Michael Welk

Contributed by: Susan Aldretti on 10/1/2009

Michael Welk, Your Castle Real Estate, was installed as the 66 th Chairman of the Board of the Jefferson County Association of REALTORS. Welk's term of office runs from October 1, 2009, through September 30, 2010. During his term in office Welk pledged to work cooperatively with other REALTOR associations to promote continuing education as a means for members to achieve success, and to have a positive attitude. Welk believes the industry will transition from survival mode to thriving in 2010 and declared, "I am going to call the bottom of the market." Citing statistics Welk continued, "I actually believe the bottom was in late second quarter. The time is now to take advantage for the first-time home buyer tax credit, low interest rates, and other opportunities."

Welk concluded, "As we move forward with a positive message and a positive attitude, REALTORS will be on the rise in 2010 and we will transition from survive to thrive."

Kay Watson, former president of the Colorado Association of REALTORS, installed Michael Welk as Chairman of the Board. Robin Lucy, Your Castle Real Estate, was installed as Chairman-elect. Steve Danyliw, Danyliw and Associates, took the oath of office as Corporate Secretary. The directors for the 2009-10 term are: Matt Cohen, Re/Max Alliance; Amanda DiVito, Re/Max Alliance; Lincoln Gill, Broker One; Kelly Murphy, Murphy Realty; Karen Nichols, Re/Max Alliance; Chad Ochsner, Re/Max Alliance; Dave Pike, Coldwell Banker; Anthony Rael, Metro Brokers; Toni Rice, Re/Max Alliance; Annie Schneider, Re/Max Professionals; Jim Smith, Golden Real Estate, and Sue Vencil, Keller Williams Advantage.

The Jefferson County Association of REATLORS represents more than 2000 real estate professionals in Jefferson County, Colorado.

I am happy to announce the release of our first book:

The 2009 Guide to Real Estate Investing

The release date is April 1st, 2009. It is a basic guide to investing in DSF Homes, Condos, Fix and Flips, and small (2-4 Unit) apartment buildings. I co-authored it along with my associates Charles Roberts, Michael Canon, and Mike Welk. We basically ran through everything we have learned as investors over the past 10 years or so, and our combined ownership or over 170 rental units played a big part of the book as well.

Some advanced praise has already started to roll in:

Your book is a concise, practical guide for all current and potential real estate investors. Your examples and insight go a long way to help readers establish their investment plans, manage the properties and monitor returns. It's a perfect reference. It was immediately beneficial to me and I can't wait to share it with my clients! Terry

McCullough, Broker Associate, Kentwood Cherry Creek
Terry works with owner occupant as well as investor clients.

I would recommend this book to our clients. This book is straightforward and pragmatic. It doesn't sell or pitch. It gives the direction and guidance that all new real estate investors need to get started. I would recommend this book to anyone getting started with real estate investing. This book serves as both a compass and a map.

Mark Struznik, owner HomeVestors, Metro Properties Inc.
Mark and his team have bought and sold hundreds of investment properties.

It's imperative in today's uncertain economic environment to cover all your bases when looking at an investment property. This book provides the investor with a comprehensive template that should increase the probability of them achieving success. The book provides a good road map.

Bobby Hutchinson, Senior Advisor, Pinnacle Real Estate Advisors
Pinnacle helps investors buy and sell mid-size apartments.

This book is just what I need to help educate my clients. It will help me save a lot of time and it'll help my clients make better decisions.

William Roberts, President, Denver Board of Realtor
Will is a developer and also helps investors buy and sell property.

The 2009 Guide to Colorado Real Estate Investments is a clear reflection of the knowledge and expertise exhibited by Your Castle Real Estate. Even in a severe housing market and economic downturn Your Castle Real Estate's methods benefit their customers. As a professional statistician I am impressed with Your Castle's creative use of data to put them leagues ahead of their competitors.

Kieron Dey BSc, MBA, FSS
Consulting Statistician

The 2009 Guide to Colorado Real Estate Investing is a great field guide for both the experienced
real estate investor as well as the novice. This book clearly describes all aspects of real estate development with thoughtful detail and real life experience. A "must read" for anyone contemplating this type of venture.

Jeff Cline, Cline Design Group

We will be taking orders soon, if you are interested.

