The PIN magazine October November 2015 by The Power Is Now Media Inc.

October / November 2015 Vol. 02 | Issue 13

EXCLUSIVE INTERVIEW REAL ESTATE MARKET WITH RON COOPER: 29TH FOCUS: PRESIDENT OF NAREB SAN FRANCISCO HOMEOWNERSHIP: THE KEY TO WEALTH

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Any of Our the PIN magazine THE POWER IS NOW INC. Vol. 02 | Issue 13 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

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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 Eric Lawrence Frazier, The Power is Now Research Team

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page 64

CONTENTS: Mission and Vision of the PIN Magazine .......................................(page 6)

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

ECONOMICS CDFI Spurs Development Projects................................................(page 16)

FINANCIAL Homeownership Remains the Key to Wealth..............................(page 20)

REAL ESTATE Real Estate Market Focus: San Francisco...................................(page 26) Real Estate Market Focus: Philadelphia......................................(page 32) Real Estate Market Focus: Memphis...........................................(page 36) Real Estate Market Focus: Los Angeles.......................................(page 40) Real Estate Market Focus: Baltimore...........................................(page 42) Investing: Single Family Home vs. Multiple Unit Property...........(page 46) How to Qualify for a Home Loan...................................................(page 50) Overcoming the Financial Hurdles to Homeownership.............(page 46) Real Estate Market Focus: Los Angeles......................................(page 40)

OUR COVER Ron Cooper.....................................................................................(page 62)

YOU

Listen More than You Speak..........................................................(page 66)

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page 40

page 46

page 86

page 62

POWER AGENT SPOTLIGHT Teresa Palacios Smith....................................................................(page 68) Vicky Silvano..................................................................................(page 72)

MORTGAGE Mortgages, What is the Best Plan for Me?...................................(page 74)

LEGAL The 2018 Proposed Accounting Rules..........................................(page 82)

DESIGN The Latest in Curb Appeal.............................................................(page 84)

TECHNOLOGY Grass vs. Astroturf...........................................................................(page 88)

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Mission and Vision of the power is now MAGazine Mission

Vision

The Power Is Now e-magazine is a national real estate and lifestyle magazine that aims to bring together consumers and the real estate, banking, insurance and investment professionals who serve them. Through smart, fun, and timely editorial content, mixed with compelling photographs and quality advertising, TPIN e-Magazine is a surefire way to stay current on all things real estate.

The Power Is Now Online and e-magazine will be the premier real estate magazine serving consumers, real estate and business professionals nationwide, in all metropolitan markets. The Power Is Now online and e-magazine will be viewed as the most effective medium for real estate and business professionals to get exposure to consumers and to share their knowledge and information that will empower readers to take action.

Each issue will feature a blend of articles from business and industry professional leaders, on topics ranging from residential and commercial real estate to default services, REO and short sales, finance, banking, insurance, dining, fashion, home design, travel, health/fitness, book/movie reviews and more. The Power Is Now e-magazine is a free subscription magazine available at www.thepowerisnow.com. The online version will be a paid subscription with more content, video, radio interviews and commentary from newsmakers and writers. Cover and Feature story profiles:

The cover of each issue will feature the CEO Centerfold. This individual will always be an extraordinary business professional who is an exceptional leader in real estate, banking, politics or another other related industries. The online and e-magazine will have many sections under The Power Is Now theme: Real Estate Sales, Real Estate Resources, Real Estate Agent Spotlight, Real Estate Headline News, Technology in Real Estate, Real Estate Politics, Real Estate Social media, Real Estate Research & Reports, Business of Real Estate, Real Estate Green & Energy, Real Estate Economics, Real Estate Coaching and the Publisherâ&#x20AC;&#x2122;s Note. The writers are industry professionals who are practitioners in their fields of expertise. We will bring experts in the industry to share their knowledge and experience. They will provide advice, and information that will enable consumers to navigate through the challenges and opportunities that exist in real estate, and opportunities in life.

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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 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/magazine PUBLICATION AND SERVICES 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 PIN Magazine™ is owned and published electronically by The Power Is Now, Inc. Copyright 2013-2015 The Power Is Now Inc. All rights reserved. “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

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From the

Editor...

As the blistering summer air is swept away by the autumn breeze, the real estate industry glides gracefully into conference season. The Asian Real Estate Association of America (AREAA) is having their conference in San Francisco from October 22nd-24th with the theme â&#x20AC;&#x153;Gateway to Our Futureâ&#x20AC;? 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 newly elected Vice Chair of AREAA, Vicky Silvano, expresses her excitement for the conference in October in her interview with The Power Is Now, giving our readers a sneak peek at the Gateway to Our Future conference. 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. Teresa Palacios Smith, the new President of NAHREP, tells all during her exclusive interview with The Power Is Now. 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 President Ron Cooper to get his take on how his first one hundred days in office went.

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EDITORIAL

In the past few weeks elections have from President Ron Cooper to AREAA’s new Vice Chair Vicky Silvano, and NAREB’s Robert Hughes as the new Chair. Their plans, their expectations, and their missions will affect these organizations for years to come as these individuals shape real estate in the United States. 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 Trump’s character and professionalism aside, he is a business man. Whether or not this bodes well for real estate is yet to be seen.

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. 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 Power Is Now, Inc.

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

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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.

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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

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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

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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).

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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/.

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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.

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, of three percent, one percent growth in real house visit the Homebuyer Resources section on The prices, and the costs of property taxes, insurance Power is Now website (www.thepowerisnow.com)

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FINANCIAL

that will provide access to valuable resources as you https://ericfrazier.youcanbook.me/ for more begin your journey toward homeownership. If you information. You have the power to change your life would like to schedule a meeting online, then go to now because 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-reduce-inequality-but-mortgage-tax-breaksmake-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/homeownershipand-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/51589baddf1dd6ec0f0c4a4ad 250ff92?AccessKeyId=C9F6D51300BCAEE97DDD&disposition=0&alloworigin=1.

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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

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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

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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

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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 Francisco is a sure way to make substantial profits,

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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.

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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.

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PHILADELPHIA The Philadelphia real estate market has recovered from a lag in early 2014 as a result of a difficult winter deterring potential homebuyers. Philadelphia has, in the recent past, remained less exposed to the housing crash in comparison to other parts of the U.S. with reduced overbuilding as well as a smaller run-up in prices. Affordability, although it is an issue, has remained more stable as compared to other major east coast housing markets; although foreclosures remain a large issue within the city. A sale of existing homes slowed in early 2015 as the rate of mortgages is expected to rise in 2016, thanks to pent-up demand as well as job and income gains as well as increased access to mortgage credit. Further, home price growth has slowed down to low single digits in addition to maintaining that

pace, consistent with growth in income; therefore, sustainability is achieved in the long run. Single-family home construction is expected to reduce modestly over the coming years as a result of weak population growth alongside rising mortgage rates.

