The Orange County Realtist Magazine October/November 2015 by The Power Is Now Media Inc.

We proudly welcome ZipRealtyâ&#x201E;˘ and its innovative technology platform to our family of real estate brands!

facebook.com/realogy

CONTENTS: Mission and Vision of the Orange County Realtist Magazine................(page 7)

BUSINESS Business consulting...................................................................................(page 14)

THE POWER IS NOW INC. Vol. 01 | Issue 4 Eric Lawrence Frazier, MBA President and CEO Office: (800) 401-8994 Ext. 703 Direct: (714) 361-2105 Eric.Frazier@ThePowerIsNow.com www.thepowerisnow.com www.blogtalkradio.com/thepowerisnow

EDITORIAL TEAM Eric Lawrence Frazier MBA Editor in Chief (800) 401-8994 Ext. 703 Alexandra Attinger Managing Editor (800) 401-8994 ext. 708

GREEN Irvine Co. to Replace 12,000 Aging Toilets.............................................(page 18)

ECONOMICS CDFI Spurs Development Projects.........................................................(page 20)

FINANCIAL Homeownership Remains the Key to Wealth........................................(page 24)

REAL ESTATE Real Estate Market Focus: Laguna Beach.............................................(page 30)

alexandra.attinger@thepowerisnow.com

Real Estate Market Focus: San Francisco.............................................(page 34)

Goldy Ponce Arratia Graphic Artist and Design Manager (800) 401-8994 ext. 711 goldy.ponce@thepowerisnow.com

Real Estate Market Focus: Westminster................................................(page 38)

CONTRIBUTORS Orange County Realtist Research Team

Rising Inventory in Southern California................................................(page 42) Overcoming the Financial Hurdles to Homeownership........................(page 44)

RENTING Best Plaes to Rent in Orange County.....................................................(page 50)

OUR COVER Donnell Spivey..........................................................................................(page 54)

YOU Listen More then You Speak....................................................................(page 58)

CONTENTS: POWER AGENT SPOTLIGHT Teresa Palacios Smith...............................................................................(page 62)

EDITORIAL TEAM Eric Lawrence Frazier MBA Editor in Chief (800) 401-8994 Ext. 703 Alexandra Attinger Managing Editor (800) 401-8994 ext. 708 alexandra.attinger@thepowerisnow.com

Goldy Ponce Arratia Graphic Artist and Design Manager (800) 401-8994 ext. 711 goldy.ponce@thepowerisnow.com

CONTRIBUTORS Orange County Realtist Research Team

MORTGAGE Mortgages: What is the Best Plan for Me? ...........................................(page 68)

LEGAL The 2018 Propossed Accounting Rules...................................................(page 72)

DESIGN Keeping Up Curb Appeal.........................................................................(page 74)

TECHNOLOGY Grass vs. Astroturf....................................................................................(page 76)

LIVING Investing: Single Family Homes vs. Multiple Unit Property.............................................................................(page 78)

The Orange County Realtist Magazine is an online and eZine publication of the Orange County Realtist a Chapter of The National Association of Real Estate Brokers® (NAREB). The magazine is published and distributed by the publishing division of The Power Is Now, Inc., and has ten sections focused on the real estate market, economics in Orange County and the Realtist members who serve the community. The mission of the OC Realtist Magazine is to educate consumers and real estate professionals about the opportunities to buy or sell real estate in Orange County and to spotlight professional real estate agents who are Realtists.

profit organizations, and community organization that support the welfare of the citizens of Orange County and are affiliates of the OC Realtist. The Digital Online subscription launched April and continually provides the best of the Orange County Realtist Magazine in an all-digital format. With the Orange County Realtist Magazine, readers can have access to archived issues as well as current content online. Videos, online radio, webinars and other events provided by the OC Realtist will be available to empower its readers with information to achieve the American Dream.

The OC REALTIST MAGAZINE - The The magazine is free and is distributed by email American Dream and online to members of our local chapter and NAREB chapters nationwide. Over 30 The Orange County Realtist Magazine features thousands real estate professionals in Orange articles about real estate in Orange County and County, our state, federal and local city political informational interviews with local and national representatives in each of the 34 cities in Orange community leaders, real estate agents, banking County, non-profit housing organizations, church and investment professionals, and community. leaders in Orange County, and many affiliates of The Orange County Realtist Magazine also our chapter -- OC NAACP, OC Black Chamber, provides consumer focus content about buying OC 100 BMOC-- and others will receive the and/or investing in real estate, financing real estate magazine. and maintaining and protecting real estate as an asset for years to come. The magazine’s focus is In addition, our own email list of consumers on all aspects of buying and/or selling real estate is growing daily through our community from a consumer’s perspective because it is still outreach. The list will continue to grow due to the American Dream. the importance of homeownership and the strong support we have in the community to help others achieve it. We want the magazine to be of great value to our members, an excellent resource for our community, and a tremendous value to our advertisers as an affordable marketing strategy to a target consumers interested in real estate as a home or investment. The Orange County Realtist magazine will also provide free advertising to non-

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

Mission The mission of the Orange County Realtist is to provide support and education for its members to grow and expand their businesses while assisting the community to achieve the American dream of homeownership.

Vision The vision of the OC Realtist is to become the largest Chapter of NAREB in the United States, comprised of successful Realtists® whose businesses are thriving from the support they receive through the chapter and the networking opportunities that exist by their affiliation with National Association of Real Estate Brokers.

Departments 1. OC Real Estate Market 2. OC Real Estate Resources 3. OC Real Estate Investing 4. OC Realtist Spotlight 5. OC Real Estate Financing 6. National Association of Real Estate Brokers News 7. California Association of Real Estate Brokers News 8. OC Realtist President’s message 9. OC Real Estate Business and Economic 10. OC Real estate laws and legislation

Cover and Feature story profiles: The OC Realtist Cover will never be sold as it will be our way of recognizing Realtists in Orange County and all over the United States who exemplify the Realtist spirit. The online magazine and eZine will have 10 sections for various articles under the OC Realtist theme: OC Real Estate Market, OC Real Estate Resources, OC Real Estate Investing, OC Realtist Spotlight, OC Real Estate Financing, National Association of Real Estate Brokers News, California Association of Real Estate Brokers News, OC Realtist President’s Message, OC Business and Economics, OC Real estate Laws and Legislation. The writers for each department will be industry professionals who are practitioners in their field of expertise. They are industry professionals who can provide advice, and information to make decisions that will enable consumers achieve the American Dream.

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

CEO & Publisher Eric Lawrence Frazier, MBA 3739 6th Street, Riverside, CA 921506 Ph: (800) 401-8994 ext. 703 EDITORIAL Editor in Chief: Eric Lawrence Frazier MBA Managing Editor: Alexandra Attinger ONLINE Web Designer: Nicholas Clarkson DESIGN Art Director & Design Manager: Goldy Ponce Graphic Artist: Mario Lujan ADMINISTRATIVE Administrative Assistant: Rachel Bacol

SALES National Sales Manager: Christina Kimble National Relationship Manager: Success Money HEADQUATERS The Power Is Now Inc. 3739 6th Street Riverside, CA 92506 Ph: (800) 401-8994 Fax: (800) 401-8994 Email: info@thepowerisnow.com www.thepowerisnow.com www.thepowerisnow.com/onlinemagazine www.thepowerisnow.com/ezine PUBLICATION AND SERVICES The Orange County Realtist Magazine The PIN Magazine The Power Is Now Radio The Power Is Now Publications The Power Is Now Radio Guide The Power Is Now VIP Agent Program The Power IS Now Power Consulting/Coaching The Power Is Now Association Management The Power Is Now Event Management

STATEMENT OF COPYRIGHT: The OC Realtist Magazine TM is owned and published electronically by The Power Is Now Inc. The Power Is Now Inc. has entered into joint venture with the OC Realtist for the design, publication and distribution of the Magazine. Copyright 2013-2015 The Power Is Now Inc. All rights reserved. The name Orange County Realtist is a trademark of the Orange County Realtist Inc. A chapter of the National Association of Real Estate Brokers. “The PIN Magazine and distinctive logo are trademarks owned by The Power Is Now Inc. “ThePINMagazine.com” is a trademark of The Power Is Now Inc. “Magazine.thepowerisnow.com “ is a trademark of The Power Is Now Inc. “Thepowerisnow.com” is a trademark of The Power Is Now Inc. “The Power Is Now Event Management” is a trademark of The Power Is Now Inc. “The Power Is Now Radio” is a trademark of The Power Is Now Inc. “The Power Is Now Publications” is a trademark of The Power Is Now Inc. “The Power Is Now Radio Guide” is a trademark of The Power Is Now Inc. “The Power Is Now VIP Agent Program” is a trademark of The Power Is Now Inc. “The Power IS Now Power Consulting/Coaching” is a trademark of The Power Is Now Inc. “The Power Is Now Association Management” is a trademark of The Power Is Now Inc. No part of this electronic magazine or website may be reproduced without the written consent of The Power Is Now Inc. Requests for permission should be directed to: info@thepowerisnow.com

Message From the President

As the blazing summertime air is swept away by the autumn gust, the real estate industry slips into the exciting conference season. The Asian Real Estate Association of America (AREAA) is having their conference in San Francisco from October 22nd-24th with the theme “Gateway to Our Future” to reflect on how far Asian Americans have come in this country. The AREAA conference will also be highlighting the issues that Asian Americans run into in real estate. The National Hispanic Real Estate Professionals (NAHREP) had a spectacular conference that took Chicago by storm in September, spreading the Latin flair of this organization throughout the United States. The National Association of Real Estate Brokers (NAREB) with the newly inaugurated leader, President Ron Cooper, is currently going through changes to move toward the goal of promoting homeownership in the African American community. I had the pleasure to sit down with Donnell Spivey, the Immediate Past President of NAREB, to get his take on how his term in office went, what he changed within NAREB, and the effect that he had on the real estate industry. Andrea Cooksey, the Chairwoman of NAREB, was also a pleasure to speak with about her experiences in NAREB. She reveals her own personal growth to be where she is today as well as her plan for shaping NAREB and the community through her position as Chairwoman. In the past few weeks, elections from President Ron Cooper to AREAA’s new Vice Chair Vicky Silvano, and NAREB’s Robert Hughes as the new Chair have taken place. Their strategies, their policies, and their undertakings will affect these organizations for years to come as these individuals shape real estate in the United States. The Power Is Now looks forward to watching these leaders shape their

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

respective organizations for the better. The Federal Reserve met for an important meeting in September where the Board of Governors reached the decision to delay raising interest rates. Borrows and real estate agents alike can breathe a sigh of relief. With interest rates remaining stagnant, clients will be able to increase their budget for their dream home and allow less affluent Americans to reach the American Dream. This is a great sign for the real estate market as it continues to recover in the fourth quarter from the 2008 crash. In the world of politics, Donald Trump reigns over the media. As his popularity increases within the Republican party, many wonder if this is the man that will lead the U.S. and the real estate industry to success. Donald Trump has been viciously compared to the other republican candidates in the running; however, one wonders how former, extremely popular President Ronald Regan would react to Trump. Worries about the Trumpâ&#x20AC;&#x2122;s character and professionalism aside, he is a business man. Whether or not this bodes well for real estate is yet to be seen. Technology, as always, is developing throughout the nation, affecting various aspects of buying, selling, and owning a home in positive ways. However, you should be wary at how far that technology encroaches on your home as the Astroturf

fad permeates California. Making small decisions like a traditional lawn versus a plastic one could change how the public sees your home for the better or worse. Making key decisions from your lawn to your business can change your life. As 2016 approaches you must be cognizant of your business decisions. Are you getting all that you possibly can out of your business? Planning for the incoming year will serve you well in making changes that could change the way you do business. The Power Is Now Inc. is ready to help you along the way, whether that is through The Power Is Now Magazine or Radio. The Power Is Now Online Resource is always available. This issue of The Power Is Now also features various articles about planning for homeownership and how to get yourself there financially. Applying for a home loan can be frightening, but we will get you through this to purchase your dream home. The Power Is Now would like to thank our readers, listeners, and contributors for the continued support. We invite you to join us online for invaluable blog posts, engaging radio shows, and the latest issues of our magazines to enhance your learning in the field of real estate, finance, and success. You have the power to change your life, because The Power Is Now.

Eric Lawrence Frazier M.B.A President & CEO

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

HOMEPOSSIBLE

FREDDIE MAC’S ALTERNATIVE TO FHA

HOME POSSIBLE Up to 95% LTV HOME POSSIBLE ADVANTAGE Up to 97% LT

THE FLEXIBILITY THAT HOMEOWNERS DESERVE Product Highlights: • Great for all buyers, including first time home buyers • Refinances up to 97%, regardless of current mortgage program • No income limits for Underserved Areas • No reserves required for 1-unit properties • Gift funds eligible for entire down payment Name: Eric Lawrence Frazier MBA

CA BRE #01143484 | NMLS # 461807

Website: www.ericfrazier.com E-mail: eric.frazier@ericfrazier.com Skype: frazier.eric Mobile: 714-475-8629 O: 800-261-1634 x 703 F: 800-261-1634

NEW!

FREE mortgage app for your cell phone! Click Here

Frazier, Eric, Lawrence is a CA Mortgage Brokerage Licensed by the State of CA BRE 01143484 and is not affiliated with any state or federal agency. Frazier, Eric Lawrence is also licensed by NMLS# 1273606 - www.nmlsconsumeraccess.org. Frazier, Eric, Lawrence is an equal housing lender. Our corporate office is located at: 3739 6th Street Riverside, CA 92501. Telephone and Fax: 800-261-1634 Eric Lawrence Frazier, MBA is a Licensed Loan Originator NMLS# 1461708. This is not a commitment to lend or extend credit. Restrictions may apply. Information and/or data is subject to change without notice. All loans are subject to credit approval. Not all loans or products are available in all states.

