The Importance of Being Prepared

I would like everyone to be successful. I would!
In real estate, Success Comes When Preparation Meets Opportunity.

The best way for a Buyer to be successful,
is to be prepared with a Pre Approved loan,
then both sides of the deal will know,
that you will have the money
to purchase the property you are pursuing.

There will be no doubt or question or worry.
The funds are there – great.

When you present your Offer,
with your Loan-Pre-Approval Letter,
you’re also showing the Seller that you are serious,
that you’re not there to waste their time or to, “play real estate” but that you are there to buy!

They will appreciate that – your preparation.
It will give them a sense of security in the deal and a confidence in you.

You want them to like you, to favor you, to favor your prepared/preapproved offer,
and not just for their acceptance  (you want that) but also for their indulgence  (you may need that)

For example, if you’re in escrow, and there’s a problem- some delay or dispute –
your good favor will earn their good will – if you need some extra time from them to solve that problem.

So, preparation pays, in a number of ways.
Or, as Emerson put it,
“The future belongs, to those who prepare for it.”

Take that as advice!
Prepare for your future with a pre approved real estate loan, so you will be successful when your preparation, meets your opportunity.

Six Ways Real Estate Makes You Money

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Along with the feeling of accomplishment and pride in ownership, there are very real financial benefits to owning real estate.

1. Cash Flow, either through rents or leveraging (borrowing against it)
2. Appreciation, when the property increases in market value Usually this is a Long Term benefit, over the period of years
3. Depreciation, when the property’s usefulness declines (with age) you are allowed to take that loss as a tax deduction.
4. Also Tax Deductible is the Interest you pay on your Mortgage
5. Improved Property Value, through improving the property’s condition through sweat equity.
6. Loan Paydown. Consider it a forced savings. By paying into your mortgage, you are gaining equity/financial ownership.

Own Your Owns: What They Are and Why You Should Buy One.

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Own Your Owns are a form of real estate ownership that pre-dates the condominium form of ownership. They are usually 2 or 3 stories, typically in 8-12 unit buildings, tucked between newer and sometimes taller buildings. Own Your Owns were mostly built in the 1950’s. Many people find these types of units appealing because of their mid-century characteristics, with older tiled bathrooms, hardwood floors, and more intimate settings. I find them appealing because of their price. They are less expensive than condos and a lot easier to manage. I’m on my 6th one. They’re all on HOMOWNERSHIP’s Facebook page.

The major challenge with buying OYO’s is the financing. Here are the nuts and bolts of it: The Housing Act of 1961 made it easy to finance Condos, but not OYOs or Co-Ops. Few Lenders give mortgages on OYO because those mortgages are not INSURED by the government, say the FHA, the Federal Housing Admin. Also these OYO mortgages can’t be SOLD on the secondary market to Freddie Mac (Federal Home Loan Mortgage Corporation) or Fannie Mae (Federal National Mortgage Assoc) that BUYS mortgages from lenders. These two either hold the mortgages in their portfolio, or package the loans into mortgage-backed securities (MBS) that can be sold.

(Quick digression: when people stop paying (default) on their mortgages these MBS become worthless (and banks that carry these loans defaulted on THEIR debt) and the whole economy tanks, like it did in the Global Recession of 2008-2012. (see page 73 of Homownership for more)

Back to OYO financing: so IF Lenders can’t insure them, or sell them, they don’t want to WRITE them. The Lenders that DO write OYO mortgages hold them in their portfolio. The loans are at a higher interest. (than say a conventional 30 year mortgage) They require a 20% down payment, which means the bank owns 80% of the property’s value, AND they want the borrower to live in it, be “owner occupier”. They own most of it (80%) they have your deposit (20%) and you LIVE in it, so, all that spells manageable risk for them.

The same is true when you SELL it. You will need to find someone who can meet those financing needs. That may not be so easy to do, but don’t let that stop you. Provided you price it reasonably and leave some equity on the table for the next guy, it will sell.  Don’t be greedy. Be measured.

In sum: Financing can be an expensive challenge. THIS is why OYO’s usually sell for CASH. This is why they are less expensive than condos and houses. They’re priced LESS to appeal those that have the cash on hand – often investors.

Even though it costs less than a condo, often the rental income can be nearly the same, therefore the return on your investment can be as good, if not better. They make a fine source of passive income. I’ve made as much as 12% on my monthly CAP (capitalization) rate and 83% ROI (return on investment) when I sold the place. I paid off our house with the sale of one of them.

One problem with OYO’s is – parking. Usually there isn’t enough, if any at all. Remember, they’re older buildings and don’t have subterranean parking that Condo buildings have. If you don’t mind that the building only has street parking, you can pick up a nice OYO for a fraction of the cost of a neighboring condo. Some people, some perspective tenants, may not need or care about parking. It is the UNIT that they’re going to call home, that interests them the most. That’s the part you control. Whether there is parking or not is out of your control. Your job is to provide a nice, comfortable and clean unit to rent. Such a place will earn you a good tenant.