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Figure 1: Adapted from National Association of figures; however, industry experts estimate that the price may ease in future. The growth Realtors; Fiserv, Inc. in prices has largely been assisted in removing Philadelphia’s housing market has shown an Philadelphia from post-market recession price upward trend following years of turmoil fuelled drawbacks. Overall, it is clear that Philadelphia by the global economic crisis witnessed in 2008. has clearly lagged behind in terms of appreciation As it stands, Philadelphia’s housing market is rates recorded in other parts of the country. estimated to boast of more than 3,600 housing units for sale. Considering that the number of This makes Philadelphia less desirable to homes sold in Philadelphia has hit 11,500, the investors initially. After all, who wants to put inventory is encouraging. The increasing pace money into a unit that will not bring in more of home sales in Philadelphia has been largely value? While this is true, one cannot doubt the attributed to reduced interest rates alongside potential in Philadelphia real estate. This is the the strengthening U.S. economy. The favorable “City of Brotherly Love”, a city of culture and conditions have positively impacted the time history. Philadelphia, or Philly as it is called by that homes spend on the market before a buyer is the locals, was the birthplace of this proud nation found, which is a great sign for those wanting to that retains the character of the former capital as sell their homes in the city. In 2014, the average well as innovative new additions. days that a home spent in the market before being sold was seventy-eight days, which is five days Stunning attractions such as the Franklin Institute, an interactive museum dedicated to its founding less than in 2013. father, is a remarkable place of learning for all Affordability is also an issue that acts as a ages that brings the community to life. Families main driver in Philadelphia’s housing market. that have the opportunity to live within walking Although affordability in Philadelphia has been distance to this amazing attraction will be able relatively strong, today it is weaker than in 2014, to cultivate learning in their children and spark as opposed to interest rates. Thankfully interest excitement. Places like this will bring in tenants rates have not risen after the Federal Reserve or homebuyers looking for location, location, decided to abstain from making homeownership location. Being in Philadelphia also allows you to become even less affordable. immersed in the culture of Rocky, cheesesteaks, In terms of the median home prices, Philadelphia’s or even the premium college opportunities housed performance was modest in comparison to the in the University of Penn, Temple University, rest of the nation. The median housing price was Drexel University, and more. There are so many estimated at $227,200 that is $15,000 compared rich opportunities in this bustling metropolis to the national median housing price (Realtytrac, that there seems to be no reason not to invest in 2015). Like other major markets in the U.S., Philadelphia. this was an appreciation compared to last year’s

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A great way for investors to make money is to buy multiple unit properties within the city. This is because it is estimated that 7,184 homes in the Philadelphia are faced with foreclosure or have been subjected to some delinquency stage already. It has further been reported that the number of properties receiving foreclosure filing in Philadelphia was at 17% lower compared to the previous month but 16% higher compared to last year (Philadelphia Market Outlook 2015). The overwhelming majority of delinquent properties in Philadelphia are of the preforeclosure variety. Making up 47.9 percent of the current market, pre-foreclosures are

actually down from this time last year. Auction properties make up the second largest group of foreclosures at 39 percent, and bank owned foreclosures round it out at 13.1 percent (Realty Trac 2015). This means that homeowners will be looking for rental opportunities once their homes are foreclosed on. This, however, is a slippery slope. You must be extremely careful in whom you chose to allow as your tenant. Background checks and credit checks are vital. Do not allow anyone to sign the lease that cannot afford it. In reality, sales volume of houses

in Philadelphia continued to remain strong over the last quarter of 2014 after remaining below average for a majority of the last five years. Just slightly more than 15,600 homes were transacted in the 4th quarter, a rise from 14,500 in the same period a year ago. The cooling off of prices contrasts with the heating up of home sales, which have typically moved in the same direction over time. In the city recent increases in lower-priced sales are the cause of this outcome, as the housing recovery has continued to become more widespread across Philadelphia’s neighborhoods. This does not appear to be the case in the suburbs; however, as recent sales of lower-priced homes have not exhibited a similar surge. With a large African American and Hispanic population, this city is perfect for seizing the opportunity in housing reforms. Bringing the homeownership rate of African Americans in particular up from below fifty percent will allow Philadelphia to bounce back from the recession and to move on.

References • Bureau of Census; Bureau of Labor Statistics; Bureau of Economic Analysis; National Association of Realtors; • National Association of Home Builders; FHFA; Moody’s Analytics; The PNC Financial Services Group • Philadelphia Market Outlook, 1st quarter, 2015. https://www.pnc.com/content/dam/pnc-com/pdf/ aboutpnc/EconomicReports/Regional%20Economic%20Reports/Philadelphia_2015Q1.pdf october / november 2015

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Real Estate Market Focus:

MEMPHIS

After the housing crash that hit the United States alongside the crippling recession, foreclosures piled up in Memphis. As a matter of fact, many will remember this as the period when Memphis homeowners watched in disbelief as the values of their houses plummeted, diminishing what had long been considered as long-term investments and potential wealth sources. As a result of the real estate crash lending was frozen, leaving hundreds of homebuilders and real estate agents jobless.

activity rising, and home markets in Memphis showing stability. The real estate market in Memphis remains with up to 2.4% vacancy rates irrespective of the reduced construction rates. Demand as in 2012 was projected to stand at over 8000 new homes compared to less than 1000 units that were under construction; however, it was expected that more than 20,000 vacant units were likely to reenter the market to meet the prevailing demand.

Like the sales market, the rental housing market Recently home values have taken an upward trend in Memphis remained as soft as in 2012 despite with foreclosures falling at all levels, lending the declining vacancy rates. Overall, Memphis

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vacancy rates were estimated at slightly below eleven percent compared to over fourteen percent back in 2010. Industry experts argued back then that new constructions should be stopped in order to allow the excess vacant units to be absorbed by the market. As of 2012, Memphis home sales rose by more than seven percent, sales increased by over eight percent, and the average sales price increased by more than fourteen percent. Inventory rose by over one percent. However, in 2012, foreclosures were on the rise, yet still below the U.S. average. Memphis foreclosures in 2012 rose by 2.65% as compared to 2011 where foreclosure stood at 2.59%. This remained below the national foreclosure rate of 3.41%. Fast track to 2013, when Realtytrac listed Memphis as the top of the twenty best markets to purchase a single home.