BUSINESS

BUSINESS CONSULTING

usiness consulting refers to both the art and the practice of helping organizations improve their performance, particularly involving the critical analysis of existing organizational problems and formulating developmental plans to curb them. It is important to engage business consulting services in any undertaking within an organization to better that business. Business consulting is a vital business culture. Hiring the right consultants and the business specialist can aid in saving both time and money. It is also evident that business consulting can increase competitiveness, professionalism, and rate in the attainment of overall organizational goals. It provides valuable advice and experience as a vital resource for every enterprise in any industry. This service is applicable in a variety of areas such as the following: strategic planning, marketing, e-business, organizational development, technology, operations, human resources, and communications. Small,

october / november 2015 issue

Medium, and large businesses usually find the advice of professionals necessary for their growth. If professional advice is required, executives seek assistance from specialists for their expertise that enables them to identify ways to manage hindrances and create lasting solutions. This results in increased productivity and efficiency (Mark, 2012). Business consulting firms are widely known in the provision of vital solutions to business and information technology challenges with innovative ideas that are highly valued by potential consumers. Most consulting professionals leverage deep industry knowledge across various entities including financial institutions, insurance firms, healthcare facilities, retail, and consumer goods. They mainly focus on delivering digital solutions especially in key areas that accelerate client growth. Business consultants work the best and yield

The ORANGE COUNTY Realtist Magazine

BUSINESS

results for those enterprises or investors who already know what they intend to seek and have defined Consultants are widely known to be objectives or projects. In most cases, the solution of long-term solutions they use this objectives and projects as a benchmark to measure their to most challenges and complicated performance and progress. There are situations. plenty of reasons that may trigger firms to seek business consulting culture that enables them to have knowledge services. Entities may need a â&#x20AC;&#x153;shortcutâ&#x20AC;? to current information, know-how, and about the market, competition, potential knowledge that is not easily obtainable in the consumers and general trends in the economy organization. They may also need a provider of to secure a larger market share. It is evident professional service that ordinary employees that this entrepreneurial culture can only be are not capable of providing or that is seasonal; adopted with the help of highly qualified therefore, it would be expensive to employ a consultants. full-time worker to provide that service. Most business consulting firms employ Consultants are widely known to be the solution talented and highly learned professionals who of long-term solutions to most challenges and constantly equip themselves with modern complicated situations. They may be required knowledge. These professionals believe that it to give their opinion regarding the authenticity is their responsibility to help firms remain in of new ideas generated before they are fully business in the foreseeable near future. This in implemented in the organization. Some turn ensures that firmâ&#x20AC;&#x2122;s going concern is not entities may want them to analyze, diagnose, threatened by challenges that can be easily and constructively criticize how they perform eliminated. Most entities that ignore business their day to day activities to identify whether consulting services are not aware that they to use a different approach. If the existing team can conduct their business via the internet members are unable to search viable business by selling their products in the global world ideas and solution to existing problems, seeking (Weiss, 2011). help from consultants is the best alternative. They can also be called upon to facilitate Investors willing to start their business from creation and implementation of methodologies scratch have a variety of business tactics to and modern systems that increases efficiency in learn from consultants. Some of this tactics operation. They are mostly required to access entails, winning end consumers who already existing network of firms in the same industry have existing suppliers, establishing healthy or government contacts and report if they are competition procedures, fair way of pricing substitute commodities, and finding better likely to affect the organization negatively. ways to market highly perishable goods among For investors to operate an entity productively, other important aspects of the market. Most business consultants must plan properly and firms that do not engage consultants in their have technical knowhow that can accelerate undertaking are likely to collapse even without growth in a rapidly changing economy. visible signs of failure (Katcher & Snyder, Entrepreneurs should adopt an entrepreneurial 2010).

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

BUSINESS

Marketing products to the wrong group are associated with decreasing sales and increased operating cost. This affects profitably and reduces staff morale (Katcher & Snyder, 2010). Employees end up underperforming due to, frustrations, pressure from the top managers and lack of motivation. This scenario can lead to high employee turnover and provision of substandard products or services. Consulting agents can easily analyze consumers and provide viable advice that can enable organization penetrate in a highly competitive market with much ease. Most of their market knowledge is obtained from research and survey conducted from time to time. This dictates why the information they provide is highly reliable. Matching organization mission and vision statements are very important since it can determine the rate of progress. Consultants ensure that these statements are in line with the objectives of the firm. They also teach investors how to remain focused in an attempt to achieve the company’s goals (Biech, 2007). Most business owners find it important for their enterprise to be analyzed by a third party who is independent. This leads to the identification of weaknesses and strength that employees have failed to detect. Most consultants can change these weaknesses to opportunities and give advice on how to improve the available strength. The existence of weaknesses is not an indication of inefficiency since absolute perfection in operation cannot be easily obtained. It is always advantageous to transform this weakness to new ventures that can yield additional income. Consultants can also identify new opportunities that prevail in an organization and give advice as to which ones are worth undertaking (Weiss, 2011).

october / november 2015 issue

Products and services provided must be well known and easily distinguishable from other similar products in the market. This helps in maintaining the customer loyalty. This objective can only be attained by involving business consultants when making the decision pertaining to marketing. Business need consult regardless of their size and market share. A well-established firm needs advice on how to venture into new markets and retain the existing market share. A corporation that does not rely on business consulting services is likely to face challenges in selling its products in the modern market regardless its potential and bargaining power. It is worth utilizing any information provided by business consulting firms. From the above case study, it is evident that engaging business consulting services yields positive results. The information obtained from business consulting firms mostly forms the backbone to business growth and development. References • Biech, E. (2007). The business of consulting: The basics and beyond. San Francisco: Pfeiffer. • Katcher, B. L., & Snyder, A. (2010). An insider’s guide to building a successful consulting practice. New York: AMACOM. • Marks, K. H. (2012). Middle market M&A: Handbook for investment banking and business consulting. Hoboken, N.J: Wiley. • Weiss, A. (2011). The consulting Bible: Everything you need to know to create and expand a seven-figure consulting practice. Hoboken, NJ: Wiley.

The ORANGE COUNTY Realtist Magazine

As you Venture out into the World of Real Estate

We can help you put the pieces together and Navigate you into Home Ownership

Making Clients for Life 3739 6th Street, Riverside, CA 92501 Office: (951) 686-5261 Fax: (951) 686-5264 www.fraziergroup realty.com

Frazier Group Realty is the right place. Our Navigators are available to give you personalized service and answer any questions you may have. You can call, email or visit us and we will be there ready to help you every step of the way. Whether you are a first time home buyer or an experienced real estate investor, here at Frazier Group Realty you gain useful information about how to choose the "right" property, and everything involved in making an informed decision in today's real estate market.

GREEN

Irvine Co. to Replace

12,000 AGING TOILETS California is currently experiencing one of the worst water droughts in recent history, thanks to poor implementation in preserving water resources. It is estimated that if this problem is not addressed and climate change continues to become an impending reality, then we will soon experience one of the most severe droughts in the history of the U.S. in California. Irvine Co. is one of the many companies that has taken the initiative to conserve water. Fresh new toilets are being readily installed across Southern California and other parts of the state in place of water guzzling, aging counterparts. The company has already replaced over three thousand toilets across the Newport Beach apartment communities in favor of low-flow flushers.

Water Preserving Initiatives

The $900,000 project involves switching old showerheads and toilets with water conserving models in apartments that were built before 1994. Since 1994, low-flow fixtures have become the standard, and the company is sure that all old properties follow the standard construction equipment.

replacing more than 9,000 aging toilets at twice the cost of the Newport Beach project. Once the Irvine project is finished, the company looks to gives its properties in Los Angeles, San Diego, and Silicon Valley the new porcelain makeover. Although the switch is coming at a very steep price, Irvine Co. claims that the initiative will cut the water bills by half while saving nearly forty-six million gallons of water per year at the Newport Beach. Fred Alson, the Head of Water Conservation for Irvine Co. claims, â&#x20AC;&#x153;It was just the right thing to do. The state needs this water.â&#x20AC;? The credit is due to Irvine Co. who is implementing these changes before the judicial system makes the company accountable. The move will also force other apartment owners across California to follow the companyâ&#x20AC;&#x2122;s lead by implementing water conserving models.

Combating Shortage in the Future

Just last year, the State of California passed the law that requires residential and commercial buildings to replace all aging fixtures to lowflow models that were built before 1994. It is also stated that these implementations are to Irvine Co. has been actively pushing its new become compulsory by 2019 for all buildings toilet initiative in Irvine and is currently and condo complexes.

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

Irvine Co. has certainly exceeded the state standards with their new models in Newport Beach community. The bill mandates toilets to use 1.6 gallons of water per flush, while the company is installing 1.28 gallon fixtures. Their showerheads have also complied with the state flow requirement.

adaptable to the water crisis issues, then your home becomes more desirable in California. The water crisis creates a heavier focus on the environment in California, so if you add more energy saving elements like solar panels to your home, you will not only increase the value of your home, but also increase the desirability.

Despite California being the most overvalued state in the U.S., its water shortage has had little impact on bringing the median home prices down. In fact, the prices have only escalated in recent months which shows the power of investors in the region. Needless to say, if the water crisis is not addressed by other companies, the housing market would automatically become unattractive.

On a larger level, we encourage all property owners to â&#x20AC;&#x153;go greenâ&#x20AC;?, especially in regards to the water supply. Conserving water on a large scale in California will keep the property values from dropping simply because there is no water for the homes. After all, a home without water is not livable in this day and age. Running water is a must, and with less water, property values will plunge.

Sellers Watch Out

If you are planning on selling your home during the water crisis, then you should invest in ecofriendly products such as new toilets that use less water. If you show that your home is more

The ORANGE COUNTY Realtist Magazine

The Power Is Now Team

www.OCREALTIST.org

ECONOMICS

CDFI Spurs Development Projects

here has been an uptick in economic activity over the past six years since the Great Recession. However, unlike the recoveries of yesteryear, gains have not been universally dispersed. The gap between the “haves” and the “have-nots” continues to grow, with low-income communities increasingly cut off from economic opportunity. Even in some of the nation’s strongest growth markets like San Francisco, New York, and Boston, there are growing pockets of poverty that suffer from disinvestment. Given the market shakeup in 2008, traditional lenders remain wary of investing in sub-prime markets. This creates a chicken and the egg problem in that if traditional lenders will not invest in economically distressed communities, then these areas will not improve. If these neighborhoods do not improve, then traditional lenders will not invest.

underserved by traditional financial institutions. CDFIs offer a range of financial products and services in inner cities, including lowcost mortgages for low-income homebuyers and non-profit housing developers, flexible underwriting for community development projects (e.g. neighborhood schools, community centers), loans, and technical assistance for small businesses located in low-income areas (CDFI Certification, 2015). CDFIs can come in all shapes and sizes with many including banks, loans, venture capital funds, and even non-profit agencies; however, all must be certified as a CDFI by the U.S. Department of Treasury’s CDFI Fund. In order to qualify for CDFI certification, the institution must have a primary mission of promoting community development, and at least 60% of its activities and 50% of its assets must be invested in designated low-income target markets (CDFI Certification Application Training, 2007).

This dynamic creates an important role for Community Development Finance Institutions Eligible CDFIs receive important support from (CDFIs). CDFIs are specialized financial the CDFI Fund, including capital grants, equity institutions that lend in markets that are investments and technical assistance. CDFIs

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

ECONOMICS

can then use CDFI S H E I L D S Fund investments H o u s i n g the bond program has been an to leverage Corporation is private capital one of these essential tool for community for projects grateful loan development and a lifeline for many in distressed recipients. When distressed parts of California and communities. the nonprofit While CDFIs sought out to Nevada. We are proud to be the are not new , purchase a new first CDFI to utilize this level of the CDFI Fund building in innerfinancing. These dollars are essential was established city Lynwood, in 1994, they California, they to bringing real change to the are growing were routinely communities we serve in importance. turned down Credit markets by traditional have tightened since the downturn, making lenders. Clearinghouse CDFI then stepped CDFIs more critical for getting projects off up, providing $1.26 million to SHEILDS the ground in what are considered “riskier” Housing Corporation. This financing allowed locations. A handful of CDFIs are proving that the nonprofit to open a center that provides much of this “risk” is unfounded. Case in point: services to 7,000 at-risk pregnant mothers Clearinghouse Community Development and families with young children annually. Finance Institution (Clearinghouse CDFI). “I don’t know what we would have done The California-based Clearinghouse CDFI without [Clearinghouse CDFI’s] support,” just became the first bond recipient to draw says Kathryn Icenhower, CEO of SHEILDS down $50 million from the CDFI Fund’s bond for Families (SHIELDS Housing Corporation, program. 2015). Douglas Bystry, Clearinghouse CDFI President & CEO explains that the bond program “has been an essential tool for community development and a lifeline for many distressed parts of California and Nevada. We are proud to be the first CDFI to utilize this level of financing. These dollars are essential to bringing real change to the communities we serve” (Clearinghouse CDFI…, 2015). Clearinghouse CDFI recently expanded its lending portfolio into Arizona, as well. These projects include low-cost loans for affordable housing, education facilities and other community development real estate projects.

Sometimes the projects have been in otherwise affluent areas, but serving a low-income demographic. In Thousand Oaks, California, median household income is in the six-figures and housing prices are correlated; the average home in Thousand Oaks clocks is $600,000. For disadvantaged families, finding affordable real estate is near impossible. Through a $1,860,920 loan from Clearinghouse CDFI, West Bay Housing Corporation has been able to acquire, build or rehab five single-family homes that are now being used as affordable rental housing for people with developmental disabilities (West Bay Housing Corporation, 2015).

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

ECONOMICS

Clearinghouse CDFI has also been able to leverage millions of dollars in New Market Tax Credits (NMTCs) to help a number of large-scale projects move forward. In 2014, Clearinghouse CDFI contributed $10 million in NMTC investments to help fund the $47.5 million La Kretz Innovation Campus in downtown Los Angeles. The La Kretz project includes the renovation of a 61,000 square foot. warehouse that will be transformed into offices, classrooms, a wet lab, and lightmanufacturing facility. The Los Angeles Cleantech Incubator, one of the largest of its kind in the United States, will make La Kretz its home. A workforce development agency will co-locate in the building, thereby creating a pipeline of workers for the small businesses and entrepreneurs in the space (Garcia, 2014). The goal is to strengthen the city’s innovation ecosystem and create opportunities for people across socioeconomic status. Clearinghouse CDFI joined US Bancorp CDC, KOR Realty Group and San Francisco Community Investment Fund to fund the $19.5

million restoration of the landmark Renoir Hotel in downtown San Francisco using NMTCs (Just Funded, 2014). Despite San Francisco’s image as an over-inflated market driven by tech entrepreneurs, there are still pockets of highly-concentrated poverty; the Renoir Hotel is in one of those pockets. The renovation of the 64,000 square foot building will create nearly two hundred new jobs in a neighborhood ripe for redevelopment. While the CDFI Fund is certainly not a silver bullet for transforming low-income communities, institutions like Clearinghouse CDFI prove that it is incredibly valuable for directing resources and investment into underserved communities. Traditional investors and real estate developers today are more mobile than ever, allowing them to cherry-pick projects in the nation’s hottest markets. As such, low-income neighborhoods will continue to rely on CDFIs for help in creating new jobs, affordable housing and building other community assets in the areas that need it most.

References • CDFI Certification, U.S. Treasury, CDFI Fund (2015). Retrieved August 26, 2015 from http://www. cdfifund.gov/what_we_do/programs_id.asp?programID=9. • CDFI Certification Application Training, U.S. Treasury, CDFI Fund (10 August 2007). Retrieved August 26, 2015 from http://www.cdfifund.gov/how_to_apply/docs/TrainingPresentation08102007. pdf. • Clearinghouse CDFI Finances $50 Million in Community Development Projects through United States Treasury Bond Guarantee Program, PRWeb (11 August 2015). Retrieved August 26, 2015 from http://www.prweb.com/releases/2015/08/prweb12897729.htm. • SHIELDS Housing Corporation, Clearinghouse CDFI (2015). Retrieved August 26, 2015 from http:// www.clearinghousecdfi.com/impact_story/shields-housing-corporation/. • Garcia, Teresa (March 2014). NMTCs Fund Cleantech Innovation Campus. Novogradac Journal of Tax Credits, Volume V, Issue III pp. 1-2. • Just Funded: Renoir Hotel, Clearinghouse CDFI (2014). Retrieved August 26, 2015 from http://www. clearinghousecdfi.com/wp-content/uploads/2014/06/Just-Funded-Renoir-FINAL2.pdf. • West Bay Housing Corporation, Clearinghouse CDFI (2015). Retrieved August 26 from http://www. clearinghousecdfi.com/impact_story/west-bay-housing-corporation/.

