I purchased my first Santa Maria investment property in June.  A large tri-level 3 bedroom townhouse with lots of mid-century modern character that needed a new kitchen. After looking at several kitchen cabinet suppliers I choose IKEA because of the modern look and low price. In exchange for the low price you do the installation yourself. IKEA supplied an instructional CD and poster illustrating each step of the process of installing the cabinets, sink and counter tops. After designing my kitchen on the IKEA web site, which was really easy, I was able to print my list of needed fixtures and trekked down to LA to place my order. The IKEA associate placed my order from my list but had some trouble entering some compents and was interrupted several times by other customers asking questions. My order arrived on time. A large pallet wrapped in plastic with probably 50 boxes on it. I began building the frames for the cabinet. The instructions are illustrated and after a little practice I got the hang of it. You do need to really follow the illustrations to the tee.

Unfortunately, I discovered I was shipped the wrong corner cabinets. I called IKEA and was first told I would need to drive the wrong ones down to LA for an exchange. After speaking to a manager, IKEA agreed to deliver the correct cabinets at no charge for delivery. That made sense to me because I had already paid for delivery and I live 200 miles away from IKEA. Now with the correct corner cabinets I was able to get the frames done. It was very difficult fitting the corner cabinets with the other cabinets and no instructions are given for this.  The next task was also very confusing. There is no instruction on witch door panel goes with witch frame. It was a lot of trail and error. In the end I discovered 3 doors were not ordered. Another call to IKEA resulted in bad news. The 3 doors that were not ordered are discontinued. Apparently the person that placed my order failed to notice this, hence the trouble he had placing the order, and didn’t bother to tell me. So as of today, IKEA is attempting to find these 3 doors for me. I learned while IKEA makes the process of designing the kitchen easy, you must make sure the person entering the order knows what they are doing.

I have tenants arriving in 10 days and this could be a major problem getting the condo finished. I will let you know how IKEA resolves this on my next blog.

Erik Schultz, Realtor Associate
Homes Central Coast Team
Century 21 Hometown Realty

Posted: July 31st, 2008 under Investment Property.

It is great time to buy a home, but not such a great time to sell one.  As a result, many smart investors are taking advantage of declining real estate prices by buying a “move-up” home and turning an existing home into a rental.

If you are considering this option, be aware that new guidelines are coming into effect that makes it more difficult to purchase a home as a primary residence with the intention of keeping and renting an existing residence.  The reason behind the new guidelines is due to what is now referred to as “Buy and Bail.” It is becoming a huge problem and FHA, Fannie Mae and Freddie Mac are dedicated to putting a stop to it. Buy and Bail happens when a borrower purchases a new primary residence and then allows an existing home to go to foreclosure once escrow closes on the new residence. 

To reduce the number of “Buy and Bails”, lenders are requiring that:

•You will need to have a minimum of 30% equity in your existing home
•You will need a copy of your new Rental Agreement on your existing residence and a copy of the tenants deposit check
•You will need to demonstrate the capacity to repay and be current on any debt obligations.

What if you do not have 30% equity in your existing home but still wish to
purchase a new primary residence?
The good news is you can still purchase but you will need to:
•Provide a down payment. The amount depends on the particular loan program in which you are applying for.
•Be able to qualify for both payments. The existing payment and your new proposed payment.
•Have sufficient funds left in the bank as reserves for both properties.

Although certainly more stringent, these steps are needed to insure the long-term health of the real estate market and the long-term health of your investment.

Aimee Ritz,Town & Country Home Loans & Shea Hutchinson, Century 21 Hometown Realty

Posted: July 30th, 2008 under Foreclosures.

For those of you who enjoy auto racing, July 26th was a special day of racing for me. That night, the Santa Maria Speedway hosted the 23th annual Bud Stanfield Memorial in memory of my father who was killed in the pits during  nights racing. My father’s passion was racing, all kinds of racing throughout his life, and now racers show up from all over the state to participate. I was lucky to be the driver of the family sprint car for several years prior to dads passing and to this day racing is still in the blood. This event has featured up to 50 sprint cars showing to go after the coveted hand machined trophy by Dave Mussels machine shop and an increased purse for the main event winner.

At this year’s Memorial Race, I enjoyed watching over 40 fire-breathing 360’s go at it. By Main event time, the track was spent, leaving very little moisture for the 23 starters for the Main event.  Winner Danny Faria Jr. found the setup to be able to wrestle the lead from Clovis ace, Peter Murphy, and hold on for the win of the 30 lapper. Danny told me Memorials are special to him and he was proud to win the Bud Stanfield Memorial.  He certainly earned it.  It was a tough night for past Memorial winner Greg Port, as he took a hard ride on the front straightaway after running near the front all night. I talked to Greg’s dad afterwards; Greg was probably awfully sore Sunday morning. 

