You're listening to KFI AM six forty on demand.
Justin Warsham here talking southern California real estate. Last break, I was talking about it is California a good state to invest in, and I kind of ended because I want to talk about flipping. I stumbled upon this because and I'm shocked I didn't think too in preparing this segment, because this happens so often. I get so many clients
or friends. Everybody wants to flip houses, and in my experience, most of it has to do with the TV shows because even with the drama that they have in those shows, they make it look so easy. The most egregious thing about these TV shows is the budget they talk about flipping houses with, like thirty forty thousand dollars.
I have listen.
If there's somebody who could pull that off out there and you're listening, hit that talkback feature let me know, because I don't know who you're getting to do these jobs for you. When I flipped houses, and when I say when I have a flipping business, I have a partner. She's great, she does like the design she makes, she's so spatially awhere, but sorry, I'm heaping praise on her
because she's the best. But anyway, the point I'm saying is that we kind of had to hit pause on looking because the market there's so much demand for housing that what people are paying for what we would consider a distressed house, right, that's a house that needs some work, needs some updates to it, need some love put in it, money put into it that people were still willing to pay so much for that by the time we put in the rehab, we weren't really making and our bare
minimum to buy a house was ten thousand dollars each, So we're looking for a twenty thousand dollars profit to buy a house and fix it up and have it for about four to six months tops, So you're working four to six months to maybe make twenty thousand. Now, during the early part of the pandemic, because of the appreciation and some time it took us to get permits,
we it went great. So then it becomes about a volume, right, because you've got to be cranking through at least ten houses a year, and that's just really really hard to do, especially with the low inventory. So I've yet to see our rehab costs were about I always tell people that you want to look at about two hundred dollars a square foot if you're doing what's salt called inside the box, so you're not adding square footage at all, you're just
updating things inside the walls. Two hundred dollars of square foot is a fair budgeting estimate. Four hundred dollars of square foot for the new construction part, right, So anything you add on is going to be four hundred dollars a square foot.
So there's just there's no room.
There's no room in there to really make money in flipping in southern California. I trust me, there are people out there doing it, and in my opinion, they're either they've got some kind of an inside track into getting the properties on what we call the up leg when they buy the property, or they've just gotten the prices down so much because they can keep these crews busy so they can afford to pay them less because they know that they're going to be doing year round work
for these people. That's the only way that I could see that It's it's profitable, but it's it's really hard. But we got some great talkbacks, so I want to get to some awesome questions Robin hit me with that first question.
Please, do you think there's any value in converting some of this vacant commercial property into residential units, you know, like the shopping malls or some of the larger shopping centers.
It's just a lot of open space. Is it practical to do this?
Could this be a good source?
This is like, I feel like you were planted, my friend, because that's a that's great, that's a great question. During the pandemic, what they found was employers found that people were actually more productive working from home, and really by more productive, because I think anybody who.
Works remotely is like am I?
I don't think so, it's that they could get more hours out of you because it became less about punching in nine to five and more about people just getting the job done. And so people would like they would pick their shots. So maybe they'd dip out for the afternoon and catch a matine movie and then they'd come back and work until ten or eleven o'clock to get
caught up. Now I'm not saying that's obviously across the board, but anyway, what they found was that there was a significant drop in the need for commercial office space and just two years into the lockdown from the pandemic, there was already data coming out from to realtors saying that there was about one hundred and fifty thousand commercial units in the state of California that they projected would be rezoned for housing. And they use that very example like
a mall right, because everybody retail brick and mortar. It's really tough when you're competing against places like Amazon, so they're like, how do we repurpose this? And that's definitely an option where you would see I've seen it. There's a Oh, I'm blanking on the city. I think it's Lincoln Heights. I sold a loft and it was an old factory that they'd converted into lofts. And then there was a jail that was across the San Fernando Road over there that they were also looking to convert into
mixed use. Mix use means they put businesses down at the bottom and then they put condos on top of it, and those could be rentals, those could be for sale. But yeah, I do think there's a chance. The problem is that now we've these high interest rates. Commercial loans are crazy expensive. If you're really in the high end of investing. You're hearing that you know these loans are due to commercial loans. Actually, they don't have thirty year
terms like you do for residential. It's usually three to five years. So all of these new apartment buildings across the US that we're being built are probably going to go under and be sold for pennies on the dollar because they're not going to profit. They're not going to pencil out, and these people have to get out or they're going to go bankrupt when they get hit with these new interest rates on their commercial loans. I think we had another question, Robin.
