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You’ve Got An Accepted Offer – Now What?!

So, you’ve gone to see your lender and been pre-qualified.  You’ve searched for weeks for the perfect home and you’ve found it.  You’ve chosen a savvy real estate agent and have negotiated the perfect offer and to your surprise, it’s been accepted!

Now what?

Well, first of all Congratulations!  Now get ready.  Things will start to move quickly.  Your agent will provide you with a list of critical dates that pertain to the contract and you will get to work.

Your lender will send you a list of required documents and it’s your job to get these documents/ requested information back to your lender in a timely manner.  Timely means quickly!  The longer it takes for you to get these items back to your lender the longer it takes to submit your loan to underwriting and the longer it takes to be approved for closing.

Escrow Deposit:

Get this to your Realtor or title company ASAP and be sure to keep a copy of the deposit for your records.  This deposit is refundable through the inspection period and will be applied to the final amount that you will need to bring to closing.

Inspection Period:

Typically the first 10-15 days from your date of acceptance are your inspection period.  This is your opportunity to inspect the property and not just on your own.  Your real estate agent will have a home inspector recommendation and you should work to get this scheduled as soon after the acceptance date as possible.  The home inspector will inspect every part of the home that he/ she has access to and will give you a nice little report including photos and descriptions to review.

This is also your opportunity to call in any contractors or additional inspectors for estimates on repairs that will need to be made.  All of this information is very important when determining if you will move forward with a purchase.  Do the numbers still work once you add in the costs of all the repairs?   If yes, proceed to the next step.

Insurance Shopping:  The Big 3!:

Start reaching out to your recommended insurance providers and getting quotes on the necessary insurances (click here for a list of my recommended insurance providers).  If you are financing a property in Florida you will likely be required to carry 3 different insurances:  flood insurance, windstorm insurance, and hazard insurance.  The bank will require you to prepay for the first year of insurances and then will escrow your insurances through out the year to pay the future years on your behalf.

Appraisal, Survey, & Elevation Certificate:

You will likely be required to have one of each.  The appraisal will tell you how much your home is worth in the current market..  The survey will be reviewed by the closing attorney to be sure there are no encroachments on your property and the elevation certificate will tell your insurance company how high off the ground the lowest point of your home is.  The appraisal, survey and elevation certificate will likely be ordered by the bank however you as the buyer will be responsible for the payment.  Generally, appraisals are pre-paid and the survey/ elevation certificate can likely be paid for at closing.

Taking care of each of these steps and communicating with your Realtor will get you to the closing table and on to the fun part and ultimate goal… homeownership!

Call, text, or email me (305-394-4073 or krystalthomasre@gmail.com) for additional information on how to purchase your first home.  I am a full time agent with Preferred Properties and ready to assist you in purchasing your Florida Keys home!

 

 

 

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Pre Qualification & Avoiding Analysis Paralysis

Although you may casually start your home search with a generic search in Google or Realtor.com the search really doesn’t start until you know what your purchasing power is.

Enter Pre-Qualification.  This is the step where you sit down with a lender to determine how much home you can actually afford and I’ll be honest with you, every first time home buyer says this is the scariest step.  Putting your financial background and information on Front Street is scary and intimidating but it doesn’t have to be.

Work with your real estate agent to find a lending partner that will fit your needs and make you feel comfortable.  This is the job of a lender.  To analyze your finances and income and help you determine what type of mortgage you will/ can qualify for.  They will also tell you how to get to where you need to be if you aren’t there yet.

Pre-qualification is the most important step in your real estate search because it saves you time.  You don’t want to be looking at homes in the $500K range if you can only afford $350K and conversely you don’t want to be limiting your search to $350K if you are approved for $500K.

In my case, the home I was purchasing would not have qualified for conventional financing. It needed a new roof, new siding, new floors (and subfloor), etc.; it was a complete mess.

As I mentioned, I’ve had the idea of homeownership on my mind for years and had been listening to a podcast called Bigger Pockets for about a year when the Pearl Street purchase opportunity fell into my lap.  If you are a real estate investor and haven’t listened to Bigger Pockets you are missing out.  Bigger Pockets is a podcast dedicated to helping real estate investors.  On the weekly podcast the hosts interview investors in various stages of the real estate investment spectrum, everyone from newbies to seasoned pros; one of the things that is so inspiring is that most all of them had to get creative to get their first deal.