If your OYO building, “Goes Condo,” is converted to condominiums, the value of the unit dramatically increases, and the owner/investor/you make a significant profit. That’s great, but that potential isn’t the only reason to invest in an OYO. There is the income potential and return that makes it immediately profitable – the Cash Flow. There’s also the satisfaction of knowing that your money is secured by a physical, “brick and mortar” investment. It’s why people invest in real estate.

Purchasing an Own Your Own to live in would be comparable to purchasing a nice Mobile Home to live in, if you just want a place to own, one that you hold Title to.  At the very least, it would accomplish the goal of owning. I’m thinking more in terms of an OYO as an investment to earn you an income, maybe lifelong income.

In an OYO building, you’re usually not dealing with HOA politics and power, just people who want a low key property with a good return. As OYOs are smaller buildings with less amenities, the monthly fees are less. They pay for the property management company to maintain the books and keep up the place.

Lastly, Own your Owns aren’t frilly and fabulous. There are no pools, tennis courts, hot tubs, gyms, saunas, yoga or Pilates studios, but you’re not there for that. Own Your Owns are protected, prolonged, profitable investment properties that will earn you significant interest on your money. You’ll have to find somewhere else to be frilly and fabulous – as if that’s ever a problem.

Homownership’s Portfolio

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PROPERTIES and RETURN ON INVESTMENTS                                      ROI’s

1066 E 2nd St.  Long Beach,  Condo                                                           30%

4300 Chandler,  Burbank,  Duplex                                                                63%

4306 Chandler,  Burbank,  Duplex                                                                417%

4308 Chandler,  Burbank,  Duplex                                                                357%

2301 Earl Ave,  Long Beach,  Duplex                                                           75%

626 Chestnut Ave,  Long Beach,  Own Your Own, “OYO”                            32%

723 E. 6th St.  Long Beach,  OYO                                                                67%

932 E. 2nd St.  Long Beach,  OYO                                                               45%

68 Lime Ave.  Long Beach,  OYO                                                                 83%

1905 E. Florida St.  Long Beach,  OYO                                                        83%

323 W. 4th St.  Long Beach, OYO                                                                 35%


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     We Gay Guys are under-served, un-informed and un-prepared for our financial futures. Who’s advising the gay boys in financial matters? Who? Our dads, brothers and uncles have men like Robert Kyosaki, Dave Ramsey and Ken McElroy to advise and mentor them. Suzie Orman seems to have all females straight and gay  on her client list – but where are the gay boys? Who’s advising them? Who’s mentoring them?
     Do they know that real estate investing and home ownership, are as much a part of their American dream as it is their straight brothers, who marry their high school sweethearts and settle down to raise a family?  Even with increased acceptance, it may take years for some of us to knock that chip of discrimination off our shoulders. We didn’t need to wait for acceptance before we staked our claim and put down roots, but many of us have. That’s why I wrote the book, Homownership. I don’t see nearly enough gay buyers in the real estate market. I see a lot of gay agents, and that’s great, but where are the gay buyers?
     Where are the younger gay guys who want to move forward, but aren’t sure which direction to go – the middle aged gay men who have job tenure, experience and money to invest – the senior gay gents who have attained some financial success and are looking for a safe, tangible, secure asset to protect their money and supplement their retirement income? It’s time to consider real estate, “Homownership.”
     We have so much going for us. We have equal protection under the law. We have marriage equality. We raise children. We run companies. We are professional athletes. We are elected officials. We openly serve in the armed forces. So what’s next? How do we turn our increased acceptance, our increased presence into financial prominence? By owning real estate! Not rent – not lease – not timeshare – own! By owning real estate, by controlling it and profiting from it, we are securing our existence, our influence, and our futures, then we truly become stakeholders in our communities, not merely place markers that reserve the seat of a city’s gay neighborhood.
     Home prices have soared in recent years. In many neighborhoods that were once known as “gay ghettos”, the price per square foot increased to unaffordable levels. Where the gays go, so go the higher rents – so go the higher prices – so goes the equity appreciation – so goes the profit, but as it stands now, it’s not going to us. We’re not making it, because we’re not buying it. We’re just renting it. We’re renting, repairing, renovating, restoring, reviving and then retreating from the incoming buyers who have the means to purchase these gentrified, renaissanced properties, only to raise the rents or sell to someone else for a substantial profit. We need to be more than just transitory tenants, who move from one adopted gay community to another, whose rents support, and whose efforts perform these feats of urban renewal. The problem is, as these communities rise in esteem, our rents rise as well, to the point where our skyrocketed rents price us out of these neighborhoods.
     Gays and lesbians who were once pushed out of their neighborhoods because of their sexuality, are now being pushed out because of their affordability. We are forced out – and the property is sold at expensive prices, making exorbitant profit for the owner. We need to make that real estate profit come our way – and for that to happen, we need to involve ourselves more.  We need to invest in ourselves more. Timely, intelligent real estate investing is a workable way of attaining self reliance, self sufficiency, security, independence and success. Making money and attaining financial security through real estate is a major theme of my book, Homownership.
     Writers say, “You write about what you know.” well I’ve done that. I know real estate investing. Read, learn and enjoy the book, Homownership, and make real estate investing something you know too.

