FNMA investment loans

FNMA has loans for investors with 10% down payments up to 4 unit properties. There are fourplexes in Santa Clara County that can be bought and nearing break even cash flow with such a low downpayment.
Mario Pinedo, CCIM
Intero Real Estate
Office 408-342-3155
Cell 415-269-6249

Buy as an investor sell to owner occupant

There are a lot of homes right now that are perfect mid term flips. Rents are strong, prices are down, especially on the short sale and bank REOs, the right combination for break even cash flow on houses and duplexes. Then in a couple years, take the right exit strategy and sell when the first time buyers are out in droves and move up home buyers are also fueling the market. The strategy is not so much to buy on numbers today, it is to focus on the type of home to buy based on what is easy to sell in the future to that buyer profile. Need help?

2 Bank Owned Duplexes Ripe for the Picking

Blossom Valley - over 2,200 square feet, great configuration of 3 bed, 2 bath and 2 bed, 1 bath units. Separate 1 car garages. Near Westfield Oakridge Mall. Sold for $770,000 in July 2005, now offered at $539,900.

San Jose City College area duplex - 1,680 square feet, 2 bedroom, 1 bath each unit with separate 1 car garages. Each unit has a separate den making it effectively a 3 bedroom on each side. Sold in May 2006 for $770,000 (coincidentally the same price as above). Now asking just under $500,000.

Both of these properties are on strong streets and good neighborhoods. Worthy rental investment properties that will produce income into the future. And... some good price appreciation when the market comes back.

Let me know if you want to see these great opportunities.

Great Development/Retirement Opportunity in Clear Lake

My partner Jinny Ahn and I just listed this wonderful opportunity in Clear Lake, CA. It is a home on 44 acres - custom built approximately 5,000 square feet. The land has already been subdivided into 24 lots ranging from 1 acre to 2+ acres. Asking price is $3,200,000 for the package. With good marketing of the lots over the next couple years - the ending cost of keeping the house would be very, very low. Here is an opportunity for a developer or land banker to fund her retirement and end up in a wonderful community. Website and virtual tour coming soon.

Please Consider Giving to the Leukemia & Lymphoma Society

This year for the second year in a row, I am running the San Diego full marathon with Team in Training to both challenge myself and raise much needed funds for research on cancer treatments.

I understand that times are tough. All I ask is that you click on the link below and read why I am doing this. A donation of any amount is greatly appreciated and will go to very good use. The Leukemia & Lymphoma society, through Team in Training has funded research that has brought forth new and beneficial drugs. This has eased the pain and suffering of our loved ones.

Please do what you can and if there is anything that I can do in return, please ask.

Click here for my page: http://pages.teamintraining.org/sj/rnr09/mpinedo

Thank you!

Silicon Valley, Facebook and Real Estate

I'm not going to go into too deep of an analysis here.... I caught a clip of "Who Wants to be a Millionaire" today. One of the questions was: Which internet giant has a CEO who is 24 years old? A. My Space B. Facebook C. ______ and D. _____ (the last two I can't remember) Answer is B - Facebook - final answer.
Facebook is yet one more internet giant created in our backyard - well actually at Stanford - same difference! The vibrancy of this area continues and will continue for a very long time. Has this affected real estate values - definitely. In fact Palo Alto is UP this year something in the range of 5%.
Google waited forever to go public - a wait lengthened by the Dot Com bust. Facebook probably will do the same - for the better. And as more and more of my 40 year old friends finally fall to the lure of sharing their college and high school pictures with friends they haven't seen in decades, the more valuable will be the FB shares - and the homes in Palo Alto.... OK I know... it's late and I rambled again. Signing off.

(By the way, scroll down to my Facebook button and friend me)

Monte Sereno Los Gatos Stunning Bank REO

$2,144,000 price for 4,700+ square feet on a 73,000 square foot lot. Built in 1990 in a gorgeous area of Monte Sereno, tucked between Los Gatos and Saratoga. This is a wonderful opportunity to buy an estate home in this wonderful area. There are few bank owned REOs in the premier areas of the valley. Call me to tour.

Bank Owned 4plex Just Listed

Was achieving $4,300 per month in rents prior to the bank evicting tenants.
Offered at $541,000 or at 10.48 gross rent multiplier. One 3 bedroom, 2 bath unit and three 1 bedroom units. There is an Owners Association that maintains landscaping throughout the 4plex neighborhood. This is a very good deal for an operator who can manage a 4plex well. Call me for details.