Taking a look at the current cash flow rental property trends, Memphis stands out as not only an attractive market but also a highly rewarding one. Experts argue that Memphis is a great location for both amateur and expert investors. It is slightly leaning toward a sellers’ market. Real

estate investors can easily enjoy cash flow in the Memphis real estate market because of this. It is no surprise that it was recently named amongst the twenty single-family home cash flowing market (Wall Street Journal). In Memphis, houses are affordable and taxes are low, making it an extremely business friendly environment for realtors. After a dive into 2014, Memphis still recorded positive market gains in real estate. As a matter fact, Memphis continued attracting a large number of real estate investors keen on snapping up foreclosures and cheap houses on sale, in addition to rehabilitating and renting home for immense profits. As at the last quarter of 2014, median housing prices in Memphis stood at $122,000 with forecast gains of 7.3%. The median housing price compared to median income returned a 2.2 compared the national 2.8 showing better prospects in Memphis. Come 2015, median sales price in Memphis is up 12.5% with listings also rising 29.1%, reflecting a flourishing market that is yet to concede ground to competing states. Fresno, Dallas and West Palm Beach, no other states recorded a high rise in median sales price than Memphis. In terms of inventory, Memphis remains on top at 71.1% increase making it a buyer’s market away form 2012 when it was a seller’s market. The current Memphis’ median home value stands at $66,900 marking a decline of 0.7% compared to last year. The current median homes median sales price in Memphis stood at $120,325 in 2015 marking a 2.2% that is $2,675 while the number of home sales rose by 4.6%. Nonetheless, the average listing price of $122,320 represented an increase of 5.1%, that is, $5,930. The average listing price of popular neighborhoods in Memphis is as shown in the table below,

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returns and affordable housing values are likely to remain major drivers of the real estate market w-o-w in Memphis. As a matter of fact, as more vacant house re-enter the market and new constructions Midtown +7.2% come up, Memphis is expected to maintain an Frayser - Raleigh PD +3.5% upward trend over the coming years. However, Jackson - University Area +11.8% with the U.S. economy under threat following the PD slowdown of the Chinese economy, it remains to Depot Planning District $60,075 -0.1% be seen if the U.S. housing market will be slowed Downtown Medical Center $262,124 +3.0% by extension. The Memphis market will remain In the majority of neighborhoods, there has been a sustainable for long. However, if the argument positive increase in listing price of homes. These by economist that China’s slowdown will have home values are expected to rise by close to four little impact on U.S. economy is anything to go by, then Memphis is likely to continued being a percent in 2016. See figure below, haven for realty for considerable time. Most popular neighborhoods

Avg. Listing Price $180,462 $50,598 $152,669

However, as Caylor says, “Builders are facing several challenges, including a lack of affordable, quality lots. Some builders were able to scoop up cheap lots from bank sales following the building bust and those lots are now running out. Regulatory actions like seismic requirements, rising material costs, increased labor costs and stricter lending practices will also challenge the industry.” These are likely to also impact on market trends in the In terms of foreclosures, Memphis still leads the near future. If you are looking to buy in Memphis, then keep your eyes and ears open. rest of the United States (see figure below),

In the period after the recession, Memphis’s real estate has continued to flourish and soar over the majority of states. As a result, investors have been increasingly attracted to Memphis. Although this trend is highly unlikely to remain so in the coming as new areas such as Dallas, Frentos, and West Palm Bay gain momentum, Memphis is likely to remain an attractive real estate destination over the next few years. High rental

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Reference • The Commercial Appeal. (2012). Memphisarea home sales rise 7.4 percent. http://www. commercialappeal.com/business/memphis-areahome-sales-rise-74-percent • The Commercial Appeal. (2012). Foreclosure rate rises in Memphis, but still below U.S. average. http://www.commercialappeal.com/ news/foreclosure-rate-rises-memphis-still-belowus-aver • Christie, L. (2014). 10 hottest housing markets for 2014. http://money.cnn.com/gallery/real_ estate/2014/01/23/hottest-housing-markets/10. html

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Real estate market focus:

LOS ANGELES

os Angeles is located in one of the most economically stable states in the nation and is a forerunner in the real estate market recovery. The Greater L.A. area, which spans five counties, is as diverse as you could ever want. The area offers its residents deserts, valleys, mountains, and seventy-five miles of gorgeous coastline all within a day’s drive.

What is Happening in the Los Angeles Real Estate Market?

The 2008 housing crisis is nearly a matter of history within Los Angeles. According to The National Association of Home Builders (NAHB) August 2015 report, L.A. is only 7.5 % below the June 2007 peak. Median home values in Los Angeles spiked to $530,000 in the 2Q 2007, but then the city plummeted to $294,000 by the 2Q 2009. The market, however, has recovered quite nicely with prices back up to $490,000 at the end 2Q 2015. Los Angeles is seeing Y-O-Y increases of 6.4%, which is slightly below the national average of 6.8%.

There is so much more to Los Angeles than simply the stunning scenery. Downtown L.A. offers a thriving culture that includes spectacular entertainment, exceptional dining experiences, and high fashion. Those who are looking for a sublime shopping experience can find it on Third Street on the West Side. If you are looking for “the best Italian restaurant outside of Italy”, take Magic Johnson’s advice and head down to Via Alloro in Beverly Hills. What does all this data mean? Buyers can be confident of stable values. In fact, there is so much activity in this real estate market that buyers can

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REAL ESTATE

expect to pay list prices and compete against multiple offers. Homes are only on the market an average of forty-five days due to a tight inventory. So, if you are planning on selling, then sell now.

over the past year for single-family detached homes. These areas have traditionally been high-cost, and they have become even more expenses,” stated Frank Nothaft, CoreLogic’s chief economist in his July 2015 Market Pulse Report. Los Angeles may be seeing rising rents, Home Affordability in Los but the $1,750 median rent for a one bedroom is only slightly higher than the statewide median Angeles of $1,600, though it still ranks as the ninth most Buyers in the L.A. area must be willing to expensive city in the U.S.to rent in. pay higher prices if they want the glamour and lifestyle that West Coast living provides. The national median home price is currently Predictions for the Los set at $230,000 whereas a median home in Los Angeles will set you back $490,000. The Angeles Market NAHB has placed the Los Angeles-Long Los Angeles is one of the top ten metro areas Beach-Glendale area at the bottom of the that are leading the way in real estate growth affordability chart based on the area’s median to build a strong seller’s market. “Price income. gains over the past two years could trigger substantially more inventory in the months Higher than average prices, however, are not ahead, and that could support higher sales holding back investors. In an April news report and tame home price appreciation,” said from CNBC, investors accounted for nearly a Andrew LePage (Foreclosure Report, 2015), quarter of all sales in Southern California, and a CoreLogic analyst. The current market cash buyers make up nearly twenty-six percent stability should encourage sellers to list their of all purchases. property, knowing that they will receive near peak prices. This in turn will stimulate more As home prices rise, rental rates are quick to real estate activity serving to raise values and follow. “Large metro areas along the Pacific the economic stability in Los Angeles. Coast, such as Los Angeles, San Francisco, and Seattle, have seen rents rise ten percent or more The Power Is Now Team

References • Hot LA housing market held back by tight supply. (2015, April 30). Retrieved September 2, 2015. • National Foreclosure Report. (2015, June 1). Retrieved September 2, 2015. • Via Alloro. (2015). Retrieved September 2, 2015. • Wells Fargo Housing Opportunity. (2015). Retrieved April 1, 2015.