Please hi there. I have a quick question.
My wife and I were looking to buy a home, but the problem is that the monthly mortgage and interest rates are so expensive, so we've been looking at manufactured homes. What are your thoughts on buying manufactured homes and mobile home parks. We're looking for somebody that has a low lease payment around the two hundred thousand dollars two hundred thousand dollars mark. Is it worth the investment? What do you guys think we want to start building equity and not rent.
Thank you?
Yeah, so, my and I think you had a second part to that question too is do you have that too, Robin, I want to answer both.
Also, second question in regards to manufactured homes, if you don't mind me asked, if a manufactured home monthly mortgage payment and lease payment are equal to what my wife and I spend in rent in our apartment, would it make sense to go down the mobile home route or should we just save our money and just buy property?
Layers on the line.
Thanks love the show.
Thank you so.
Without getting into the weeds and understanding your situation, like I would love to talk a little bit more, just I'm going to give you a surface level answer. I don't think a manufactured home or a mobile home is the solution to home ownership because they don't appreciate in value. I would, as much as I railed against condos and townhomes earlier in the show, I would much rather see you in a condor a town home than a manufactured home.
I think that's the lowest level of purchase because you're already buying. So why do those exist, right? I think they exist because it's a primary way for real estate investors to make money because they basically get rental property with zero responsibility for upkeep on the actual individual units. They only have to upkeep the infrastructure of the lot, the mobile home lot. It's also difficult to get loans
for manufactured home. My mom she owns a manufactured home in northern California, and I help her rent it, and it was hard for her to get a loan. My wife helped her, and she had to make all these like jump through all these hoops to get it. So there's a manufactured home that comes as like a prefab single family home, and then there's like what we all
think of as like a mobile home. Mobile homes might as well be like a mo an RV that just parks there forever it loses value like a car over time, it doesn't appreciate in value, and you're still paying rent, So you're making payments like you're making a car payment, and you still have rent that can go up on the individual spaces. And I think maybe it makes sense
for retirement. I mean, I know my mother in law was trying to get into one, but the problem was she couldn't even qualify for the income for the rental space at the mobile home park where she lives. And even if I co signed for her they didn't allow non occupant co signers for that exact reason. They didn't want it to get flooded with people who could barely afford to live there. So all in all, I think this is probably the first time I've said this out loud.
I think if your only option is a mobile home or a man manufactured home, I think you're better off renting and trying to figure out some way to save up. I would take my tip last week is look at what it would cost for you to get a mortgage on maybe a condo or a town home, and then take the difference between what you're paying in rent and pay yourself that different. So let's say you're paying one thousand dollars a month in rent and it's twenty five
hundred dollars a month. I know these are low numbers, but just for the sake of the example, twenty five hundred dollars a month for your projected mortgage payment, you start acting like you're paying it but saving up. That'll help you save for a down payment and see how much it impacts your financial lifestyle. Okay, thank you guys for the questions. When we come back, we're going to be talking to a mortgage broker, my friend Christine Hatch from the Mortgage Group and going over loan tips.
You're listening to KFI AM six forty on demand and.
I'm excited to have my friend Christine Hatch here with me today. Christine is a mortgage broker. Feel free to jump in and correct me anywhere I'm wrong, but I try to help everybody understand the different roles. So, like, you could go talk to a loan officer at your bank right and they would give you, like wherever you bank, they would give you whatever lending or loans that they're offering there. You could do the same thing for your
credit union. But what Christine does is she works with multiple lenders at the same time, so she kind of looks around and figures out based on your scenario, she'll place you with a lender that is the best fit for you. Do you also represent like private investors as well, Christine? Yeah, no private investor. So some brokers will also have private investors.
