750,000 is a legitimate deduction. To be able to take this deduction, you must itemize.  Most Californians will benefit from this deduction because the majority of itemize deductions will most likely exceed the standard deduction of $24,400 for a married couple, or $12,200 for an individual.
  2. Property Taxes:  This deduction is capped at $10,000 for those married filing jointly no matter how high the taxes are.  Remember that your taxes may be part of the total payment you pay to your lender.
  3. Private Mortgage Insurance:  If you put less than 20% down on your home, you are probably paying private mortgage insurance (PMI).  This can cost from 0.3% to 1.15% of your home loan. Good news: you can deduct this interest payment thanks to the Mortgage Insurance Tax Deduction Act of 2019.  This credit is retroactive for 2018, so it is a good idea to speak to your accountant to see if it makes sense to amend your 2018 tax return.

There are many reasons owning a home makes sense, but the tax benefits have always been a major motivator.  The renter’s deduction is a pittance compared to the tax write-off you can claim as a homeowner when you consider both mortgage interest and property taxes.

Hope you’ve found this useful.

Loan of the Week – Popular And Fast

March 19, 2020

Flying Money Promo 2020

Popular – Fast – Good Rates
Loan of the Week

A past borrower called looking for a loan of $630,400 so he could purchase a rental unit in Sebastopol, a town in western Sonoma County.  He was looking to supplement his income and add to his retirement portfolio.

He had a good down payment but since he was self-employed, he was having a problem proving enough income for conventional financing.  This is where our alternative financing, also known as Hard Money, became the answer for his investment needs.

Because this client had already proven himself to be a trusted and responsible borrower, it was not difficult to get his loan completed in less than two weeks!

If you need a fast close on a real estate deal, or have difficulty proving your income, we have the answer.  Our programs make it easy to wrap up real estate transactions quickly and smoothly. Give us a call at 707-523-2099 with your questions.

 

*APR for this rate based on a $200,000 first mortgage is 6.31%.

Wrangled Up Unique Financing For You!

March 12, 2020

Wrangeled Up Promo 2020

Taking advantage of our most popular alternative finance program could be the best mortgage option for yourself or a client – with rates as low as *6%!

If the FICO score is good (640 and up), the loan to value is 64% or less,  and the property being purchased or refinanced is in good condition, then our Alt-A Hard Money Loan could be just the solution you are seeking.

Call us at 707-523-2099 and we’ll quickly respond with our answer to your financing dilemma!

Recently Funded with Alternative Financing

Location: Oakley, Contra Costa County
Finance Program: Primary Residence Bridge Loan Refinance
Loan Size: $310,000 with 62% LTV
Days To Finish: 19
Why Needed Us: Wanted to buy another property prior to his current home being sold.

Location:  Murrieta, Riverside County
Finance Program: Investment Property Refinance
Loan Size: $650,000 with 63% LTV
Days To Finish: 17
Why Needed Us: Was looking for fast capital for his business.

Location:  Mill Valley, Marin County
Finance Program: Investment Property Purchase
Loan Size: $2,100,000 with 67% LTV
Days To Finish: 16
Why Needed Us: Real Estate Investor having difficulty with financing elsewhere due to multiple properties owned with mortgages.

Location: Covina, Los Angeles County
Finance Program: Primary Residence Temporary Refinance
Loan Size: $450,000 with 62% LTV
Days To Finish: 11
Why Needed Us: Turned down by other lending institutions due to difficult to prove income.

 

*APR for this rate based on a $200,000 first mortgage is 6.31%.

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