Keith and Kinsey's Real Estate Update

New Brokerage – Great Rock Realty
March 23, 2013, 6:09 pm
Filed under: Business, Real Estate | Tags: , , ,

Great Rock Logo TallWe’ve been slacking on blog posting lately. That is because we’ve been swamped! I think the last 6 weeks have been our busiest ever, and in addition to that we started our own real estate brokerage. I (Keith) made the transition to Great Rock Realty 5 or 6 weeks ago in to get things started. Kinsey just transferred her license over on Friday.

Great Rock Realty is now officially open and ready for business! In fact, we’ve already got two properties under contract as Great Rock Realty. Our website isn’t quite done yet, but it should be ready in a couple more weeks.

Our clients probably won’t notice much of a change with this move since we’ve always been fairly independent, even while working other brokers. Our goal with the new business is to provide the same great service, help more buyers and sellers, donate more money to charity, and eventually bring on other quality agents to do the same.

You will continue to see our personal branding as Keith and Kinsey Real Estate. This has become our recognizable personal brand. Great Rock Realty will just replace the roll that Keller Williams had played for us in the past. So, don’t be surprised to see both logos on signs around town.

We will continue our charity program with 10% of our commissions going to the charity of our clients choice. As we add agents and grow our new business, we will also donate 10% of Great Rock Realty profits to charity.

It’s been a lot of work to get things set up, and we are excited and looking forward to this new challenge and adventure. Thanks to all of our clients, family, and friends who have been very supportive in this move.

On a side note… 6 weeks until the baby is expected! 🙂 We’ve got lots to get done!


Purging Properties – Ditch the Non Performers
January 17, 2013, 11:45 am
Filed under: Income Property | Tags: , , , ,

Real Estate Investors are generally optimistic, hardworking, entrepreneurial people. They have the belief that they can do anything, can overcome any challenge, and never give up. These are all great traits to have. Although, there’s one problem with this mindset… Sometimes you don’t realize when a deal has gone bad.

I recommend reviewing the profit and loss of your rental properties monthly or at least once per quarter. If you are in the flip business I hope you’re paying weekly (maybe even daily) attention to your project budget. Last year, after looking at our big picture, we sold our two worst performing rentals. It was a very freeing feeling to ditch the two worst performing properties as they were creating the most stress. It also helped us turn our focus back in the right direction.

The first rental was my former personal residence. It was never intended to be a rental. It just happened to turn into a rental after I met my wife. This property was slightly better than breaking even (the rent covered the mortgage, insurance, and taxes). Although, there wasn’t much left over after paying PITI (principle, interest, taxes, and insurance). This isn’t how I like properties to perform, though. This property was fairly high maintenance. In the long run after factoring in maintenance and rental turn over vacancy, it would have been negative cash flow. So, we sold it. You can read more about this property in our Better Than Renting post.

The second property was our Indianapolis rental house. By the numbers (rent vs payment) it should have been the best performing property we had. However, this one was a nightmare. You can read more about this one in our posts Lesson Learned – No More Long Distance Landlording and Why I Fired My Property Manager. Too make a long story short though… My property manager was horrible, my tenants were horrible. I couldn’t keep a good handle on the place from a distance, it was a daily stress, and I held on too long trying to make it work. So, that one went bye bye too.

My point is if you have properties that aren’t working out the way you would expect, analyze the situation, and seriously think about if they are worth keeping. Look at it from a sunk cost analysis perspective. Ask yourself, if I didn’t already own this property, would I buy it again for what it’s currently worth. If the answer is no, sell it. Consider that getting rid of the non-performers can free up resources, time, energy, and focus for other things that are more important. Sometimes you have to ditch that “I can do it” mentality, swallow your pride, and realize it didn’t work out the way you thought it would. You’ll feel the relief by doing so! You will also regain your focus.

Choosing a Lender
January 9, 2013, 11:37 am
Filed under: Real Estate | Tags: , , , , , ,

Your lender will be one of the most important people involved in your real estate transaction choosing them wisely is important. Just like agents, not all people within one organization operate the same. One loan officer at your bank may be horrible to work with and another may be great.

I always suggest people start looking for a lender one of two ways:

  • Ask you real estate agent who they recommend? Realtors have worked with many different lenders, and they know who has done a good job in the past and who hasn’t.
  • Ask your friends who they recommend? Your friends, family, or coworkers who have been through the buying process may have worked with somebody they really liked (or didn’t like).

