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Seniors: Do You Know About Reverse Mortgages?


Hear two different true stories that demonstrate how reverse mortgages can help senior buyers purchase a home without adding monthly payments to their budget.

Today I’d like to talk about two scenarios, both of which are true case studies. In each scenario, a reverse mortgage helped the senior buyer to do away with their monthly mortgage payment.

The first refers to a home in Orange County for $950,000. The mortgage is still about $550,000. After the selling cost and the commission, the net amount is about $330,000. How would you buy a home for that amount in this current California market?

Since you’re planning to retire, you don’t want to worry about a higher mortgage. A solution to the problem is a reverse mortgage. This allows you to use the equity in your home to be converted into cash or a payment towards your mortgage, which means no monthly payment.


Since you’re planning to retire, you don’t want to worry about a higher mortgage.


The second scenario is about a single woman whose home is worth $550,000. She wants to move close to her children, and the home she’s interested in is $600,000. The solution here is similar: She can put $300,000 down and use the other $300,000 in a reverse mortgage so that she doesn’t have a monthly payment. She’s only obligated to pay the property tax and the annual homeowner insurance fee.


I have been able to put people into an investment vehicle like a Delaware Statutory Trust (DST) or in a TIC (tenant in common). For triple-net properties and A-Class, accredited types of investments, they can put it in and the return is between 5.25% - 6.25% depending on the offering from the sponsor.


Returning to the woman in the second scenario, with the $200,000 she has after the down payment of $300,000, she can get roughly an additional $11,000 to $12,000 a year in income that is fully sheltered.

Outside of this topic, I want to give a client named Quentin a shout-out. He told me about an area right here in Southern California with an affordable retirement community called Paumer Valley. You can find a 3-bedroom, 3-bath, 2,000 square foot home for $350,000. It’s a great community.

I’d love to hear from you. If you want to hear more about reverse mortgages for example, I’d be more than happy to bring in an expert to discuss your specific case. Just give me a call or send an email. Stay safe and stay happy!

What’s the Key to Identifying a Great Investment Property?


The key to identifying a great investment property is determining if the 1% rule applies to it.

How do you locate and identify a good investment property?

First, there are a few terms brokers use when it comes to real estate investment that you need to know about.

The first is cap rate (or capitalization rate). This is taking the net operating income the property is expected to generate over the property’s purchase price. Your net operating income is defined as your gross income minus the vacancy minus any type of fee you have to pay before the mortgage debt payment. The cap rate NOI is like a company’s EBITDA.

The second term is cash on cash. This is how much cash will be generated from your investment. This is the net of your income minus the debt payment (or principal interest that you pay the bank).

The last term is return on investment. Every year, you pay back 1.5% of your principal and add that onto your equity.

So, how do you identify a good investment property to purchase?

Let me give you an example. If a property is valued at $500,000 and is generating $5,000 in monthly income, then the 1% rule applies, and that makes that property a very good investment. With a 1% property, you’d have an 8% cap rate, a 12% cash flow, and 16% for your return on investment.

A $4,000 monthly income from that property would still be a great deal because you can still improve the property and raise the rent. At a 0.8% monthly rate, you’d still have a 6.2% cap rate, a 5% cash flow, and 8.9% for your return on investment.


Look for a property where the 1% rule applies.


Those numbers from each scenario are based on an interest rate of 5%, so they’re not unrealistic. The point is, you should look for a 1% property. Even if you find a 0.8% property, I can help you turn it into a 1% property.

If you want to know more about identifying a good investment property, don’t hesitate to reach out to me. I’d be happy to help you.

A Tip for Homeowners Over Age 62


We’ve got a great tip for senior homeowners today. Have you ever heard of a reverse mortgage?

As promised, I want to discuss a few tips for any senior homeowners in the market to buy or sell a property in the near future. They will help you compete in this crazy market.

Last time, we discussed the increased number of sales from 2016. A big portion of those sales is coming from seniors who are looking to downsize. There is a lot of demand for homes like this, especially from first-time homebuyers. First-time homebuyers are a great demographic to attract for home sellers because they often have no home to sell contingencies, hence a big source of competition for seniors looking to downsize.

Even if you have had a previous bankruptcy or bad credit, you can still qualify for a reverse mortgage.

If you’re a senior that’s looking to sell your home and move to something a little smaller, you should consider a reverse mortgage. You can use a reverse mortgage to buy a new home before your current home is sold, then use the proceeds from the eventual sale to pay back the lender.  Even if you have had a previous bankruptcy or bad credit, you can still qualify for a reverse mortgage, which will eliminate the need to make a monthly mortgage payment. However, you do have to be age 62 or older.

Remember that if you’re thinking about selling, you become a buyer just as soon as you become a seller. If you’re thinking of buying a home in the near future or have any other questions for me, don’t hesitate to give me a call or send me an email. I look forward to hearing from you.