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BALTIMORE:

Real Estate Market Focus Baltimore is a region of mixed possibilities. While for over three decades, this city has been accused of having high poverty and crime rates, it also enjoys a rich history, friendly people, esteemed institutions, and old-money affluence pockets. Additionally, there is the notion of two Baltimoreâ&#x20AC;&#x2122;s that is yet to be reconciled. Baltimore, like the rest of the U.S, has recently seen improved performance in the real estate sector. Data on the size of households confirm positive demographic trends. While the U.S. average household size has significantly declined from 3.4 in 1950 people to 2.58 in 2010 respectively, county data have suggest that in the larger Boston area, the decline has been more than the national (Terrence McCoy, 2015). In Baltimore, up to thirty percent of housing units are owned by a single

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individual with sixty percent of the housing units having a maximum of two persons. Only a meager twenty-three percent of the housing units in Baltimore have more than four inhabitants. Whilst household sizes in Baltimore have declined and its population is aging, its housing stock is largely dominated by single-families. In the meantime, demand for multiple-unit houses has arisen among aging baby boomers, working families, and low-income families.

Upward Trend

Over the last four years, there has been optimism that Baltimoreâ&#x20AC;&#x2122;s housing market will maintain an upward trend. Construction of homes has risen with a shift towards multiple unit houses. However, the 2014 data on new constructions and price ranges has given reason for concern. From as far back as 2008, the number of permits for new housing unit constructions in the Baltimore area has

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House prices are steadily rising, and a

It has been five years since majority of Baltimore’s neighborhoods are the global financial crisis came to an end, and for the first time Baltimore is swinging back to a seller’s market. set for real estate market begun to fall into a downward trend. As a matter recovery. Baltimore real of fact, it is revealed that Baltimore developers estate market health is likely to follow trends of have failed to keep up with the housing needs the other parts of the U.S. with record positive in Baltimore, in that the demand continues to improvements. As a matter of fact, the time has exceed the supply (Fletcher, 2015). While multi- come when both sellers and buyers have a reason family houses and condo construction continues to have positive expectations in Baltimore. to flag, single family houses have shown signs House prices are steadily rising, and a majority of of increase. Of greater concern is that permits Baltimore’s neighborhoods are swinging back to issued for constructions over five unit buildings a seller’s market; although this has not been the have dropped by more than six percent in 2014 case since back in 2006. when compared to 2013, with the trend expecting to prevail when 2015 data is released. The number of foreclosures has also risen. Although home markets in Baltimore have remained soft as it stabilized in 2014. As a matter of fact, the demand for new units is projected at close to 16,000 units compared to only 1,450 units that are currently under construction (Benfield, 2015). The median house sale has been a constant rise in Baltimore. The figure below shows that although median home prices have been fluctuating from time to time, Baltimore is seeing rising median house prices.

Stability

In terms of units sold, stability has been seen in the Baltimore real estate market. However, the market has been unable to reach levels recorded prior to the global financial crisis. As a matter of fact, a sharp decline in number of sales is witnessed from 2006 through to 2011, where signs of recovery have become visible.

It is projected that the home prices in Baltimore will increase by more than fifteen percent in 2016. All across the U.S., appreciation has continued to drive the value of homes. Although a majority of real estate markets have recorded rising prices after the end of the recession, the same has not been the case for Baltimore. As a matter of fact, the real estate market in Baltimore has recorded a 2.7% decrease in home values in 2014. This was rather surprising bearing in mind that the national average stood at an increase of 4.6% in 2014. However, despite the fact that Baltimore has fallen behind in appreciation rates, homes in Baltimore are currently trading at an average of $255,600 that is comparable to those in Richmond and higher than the national average of $212,267 (Goldstein, 2015). In essence, postrecession gains are evident under other statistics. In the coming three years, the prices are expected to even rise further. Baltimore is amongst the top ten real estate markets that are expected to record the

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biggest increments in home prices this year. In line with these expectations, rental prices in Baltimore are already on an upward trend, hitting levels only equitable to the likes of San Francisco and New York (Baltimore, 2015). Existing statistics also reveal that home inventory rose by four percent this year, marking a positive shift.

Flipping homes

Just recently, Baltimore has been reported as the best city to flip a home, noting that Baltimore real estate investments have yielded up to 94.1 percent return on investment. However, thanks to rising inventory as a result of newly constructed homes, these properties will enhance Baltimore’s real estate market. It is already cheaper to purchase a house in Baltimore than it was in 2013. This is only unique to Baltimore and cannot be claimed other real estate markets across the U.S. Note that in 2014 Baltimore

dropped median house sales price by 1.7 percent while sales increased by an impressive 26.7 percent (Baltimore, 2015). Baltimore’s case is one of a real estate market that has recorded trends different from those of other parts of the U.S (Baltimore, 2015). As a result, houses are selling at prices lower than they were selling years prior. Compared to the fact that rental prices have remained relatively high only comparable to that of some of the most expensive cities in the United States, real estate in Baltimore is a promising market that investors can expect to reap even much better rewards. In essence, Baltimore offers great potential for investors. Despite the riots in Baltimore and the two sides having yet to reconcile, the steps put in place reflects a bright future for Baltimore. As a matter of fact, owning a property in Baltimore currently is a guarantee to future in a peaceful metropolitan neighborhood with exclusive property.

References • Baltimore. 2015, “Real Estate Predictions for 2015,” Baltimore Magazine, http://www. baltimoremagazine.net/2015/3/20/real-estate-predictions-for-2015 • Benfield, K. 2015, “A Second Life for Some of Baltimore’s Vacant Properties,” The Atlantic CityLab, http://www.citylab.com/design/2013/05/second-life-some-baltimores-vacant-lots/5764/ • Fletcher, M. 2015, “What you really need to know about Baltimore, from a reporter who’s lived there for over 30 years,” The Washington Post, http://www.washingtonpost.com/news/wonkblog/ wp/2015/04/28/what-you-really-need-to-know-about-baltimore-from-a-reporter-who-lived-there-for30-years/ • Goldstein, S. 2015, “Why Baltimore house prices are plunging” Economic Report, http://www. marketwatch.com/story/why-baltimore-house-prices-are-plunging-2015-08-04 • Terrence McCoy, T. 2015, “Baltimore has more than 16,000 vacant houses. Why can’t the homeless move in?” The Washington Post, http://www.washingtonpost.com/local/baltimore-has-more-than16000-vacant-houses-why-cant-the-homeless-move-in/2015/05/12/3fd6b068-f7ed-11e4-9030b4732caefe81_story.html

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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

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REAL ESTATE

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. The Power Is Now MAGAZINE | 47

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REAL ESTATE

How to Qualify for a

HOME LOAN Those following the news in recent months are well aware that interest rates continue to hover just above rock bottom. There is growing speculation that the Federal Reserve Bank will increase interest rates sometime before the yearâ&#x20AC;&#x2122;s end. For people interested in buying a home, there is no better time than now to take advantage of the lowest interest rates in nearly thirty years.

into a bank. One of the strings attached to the low interest rates are the incredibly stringent lending requirements. The Consumer Financial Protection Bureau released a new set of Qualified Mortgage Standards that came into effect in January 2014, largely as a result of the housing market bubble bursting in 2008 (Mortgage rules, 2014). The result is a more burdensome application process; however, this is a process that is intended Qualifying for a home loan to protect consumers from the is not as easy as just walking lax bank lending that led to

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many buyers taking on larger, more costly loans than they could actually afford. Those interested in obtaining a loan should prepare for this increased scrutiny by taking a number of proactive steps in advance of approaching a mortgage lender.

