David Sharkey, Vice President of Progressive Urban Real Estate, was one of the panelists featured on Dan Moulthrop's 9 a.m. news program on WPCN/90.3 Ideastream this past Wednesday, Sept. 3rd.
Sharkey is a former Tremont resident who now lives in the St. Clair Superior neighborhood with his wife and two sons. PURE's focus on marketing and selling homes as well as an urban lifestyle in Cleveland have helped to transform Tremont from a neighborhood that suffered from arson and blight in the mid 1980's, to one of Cleveland's success stories today.
To listen to a podcast of the show, visit the WCPN archives at www.wcpn.org.
For more information about Tremont, visit the website of the local community development corporation, Tremont West Development Corporation at www.tremontwest.org.
Friday, September 5, 2008
Investing in Cleveland: Does It Make Sense?
One of the untold stories of the housing market meltdown and foreclosure crisis is the opportunity that it presents to responsible investors to purchase and rehab homes in the city.
This was one of the messages conveyed at a forum hosted by Cleveland Action to Support Housing (CASH) on investing in Cleveland real estate. The event was held this past Thursday, Sept. 4th at West 65th and Detroit Ave., in the heart of the Gordon Square Arts District of the Detroit Shoreway neighborhood.
Douglas Moltz, loan officer with Shorebank Cleveland, described the opportunities and challenges of investing in our current, urban real estate market. On the one hand, he told the audience of 30+ nonprofit and development professionals, there has never been a better time to buy. If you are an investor, you can scoop up a foreclosure or a short sale for a below-appraised value.
One particular investor, Moltz said, recently purchased a home in the Collinwood neighborhood of Cleveland, rehabbed it, and rented it at a profitable level. Once the work was completed, the owner was at a less than 50% loan-to-value ratio. This means that while the property would have appraised for over $80,000, the owner only had spent about $40,000, resulting in a kind of “instant equity”.
On the other hand, Moltz related, investors must be both savvy and selective to be successful and avoid the pitfalls that led to the current housing crisis. They must choose marketable neighborhoods in which to invest; identify properties that fit within their budget and scope of work; complete the type of workmanship and finishes which buyers and renters demand; and obtain the necessary financing to complete the project while keeping funds in reserve.
Additionally, if investors intend to resell the rehabbed property, they must examine recent sale comps, factor in the decline in value across the market, and anticipate the fact that many homebuyers today expect to get a deal. They have to examine the pricing of other homes on the market so as not to be undercut by the competition. And they should be prepared to wait longer for the property to sell in many cases.
David Sharkey, Vice President of Progressive Urban Real Estate Inc. (PURE), addressed the fact that rehabbers in today's market must have a "back up plan" that includes lowering the price or renting the home until the market improves and the seller finds a buyer. He stressed that homes continue to sell in many neighborhoods in Cleveland, despite the market downturn.
Marcia Nolan, Executive Director of CASH Cleveland, stated that her organization has formed a partnership with Shorebank and other lenders in Cleveland to offer special, low interest rates to owner-occupants and investors. Currently, the rate is 3.6%, approximately three points or more below a conventional rate (even for an owner-occupant). Taking advantage of this program saves investors and homeowners thousands of dollars in interest, and allows owners to build up equity more quickly. CASH provides technical assistance with identifying the scope of work on a property, and monitoring construction quality.
For more information about special programs for investors and owner-occupants that are rehabbing homes in Cleveland, visit www.cashcleveland.org.
To search for homes in Cleveland and other urban neighborhoods across Northeast Ohio, visit www.progressiveurban.com and go to the search page.
This was one of the messages conveyed at a forum hosted by Cleveland Action to Support Housing (CASH) on investing in Cleveland real estate. The event was held this past Thursday, Sept. 4th at West 65th and Detroit Ave., in the heart of the Gordon Square Arts District of the Detroit Shoreway neighborhood.
