News about Real Estate & Inspired Living In Puerto Vallarta

100% Pure Honey In Puerto Vallarta

Honey in Puerto Vallarta: There’s some good honey to be found in Puerto Vallarta. Vendors at the Farmer’s Markets have abundant supplies of the real stuff. We love it and couldn’t have our tea without

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7 Essential Elements of Your Home Inspection (Beware of #7!)

Home Inspection Elements

A quality home valuation is essential in guaranteeing that your next acquisition is a solid investment. The valuation process begin with the numbers on paper, but in order to justify the numbers, a thorough property inspection (walk through) must be done. If you can correctly evaluate these 7 areas of any structure you will be able to nail your rehab cost, but I know you will miss the final one.

The 7 Elements Essential to Your Inspection

When conducting a walk through, cosmetics should not be the focal point or the deciding factor on how much you will pay for a property. Each house has 7 essential elements that must be meticulously inspected to ensure you minimize overages on the renovation budget. When conducting a walk through these areas should help justify your position:

  • Foundation
  • Roof
  • Plumbing
  • Heating/Cooling
  • Electrical
  • Windows
  • Infestation
  • These elements are what keep the house functioning as designed. I normally refer to a home as having 3 levels: Mind (electrical), Body (foundation/roof), Soul (plumbing/heating/windows), by focusing on these areas will normally save you thousands.

    Related: The Value of Presale Home Inspections for Real Estate Investors

    3 “Levels” of a Home

    Mind– prior to entering the property, check the electrical panel box. Look to see if there is a circuit breaker box or a fuse box, this is very important because fuse boxes normally will not pass inspection in most cities, and insurance companies will not insure the property. Also if the exit strategy for the property is to find a retail buyer a fuse box is not acceptable according to FHA standards, thus limiting the buyer pool. Knob-and-tube wiring in houses that pre-date 1950 will be another source of concern. This form of electrical wiring is dangerous and very expensive to replace. If this type of electrical wiring is throughout the property it will need to be replaced. Many insurance companies will not insure a property with this wiring either. Knob-and-tube wiring is hazardous for 2 reasons: the wiring pre-dates 1950, and the wiring becomes brittle and breaks down which can result in electrical currents not being channeled correctly. In traditional electrical wiring the ground wire will channel that energy but because of the absence of the ground wiring in knob-and-tube wiring the current may cause a fire. Check the electrical circuitry thoroughly during the inspection period. If there are any doubts consult a licensed electrician.

    Body– Structural issues with a property can result in blown timelines. Many times I have witnessed investors not carefully checking the roof or the foundation. As you approach the property, the roof line should be what is being evaluated. Look for turned up or missing shingles, if this is evident be aware that there may be rotted wood or mold within the property. Dealing with a roof that is at the end of its life is very noticeable and if it is addressed immediately can save the budget and the timeline on a project. Foundation problems, on the other hand, can quickly scare any buyer; this is the most feared word when dealing with a rehab. If the resources to fix a damaged foundation are available, then getting deeply discounted properties with this issue will not be a problem. Signs to look for in damaged/faulty foundations: stress cracks in the garage slab, cracks in the walls and around doors and windows,. and doors that do not close properly can be found in properties with foundation problems. Often owners will say “the house is 30 years old the house is just settling,” this may be true but deep cracks mean something more major than settling.

    Soul– the soul is the heart of the home and this is the HVAC and windows. Windows are easily identifiable if replacing is needed. Windows add value to the property in 2 aspects; windows add to the appeal of the property or the lack there of, and the energy efficiency of the property. There is an ancient proverb that says “eyes are the window of the soul.” I like to say windows are the eyes of the house. If the windows are in good condition you can expect to have an efficient property. This is especially important for landlords, and mid-grade to luxury flips. Windows can save landlords money, and make a flipper lots of money.

    The HVAC systems are the lungs of the property, but I encompass this system with the soul. HVAC is important because it coincides with the energy rating and efficiency of the property. Always be aware of the the functionality of the furnace. First, try and find the manufacture date to see how old the unit(s) is. Secondly, see if it was maintained correctly, normally you can find this information by dates of inspection labeled on the units. If this is not visible, pull out the furnace filter, this will give an indication of how the unit were maintained. Following similar steps with the water heater (except checking the filter) is normally a good practice to follow.