Run Your Credit Report

Be sure to run the credit reports of anyone who will potentially be listed on the mortgage and do so with all three credit bureaus. Credit scores are one of the most

REAL ESTATE

crucial elements that lenders evaluate before providing loan commitments. Credit scores range from 300 (poor) to 850 (excellent). A person will usually need a minimum credit score of 620 to qualify for a mortgage, but 740 and above is a better target for favorable loan terms. Ten points higher or lower in one direction could result in tens of thousands of dollars of interest paid or saved income over the lifetime of a loan. If there are any delinquencies revealed by the credit report, resolve those issues immediately. Running a credit report will also uncover mistakes that may be on a person’s credit report. According to the Federal Trade Commission, at least twenty percent of people have one or more significant errors on their credit reports (FTC…, 2015). With recent security breaches, it is more important than ever to ensure credit history accuracy. If mistakes appear, a person should file a claim on the credit bureau website. Credit bureaus typically resolve claims within thirty to sixty days of the initial filing. Correcting credit-related issues can take months, even years, to completely remedy. Potential home buyers should run their credit reports several months in advance of applying for a loan in order to resolve any

problems. Those with low credit scores may consider taking several proactive steps, including reducing the balance on any credit cards and/or maintaining low balances. Also avoid making any big changes to monthly finances, such as a new car loan or an expensive family vacation.

Save Up for a Down Payment

In especially hot real estate markets, like San Francisco and Dallas, home buyers may find themselves in bidding wars. One of the best ways to secure an accepted offer – and a home loan – is to have a substantial down payment. Sellers are usually more confident accepting an offer that has a twenty percent or more as a down payment, because these deals are typically easier for banks to finance. In that same regard, banks give much more favorable loan terms to those with larger down payments, as this reduces the lender’s risk. The more a home buyer has as a down payment, the lower the lender is leveraged. Banks feel more comfortable when people have significant equity in their homes, say twenty percent or more, at the beginning of the loan. This is because in the event that a person defaults on his or her mortgage, it is easier for a bank to recoup its losses through a short-sale or the foreclosure process.

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Saving for a large down payment also has the added benefit of making an otherwise unaffordable home affordable to a home buyer. For instance, if a person only qualifies for a $200,000 mortgage but falls in love with a $265,000 home, having a large savings to draw upon may enable this person to purchase the more costly home under the same loan terms.

Research Mortgage Programs

It may seem as though all banks are offering relatively comparable terms for mortgages, but there are nuances that a home buyer should take in to consideration. For one, even the slight differences in interest rates can make a big difference over the lifetime of the loan. A person may be tempted to apply for a loan with the bank where they already have a checking or savings account, but this may not be the most prudent decision. Second, two banks that offer the same exact interest rates may have different costs baked into the loan agreement, such as origination fees. Origination fees are the fees charged by the lender to cover their costs for making the loan.

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REAL ESTATE

Some banks may also charge discount points, equivalent to Determine Which one percent of the loan amount, Type of Financing is to prepay interest on the mortgage loan in exchange for a Best for Your Needs lower interest rate. These details After investigating your credit can become quite costly in short score, accumulating your down payment, and evaluating the order. nuances of the various mortgages, A number of first-time it is now time to determine which

The benefit of a shorter-term loan is that a person pays less interest over the duration of the loan homebuyer programs also exist that can make the buying a home more affordable. Some cities offer down payment or closing cost assistance for income-eligible homebuyers. Many states have “soft second” mortgage programs in which the local government guarantees seventeen percent of the loan. When combined with a traditional loan for eighty percent of purchase price, this leaves the homebuyer responsible for only three percent as a down payment. Discover which programs you may qualify for before you apply for a traditional loan, as these programs often have specific guidelines and criteria aboveand-beyond what is required of the bank.

loan program is best for your needs. Perhaps you have a small down payment. In this case, a Federal Housing Administration (FHA) loan might be your best path forward. FHA loans only require borrows put down 3.5 percent as a down payment, but it also requires them to pay private mortgage insurance (PMI) over the lifetime of the loan (unless the loan is refinanced after twenty percent of the loan is repaid). PMI can be the equivalent to several hundred of dollars each month, but it allows those with larger monthly incomes to be able to afford to purchase homes faster than if they were required to save a larger down payment. Military veterans may be eligible for low-cost, 0% down loans through the Veterans’

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Administration, a loan program that does not require borrowers to pay PMI, though there are other restrictions to consider. Based upon a person’s financial circumstances, he or she must also determine whether to take a short- or long-term loan, such as a ten, fifteen, or thirty year mortgage. The benefit of a shorter-term loan is that a person pays less interest over the duration of the loan, but monthly payments are higher. Vice versa is true for longerterm loans. A person should also evaluate whether a fixed- or variable-rate interest loan is best for their needs. Anyone planning to refinance or sell their home in the next five to seven years may want to consider a variable-rate, as this often provides lower interest rates in the short term. Buyers who plan to own their home for a long time may prefer the certainty associated with a 30-year fixed-rate loan.

Get Pre-Qualified for a Loan

One of the first steps in qualifying for a mortgage is getting prequalified for a loan. A prequalification is not the same as a hard commitment from a bank. Instead, it is a bank’s general analysis of your ability to afford a mortgage of a certain amount. This will help steer you during your house hunt, because you

REAL ESTATE

will know what price points you should be considering. Having a pre-qualification letter in hand is also beneficial when putting an offer in on a home, as the sellers will want to know that a potential homebuyer is serious and can afford the price they have offered.