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

FINANCIAL

HOMEOWNERSHIP

Remains the Key to Wealth Two themes have dominated the headlines in recent years. The first is the linger effects of the Great Recession, an economic downturn that has largely been attributed to the housing market’s burst. Lax lending and overbuilding resulted in many

buying homes who would not have otherwise qualified in decades past. The second storyline is the growing gap between the “haves” and the “have nots,” or more bluntly, the growth in income inequality. Missing from these stories, however, is their link to one another. Homeownership is one of the key drivers of

FINANCIAL

wealth creation. A mortgage. study by Harvard There are many University’s Joint other ways Homeownership is one of the Center for Housing homeownership Study finds that “as leads to key drivers of wealth creation a means to building wealth as well. wealth, there is Appreciation is one no practical substitute for homeownership,” example. While it is true that the housing market (Harvard, 2013). By some estimates, 90% of has experienced ebbs and flows, long-term today’s millionaires accumulated their wealth homeowners experience appreciation nearly through real estate (Lyons, 2014). one percentage point higher than the annual rate When people consider the tradeoffs between of inflation (Harvard, 2013). The benefits of buying a home versus renting, most cite the obvious appreciation compound over time, making the benefit of building equity through homeownership. purchase of a home a relatively safe investment Rather than forking over hundreds (or thousands) for those who are willing and able to wait out of dollars each month to a landlord, this money downturns in the market. could be better leveraged by paying Investment down one’s Skeptics suggest that the investment one makes toward purchasing a home, such as saving for a down payment, can just as easily build wealth if investment smartly elsewhere.

FINANCIAL

Yet the Harvard study finds even a small down payment—say, five percent—can help a person realize tremendous return despite their small equity stake in a property. If a person’s house appreciated at four percent annually, after just five years, the value of the home will have increased in value by nearly twenty-two percent, or more than four times the original five percent down payment. Stockholders would clamor for such returns on investment. Tax benefits Homeownership provides a number of tax benefits, as well. Property owners are able to deduct both the annual interest paid toward a mortgage and property taxes when the property is a primary residence. Individual homeowners and married couples are also exempted up to $250,000 and $500,000, respectively, from capital gains tax upon the sale of a home. These benefits are often cited as a subsidy for the wealthy, as combined, they can boost posttax annual incomes for families by nearly $2,000 (Badger, 2015).

and maintenance, real housing costs decline by ten percent after five years, fifteen percent after ten years, and thirty percent by the last year of the mortgage. Housing costs for renters are much more variable, and trend upwards as inflation and housing prices rise. Homeowners are able to better plan and make more well-informed financial decisions given the predictability of housing expenses that homeownership provides. Owning a home is certainly not without its risks, but data confirms its long-term benefit: even with the Great Recession’s resulting decline in home equity, the median net worth of American homeowners is more than thirty-six times ($195,400) the median net worth of renters ($5,400) (The New York Times, 2014).

The number of years a family owns a home is one of the largest predictors of their eventual wealth, finds a Brandeis University study (Institute on Assets…, 2013). One potential way to combat growing income inequality, then, is to enable more people to buy homes earlier in life. Unfortunately, Level of certainty there is a trend in the opposite direction: the rate of Owning also provides homeowners with a level of homeownership continues to decline, due in part certainty regarding housing expenses. As anyone to tighter lending requirements and in part to the in the Boston, New York, Los Angeles, or San number of Americans saddled with student debt. Francisco markets would gladly attest, the cost of rental housing continues to rise. When it will slow is anyone’s guess. Homeowners, especially those with 30Homeownership, more so year fixed rate mortgages, have the benefit of knowing exactly how much they will be than ever before, is the key spending each month, each year, on housing costs (with some minor exceptions, such as to wealth creation the common increase or decrease in annual property taxes—a number that does not Yet for those searching for financial freedom, drastically change one’s monthly housing expenses). homeownership remains pivotal. The numbers don’t In addition, the real costs of owning a home lie. Homeownership, more so than ever before, is the actually decrease over time, even as mortgage key to wealth creation. payments remain consistent: assuming inflation To learn more about purchasing your first home, visit of three percent, one percent growth in real house the Homebuyer Resources section on The Power is prices, and the costs of property taxes, insurance Now website (www.thepowerisnow.com) that will

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

FINANCIAL

provide access to valuable resources as you begin ericfrazier.youcanbook.me/ for more information. your journey toward homeownership. If you would You have the power to change your life now because like to schedule a meeting online, then go to https:// The Power Is Now.

References: • Badger, Emily. “Housing subsidies reduce inequality. But mortgage tax breaks make it worse.” The New York Times (25 August 2015). Retrieved September 7, 2015 from • http://www.washingtonpost.com/news/wonkblog/wp/2015/08/25/housing-subsidies-reduceinequality-but-mortgage-tax-breaks-make-it-worse. • The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide. Brandeis University, Institute on Assets and Social Policy. (February 2013). Retrieved September 5, 2015 from http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-m/racialwealthgapbrief.pdf. • Is Homeownership Still an Effective Means of Building Wealth for Low-income and Minority Households? (Was it Ever?), Harvard University, Joint Center for Housing Studies (September 2013). Retrieved September 5, 2015 from http://www.jchs.harvard.edu/sites/jchs.harvard.edu/ files/hbtl-06.pdf. • “Homeownership and Wealth Creation.” The New York Times, Editorial Board (29 November 2014). Retrieved September 7, 2015 from www.nytimes.com/2014/11/30/opinion/sunday/ homeownership-and-wealth-creation.html. • Lyons, Ben. Creation of Wealth Through Real Estate and Mortgage Lending. LYNK Capital (June 2014). Retrieved on September 7, 2015 from http://nebula.wsimg.com/51589baddf1dd6ec0f0c4a4 ad250ff92?AccessKeyId=C9F6D51300BCAEE97DDD&disposition=0&alloworigin=1.

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

NHF Sapphire is a grant

housands of people each year dream of becoming homeowners. The NHF Sapphire Program may help that dream become reality. This homebuyer assistance program currently provides low-to-moderate income families and individuals with a choice of a 3% or 5% Grant* that does not have to be repaid. The grant can be used towards down payment or closing costs. Many times this allows homebuyers to purchase a home much sooner than they thought possible. The NHF Sapphire Program is available for the purchase of an owner-occupied singlefamily residence, approved condominium, or planned unit development located in the state of California. The program is available for purchases of both new and existing homes and is NOT limited to first-time homebuyers.

Program Features at a Glance • • • • • •

Down payment assistance (Currently in the form of a 3% or 5% Grant)* For the purchase of primary residences in California New or existing properties are eligible Program is NOT limited to first-time homebuyers Income limits up to 115% of HUD Area Median Income

*Differing rates apply to 3% and 5% Grants respectively

Call for full details: Name: Eric Lawrence Frazier MBA CA BRE #01143484 | NMLS # 461807 Website: www.applytobuynow.com E-mail: eric.frazier@ericfrazier.com NEW! Skype: frazier.eric FREE mortgage app Mobile: 714-475-8629 for your cell phone! O: 800-261-1634 x 703 Click Here F: 800-261-1634 Frazier, Eric, Lawrence is a CA Mortgage Brokerage Licensed by the State of CA BRE 01143484 and is not affiliated with any state or federal agency. Frazier, Eric Lawrence is also licensed by NMLS# 1273606 - www.nmlsconsumeraccess.org. Frazier, Eric, Lawrence is an equal housing lender. Our corporate office is located at: 3739 6th Street Riverside, CA 92501. Telephone and Fax: 800-261-1634 Eric Lawrence Frazier, MBA is a Licensed Loan Originator NMLS# 1461708. This is not a commitment to lend or extend credit. Restrictions may apply. Information and/or data is subject to change without notice. All loans are subject to credit approval. Not all loans or products are available in all states.

REAL ESTATE

LAGUNA BEACH Real Estate

Laguna Beach is a coastal tourist and resort town in Orange County, California. It occupies about nine square miles, encompassing the popular Zip codes 92651, 92677, and 92652 (“Real estate market trends for Laguna Beach, CA - Trulia,” 2015). Laguna Beach has a population of just under 23,000, a household median income of $98,634 and an unemployment rate of 3.30 percent (“Laguna Beach real estate statistics & foreclosure trends summary | RealtyTrac,” 2015).

High-Priced Property

According to the California Association of Realtors (“Current sales & price statistics,” 2015), the median home price in Laguna Beach is roughly triple that in California. In July 2015, California’s median home price was approximately $488K, a 5.4 percent annual increase, compared to approximately $1.58M in Laguna Beach, an increase of about ten percent year-to-year. The national median price for existing homes was $234K in July 2015, a 5.6 percent increase year-over-year, according to the National Association of Realtors (“Current sales & price statistics,” 2015). Trulia reports that Laguna Beach home sales prices have appreciated by over fifty percent in the past five years. Zillow rates Laguna Beach as a healthy buyer’s market, predicting a 0.2 percent decrease in 2016 home values, due principally to the 0.9 percent foreclosure rate (“Laguna Beach CA home prices & home values | Zillow,” 2015). However, this rate is lower than that of Los Angeles (1.8 percent) and the nation (3.6 percent).

rental rates are higher in Laguna Beach than in the rest of Orange County and California (“View Laguna Beach, Orange County, CA rental prices and rates on Realtor.com®,” 2015). The one-bedroom average monthly rental prices are $3,920, $2,228, and $2,294, respectively. The rents on two-bedroom units are $6,177, $3,088 and $3,133. Renting for up to twelve years is cheaper than buying Laguna Beach property; after which time buying is cheaper (“Browse Laguna Beach, CA market overview data on Realtor.com®,” 2015). The high rental prices give sellers the alternative of renting out homes that have become too expensive for current demand. Buyers who don’t plan to live in Laguna Beach for 12 years can save money by renting. The Zillow Laguna Beach Rent Index increased from $2,942 per month in November 2010 to $4,098 in September 2012, then held fairly steady until July 2014. Since then, rents have increased sharply, to a current index reading of $4,745 for all Laguna Beach rentals, indicating a tight rental market with low availability. This compares to index readings of $2,513 for Los Angeles and $1,376 for the U.S. The average Laguna Beach rental price per square foot is $4.38.

Recovery from 2007-2008 Recession

Laguna Beach home sale prices were not immune to the recession of 2007-2008. The peak median price of approximately $1.7M in 2007 through early 2008 plunged to $0.8M by Q1 of 2009, a fifty-three percent decline. Prices remained depressed until 2013, then gained steadily and peaked at a new high of $1.87M Rental Rates As would be expected from its premium location, in Q3 of 2014. During the crisis, the national

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

REAL ESTATE

median home price index dropped 27 percent according to Case-Shiller data, bottoming out in January 2012 and currently 5.8 percent below its pre-crisis high (“S&P/Case-Shiller U.S. national home price index S&P Dow Jones Indices,” 2015). Clearly, Laguna Beach real estate had a faster and stronger rebound than that of the U.S. as a whole. With relatively high prices compared to the rest of country, fewer folks from other markets will have enough profits from their old houses to buy in Laguna Beach. This could have the effect of moderating the growth of prices and extending the amount of time it will take to sell a home.

Laguna Beach Attractions

Delightful weather, low unemployment, and several top schools attract visitors and new residents to Laguna Beach. The summer temperatures range from 61 °F to 79°F and 44°F to 67°F in winter. The population’s age is predominantly in its 50s and 60s, meaning that the community is much calmer than other beaches like Ocean City. The Realtor.com Laguna Beach overall crime rate index is 47, compared to 135 for Los Angeles, 66 for Orange County and 100 for the nation. About fifty-five percent of Laguna Beach residents are married without children and another twenty-six percent are married with children. Just over nine percent are single (“Laguna Beach, CA - Lifestyle and demographics Realtor.com®,” 2015).

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

REAL ESTATE

Visitors and residents can enjoy several festivals in Laguna Beach. For example, the Sawdust Art & Craft Festival has, since 1966, been an annual outdoor attraction for artists and collectors. The festival showcases exhibits and demonstrations in painting, jewelry making, glass blowing, sculpture, photography and much more (“Festivals | Sawdust Art Festival,” 2015). Another popular attraction is the Laguna Canyon Winery, which has a tasting room where you can sample two brands of wine -- Laguna Canyon and Purple Paws. Sales of the latter help support the care of homeless pets (“Orange County wines, award winning wines - Laguna Canyon Winery,” n.d.).

References • Browse Laguna Beach, CA market overview data on Realtor.com®. (2015, July). Retrieved August 30, 2015, from http://www.realtor.com/local/Laguna-Beach_CA • Current sales & price statistics. (2015). Retrieved August 30, 2015, from http://www.car.org/ marketdata/data/countysalesactivity/ • Existing-home sales maintain solid growth in July | realtor.org. (2015, July). Retrieved August 30, 2015, from http://www.realtor.org/news-releases/2015/08/existing-home-sales-maintain-solid-growthin-july • Festivals | Sawdust Art Festival. (2015). Retrieved August 30, 2015, from http://sawdustartfestival.org/ festivals/ • Laguna Beach CA home prices & home values | Zillow. (2015, July 31). Retrieved August 30, 2015, from http://www.zillow.com/laguna-beach-ca/home-values/ • Laguna Beach events calendar | entertainment & cultural events. (2015). Retrieved August 30, 2015, from http://www.visitlagunabeach.com/things-to-do/attractions/ • Laguna Beach real estate statistics & foreclosure trends summary | RealtyTrac. (2015). Retrieved August 30, 2015, from http://www.realtytrac.com/statsandtrends/ca/orange-county/ laguna-beach/?address=Laguna%20Beach%2C%20CA%20&parsed=1&ct=laguna%20 beach&cn=orange%20county&stc=ca • Laguna Beach, CA - Lifestyle and demographics - Realtor.com®. (2015, July). Retrieved August 30, 2015, from http://www.realtor.com/local/Laguna-Beach_CA/lifestyle • Orange County wines, award wInning wines - Laguna Canyon Winery. (n.d.). Retrieved from http:// www.lagunacanyonwinery.com • Real estate market trends for Laguna Beach, CA - Trulia. (2015, July). Retrieved August 30, 2015, from http://www.trulia.com/real_estate/Laguna_Beach-California/market-trends/ • S&P/Case-Shiller U.S. national home price index - S&P Dow Jones Indices. (2015, July). Retrieved August 30, 2015, from http://us.spindices.com/indices/real-estate/sp-case-shiller-us-national-homeprice-index • View Laguna Beach, Orange County, CA rental prices and rates on Realtor.com®. (2015, July). Retrieved August 30, 2015, from http://www.realtor.com/local/Laguna-Beach_CA/rent-prices

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

REAL ESTATE

Real estate market focus:

