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Have you ever looked back and said I should have done this?…. I know I have.  I remember looking at the bond market in the end of 2008 and thinking, we should be buying these right now.  Some of the municipal bonds were trading at a 20-30% discount to par value.  It is really difficult to pull the trigger, especially while you are in the moment.   I didn’t do anything about it for myself.  I told people to buy and hopefully they did.  These bonds rallied way back and close to par value.  Now we are still in very opportunistic times for purchasing real estate.   In regards to the housing market, many people are going to be saying that to themselves in a few years when they decided to sit on the sidelines.  There are a couple things we know are true.  The old saying death, taxes, and ???  I am going to plug in lending rates will never be this low again!  If you have not refinanced, please do so.  (However, please watch out for closing costs) Even if you are only going to be in your house for 1, 2, or 3 more years.  I heard one lender talking about a 5 year arm at 3.75% and the 30 year loans are still in the 4.75% range.  I am not sure how long this tax credit will be good for, but if you or someone you know are renting right now and you have never bought a house, it is time.  Even if you use it as an investment property down the road, the government is giving you $8000.  It must be owner occupied, but If you have a nephew, grandchild, or child who is graduating college, it is the perfect opportunity for you and them to work out a deal.   You can help by gifting them the $8000 they need for their down payment.

Here is an example of a potential opportunity.…If you are from Saint Louis you have most likely heard of Brentwood Forest Condos.  They are in a very desirable area right off the main highway and a very popular area for rentals as well.  Right now, you can buy a nice condo in Brentwood Forest for $150,000(maybe lower).  FHA requires you to put down 3.5% which is  $6000, but let’s assume you put down the full $8000.   Now we have bought our home for $150,000 and borrowed $142,000.  Our monthly payment based on a 5% loan(example of loan rate only, please check with lender for actual rates) amortized over a 30 year period will be $762.29 plus condo fee and taxes gets you to approximately $1000 per month.  When I first bought a condo in Brentwood Forest I rented the other room to a friend for $500 and paid the rest.  If it ends up being a rental down the road, as long as you continue to pay the note down you should be able to get around $1000/ month in rent for these places.  (You must hold property for more than 36 months or you will have to pay back part of credit) Without any growth at all (which right now you are most likely buying at a discount to market value) you are paying down your note and building equity.

The TWO Family market is another way to be an owner occupier and end up in a situation where the owner can live in a nice place for less than $500/month.  Let’s take a look at one that is on the market right now.  It is listed for around $250,000 in University City.  Many Wash U students are in the area and it is a half mile from downtown Clayton.  This is a very popular area for students and recent graduates.  We will use the same scenario putting down $8000 and borrowing $242,000.  Based on a 5% and 30 year loan(Again, please check with a lender for actual rates), our monthly payment would be $1300 with taxes and insurance and a reserve account for maintenance totaling about $1800 per month.  We rent 1 unit out for $1100 per month and same as the previous scenario rent the other room to a friend for $500 per month and your part is $300 per month.  Again, worst case you rent this as an investment property down the road you are paying it down and can get $1000 for each unit more than covering your monthly expenses.  There is also some growth potential as well.  This is a real life right now opportunity! (Every property purchase requires a deep look at recent tax laws etc., we recommend you consult a tax advisor for each individual situation)

For more details please visit www.federalhousingtaxcredit.com/faq1.php

At Upper End Properties, we can help your son, daughter, nephew, niece, grandson, granddaughter, or just a friend with the purchase of this property and any other questions you might have.  There are a ton of opportunities to make some money in real estate right now.   Get off the sidelines.  Talk to one of our agents.  We also work with some great lenders in the area that can help you through the process.

Cory J. Spielberg

Operating Partner

Upper End Properties

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