And what that means is like I'm a billionaire and I just got a ton of coins sitting around, which, by the way, I don't know if you would agree with this, Christine, but if I did have a million dollars, just chilling that. I was like, what am I going to do with that million dollars? What I would do is I would buy mortgages because there is a secondary market out there where you could buy mortgages eighty cents
on the dollars. So if it's a nine hundred thousand dollars loan, you could get it for probably eight hundred eight around eight hundred thousand dollars. You buy that nine hundred thousand dollar loan and then they make the payments to you.
Yeah, yeah, Or you could be a hard money lender, your hard money.
Yeah, that's a good point too. See, this is why I love you, Christine.
Hard money, if you don't know, is like when I do a flip, it's a hard money loan. So usually that has about a one year term, right, and you're going to pay a higher interest rate. You're going to pay higher points when you originate the loan, but it's intended just to be a quick, short term loan. There's less hoops to jump through than if I'm going out
and just buying a house. Yeah right, Okay, here's the thing I wanted to talk to you about though, Christine, specifically is I think that the first thing whenever people come to me looking for a home as a realtor, unfortunately, what always ends up happening is I have to sling them back over to you. So Christine is one of probably the most popular lender that I refer clients to, and so they'll come to me like I want to
buy a house, but I don't know. And the first thing is the realtor I need to know is what they can afford, what they qualify for. And there's also a difference between what you qualify for and what you're comfortable with, right, So so I.
Kick them over to you.
Tell us a little bit about what are some common like questions that you get from people, like right out of the gates when they come see you.
I think the most common question lately has been to have too much student loan debt, so I don't think I'm going to qualify, yes, And they are fearful of taking the next steps towards home ownership because they're like, I'm drowning in student loan debt.
And this is a great point too. Again, correct me anytime I'm wrong here, Christine. Is that a lot of times people will make the mistake of not talking to a Christine or even a me a realtor because they're like, well, I got so much debt, so I'm going to pay off my student loans and then I'm gonna because that's that's what's really messing me up when an actually and
so that example is like, what am I right? If you have make you have great income, right, but you don't have a ton of money in a savings account that you could use for a down payment, Chances are you probably shouldn't be paying your down paying down your student loans. You should be saving extra money to build up the money.
Is that right?
In most cases?
Yes, because the beauty about student loans, which people don't realize, is that we don't care how much your total balance is. We only look at the minimum payments. Say you owe fifty thousand dollars in student loan debt, but your minimum payment is one hundred and fifty dollars. That's what we're
taking for a loan qualification. So some people think I have to pay this fifty thousand dollars debt, but one hundred and fifty dollars in monthly debt doesn't really move the needle that much, So why pay off the fifty thousand when you could maybe use that fifty thousand towards the down payment and purchase. Your purchasing power is higher at that point.
Right, Because it all boils down to what they call the DTI, the debt to income ratio. So that's the percentage of all of your debt, including the housing payment, right.
Correct, housing payment, your principal interest, taxes, and insurance in any hoas, and then combine that with your other debt obligations that you have.
So if I have credit cards, right, maybe I have five thousand dollars on a credit card. You're not looking at the five thousand dollars payoff of the credit card. You just want to know that I have a minimum payment of eighty dollars. That's correct, and so the same thing. And then this is the other thing. So you got your car payment, you got your credit cards, All of that stuff goes into qualifying for the loan based on
your income. What in your experience, Because I know that a financial advisor would recommend and most of the other states in the nation can do this, recommend that your housing payment is about thirty percent of your monthly income.
Yeah, yes, Now, thirty percent is super low, especially for southern California, right our market.
Yeah, yeah, your clients' what's the average are most common?
I mean, most people will push it up to fifty percent. Lending guidelines can go up to fifty and a lot of people will push it to fifty. But I think a safe space is around.
Forty forty percent is a good comfort zone. So what would be a circumstance though, where somebody should be comfortable going up to fifty percent If.
They know that they're going to get a raise soon, if they get bonuses, if let's say they have a spouse that's not currently working but will possibly be working in six to twelve months, right, so certain financial situations that are going to put them in a better financial picture down the line. Then I would say, okay, well maybe we can go higher, just as long as they know they're kind of already at that threshold of your max.