SAN FRANCISCO Everyone knows how expensive it is to live in San Francisco. It is an iconic city with rental rates higher than the Golden Gate Bridge, and unfortunately, many prospective home buyers would not even consider buying a home with prices as high as they are. The real estate market has been on the path of recovery following the 2008 financial crisis. The destructive wave that swept across the U.S. did not spare San Francisco as the housing bubble popped. However, experts believe that San Franciscoâ&#x20AC;&#x2122;s turning point in real estate market began in 2011 when supply and demand shifted alongside the changing economic fortunes. As a matter of fact, in late 2011 and early 2012, San Franciscoâ&#x20AC;&#x2122;s real estate market began to accelerate gradually with buyer demand surging against a depleting inventory with multiple-offer situations increasing. The result was an upsurge in home

prices currently estimated at between ten and twenty percent. There are plenty of reasons to invest in San Francisco right now with home prices being only one of them. One of these reasons is that there is no better time to get in on a rising market than now. After all, prices will only continue to rise in a city with perfect temperatures, wondrous views, and superstar living. In San Francisco real estate inventory continues to become tighter as well. As a matter of fact, active single family house listings in San Francisco area declined by 21.7% while condos active listing declined by 20.6% in 2015. As a result of the reduced inventory and increased demand for real estate, San Francisco saw forty-eight percent of single family homes and sixty-nine percent of

REAL ESTATE

condos selling at a price above their listing price. appreciation, hitting extremely high levels with This marked a 2.9% and 3.3% increased for single the spring of 2015 blowing last yearâ&#x20AC;&#x2122;s numbers family homes and condos respectively. substantially. Looking at housing affordability index, existing evidence suggests a declining These numbers beg the question of how are buyers trend in the post-recovery period. The chart below affording San Francisco. Obviously this is not the shows that in San Francisco low affordability city to live in for a college student swimming in readings have been recorded in comparison to the debt. To buy in San Francisco you will need a national values at thirty-one percent average for foundation of wealth to allow yourself to invest the three and fifty-nine percent average for the in this top notch area. The lower end homes national index. tend to be more affordable in San Francisco; although you will definitely get more for your dollar outside of the city limits where home are much more affordable. If you do look into outside of the city, however, you will be slighted in the immense appreciation that is going on within San Francisco. Because of this it depends on your needs. If you are looking for an opportunity to become a multiple unit property manager, then in the city would be best for optimal renting rates. If you are buying a home on a budget, then the city outskirts will serve your wallet better. High-end homes are the most affected by the

REAL ESTATE

In terms of rentals, San Francisco stands above the entire United States with property rentals being extremely high. As a matter of fact, compared to the twenty-five largest U.S. metro rental house markets, San Francisco attracts the highest rents. San Francisco is rising in the pecking order. Improved economy, hiking rents, low interest rates, and increased buyer demand alongside low inventory listings have put pressure on rental prices in San Francisco. As a matter of fact, San Francisco median home sales have dramatically increased from 2012 to 2015 and are expected to continue to rise. San Francisco is no doubt a great area to stay. More often than not, it is not just the rents that determine suitability of a place to stay but other factors such as the people you will stay around also matters. Additionally, owning a home in San

october / november 2015 issue

Francisco is a sure way to make substantial profits, especially in light of the increasing rents as well as the high demand for houses. If you choose to resale the house later, then you can be sure that you will not only find a quick buyer, but you are also likely to sell it a price higher than its listing price. However, it must not be forgotten that short-term median house prices may fluctuate as a result of multiple factors including seasonality, inventory listings available for purchase, changing interest rates such as the expected raise of US interest rates, and substantial changes in luxury and newhome market segments. As a matter of fact, these prices, both sales and rental may change with time; however, it is highly unlikely that a substantial reduction will be recorded in the recent times considering that only recessions have been to hit the U.S. housing market.

The ORANGE COUNTY Realtist Magazine

JUMBO LOANS REAL ESTATE

WITH 10% DOWN

NEW!

FREE mortgage app for your cell phone! Click Here

• • • •

GREAT RATES! CLOSE FAST!

Loan Amounts up to $3 Million! * No monthly PMI Fixed-rate and ARM options are available Eligible for primary, secondary and investment properties Name: Eric Lawrence Frazier MBA CA BRE # 01143484 | NMLS # 461807 Website: www.ericfrazier.com E-mail: eric.frazier@ericfrazier.com Skype: frazier.eric Mobile: 714-475-8629 O: 800-261-1634 x 703 F: 800-261-1634

* Restrictions may apply.

REAL ESTATE

Real Estate Market

WESTMINSTER, CA Real Estate Market Westminster, CA Westminster, CA is a beautiful city that has the best of Orange County. Landlocked by Seal Beach, Huntington Beach, Garden Grove, and Fountain Valley, this metropolitan area has stayed out of the real estate spotlight; however, there is opportunity in this city. Sales of new homes in Westminster, CA rose more than expected this year. The median home price jumped, revealing the jumpstart of the housing market after a temporary downturn occasioned by the 2008 global financial crisis. After half a decade of declining housing construction in Westminster, the number of construction permits issued for new, privately-owned residential houses in Westminster increased since 2010 through 2015. Total residential units allowed in Westminster peaked at 970 in 2001, but suffered a major decline from 2005 through to 2009, to reach a low of 44 in 2009 during the global financial crisis. However, following the end of the financial crisis in 2011, the number of permits issued for home construction in Westminster, CA doubled from 2010 to reach ninety-six, a trend that has since continued with substantial rise being recorded year after year. However, construction levels in the city have largely been blamed on limited availability of vacant land rather than on economic factors. Nonetheless, the uptick in residential housing construction permits is a sign pointing to recovery of Westminsterâ&#x20AC;&#x2122;s local economy.

Department, total house inventory in Westminster increased by eighty-two percent to stand at 474, up from 260 last year. The inventory of homes for sale has increased immensely, a level that represents a direction towards the highs during the housing boom of the 2000s, yet still falls short. With this limited offer, the median price of transactions rose eighteen percent in 2014 to $306,500 down from $391,000. BLLEâ&#x20AC;&#x2122;s forecast of housing demand is based on projected population growth in the city of Westminster. Factors for population per occupied housing unit and estimated vacancy rates that range from 2.5 to 4.4 percent were applied to forecast total units of housing demand and additional housing construction required from 2012 to 2032. Additional housing construction required was calculated at 5,400 units for the period from 2012 to 2022 and According to figures released by the Commerce 4,000 units for the period from 2022 to 2032,

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

REAL ESTATE

market rebound. Economists on average expected a 4.7% increase. Real estate prices continue to rise faster than household incomes and wages, which will have the effect of reducing the pool of prospective buyers significantly in Westminster. This suggests that there will be a time to another moderating the rise prices.

for a total of 9,400 to 9,500 units over the two decades. The total housing units demand was then broken down into single-family units, townhouses and multifamily units. Total demand for residential acres were then estimated based on residential densities of 3.5 units per acre for singlefamily units, 8.0 units per acre for townhouses, and 16 units per acre for multifamily units. These residential densities were based upon a slight increase over actual densities of recently completed projects and currently in the development pipeline. The result recommended residential acreage required

to accommodate the demand through 2032 range from 1,540 to 1,830 acres total. Of this, approximately 1,200 to 1,400 acres will be for singlefamily homes, 120 to 150 acres for townhomes and 220 to 280 acres for multifamily units. (Higher density developments in the WURP site and Westminster Station areas, as well as other activity nodes in the city, could result in less total acreage demand for multifamily units.) The S & P / Case-Shiller index measuring prices for individual houses in twenty urban areas increased by five percent in March after an increase of the same magnitude in February, confirming the real estate

The ORANGE COUNTY Realtist Magazine

The National Association of Realtors (NAR), the main federation of estate agents in the country, reported a 1% decrease in resale. The relative weakness of home resales alters one of the most positive segments of the U.S. economy after the slowdown of growth in the first quarter. Westminster has seen less housing construction in recent years compared to the surrounding cities of Broomfield and Thornton. While the number of units permitted in Westminster averaged 386 between 2005 and 2015, Broomfield and Thornton averaged 700 and 1,120, respectively. This is mostly due to the fact that the cities of Broomfield and Thornton have more developable vacant land than Westminster. In nearly all jurisdictions except Boulder and Denver, a greater

www.OCREALTIST.org

REAL ESTATE

percentage of multifamily units were permitted in the early 2000s. In 2001, sixtyWestminster’s home resale inventories four percent of total units permitted in Westminster decreased slightly, with a one percent were multifamily. By 2010, multifamily units comprised decrease since August 2015. only seventeen percent of total units permitted. units permitted has increased beyond the Across the ten-year period overall, thirty- 2003 peak level of the past development seven percent of building permits issued in cycle. Current housing development interest Westminster were for multifamily units. The is also indicated by the 1,800 multifamily and proportion of multifamily units permitted single-family units in the city’s development In Adams County and Jefferson County pipeline. More growth is expected. between 2001 and 2015 was eighteen percent and thirty-three percent, respectively. Both Westminster not only has the numbers on its Broomfield and Thornton have significantly side. This charming city has character and more remaining vacant land than Westminster. history to have any homebuyer running to a realtor. Westminster was originally established Westminster’s home resale inventories by Rev. Webber, a Presbyterian minister that decreased slightly, with a one percent decrease supported the temperance movement. The since August 2015. Distressed properties name of the city itself is derived from the such as foreclosures and short sales remained Westminster Assembly of 1643 which noted the same as a percentage of the total market the basic tenants of the Presbyterian faith. One in September. The median listing price in famous story from Westminster is when the Westminster went up from August to September. farmers refused to grow grapes for the infancy There were a total of sixteen price increases of the settlement. While you can now freely and one hundred and twenty price decreases. enjoy your favorite cocktail in Westminster, According MPF Research’s Denver Apartment history buffs and homebuyers will revel in Market Report from the third quarter of 2014, the rich culture and real estate opportunities. the Metro Area’s apartment market was in the best shape since the tech boom in 2000 and 2001. With impressive job growth in the region, apartment occupancy rates were at their highest since 2001, at 96.3 percent. Rents are also surging, with suburban areas leading the rent growth. MPF Research reported annual rent growth of 6.8 percent in Westminster. New supply levels have been modest and apartment developers have been taking notice. In the past year, the number of multifamily

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

FHA 99.5%

Join Us On:

FINANCING

This 1/2% * down payment program is CREDIT SCORES designed to help low-to moderate- income borrowers achieve the dream of home 580 minimum credit score rquired. Those with ownership. no credit score may also qualify with alternative credit. Two.unit properties require a minimum * Make home ownership a reality for yor borrowers sooner 640 credit score rather than later. Check out program requirements and contact us with your questions.

BORROWER ELIGIBILITY Owner-occupied only. No first-time home buyer requirement. May own other property (within FHA requirements). No minimum home buyer contribution required.

PROPERTY ELIGIBILITY Single family residences. PUDs, FHA-approved condos (must meet FHA requirements and FMC overlays), two-unit properties and manufactured homes.

OTHER DETAILS Income limits are 115% of HUD area median income (AMI). Non-occupying co-borrowers and co-signers are not allowed. Home buyer education is required.

Contact me today! Name: Eric Lawrence Frazier MBA CA BRE #01143484 | NMLS # 461807 Website: www.ericfrazier.com E-mail: eric.frazier@ericfrazier.com Skype: frazier.eric Mobile: 714-475-8629 O: 800-261-1634 x 703 F: 800-261-1634

NEW!

FREE mortgage app for your cell phone! Click Here

REAL ESTATE

RISING INVENTORY in Southern California

The housing market has been characterized as summer, we take a look at the implications it sluggish, especially in the past decade. While presents for both buyers and sellers. the stock markets shift momentum can be as fast as a fighter jet, the housing market is more For Buyers like a cruise ship. There is little surprise in the fact that 2013 has Since the previous housing bubble (Bubble, been the baseline of inventory growth, thanks 2015), the turning point was indicated with to the housing market rebounding after the shift in price appreciation and rising inventory; housing crash. Since then, big investments in however, in Southern California the trajectory construction and development activity across looks significantly different as compared to the nation have become the norm. the state average of 368,160 units in February, Slowly but progressively, the inventory in 2015. Southern For the first time in years, the Orange County California and Inland Empire markets have taken huge m a r k e t s leaps in inventory. Due to the increasing buying has been activity in Southern California, investment growing. opportunities are now available at large in these two counties. Los Angeles and Ventura have also experienced increasing inventory, albeit very slowly. On the other side of the spectrum, San Diego remains unchanged. As inventory is finally returning to Southern California t h i s

REAL ESTATE

The rising inventory in Southern California, coupled with the ease in regulations by the FHA, shows encouraging signs of prosperity in the local market. The prices in some markets are higher than others, whether or not in relation to rising inventory. For instance, the median home price in Southern California is higher than the state average. As such, someone looking to invest in the local real estate has to borrow more funds or pay a significantly larger sum at the time of purchase, despite having various options available in inventory. The onset of the housing market means that the average household will have a more difficult time buying a home. With the increase in inventory comes more competition, which turns to an increase in price. The average American will have difficulty purchasing a home in Southern California.

For Sellers

In the Southern California counties, particularly Orange County, inventory is up by a staggering 70%. Compare that to the meager 30% increase in inventory in Los Angeles and you realize that most of the money is being invested. While double digit gains are no longer the highlight of the market, the escalating prices in South California are turning it into a seller’s market where conditions are more favorable for selling and renting. With the increasing number of options available for homebuyers in Southern

California and the ease of borrowing, the inventory could decrease over time. However, given that Orange County is now the hub of real estate activity, the inventory is likely to remain high for quite some time. As a seller in this market, you should know that turnkey properties and rentals will help keep a steady flow of income. The rising inventory in Southern California, coupled with the ease in regulations by the FHA, shows encouraging signs of prosperity in the local market. Sellers and renters should be ready to watch the buyers outbid each other in the search for a home, sending profit into the seller’s pocket. Want to know more? Go to www. thepowerisnow.com and join the buyer’s and seller’s club for free to get free support, consultation and information from me and my team. You have the power to change your life now because The Power Is Now. References • Bubble, D. H. (2015). Southern California takes the trophy for most overvalued real estate in the nation: Austin Texas now home to inflated real estate as well. Retrieved from • http://www.doctorhousingbubble.com/ southern-california-real-estate-bubble-austintexas-bubble-territory/

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

REAL ESTATE

Overcoming the Financial Hurdles to

HOMEOWNERSHIP

From the outside, purchasing a house seems pretty cut and dry. The process seems simple in that you save up for a down payment, find a home that is in your price range, secure the financing, close on the home, and move in. If only it were that simple. More so than ever before, buyers are finding themselves up against an array of obstacles that must be overcome prior to obtaining the keys to their new home; the first of which is saving for that down payment. Poor credit, outstanding debt, checkered employment histories, and a lack of documentation are other substantial obstacles that will hinder your dreams, yet none of these hurdles are

insurmountable if managed properly.

