Darel Ansley

With some great prices out there right now for vacation condos in Leavenworth and Chelan, a lot of people are entering the market. With prices coming down, some people ask me if they should wait for them to drop further; I tell them, " When you can buy a condo you like for less than it costs to build, there can never be an oversupply at this price, because if this is the price, no one will build any new ones. So if you didn't catch the absolute bottom of the market, you sure got close"

After you see the great prices, before you make an offer, you better check on financing. A lot of lenders have backed away from doing loans on vacation condos, especially those which can be rented out part of the time. Most condos loans I actually do are for people who started with a lender who said they could finance it as a conventional loan- only to have it get kicked out of underwriting. We do both Fannie Mae condo loans as well as 'non-warrantable' condo loans, and here is the big difference (I'm not smarter than anyone on this, we just checked with Fannie Mae to see what they would take): It is the presence of BOTH a rental pool, AND a nightly rental desk that kicks most of the loans out of FNMA eleigibility.

The other issue is the percentage of units that are investment properties Vs 1st/2nd homes. And then the other new FNMA rule that stops most new condos is that FNMA won't buy a loan for a condo unless 90% of the units have been sold.

So what does this all mean? For Leavenworth and Chelan, only a small number of projects can get Fannie Mae loans (I recently closed one at Kahler Glen). For all other condos, you will need to seek out a community bank that does Portfolio lending (lending their depositors money). These rates can be higher, however 1) If it is a new project, the bank that financed the project is probably offering special financing. and 2) If you save $100,000 or more off of what they used to go for, but you have to pay a higher interest rate SO WHAT; you are saving a bundle overall. Here is some quick math - you think you would like to pay 5% , but let's say the portfolio rate you find is 7%. If the loan amount with the new pricing is $200,000 you pay $1330 a month P/I. That unit used to sell for a $100K more. Even if you could have gotten the 5% you wanted, 5% on $300,000 is $1610 a month.

These deals won't last forever, as there is no more supply coming on the market for a great while. Seek out a competent Realtor in the specific market you are looking at to help you.

This year, probably half of the construction loans I have done have been for owner-builders. This is the term we use for people who are building a home without a general contractor. In reality, the projects vary from individuals who never lift a hammer and just schedule all the subcontractors, to the people who are out there on the project themselves setting their own concrete forms and doing all their own framing and finish work.

For those who are a little nervous about being completely in charge, there are now lots of consultants available, as well as companies who will build everything for you except for the parts you feel comfortable with. Oftentimes they will build the external shell of the house -framed inside with roof,siding, doors and windows. You can then split the rest between your own labor and subcontracting. Basically, if you know which parts you want to do, you can find a builder who will take care of all the rest.

What I have been seeing is a nice drop in materials and labor prices this year, making these projects a great investment for the homeowners, as the cost savings equals additional equity in their homes.

If you are in the greater Wenatchee area, pick up a copy of the July issue of The Good Life magazine; a story inside features my clients the Flittons and the success they had with their owner-builder project in East Wenatchee. I would love to link to the article, but the magazine is not online.

I currently have owner builder homes under construction in Winthrop, Omak, Chelan, East Wenatchee, Leavenworth, Cashmere and Crescent Bar, and just finished one in Wenatchee.

If you are looking for a new home, with prices down for land, construction materials and labor, now would be a good time to check out the option of being your own contractor.

Here are a couple shots of some owner-builder projects currently underway.

I was at a meeting with Realtors from Western Washington, and they were amazed that we were still doing lot and land financing. Actually in our market areas of Wenatchee, Chelan, Winthrop, and Leavenworth (plus surrounding Counties), there are actually several community lenders that will lend on land. Each bank has different programs and terms, so it is worth calling around to compare programs before making a decision.

I have seen some great deals out there; your dollar really goes a lot farther than it did a few years ago.

I cringe whenever people ask, "Are you still lending money?"; but I suppose it is a fair question these days. In my markets of Wenatchee, Leavenworth, Chelan, Winthrop and Okanogan County, most of the banks that used to do a lot of construction lending have severely cut back their programs. Some of the things that other lenders have dropped but we still do are:

Owner-Builder Construction Loans

Lot Loans, Land Loans

Modular Home Loans (those delivered in sections)

Kit Home Construction Loans, or panelized home Loans such as Lindal, Viceroy, etc.

Loans for homes where construction has already started

SIP Construction loans, or ICF construction loans

Many of my clients were planning to build a year or two ago, but everyone was too busy. It has turned out to be a huge blessing as prices are coming in much lower than they were in the past.

Many people from the Puget Sound region eventually seek out a simpler life and move over here to Eastern Washington where there is no traffic, the pace is much slower and the sun shines. Whether you want a small town, or wide open spaces; the low cost of building makes it a great time to make your escape.

Click here for some basics on Construction Lending

I lost out on a transaction with one of my clients the other day; but I think they made the right choice by not refinancing with me.

I had financed a spec home for them near Lake Chelan which has not sold. I was in the process of refinancing it into an investment property on a 30 year fixed loan. These days Fannie Mae adds all kinds of extra fees for investment properties, and less than perfect FICO scores etc. They weren't taking any cash out, and the loan is less than 60% of the current appraised value, but it was still going to cost them about $10,000 in fees to get a 6% loan.

The owner called me and said that a freind was looking for a good investment that was safer than the stock market and returned better than CDs, so she asked if she could pay off my client's mortgage and have my client pay her 6% interest.

So the friend gets a safe 6% return on her investment, which beats the stock market by about 50%, and my client gets her new loan without the Fannie Mae loan fees.

Of course, I'm out a nice commission on a $417,000 loan, but I couldn't argue with the logic, and encouraged my client to take advantage of a great opportunity.

When people are lining up for 0% interest on 3 month Treasuries, a mortgage on a trusted friend's property, at a safe loan-to-value, looks pretty good.