This year I donated $500.00 towards the purse for the night’s racing, spreading it between finishers 3rd, 4th and 5th places of the Main event.  It was nice to help out the racers I so dearly love to watch.  Good job to all at the speedway!

Posted: July 28th, 2008 under Area Information.

Would you love to own a second home or condominium on the Central Coast but question whether you’ll use it enough to warrant the expense?  You may be interested in a condo hotel (also known as condotel.) What is a condo hotel or condotel?  Think of it as a hotel comprised of condominiums instead of a bedroom and bath.  It is operated as hotel or vacation rental but most or all the units are individually owned.  Most hotel guests never know that different individuals own each unit.  In some condotels all units are identical while others will allow the individual owners to personalize their units. (One of our Central Coast condotels allows each unit to be personalized).

Condotels make great second or vacation homes while giving you the benefit of someone helping you make the payment.  They are not sold as a primary residence due to the fact that the owner’s usage is normally limited because each unit is expected to be included in the hotel’s inventory of rentable units.  But one of the great benefits of this type of unit is that it is maintained and rented out for you, just like any other room in a hotel.  You don’t have to worry about advertising, collecting rent, cleaning or any of the stress that normally goes with having a vacation rental.  As owner, you’ll receive a percentage of the revenue that is generated, so you’ll want to do your research to determine what amount of income you can realistically expect.

Some of the advantages of this type of ownership:

a) Rental revenue to offset some of your ownership expenses (in some cases maybe all your expenses.)
b) A worry-free vacation home in a great location.
c) Hassle free ownership; no landlord issues.
d) Own instead of rent.

Some disadvantages:
a) Pets may not be allowed.
b) Your unit is subject to the same trends in the real estate market that affect hotels.
c) Your unit may not always be available on short notice (but most manager’s will try to work with you).

We are fortunate to have two hotel/condotels on the Central Coast.  And remember location, location, and location when purchasing this kind of unit.  We have one condotel that sits right on the sand in Pismo Beach and one that is only one block from the water in Oceano.

If you are interested in finding out more about condo hotels on the Central Coast, well be glad to answer your questions and help you explore your options.

Nancy Tucker, Realtor Associate
HomesCentralCoast.com Team
   

Posted: July 16th, 2008 under Foreclosures.

Floods are a fact of life in many places around the country.  During the last few years, we have seen devastation from events like Hurricane Katrina in New Orleans, the drastic flooding in Iowa, Missouri and many other states along the Mississippi River.  Unless you have lived in the Santa Maria Valley for longer than 40 years, the concept of flooding creating damage and loss to your home or personal property has not been a concern.

The city of Santa Maria prior to 1967 was subject to flooding on an almost bi-annual basis.  This is because the Santa Maria River, which is fed by the foothills and mountains to our east, channels a tremendous amount of water over a short distance on its way to the Pacific Ocean during our rainy season.  Without a way to channel the water away from the city, it was not unusual to see water flood into the city center, usually as far south as Stowell Road on a regular basis.  The flooding, although chronic, was not catastrophic, usually flooding about a foot or so of water on average.

In the 1960’s as both a flood control and water reclamation project, the Santa Maria River Levee and Twitchell Resevoir were constructed by the Army Corps of Engineers.  Upon the completion of the levee,  the area south of the river was categorized in the Flood Insurance Rate Maps (FIRM) as an area that is deemed to have a 1% or less chance of major flooding in any given year.  As a result of this categorization, property owners have been generally exempt from a requirement to purchase flood insurance.  (Federally backed mortgages require flood insurance when there is a greater than 1% chance of flooding, and most private mortgages are starting to adopt the same requirement).

The failure of the levee system in New Orleans, along with the large numbers of uninsured losses in traditionally flood prone areas has prompted the review of all levees across the United States.  Every levee will need to be ‘re-certified’ to determine that their protection is still adequate. 

Santa Maria’s levee, upon review, was deemed to be inadequate and in need of renovation.  This causes our area to lose it’s category of 1% or less chance of flooding, and requires FEMA to re-draw the flood maps that determine the amount of risk, and therefore the pricing mechanism for flood insurance.   The maps create ‘zones’ which distinguish a particular area’s risk versus another.  Basically, the higher the risk, the higher the pricing for flood insurance.

