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Maui Real Estate


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Hard Money Lenders: Why you’re not Getting 100% financing

hard_earned_moneyWhat does 100% financing mean to lenders? Does it sound good or bad? Well, getting a 100% financing is almost too impossible, especially if you are a new prospect. So if your lender just turned down your application, here are some reasons you must know why such application is disappointing to lenders.

Financial incapacity or insolvency risk. When a new borrower states that he or she needs 100% financing for an investment property, lenders are typically hesitant in providing the cash. Of course, for most of lenders it tells a great deal about the borrower. Aside that it puts lenders at big risks; it puts the financial strength of the borrower in question. Why do you need a 100% financing if you can afford to pay? Perhaps, the borrower is not financially strong.

100% financing implies that you probably have little cash to commit to the project and may not be able to pay the loan later on. Lenders also come to doubt if you have cash reserves and your timeliness in paying back.

2104b75Less real estate experience. Borrowers who expect to get hard money loans have not probably done many deals. Since the borrower is less experienced, it is likely that he will commit mistakes that may cause a lot of money in the long run. Individuals who have more experience in real estate usually don’t not opt for 100% loan to value (LTV) for the first time. Field experts know how to ask for an ideal price and have already figured that lenders do not provide hard money loans.

All-risk assumed by the lender. It is basically a huge risk for lenders, and most of them do no_hard_loan_moneynot want to take a risk on something they are sure of the return. Hard money loans are asset based, which means that the loan secured by a real estate mortgage. In case the borrower defaults in payment, the mortgaged property will answer the loan. But there are times when the real estate mortgage is not sufficient due to some economic downturns. That’s why lenders first make sure that the borrower has equity over the property of usually at least 25%. Otherwise, lenders would be assuming all the risk and loss arising from such transaction.

B0FAA6C4FCAE464B8C736D14A6632A22As you see, a hard money loan is not such a good option especially for starters. And the reason why lenders nowadays are very careful when it comes to 100% financing is that they have already been victimized by a huge fall down in the past. Hard money loans were responsible for the collapse of the real estate market in 2007. When the real estate market was declining, many hard money borrowers decided to walk away from their properties after realizing that they have already owed more money in the bank than what their property was worth. As many properties end up in foreclosure, the real estate turn down stabilized and took the overall American economy down with it.


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Buying a Condo in Maui – A Handy Guide for Vacation Rentals

condo in mauiMaui is not so hard to fall in love with. With wide stretching beaches and sweet scenery in a picturesque tropical setting, who wouldn’t love this place?

So your dad is probably planning to buy a condo in Maui, and you are trying to weigh its pros and cons. Or you are buying a condo yourself as an investment – that is also a pretty good idea. You can make it your retirement home or rent it out as a vacation rental. Every situation can work perfectly depending on a lot of factors. Vacation rental is a popular trend in Maui real estate. People invest in condo units, rent it out, and get a big pay back for their capital.

Getting started

Now, before you buy a condo here are some things that you would want to know. In Hawaii, every condominium development buying-a-condoi8s required to have an AOAO (Association of Apartment Owners). The association is made up of condo owners who are responsible for the condo maintenance. When you buy a condo in Maui, you get to vote which association you’ll want to take care of your unit and how complex the management should be. You also need to find out, before voting, if the association allows vacation rentals. Not all associations allow rental vacations.

Once you have decided on the association, you will need to pay AOAO fees. How much does your AOAO fees be? It is very dependent on the things that need be covered, most importantly the “common elements” in the condo building. Some examples are the building walls and exterior, roofs, ground pool, patio, garden, and many more.

In checking for you AOAO fees, you don’t just the numbers but you also would want to know what you can get out of your money. To give you an idea, the following are some questions you can ask when meeting with your realtor.

  • How much are the operating expenses?
  • How do you determine the budget?
  • How do you set the reserves?

Once you get the escrow, the condo owner can provide the documents you need upon request.

imagesSpotting Red Flags

Once you have the documents, there are many things that you need to see. One of the first things that you should take a look are the profit and loss statement. Study the balance sheet where you can find the financial statement of the person you are dealing with. At some point you may not understand its complexities, so it would be beneficial on your part to have an accountant to explain it to you.

The financial statement is one of the important aspects in estimating your budget and in checking if your investment is worth it. If you don’t check it, you won’t be able to anticipate any risk that might come out in the future.

What’s a Rental Company Agreementcondo-main

Since you are buying a condo and renting it out, you need to decide how your unit is going to be handled. Here are some options you can try.