Santa Clara County Home (REO) Stats

5,800 listings for sale on the MLS in Santa Clara County.
*** 48% of those are Bank Owned REO or short sales ***
2,200 homes are in "Pending" status
*** 78% of the Pending homes are Bank Owned REOs or short sales ***

The bank deals ARE the market. This is very clear. Some "normal" sellers will price according to what the banks are selling homes for or they will not attract buyers. Yes, this is not easy to accept, yet that is reality.

Case Study of Duplexes in San Jose

I'm representing a buyer on a very well-priced duplex purchase in San Jose. This little street of 7 properties which were built in the late 1950's rode the roller coaster of boom and bust. Three side-by-side duplexes all sold in mid-2006 between $770,000 - $795,000. Now two of those three units will sell between $500,000 - $530,000. One was a short sale which was in escrow for 4 months, the other a bank REO that should transact quickly. Of the 4 other owners on that street that did not play the real estate game in the last few years, they apparently have been sitting pretty, collecting rents and paying low Prop 13 property taxes. Go conservatives!

Cupertino Schools Bank REO $264,900

Two story condo in Cupertino school district, 2 bedrooms, 1.5 baths, 1099 square feet for only $264,900! Low HOA dues of $295 per month. Great first time buyer home or strong investment property that will rent well. Nice condition, good location near 280 and Saratoga Avenue. Yes, Virginia, there is a Santa Claus - or - Yes, sweetie, there are deals on the west side!

San Jose NNN Dollar Tree for Sale

There is a great local NNN investment that just came available. On Story Road at McLaughlin in the heart of very dense retail development and renovation is a single tenant Dollar Tree on a new 10 year NNN lease. Offered at a reasonable 6% cap rate, the asking price is $5,128,000. The future upside is the 39,200 sq ft lot that the building is sitting on. The building was built in 1998 and has 4.59 spaces per 1,000 square feet or 55 parking spaces. If Dollar Tree does not exercise it's option to extend the lease in 10 years, the property will be well positioned to rent to another user. This is the time to get in to the San Jose retail market with a great location and great solid tenant. Call me for info!

Applebee's NNN Investment

3 year old Applebee's (I'm not a big fan of their food, although many people are)

20 year absolute NNN lease

Strong Missouri location adjacent to a Lowe's & Wal-Mart supercenter

54,000 square foot lot

7.75% Cap Rate

$1,185,000 price

These are the kind of strong tenant, great NNN lease term deals that are out there now for 1031 exchanges or straight purchases. Time to trade in the management intensive fourplex for a corporate rent check every month and higher net income.

Loan Update from Tony Guaraldi of Intero Mortgage

Rates are up quite a bit this week as Fannie/Freddie mortgage securities traded lower six days in a row, which lead to higher rates each day. Things are abnormal these days with mortgage rates. Typically rates are influenced most heavily by inflation and demand for bonds. Lately it’s been different. Here’s why.

The lenders spent most of 2008 either going out of business, merging with other banks, or laying off employees to cut costs as business came to a grinding halt. All of a sudden the US Treasury starts buying mortgage securities from Fannie & Freddie at a low 4% coupon, and this action dropped interest rates in the beginning of December. The lenders were instantly slammed with new refinance business, and now are at the point where they can not keep up with work load. So when you have too many loans in your pipeline the best way to slow down the flow of new loans coming in the door is to raise your interest rates! But people are still applying! Raise them again! Let’s take some profits while we’re at it, we can use it!

The second phenomenon in this environment is the lenders are changing the way they price zero point loans. They are strongly encouraging borrowers to pay points to get lower rates by increasing the spread between zero point rates and 1.0 point rates. You will see this on the rate sheet for conforming loans. The reason for this is a buyer/borrower is more likely to keep the loan for a longer period of time if they pay the points to get the loan and have a lower rate. The bank loses money if the borrower keeps the loan for only a few months. To encourage the behavior they desire, they are pricing the 1.0 point rates much better than zero point rates. This is of course the opposite of what the client thinks they need, so it’s our job to educate them on the benefit of paying points and show them the large amount money they will save by investing in lower monthly payments. This is a generalization on the market right now, but there are exceptions to this rule.

