Vero Beach Income Properties

Vero Beach Florida - After month long run at record low levels, rates on 30 year fixed rate mortgages rose above 5 percent last week. Rates started their decline after the Federal Reserve announced last November their plan to buy $500 million in mortgage backed securities. It was hoped this would encourage banks to lend more money and help the troubled housing industry.

The majority of new mortgage activity came from home owners anxious to take advantage of rates just under 5% for a 30 year fixed rate. Prices seem to stabilizing especially in desirable areas as the available supply diminishes.

The pending expiration of the first time home buyers tax credit of $7,500 has been a factor in the entry level market. Well located homes in good condition, especially newer construction, are beginning to sell. Prospective home buyers with steady employment, a down payment and decent credit are getting loans.

Investors are also buying again, helping to deplete the overstock of Foreclosures and Short Sales. When income from a potential rental home equals holding costs, Investors are ready to act on the opportunity for future appreciation.

A pilot project recently introduced by Fannie Mae will hopefully reach Vero Beach Homes facing Foreclosure, but for now is limited to Orlando and Phoenix. By pre-approving a “short sale” the lender would agree to a payoff less than the mortgage before the home is listed. This could improve the popularity of short sales as they now have a reputation of slow approval times and difficult negotiations.

Most lenders are in the process of streamlining the process but are at times overwhelmed by the number of requests. Sellers with distressed homes in Indian River County can greatly improve their chances of avoiding foreclosure by negotiating with their lenders ASAP. This includes homes used for Rental Income

Using an agent who is experience with the “short sale” process and looking for a home with a bank approved listing price simplifies the purchase. It not only helps the seller avoid foreclosure, but also allows the buyer to get a great deal on a home that hasn’t been neglected as is the case with many foreclosures.

The ongoing redevelopment of the beachside retail and commercial district will have a great positive impact for the value of residential areas on “Central Beach”. The recent rebuild of Sexton Plaza, the addition of several upscale hotels, and the planned improvements at Humiston Park will increase the appeal of a central beach address.

Income property owners and residents alike will benefit from the great selection of retail on Ocean Drive and many fine restaurants. With easy walking access to the beach and many opportunities for shopping and dining, central beach will once again be the place to stay.

The opportunity for investors and prospective homeowners is the recent decline in the price of property listings. The are several current listing for single family homes under $300,000 and condos under $200,000. Although these listing may need updating and or renovation, these prices haven’t been seen since 2003.

Now is the time to take advantage of a great selection of homes for sale, a strong buyer’s market and historically low interest rates!

The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified first-time home buyers purchasing homes on or after April 9, 2008 and before July 1, 2009.

First time home buyers purchasing any kind of home—new or resale, including foreclosures and short sales are eligible for the tax credit The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

You claim the tax credit on your federal income tax return. No other applications or forms are required. The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

The tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The credit is not available at this time to Investors.

The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.

Rates for a 30 year fixed loan are at their lowest rate since last January dropping to 5.53 percent. It was the largest one week drop in 27 years, in response to the massive federal government bailout.

A mortgage industry backed plan in which the fed would buy $600 billion dollars worth of mortgage backed securities, could lower rates further. Analysts predict rates could drop to an amazing 4.5 percent as the effect of the bailout takes affect.

Home buyers are taking advantage of the interest rate drop before housing prices rebound. New mortgage applications more than doubled last week according to the Mortgage Bankers Association.

Borrowers will receive greater scrutiny of their income and assets but loans are available. If you can document sufficient income, a decent credit score and a
down-payment, the application process has not changed.

Whether it’s your first or 50th home, real estate is a complex and major transaction. Be aware that when you are looking to purchase real estate in Vero Beach FL, the listing agent works for the seller, not you the buyer. The best way to be certain that an agent is working in your best interests is by signing a buyer representation agreement with your own agent.

A buyer’s agent represents the buyer who is purchasing property in a real estate transaction. Research by Vero Beach Real Estate Agents has shown that when a buyer’s agent is used, the prospective buyer found a home one week faster than consumers who did not.
The buyer’s agent works for, and owes fiduciary responsibilities to, the real estate buyer. This is especially important when buying Foreclosures and Short Sales

A buyer’s representative will:
1. Evaluate the needs and wants of the buyer and locate properties that fit those specifications.
2. Assist the buyer in pre-qualifying for financing, and show properties in that price range.
3. Assist in viewing properties by accompany the buyer on the showings.
4. Research the selected properties to identify any problems or issues.
5. Advise the buyer on structuring an appropriate offer to purchase the property.
6. Present the offer to the seller’s agent and the seller on the buyer’s behalf.
7. Negotiate on behalf of the buyer to help obtain the identified property.
8. Assist in securing appropriate financing for the selected property.
9. Fully-represent the buyer throughout the real estate transaction.