So I figured out how much money I would need to purchase and renovate the house (I estimated $300K total, $240K to purchase and $60K to renovate) and pursued the avenue of hard money financing.

I thought long and hard and eventually worked up the courage to put up a post on my Facebook wall that read something like this:  “Investment opportunity available, seeking hard money financing for a home purchase.  Serious inquiries only, PM me for details.”  From this post I had 3 responses, and one of those responses worked out.  We were able to come to an agreement.

If you aren’t familiar with the concept of hard money financing it is a loan typically offered by a private investor, and secured with real estate or some sort of “real” asset.   You are charged a higher interest rate and these types of loans are often interest only and for a short term (6months, 1year, etc).  In my case we borrowed $300K for a term of 1 year @ 10% interest only.

So now you’re thinking whoa!  10%, no way.  Yes way!  Sometimes you need to do what you have to do to get your foot in the door. As long as the numbers work, who cares what the interest rate it.  The numbers worked for us so we went to closing and started what would be our most challenging project to date!

That being said, where there’s a will there is a way.  The challenge we took on almost a year ago has grown $100K in equity and is a successful long-term rental in Key West with a positive cash flow.

Stay tuned for the next post in this series, You’ve Got An Offer, Now What?!…=

Call, text, or email me (305-394-4073 or krystalthomasre@gmail.com) for additional information on how to purchase your first home.  I am a full time buyer’s agent with Preferred Properties and ready to assist you in purchasing your Florida Keys home!

 

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Fixer Upper Rental Homes

So about this time last year I was preparing to purchase my first home.

It’s something that I had thought about often but in the Key West market was doubtful that I would be able to afford to get my foot in the door.  Enter Pearl Avenue.  This was a deal that kind of fell into my lap and what was a casual home search got shoved into overdrive.

This place was a fixer upper although I didn’t realize just how much of a fixer upper it would become.  What was purchased to be a cosmetic flip quickly became a domino effect of issues and I often found my boyfriend Ed looking at me with wide eyes like what in the hell did we get ourselves into?!

Here’s a before & after to get your juices flowing:

key-west-rental-renovation

In this series of blog posts we will explore the highs and lows of homeownership & renovation life including how not to have a nervous breakdown when you go to your final walkthrough before closing and there is water pouring out of your ceiling.

I am going to break down each step of the way from purchase to renovating to listing the home for purchase to deciding to take it off the market and rent long term to how to be a landlord.

 

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5 Reasons You Should Buy A Duplex in Key West

If you’ve been struggling with how to break into the realm of real estate ownership consider this:  purchase a duplex.  A duplex is defined as a house divided into two apartments, with a separate entrance for each.  It is also what I consider one of the best investments that a homebuyer can make.

 

  1. YOU CAN LIVE IN ONE UNIT AND RENT THE OTHER!

 

  1. Duplexes qualify for FHA financing, which means that you could purchase the property for as little as 3.5%% down. For a list of my preferred lenders, click here.  (if you are in Key West you could also qualify for 0% down financing, contact me for additional information about the financing programs that are available locally.)

 

  1. You can use the rental income from the unit that you rent out to help you qualify for the mortgage to purchase the property

 

  1. Hellllllo Tax Write Offs – It’s no secret that owning a property provides many tax incentives that you don’t find as a renter. If you buy a duplex and rent out the other side you can write off all the costs that take place including costs to market and rent the property as well as repairs and shared expenses.

 

  1. Welcome to the World of Landlording – Real estate is one of the most lucrative investments you can make.  If you’ve ever thought about investing in real estate this is a great way to start.  Start small with your one unit and then grow your portfolio.  You’ll have a vested interest in the quality of property and tenant that you choose because you will be neighbors.

 

Let’s take a look at 1610 Dennis Street.  A duplex located in Mid Town Key West and currently listed for $385,000 (one of the best deals on the market I think!)

FHA 0% 3.50% 5% 10% 20%
Mortgage $2490 $2415 $2405 $2222 $1856
Taxes*  $324 $324 $324 $324   $324
Insurances** $425 $425 $425 $425 $425
Sample Total Monthly Payment $3239 $3164 $3154 $2971 $2605

 

Now.  Divide that Sample Payment by 2.  #boomshakalaka, you could OWN a home in Key West for as little as $1300!

