Class Canceled

I am very sorry to report that the Wells Fargo Real Estate Exposition scheduled for Saturday, July 18 has been canceled. It turns out that due to government regulations, it is not legal for Wells Fargo to put on an event like this. We are trying to see if the Durango Board of Realtors would be the sponsor instead of the bank, but we have not heard yet.
As many of you know, I was going to teach a class on being a landlord and what that entails. I was going to discuss the types of properties to buy and the types of property to avoid buying. I was going to share my lease that I use, when to have leases expire, the kinds of ads to write and many more topics of interest. As soon as we can get this rescheduled, I will post a note on my blog with plenty of advance notice.
Navigating your way through the purchase of Durango real estate, particularly investment real estate, could be a daunting task the first time you make that effort. Remember back when you bought your first house? You had lots of questions I'll bet. Buying your first investment property is just like that. This class will be extremely helpful to not only people that would be a first-time investors, but also to those that own numerous properties. I've taught this class before to people that own six or seven rental homesand they commented that they learned claims from the class.

National Events & How they Affect Durango Real Estate

This past week has certainly seen some upheaval in the financial markets across the country. We've seen stock brokerage houses go belly up, we've seen Fannie Mae and Freddie Mac in effect taken over by the federal government, we've witnessed the stock market go on a complete roller coaster ride. Those events in the national headlines, do have an effect on Durango real estate, so I would like to share my thoughts with you on that.

The Fannie Mae and Freddie Mac takeover, should actually help the housing industry. The people and countries who were buying the Fannie Mae and Freddie Mac securities, were worried about the potential losses that Fannie and Freddie were going to take on bad loans. Consequently, those individuals and countries who were the buyers, we're offering far less money than previously. Let me give you an illustration. Let's say that in 2005 Fannie Mae sold loans with a face value totaling $40 million to the country of China. At that time China might have paid $39 million. Two weeks ago, (prior to the Fannie and Freddie Mac takeover), because of the very real fear of loan losses, that same package of loans with a face value of $40 million, might only sell for $32 million. That very fact, forced Fannie and Freddie, to raise the interest rates on their loans so that the ultimate buyer of those loans was able to make an expected return after factoring in the fact of the large loan losses.

Now with the full faith and backing of the federal government behind these loans, those ultimate buyers don't fear the risk of loss for bad loans and consequently are willing to pay more to buy that $40 million loan package. Because of that, the interest rate charged on the loans that Fannie Mae and Freddie Mac are providing will go down and indeed we already see that this week. With this day like that permanently? That's not likely, but it certainly provides a window of opportunity right now for a well-qualified buyer to get a loan on a property with an especially attractive rate. Combine that with the fact that the inventory right now is higher than we've seen it in years... and you know when there's more supply that means prices come down... this makes it an excellent time to invest in Durango real estate.

INVESTMENT OPPORTUNITIES IN DURANGO COLORADO

As I have discussed in several posts, the lower-end market in the Durango and Bayfield area is not real strong. In particular over in Bayfield where there are two new subdivisions, some of the builders are getting a little nervous. Unlike big cities where US Homes and Pulte Homes often times come in and build 300 to 500 homes per year, we don't have that here. Here's how it works here. Carpenter Fred builds two or three homes per year; carpenter Mark may build two or three homes per year, etc. We don't have mass building. And for Carpenter Fred and carpenter Mark, their ability to hold and sit on these homes after they're built is not the same as Pulte’s ability. Some of these builders are a little bit nervous. With Labor Day just around the corner and plenty of $200-$300,000 homes still on the market and those buyers being few and far between right now, this could be a great opportunity for an investor to pick up a brand-new home and use it as a rental. Conservative person that I am, I recommend a 30% down payment for rental properties and with that type of down payment you should be able to find something that would cash flow or maybe have a very small feed. Remember that that low-end buyer no longer qualifies for a loan and as such has been put back into the rental market so rents have been firm and vacancy rates are lower.

If the residential rental market is something new to you, please give me a call and I would be happy to mail you a copy of my 25 page white paper on Single-Family Residential Investing. This paper walks you through what is the best time to have your leases end, special clauses to be sure to include your lease how many bedrooms is the best amount and much more.