The Buyer Representation Agreement

It is important for the buyer to discuss the buyer’s agents compensation in the initial interview. It is typically paid by the seller as a percentage of the sale price. Terms may vary depending on the requirements of the buyer, be they a prospective home owner or an Investor buying Florida beach foreclosures. The agreement should spell out the responsibilities of both parties throughout the real estate process.

They are taking a longer term approach to allow the market to recover and profit in the interim by offering financing. With a record number of Foreclosures and short sales in the Vero Beach area,
there are many opportunities to invest in.

There are buyers in every market, the only problem is many good buyers won’t qualify for a bank loan under the new lending guidelines. Some investors are deciding to hold the mortgage themselves for up to five years. By doing so, they make some extra money and ensure the sale of their rehabbed property went through. At 8 percent interest, an investor can plan to make an extra $10,000 in interest in addition to proceeds from the sale of the house.

While you may have buyers that many banks would probably reject, and take a smaller down payment than most financial institutions, you can sell for more in any market. Find somebody with halfway decent credit and a steady job, write a binding legal contract, and be sure the home is properly insured. Even though you are charging higher interest, you are offering homes that buyers can afford, something most banks didn’t do before with sub-prime mortgages.

Lou Harris a Vero Beach real estate agent, said that in today’s tough housing market, offering homes with owner financing gives sellers an edge. “Depending on the area, it can be critical and the difference between making a sale and not,” said Harris, who advises investors on Vero Beach foreclosures and short sales.

Owner financing in 2006 was part of the sale for one in every 400 properties sold in Indian River County. That jumped to one in every 50 this year, and that number will grow as the inventory of Vero Beach houses declines during the next few years.

Harris said that while the market has been a tough road for sellers these past couple of years, there is a niche that owner financing will fill. “I think it’s potentially a good system,” he said. “ The investor is getting a decent return on his money and it’s safer than the stock market. I think it’s a fabulous strategy.”

But buying a home cheap, fixing it and selling it by holding the mortgage isn’t for everybody. Sellers need a reliable source of discounted properties and the equity to buy. Sellers should also make sure they have all the financial documents in order, such as proof of buyers’ income, tax returns and credit history, in case the seller wants to sell the mortgage one day to another investor.

With home prices decreasing and interest rates holding at historically low levels, the number of potential homebuyers who can afford to buy new and existing homes has reached the highest level in more than four years.

According to the third-quarter statistics, 56 percent of all new and existing homes sold were affordable to families earning the national median income of $61,500 – far more than the 40 percent of families who could afford Vero Beach homes at the peak of the housing boom.

“If there is a silver lining to this crisis, it would be that some housing markets have become more affordable with a larger inventory to choose from,” said NAHB Chairman Sandy Dunn. First time home buyers can benefit from a $7,500tax credit due to expire next spring. Investors are also returning to the market in anticipation of increasing home prices and interest rates.

Vero Beach, Fl realtors are citing a Manpower Employment Outlook Survey that predicts growth in construction, manufacturing and retail jobs. Balmy weather, low property taxes, and a cost of living 3 percent lower than that of nearby West Palm Beach make this coastal town an affordable alternative, with sandy shores and the best surfing on the East Coast. Foreclosures and Short Sales may be driving the lower home prices and increase in sales of Vero Beach houses.

First-time buyers are finally able to afford places of their own. Retirees are paying cash, taking their money out of the stock market and putting it back into real estate. Buyers who wait until they see prices rising on Vero Beach homes will likely pay more!

Even investors are slowly returning. They’re not flipping properties for quick profits anymore. Instead, they plan to rent them out, at least until the market recovers. Some Vero Beach Homes are bought from foreclosures or as “Short Sales” – where the bank takes less than mortgage balance.

Ed Gleason is due to close any day on a condo on the Vero Beach (32963) Barrier Island, but he’s not stopping there. He wants to buy several properties over the next year or so, with plans to rent them. “This is the first time in years that you can buy a rental and have it pay for itself,” said Gleason, 35, an architect who lives in Boca Raton. “I’m looking towards future appreciation and rental income..”

A typical home on Orchid Island now sells for less than $350,000, a price not seen here since spring 2004, according to the most recent data from the Florida Association of Realtors. Distressed properties fetch far less than that as desperate sellers and lenders slash prices to make quick sales.

Many existing condominium units, meanwhile, are going for under $200,000, nearly 30 percent less than two years ago. Age-restricted communities are seeing renewed interest in one-bedroom condos selling for less than $175,000, Vero Beach real estate agents say.

Properties in the $100,000 to $250,000 range appear to be the most popular among buyers, agents say. Despite the recent sales rise, Florida’s housing market is expected to remain soft into 2009 because of the slow economy and the large supply of homes for sale .

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