To Rent or To Buy..?

…That is the question – well, the question that many people are asking themselves right now. To help answer that question, we’re featuring an article provided by the California Association of Realtors.

This year, California real estate market conditions make a strong and compelling case for homeownership. With prices still well below the historic highs of just a few years ago and attractive mortgage rates, qualified buyers have a unique opportunity to own their own home. As seen below, a rigorous analysis of renting versus buying hears this conclusion out. As shown in the following chart, the monthly housing costs (principle, interest, taxes, and insurance or PITI) associated with buying a median-priced home of $301,430 is $1,590 (Fourth Quarter 2010 median priced home in California).  This assumes the buyer is making a 20 percent downpayment and financing with a 30-year fixed rate mortgage at 4.62 percent. In comparison, the median rent on a three-bedroom two-bath apartment with renter’s insurance in California is $1,810. That means buying a home would save the homeowner $220 per month when compared to renting and the homeowner would save over $2,600 a year.


In addition, existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. For example, compare the tax implications for two households both earning $63,430 a year, the minimum income required to purchase the statewide median-priced home of $301,430.* The household that purchases the home with a 20 percent downpayment and finances the mortgage at the current rate of 4.62 percent will receive a tax deduction of over $14,000 in the first year of ownership. The renter household will most likely utilize the IRS Standard deduction of $11,400, $2,600 less than their homeowner counterparts. The homebuyer reduces their total tax liability by $400 compared to the renter in the first year of ownership. Accounting for the out-of-pocket savings as well as the tax savings, the homebuyer saves over $3,000 in their first year of ownership.


The mortgage rate is a significant factor in determining just how much a homebuyer can afford. Today’s low mortgage rate environment tips the scale—for some—in favor of buying versus renting. For a home priced at $400,000, with a 20 percent downpayment and a 4 percent mortgage rate, the monthly PITI will be $1,990 for the homebuyer. The monthly PITI jumps to $2,180 at 5 percent and to $2,380 at 6 percent. For each one percentage point increase in the mortgage rate, the payment goes up by almost $200 under these assumptions. Even for a lower priced home at $200,000, the difference in the monthly payment is significant as each percentage point rise in the mortgage rate tacks on $100 to the monthly PITI.


Of course, there are many other socioeconomic benefits that homeownership brings to communities. And there are other costs associated with homeownership above and beyond the downpayment and monthly PITI. So as long as one has considered all of the costs and benefits of owning a home and is in the financial position to do so, there are some pretty compelling reasons to strive for the “American Dream.”


Investing in Real Estate Part 2

If you want to own a rental property, but do not want to be a landlord, a real estate investment group may be the solution for you. A company will buy or build a set of apartment blocks or condos and then allow investors to buy them through the company. A single investor can own one or multiple units, but the company operating the investment group collectively manages all the units – taking care of the maintenance, advertising vacant units, and interviewing tenants. In exchange for this management, the company will take a percentage of the monthly rent.

Typically the lease is in the investor’s name and all of the units pool a portion of the rent to guard against occasional vacancies, meaning that you will receive enough to pay the mortgage even if your unit is empty. The quality of an investment group depends on the company offering it. It is usually a safe way to get into real estate investment, but some groups CAN be vulnerable to fees that affect the mutual fund industry. It is important that you look into these potential fees beforehand.

Real Estate Trading

Real estate trading is very different from buying-and-renting. Real estate traders buy properties with the purpose of holding them for a short period of time (three to four months). Afterwards, they hope to sell them for a profit. This technique is also called flipping properties and is based on buying properties that are either significantly undervalued or are in a very hot market.

Property flippers usually do not put any money into a house for improvements – the investment ha to have the intrinsic value to turn a profit without alteration or they won’t consider it. Flipping in this manner is a short-term cash investment. If a property flipper gets caught in a situation where he or she can’t unload a property, it can be devastating because these investors generally don’t keep enough ready cash to pay the mortgage on a property for the long term. This can lead to continued losses for a real estate trader who is unable to offload the property in a bad market.

Other property flippers may also buy reasonably priced properties and add value by renovating them. This is a longer-term investment (depending on the types of improvements). This form of investment is time intensive and may only allow investors to take on one property at a time.

Real Estate Investment Trust

A real estate investment trust or REIT is created when a corporation (or trust) uses investors’ money to purchase and operate income properties. REITs are bought and sold on the major exchanges just like any other stock. A corporation must pay out 90% of its taxable profits in the form of dividends to keep its status as an REIT. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed its profits and then have to decide whether or not to distribute its after-tax profits as dividends.


Investing in real estate gives an investor one tool that is not available to stock market investors: leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order. Even if you are buying on margin, the amount you can borrow is still much less than with real estate. Most “conventional” mortgages require a 25% down. However, depending on where you live, there are many types of mortgages that require as little as 5%. This means that you can control the whole property and the equity it holds by only paying a fraction of the total value. Of course, your mortgage will eventually pay the total value of the house at the time you purchased it, buy you control it the minute the papers are signed.