Loan Considerations for Buy and Hold Investors


As far as investment loans, little or no money down loans are impossible. However, lenders do permit the use of Home Equity Lines of Credit or second mortgages from other properties owned by the borrower as a source of down payment. Or, self-employed borrowers are using funds from business lines of credit to fund down payments or renovations (please note: there are asset seasoning guidelines for doing so and the debt incurred by accessing other credit lines must be accounted for against the borrower’s debt-to-income ratio). Thus, we have clients leveraging themselves with other homes they own in order to get in with little or nothing down.
There are exceptions, but practically every lender requires Full Income Documentation on any investment purchase. Full Documentation requires the proof of income through W2s, pay stubs and/or tax returns, as well as proving liquid assets with bank statements. The max LTV is 85% on a non-owner single family property (75% for a 3 - 4 unit); however, most homes are being affected with the ‘declining market’ tag. As such, the maximum loan permitted would be 80% of the purchase price. This is due to mortgage insurance companies refusing to provide MI on investment properties in declining markets. Also, if an investor does not have landlord experience in the past two years, new rules will now not allow any rental income to be included as monthly income. Hence, the buyer would need to qualify with the entire payment going against his/her debt-to-income ratio.
Another point to keep in mind is that Fannie Mae and Freddie Mac are only permitting a maximum of 4 financed properties on a borrower’s credit report. Hence, if a borrower is looking to purchase or refinance a fifth home and already have four loans on their credit, they will face a tremendous challenge in securing financing. This latter rule only affects someone purchasing or refinancing an investment property/second home and NOT an owner occupied purchase.
All this being said, if an investor can put down 20% (or borrow a good chunk of that 20% from other homes they own or lines of credit), is Full Doc, with a 680+ credit score and DTI below 50%, rates are in the upper 6% range on 30yr fixed mortgages with no prepay penalties. With home prices bottoming up in most neighborhoods, coupled with a bullish rental market with increasing rents and low vacancy, investors can easily generate hundreds of dollars of cash flow per month. In fact, many investors choose 15 year fixed mortgages to pay off the loan quickly, yet still cash flow tremendously.

What is a FICO score?
FICO stands for Fair Isaac Corporation, a company that created the most used credit scoring model in the United States. An individual’s credit score is calculated through a statistical algorithm and is used as a factor in determining the likelihood of a borrower defaulting on a loan. FICO scores are generally used for obtaining mortgages, car loans or consumer credit. The scores are provided from the three major credit reporting agencies: Equifax, Experian and Transunion. Typically, there is a variance amongst the scores since each agency has a slightly different scoring formula. FICO scores range from 300 – 850, with higher scores being considered less risky. For mortgage lending purposes, any score over a 680 is considered good and above a 750 is considered excellent. Any score below 580 is considered great risk and will be challenging for such a borrower to secure financing.
The factors that contribute to a FICO score and the weighted percentages for each are as follows:
• 35% — timeliness of payments (adverse dings to scores for any payment greater than 30 days later, collections, past due accounts)
• 30% — the ratio of used debt to allowable debt for consumer credit (an individual that maxes out their credit cards will see a decrease in their score)
• 15% — length of credit history (the more credit history and showing proof of consistent timely payment, the better the score)
• 10% — types of credit used (installment, revolving, mortgage)
• 10% — recent credit inquiries and recent new credit (taking out a fair amount of new credit with multiple credit inquires can adversely impact a score)

A LOT of agents don't advise their clients to get sewer scopes when they purchase a property. This is a major mistake. A broken sewer can cost between $3,000 - $10,000 dollars to repair and it only costs $99 ($99Rooter - others are more expensive) to have a tech put a camera down the sewer pipe and videotape the sewer all the way to the mainline. This will tell you and the-buyer what the condition of the sewer is. So let's see, we pay to have the furnace inspected but a new furnace will only be about $2,000. We pay to have the roof inspected but that's probably a $4,000 job. So why don't we always inspect the sewer? One reason is because, let's face it, Realtors want closings. Many figure if they keep their mouth shut and don't go out of their way to recommend a sewer scope that's one less chance the deal will fall through. Inexcusable, but all too commonplace. Don't be a chump - get a sewer scope.