Find Homes within Your Budget

Now that you know what you are pre-qualified for, begin your home search in earnest. You may realize that the homes you have been browsing online are well outside of your price range. This may mean looking outside of a desired neighborhood, or even putting the search on hold while establishing a larger down payment or improving your credit score.

in interest rates while they are low is imperative, as there is no guarantee that rates will remain If and when your offer to this low in the future. purchase a home is accepted, immediate begin the mortgage Qualifying for a mortgage pre-approval process. The nowadays might be more pre-approval process is much complicated than ever before, more involved than the pre- but with proper planning, qualification process. A lender buying a home is well worth will run a person’s credit report, the effort. Be sure to visit the verify income and assets, and Buyer and Sellers Club on The will confirm employment Power is Now website (www. through a review of documents thepowerisnow.com) for a free like federal tax returns. Be membership that will provide prepared to have copies of access to valuable resources as pay stubs, tax returns, bank you begin your journey toward statements, and other financial homeownership. If you would records dating back at least two like to schedule a meeting years. The pre-approval process online, then go to https:// is what will help the lender ericfrazier.youcanbook.me/ for establish the terms of the loan, more information. You have the and if the terms are agreeable power to change your life now to the buyer, they can then lock because The Power Is Now. in the interest rate. Locking

Get Pre-Approved for a Loan

Eric Lawrence Frazier MBA President and CEO References • FTC Issues Follow-Up Study on Credit Report Accuracy, Federal Trade Commission (21 January 2015). Retrieved 1 September 2015 from https://www.ftc.gov/news-events/press-releases/2015/01/ftcissues-follow-study-credit-report-accuracy. • Mortgage rules, Consumer Financial Protection Bureau (2014). Retrieved 1 September 2015 from http://files.consumerfinance.gov/f/201312_cfpb_mortgagerules.pdf.

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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

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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. The Power Is Now MAGAZINE | 59

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Our Cover

OUR COVER

Ron COOPER President of the National Association of Real Estate Brokers (NAREB)

Ron Cooper is the current President of the National Association of Real Estate Brokers (NAREB). After beginning his REO real estate brokerage in 1983, Ron has developed a reputation of the utmost professionalism when working with his thirty real estate agents as well as his customers and the community as a whole. Methodically growing his company over twenty-nine years, Ron Cooper has been an inspiration to real estate professionals everywhere with his production team service model of business. A member of CAREB, NAREB, CBR, NAR, and CAR, Ron Cooper has the experience in the local, national, and state levels of real estate leadership. He has also diligently served on the Freddie Mac advisory board, revealing just how involved and dedicated Ron Cooper is to the real estate industry. Ron Cooper graduated with a Political Science Bachelorâ&#x20AC;&#x2122;s degree from UCLA and decided to change his path from law to real estate. Ron currently lives in beautiful California with his family. The Power Is Now had the pleasure to sit down with Ron Cooper to speak about his inspiring ascent to the presidency of NAREB and his career in real estate. As President of NAREB, Mr. Cooper is working to have the greatest impact on the organization as well as in the African American community by making advocacy his number one priority, and he cites many reasons why advocacy must be a priority for his current administration.

After the real estate crash of 2008, the African American community in particular was devastated. Now that the country is gradually recovering, only 2.2% of all loans are being approved to African Americans according to the most recent data from Freddie Mac. A meager 41% of African Americans currently own a home, which is a significant fall from the still low norm of 48%. To make matters worse, there is a 59% loan denial rate to African Americans applying for a mortgage loan. This makes the American Dream farther and farther away for such an integral community in the nation. For most Americans, 90% of their wealth is in homeownership; however, the average African American does not have that huge percentage of wealth to lean on. There is already a significant wealth gap between blacks and whites, and without a change in the state of homeownership the wealth gap will never be minimized. Government policies in housing and banking, credit overlays in lending, FICO requirement and many other barriers are expanding that gap, by making it almost impossible for African Americans to return to the ever growing housing market. Ron Cooper is a shining example of how real estate can change lives. He was able to send his children to college through his wealth that he accumulated through properties. Without that income, he would have had to dig into other money that he could be using for other aspects of his life, like his business, his family, or retirement.

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OUR COVER

Ron utilized real estate and property investment to increase his own wealth and live his American Dream. Part of that dream for Ron was being inaugurated as the twenty-ninth President of NAREB in August 2015. Ever since his inauguration, he has been working toward three goals for NAREB. The first is that Ron believes that the NAREB has moved away from enacting social change in real estate in favor of becoming a trade organization. He is concerned about moving away from the roots of NAREB as a center for change in the community, and Ron Cooper knows that NAREB must turn the attention away from being a trade organization and toward “Democracy in Housing”, which is a call to action for equality and opportunity for homeownership in the African Americans community. Ron Cooper issues regarding the state of housing for African will be using his position as the President of the Americans. NAREB to begin rebuilding the African American community’s re-entry into homeownership. Ron Cooper shared his progressive mission statement for his two year term as the President His second goal for NAREB is to get on the same of the NAREB, which is to “reimagine the page to bring partnerships together with leading dream of homeownership through advocacy, advocacy organizations that also serve minorities action, and activism.” Ron understands that and the African American community. This goal reimagining entails more than simply a new idea. is a high priority for Ron Cooper to begin to Reimagining involves rethinking and revamping mend the state of African American involvement what has already been in place, asking the hard with real estate. He intends to work with these questions about policies and actions taken. Did organizations to improve homeownership of they work? Why or why not? What can we do African Americans to form strong collaborations to accentuate this success or build up from this and partnerships that will unite and strengthen the failure? Through reimagining, he intends to fulfill efforts as these advocacy organizations strive to his goals for NAREB. the meet the needs of the communities throughout the U.S. The Power Is Now thanks Ron Cooper profusely for joining us and congratulates him on his rise to The third priority for Ron is that NAREB the presidency. We eagerly await the changes that needs to become reintroduced into the public Ron intends to make for not only NAREB, but for to begin grappling with the social issues with the everyday consumer as well. The future looks homeownership. Mr. Cooper vows that there will bright for NAREB with President Ron Cooper at be a community day every year at the National the helm. Convention to bring news of the NAREB’s activities to the public as well as exposed the

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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

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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 The Power Is Now MAGAZINE | 67

Eric Lawrence Frazier MBA President and CEO www.thepowerisnow.com

Power Agent Spotlight

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.

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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

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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.

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Power Agent Spotlight

POWER AGENT SPOTLIGHT

Vicky

Silvano

Vicky Silvano is the upcoming Vice Chair of the Asian Real Estate Association of America (AREAA), after becoming a real estate broker over fifteen years ago. Her outstanding professionalism, experience, and personal attention have defined her progress in the real estate industry. She provides high-level customer service to sellers and buyers of homes. In fact, international and domestic homebuyers are always impressed by her dependability, honesty, commitment, and expertise. Investors and first-time homebuyers always benefit from her services. Vicky Silvano is among the best in the provision of quality services to domestic and international investors and homebuyers. She comes from a family of six, comprising of three brothers and two sisters who originated from the Philippines. She has a Bachelorâ&#x20AC;&#x2122;s Degree in Economics from the University of the Philippines and worked with the National Economic Development Authority (NEDA), a government entity in the Philippines, as a researcher right after graduation. Then, Vicky Silvano went to Procter & Gamble in the marketing department and introduced a new product line P &G distributed and sold nationally. She came to the U.S. in 1985, and she has been married for thirty years. She has two beautiful daughters: Camille and Carla ages twenty-one and twenty-three respectively. Camille recently graduated from the University of Illinois, Champaign, and Carla is in her senior year at Purdue University. Vicky has been in real estate business since 1990, doing 70% residential and 30% commercial. With the following designations: CIPS, ABR, CRS, and CCIM, Vicky is definitely up to anything. She volunteers professionally and personally in many nonprofit organizations including AREAA. Vicky bought a Century 21 franchise in 2000, but she felt that it was not her career to be a real estate broker. She felt that her fortune was in the sales part of real estate; although she experienced tremendous success in Century 21.