So, how do you know if this lender will be good to work with? Here’s a few things to look for and pay attention to when talking to a lender:

  • Responsiveness is a key necessity in a lender. I’ve worked with lenders who wouldn’t respond to their clients questions for 4 or 5 days. This makes the buyer feel extremely insecure and freaked out through the home buying process. Find someone who responds at least within 24 hours when you call or email them.
  • Knowledge is another must have trait of a good lender. There’s a million different loan programs out there, but after talking through your situation, your lender should be able to give you guidance on what loan program best meets your needs.
  • Honesty is extremely important too. Of course it’s tough to tell if somebody is being honest with you in the first conversation you have with them. Although, your lender should be able to give you general guidelines about closing costs, fees, and rates. If you ask them questions about these things and you start to get the used car salesman vibe, run away. No offense to car salesmen, but you know what I mean.
  • Deadlines within your real estate contract must be met by your lender. So, you want somebody that is prompt and organized to meet these deadlines. Usually if they fit all of the characteristics above, they’ll come through with your deadlines. Of course, there can be snags in underwriting that aren’t your lenders fault, but a good lender will advise of those potential snags ahead of time.
  • Local lenders tend to be better to work with. It usually feels like somebody cares more about what you need, when you can actually sit down face to face. People get loans all the time without ever meeting their lender, but it’s good to know you have the option. It’s much nicer not dealing with a national call center.

Lastly, there’s the question of should you go with a broker or a bank lender. There is definitely a place for both.

  • Bank (and credit union) lenders are usually great to work with for somebody who is in a strong financial position to buy, and they often have the best fees and rates. Shop around for the best rates and fees.
  • Mortgage Brokers on the other hand are great at figuring out how to get the deal done if somebody is border line on a loan. They have a full arsenal of loan options available to them, and can sometimes make loans work that bank lenders can’t. Their fees and rates can sometimes be a bit higher, but if you’re not willing to shop around, they do the shopping for you potentially saving time and money.

In summary, there’s a lot to think about when choosing a lender, but take your time, ask for referrals and make a good choice.  If you are in the Madison area, there are some great lenders that we recommend on our web page.

Deciding to Buy a House – When Are You Ready?
October 2, 2012, 8:08 am
Filed under: Money, Real Estate | Tags: , , , , ,

A couple weeks ago, we wrote a step by step guide to home buying, and step one is making the decision to buy. So, you’ve been thinking about buying a home, but aren’t quite sure if you’re ready. It’s a big decision, and now is an amazing time to buy. Prices are still low, the market seems to be starting to recover, and the current interest rates unbelievable. Are your lifestyle, your job, and your financials ready to buy though?

One of our goals is to never have a buyer/client go through foreclosure after selling them a house. Obviously some aspects of a person’s financial or job situation are well beyond our control. Although, we can offer advice as to when we think you are financially ready. We’ve had a lot of people come to us wanting to buy a house when they are on very shaking financial ground. We will be completely honest with these people and tell them, “We think you should wait a bit to buy a home.” We would rather see a buyer comfortable and happy in the long term rather than happy in the short term, but in serious trouble a year from now.

In our opinion, these items are must haves in order to buy a house:

  • 3 month emergency fund – Take your monthly expenses (including your projected mortgage payments) and multiply it by 3. You should have this much set aside as a safety net.
  • Stable income – If your job is questionable, or you go through temporary layoffs, you probably want to look for a more stable income. The exception would be somebody who has budgeted well and makes enough of an irregular income to spread out throughout the whole year.
  • Plans to stay for 3 years – If you don’t plan to stay in the same place for 3 years or more, your likelihood of losing money when you sell is higher. If your location is short term, just rent.
  • No credit card debt -If you have credit card debt, your part of the norm in America. Life and home ownership is so much easier without credit card debt. Please get rid of these payments before buying a home.

These are recommendations, but not necessities:

  • 6 month emergency fund – Take your monthly expenses (including your projected mortgage payments) and multiply it by 6. You should have this much set aside as a safety net.
  • No student loans – You’re likely going to be paying on that mortgage for a long time. Just knock this debt out before you have a mortgage payment.
  • No car payments – Seriously, you bought an expensive fancy car before a house? Cars go down in value; real estate generally goes up over the long term. I’d take a mortgage over a car payment any day.
  • No debts at all – If the only payment you have is a mortgage think of how much simpler and comfortable your finances will be.
  • 15% of your income going toward retirement – Many people look at home ownership as an investment, but let’s face it; your home is not a retirement plan. You still need a place to live when you are retired.
  • 20% Down payment -While there’s still low money/no money down loans out there. You’ll find yourself much more comfortable and getting a better interest rate if you have money to put down. 20% down will get you the best rate and avoid PMI.