Douglas Moltz, loan officer with Shorebank Cleveland, described the opportunities and challenges of investing in our current, urban real estate market. On the one hand, he told the audience of 30+ nonprofit and development professionals, there has never been a better time to buy. If you are an investor, you can scoop up a foreclosure or a short sale for a below-appraised value.
One particular investor, Moltz said, recently purchased a home in the Collinwood neighborhood of Cleveland, rehabbed it, and rented it at a profitable level. Once the work was completed, the owner was at a less than 50% loan-to-value ratio. This means that while the property would have appraised for over $80,000, the owner only had spent about $40,000, resulting in a kind of “instant equity”.
On the other hand, Moltz related, investors must be both savvy and selective to be successful and avoid the pitfalls that led to the current housing crisis. They must choose marketable neighborhoods in which to invest; identify properties that fit within their budget and scope of work; complete the type of workmanship and finishes which buyers and renters demand; and obtain the necessary financing to complete the project while keeping funds in reserve.
Additionally, if investors intend to resell the rehabbed property, they must examine recent sale comps, factor in the decline in value across the market, and anticipate the fact that many homebuyers today expect to get a deal. They have to examine the pricing of other homes on the market so as not to be undercut by the competition. And they should be prepared to wait longer for the property to sell in many cases.
David Sharkey, Vice President of Progressive Urban Real Estate Inc. (PURE), addressed the fact that rehabbers in today's market must have a "back up plan" that includes lowering the price or renting the home until the market improves and the seller finds a buyer. He stressed that homes continue to sell in many neighborhoods in Cleveland, despite the market downturn.
Marcia Nolan, Executive Director of CASH Cleveland, stated that her organization has formed a partnership with Shorebank and other lenders in Cleveland to offer special, low interest rates to owner-occupants and investors. Currently, the rate is 3.6%, approximately three points or more below a conventional rate (even for an owner-occupant). Taking advantage of this program saves investors and homeowners thousands of dollars in interest, and allows owners to build up equity more quickly. CASH provides technical assistance with identifying the scope of work on a property, and monitoring construction quality.
For more information about special programs for investors and owner-occupants that are rehabbing homes in Cleveland, visit www.cashcleveland.org.
To search for homes in Cleveland and other urban neighborhoods across Northeast Ohio, visit www.progressiveurban.com and go to the search page.
Wednesday, September 3, 2008
Focus on Foreclosure: Cities Step In to Buy, Rehab Homes
The recently-passed Housing and Economic Recovery Act of 2008 allots $4 billion of federal money to assist communities with buying and rehabbing foreclosed properties, yet some communities have already stepped in to fight the blight in their neighborhoods.
Cleveland Heights is one of them. Known for its forward-thinking strategy towards such issues as integration, historic preservation and promoting independent businesses over past several decades, the city recently turned its attention to troubled duplexes on East Derbyshire Road. Using Community Development Block Grant funds from the federal government, the city purchased and renovated several distressed properties, transforming them into side-by-side, townhouse-style condominiums. The units range from 1,700 to 2,900 square feet; 3150 East Derbyshire, one of the first completed units to hit the market, is currently listed at $139,900, and the future homebuyer will benefit from tax abatement.
A recent article in the New York Times ("Communities Become Home Buyers to Fight Decay," 9/25/08) cited several cities across the U.S. using a combination of taxpayer and private money to buy and rehab foreclosed properties. These cities are trying to re-sell the properties to buyers or developers as a means of stimulating the troubled housing market and promoting redevelopment.
Although the housing decline is showing signs of slowing, these cities are stepping in because their leaders fear that the overwhelming volume of foreclosures and homes on the market will foster more blight. They also do not see the problem being solved entirely by the private market, despite the argument by the Bush administration and others that spending federal funds represents an unnecessary market intervention.
Some examples of cities acting as developers include:
* The city of Boston recently purchased four foreclosed homes in a troubled section of Dorchester. A developer then purchased the homes from the city. The developer will renovate the homes and place them back on the market for sale.