And this is why Christina and I are such big fans of that to I've given out I think now three times where you figure out whatever your projected mortgage payment is and what you're paying in rent, and you pay yourself the difference, so you could see what's that good? How is that going to impact my lifestyle? Because a lot of people tell me they don't want to be house poor, right. They like to go to concerts, they want to travel.
And that's exactly what I tell people too.
When I qualify them, I'll qualify them for the maximum that they lending guidelines would allow for us to lend. But then I also tell them, based on your comfort zone, you should be looking at X purchase price, right, because I don't think they should be house poor either.
But I too strategy session.
I too will tell them if you're let's say, paying three thousand dollars in rent, but your house payment's going to be five thousand, start paying yourself the difference and see if you're comfortable with that, right, Because if you are, then great. If you're not, then maybe we have to take your comfort zone down a little bit so that you are comfortable purchasing at that budget.
So student loans is a big issue.
Anything else that comes up when you're talking to clients frequently.
Credit credit score, credit score.
A lot of people think that they have terrible credit and it's actually not as bad as they think it is, and that they wouldn't be able to qualify. We can actually go down as low as six twenty, sometimes even five eighty depending on the loan program. But six twenty and higher you have a wide range of loan programs available to you.
Yeah, because I get people like, well, I don't know my credit like what's the cap credit score? Where it's like after this, you don't really get what we're talking about here. Just to break it down a little bit more, is that your credit score really is probably the strongest indicator of what your rate is going to be, because that's the rate is what the lender uses to cover their risk of lending you this large amount of money.
Fair to say, yeah, okay, so.
If that's the case, so your lower credit score, the five eighty is going to be on the higher end. But if I have an eight hundred credit score, I'm going to be on the lower end. Is there like a capped out max?
Well, seven eighty and above, So.
Seven eighty above doesn't get any better.
Exactly whether seven eighty two or eight ten doesn't matter.
You're getting the best rate you can get for that credit score. What are some common mistakes that people make in screwing up their credit score, But they think is the smart.
Thing paying off stuff and closing them out, paying off credit cards and actually closing them because imagine you have a credit history. Let's say you have a target credit card for the last fifteen years, you pay it off and you close that account, that fifteen year history of
making payments is now gone. So if you're going to pay down at great pay it down, but do not close out the actual credit card accounts because that could actually negatively affect you and drop your scores as opposed to increasing your scores.
And what about like balances, Is there are there thresholds for what kind of balances I should have on the right question.
Yes, thirty percent.
So let's say you have a limit of ten thousand dollars on your credit card, on your target credit card, ten thousand dollars. You don't want to exceed three thousand dollars a month on the balance.
I've heard fifty percent.
Also, is it like is it a tiered thing, Like if you're above fifty percent you get a bigger dean.
It would be yeah, But anytime thirty percent or more, that's when you're going to start to see your FYCAL scoring decrease.
Okay, So ways that I've heard you give this tip before, so I'm going to say it, but I'm going to give you credit.
Where it's due. If that ways that.
Let's say I'm right now, I'm like, I want to start looking for a house, but I'm at you know, I'm at thirty well above, I'm forty percent of my limit?
Is an easy way? What's an easy way that I could just Is there an easy way I could just.
Fix that get it down to the thirty percent?
Well?
What if I can't pay it down? What if I don't have a couple grands sitting around? Like what I'm getting at here too? Is I think you could call and just ask for a credit line increase. Right, So if I have a ten thousand dollars limit but I'm already and I have five thousand dollars, if I get them to bump it up to fifteen thousand dollars, now I'm at that thirty percent threshold.
You're all right?
Yeah, all right, let's uh, oh man talk too much with Christine. We're going to come back and I think what we're going to talk about is buying down rates, right, I want to talk about is it worth it to pay the extra money to try to get as close as you can to those fantastic pandemic rates.
When we come back, you're listening to KFI AM six forty on demand.
Justin Warsham here talking Southern California with real estate Sorry, with my guest Christine Hatch from the Mortgage Group. She's a mortgage broker, and last break we were talking about common questions that you get and how to what credit score has, how that impacts it. But now I want
to talk about rate, right, because it's the thing. It's probably don't let me put words in your mouth, Christine's probably the most annoying question that you get as a lender, not because you think it's a dumb question, but people always want to know what is the rate? But there's so many variables, right, that go into the rate. It's hard to answer that, is correct.