Saving for a Down Payment

The first step to establishing the amount you will need for a down payment is determining the price point of your desired home. Those looking at homes with a $150,000 price tag will need a much smaller down payment than those looking in neighborhoods or markets where the average home sells for $650,000. It is also important to determine how you plan to finance the house. Though it is typically best practice to save twenty percent as a down payment, there are arrays of loan programs, such as Federal Housing Administration (FHA) and Veteranâ&#x20AC;&#x2122;s Administration (VA), that allow homebuyers to put down

REAL ESTATE

a more modest amount. For example, a person buying a $200,000 home may need to put down $40,000 to meet the terms of a traditional 30-year fixed rate loan, but only $7,000 with an FHA loan. Typically, the higher the down payment, the lower the interest rate a person will be able to obtain. Once the price point and mortgage program are established, you will have a better understanding of the amount needed as a down payment. When there is a gap between savings and the amount required, a person has a number of options: • Automatically deposit money from paycheck into a checking, savings, or money market account. Money market accounts have a few drawbacks, such as minimum balances and higher fees, but often provide a higher rate of return than traditional savings accounts. • Draw from other investments, such as IRAs, 401(k)s, and stock market accounts. Tax laws allow a

person the ability to withdraw $10,000 from an IRA on a one-time, penalty-free basis when put towards the purchase of a first home. Married couples can leverage up to $20,000 this way. Homebuyers can also borrow against their 401(k)s for a down payment, though this is less advisable given that money taken from company contributions must be repaid using after-tax dollars. Finally, those who have invested in other assets, such as stocks and bonds, may consider selling them to use as a contribution toward their down payment. • Consider asking friends or family for a gift. Adjusted annually, the existing tax law allows a person to receive a gift of up to $12,000 per year without consequence. Gifts of cash can be put towards a down payment. No rich friends and family? That is no problem. Consider structuring the “gift” as a loan and establish repayment terms with the giver.

REAL ESTATE

• Explore city and state programs for firsttime homebuyers; many offer eligible buyers down payment assistance. Usually these take the form of forgivable loans. For instance, a city may offer a buyer $5,000 toward closing costs, to be forgiven at a rate of twenty percent over five years. These programs typically have hard and fast rules, such as income limits and residency requirements, but they can be a valuable source of capital for the first-time buyer.

student loans that were necessary to continue your education. Whatever the case may be, paying this debt is a critical step toward buying a home. Many mortgage programs have strict debt-to-income ratios. For example, an FHA loan limits front-end ratios (or total housing expenses) to thirty-one percent and back-end ratios (all of a person’s monthly expenses, including housing) to forty-three percent (FHA, 2015) on manually underwritten loans. If a person has debt that exceeds these ratios, obtaining a loan approval may be challenging unless the loan is approved Improving Your Credit Score by an automatic underwriting system by FNMA There are a number of factors that credit bureaus or FHLMC. A conforming loan will be even more take into consideration when issuing a credit challenging. score, including income to debt ratio, recent credit inquiries, and credit utilization. Improving a credit score can take time, but it is also The most effective way to improve important when buying a house. Even a slight improvement in a your credit score is to keep credit card credit score can lead to a better interest rate, thereby saving balances low and pay bills on time borrowers thousands of dollars over the lifetime of their loan. There are a number of scenarios to the homebuyer The most effective way to improve your credit who has a high debt-to-income ratio. First, a buyer score is to keep credit card balances low and may consider a smaller down payment in lieu of pay bills on time. Delinquent payments and investing other free cash towards the repayment collection proceedings can destroy your credit of existing debt. Second, a person may accept score. Moreover, only open credit cards or initiate the penalties for doing so and withdraw money loans if absolutely necessary. That new car may from retirement accounts to pay off existing debt. seem like a great deal, but the combination of Another option is to seek a co-signer for the new credit inquiries and additional debt will loan, someone with a higher credit score and a only hurt your credit. A number of credit score lower debt-to-income ratio. The debt and income simulators exist that allow a person to play with of both mortgagors would then be taken into various scenarios, such as paying off a credit card consideration and could lead to a more favorable in its entirety, adding a credit card, or increasing debt-to-income ratio when averaged. Be sure, of a credit card’s limits. Consider using a simulator course, to consider the implications of having a to determine the best way to increase your credit co-signer and what this means for your long-term score based upon your unique credit profile. investment strategy.

Grappling with Outstanding Debt

Establishing a Stable Job History

There are any number of reasons why a person may have significant debt, often times the debt is through no fault of their own. It could be medical When banks issue mortgage notes, they want bills from an accident, an untimely divorce, or to know that the borrower will be able to repay the loan. In order to do so, many lenders october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

REAL ESTATE

require borrowers to have at least two years of employment with the same employer to establish stability. If you are considering purchasing a home in the near future, it is not wise to suddenly change jobs. Of course there are exceptions. For example, if a job offer presents itself that pays significantly more than what you are currently earning, this will be looked upon favorably. Make sure that you have the job offer in writing and at least a three months of pay stubs to back up the offer letter for the bank to confirm the new earnings. Lenders will average your earnings over the course of the past twenty-four months, even if a person is now earning substantially more than previously (Sheldon, 2014). It is also important to note that overtime, commissions and bonuses are not typically taken into consideration when establishing a person’s earnings unless these additional sources of income have an established history over time.

Compiling Proper Documentation

Nowadays, lenders require prospective borrowers to compile a range of documents in preparation of issuing a loan commitment. In addition to the pay stubs noted above, a person should be prepared to send the bank three years of bank statements, tax returns and documentation regarding additional assets, such as retirement accounts and stock portfolios. All funds that will be used toward the down payment and closing costs must be established and in a readily-accessible account prior to the bank issuing a loan commitment. Banks will not simply trust that a person’s family is gifting them $12,000 towards closing costs

unless the $12,000 is already in an account with the borrower’s name on it. For those interested in purchasing an incomegenerating property, such as a multi-family home or a home with an in-law apartment, the bank will typically want to see copies of existing leases before considering this cash flow as a viable source of income. Even then, banks will usually only allow seventy five percent of the rental income to be included as a source of income in order to cover for unanticipated vacancies or downturns in the rental market. Again, there are exceptions to this rule. If a unit is not currently leased for any number of reasons (perhaps the seller chose not to resign a lease with the anticipation of selling the home, for example), the bank may allow an independent third party to provide an analysis of the existing market conditions and give the bank an estimate of likely rental income potential. As is often the case in life, the most difficult things to accomplish are often the most worth working towards. While there are certain financial realities that come with buying a house, the outcome is worth the effort needed to overcome the hurdles identified here. Owning a home provides financial stability, long-term equity, and an investment that can be passed on for generations to come. Want to know more? Go to www.thepowerisnow. com and achieve your goals. Join the buyer’s and seller’s club for free to get free support, consultation and information from me and my team. If you would like to schedule a meeting online, then go to https://ericfrazier.youcanbook. me/ for more information. You have the power to change your life now because The Power Is Now.

References • FHA Requirements: Debt-to-Income Ratio Guidelines, FHA.com (2015). Retrieved September 8, 2015 from http://www.fha.com/fha_requirements_debt. • Sheldon, Scott. Why Your Job Matters When Buying a Home, Credit.com (16 July 2014). Retrieved September 8, 2015 from http://blog.credit.com/2014/07/why-your-job-matters-when-buying-ahome-88105. 47

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

USDA

Rural Home Loan Program

Zero Down Payment

NEW!

FREE mortgage app for your cell phone! Click Here

• Available for designated rural areas • No down payment required • Closing costs may be nanced if appraised value is higher than sale price • • • •

*additional nanced amount may not exceed actual closing costs

No loan limits, No Sale Price Limits Income limits apply Maximum loan amount up to 102% of appraised value One time 2% Guarantee Fee may be nanced into the loan amount or paid from seller’s credit, .4% Annual Guarantee Fee • For property eligibility, visit: http://eligibility.sc.egov.usda.gov/eligibility/ Name: Eric Lawrence Frazier MBA

CA BRE #01143484 | NMLS # 461807

Website: www.applytobuynow.com E-mail: eric.frazier@ericfrazier.com Skype: frazier.eric Mobile: 714-475-8629 O: 800-261-1634 x 703 F: 800-261-1634

RENTING

BEST PLACES TO RENT In Orange County Orange County, California is one of the most appealing places to live in the U.S. The excitement, diversity, vast cultural facilities, non-congested cities, reduced crime rates and of course the beautiful beaches make Orange County an ideal place for people of all walks of life. Perhaps you are already asking yourself: how expensive it is to purchase a home in Orange County? Well, you do not have to start by purchasing a home; there is always the rental option. Renting a home is an option in many circumstances if you are still not ready to buy a home, or you have not found the right destination to settle down. These, amongst other circumstances, make renting a place ideal. So, what are the best places to rent? In reality, the places to rent a house in Orange County are immense; however, these are the best places to rent in Orange County.

Irvine

october / november 2015 issue

Irvine is one of those places that offers so much, yet remains affordable. Rich in apartments and family homes for rental, Irvine is indeed ideal. Additionally, it is amongst the safest cities in Orange County. In terms of education, the average student scores on API tests have consistently remained high, reflecting high success rates in the area. Some of the outstanding facilities you will be able to access where you rent a house in Irvine include the Irvine Community College, 668-acre Great Park, UC Irvine, and of course the Irvine Spectrum Mall. In terms of cultural amenities, there is the Irvine Museum of Art, the Irvine Historical Museum, Barclayâ&#x20AC;&#x2122;s Theater, Verizon Wireless Amphitheater, Musical Theater Village, and the famous Pretend City Childrenâ&#x20AC;&#x2122;s Museum.

Newport Beach

The ORANGE COUNTY Realtist Magazine

RENTING

Other than its substantially low crime rates, student score tests in the Newport Beach area will make anyone want to raise kids there. Although the rental prices are less than affordable for many, residents will tell you that the price is worth the stay. The city has an aura of an exclusive town that has earned it the name, “A Community of Villages.” These include the eight islands of Newport Harbor, Newport Coast, and Corona Del Mar. In term of lifestyle, anyone that resides in Newport Beach will find something that suites his or her lifestyle. For water lovers, you can enjoy the ten miles coastline; boaters can get a feel of the county’s harbors; nature lovers have more than 1,000 acres Upper Newport Bay Nature Preserve and Ecological Reserve to explore; and for the city-life lovers, Newport Beach’s high rise buildings offer exactly what you need. Families can also enjoy a wide array of attractions such as the outstanding Balboa Island Ferry, Orange County Museum of Art, Balboa Pier as well as Fun Zone, and the Environmental Nature Center. Shoppers can also visit the upscale Fashion Island, surfers visit The Wedge, and hikers and bikers can enjoy themselves at Crystal Cove State Park.

Like a majority of towns in Orange County, Lake Forest student test scores are premium, and crime is low. Its population is low and growing it hosts seven neighborhoods that have been master-planned, in addition to over four thousand new homes, a sports park, and a community and civic center. The town prides in up to twenty-nine public parks, a skating facility, and over 2,500-acre to explore in Whiting Ranch Regional Wilderness Park. Rental prices are at the median of Orange County, allowing Lake Forest to be more affordable than Newport Beach. Its strategic location allows residents to get a share of the South County, North County, as well as Laguna Beach without much difficulty. Its rental housing options range from post-WWII homes and apartment complexes to the exclusive gated communities.

Huntington Beach

Lake Forest

Huntington Beach, unlike the overpriced Laguna Beach and Dana Point, is fairly affordable. Rental estates range from Huntington Harbor Estates to the Slater Slums. The most profound aspect about Huntington Beach is that if you want beach life without paying top dollar, then this is the place to be.

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

RENTING

compared to other Orange County towns. This town prides itself in its vibrant music scene. Regardless of the costs, you will enjoy access to not just the Coastline but also the progressive City Council and the Queen Mary. The places range from Belmont Shores to Little Phnom Penh, offering a plethora of rental housing options. For those that prefer hipster or unconventional apartments, this is the place to be. The people here are friendly and know what it takes to live as a community.

San Clemente

San Clemente, like the other areas, enjoy low rates of crimes and good schooling facilities. It has more than fourteen miles of hike trails, two-miles of public beaches as well as over twenty-one recreational parks accessible to all. If you love dogs, then here is the place for you with a boisterous dog park. Additionally, the parks here have access to beaches, while some are sports and others provide exclusive ocean views. Rental prices are affordable compared to the amenities you will enjoy. Being a resident, you will also enjoy the pier, the exclusive Casa Romantica Cultural Center and Gardens, as well as the Pizza Port.

Long Beach

Fullerton

Fullerton is one of those places that college kids love, thanks to the avid nightlife. In terms of affordability, this is a great place, thanks to lots of single-family homes dating from as early as 1920s available for rent, making this another great destination for college age young people to afford. The rental homes here are gorgeous ranch-style homes and are located in the Sunny Hills neighborhood. Additionally, this is the home of diversity, bringing together all races and ethnicities together.

In general, Orange County has a lot to offer in terms of rental property. However, these are the best places you should start looking at before This is the best place if rental cost is your main looking elsewhere. You will not find better concern. Long Beach is the least expensive anywhere!

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

OUR COVER

Donnell S pivey

Donnell Spivey is the Immediate Past President of the National Association of Real Estate Professionals (NAREB). He is the owner and broker of Exit Spivey Professional Realty with over twenty-nine years of experience in the surrounding Baltimore area. Donnell’s business philosophy is to lead and manage a team of real estate agents, specializing in residential and investment property sales, while providing full time professional real estate services. When you work with Donnell Spivey, he becomes the client’s personal assistant in the real estate transaction. This former president of NAREB and former 1st Vice President is an accomplished broker and leader in the real estate community.

He is currently a board member of the National Association of Real Estate Brokers, Real Estate Brokers of Baltimore, National Association of Realtors, Greater Baltimore Board of Realtors, Maryland Association of Realtors, Howard County Association of Realtors, Anne Arundel County Association of Realtors, National Association for the Advancement of Colored People (NAACP), and a member of the 100 Black Men of America. Donnell received his education at the Catonsville Community College after graduating with a degree in the offered real estate program. He received his training as an REO specialist and is constantly continuing his education in regards to real estate, marketing, and technology. His specialties include residential listing and sales, new home sales, investment property, relocations, and REO properties. The Power Is Now had the pleasure of getting to know Donnell Spivey during our interview together to speak about the developments since the end of his term as

president of NAREB. Donnell began by noting the benefits of NAREB such as the connections that one gains while in the organization as he reflected on his roots. After high school Donnell moved from South Carolina to Baltimore, Maryland to be a petroleum distributor, or a gas technician, until his rise to his successful career as a realtist. His story is most certainly one that speaks to the importance of being consistent in your pursuit of success and in cultivating relationships. Donnell believes “you can start from ground zero and become as successful as you want to be”. For up and coming realtors looking to start a brokerage or create a client base, Donnell shared how creating different revenue streams will be key to the growth one would desire; he suggested creating a referral base not just based on receiving referrals but also sending referrals out. Donnell created a network that spans the country by learning what other realtist have done to grow their businesses. In the early days of his career he tapped into a wealth of information that gave him the confidence to move forward and open his first brokerage firm. It is through this formula for growing his business that Donnell has been able to connect with hundreds of individuals across the country and makes a point to stay in touch with these individuals and know them on a first name basis. Donnell also gave us a brief history of NAREB and why it was formed in 1947 as an organization designed to meet and fill the vacancy of African Americans in traditional reality markets and organizations at that time. NAREB served two purposes educating African American realtors,

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

OUR COVER

serving the needs and issues of the African American community, we asked Donnell what the Power Is which were and are still today very different Now means to him, He boldly stated from other communities. Donnell considers that “you should ACT now” himself both a realtor and a realtist, explaining successful as homeowners, so they would truly that the term came about because African Americans during the time have an understanding of the investment they before NAREB were actual not permitted to were making and steer them towards choosing call themselves realtors. Inspired by the history options that would fill that buyers specific and purpose behind NAREB, Donnell Spivey’s needs now and in the future. For realtors passion for people and his leadership gifts looking to connect, NAREB exists in fortycame full circle, positioning him as NAREB’s five states with ninety-three chapters across First Vice President and In 2013 when Donnell the country. These chapters continue to grow was installed as the 28th President of NAREB. in the areas of training and building wealth for its members and the communities and clients Donnell just completed his tour as the President that those members serve. of NAREB and believes that his work with the organization has been successful. Under his As we do with all of our guests, we asked tenure Donnell partnered with the Congressional Donnell what the Power Is Now means to him, Black Caucus on a project geared specifically He boldly stated that “you should ACT now”, towards expanding knowledge of the potential and use every bit of your ability to act now home buyer, his or her rights, and starting while doing all that you can do to a improve real commentary and teaching regarding best yourself today, because no one knows what practices when purchasing a home such as the future holds. We at The Power Is Now the types of loans one should consider when wholeheartedly agree. By bettering yourself buying or refinancing a home. Donnell created now you are able to make better decisions in and sponsored events across the country called the future, plan for the worse while hoping for the best, and be the best prepared that you can the State Of Housing In Black America. be for what is to come. The State of Housing In Black America created two tracks, one that educated the real- The Power Is Now was delighted to have estate consumers about the different types of been able to connect with Donnell Spivey for mortgages, credit, and down payment assistance a one on one conversation, and we thank him programs that were available. The second track for sharing his wealth of knowledge with us educated the consumer on financial wellness related to authoring the best path to success and building wealth through various means as a real-estate professional as well as being such as retirement planning, credit scores, and educated in several key areas before making other elements related to building generational your next real-estate investment. wealth. Donnell’s goal in creating these events was a strong desire to set the buyers up to be

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

GOOD NEWS!