Is This For You?

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Though HOMOWNERSHIP book was written for the queer folk, you don’t have to be, “that way”  or  “a bit funny”  or  “on the bus” or  “batting for the other team”  to read it, learn from it, or enjoy it. Much of the content is true for everyone. It’s just that the stories, examples, references, and humor are tilted toward those wearing the lighter loafers. It’s written in small, easy-going sections, so you can pick it up or put it down whenever you want or need.

Me: I’ll tell you up front, I am not a multi-millionaire with the sir name Kiyosaki, Gates, Wynn or Buffett. I do however have the wealth of experience and insight to share with you my queer family. If along way I help to create more gay millionaires, well, that would be great, fagtastic, gaymazing! I do tell you my story, and show you a picture or two to qualify, but rest assured, the book is about you.

You: You know that homeownership is an aspiration many people have. From an early age it is instilled in us as part of the American dream. We were taught that buying a home is as much a part of the pattern of life as courtship, engagement, marriage and raising children. Fine, but what if that’s not a pattern you want to follow? Where do you fit in? Is there an American dream for you? Yes there is, and it’s time to make it a reality.

For those of you who have an interest in home buying but were never taught the basics and benefits of it, who are “buy-curious”  but never had the opportunity to follow anyone’s example, this book is for you. You all have varying degrees of understanding, but for one reason or another haven’t done anything about it. My goal is to inform and encourage those of you who are still sitting on the fence waiting, wanting or needing something to happen, something to get you going.

Read and learn the information in this book. Get a clear sense of the property buying process, why you should buy real estate, and how it will change your life and secure your future. If you don’t get what you need in these pages, well, the fence will still be there, but c’mon, let’s go.

First Time Buyer

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The fact that you are a first-time buyer is a bonus. Also, it is much easier to qualify for a loan if you are going to be living in the property. It is called “Owner Occupied.” It’s almost a necessity, a condition for a loan, certainly for a first-time buyer.

As the Owner/Occupier of the property, you will be living in the property you are taking out a mortgage to buy and will always be on-site to care for it. No Lender is going to give you your first loan on a property that you don’t plan on living in. They want you to have, “skin in the game” and all that. It is more of a risk to them. Even if you are a seasoned borrower and this is your second house, lenders usually want you to be an Owner-Occupier.

A “seasoned borrower” is one who has consecutively paid one or more mortgages for at least two years. Don’t be deterred if this is not you. All borrowers have their first loan, and this is yours. You are gainfully employed, have a source of income and have good credit – carry on.

If you are a younger gay buyer, having many working years ahead of you is an advantage when being considered for a mortgage, certainly for your first mortgage.

For us mid-career or retiring gays, we may have the advantage of having more money down, more assets to list, more credit experience (good for us). When you go back in a year or two, or three, looking for second mortgage to buy a second property, the lender will look at how seasoned you are, how consecutive and successful you were at paying your first mortgage.

The Road Forward

If you really want to improve your future, make real estate investing part of your present. Follow the plan of buying low, improving, gaining equity, renting and/or selling, until you make enough cash flow to support yourself, or you make enough money to buy a property for cash. That’s the greater goal. It doesn’t have to be a block of houses. One income property can do the job.

When you buy a property for cash, all of the monthly rental income is Cash Flow, Passive Income, Disposable Income. It will further support you in later years if you take out a Reverse Mortgage on it. That’s it! Financial freedom is yours! You will never again have to punch a clock, sign in, report to the office or be treated like your bosses bitch – unless you want to.

Now, start preparing, saving, and paying attention to potential properties. Keep an open mind as to when, where and what you want to buy.

Remember, “Buy real estate, take care of it, and it will take care of you.” You can do it. You want to do it. You’re willing to work-it. Great! Let’s all work-it. Let’s all work to increase our physical presence and improve our financial prominence. Real estate investing is a dependable and profitable direction to go. The road is before us. Let’s leave our footprints all over it.

America’s ‘Gayborhoods’ Are a Lot More Expensive, a Lot Less Gay

What becomes of a trendy gay neighborhood when housing prices soar and straight people move in?

As gay acceptance has risen over the years, gay people have increasingly moved away from historically gay neighborhoods, such as the Castro in San Francisco and Chicago’s Boystown. Simultaneously, more and more straight individuals and couples have felt comfortable enough to move into these neighborhoods. As a result, many gay neighborhoods—call them “gayborhoods”—aren’t nearly as gay as they used to be. Read the rest of the article here. 

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