I get that question all the time and fight go score your down payment, the type of property, the loan program, the term of the loan.
Is it a fix it adjustable?
All that plays a factor, and how the bond market is performing plays a factor. So if someone says what's my rate, I say, well, it depends, right, it's not black and white because of all those variables. So you have to be really careful on when you see advertisements right at there, let's say online or at your big bank, and they say, oh, get a five and a half percent rate, Well, what's the catch ye, with what type of down payment? With type of FCO score? All of that plays a huge factor, and it's.
Hard to because you can sit down with any lender right and you can say these are the rate in terms that I'm offering right now. But on average, it takes a buyer three to six months to find a house, even in this market, and so that all changes by the time you get the contract right.
And they get misled.
And that's the one thing that buyers have that you know, I want to know what my rate is, but it's so hard to determine because absolutely, if it takes three months, if it takes six months, well the market hopefully is better by that time, right, But if it's not, then you're stuck with thinking you're going to get this rate and then come to find out it's different.
So people often will ask me about they don't actually it's not a lot, but the people who are like really geeky, right, that really geek out about this stuff. They always want to know about buying down the rate because the rates are so much higher. What does that look like? And can you give me like a top level example of what where a scenario might make sense to buy down the rate.
So a buy down, there's a couple different buydowns. So when you're buying down, you're paying points to buy down the rate. It's typically you're paying one percent of the loan amount to drop your rate, typically a quarter percent. So let's say let's use round numbers on a five hundred thousand dollars loan. To drop your rate a quarter percent, you're going to pay one point, which is five thousand dollars. So that might change your payment what eighty bucks a month? So does it make.
Sense You've got to pay twenty grand to get a full percentage point? So if you're at a seven and a quarter rate, it's twenty grand to get a six.
And a quarter rate, right, So does it financially make sense to pay five thousand dollars just to save eighty dollars a month?
Right?
So I look at it from a financial strategy because at the end of the day, a mortgage is a financial strategy, that's really what it is. And do you want the peace of mind of the lower payment regardless of how much it's going to cost you, or would you rather be a little bit smart with your money and say, well, I'll save that five thousand dollars or that twenty thousand dollars maybe for home improvements or my emergency fund.
Take the slightly higher rate.
When rates come down, we rewrite the mortgage refinance, take advantage of the lower rate, lower payment.
And I've seen you talk to our clients, mutual clients that we've had that you talk about like, well, how long do you think because it if you if there's a chance that you're not going to be in that house for five, ten years or more. Right, you could be putting forty sixty thousand dollars to buy down that example, which is a very low price, right because we're talking
about a five hundred thousand dollars loan amount. More likely your loan is north of a million dollars in this market, right, So double all these numbers really, So you're talking sixty to eighty thousand dollars to try to buy down two percent on your rate to get probably a five and a quarter rate. So you've paid all of that money and then something happens, right, you get a job change. Now you're moving out of that house. You don't get
to take that rate with you. So you've paid that money to buy down that rate without experience the benefit of.
It, exactly.
Or what if rates take down a year from now, two years from now, where you can get that five and a quarter percent rate.
You just spent all this money up front, right.
I've never even thought of that as being an option because rates have been so low through most of my career.
Yeah, that's right, and most homeowners actually refinance within the first five years, whether they refinance to a lower rate, they go from an adjustable to a fix, whether they cash out, shortened the term lengths in the term. So you're probably going to be touching your mortgage within those first five years. And if you did spend all that money up front, well, now you just you.
Just spend all that money for nothing exactly. The other there's a program that came out after the rate hikes because I think lenders were like, oh crap, there's nothing out there, there's no way we could do it, and everybody was like the Fed just raised the rate, like it went from three percent all the way up to six at that time, and so they put out a two to one buy down. Can you talk a little bit about that.
I love this program. Yeah, So in essence, what you're doing is you're buying down the rate those first two years. So the two stands for a two percent lower the first year, the one stands for a one percent lower the second year. So let's just say, hypothetically speaking, your rate is seven percent today on a thirty year fixed mortgage. That first year you would be at five percent, the second year you would be at six percent, and then you're three through thirty you would be at seven percent.
