Tim Holtkamp

Starting April 22, 2010 The EPA has a new rule that will start to change the way you do business and who you do it with. 40 CFR 745.80 to.91 sets forth new lead based paint requirements. I have listed some of the highlights and enclosed a link to a 15 minute video that you should really watch. The rule applies to housing built before 1978 If you are doing the work to your own home you don’t have to comply with the rule. Rule applies if you disturb more than 6 square feet on the inside and 20 outside or if you replace a window or any demolition. For rentals you will need to distribute the “Renovate Right” hand book before starting any work and get their signature confirming they received the book. You can order copies of the book at www.epa.gov/lead You must give tenants the book within 60 days of starting a renovation. It does not require that you clean up existing lead hazards or test for Lead. It does require you use lead safe work practices and hire a contractor that is certified in lead practices. You can get out of the rule if you test for lead and do not work in an area that has no lead. In emergency renovations you do not have to be certified however you have to use a certified Renovator to do the clean up. Penalty for not complying is up to $37,500 per day per violation. Not just the EPA and state can enforce this rule any citizen can sue you for compliance. This is the link to the video you should go watch this video. http://www.realtor.org/government_affairs/lead_paint_property_managers

Wholesaling Real Estate: A very popular way of making money in Real Estate investment is to do what people call Wholesaling. That is to find a great deal on a property and then mark it up and resale it to another person. Both of these transactions would be below the retail market price hence the name. This can be done with great success in several ways. First you need a network of buyers. These people should be a diverse group of people from other Real Estate investors (the least profitable but more possible sales) to retail customers (the most profitable but least prolific). You need to develop contacts with types of customers in between as well. Look for customers looking to buy Real Estate for rental but only want a few properties to diversify stock and bond portfolios. You will find they are very particular about the house and location and will only do a few deals from time to time. I know an insurance agent that buys rental property as his retirement plan he pays cash and just keeps saving what he makes each month and when he has enough money saved up he then buys a house. I think he is up to about 2 per year. Another good source for customers is the neighbors of the property. I know a couple of guys that paid $50,000 for a house just to bulldoze it and split the lot between them. Apparently the house had been a rental that had caused them both so much pain that they were willing to pay $25,000 each just to get rid of the problem. Also the neighbors have a pretty good idea of what houses go for around them and if you are offering it at a discount they will buy it just because it is a good deal. The key is to have as many ready willing and able buyers at your finger tips as you can. The second half of the coin is to have properties under your control. You can purchase them or option them but do not start marketing them until you control them. There are lots of ways to find properties and I will go in detail on how to do that in latter articles. The main thing is to be looking for deals all the time. The best deal for a wholesaler is a deal that only he knows about.

I just ordered a book today called “Obamanomics” by Timothy Carney. I watched an episode of Book TV on CSPAN this weekend where Mr. Carney gave a lecture on his book. I almost did not watch the show because of the title of his book. I did not want to sit thru another guy blaming all the trouble in the world on the Democratic Party or president Obama any more then I wanted to sit thru a guy doing the same thing to the Republicans or former President Bush. However even though I have several hundred channels to choose from nothing else was on. Thankfully I gave him a chance. I will tell you Mr. Carney’s politics seems to be from the Right his lecture seemed not to be politically motivated. His points were things that both parties do and that affect all of us. I as best I can tell his book list examples of how big business works with both parties to make additional profits and damage competitors. This was not that surprising but the way they use the government and their armies of lobbyist to crush small companies and make it harder or impossible for people to start up. Mr. Carney has what he calls the Four Laws of Obamanomics. “The inside Game” This is when the business with the best lobbyists will get what they want written in the bill. After the bill is written then they will hire people from Capitol Hill or other staffers to help influence the crafting of the regulations all with the purpose of damaging their competitors or enriching their companies. “Overhead Smash” This is when a large company lobbies for increased regulation for the purpose of driving up overhead costs to make it more difficult on smaller competitors or to make it impossible for new people to enter the industry. “Gumming Up the Works” It is difficult for large companies to move quickly so completion is threatened to them. Because of this they will work toward regulations that slow things down. This helps them maintain an advantage over smaller companies. “The Confidence Game” Large companies lobby for regulation in order to boost public confidence in their products or services. Lots of times any real changes don’t help protect the public they just help out the large company. I am not sure what we can do about this system but letting people know how it really works is a good first step. I will most likely post some examples from the book after I get it.

This is a blog post that a friend of mine Matt Spinn put together and I think it is good information for people to know. Tim Holtkamp 254-662-2222 Before the conventional mortgage loan market collapsed, approximately 10% of home buyers utilized FHA financing. Conventional loans were king. Borrowers who had less than perfect credit and little money down could utilize the FHA programs to purchase a home. FHA required 3 percent down and the seller could contribute up to 6 percent in seller paid closing costs. A buyer who purchased a $200,000 home with the seller paying 6% in seller paid closing costs needed only $6,000 in down payment and about $1,000 in additional cash to cover buyer paid closing costs. Today approximately 41% of all loans originated by mortgage banks are issued and insured by FHA. The reason for the sudden use of FHA insured loans is due to the stringent conventional mortgage guidelines and lack of insurability of conventional loans where the buyer does not have 20% for down payment. Today a buyer who wants to use a conventional loan to purchase a home needs a 680 credit score and the combined housing and credit debt ratio cannot exceed 41 percent of the buyers gross income. FHA will in some instances allow a higher debt ratio if the borrower has good quality risk factors such as great credit, cash reserves in the bank and job stability. FHA now requires borrowers to be on their current job at least 6 months. Due to the number of defaults on loans in the past year FHA loans are changing. Today FHA requires only 3.5% down however this will be changing. FHA will require 5% to 10% down when utilizing an FHA loan. They are taking away the ability for a seller to contribute 6% to assist the buyer to pay closing costs. The seller will be able to contribute up to 3%, the same as a conventional loan. Also the upfront mortgage premium is going to be increased from 1.75% to 2.5%. If you are a home buyer and utilizing FHA now is the time to purchase that home before these changes go into effect! Remember you must be under contract by April 30, 2010 and settle by June 30th, 2010 to also take advantage of the tax credit!