  • Hire an offsite manager to handle your rental services
  • Handle it on your own (this is more advantageous if you live in the island)
  • Enter a contract with your AOAO to hire an onsite company to handle your property

In signing the contract, you need to be mindful on how much it would cost you to hire a rental management company. Make sure you know some potential charges that might surprise you later on. Some factors many also affect the cost such as marketing, check-ins, cleaning, and minor maintenance.

Form of land tenure – Is it fee simple or leasehold?index

Hawaii basically have two ways to own a condo unit. When you have fee simple, it means you own your dwelling and the land under it. Leasehold will have you own the unit but not the land, so will be required to pay a monthly owner leasehold rental.

Leasehold usually lasts five to ten years, and the rental largely depends on the value of the property. You can have the right of first refusal to buy the unit after the term of the lease. However, the risk usually comes when you can afford to buy it and the unit ends up in a new hand.

As you can see, leasehold comes with some potential losses too, though they only come at alter time. One advantage is that the risk is often offset by a cheaper purchase price.

Some properties in Kula and Kahului, which were once under leasehold agreements are now fee simple. Owning a condo in indexMaui is an expensive investment – median cost is around $2, 500 a month – but very worth it. People come and go in Maui to have vacation for a quarter or half a year and if you have good management, these people can end up in your condo unit.

There’s a lot more to owning a condo in Maui and you will need a lot of spirit to enter into the business cycle. When you are in good hands, you will definitely be thriving.


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Things You Can Do to Your Home to Sell it Fast

Contract-Sale-Pending-SignIf you have ever been in a situation where you need to sell your house faster, you know how exasperating it can be. Each day you wish that a good buyer would come along to make a good deal and purchase your property.

Fortunately, there are several ways you can hasten the sale of your home without sacrificing the price. Last time we talked about some questions you should ask to a realtor and today I am going to walk you through some steps on how to sell your home quick in any real estate market and get your leg up in the real estate competition.

I’m sure you know real estate market is a little bit different in Hawaii. For example, if your buyers come from top cities in other States such as Florida, San Francisco, New York, and Seattle you would probably want to offer a great deal that will put them out from a real estate shock.images

The prices of properties for sale in these cities and the Maui do not really feature much difference. In San Francisco metro area you can a home for $688,600 in the same way as you can buy a house in Maui for $540,000 to $640. But if you bring the same amount of money to central Florida you can have the mansion of your dream, while you can be hard-pushed to find a mansion in Maui for the same price. So you now see how much convincing you can do before you make your property attractive to buyers from any states.

So here are some things you can do.

Screenshot_17First of all you need to improve the curb appeal. Try looking outside your home and see its shortcomings. Is it clean and well-maintained? Check for broken windows, corroded roof, and fading paint. Take note of your landscape and make sure your lawn is mowed 24/7. Make sure your driveway, exterior porches, and exterior walls are well-groomed and functional.

If you take these steps before putting out your home in the market, I’m sure that buyers will be more likely to have a tour of the inside. Unless you are willing to discount your home price well below the market value, buyers do not want to buy houses that needs a lot of work.

Make some small upgrades to erase red flags. So if you have an extremely outdated kitchen sink or bathroom tiles, you probably need to replace them. Remember that the ROI (return on investment) is not 100% but making small upgrades can increase the value of your home.

The next you should do is depersonalize your home. Later on you’d be surrendering possession and ownership of your home to someone else who might not like your personalized design. Unless it is part of your home design, you can take out pet accessories, movie collection, clutters, and over-stuffed cupboards.

The next most important thing is to price your home competitively. If you sell your home for a price too low, you are like best_price_better_priceleaving money on the table. And if the price is too high, you are sending prospective buyers away to greater offers in online listings. So price your house correctly or better yet check market listings and see how strong the competition is for properties like yours.

The last thing to do is to advertise your house or place in the listing during the peak season. Sometimes the peak season depends on the prices of homes going down but naturally more homes are sold during Christmas season to the middle of April. Maui’s peak season usually coincides with the primary visitor season where most number of visitors come in. Most of these visitors come for vacation but many of them come for investment opportunities.

home soldHowever, even if the peak season might be over, you can still get a speedy sale. So how do you get the offers rolling after people stage in to your house? Remember that when prospects get into your house, they can still change their mind or haggle for discount.Better yet, you can hire a real estate professional to help you get trough the way. As a realtor, I can tell you good ones will save you both time and money without a doubt.

Selling a house can really be challenging, considering the rigid market competition. Home sales were down in May 2014 from the with a total of 85 homes sold for a median price, according to the Realtors Association of Maui. However, now is not the time to wine about it if you really need to sell your home that fast. It takes a blend of good effort, the right steps, and luck to get into your goals. Just follow these simple tips and you will have a leg up in the market – and will attract many buyers for the right price.