So the benefit of that is you're going to get into the house with a more comfortable payment, and hopefully within those first three years you refinance out of it, right, hopefully rates go down to where you can rewrite the mortgage.
It's a fantastic way for people that are worried about their mortgage payment being high right at that seven percent, get into it now, and then we monitor the rates over these next two to three years and hope that right cross our fingers, hope that we can refinance you and get the lower and not even see that seven percent rate.
And as a realtor, what I like is that this is a way that you could put your you could finance your buydown because what you do, what I do with clients who want to do a two to one buy down is usually it's about fifteen to twenty thousand.
Is that a fair guessimate of price to do?
That depends on your loan size and the purchase price how much you're putting down, but gets.
Somewhere around there for most of the places here in southern California. So what I encourage my clients to do is they throw on that extra fifteen to twenty thousand dollars into their purchase price and then ask for that credit because part of the term to get that two to one buy down is it does have to come from the seller as a credit, right correct.
So let's say the properties listened for eight hundred thousand, you offer eight fifteen with a fifteen thousand dollars sellar credit, you accomplish the buydown, the seller still nuts that eight hundred thousand that they wanted right as their price there go.
So you've paid for it, like you financed the credit, but a lot of times when people find out about it, they want to, like say, make a list price offer at eight hundred thousand, and they want that twenty thousand dollars credit, which feels like a little bit of a slap in the face if you're the seller, going, well, really, you're only you're offering seventy eighty. That's what you're offering me. And so that's why I always tell it if you can,
like push it up now. During the break though, before we let you go, we were talking about you you are a fan of condos and townhomes for first time home buyers.
I actually am, yeah, so I actually bought my first property as a condo. I think it's a great stepping stone to home ownership because the price point is slightly lower than single families. So I would hate for people to not get into home ownership because they think they
can't afford it. Now, with all the stuff that's going on with Hway's and California law, I think it does make it a little bit trickier for condos to get finance, but still a great stepping stone, especially if you can build that equity over the next three to five years you, let's say fifty one hundred thousand equity, you sell that property, you then have a bigger down payment for your next property, which hopefully then will be a single family home.
And admittedly I gave it a Google, and this is a very quick google. I would love to dig a little bit deeper because this is really just the first run. But in Orange County, the median house price for a condoor a town home is eight hundred and seventy one thousand dollars, whereas a single family home is one point four million dollars, which I think feeds right into your example. But when we start to account for LA County, I don't know how these condo and townhome prices are so
high or the single family. The single family rate kind of seem makes sense, but it says the median condo price in LA is eight hundred and sixty four thousand, and my only guess is that LA must have a lot more amenities or something that's driving those prices up.
And the median house price is nine hundred and.
Eighteen Yeah, so now if you're comparing that price point, maybe go with a single family that would make more sense. But at Orange County, with that big of a difference in condo versus single family condo is a great opt.
But I would bet in La that to get that nine hundred and eighteen thousand dollars house, you're probably living in a place that you're not going to want to be living maybe.
A one to one right, a bedroom, one bath.
But I would venture a guest that if you're buying an eight hundred and sixty four thousand dollars condo or town home anywhere in LA, that's a really nice condo or town Yeah.
You're probably sixteen hundred or sixteen.
Hundred square feet, three bedroom, two bath and a pool and a gym in of you probably. Yeah, Thanks Christine, I appreciate How could people find you? You got a website and give social media handles? How can they find you?
Yes, my website is www. The Mortgage GROUPCA dot com and my social media you can find me on Instagram at CTHELETTERC dot Mortgage sister, and I am on Facebook as well under Christine Hatch.
What I love about Christine is Christine is the kind of person. We both have said this to clients. She will sit down with a person and educate them and talk them through stuff. So what we both are like big fans of We don't want you to come to us just when you think you're ready, when you're just starting to think about it, start talking to a lender that you trust just to get the information, and someone like a Christine or myself will help you build a plan to get that home.
Yeah.
I always tell people, if you have the slightest thought, even if you don't think you're going to buy for two or three years, start that conversation today because you can start to put a game plan in place and then work towards that over these next two three years, rather than waiting and thinking, I'm just going to talk to you know, Justin or myself right when I'm ready to buy. So it's always better put your ducks in a row while in advance and you'll be in good ship.