FHA Back to Work Program! Our company is proud to participate in the FHA’s Back to Work Program. This program is designed to help buyers who have lost their homes as the result of an economic event. Using this program, you can reduce the bankruptcy, foreclosure, short sale and deed in lieu of foreclosure seasoning requirements to as little as 1 year!

PROGRAM BASICS • Buyer must have experienced an economic even, defined as: - Loss of employment - Drop in household income of 20% or more lasting 6 months or longer. • Purchase Loans only • Demonstrate full recovery from the event, including re-established credit for the most recent 12 months. • Completion of housing counseling through a HUD-approved counseling agency

Call me for details: Name: Eric Lawrence Frazier MBA CA BRE # 01143484 | NMLS # 461807 Website: www.ericfrazier.com E-mail: eric.frazier@ericfrazier.com Skype: frazier.eric Mobile: 714-475-8629 O: 800-261-1634 x 703 F: 800-261-1634

NEW!

FREE mortgage app for your cell phone! Click Here

YOU

LISTEN MORE Than

YOU SPEAK

his statement alone “Listen more than you speak” should conjure up people in your mind that simply do not listen to anything you have to say. It probably hurts a little bit when you think about it. These are people who are close to you, like family and friends, or have worked with you for some time. The irony is that you can get better treatment from strangers who are actually interested in what you think or have to say. The old saying “familiarity breeds contempt” is still alive and well in the area of communications. One would think it should be the opposite, but it is not. I am talking about the people who never talk with you; they talk to you. They are incapable of true listening. There is not an authentic exchange of ideas or great conversation where they really hear you and you really hear them. It is actually just the opposite. They are not talking with you. They are talking to you, and if you have anything to contribute, then they are not interested because of the assumptions they have already made about you such as: you are not smart as they are or as interesting, so what could you really have to

YOU

contribute to the conversation? Therefore, it is not that important for them to be talking to you unless you want to know something about them. Have I described you yet or someone you know? Let me continue, because this is important:

and not let them fully express themselves to discover their needs. Do this and you will lose that client. This strategy applies to sales, marriage, friendship, and people in general. Learn to listen well, and you will become a better communicator.

I am talking about people who are incapable of listening. They talk over you; they think they know more than you; or they simply cannot be told anything new or instructive, because they know it all. How about that? Did that do it? Am I on your street, or in the vicinity of where you live? Not listening or being willing to listen to others but speaking incessantly and not allowing others to talk is often indicative of an attitude of superiority. It is also demonstrated in their lack of attentiveness when you are speaking to them or their inability to look at you directly. They are constantly scanning the room and looking over you or to left or right of you, as if they are waiting for someone else to come along more important to talk to. If that is you, then STOP IT! STOP IT RIGHT NOW! You cannot experience long term success behaving that way; it is an impossibility. You may have bouts of success, but long term success is out of reach for you, because you cannot listen more than you speak.

Keeping your mouth shut in general and your ears open will serve you well on the road to success in any endeavor. You will listen to directions more avidly and follow them to the letter. People will see you as engaged in the conversation instead of tolerating the conversation. If you learn to listen, you will be better able to take direction or criticism which shows character and maturity. If people see you as a great listener and have a positive attitude toward you because you listen, opportunities will come to you in abundance and that will always lead to more success. We have the power to be great listeners in all interaction we have and that power is now. Please go to the Power Is Now website and take advantage of the many resources available to you. Membership is free.

Listening rather than speaking is vital. We all must acknowledge that we are not omniscience and that we can all learn something from others. While it may seem difficult to reign in the urge to cut someone off, we may learn more about the person and the topic of conversation if we let him or her speak. This is especially important in sales. Your number one priority in sales is to understand the needs of the client. In order to discover those needs of your clients, you must learn to ask questions and to listen before sharing your thoughts or information. The cardinal sin is to continually interrupt your client with your commentary 59

The ORANGE COUNTY Realtist Magazine

Eric Lawrence Frazier MBA President and CEO www.OCREALTIST.org

POWER AGENT SPOTLIGHT

TERESA PALACIOS SMITH

Teresa Palacios Smith is the President of the National Association of Hispanic Real Estate Professionals (NAHREP). She is also the Immediate Past President of the Atlanta chapter of NAHREP. Teresa is also the Vice President of Business Cultural Initiatives for Berkshire Hathaway Home Services Georgia Properties. She is responsible for business development and corporate marketing of Relocation Services, HUD and REO properties, International & Rental Services and Affinity Marketing Programs. With all of her experience Teresa is, without a doubt, more than qualified for the position of President of NAHREP. Teresa Palacios Smith has been ranked as the forty-ninth most successful real estate agent in the country out of an elite pool of two hundred and fifty fantastic real estate agents throughout the nation. With Bachelor’s Degree in Broadcasting and another in Public Relations from the Mississippi State University, Teresa brings her diverse education to NAHREP’s national presidency. After ending her college career in broadcasting and public relations, Teresa went into sales at a stressful television network company job. The constant stress took its toll and when her family moved to Atlanta, Teresa went into recruiting until she became a stayat-home mother for five years. In the quest to find a different career, she went back to school and got her real estate license to have the flexibility to work and be an amazing mother. From her professional life

to her personal life, this superwoman is a success. Teresa has two wonderful children, twenty-five year old Jessica and twenty-three year old Jeffery, and her husband of thirty-two years, Mike Smith. Teresa is also one of the founding members of the Atlanta chapter of NAHREP. After she had been in real estate for nine years, Teresa became more involved with Georgia’s Hispanic community. Through an insistent colleague, she flew out to a NAHREP conference and was inspired by the people, the music, and the mission of the organization. Soon after, she began the Atlanta chapter of NAHREP with two other co-founders, growing NAHREP from its infancy. After many years of serving in the Atlanta chapter Teresa was inspired by the co-founders of NAHREP, Gary Acosta and Ernie Reyes, who encouraged her to step into leadership and to continue being the powerful, influential Latina that she is. Her mentors triggered her growth and how she approached the presidency. After learning and growing under NAHREP superstars, Teresa is ready to set her goals and make change within NAHREP. Teresa’s first goal as president is to brand NAHREP across the country by visiting each chapter across the United States. Knowing that NAHREP can grow exponentially, she intends to give exposure to her organization and unify them at the same time. This will allow all of the chapters to pool resources and promote newer initiatives to increase the power of local chapters. Teresa intends to advocate the bigger picture of NAHREP, such as the NAHREP Top 250 Mortgage Brokers which is brand new.

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

POWER AGENT SPOTLIGHT

Teresa Palacios Smith She loves that her organization is bettering itself every year and intends to continue that trend with consulting services for marketing to Latinos. Above all, Teresa’s goal for her short, one year term of presidency is to empower Latinos to become involved in real estate to reveal the potential of Latinos. These goals are focused on encouragement, inspiration, and coming together as one to better the Hispanic community and NAHREP as a whole. The recent NAHREP Latin Festival and Conference featured the idea of “Sabores”, or taste, this year. Emphasizing food, culture, family, and business allowed all to come and learn while developing business opportunities to develop businesses. Tools were given to the participants through keynote speakers that allowed the real estate professionals to grow in their careers. Darren Harding, the president and CEO of Success magazine, was one of the keynote speakers at the conference, bringing together the idea of success and the principles of millionaires. Dave Litinger, the CEO of REMAX, shared his personal story to inspire all that came to listen. Leo Pareja also spoke about how sometimes to become an enormous success, you must fail. Failure breeds success when you rebuild after being knocked down, and the themes of resilience and persistence truly enhanced the conference. This fantastic conference culminated with the Latin music festival complete with authentic dancing, food, and wonderful people. Teresa Palacios Smith also spoke about the mission of NAHREP and the direction that she intends to guide the organization. The mission of training at the local level and world class seminars to better the community is looking to expand in NAHREP’s biggest expansion year. Teresa intends to create twenty new chapters in twenty different markets to continue to grow NAHREP

october / november 2015 issue

and pool even more resources. Allowing Hispanic homeownership to become attainable to the 20,000 current members and all Hispanics is vital to the mission of NAHREP.

The state of homeownership for Hispanics is definitely an important point for Teresa, and she pointed out the 55.5 percent of new homeowners are predicted to emerge between 2015 and 2020. Her focus is to ensure that lower to middle income Latinos invest in homeownership as the large influx of 53 million Hispanics in the U.S. rises to 120 million in 2050. After all, a Hispanic person turns eighteen every second and those people are voters, homebuyers, and future. Because the median age is twenty-eight in the Hispanic community, the majority of the group is in the prime time to invest in real estate. The future is looking bright for Hispanics in the U.S. In commercial real estate Latinos are also investing in businesses, investing six times more than other groups in the U.S. During the recession, many Hispanics lost wealth. The Hispanic Wealth Project is an initiative through NAHREP intended to triple the wealth of Latinos in ten years by increasing the success of Hispanic owned businesses and encouraging the diversification of wealth. This is one of the most important initiatives in NAHREP, because it directly affects the masses, allowing direct change to occur. As the community of Latinos is growing rapidly, we are confident in Teresa’s ability to enact change to promote this growth. The Power Is Now thanks Teresa Palacios Smith for joining us and warmly congratulates her on obtaining her well-deserved presidency. We cannot wait to hear how her term goes and what changes she instills in the Hispanic community. Great things are to come for the Latinos in the U.S. and we cannot wait to see the future.

The ORANGE COUNTY Realtist Magazine

LET IT WAVE!

NO DOWNPAYMENT, NO MINIMUM CREDIT SCORE REQUIRED

VA LOAN!

VA Program Highlights • • • • •

No Minimum Credit Score No Downpayment Required! 100% Financing with Full Entitlement Ability to Use Parting Residence Rental Income for Loan Qualification

Details:

NEW!

FREE mortgage app for your cell phone! Click Here

Call today for details:

• 30 year and 15 year fixed-rate mortgages. • Loan amounts up to $417,000. Jumbo availability (Please call for details) • Available for purchase and cash-out refinance.

Requirements: • Must be an active-duty veteran ; a veteran discharged with other than dishonorable condition, a service-disabled veteran; a National Guard; or Reservist with at least six years in selected reserve status. • Unmarried widows of eligible veterans as well as spouses of MIAs and POWs missing more than 90 days, qualify. • Eligible branches of service include Army, Navy, Air Force, Marine Corps and Coast Guard.

Name: Eric Lawrence Frazier MBA CA BRE # 01143484 | NMLS # 461807 Website: www.ericfrazier.com E-mail: eric.frazier@ericfrazier.com Skype: frazier.eric Mobile: 714-475-8629 O: 800-261-1634 x 703 F: 800-261-1634

MORTGAGE

MORTGAGES:

What Is the Best Plan for Me?

aising a family and managing all the financial decisions related to food, shelter, clothing, healthcare, tuition fees, and additional living expenses in the already inflated counties and cities in high-tax California is not a pretty sight for most households. Letâ&#x20AC;&#x2122;s face it; you have to pay to play in California. In fact, there is common saying that once you leave California you cannot afford to come back. Housing is another matter that has been out of control for years and it is not getting better it is getting worse. The cost of housing is skyrocketing, and the last opportunity to get into the rising cost of California real estate will soon be gone as interest rates continue to rise. Janet Yellen, the chairwoman of the Federal Reserve, announced that the federal discount rate must increase in order to keep inflation under control. This increase will negatively impact mortgage interest rates, and this will make choosing the right mortgage more difficult as you look for the lowest rate and payment possible, especially with

all the options that are available today. So what is the best mortgage on the planet that everyone should have? If you do not know, then take my advice. I have been a witness and a participant in the craziness of the mortgage business for the last thirty years. I have seen it all and I can help you. So here is it â&#x2C6;&#x2019; the best mortgage on the planet: The 30 or 40-year fixed rate.

The 30-year fixed

The 30-year fixed rate is the best and only option as far as I am concerned that a buyer has available, and it does not matter if you are a first time homebuyer or an experienced investor. The 40 year is available but I believe the term is too long. Do not apply for anything less or more than a 30year fixed mortgage. This option is definitely the most popular mortgage in the United States. A 30year fixed rate mortgage is a loan from a financial institution that must be paid off in thirty years. The long term allows for smaller monthly payments and the down payments can be as low as 3%. A 30-year fixed rate mortgage also allows the buyer to borrow up to three million dollars depending on their credit, overall qualifications, and cash reserves. This mortgage option provides peace of mind and a clear path to paying off the mortgage with lowest possible payments as they work to achieve homeownership,

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

MORTGAGE

which is the American Dream realized. Keep in mind that obtaining a mortgage to buy your home is just the beginning of the American Dream to own your own home. You must make all of the payments to pay it off to achieve the American Reality of Homeownership. For many, the dream becomes a nightmare when they lose the home they were financing, because they received bad advice and were victims of predatory lenders and real estate agents.

approximately $165,719 and this is because you are paying the loan off in one half the time. You will no longer need to worry about shelling out a large check to the bank every month even during your retirement. Instead, that money becomes income to live your life.

The problem with a 15-year fixed mortgage is that the monthly payments are significantly higher than a 30-year fixed mortgage. Many borrowers opt out of the 15-year fixed mortgage simply because There are, however, a few problems with the the payments are not affordable and it may put 30-year fixed mortgage. One is that you have no idea what your life is [A 30-year fixed rate mortgage] option going to be like in thirty years. Perhaps you will provides peace of mind and a clear have children to send off to college, retirement, or path to paying off the mortgage with health problems to sort out. Dealing with the lowest possible payments as they work mortgage on top of life can be difficult but you to achieve homeownership, which is the have to have somewhere to live, so you have to AMERICAN DREAM REALIZED ask yourself the question: do you want a mortgage for 30 years? Also, the them at risk of defaulting on their loan. You may mortgage interest on a home adds up quickly. also not qualify for the mortgage because of the For example, if you were to obtain a mortgage of higher payment and may have to settle for a $500,000 dollars over thirty years at an interest smaller home, smaller mortgage, or higher down rate of 4%, then the total interest paid after the payment to meet the debt ratio requirements for thirty years will be approximately $359,349 the lender. Buying a smaller home with a 15-year dollars, which is a substantial amount of money mortgage is something you should only consider that is added to the price of the home. This does if you are in your late 30s or early 40s. Do you not include the cost and fees associated with really want a mortgage when you are ready to the mortgage, which is reflected in your annual retire or are getting close to retirement? percentage rate (APR). $359,349 is just the interest you will pay in addition to the principle.