These are signs you are not ready to buy

  • You live paycheck to paycheck – if you are waiting on the next check to come in to pay your next bill, you are probably too tight on cash for home ownership.
  • You pay minimum credit card payments – If you are only able to pay minimum payments now, how much harder is it going to be once you have a mortgage and home to maintain?
  • Unexpected expenses throw you off for months – When your car breaks down, does it take you several months to get caught back up? This is a sign you don’t have a good emergency fund. Keep in mind, once you buy a house, you no longer have the landlord to call for repairs, you’re responsible.
  • You’re worried about every penny of closing expenses – If you are stressed about your closing costs being $1800 vs $1725, you definitely don’t have enough cushion.

If you’re not quite in position to buy, there’s a lot you can do to get yourself in position to buy. First, start tracking your expenses and set yourself a budget. A structured budget will quickly help you see where you are wasting money. Then cut back on your wasteful expenses and pay down your existing debt. Lastly, if there’s still not much extra room in your budget, pick up some overtime or get a second job. Once you get accustomed to living on tighter finances to get rid of your debts and save a down payment, you’ll find paying a mortgage payment and maintaining a home a breeze.

Desperation – Please Don’t Hire An Agent Like This
August 23, 2012, 12:28 pm
Filed under: Business, Real Estate | Tags: , , ,

I recently listened to a real estate agent training podcast that said this:

“Fear is the biggest motivator in the world…  Go out and buy yourself a brand new BMW, a 7 series, and then find out how much fear you have when you’ve got to make that $1000-$1200 payment. Put yourself in a mode of desperation.”

Seriously? That is advice from a real estate coach? Is this why so many agents (who aren’t even big time agents) drive fancy cars? I hope that none of my colleagues listen to ridiculously horrible advice like that.

Desperate agents make desperate sales and work in the interest of their bank account not in the best interest of their clients. We should never put ourselves in a desperate position that will cause us to push people to buy homes just to get another sale. We should be working with our clients to find them the perfect home for their situation, needs, timeline, and financial plan. The client’s needs should always be put before the agent’s needs. If you sense that your agent is pushy or desperate for a sale, fire them and move on. The worst advice will come from an agent that needs a sale. You want an agent can provide you good advice and wants a happy client, not just a sale.

Goals and motivation are great things, desperation is not!

Related post: How to Pick the Right Agent For You

What is the difference between appraised value, assessed value, and market value?

This was the question in our Ask A Pro segment of the Verona Press this week, but I thought I would expand on our response.

The Appraised Value of a property is a valuation conducted by a certified independent professional who visits a property and compares it to similar recently sold houses in the area. The appraiser will make adjustments to the value based on pros and cons of the subject property in comparison to the recently sold properties. This value is primarily used by lenders for financing purposes to make sure that the property is worth the amount they are basing the loan on.
The Assessed Value is a value determined by the local government and is used to establish property tax payments. Though market data is used during this process, the assessed value is generally less accurate because it is an annual snapshot without a property visit. Keep in mind, assessors are tasked with the job of valuing tens of thousands of properties. I always tell buyers and sellers to ignore the assessment when trying to figure out the value of a property.

Ultimately, the Market Value is determined by what a buyer is willing to pay for a particular property on a particular day. Keep in mind, property values vary with time and market conditions. What somebody is willing to pay today, and what somebody is willing to pay two months from now could be different values.

There is one last form of valuation, called a Comparative Market Analysis. This is an analysis done by a real estate agent, usually for purposes of determining a list price or a purchase price for a seller or buyer. Agents generally look at recently sold comparable homes, like an appraiser does to determine an estimated market value. If you have property in south central Wisconsin, feel free to contact us for a free market analysis to determine what your home may be worth.

Home Build – Week 14
July 7, 2012, 5:16 pm
Filed under: Home Build | Tags: , , , , , , ,

This week in our home build, the carpet, dishwasher, and hvac grills were installed. Also the electrical and lighting is almost complete. We spent today putting up shelves and rods in one of the closets, and helping Kinsey’s step-dad (our electrician) with some little things. If you remember, we didn’t have the builder finish out the bedroom closets. We decided to save a few bucks on the closets and build something more custom ourselves. The closet we did today was the easiest one, and we wanted it done just so we could hang some clothes up on moving day. We’ll finish out the rest of the closets after we get settled in.

All that’s left to do at this point are the finishing touches of electrical work, yard seeding, touch up, and cleaning. We are crossing our fingers that everything can get done this coming week so we can start moving in a week early. After things are finished the code inspector and the bank appraiser will need to inspect and approve the property. At that point we can get an occupancy permit, and the bank can release the final payment to the builder. Then it’s moving time! Stay tuned next week to see if it happens a week early! We’ll welcome any moving help too. 😉


Light fixtures installed

My handywork with the double row closet shelving and rods.

Tray ceiling with the ceiling fan

Day 98 – 13 Days and counting (or maybe 7).