Austin Investors:Fannie Mae or Freddie Mac may be rethinking loan limits for investors

In Austin, there  are real estate bargains to be had by bargain hunters but the mid sized investor has been side lined do to the 4 property limit imposed by Freddie Mae and Fannie Mac.

Freddie Mac Fannie Mae rethinking investor loan limits

The previous limit was 10 homes.  And most mid sized investors will easily reach the 4 home limit.  Your primary residence is counted in the 4 home limit.    This new limit pushed many small investors out of the game because they have to seek higher cost financing from non Freddie Mac/Fannie Mae sources.

At this point, we dont know which agency is rethinking the policy as we have not had any official communication from Fannie Mae and Freddie Mac.   I picked up on this rumor by respected Realty Times Contributor Kenneth Harney in his article  Investor Report:  Rethinking Controversial Limits .

Lets hope this is really going to happen.  PMI insurance wont underwrite investor properties — so investors have to put  down a 20% downpayment or find an expensive, elusive 2nd mortgage.  So the deals have to be really good to motivate an investor to take action.  If we can participate in favorable financing , that will sweeten the pot.

The Velocity of Money and What it means to the Economy

This is a big topic for an Austin investment real estate agent to take on. So…… I won’t. But I do find the topic fascinating. Most of us get our economic news from Cable News.

During the build up to the Iraq war– I lost all faith in our “cheer leading” media. I believe that with economic news — the media has their “talking points”.

I found this article By John Mauldin — it is a cohesive argument that is written in terms we can all understand. John put this article together with input from Dr. Lacy Hunt of Hoisington Investment Management in Austin, Texas. It is an overview of the risks that we face in the US Economy. I am covering it here because investors always want to be able to predict how their investments will fare with the upcoming economic woes.

What does this article mean to the Austin Real Estate Investor:

1. Sellers– if you really want to sell a property, be reasonable now. You don’t need to sell good properties but if you are trying to dump a “dog” -- dump it now or prepare to hold it for another 2 or 3 years.

2. Buyers: — Austin is one of the best real estate markets in the country. There will be plenty of bargains out there. Spend your investment dollars here.  The following photo shows the areas of the country with the highest loan default rate.  As you can see, Texas is faring well compared to most of the country.  The Texas market is stronger than the markets making headlines.

http://www.tradingurus.com/the-velocity-of-money-john-mauldins-weekly-e-letter.html

It’s something to ponder.

 

Travis County Tax Appraisals for 2008 have gone up 12.5%

That is good news for investors worried about the potential of declining values but bad news for taxpayers. 

 Austin real estate is appraised by the Travis County Aprraisal district by a flawed method of appraisal called the “mass appraisal method”.  This has a lot of twists and turns.  I once read a 30 paige pdf on it– It really put me to sleep.  I say a flawed method because texas is a privacy state.  The price that you paid for a property is not a matter of public record. 

When your deed is recorded the appraisal district will  politely send out a notice asking what you paid for the property.  When you recieve it— THROW IT AWAY.  Sometimes new proud homeowners report values to the appraisal district — that then get applied to all the properties within the same section code.  This is far different from a Comparitave Market Analysis  (CMA) that an Austin Realtor will give you.  A CMA takes into consideration the condition of the property, upgrades and other factors. 

If you do not agree with the appraised value– before you protest– call a realtor ( namely Dena Davis) and let me take a quick look at the value.  I will let you know if you have an adequate chance of winning a protest.  You will have to bring in comparables– that support your claim of value. 

One other thing to know.  Some if not all  appraisals that work for the district have real estate licenses.  One time– during a protest– I brought my comps pointing to the lower value and Karlton Sneed, an appraiser for the district sat on his computer and pulled comps that he saw from a higher value. 

So this privacy issue only goes so far.  I dont know if they are supposed to be doing that.  — I doubt it.  But it happens. 

We are always here to serve the Austin investment real estate community in any way we can.  If you are wondering whether or not a property is really worth the appraised value.  Call me 512-473-2444 ext. 2. 

 To read the entire statesman article http://www.statesman.com/business/content/business/stories/realestate/04/16/0416appraisals.html

 

 

 

 

 

What does an impending Recession mean to the Austin Real Estate Investor?

On Friday – the jobs numbers came out.  The country lost over 67,000 jobs.  If it walks like a duck, and talks like a duck it’s a duck.  These economic numbers are definitely talking like a recession.  The jobs are walking out of the US to countries like India and China.  US companies are tightening their belt.

What is an Austin real estate investor to do?  Dump you dogs.

The Austin real estate market is still a good market.  We are moving into our best season– summer buying season.  Well located property will still fetch a premium.  If you have a property that you don’t want to own long term– sell it now.

I am not saying dump your Austin portfolio.  No — Austin real estate market is one of the safest markets in the country.  We don’t have the same kind of sub-prime mortgage issues that a lot of other markets face.  Only 8.3% of our mortgages were subprime.  But a recession could quell the demand for property.  Liquidity remains an ongoing concern. 

Those in strong cash positions will be positioned to take advantage of deals in the near future.  Banks are going to require that investor borrowers have larger cash reserves than they did a year ago.  So it’s not only a question of the source and seasoning (where it came from and how long you have had it on deposit) of your down payment – its a question of your financial stability.   A credit score of 680 or more won’t be enough — it will take 20% down plus greater cash reserves on hand.  It’s going to get tighter and tighter. 

 This is why you want to dump your dogs.  It will take a well positioned, seasoned investor to be able to go through bank underwriting in the future.  Those seasoned investors are going to be attracted to prime properties.  If you have a dog– dump it now. If you want to be poised to take advantage of reasonably priced prime property opportunities in the near future– you had better get your house in order now.