ARMs

15-year fixed

A risky alternative is a 15-year fixed mortgage. A 15-year fixed mortgage is the same as a 30year fixed mortgage, but you pay for fifteen years instead of thirty. A benefit to this plan is that the amount of interest you have to pay is cut in half to 67

Another option for a homebuyer is an intermediate adjustable rate mortgage (ARM). An intermediate ARM has a below market initial interest rate that is fixed and lasts a set period of time of three, five, seven, or ten years. The rate will adjusts annually after the fixed period for the remaining term of the thirty year loan. The increase in the rate is

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

MORTGAGE

limited to an annual rate cap and lifetime rate cap that is disclosed at the time of the application, so that you are completely aware of the rate risk. The rate caps prevent the interest rate from increasing too high and too fast. For example: at the end of the initial fixed period your interest rate and mortgage payment will most likely increase based on the combination of the index rate and margin value at the time of the cap. The increase of your interest rate is limited to the interest rate cap of 2% annually and 5% over the lifetime of the loan. So if your initial rate is 3% at the end of your fixed period, your interest rate will be 5% until the next adjustment. No one can predict the future, so it is in your best interest to know what your payments could be if the interest rate increased to annual cap each year or achieve the interest rate equal to the life cap over the life of the loan.

2% and your margin is 2.75% , then your fully indexed interest rate would be 4.75% percent at the adjustment period; however, the rate cannot exceed the annual or lifetime rate cap and its corresponding payment. The initial interest rates for ARMs are normally lower than a fixed rate, which in turn means your monthly payment is lower temporarily. Many people choose this plan, because they are sold on the dream or hope of making more money in the future, selling the home at a higher value, or the hope that something great will happen to prepare them for the future when the interest rates adjust. Unfortunately, bad things happen to good people all the time and your great plans may not come to pass. The ARM loan is just a trick in the mortgage industry to help you buy more house than you can afford, so do not fall for it. It sounds great, but it is not. It is like car dealers who have one car price below market and they advertise it to get in to sell you another car at or above the market price. Unfortunately, if you take the bait with the ARM you may be stuck when the honeymoon of

What determines how much your rate will increase is the index rate at the time of the adjustment and the margin value. The index rate is a variable rate tied to a publicly traded security. The margin value is fixed throughout the lifetime of the loan and represents the profit that the lender makes on the loan and is negotiable. To determine your interest rate on an The index rate is tied to variable interest ARM, add to your index rate to the margin rates that are published regularly and available value and the result is the fully indexed publicly. Typical index rates that are associated rate for an adjustable-rate mortgage. with ARMs are LIBOR (London Interbank Offered Rate), COFI (11 the low initial start rate is over. After this happens District Cost of Funds), T-Bill (U.S. Treasury you have to face the reality of paying the real Bill), and CMT (Constant Maturity Treasury). To mortgage payment for the home of your dreams determine your interest rate on an ARM, add to instead of the home you can really afford. One your index rate to the margin value and the result of the reasons many people choose ARMs over is the fully indexed rate for an adjustable-rate a 30-year fixed rate mortgages is because they mortgage. This rate determines your mortgage have champagne tastes and beer budgets. In payment until the next adjustment period in six other words, they are buying more house they can months or one year depending on the program afford. It is like the person who buys a 60k car you choose. For example, If your index rate is with payments equal to or in some cases higher october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

MORTGAGE

than their rent, and they have yet to purchase a home. In fact, they cannot purchase a home now because of the car payment. If they had purchased a home first, they would not have purchased the car. ARMs are generally considered high risk loans, because your interest rate will go up after the initial fixed-rate period ends. Most people who can afford to buy a home and have prepared themselves to buy do not take this mortgage. The benefits are temporary and may result in higher cost, because you are forced to refinance or even sell the property because you can no longer afford the mortgage payments after the adjustment. To make matters worse, you may not be able to sell if the property value decreases and there is not enough equity to sell or refinance. In my opinion there are no advantages associated with any ARM that is worth the risk of the mortgage payments being too high to pay. The value of your home may increase or decrease, but as long as you can afford the payment you will be okay.

see a market correction in real estate and the stock market. The baby boomers are downsizing and as a result we will see inventory increasing and prices dropping in larger homes, and we will see increase prices on smaller homes, townhomes, and condos where the homes are most affordable. Do not be surprised to see many people downsizing because they are ready to retire. The baby boomers and senior citizens represent the fastest growing population in the US that are headed to retirement, and they do not want a mortgage. The millennials would rather not be burdened with a mortgage so small, and affordable is their focus. The demand for homes in $200k to $400k is going to increase significantly in California for sure. Every state has their affordability range.

Choosing the right mortgage when you are ready to buy is imperative. Stay away from the adjustablerate mortgage loan as interest continues to rise and choose for a 30-year fixed. If you cannot afford the payment, then buy a smaller home. Want to know more? Go to www.thepowerisnow. com and join the buyer’s and seller’s club for free The market is changing, California real estate to get free support, consultation and information is going nowhere but up, and it is the same from me and my team. You have the power to everywhere. Interest rates are rising and we will change your life now because The Power Is Now.

References • Register on Real Estate Blog: Orange County Register: 30-year mortgage rates drop slightly. Retrieved August 3, 2015. • 30-year mortgage rate drops to 4.04%. Retrieved August 3, 2015. • Register on Real Estate Blog: Orange County Register - The Orange County Register. Retrieved August 3, 2015.

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

Find joy in owning YOUR OWN home Why Buy? Have you ever thought about what it must

feel like to own the roof over your head? To be able to do what you want, when you want - to YOUR home?

With the recent decrease in FHA mortgage insurance premiums, homeowners are saving hundreds a year on their mortgage. Furthermore, considering the numerous Down Payment Assistance Programs available and that California median home prices have fallen more than 40% since 2008, affordability is the best it has been in 20 years.

For many people, buying a home is the biggest and most fullling purchase they will make in their life. Because you aren’t just buying a house when you buy a home, you’re starting a new life. And right now it’s easier than ever to do just that. Right now really is the best time to own a home. So take full advantage and live the dream of homeownership for yourself today! Name: Eric Lawrence Frazier MBA

CA BRE #01143484 | NMLS # 461807

Website: www.applytobuynow.com E-mail: eric.frazier@ericfrazier.com NEW! Skype: frazier.eric FREE mortgage app Mobile: 714-475-8629 for your cell phone! O: 800-261-1634 x 703 Click Here F: 800-261-1634 Frazier, Eric, Lawrence is a CA Mortgage Brokerage Licensed by the State of CA BRE 01143484 and is not affiliated with any state or federal agency. Frazier, Eric Lawrence is also licensed by NMLS# 1273606 - www.nmlsconsumeraccess.org. Frazier, Eric, Lawrence is an equal housing lender. Our corporate office is located at: 3739 6th Street Riverside, CA 92501. Telephone and Fax: 800-261-1634 Eric Lawrence Frazier, MBA is a Licensed Loan Originator NMLS# 1461708. This is not a commitment to lend or extend credit. Restrictions may apply. Information and/or data is subject to change without notice. All loans are subject to credit approval. Not all loans or products are available in all states.

Technology YOUR ONLINE PRESENCE BEGINS HERE!

Begin by choosing a template for your new site. Your chosen template will be branded to suit your business’ image. CUSTOM WEBSITE DEVELOPMENT IS AVAILABLE UPON REQUEST. ONCE YOUR SITE IS BUILT YOUR STORE FRONT HAS ONLY BEGUN. NOW YOU HAVE TO DRAW PEOPLE TO YOUR BRAND.

CLICK HERE FOR MORE INFORMATION!

LEGAL

THE 2018 PROPOSED ACCOUNTING RULES

Revenue is a crucial measure in assessing the performance and future prospects of any business; however, the guidance for revenue recognition varies in Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS). Many in the industry today are of the view that both these standards must be improved. As of May 28th, 2014, the International Accounting Standards Board (IASB) and the FASB have cohesively issued guidance on revenue recognition in customer

contracts (FASB, 2015). Slated to be a major achievement in improving financial reporting, the new guidance will have a profound impact on revenue recognition requirements in specific industries, of which real estate is the highlight.

software. This is one of the reasons why real estate will use different accounting processes for the same economic transactions.

However, the new guidance sets forth to establish reporting principles that will provide resource to users about the Establishing uncertainty of revenues from contracts in the financial Standards Currently the GAAP system statements (Borland, 2015). is not only complex, but has The new guidance will do the disparate requirements for following: revenue recognition in specific inconsistencies transactions, especially those â&#x20AC;˘ Remove in the current pertaining to real estate and revenue framework

LEGAL

• Provide a more robust system for revenue issues • Improve revenue recognition assessment across industries and capital markets • Offer resourceful information to users in the financial statements for improved disclosure • Streamline financial statements by reducing the requirements

How It Affects California

should start preparing for the recorded in the balance sheet. changes with their accountants. Hence, with the new standards, She says, leasing will affect equity for a company, and subsequently, the “People do need to work closely assets and liabilities. with their accountants on these new rules to see the impact that What is more concerning here it is going to have. It is going is that the IRS is considering to be very important to have an how the rules are going to affect accountant that is well versed taxes. In other words, a real in real estate. They need to be estate agency may have to file starting now, even if it isn’t going for change in the accounting to be effective until 2018.” method, something that a What must be understood is company may not be able to do how the lease options we have on its own (Borland, 2015). taken now, or ones that will be signed up for, will affect our balance sheets and banking as a whole. The new standards mark no exception for existing leases, so it is time you need to utilize to get started with planning.

The best way to prepare for the 2018 changes in accounting rules is to speak to your accountant. Your net worth, equity, and debt could be at stake. Getting a professional opinion will allow you to develop a plan and With the accounting rules in prepare for the worst. effect, lessees will be required to record lease payments as liabilities. Conventionally Ellen explains that there are still speaking, lease payments are many people who are unfamiliar treated as disclosure items in the with the new standards, and one financial statements and are not To begin with, lessees have already begun preparing for the new lease and revenue recognition guidance that are to take effect in 2018. According to Ellen Bartholemy, the Director of Accounting at Hall & Co., the new accounting rules will change the way recording lease payments work.

References: • Borland, K. (2015, June 1). Prepare Now for 2018 Accounting Rules. Retrieved August 3, 2015. • FASB, Financial Accounting Standards Board. Retrieved August 3, 2015.

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

r DESIGN

Keeping Up

Curb Appeal

he exterior of the home must be given as much attention as possible when you are trying to sell your home. When it comes to homes, it is not just what is inside that counts; the exterior is just as important. This explains why people heavily invest in creating the best curb appeal for the homes. It is no doubt that a drab curb appeal can make one cringe each time they approach their front door, while a handsome, and well-planned designed can change the homeownership experience into an encouraging experience. In the recent past, experts have placed efforts at coming up with amazing options for curb appeal.

using other vegetation such as bright flowers, lofty trees that do not shroud the home, and clean pathways lined with dark mulch. Other curb appeal options that are growing in popularity include the introduction of gravel pathways tying the houseâ&#x20AC;&#x2122;s neutral tones with its landscape. Additionally, letting the front yard be overrun

These latest curb appeal options are budget friendly. Take for instance the reuse of old hardware or utilizing replicas of high-quality expensive materials, in addition to old sweat equity that can accomplish immense levels of transformation. Other affordable and practical options may include the more expensive addition of a new porch in the front yard. In reality, curb appeal can be achieved through multiple methods such as exterior decorations installation, repainting of the exteriors, as well as extensive landscape. These are just but a few of the latest curb appeal techniques in the modern buying and selling world. Adding some eye-catching elements to the home exterior is a great way of creating an appealing impression. One example may include adding beautiful, colorful flowers and concrete steps in order to offer a clear path through lush landscape. Alternatively, the exterior can also be livened october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

by vegetation such as ivy or weeds can prove to be a major eyesore. Instead, one of the latest ways through which curb appeal is maintained is through maintenance of grass, shrubs, and other vegetation in such a way that there is adequate ground cover but not excess. Also, a winding stone walkway can be provided to act as an inviting path to the front entrance. Clearing overgrown plants creates a strong statement for your home. In reality, while evergreens provide a great way to have all year-round color enhance your curb appeal, if not planned and consistently trimmed, they can grow too long and large compromising the curb appeal.

to start. They will bring color to your lawn and the flowery smell to your doorway. It is also a good idea to keep windows clean and maintain their sparkle.

Further, the best way to maintain curb appeal is keeping the front door clean and attractive; keep lawn clean and trimming bushes. It is advisable to ensure that the driveway and property is free of trash, poorly packed cars, as well as other non-essential objects. It is a good idea to add color using perennial flowers that do not require yearly replanting. Flowers such as shasta daisies and lavender are great places

The main idea of curb appeal is to give a lasting, positive first impression. Your lawn and front door are the first parts of your home that the buyer sees, so keep it neat and well taken care of. A homebuyer will assume that if the front yard is not taken care of, then your home will not be taken care of.

In general, for an appealing landscape, it may be wise to replace some of the lawn with swathes of easy to maintain garden beds filled with constantly green shrub and mulch. You could also add ornamental grass displays. It is also a good idea to remove any turf beneath trees and add shade-loving groundcover, for instance, periwinkle, pachysandra, ferns, violets, and hostas that help lower watering and mowing needs.

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

GRASS VS. ASTROTURF in Homes

kids, then expect to be cleaning up the thousands of turf beads that are tracked into your home (“Do artificial lawns…”, 2013).

The idea behind replacing your grass lawn with Astroturf is sound. There is little to no maintenance on an astroturf lawn. The homeowner does not have to mow the lawn, because the plastic blades do not grow out of the rubber beads that make up the “dirt”. These rubber beads that make up the turf simulate walking on a natural lawn; however, these beads frequently end up inside your sneakers. If you have

Another positive aspect is that the astroturf does not attract insects that will destroy your lawn and garden. You will have a difficult time finding insects that want to fly around an astroturf lawn, because there is nothing useful for the insects there to use. Astroturf is made of plastic and rubber, allowing it to be almost a bug repellant for insects like ants and beetles. Because there are no bugs, there is no need for any pesticides, which shields the environment from harm. The problem with this, however, is that you will also be keeping helpful insects like honeybees and butterflies away from your garden. Flowers will obviously not grow on astroturf, and many insects will not make the trek from one side of your astroturf yard to the other to pollinate your garden

he ultimate lawn is precious to homeowners. Keeping the grass green, mowing, weed whacking, and uprooting pesky dandelions can be surprisingly daunting tasks all over the U.S., but a new trend seems to be sweeping the hotter states including California. That trend is Astroturf, which is a synthetic lawn used for sports arenas. While both a grass lawn and astroturf have their advantages, we recommend a natural, grass lawn for both the resale value of your home and your own comfort.