Let’s make it happen.

* Taxes are based on your purchase price and are a little bit less than 1% of your purchase price.

** We estimated that the insurances for this home will be about  $5100 for hazard, windstorm, and flood insurances.

 

 

 

 

 

 

 

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Key West Flood Zones & Insurance Explained

duval-street-floodFlood insurance is one of the most asked about topics in Florida real estate, especially in The Florida Keys and Key West.  Flood insurance requirements and premiums are dictated by the flood zone in which your property lies.

To understand flood zones you will first need to understand BFE; Base Flood Elevation.  BFE is a reference height for building elevations and flood insurance.  A building below BFE is a building below the flood level for that site.  Building codes require most new and Substantially Improved buildings be at a minimum height of BFE +1′.

 

Types of Flood Zones:

“A” Flood Zone:  These zones are more inland from the coastline, where a static rise in water levels can be expected.  This is the most common flood zone in Key West.

“V” Flood Zone:  These zones are close to the shoreline.  The “V” stands for “velocity,” or breaking waves with a force that’s considerably more damaging. As a consequence, building standards are much higher within “V” zones.

X Flood Zones:  These zones are areas where the elevation is higher than the minimum expected flood levels.  Buildings in these zones are not subject to enhanced building codes to prevent flood damage.  Flood insurance is available in these zones at a considerable discount. The elusive X flood zone is typically found in the Solares Hill and The Meadows neighborhoods of Key West.

*Note:  Type “V” and “A” zones appear on flood maps as “AE-#” and “VE-#.  The “E” denotes this flood zone has an elevation level assigned to it, and is expressed as “AE-6” or “VE-9,” with the trailing number indicating the Base Flood Elevation or BFE for that zone.  That BFE number notes the height above sea level flood waters can be expected to rise… at a minimum. For example, if a property falls within the flood zone “AE-6”, the structure would have to be elevated 7 feet above the BFE (6 feet as specified in the flood zone + 1 foot)

Don’t let flood insurance scare you, let me help you navigate the ins and outs of the insurance requirements for your Key West home.  I am a full time real estate agent with Preferred Properties, Contact me krystalthomasre@gmail.com or 305-394-4073.

Source:  How to Read Flood Maps. Retrieved from http://www.cityofkeywest-fl.gov/topic/subtopic.php?topicid=30

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5 Homes Under $529K Stock Island & Lower Keys

A couple of days ago I posted a blog post that featured 5 homes that were under $529K (the Monroe County FHA limit) and for sale in Key West, Florida.

FHA is offering their 203(h) program to buyers that lost their home or space they rented due to Hurricane Irma.  Borrowers utilizing the 203(h) program are eligible for 100 percent financing and closing costs (up to 6%) can be paid by the seller.

Below is a link to 5 homes in Stock Island and Big Coppitt  that are for sale for $529K or less.

http://www.flexmls.com/share/162NY/Selected

Let’s take a closer look at one of my personal favorites in this list:  50 Riviera Drive, Big Coppitt.  This home is listed by Key West Property Sisters for $450,000 and is move in ready.  It features granite counter tops, 10 ft ceilings and and en-suite master with a walk in closet.  Taxes are less than $3500 per year for ALL THREE (windstorm, flood, & hazard)

If you’re wondering how this translates to a monthly mortgage payment let me break it down for you:

 

0% 3.50% 5% 10% 20%
Mortgage  $2,504  $2,416  $2,405  $2,235  $1,797
Taxes  $350  $350  $350  $350  $350
Insurances  $291  $291  $291  $291  $291
Sample Total Monthly Payment  $3,145  $3,057  $3,046  $2,876  $2,438

 

This is “On the Rim & Out the Door” pricing so all of your taxes and insurances will be rolled right into your mortgage payment and your mortgage company will take care of making the yearly payment on your behalf.

Call, text, or email me (305-394-4073 or krystalthomasre@gmail.com) for additional information about these home as well as additional options that are available.  I am a full time buyers agent with Preferred Properties and ready to assist you in purchasing your Florida Keys home!

 

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Financing, Pre-Quals, and Approvals, Oh My!

One of the most important and intimidating steps in your home buying process is getting a pre-qualification from a lender.  In this blog post I’m going to break down the pre-qualification process and help set you up for success when approaching this step in your home buying journey in Key West.