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Vicky Silvano decided to join Century 21, because it was one of the biggest franchise companies in the world with over 8000 franchises. She believed that it was easier to move to international business due to international opportunities offered by the organization. Vicky did not know the importance of AREAA and its mandate in the beginning of her career. She was introduced to it by Nancy Suvarnamani, brokerowner of Century 21 SGR, who brought her to the first national convention in California. During the convention, Vicky Silvano saw the main gala and discovered that it was a vital organization to be a part of. She started volunteering in the local chapter, where she became the chapter president in 2011 and 2012. For the two years, she held the local chapter presidency and brought Chicago into the real estate world. The national organization was impressed with her work at the local level and offered her a position at the national level. She was promoted from the post of international committee chairperson to that of chapter development chairperson. From

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Vicky Silvano will focus on infrastructure, community alignment, chapter development, and leadership. her story, we learn that Vicky Silvano, the new Vice Chair, came from the grass root level and lived her American Dream. She joined the organization as an immigrant but felt the desire and motivation not only to serve Asians, but the entire community.

or committee chairperson to assign and delegate duties to the committees. Involvement of the committee chairpersons in the organizationâ&#x20AC;&#x2122;s matters was unfortunately very limited. Vicky will make sure that the structures strengthened will pave the way for the involvement of the chairperson AREAA has had new changes and vice chairpersons in the in its bylaws of structuring specific committees throughout its committees starting with the year. Vickyâ&#x20AC;&#x2122;s chairmanship. There are plans of having committee Second, she will facilitate early chairpersons or committee planning of AREAA events that vice chairpersons, who will are held in the course of the automatically become the year. The leadership event that is chairpersons in the following normally attended by the Board year. In her first one hundred of Directors of all the chapters days of the chairmanship, in the organization is among she will make sure that the the first event to be organized. structures of the committees are This leadership seminar held in strengthened. This will ensure February is very educative in that the board of chairpersons nature. The global summit held and vice chairpersons will every year is also very important be more involved rather to the development of AREAA than just the chairperson. and the community. It is evident In the past years, it was the that her main initiative focuses mandate of the chairperson on the policies affecting the

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POWER AGENT SPOTLIGHT

organization. Vicky will inform AREAA members on how important their voice is. She believes that if the members of AREAA speak out their grievances, the government will make policy changes to adhere to the organization’s needs. Consequently, homeownership opportunities for the community at large will increase. In her first one hundred days of the chairmanship, she plans to hold more community outreach. Due to the need of increasing homeownership, Vicky will enhance what Carmen Chong has already done. She organized a community event with all the chapters across the country called ABCD meaning ‘AREAA Built Community Day.’ Vicky plans to expand this by mandating all the chapters to have at least one community event as part of the organization compliance. Currently, the organization mandates all the chapters and requires them to have four events per year. Vicky feels that it is important to have a community event, although it is not a requirement. During her term she will make sure that each and every chapter of all the chapters across the nation holds

at least one event a year.

AREAA adopt alternative credit scoring systems so that Asian In summary, Vicky Silvano American can apply for a loan will focus on infrastructure, and be able to buy homes. community alignment, chapter development, and leadership. The second policy point that She will also make sure that she intends to support is the the organization is leading the American Entrepreneurship community events, unlike most Investment Act, known as the related trade associations that EB 5 program. She plans to focus on professional events make sure that the EB5 program and development of their agent. is permanent, because there are It is important for professionals a many investors going to the to educate communities either USA from all over the world, in group studies or conferences. who wants to settle, invest, and Since that has never been the buy homes. mandate of the chapters, she will be the first chair to introduce Her third policy is to reject the such a policy to the compliance budget proposal of limit or the requirement chapter presidents plan to eliminate ‘ten thirty-one or board of directors. In her exchanges’. She feels that the first one hundred days of the ‘ten thirty-one exchanges’ is chairmanship, she will focus on the right brand of investment. setting the right policies that can An estimated 30% of all state help Asian American achieve transaction involves ‘ten thirtytheir dreams of homeownership. one exchanges’ and a lot of She is determined to bring Asian Americans have used the reforms that provide the solution ‘ten thirty-one exchanges’ in to the policy issues that the Asian their transaction. American face. Vicky Silvano plans to promote the adoption She believes that this policy of the alternative credit scoring issues that the Asian American model. Most Asian Americans face will have a positive own businesses whether they be impact if communicated to small or large, but it is hard for the Congress. Their role as the them to have files. Most of their policy makers in the government credit cards are very thin and is vital particularly in increasing hence she will make sure that homeownership opportunities

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among the communities. AREAA will hold a conference in San Francisco on October 22 to 24 to discuss policies that promote the provision of education and training to the society. During the conference, members will participate in ‘Napa Valley Wine Tour’ as well the ‘Chinatown Walking Tour’. Various courses such as CIPS, CRS and CCIM will be offered during the conference. Different tracks of sessions starting with commercial, international, lending and then back to basics have been organized. Other sessions organized include AGTB, relocation specialists and recruiting of the parents who can best serve the Asian American communities. Most importantly, there will be AREAA’s Got Talent and fashion show.

Vicky Silvano vividly described the phrase “the power is now” as one of the most powerful phrases. According to her, it transcends from the mind, to the emotions, to the spiritual. from the mind, to the emotions, to the spiritual. She also added that the phrase was like a spirit that flows into her actions every day, job, volunteer work as well as the positions she had held before. She concluded that people were required to look forward into making things happen for the betterment of everything that they do in life.

The Power Is Now sincerely thanks Vicky Silvano for joining us and warmly congratulates her on Vicky is ready to take her role and fight for the her accomplishments. We cannot wait to hear how Asian American and alternative credit. She will her term goes and what changes she instills in the also promote policies that will strengthen the Asian American community as well as AREAA. ability of Asian American to acquire real estate and that might impact the business as a whole with ‘ten thirty-one exchanges’ being at risk. Vicky has a lot of work ahead of her and a great team of professionals surrounding her in AREAA. AREAA has provided excellent opportunities that have promoted networking with practitioners and peers especially regarding strategies and ideas exchange. Its events create a platform that enhances interaction with experts who are likely to offer creative solutions to challenges faced by the entire community. During an interview hosted by Eric Lawrence Frazier, Vicky Silvano vividly described the phrase “the power is now” as one of the most powerful phrases. According to her, it transcends

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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

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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,

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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

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

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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

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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.