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

TECHNOLOGY

(“Do artificial 2013).

lawns…”,

A large selling point for Astroturf is that it stays green year round. During the sweltering California droughts, green lawns are practically outlawed as frivolous water usage becomes taboo. An Astroturf lawn would eliminate the dead lawns in a heartbeat; however, you will not want to use that Astroturf in the heat. Astroturf can get up to fifty degrees hotter than a regular grass lawn, and with California’s excessive heat waves, temperatures will become dangerous. Heat exhaustion becomes a possibility on a comfortable day because of an astroturf lawn (Penn State…, 2015). The heat is one of the major drawbacks that has caused Astroturf to develop the stigma of being tacky. Another drawback is the look and feel of the Astroturf. While Astroturf is a close

imitation to regular grass and soil, the plastic grass blades and rubber soil do not lend themselves to comfort. The lower end Astroturf options look fake as well, while the higher end market of astroturf has a closer look to real grass. Improvements are being made as Astroturf becomes more popular, but the common theme is relinquishing the comfort of real grass for less yard work (Miley, “Artificial Grass vs. Real Grass”). Trading your natural lawn in for an artifical on is fine if you are not reselling your home. If you do not plan on staying in your home, then keep your natural lawn. Astroturf, while it may not lower the value of your home, it will limit your buyers. Buyers with children or dogs may not want an Astroturf lawn, and that stigma of Astroturf being tacky and a lack of flexibility with the space will make selling your home more difficult. After all, if the new owner wants to put a garden or foliage into the

yard, then that owner would have to deal with patching the Astroturf or ruining it. So yes, yard work for a natural lawn can be labor intensive, but you will be able to better utilize your outdoor space with a natural lawn. Sacrificing a real lawn for Astroturf will cause a bigger headache than it is worth for the owner. Keep your natural lawn and you will not need to deal with ripping it up and replacing it with natural sod when you want to sell your home. Want to know more? Go to w w w. t h e p o w e r i s n o w. c o m and achieve your goals. Join the buyer’s and seller’s club for free to get free support, consultation and information from me and my team. If you would like to schedule a meeting online, then go to https://ericfrazier. youcanbook.me/ for more information. You have the power to change your life now because The Power Is Now.

Eric Lawrence Frazier MBA President and CEO References: • Do artificial lawns impact home values? (2013). Retrieved August 10, 2015. • Miley, M. (2015). Artificial Grass Vs. Real Grass. Retrieved August 10, 2015. • Penn State Sport Surface Research Team. (2015). Surface Temperature of Synthetic Turf. Retrieved August 10, 2015.

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

LIVING

Investing:

SINGLE FAMILY HOME MULTIPLE UNIT PROPERTY Deciding whether to buy a single family home or a multiple unit property is a easy decision for me, because I am fifty-three years old, and I can remember buying my first home. It was not a multiple unit property, but I wish it was. I made the mistake that many other first time homebuyers do and was led around by the nose to an overpriced single family home.

family residence, not income property; however, it is should be. When you are starting young you have time on your side to learn, to make mistakes,and to recover to maximize the power of compound interest and the rule of seventytwo. Acquire assets and build multi streams of income while you are young and you will do very well in life.

I had an opportunity to eliminate my housing expense completely, but instead I bought a single family home and made payments for years. I discovered the magic and promise of multiple unit properties later in life by accident as an investor and not an owner occupant. Imagine paying $300k for one single family home or 75k for one unit of a four unit multi unit property. Why would you pay more? You would not unless the home meant more to you than cash flow. Cash flow makes the world go round; without it everything stops.

Get ready to go on short ride, because if you want to be a real estate investor and a first time home buyer, then you need to seriously consider multiple unit properties. There are advantages and disadvantages to owning single family homes and multiple unit properties, but finding the right deal for you will require a careful analysis of your financial stability and the quality of the property and neighborhood that you select to buy in. The disadvantages to buying multiple u n i t

You see, early in my life I did not have anyone telling me what I am about to tell you, Mr. or Ms. First time home buyer. My realtor did not tell me; my lender did not tell me; my parents did not tell me; and I certainly did not learn it in high school or college and I have MBA. The American Dream for most of leaving home, getting a job, and buying home is represented in single

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

LIVING

property are so few that I will list them in a it! Do not listen to so called experts who say you future article. With everything there are risk and must be an experienced homeowner before you buy rewards. an investment property. Hogwash! This is how get experience in real estate. You just do it. Whether it is your first single family, multiple unit property, or The Rewards of Multiple Unit commercial property - just do it. Fear never served Properties - One to Four Units anyone well in life. Courage and risk taking always Cash Flow: Here is the rule for every dollar you has it rewards. Fear always leads to failure. pay on the mortgage and all the expenses on the property. You need a 1.25% in revenue/rent or To reduce risk, only rent to people with good credit higher. That is the key rule. As a result, you never and stable jobs. Keep in mind that you need to be pay a mortgage. The tenants pay your mortgage able to afford the payment even if you did not have and it is a beautiful thing. a renter. Ironically that would be case anyway if you bought a single family home. You would have Mortgage acceleration: If three of the four to pay the mortgage, and there would be no income units are occupied, you can actually make two from the property coming to you unless you rented payments on your mortgage or a payment and a out one of the kids’ bedrooms to a family member. half to pay off your mortgage in fifteen to twenty Who wants to do that? years or sooner. Secondly, join a local apartment association and get Income Appreciation: Every year you increase a mentor who is currently a real estate investor. Find the rent three to five percent. This increase the an experienced professional and join the buyers and value and cash flow of the property. sellers club on the Power Is Now’s website. We have all the resources you need to be investor and Market Appreciation: Every year the property homeowner. value will go up because of inflation and demand for housing in your neighborhood. This is why A seasoned professional in the real estate business location, location, location are still very important knows that having both multiple unit properties and even when buying multiple unit properties. single family homes makes for a diversified and strengthened portfolio. As you grow as a property Do Not Listen to Fearmongers owner, be sure to invest and diversify. With ninety and “Glass Half Empty” People percent of wealth coming from property, there If you are just beginning in real estate investment, is no reason not to invest in homeownership and you want to start out with a two, three, or four unit particularly in multiple unit properties. home. Live in one unit and rent the the other. Do

Eric Lawrence Frazier MBA President and CEO References: • Boone, A. (2014, December 28). Single v. Multi-Family: Which is a Better Rental Property? Retrieved August 11, 2015. • Chautin, J. (2014, December 11). Real Estate Investing: Single Family Houses Versus Multifamily Rentals. Which Is Better? Retrieved August 11, 2015. 79

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

BUSINESS CONSULTING

POWER BUSINESS COACHING | POWER LEADERSHIP COACHING | POWER PERSONAL COACHING

Reasons why you need a

POWER COACH: • • • • • • • •

You never have the time to do all that you want with you business. Your practical business experience is not high enough to jump to the next level. You end up focusing on working “in” the business instead of “on” the business. Training people to take over certain tasks is time consuming. You constantly stress about the business. Balancing work, family, and fun is nearly impossible. You lack an experienced business team for support You know that you could flourish with an experienced, knowledgeable person involved in your business.

Business coaching is provided by industry leaders in strategic planning, financial planning, marketing strategies, human resources strategies, and management strategies. Group coaching is available as well.

CLICK HERE FOR MORE INFORMATION!

POLITICS

“WEALTH GAP WIDENING AS BLACK AMERICA IS LEFT OUT OF REAL ESTATE RECOVERY” National Association of Real Estate Brokers (NAREB) and thought leaders sound alarm at Congressional Black Caucus Foundation (CBCF) Annual Legislative Conference

Washington, DC - September 29, 2015 Statistics, issued recently by the Home Mortgage Data Administration (HMDA) indicate that in 2014, only 5.2 percent of mortgage loans were made to Black borrowers at a time when the homeownership rate for the Black population had already fallen from nearly 50 percent in 2004 to its current low of 43 percent. The failure of financial firms to originate home loans to Blacks, the consequent continuing fall in homeownership rate if this trend is not reversed, solutions to jumpstart affordable and sustainable mortgage lending to Black Americans, and the important wealth-building potential of increasing the Black homeownership rate, were subjects of a Forum hosted by the National Association of Real Estate Brokers (NAREB) held during the Congressional Black Caucus Foundation (CBCF) Annual Legislative Conference recently convened in Washington, DC. Forum attendees heard expert panelists present and discuss the key factors contributing to the downward homeownership rate for Black households which now stands at its lowest level in 20 years and is projected to continue to fall. “NAREB is drawing back the curtains and shining a spotlight on unequal access to mortgage credit to the Black community. Economic recovery has definitely not reached the majority of Black Americans. As a result, the real estate recovery is not real for Black

october / november 2015 issue

America,” said Ron Cooper, President NAREB the country’s oldest, minority real estate trade association formed in 1947. Cooper’s remarks directly responded to NAREB’s Forum title, “Real Estate Recovery 2015: Is it REAL for Black America?” The Forum, sponsored in part by the Federal Home Loan Bank of San Francisco (FHLBSF) brought together real estate practitioners, housing advocates, mortgage loan analysts and thought leaders to present viable options to increase homeownership for Black Americans. Congressional host, U.S. Representative Gregory Meeks (D-NY) said his 5th District was one of the hardest hit by the housing crisis but “comprehensive housing finance reform hasn’t happened and it doesn’t look like it’s going to” in this Congress. Congressman Meeks spoke of the value of the government-backed housing agencies, Fannie Mae and Freddie Mac, which provide the largest number of home loans to our nation’s homebuyers. He stressed in his remarks that we need those agencies to do a better job of lending to Black families. But rather than improving their outreach to Black America, he warned the audience about the conservative Congress’ proposals to eliminate federal support for these entities.

The ORANGE COUNTY Realtist Magazine

POLITICS

Mark Alston, Forum moderator and chair of NAREB’s Public Affairs Committee, set the tone of the two-hour session in his opening remarks saying that “systemic disparities in access to the mortgage financing system have significantly dimmed the prospects for a recovery in homeownership among Black Americans. Mr. Alston noted that if current barriers to access are not removed, homeownership for Black Americans will continue to fall in spite of the overall housing recovery. The loss of wealth in Black America as a result of this situation is staggering.” Forum panelists presented their expert perspectives, historical background and solutions to address and reverse the seemingly intractable falling homeownership trend. Unanimously, Forum panelists called upon Congress to address immediately, disparities in mortgage lending practices that are contributing to the increasing racial wealth gap and slowing economic growth for the entire nation. Maurice JourdainEarl, Managing Director, ComplianceTech said Blacks still face challenges that limit their ability to secure mortgage loan applications, let alone loans. He said that redlining is still a major problem. Majority Black areas in America do not have an adequate access to credit.

Fannie Mae and Freddie Mac buys. His statistics showed that from 2004 to 2013, of the 43.7 million home loans Whites received, 83.50 percent were conventional loans, of which, 9.5 percent were subprime loans, and 16.50 percent were government-backed loans. Comparatively, during the same period, of the 3.2 million home loans Black Americans received, 70.85 percent were conventional loans, 36 percent were subprime loans, and 29.15 percent were government loans. To the question is the Real Estate Recovery Real for Black Americans, Jourdain-Earl said “the data says no.” Lisa Rice, Executive Vice President, National Fair Housing Alliance illustrated how the discriminatory effects of age-old bank redlining practices persist and are still having an adverse impact on communities of color using Cleveland, OH as a model. The areas where predatory subprime mortgage loans to Blacks were concentrated are the same areas that were hardest hit by the foreclosure crisis during the most recent economic meltdown. The Alliance’s research also shows that the housing stock in communities of color is being gobbled up investors and today, those neighborhoods are quickly gentrifying. She pointed out how credit scoring mechanisms produce disparate and unreliable negative outcomes for borrowers of color and discussed how all these issues contribute to the widening wealth gap in America.

Moreover, he said, when Black Americans do receive loans they are disproportionately of the higher cost variety, that is, subprime or loans backed by the Federal Housing Administration (FHA); not conventional prime loans which

The ORANGE COUNTY Realtist Magazine

www.OCREALTIST.org

POLITICS

Timothy L. Simons,Vice President and Senior Compliance Officer of the Federal Home Loan Bank of San Francisco, said “Homeownership must be affirmed as a principal ladder for upward mobility for working families and for community stability.” Simons recommended that going forward Congress “mandate a mission of universal access to low cost mortgage credit for all communities.”

to succeed in this economy.” And he noted that homeownership is the single most important source of wealth building. But he stated that the doors to homeownership are currently all but closed for Blacks and that no legislation is pending before Congress that would meaningfully improve access to mortgage credit. In fact, Carr stated that there are ways to significantly improve access to credit for people of color that could be implemented virtually overnight, but are not being implemented. Carr cited a study by the credit scoring company VantageScore that estimates that using their more updated and predictive credit scoring Keith Corbett, Executive models could increase mortgage lending to Vice President of the Center Blacks and Latinos by as much as 30 percent for Responsible Lending each year. which offers specialized programs for nontraditional NAREB President Ron and first-time borrowers, said Cooper called upon NAREB’s “we know that affordable members to continue their lending works.” One fix support of Fannie Mae and Congress could make Corbett Freddie Mac, and charged said, is not to mandate down them to lobby for policies and payments from borrowers. practices that will help create two million more Black James H. Carr, Senior Fellow homeowners in the next 5 at the Center for American years. Cooper stated that plans about NAREB’s Progress summarized panelist campaign launch to reach the two million presentations by stating that, homeowners goal are expected to be released “the future wealth of America later this fall. largely hinges on the extent to which people of color are able

The National Association of Real Estate Brokers (NAREB) was formed in 1947 out of a need to secure the right to equal housing opportunities, regardless of race, creed, or color. Since its inception, NAREB has initiated and promoted meaningful challenges and supported legislative initiatives to ensure fair housing for all Americans. www.nareb.com.

october / november 2015 issue

The ORANGE COUNTY Realtist Magazine

Our board of directors

Successs Money

SECOND VICE PRESIDENT success.money@ocrealtist.org 800-790-0941 ext. 737

Eric Lawrence Frazier PRESIDENT

Kym Thompson

DIRECTOR AND ASSISTANT TO THE PRESIDENT kym.thompson@ocrealtist.org 714-293-2098

Christina Kimble

Ivery Summers

R. Ann Ellis Hall

FIRST VICE PRESIDENT ivery.sells@verizon.net 310-920-3455

october / november 2015 issue

THIRD VICE PRESIDENT christina.kimble@ocrealtist.org 800-790-0941 ext. 705

SECRETARY ann.annellis@gmail.com 626-864-4127

The ORANGE COUNTY Realtist Magazine

Edilma Friesen

EXECUTIVE VICE PRESIDENT Edilman.Friesen@ocrealtist.org 949-209-7708 657-900-2066

La Toya James

VICE PRESIDENT OF AFFILIATE latoyajamesrealestate@gmail.com 323-767-6933

Mary Ann Epstein

VICE PRESIDENT OF TECHNOLOGY maryann@realpro.la 909-539-7196

Felsia Dailey

DIRECTOR OF MARKETING fdailey@ocregister.com 714-856-1743

For information about membership and upcoming events please go to www.ocrealtist.org

The ORANGE COUNTY Realtist Magazine