Let’s start by defining “pre-qualification”.

Pre-qualification is a letter from a bank that states the loan type (conventional, FHA, VA, etc.) and amount you have been approved to borrow based on the financial picture you provide to the lender.  It does NOT include an analysis of your credit report/ score.

This is how you see what your buying power is and is a crucial step in being successful in your real estate search.   Many people over and under estimate their buying power, which is a total time waster for everyone involved.  You don’t want to spend time looking at $500K houses when your purchasing power is $350K and vice versa.

Below are four simple steps to help you take the leap into getting pre-qualified.  Side note:  just do it already!

  1. Make an appointment. Reach out to your bank and ask to meet with a loan officer.   You can also ask your real estate agent for recommendations as well, they always have preferred contacts and suggestions if you don’t know where to start.
  2. Know your number(ish). One misconception of the pre-qualification process is that you need to pull your credit report to be pre-qualified which is completely FALSE.  That’s right, many people think that you do but you don’t.  You should have an idea of what your credit score is though  to be sure your pre-qualification is as accurate as possible and I recommend using Credit Karma to find out.  Credit Karma is my go to app and website for credit checking and monitoring and it’s FREE!
  3. Get your sh*t together. No for real, get it together… get a copy of your most recent tax return, a recent pay stub, and a couple of months of bank statements together.  The more information you can provide the more accurate your pre-qualification will be.
  4. Take your pre-qualification letter and give (or email) it to your real estate agent.

Once you’ve given your agent your pre-qualification letter they will adjust your real estate search accordingly and you will be on your way to finding your dream home!

I am a full time buyers agent in Key West, Florida and am happy to help you in your real estate search.  Please contact me at 305-394-4073 or krystalthomasre@gmail.com and let’s talk real estate!

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5 Homes Under $529K For Sale in Key West

If you’re on the fence about purchasing a home right now let me help you with your decision:  0% DOWN FHA Financing IS Available.

The FHA 203(h) loan program is for those that lost their home or space they rented due to Hurricane Irma.  The borrower is eligible for 100 percent financing and closing costs can be paid by the seller (up to 6%).  This means that you could move into a home in Key West for the cost of an inspection.

$529,000 is the FHA limit for Monroe County, FL.  Below is a link to 5 homes IN Key West that are for sale for $529K or less:

http://www.flexmls.com/share/15iYy/Selected

Please contact me for additional information and options.  I am a full time buyers agent with Preferred Properties and happy to help you in your home buying journey.  krystalthomasre@gmail.com or 305.394.4073

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SBDC Bridge Loans & SBA Loans

City Hall Meeting 9/27 Recap 4:00pm

Yesterday Kelly Penwell and Julie Brown of the SBDC along with Tracy Ray Harbor from the SBA in Miami spoke to the business owners of The Florida Keys about the options that they have available to them.  Below is my recap of the meeting for those who were unable to attend.

Initial Steps each Monroe County resident should take if you haven’t already: 

  1. Contact your insurance agent/ agency
  2. Register with FEMA
  3. Apply for the SBA loan

SBDC – Small Business Development Council

The SBDC is an organization sponsored by the SBA to provide local help and assistance to business owners in Monroe County.  Their office is located at FKCC.  The SBDC is offering up to $50K in bridge loans to business owners in Monroe County.  These loans are 0% for 6 months and intended to keep businesses afloat while they are determining what their long term needs are.  You can use the bridge loan for repairs or working capital.

Since last week the SBDC has already closed two of these loans (which means that they will have cash in hand this week!) and expects to have 12-15 more loans closed by next week.  The process is fast!

One of the questions that you will be asked in the application process is “Do you intend to pay off the bridge loan with an SBA loan?”  The answer can be YES!  This means you can take advantage of the 0% bridge loan while you are waiting for your SBA determination which averaging about 4 weeks according to Harbour.

To qualify you must have more than 2 (you can include yourself) but less than 100 employees.  You will also need your personal and business tax returns for the past two years to submit with your application.  The deadline to apply for this loan is October 31st, 2017.

To apply please contact Kelly Penwell (Kelly.conklinpenwell@fkcc.edu or 516-903-7561) and Julie Brown (julie.brown@floridasbdc.org).  They are available to answer questions or help you get your application rolling.

