REPOST: Home buying: Go with cold, clear logic (and rent)

Financial advisor Patrick Bet-David migrated from Iran in 1990. Despite having the money to buy a new home, he still rents his house in Los Angeles. He likes the flexibility of not being tied to a house and the benefits of a rising market. The Denver Post tells his story.

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Anyone looking for a strong shot of unvarnished reality need look no further than Patrick Bet-David. This California-based financial services adviser is to romantic notions — like home ownership and dating — what sunshine is to fog.

His outlook may be just what America needs.

"I was sold an American dream," said Bet-David, who immigrated with his family from Iran in 1990. "What I saw as an immigrant was a place we could have freedom of religion, and run a business in a free market, with free enterprise."

And today, at 34, Bet-David owns the PHP Agency, a financial services firm he founded four years ago that has 30 employees and 200 full-time independent contractors nationwide. Bet-David does very well.

He also rents his home.

"My employees come over and wonder, 'Why does our CEO rent his house?' " he says.

Because he's following his own financial rules, that's why. One of those rules: Just because you have the money doesn't mean you should buy a house.

His wife of nearly five years knew early in their courtship that owning a home was not going to be part of the plan for a long time. That discovery occurred shortly after their second date.

They went to church, then to breakfast, then to a bookstore where he bought her a book: "101 Questions to Ask Before You Get Engaged."

Talk about cutting to the chase. "I figured, I liked her, she liked me, so let's flush out any problems before some deal-breaker comes up a year from now."

I'm telling you, this guy is practical in the extreme. "After that, I knew I would marry her."

His no-nonsense approach to courtship applies to home buying, too: Logic first, emotion second.

"I've worked with thousands of families struggling to make house payments, which leads to arguments, all because they bought a house prematurely, and spent too much," said Bet-David.

I thought I'd call Bet-David for a reality check because lately, I've been hankering to buy a home again. As a live-in home stager, I am not currently living in a home I own — a lifestyle that breaks with more than two decades of personal history.

However, I do own a home in another state, which I rent out, making me both landlord and tenant — as well as crazy.

"While I like having the flexibility of not being tied to a house," I tell Bet-David, "being a tenant just isn't the same as owning. I want to paint my way, add built-ins and moldings, put up window treatments, plant a garden, have a dog, get to know the neighbors, nest." He's heard it all before.

"What you're doing — owning a home you rent out and renting where you live — is perfect right now," he tells me. "You get the benefits of a rising market, but can be nimble."

"Perfect?" I'm not sure I heard right. That would be the first time anyone has ever used that word to describe my investment strategy.

"What you're doing has a lot to do with the phase of life you're in. Your kids are taking off. Your career is blooming. You're charting a new course."

"You think I planned it this way?"

"You've built houses from the ground up. You've bought and sold. Been landlord and tenant. You know about the different phases and stages of life and houses. I want to teach other people to do what you've done," he says.

I can't even talk for laughing.

"I work with a lot of millennials just getting started. They think buying a house is the next thing to do. But they saw what happened to their parents," he says.

"Please tell me they learned something from the spend, extend, pretend era," I beg.

"My message isn't 'don't buy a home,' " he says. "My message is, the American dream is not home ownership. The American dream is freedom."

"I want both," I said.

Bet-David is about to have both. In four months, he and his wife, and their two sons, ages 20 months and three weeks, are moving from their rental home in Woodland Hills, Calif., to a house they're buying in Dallas. (He chose Texas partly because it has no state income tax, so it's friendlier to business.)

But he still followed his own home-buying rules.

Smart home buying

Financial services adviser Patrick Bet-David's five rules:

1. Don't buy unless you have more than 12 months of house payments saved. He helped me with the math: Say, you buy a house for $350,000 and put 10 percent down. Depending on your loan, you will probably have a $315,000 mortgage, which will cost about $1,800 a month or $22,000 a year in mortgage payments. Add $3,000 for property taxes, and more for insurance and association fees, so you should have $25,000 to $30,000 in the bank after closing.