This is what emboldens real estate flippers and landlords alike. They can take out a second mortgage on their homes and put down payments on two or three other properties. Whether they rent these out so that tenants pay the mortgage or they wait for an opportunity to sell for a profit, they control these assets despite having only paid for a small part of the total value.

Investing in Real Estate Part 1

Investing in real estate has become exponentially popular over the last five decades and is now one of the most common forms of investment. Although the real estate market has plenty of opportunities for making big bucks, there is a lot more to investing in real estate compared to investing in stocks in bonds.

Rental 101

This form of investment has been around for.. a very long time. Typically, a person will purchase a property and rent it out to a tenant. The owner (aka, landlord) is responsible for paying the mortgage, taxes, and maintenance costs. Ideally, the landlord charges enough rent to cover all of the costs mentioned above. If the landlord wants to go above and beyond, he/she may also charge more to gain monthly profit. However, the common strategy is to be patient and charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit.

In addition, the property may also appreciate in value over the course of the mortgage, leaving the landlord with a more valuable asset.

Potential Risks of Real Estate Investment

  • The landlord may end up with a bad tenant who damages the property.
  • The landlord may have no tenant. (This would leave the landlord with a negative monthly cash flow).
  • Finding the right property – it is important to pick an area where vacancy rates are low and to choose a place where people will want to rent.

The biggest difference between a rental property and other investments is the amount of time and work that you will have to devote to the maintenance of the investment. When you buy a stock, it sits in your brokerage account and (hopefully) increases in value. If you invest in a rental property, there are many responsibilities that come along with being a landlord. For instance, when the AC stops working, you’re the one that gets the call.

For those who mind the work, you may hire a professional property manager who will take the problem off your hands.


Luxury in Aliso Viejo

Price: $1,079,000
Bedrooms: 6
Bathrooms: 3
Size: 3,200 square feet
Lot size: Approximately 6,050 square feet
Breathtaking Un-obstructed Canyon View Home with more than $350,000 in upgrades! This Light and Bright Turnkey Home is a Must See! Truly an Entertainer’s Home with an Open Floor Plan and one of the Largest Lots on the Street with a Pool, Spa, Built-in BBQ, and Outdoor Fireplace. The Home possesses every Upgrade Imaginable, Including: Brand New Maple Flooring, Cherry Cabinets throughout, Gourmet Kitchen with Sub-Zero & Viking Range, Granite Countertops, Wainscoting, Custom Stone and Mill Work throughout, Crown Molding in every Room, Built-in Wine Fridge, Outdoor-Fridge, New Exterior Paint, $30,000 Sound System throughout the house and back yard, Four-Room indoor Surveillance cameras, Built-in Cabinets throughout the Garage, & Much, Much More. This Home is Situated on a Single-Loaded Street, and the Curb Appearance is Beautiful with the Manicured Landscape and Lighting. The Stereo Equipment and the Majority of TVs are included in the listing price.

More information:

Provided by: Nariman Noosha | | (949) 500-8035

Things to Consider Before Buying a Home

Interest rates are crazy low, tons of houses are on the market (meaning that there are plenty of options for buyers), and the cost of renting is going up. With all of these things in mind, the housing market is great for buyers right now.

Unfortunately, this does not mean that buying a home is right for everyone right now. Which is why there are a few things that you ned to consider before buying a home.


It’s important to consider whether or not your job and your finances are stable. How is your industry doing right now? Do you have a financial buffer? Financial buffers are important because if the worst case scenario happens (knock on wood), you want to be able to sustain yourself as you get yourself out of the worst case scenario.

If you’re in good financial condition, now you may consider whether or not you have enough money for a down payment. Depending on where you want to live and the house, you may need $8,000 to $40,000 dollars for the down payment. And you’ll have to remember the closing costs, which may be 3 to 4 percent of the total purchase price.

Cons of Homeownership

Some of the difficulties that come with owning your own home include self maintenance of the home. If you’re not willing to deal with home maintenance on your own, then purchasing a home may not be right for you at this time. There will also be additional bills that you will have to pay because you are the homeowner (e.g. cost of maintenance appliances, property taxes, hazard insurance, etc.).


More bang for your buck. Financially, it makes sense to stay in your home for 5-7 years (at least) before selling it. So if you think there’s a good chance that you may leave the area, you might want to hold off on the home buying.

Your Reasons for Buying

Buying a home is a long-term commitment that will have massive impacts on your lifestyle, your family and your finances. In other words, don’t do it unless you’re really sure you want to and are ready for the lifestyle change – don’t let someone else talk you into it. Worthy reasons renters with homeowning readiness give for their decision to buy include some or all of the following:

  • You want to build equity instead of paying a landlord. Fact is, if you get a fixed rate mortgage and make the payments for the full term of the loan, you’ll eventually pay it off. That’s not possible when you’re renting.
  • You want a place to call your own, where you can paint a wall purple, add a pottery spinning studio or build your dogs an obstacle course (oops – that’s my reason for homeownership!), because it’s your prerogative.
  • You want the tax advantages of homeownership.
  • You want a stable place you and your family can live for as long as you’d like.