* In San Diego, the city is raising private money ($20 million so far) to buy, rehab and sell hundreds of properties. Investors includee the California State Retirement System and Washington Mutual bank.
* In Minneapolis, the Greater Metropolitan Housing Authority has bought 75 homes in a strategic area that has been hard hit by foreclosures. The housing authority plans to complete the rehab to help stimulate the local market.
How the $4 billion allotted by the feds will be allocated and spent - and how much Cleveland communities will receive - has not yet been determined, but officials expect to have more information by the year's end.
Many housing experts also wonder whether the recently passed housing bill is enough to combat the troubled market, and whether the new administration in 2009 will have to consider additional measures to ease the credit crunch and stem the tide of foreclosures.
For more information on the rehabbed condominiums on East Derbyshire Road in Cleveland Heights, visit these websites:
www.heightsobserver.org
www.clevelandheights.com
Cleveland Heights is one of them. Known for its forward-thinking strategy towards such issues as integration, historic preservation and promoting independent businesses over past several decades, the city recently turned its attention to troubled duplexes on East Derbyshire Road. Using Community Development Block Grant funds from the federal government, the city purchased and renovated several distressed properties, transforming them into side-by-side, townhouse-style condominiums. The units range from 1,700 to 2,900 square feet; 3150 East Derbyshire, one of the first completed units to hit the market, is currently listed at $139,900, and the future homebuyer will benefit from tax abatement.
A recent article in the New York Times ("Communities Become Home Buyers to Fight Decay," 9/25/08) cited several cities across the U.S. using a combination of taxpayer and private money to buy and rehab foreclosed properties. These cities are trying to re-sell the properties to buyers or developers as a means of stimulating the troubled housing market and promoting redevelopment.
Although the housing decline is showing signs of slowing, these cities are stepping in because their leaders fear that the overwhelming volume of foreclosures and homes on the market will foster more blight. They also do not see the problem being solved entirely by the private market, despite the argument by the Bush administration and others that spending federal funds represents an unnecessary market intervention.
Some examples of cities acting as developers include:
* The city of Boston recently purchased four foreclosed homes in a troubled section of Dorchester. A developer then purchased the homes from the city. The developer will renovate the homes and place them back on the market for sale.
* In San Diego, the city is raising private money ($20 million so far) to buy, rehab and sell hundreds of properties. Investors includee the California State Retirement System and Washington Mutual bank.
* In Minneapolis, the Greater Metropolitan Housing Authority has bought 75 homes in a strategic area that has been hard hit by foreclosures. The housing authority plans to complete the rehab to help stimulate the local market.
How the $4 billion allotted by the feds will be allocated and spent - and how much Cleveland communities will receive - has not yet been determined, but officials expect to have more information by the year's end.
Many housing experts also wonder whether the recently passed housing bill is enough to combat the troubled market, and whether the new administration in 2009 will have to consider additional measures to ease the credit crunch and stem the tide of foreclosures.
For more information on the rehabbed condominiums on East Derbyshire Road in Cleveland Heights, visit these websites:
www.heightsobserver.org
www.clevelandheights.com
Friday, August 15, 2008
Good Borrowers, Better Loans:
New Legislation Eases Credit Crunch
We’ve all seen it. In recent months, even borrowers with good credit have become caught up in the credit crunch. The lenders, Fannie Mae and Freddie Mac have all tightened their lending restrictions. Some of this – such as the elimination of the all-too-easy credit that got us into this mess – is a good thing and will help to correct the housing market.
Yet some of it appears overly restrictive to observers, and passes the risks within the market along to good borrowers. For instance, in new condominium buildings that are not yet FHA-approved, some lenders have been requiring 10% or 15% down before they’ll provide a loan. These types of restrictions eliminate otherwise qualified buyers who have a 3% or 5% down payment in hand – the very type of good buyers that will help the housing market to right itself.
However, the Housing and Economic Recovery Act of 2008, a bill recently passed by Congress, will make it easier for good borrowers to get good loans.