2. Don't buy if you're not going to live in the area for 10 years. Do your due diligence. (Bet-David has been considering the Dallas area for two years.) Consider your work, the community, nearby family, schools and neighborhood.

3. Don't buy if you're a newlywed. "Wait two years," he said. "In addition to being a couple, you are business partners. It could take a while for you to learn how your partner manages finances. If one is spending out of control, you don't want to take on a mortgage. First learn how disciplined (the other is.)"

4. Don't buy too much house. Whatever price home you can afford, force yourself to go 10 to 20 percent cheaper. Brokers might try to persuade you to buy as much house as you can qualify for. Resist.

5. Don't buy a house to keep up with your friends. Even if you and your friends have the same household income, and they buy a house for a certain amount, you don't know whether their parents helped with the down payment; you don't know what their debt is or whether they're going to be overextended, he said. Deal with the cards you were dealt. Buy within your means, not someone else's.


Mariyan Khosravizadeh is an experienced Woodland Hills realtor who helps buyers and renters find their ideal home in the best possible deal. Subscribe to this Facebook page to get more tips on home buying and renting.

REPOST: Fannie, Freddie ease lending crunch during shutdown

 CNN reports that lenders are now allowed to issue loans without verification from the Internal Revenue Service (IRS) during the federal government shutdown.

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Fannie Mae and Freddie Mac have relaxed rules that would have kept banks from approving mortgages during the government shutdown.

Typically, Fannie and Freddie require lenders to verify a borrower's income with the Internal Revenue Service before closing on a mortgage. But last week, some lenders reported that they could not approve the mortgages because the shutdown had severely curtailed the IRS's operations.

The government-backed mortgage giants have since said lenders could continue to issue new loans even without the IRS's confirmation.

Borrowers who apply for mortgages will still need to sign an income verification request with the IRS. But verification can wait until after the government shutdown ends, and lenders can use other means to verify a borrower's income.

Wells Fargo (WFC, Fortune 500), the nation's biggest mortgage lender, had originally said all mortgage applications would have to wait until the shutdown ends. But now it is telling underwriters they can move mortgage applications through the pipeline without the completed IRS verification, said Tom Goyda, a spokesman for the bank.

Some banks, however, may be more cautious, according to David Stevens, president and CEO of the Mortgage Bankers Association. Stung by a flood of defaults after the housing bubble burst, lenders are especially wary of borrowers who claim earnings from self-employment or who supplement their wages with freelance work, consulting or other less-thoroughly documented income sources.

In cases like those, said Stevens, lenders may seek to verify the information on a borrower's 1040 by asking for a copy of their bank statement from the month they deposited their 2012 tax refund or copies of the check they sent to the IRS to pay their taxes.

A small percentage of lenders -- perhaps 10% or fewer -- may decide that lending without the IRS income verification is too risky, said Stevens. If a mortgage defaults, Fannie or Freddie could force the lender to shoulder the losses.

"There's less appetite for risk, after the fiscal crisis," said Stevens. And that could be enough to scare some lenders into waiting until the shutdown ends.

Mariyan Khosravizadeh is a realtor at Woodland Hills Real Estate Services. She specializes on serving clients who are looking for real estate opportunities in Los Angeles County and  its surrounding communities. Visit this website to learn how she can help you find your ideal home or sell your property at the highest value.

REPOST: How Fast Can You Buy a Home?

Homes are selling fast these days as the real estate market continues to perform well. But how financially prepared are people when buying a home? Credit.com’s Gerri Detweiler finds out in the article below.

Image source: homes.yahoo.com

In hot markets across the country, homes are selling fast. And that means if you hope to buy a home, you have to be prepared to move quickly.

"I've seen all cash offers close in three days," says Realtor.com's Consumer Housing Specialist Leslie Piper. "And I've seen loans get approved and close within 21-25 days."