The third thing holding back the jumbo/conforming rates from dropping further is the rule created with the 2009 Jumbo/Conforming loans. A given bank is not allowed to have more than 10% of all of its conforming loans be jumbo/conforming. That means that 90% of all their loans must be below 417k and only 10% and go up to 625k. Well there is such a huge demand for jumbo/conforming loans that the lenders maxed out of it in a couple weeks. So most of them have greatly increased the rates on jumbo/conforming to stop the new submissions from coming in. This will hopefully normalize soon as the bundling and selling cycle starts over, and jumbo/conforming will come back down again.

In order to minimize this risk for rate volatility, with Intero Mortgage we are signing up new lenders constantly. This is a big advantage of being a broker, and not just any broker. A broker with some good volume and professional loan officers who submit clean files and act with integrity. The lenders are starting to really realize that not all brokers are good to partner with, and they are being very picky about who they will do business with. This way we have a better chance of having a lender that is not “full” already and can be competitive for rates and turn times.

That’s all for today. Give us a call this weekend if you need anything. We’ll be around! Have a good one!


Tony Guaraldi
Mortgage Consultant

Top Ten Foreclosure Cities

1. Merced, CA

2. Modesto, CA

3. Stockton, CA

4. Riverside, CA

5. Detroit, MI

6. Fort Lauderdale, FL

7. Cape Coral, FL

8. Vallejo, CA

9. Las Vegas, NV

10. Sacramento, CA



Interesting that Merced is the top foreclosure city in the US. Why Merced? Perhaps because it was a hotbed for home investors over the last few years ever since the new University of California campus was chosen there. I saw a lot of people buy there with the expectation that some 30,000 students and faculty would greatly impact the value of real estate in that city. Just buying anything in any market does not guarantee you success. We may all agree that now is a good time to buy. What is more difficult is what location, property type, etc. is best to buy. Following the herd is also not wise. The herd was very present in Las Vegas too as seen by their 9th place ranking. The land of glitter had many non-owner purchases. These being the easiest to let go to foreclosure when times get tough. The strongest markets? - those that have very high owner occupant ratios. Look at the central bay area with ratios as high as 98% for owner occupied single family homes - now that is stability.

Bank REO Purchase Addendum - Watch Out!!!

After a buyer makes an offer on a bank owned property, the counter offer addendum that comes from the bank or from the asset manager/servicer is interesting, for lack of a more nasty word! Little clauses such as: attorney fees for the bank to be paid by buyer if buyer loses their dispute, buyer's attorney fees to be borne by buyer if buyer wins! Evil, evil, evil. If buyer defaults on the purchase agreement, then the bank keeps the deposit without needing buyer to approve release of deposit from escrow (I hear retired Realtors turning over in their graves at that one - also to be known that Realtors never retire, they just sell underground dwelling into eternity). OK, yes, you can hear in my words that I am a bit upset at these addendum and the rough-shod take-it-or-leave-it attitude of the banks disposing of their inventory. My current buyer loses his job during escrow and the bank (to remain un-named - let's just say they are now owned by Chase...) decides to keep the family's $5,250 deposit. Nice, very nice...

Bank Owned Duplex San Jose

The following financial analysis is of a duplex that I previewed today. The numbers make good sense.

$399,000 list price for two 2-bedroom, 1 bath units in decent shape.
Assuming a purchase price of $380,000
Down payment of $76,000
1st loan of $304,000
payments at 5.25% = $1,450
Insurance, taxes and utilities = $550
Rent at $1,200 per month per unit
$400 monthly cash flow

Not a bad little investment at all!

San Francisco Apartment Building Deals

The core rental markets in San Francisco have always been great areas in which to own. Due to the softness in certain other markets such as the single family rental home sales market, the buyer demand of small apartment buildings has lessened. Fewer sellers of rental houses are initiating 1031 exchanges and then looking for small apartment buildings to trade in to. If you have the ability to buy in this market, it very well may be the best time to get into the SF rental market. I have seen very nice buildings for prices not seen in a long time. Two such deals in Nob Hill and the Inner Richmond stand out with asking prices in the $260 per square foot range. Prices at $1.6M - $1.9M. And... rents are very healthy! And, and... interest rates are way low! Time to take advantage of the deals out there. Call me to run the numbers and see the opps.

Bank Owned Cambrian Home

Just on the market today is a beautiful 4 bedroom and 2 bath single story home. Prefect for first time home buyers. Large front and backyard, spacious and bright living room, open floor plan. Nice and quiet neighborhood. Great location, easy access to major freeways, close to schools, parks and shopping's. Must See! List Price $534,900

Home Buyers Workshop Thursday, Jan 15th