Yeah, you're not wasting our time. People think you're wasting on them. It all right.
When we come back, I want to talk about more ho waves. We've got a great huaight talkback question, and then I also want to talk a little bit about listing prices and what they mean.
You're listening to KFI AM six forty on demand.
Justin Worsham talk in Southern California real Estate. We got a great talkback question that I want to hit first before we get into listing prices.
Can you play that for me? Robin, I justin love the show.
My question is I have a town house and what's to deal with.
They just keep raising the ho way?
Are they allowed to do that? And is there a.
Cap at some point? Because now it's half.
Of my mortgage?
Can you give me some assistance?
Thanks, have a great day.
I'm gonna try and it's I'm so glad you asked this question because it reminded me to do some research into it, because I was literally talking about this yesterday with clients that were considering getting a condo or a town home instead of a single family home. And here's what I found. You're gonna want to talk to a lawyer. I'm just a license broker. I'm not a lawyer, so
I should not be giving legal advice. But the cap, according to what the California Civil Code is that they can only raise it up to twenty percent over the previous year's assessment. Now, what I don't know and what you might want to talk to a lawyer or do some more research into is that is that twenty percent
overall or just the monthly cost or whatever. And then the other fun fact I found was that they can they can do a special assessment up to five percent of the annual budget of the h away without homeowner approval. So if you get hit with a special assessment that's more than five percent of the annual budget for the
h away, then they need to get your approval. And this is part of what I was saying too that I have concerns about the h aways is that they can just eight people in a room decide one day that they're going to raise your dues and you don't really have a lot of say in that. Now, you could be the person who's like, I'm going to be the president and that's how I'm going to regulate that, But I again don't I don't know that how much
control you're going to have. What I will tell you is that more than likely, if your town home is here in southern California, the reason that your hays are going up is insurance costs. I would, I would it's got to be insurance costs, because I think the property taxes a yeah, they're all broken up by the individual owners. So it's only insurance costs, very rarely unless they're talking about doing some kind of a major improvement down the road.
I think it's because their insurance costs are going up and it's crazy for them.
Thank you.
And the other thing I want to talk about before we get to Chris Merrill, who's coming up here next with his show, is listing prices. This was actually a question I asked people at open houses before I did the show. I asked what they thought, and this is something that I don't know if Christine Hatch is still here with me with the mortgage group, but the people
are confused by the listing price. And I think that the listing price is it was at some point was probably intended to be some kind of a representation of value, and I think that's kind of gone away. I think now it's more of just a marketing strategy. The best example was that I saw a home that was listed. Does it mean oh, I saw a home that was listed at eight ninety nine and it was way low that house should have been. It was going to sell for at least a million fifty at least one point one.
But when you look at the most common listed prices in the in the city that it was in, which it happened to be Burbank, that those were the most common spots, and so it was it was their way of getting the most eyes on it. And it was during the pandemic where you could do that. You could list a house for a dollar and the interest would
just drive it up. But more recently, because the market is slow, I've seen people try to list houses more conservatively and if you have a seller who's not patient, if they're not if they're anxious, then they and they might take an offer early. I was able to Arstine actually helped these clients. But we were able to get a house for sixty thousand dollars below the appraised value on the home, just because the realtors had a strategy of they wanted to list it a little low to
let the interest drive it up. And we just came in early, right after the first weekend, and the seller was like, well, I think this is going to be as good as it's going to get, and it's close enough, and so we did it. We didn't offer list. We offered like twenty k above lists, just to show them that we mean business. You think I missed anything in there, Christine, No, I think.
You're absolutely right.
List price doesn't necessarily mean that's what the home is worth, right, Yeah, So.
I always tell people try not listen to your realtor, try not to pay too much attention to a list price on that one. Chris Merrill is here. He is coming up in the next hour. Chris, what are you talking about in your show, sir? Well, first of all, I guess hey, I'm really enjoying listening to your show. Oh thanks, man, that mayes a lot. You're like a professional, You're like the real deal. I'm just here being a weekend warrior ing.