Forty-seven percent of all homes sold in June 2013 were on the market for less than a month, according to the National Association of Realtors. It also reports that the median time on market for all homes was 37 days in June. Short sales were on the market for a median of 68 days, while foreclosures typically sold in 39 days and non-distressed homes took 35 days.

If you don't have cash to buy a home, it's critical that you get pre-approved for a mortgage. "Prior to starting your house hunt, you give your lender all of your financials," says Scott Sheldon, a loan officer with Sonoma County Mortgages. "You let them pull a copy of your credit report, run your debt ratios … and you go house hunting knowing you are ready to roll."

Once your offer on the home is accepted, be prepared to be at your loan officer's beck and call. "If you are diligent about providing the lender everything they request, you should be able to close in 25 days or less provided the real estate agent title company and everyone is diligent about meeting contractual time frames," Sheldon adds.

Barriers to Speedy Homebuying

Piper warns that if deadlines can't be met, you can lose the home. "We are seeing a lot of back-up offers so if someone overpromises but underperforms things can fall out of escrow."

Searching for the right home to buy might take a little longer.

According to an annual survey by the National Association of Realtors, the typical buyer searched for a home for a median 12 weeks and visited 10 homes, down from 12 homes in the previous year's survey.

It helps to find a real estate professional you can trust to help you in your search. "That person is going to be your eyes and ears and tell you what is going on," says Piper. In addition to providing profiles on real estate professionals, Realtor.com offers free mobile apps with information about millions of homes for sale, and includes the ability to search within a particular school district.

Also be sure to scout out neighborhoods where you'd like to live so you are prepared to make an offer when a home you like becomes available. "Most buyers are choosing a (home) based on the neighborhood," says Walter Molony, spokesman for National Association of Realtors. "They want to be close to work or close to family and friends. If you are an entry level buyer you want to make sure you understand that neighborhood. Try it in rush hour. Get a crime report if you don't have first-hand knowledge. Check out schools if you are a family with children."

Tips to Buy a Home Fast

• Check your credit reports and your credit score before you start shopping for a home to give yourself time to fix any mistakes you find. You can check your credit reports for free once a year from each of the three major credit reporting agencies from AnnualCreditReport.com. You can also check your credit score using Credit.com's free Credit Report Card.

• Get preapproved — not just prequalified — for a mortgage. Doing so may even put you at an advantage over a cash buyer who may be offering less money.

• Work with real estate and mortgage professionals who have a track record of meeting deadlines. Don't be afraid to ask for references.

• Protect yourself. No matter how much you love the home, make your offer contingent upon a satisfactory home inspection, so you aren't stuck with a house with unknown problems, suggests Molony.

Buyers seek the help of real estate agents like Mariyan Khosravizadeh in their quest to purchase their dream house. Learn more about the essentials when purchasing a home from this Twitter account.

Distressed properties: Worth the investment?

The remodeling industry is thriving under the current economic conditions. Home remodeling is a popular topic in the media, particularly in magazines and reality television shows. Distressed properties are in abundance, and renovating these homes for a handsome profit has attracted the attention of both amateur investors and specialists.

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Distressed properties—particularly those that have undergone a considerable amount of disrepair through the years—can be a real estate investor’s goldmine. While the actual profit margins from buying and selling remodeled real estate are not as big as those seen in popular media, repairing and renovating a low-priced rundown home can be a very good investment depending on the circumstances. Much of the advantages come from low initial cost of the home and of remodeling the property. The markup prices of newly renovated homes are usually more than the initial price of the home when it was first purchased.

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Homes that are dilapidated are usually sold for much cheaper prices than homes that are in mint condition. The costs of remodeling these homes are typically much lower than the costs of building a new home, assuming that the home has not dilapidated beyond a certain point.

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Done right, a distressed property can be transformed into a nice home ready to be sold at a substantial profile. This article on Forbes.com provides more information on profiting from distressed properties.

Mariyan Khosravizadeh is a sought-after real estate agent in the Los Angeles area. Visit this site for more information about her work.