 

SBA – Small Business Administration

The SBA is a government agency that promotes and supports small businesses.  The SBA loan is for any business owner, homeowner, or renter who has suffered a loss due to Hurricane Irma.  This includes:  home based businesses, rental property homeowners, and sole proprietors.

Business Owners:

SBA is offering loans for as low as 3.03% and up to 30 years for businesses impacted by Hurricane Irma (either with physical damage or economic damage).  If you are approved you can put the loan on hold for up to 6 months until you decide what your long term needs are.  Your first payment is deferred for 12 months.

Homeowners/ Renters:

The SBA is offering loans for as low as 1.75% for 30 years for homeowners/ renters impacted by Hurricane Irma.  You can use this SBA loan to make repairs to your home, replace damaged contents, as well as mitigation against future damages.  The SBA will increase the loan by 20% of the loan amount to help mitigate your property against future damages.

If the SBA denies you then you will be referred back to FEMA for additional options and grants.   The processing time is about 4 weeks for a determination.

If you have additional questions or would like additional information I recommend visiting one of the disaster relief centers so that you can receive one on one coaching with an SBA loan officer.

3 Ways to Apply for the SBA Loan:

  1. Phone: 1-800-659-2955
  2. Online: SBA.gov
  3. In Person: Visit a disaster recovery center. Click here for a link to the FEMA recovery center locator.  As of today (7/28) the center behind the new fire station on Simonton & Angela is open 7 days a week from 7am – 7pm.  There is an air-conditioned tent to sit in if you like but be prepared to wait.

 

Additional Assistance Available:

If you do not qualify for the SBDC Bridge Loan Kelly Penwell suggests reaching out to Accion Loans for additional lending options http://us.accion.org/.

Locally the following banks are offering assistance, please contact them directly for additional information about the programs they have.

Keys Federal Credit Union:  $5,000, no collateral

First State Bank:  $10,000 for individuals and up to $50,000 for businesses.

 

 

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Hurricane Irma Aftermath: 3 Types of Mortgages You NEED To Know About

It’s been almost 3 weeks since Hurricane Irma roared into the Florida Keys leaving lots of devastation behind.  We in The Keys have a long way to go for our recovery and housing needs are certainly a top priority.  There are a couple of mortgage options that I want to be sure that people are aware of for both purchase and refinancing:  FHA 203(h), Repair Loans, and Rehab Loans.

 

FHA 203(h):

This loan program is for those that lost their home or space they rented due to Hurricane Irma.  FHA is offering a 0% down FHA Disaster purchase loan.  To qualify you will need to prove that the buyer’s prior living area is non-livable.  The seller can pay their closing costs (if written in the contract that way), or the buyer can pay those on their own.

Here’s a snapshot of the program:

FHA Mortgage Loans for Disaster Victims (Section 203(h)

Summary:
The program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

Purpose:
Through Section 203(h), the Federal Government helps victims in Presidentially designated disaster areas recover by making it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners.

Type of Assistance:
Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Insured mortgages may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner. One to Four Family Homes.

This makes recovery from a disaster easier for homeowners:
No downpayment is required. The borrower is eligible for 100 percent financing. Closing costs and prepaid expenses must be paid by the borrower in cash or paid through premium pricing or by the seller, subject to a 6 percent limitation on seller concessions.

The Fine Print:  https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ins/203h-dft

Repair Loans: 

This is for the buyer that wants to purchase a home that is slightly in disarray, but not repaired yet. The seller CAN put up to $15,000 in “repair escrow” reserves at closing for the repair items that the house needs. Buyers can follow through on buying and not be held up on closing until things are completed this way. It is a bit of extra paperwork of course, but it’s nice because with contractors backed up on roof work, etc. this can help closings to keep moving. The buyer can buy and seller can move forward. (This is for conventional, VA or FHA loans).

 

Rehab Loans: 

This can be used for a buyer that wants to buy a home with more significant damage (than $15,000) AND can help current homeowners to refinance that need help financing repairs. These loans are much more paper intensive and require contractor quotes, references, license and insurance info, etc. but they are wonderful tools for properties that need a lot of love right now.

Please contact me if you have any questions or would like to start your home search.  You can also visit my Recommended Lenders for additional information and to discuss your financing options.