I know. No, It's funny because I cracked open Zillow while you guys were talking, and I was like, is there really.
That much of a difference between condos and single thing? Oh? Yeah there is. Yeah, there's a huge difference. Yeah.
But those hoa man, they they oftentimes they don't they make it now. They're just close enough where it's like it has a lot of buyers going, it's just not worth it. I feel like I want to push my budget up just to get a single family home.
Yeah, But then I lived in a neighborhood where somebody decided to paint their They had kind of one of those walls in front of their house, you know, or there's a like not a fence, but like a solid wall. Yeah, and they decided to put a mural on it. But it was not well. They didn't have an HOA and it was gauny as all hell. It was like a wolf bang at the moon kind of thing. And and then they painted their house this like a pastel pink.
Oh, it's horrible.
So you wished you had an HOA in that case for design and Review as they call.
The one thing I like about HOA is it gives me a chance to tell other people what to do.
Yeah.
I'm a big fan of me having control over them. Yeah, And I just love that and I hate giving that up. So that's that's the one thing I'm doing. Hey, we'll talk about the Grand Prix is in town and that means that it's time to shoot somebody. So that's happening. Tariffs are hitting us, and I appreciate that. You guys,
we're talking so much about tariffs. In fact, I'm going to dive into the tariffs and the home prices of what they're doing UH in southern California, and what they are doing nationwide, and then what they're doing to industry as well. We'll talk about that coming up in the five o'clock hour, and we're going to open up our talk back as well. We'll ask the question, what is the one thing that you won't give up no matter how expensive it gets? So I was talking to my son.
He's he's a jim He's I gotta go to the gym. Is a jim rat.
Yeah.
He likes to throw some steel, Yeah, a pumps iron like that.
How old is he? He's twenty five? Yeah, I swear he's twenty five going on fifteen. Yeah, But he says, I'm not I'm not giving up. I'm not giving up egg whites. I gotta have my egg whites and my protein powders. And I thought that's really convenient because he is paying a nominal rent and and I'm thinking, am I subsidizing his protein powders and and UH and whites?
Yes, you are, I think kind of am ernest.
I mean, I actually have a sixteen year old, so I feel like I was just talking about a thirteen year old and my younger son is very fast and loose with my money. Like today, Billiest example, today he decided to have McDonald's delivered to the house instead of having his older brother drive him there. And the only reason I knew this is because I was sitting at home preparing for this very show and he called.
His mother, Chris.
He called the mother and said, can you get I want McDonald's delivered to me? And then when I found I was like why, and he goes, well, if I asked you, you would have said no.
Right.
He was right, He was totally right. Well, and then are the terroriffs? Is the concern people are having? Is that leading to more petty theft? Are we're going to see resurgons in portpos Because I actually had about one hundred and seventy dollars where the stuff stolen from me yesterday.
I was very unpleased.
And I haven't told my wife about it because I'm kind of ashamed and and I'm afraid that she's going to say, how could you have been so stupid?
You know what I love is that you're saying this on the radio where she's you just know, my wife is also not listening.
Are you kidding? My wife is like, did you meet Seacrest?
I love Seacrest? When can I meet Seacrest? That's what I get from my shot. Listen to this thing.
I don't even know, no, but I like that. That's I never would have thought. That's a great idea, Chris. Not to not to suck up to you, but that's a great idea. I never would have thought that tariffs would have an impact on crime, like I never would have even crossed my mind.
I'm looking forward to it, man, Thank you so much. Funny.
All right, Well, we'll see you guys next week again, two to four. Right here more southern California real estate.
Reach out to me.
You could find me at home with Justin on Instagram, or you could go to Justin Worsham dot com. If you want to send me an email, you can find my number anywhere out there. Just type it justin w O R and then that'll spell the rest of my name for you.
Thanks to shout out to Richie and everybody.
Robin Brigeta, I'm sorry I messed up your name again, but I think I ended strong.
I felt good about it. You did I did right.
I rallied, I locked in, and I rallied and ill him here.
Yeah, you know what.
I found success in betting people pop tarts. Richie scored himself a family pack of pop tarts because I guess the affordability next in correctly last week, thank you Christine as well hit her up.
Thank you guys very much.
KFI AM six forty on demand