    Related: 5 Tips for Installing an HVAC System

    Infestations– Many investors overlook this step because it is not as easily identifiable as the others. This is an issue with properties that are in wooded areas, but it occurs in many residential neighborhoods as well. Infestations can be dormant at the time of inspection, but once demo is underway it can pose serious problems. Infestations can be: mice, rats, raccoon, squirrels, scorpions, bees, roaches, mites, termites, and many others. These hidden critters can be a pain to get rid of but most of all the damage done by these varmints can affect the other main systems of the property. Things to look for when doing the inspection for infestations are: dirt tubes around the base of the property for termites, shredded pieces of paper or droppings in cabinets for mice and rats. Nut shells or borrows in the attic for squirrels and raccoon. With scorpions a different approach is needed; if you are in …read more

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    Best Burger in Vallarta

    Best Burger in Vallarta Puerto Vallarta has so many great restaurants. Some specialize in steak, others in shrimp, and there are many countries whose palates are represented, from Middle Eastern and Chinese to Eastern European

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    Dolphins & Puerto Vallarta

    Dolphins Dolphins, those happy little creatures who squeal with delight communicating with one another, seem to have a language of their own. We wonder what they would say if they had any idea how much

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    Should You Stop Buying Real Estate in a Appreciating Market? I’m Still Buying and Here’s Why

    Should You Stop Buying in an Appreciating Market?

    We all see home prices rising in most parts of the country. In fact some parts of the country have seen prices surpass the high points that were seen before the housing crisis. This rise in market prices has caused many people to worry about another housing crisis and rethinking whether they should buy any real estate right now. I personally am still buying houses and I will continue to buy houses going forward. This article is an explanation of my limited view of our national economy based on my local economy. I am by no means an expert and please feel free to chime in if I am missing something or got something drastically wrong!

    My current market

    I am in located in Northern Colorado and our market appears to be very similar to the national market. The median price in Greeley Colorado is about $180,000 and our prices have increased about 20% over the last two or three years. The price increases have made it harder to buy houses as cheap as I would like too, but even though I have to buy houses for more money now, I can also sell and rent them for more money as well. In fact our rental market is going crazy with rents increasing 20% as well and vacancies extremely low. I am still making just as much money on my fix and flips as I was two years ago and I am making just as much on my new rental property purchases as well.

    Why is our market appreciating so much?

    In my market we have almost no inventory; last year we had 1,500 homes for sale and now we have 300. The law of supply and demand has pushed prices up, especially in the lower end of our market. In the past it was not uncommon to see homes for sale for under $50,000 in the low end and now it is hard to find anything below $100,000. There simply are not enough lower priced homes for the current buyer demand. That demand is continuing to push prices higher.

    Related: What Needs To Be Said About Appreciation

    Why is our inventory so low?

    For seven years there was no new construction in our area. Our market was fueled with REO and short sale inventory and that inventory was priced much lower than any new homes that could be built. The inventory kept coming and our prices slowly decreased as well. Then someone turned off the faucet and the REO and short sale inventory dried up. All the sudden there is very little REO inventory and people have to resort to buying fair market sales, but there has been no new building while the population has been increasing every year. People still want houses, but there are not enough houses in our area to meet demand.

    Can new construction meet the demand?

    Building in our area has taken off lately. Builders are filling up the vacant lots that were left in subdivisions when the housing crisis started. There is a lot of new construction in our area, but prices start at about $200,000 for a new house. The construction can’t come close to the median price or the lower end demand. I think the new homes can ease the housing shortage in some segments of the market, but we still have huge demand in the lower end and with little inventory.

    What the future holds?

    I only know my market, I don’t have the time to study every state in the US and learn their market statistics. I am guessing many markets are similar to my market from what I hear from other investors and agents across the country. I can’t possibly see how our market will see another huge decrease in prices unless a huge wave of REOs hit or the national economy tanks. Unfortunately I can’t predict those scenarios, but I have high doubts that we will ever see prices drop down to 2008 levels again. As for other markets in the US I think it could go either way. I see crazy prices in areas like California again and California always seems to have extreme ups and downs ever since I was a child. Could some markets see a huge decrease again? Probably, but I don’t think the entire US will see huge decreases anytime soon.

    What if the population cannot afford the cost of housing?

    This is the part that I am struggling with. If the average person cannot afford the average house and rental rates are skyrocketing; how can prices keep going up? To me it seems inflation may be the answer to allow people to afford higher priced homes. We have had very low inflation rates recently due to the poor economy and maybe inflation will help balance the housing market with the economy. That is unless the cost of houses rise right along with inflation. I am in no way an economic expert and this is a very simply observation on my part.

    How will inflation affect the real estate investor?

    The great thing about real estate is if you already own property; inflation is not a bad thing. Your rents and values will most likely increase and your payments stay the same. The downside is it is more expensive to buy property, but if the rents are rising as well; you should still be able to make the same amount of money as you did with a lower priced property. That is why I continue to buy properties and I am not worried about rising prices. I also can’t predict the future, I can only do the best I can right now with things I …read more

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