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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.

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.

As of May 28th, 2014, the International Accounting

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Establishing Standards

Currently the GAAP system is not only complex, but has disparate requirements for revenue recognition in specific transactions, especially those pertaining to real estate and software. This is one of the reasons why real estate will use different accounting processes for the same economic transactions.

LEGAL

However, the new guidance sets forth to establish reporting principles that will provide resource to users about the uncertainty of revenues from contracts in the financial statements (Borland, 2015). The new guidance will do the following: • Remove inconsistencies in the current revenue framework 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

Ellen Bartholemy, the Director of Accounting at Hall & Co., the new accounting rules will change the way recording lease payments work.

liabilities. Conventionally speaking, lease payments are treated as disclosure items in the financial statements and are not recorded in the balance sheet. Hence, with the new standards, Ellen explains that there are still leasing will affect equity for a many people who are unfamiliar company, and subsequently, the with the new standards, and one assets and liabilities. should start preparing for the changes with their accountants. What is more concerning here She says, is that the IRS is considering how the rules are going to affect “People do need to work closely taxes. In other words, a real with their accountants on these estate agency may have to file new rules to see the impact that for change in the accounting it is going to have. It is going method, something that a to be very important to have an company may not be able to do accountant that is well versed on its own (Borland, 2015). in real estate. They need to be starting now, even if it isn’t going The best way to prepare for the to be effective until 2018.” 2018 changes in accounting rules What must be understood is is to speak to your accountant. how the lease options we have Your net worth, equity, and taken now, or ones that will be debt could be at stake. Getting signed up for, will affect our a professional opinion will balance sheets and banking as a allow you to develop a plan and whole. The new standards mark prepare for the worst.

no exception for existing leases, so it is time you need to utilize To begin with, lessees have to get started with planning. already begun preparing for the new lease and revenue With the accounting rules in recognition guidance that are to effect, lessees will be required take effect in 2018. According to to record lease payments as 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.

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r DESIGN

The Latest in

Curb Appeal

hen it comes to homes, it is not just what is inside that counts; the exterior is just as important. Homeowners heavily invest in creating the best curb appeal for their homes. It is no doubt that a drab curb appeal can make a buyer cringe before he or she even walks through the front door, while a handsome, well-planned designed could get you that offer that will sell your home. In reality, curb appeal can be achieved through multiple methods such as exterior decorations installation, repainting of the exteriors, as well as extensive landscape. Adding eye-catching elements to the home exterior such as staging charming benches and subtle art is a modern way of creating an appealing impression. Allowing the buyer the opportunity to picture his or her family playing in the yard or swinging on the porch-swing could mean the difference between an offer and waiting another week on the market. It is imperative that the seller gives the impression that he or she takes care of the home, and a pristine front yard is a fantastic way to do that (Forbes 2014).

be a major eyesore. Maintain your lawnâ&#x20AC;&#x2122;s grass, shrubs, and other vegetation in such a way that there is adequate ground cover but not excess. You must be very careful that your grass is mowed when your prospective buyers come to look at your home. Nothing looks worse than an overgrown lawn. The buyer then begins to wonder what else you have not been taking care of. In some cases, a winding stone walkway can be provided to act as an inviting path to the front entrance if you have more foliage. 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

A great option may include the addition of concrete steps to offer a clear path through lush, but not overgrown landscaping. Alternatively, the exterior can also be livened using vegetation such as bright annual blooms lined with dark mulch. Other curb appeal options include the introduction of gravel pathways, tying the houseâ&#x20AC;&#x2122;s neutral tones with its landscape (Tracey 2012). Additionally, letting the front yard be overrun by vegetation such as ivy or weeds can prove to

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and consistently trimmed, they can grow too long and large, compromising the curb appeal. You want the buyer to be able to see your home from the street, and if there are too many overgrown trees, than you may want to consider trimming the dense branches. Be sure to have this professionally done to avoid harming the trees (Forbes 2014). Another way to maintain great curb appeal is by keeping the front door clean and attractive. This can mean anything from a fresh coat of paint to new hardware. It is the little aspects of your home like this that can be overlooked. Additionally, it is advisable to ensure that the driveway and property is free of trash, poorly packed cars, or other non-essential objects. Keeping freshly mulch front garden beds or planting colorful flowers that create an interesting look is another aspect of maintaining premium curb appeal. It is necessary to add color using perennial flowers that do not require yearly replanting as well as annuals that reflect the work you did in the flower bed that season. Flowers such as Shasta daisies and lavender are great places to start, especially because of the pleasant aroma that lavender emits (O’Brien 2015). It is not exceedingly difficult to maintain a beautiful exterior to your home. All it takes is some new mulch, a coat of paint, a bench

or two, and a well-manicured lawn. Making sure that the grass is mowed and the leaves are raked can be tedious; however, selling your home for more money will more than make up for it (Tracey 2012). 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 • O’Brien, S. (2015). What Does Your ‘Curb Appeal’ Say About Your Real Estate Business? Retrieved October 6, 2015. • Simple And Quick Ways To Improve Curb Appeal When Selling Your Home. Forbes. Retrieved 7 May 2014. • Tracey, M. (2012, September 5). Amp Up Curb Appeal. Retrieved October 6, 2015. • 150 Remarkable Projects and Ideas to Improve Your Home’s Curb Appeal. DIYnCrafts. Retrieved 7 May 2014.

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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.

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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.

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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.

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ASK ERIC LAWRENCE FRAZIER Get yor questions answered about mortgage programs and qualifying for a home loan or commercial loan.

LIVE! Every 2nd and 4th Tuesday of the Month. ASK any question about any aspect of FINANCING REAL ESTATE CLICK HERE FOR DETAILS!

NHF SAPPHIRE

DownpaymentAssistance Program Details Available for FHA, VA & USDA Products

• Grant with an option for 3% or 5% of 1st lien loan amount (Including MIP) • True grant - requires no repament • Rates differ from 3% and 5% grant respectively • 620 minimum FICO • 115% of HUD Area Medium Income. • All borrowers must occupy the property • Max Base Loan Ammount: $417.000 • SFR, Condo, PUD • DTI determined by Automated Underwriting System • Seller contributions up to 6% • May be combined with other downpayment assistance • Gift funds 0 K • Origination 1.5% + $900 • Call for details regarding origination fees cost and interest rates • Interest rates set by National Housing Fund • Loan registered after AFTER underwriting has approved • $400 cancellation fee & 30 day waiting period to re-register

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

NEW!

FREE mortgage app for your cell phone! Click Here

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

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.

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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

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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.

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