Ask yourself these questions, and be honest with your answers. If you really want to buy, but your answers to these questions today don’t weigh in that direction, it doesn’t mean you’ll never own a home. It’s usually just a matter of strategically timing your purchase out a year or two when your savings, your career and your lifestyle are in alignment with the implications of ownership – consider working closely with a real estate broker and a mortgage professional to get an action plan in place and start working that plan.

Helpful articles:

Only 1 Out of 3 O.C. Residents Can Afford A Home

Fewer than one-third of Orange County residents could afford to buy a median-priced, single-family home here as of the second quarter of 2011, a California Association of Realtors analysis shows.

The report’s Orange County highlights:

  • Only 31% could afford the home. That compares with 27% in Q2 2010 and 33% in Q1 2011.
  • The median, single family home price: $536,720
  • A minimum qualifying income of $115,320 would be required.
  • Monthly payments, including taxes and insurance, were pegged at $2,880 a month.

Statewide, the percentage of buyers who could afford to purchase a median-priced, single-family home dropped to 51% in the second quarter of 2011, down from 53% in Q1 2011 but up 46% in Q2 2010.

California buyers needed a minimum annual income of $63,080 to qualify for a $293,580 median-priced home in Q2 2011. The monthly payment, including taxes and insurance, would be $1,580, assuming a 20 percent down payment and an effective composite interest rate of 4.85 percent, according to the report.

From C.A.R. President Beth L. Peerce:
“The pending cut in the Fannie Mae/Freddie Mac high cost loan limits will make it harder and more expensive for those who live in high cost areas to purchase a home. Buyers who plan to finance their home purchase with a mortgage of $625,500 or more will face higher interest rates, higher down payments, and tighter loan qualification requirements beginning October 1.”

View post here:

A Tranquil Home in Orange

Price: $519,900
Bedrooms: 3
Bathrooms: 1.75
Size: 1,651 square feet
Lot size: Approximately 14,000 square feet
Description: Imagine living in a tranquil, tucked away cul de sac near the prestigious Villa Park border and in close proximity to shopping and restaurants. This warm and spacious ranch style, 3 bedroom, 1.75 bath residence has many upgrades including a new Bosh dishwasher, full house security system (fire & police monitoring capability, glass breakers & sensors), surround sound system, new flooring and new interior paint. View the city night lights each evening from the living room bay window. Enjoy intimate entertaining in your spacious backyard (approximately 14,00 sq ft) with garden and woods view. This house is turn key and will sell fast! Don’t miss out on this rare opportunity.

More information:

Provided by: Nina Havelind | | (951) 233-9213

So Little Time, So Much to Tweet!

The most popular people on Twitter send out about 10-20 tweets per day.

Now, I’m not suggesting that you should send out double-digit tweets, but it is important to have a strong presence on your social media networks, like Twitter. You may not have enough time to go on Twitter more than once a day, so what can you do? is a free website that allows you to schedule your tweets throughout the day so that you don’t have to be on Twitter all the time.

This is a great application for people who are constantly on the go, but want a strong presence online. Play around with it to see how useful it is for you!

Family Home in Mission Viejo

Price: $379,000
Bedrooms: 3
Bathrooms: 2.25
Size: 1,290 square feet
Lot size: 3,077 square feet
Description: The house is a two-story, two-car garage, 3 bedrooms (one downstairs & 2 upstairs) plus loft, or bonus room, or extra bedroom upstairs, two full baths (plus 1/4 bath), living/dining room, central a/c and heating, new double-panel, energy efficient windows and two sliding doors downstairs. This house has Mission Viejo Lake privledges. Walking distance to parks, top rated schools and shops. Excellent curb appeal. No Mello Roos and very low HOA.

More information:

Provided by: Sebastian Naum | | (949) 322-2464

Beautiful Home in Yucaipa

Price: $269,5000
Bedrooms: 4
Bathrooms: 2
Size: 1,896 square feet
Lot size: 9,160 square feet
Description: This magnificent home is located on a Cul-de-sac corner lot in a quiet area. Nestled up into the foothill, 7-10 degrees cooler during summer. Features, 4 spacious bedrooms. Currently, 4th room is a spacious office, can be converted into bedroom. Living room has vaulted ceiling and joined by a formal dining room. The interior has been recently professionally painted and cleaned carpet. You will love the new tile in the entrance and kitchen. Looks amazing! The kitchen has a center island and a convenient eating area joined by the family room with a cozy fireplace. Sliding glass door leads to the large covered patio and landscaped back yard for your entertainment. The master suite has a vaulted ceiling, large walk in closet, dressing area in addition to a second roomy closet. The master bathroom features dual sinks, large tub and separate shower with a lot of natural lighting. A secondary full size bathroom has spacious cupboards for linens & accessories. The indoor laundry room leads into a 3 car garage. The custom landscaped front yard features curbing & beautiful plants with trees. Elementary school is walking distance. This is a lovely home is located in a great community. Turnkey, move in ready. Call for a private showing. Price has just been reduced.

More information:

Provided by: Eileen Angulo-Barner | | (760) 217-6091