Perhaps the biggest thing, beyond the $7,500 tax credit, is that FHA insured loans are getting cheaper. The FHA rates are more competitive with typical bank rates, the required down payment amount is 3.5%, and the mortgage insurance amount for those buyers that are putting down less than 20% (most of the market) is significantly cheaper than a conventional loan. Overall, this will make it cheaper and easier for buyers to get financing.
Other improvements that are taking place as a result of this legislation include:
• The elimination of seller-funded down payment assistance programs (which helped to facilitate increased foreclosures and other problems)
• Simplification of condominium project approvals (it will be easier for a buyer to get a good loan when buying a new condo)
• Higher mortgage loan limits (qualified buyers purchasing properties up to $271,050 can go FHA – providing them with a better financing option with lower mortgage insurance and 3.5% down payment requirement)
For more information, please click here.
To read the bill (HR.3221), please click here.
Friday, August 8, 2008
First Time Homebuyers Eligible for $7,500 Tax Credit
The U.S. Congress and President Bush recently passed the Housing and Economic Recovery Act of 2008. The legislation provides a first-time homebuyer tax credit of up to $7,500 (10 percent of the cost of the home, not to exceed $7,500).
Eligible properties include any single-family residence (including condos and co-ops) that will be used as a principal residence. Homebuyers must not have owned a principal residence within the last three years.
The tax credit means that if you are a first-time homebuyer and would otherwise owe $7,500 in taxes, then for the year in which you purchased the home, you would owe the IRS nothing.
The tax credit terminates on July 1st 2009. However, first-time homebuyers are eligible if they purchased a home after April 9th 2008.
The tax credit has an income limit: individuals earning no more than $75,000 or couples earning no more than $150,000 on a joint return. The credit is phased out above those caps ($95,000 and $170,000 respectively).
The tax credit must be repaid, over a period of 15 years. For instance, if you earn a credit of $7,500 then you would pay $500 per year over 15 years. This amounts to a zero interest loan from the federal government. If the home is sold before 15 years, then the remainder of the credit would be recaptured upon the sale. If the home does not sell for enough to repay the credit, then it is forgiven.
For more information, please visit www.federalhousingtaxcredit.com.
Friday, August 1, 2008
Ohio Fourth Nationally in Biotech Growth,
Spending and Research
Business Facilities Magazine recently released what’s being called one of the most detailed surveys ever to examine biotech growth, spending, and research.
Measuring all 50 states, it placed Ohio fourth - tied with Texas - in the overall rankings, and called the state a national leader in the field.
Jack Rogers, Business Facilities Editor-in-chief, told WCPN 90.3 that “the states that are doing really well are the ones that have coordinated efforts, that are leveraging university systems and laboratory initiatives and the institutions that they have and they’re really putting the whole thing together.”
More than 20 separate categories were considered to compile scores, and Ohio’s $146 billion-dollar bioscience economy involving more than 800 companies and organizations put the state among the national leaders.
The Third Frontier project - begun during the Taft administration to create high tech jobs - was praised for allocating more than $350 million dollars to biosceince-related development and commercialization. Also noted were education and research facilities at CASE, Ohio State, and the University of Cincinnati.
Friday, July 25, 2008
Housing Stimulus Bill Set to Pass in Congress
President Bush lifted his veto threat and the Senate passed a housing stimulus package on Wednesday. Some key provisions of the bill will affect residents of Northeast Ohio.
1. $300 million to help homeowners facing foreclosure refinance their mortgages into FHA loans. The lender would have to agree to take a loss on the original loan and lender participation is voluntary.
2. $3.9 billion in block grants to help local communities buy up (often vacant)foreclosed homes, rehab them, and resell them.
3. $15 billion in housing tax breaks, including $7,500 in tax credits to first time home buyers. This provision applies only to buyers who purchase between April 9th 2008 and July 1st 2009. The full tax credit is available only to homeowners making less than $75,000 (or couples earning less than $150,000). The tax credit must be paid back, interest-free, over the next 15 years.
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