Unfortunately, this area’s designation will change from a FIRM zone that allows for relative inexpensive pricing (currently $348 for a preferred policy that contains $250,000 of building coverage and $100,000 of contents coverage) to a pricing model that can make the same preferred policy on the same property cost $1385.00.  If the home you live in or are purchasing was built before 1974 and is in the changed zones, your same policy can cost as much as $5481.00.  So, where you live, and when your house was constructed will play a big part as to how these changes will effect you and your family.

City, County and Federal officials are working on a plan to bring the levee up to certification standards.  At the last estimate, the cost is approximately $48 million.  Upon completion of the work and re-certification of the levee, the requirement for purchasing flood insurance should be lifted, but consumers are urged to consider maintaining this valuable coverage.  Of course, the pricing at that time should be substantially reduced.

Our office will be glad to discuss your particular situation and help you with your insurance needs.  Feel free to contact us to help you determine if the home you own or are considering buying may be affected.

Marty Mariscal  CLU, CHFC
Mariscal-Rumbaugh Insurance

Posted: July 11th, 2008 under Area Information.

I continue to see below market pricing of foreclosure properties in the Santa Maria and Orcutt area resulting in a large number of offers which drive up the price.  Last week, a bank owned property came on the market in Old Orcutt which was listed at $189,900.  The previous owner bought the property for $469,500 in September 2004 and it was subsequently valued at $665,000 in December 2006, per a title search.  The property is over 2300 square feet on a 10,000+ square foot lot, has a swimming pool (in disrepair) and has a number of upgrades, including kitchen and bath.  It still needs a lot of work and is an ideal property for a contractor or handyman.  I showed it to several buyers and we had to wait in line for our turn.  There were multiple offers on the property and we won’t know the final price until it closes escrow, but I can assure you that it is going well over the asking price.

Posted: July 2nd, 2008 under Foreclosures.

The Pismo Beach Car Show took place this past weekend.   I used to participate by entering my 1969 Checker Aerobus and even was fortunate to win first place one year in my division.  Now it’s fun for me to be an observer and to roam downtown Pismo Beach and talk to the owners of the cars on display. 

The record-breaking heat added another element to the event.  I thoroughly enjoyed the warm evening weather as we watched the cars cruise the streets, although some of the vendors complained that the crowds were thinner than they expected.  If that was the case, it’s hard to tell whether it was the heat or gas prices (or both) that affected their business.

Posted: June 23rd, 2008 under Area Information.

As real estate agents, we sometimes take it for granted that buyers understand how real estate agents are paid.  However, most first-time home buyers haven’t experienced the process yet, so we wanted to clarify some important points for those who may be unfamiliar with how it all works.

In most cases buyer representation is free of charge. It is traditional that the seller pays for the costs of all commissions of the listing agent and selling agent (buyers’ agent).  This comes from the proceeds of the sale. Sellers are fully prepared to pay the cost of hiring a real estate professional to sell their home.  The agent’s commission is negotiated and noted in a written contract between the sellers and the agent they select to market their home and represent them throughout the process.  Most of time, the commission is an agreed upon percentage of the selling price of the home.  That commission is shared or split with the agent who represents the buyers of the home. 

So there is no commission cost to the buyers for agent representation.  Obviously,  there will be other costs involved with the home buying process such as obtaining a mortgage loan and buyer inspections ect. A knowledgeable real estate agent will be able to explain the whole process to you in detail when you are ready to make your home purchase.

You can find more information for first-time home buyers in our article, Can I Afford to Buy a Home?

~Shea Hutchinson, Realtor Associate, HomesCentralCoast.com Team

Posted: June 12th, 2008 under Real Estate Sales Activity.

We often get questions from people who are interested in buying a Central Coast beach property that generates income as a vacation rental. Pismo Beach and Shell Beach are popular destinators for tourists and one of the key areas of interest for a possible vacation home. However many people, including locals, are not aware of the fact that the City of Pismo Beach (which includes Shell Beach) has a Zoning Ordinance that makes it illegal to rent a home as a short-term vacation rental in Pismo Beach and Shell Beach neighborhoods that are zoned “residential”. The ordinance defines a short-term rental as one that is less than 30 days. Until recently, the City of Pismo Beach really didn’t enforce any penalties for violators and left it up to neighbors to complain before any action was taken. Now Pismo Beach has hired an enforcement officer who will be researching, investigating and enforcing the ordinance. Currently the City plans to shut off the water supply for those who violate the ordinance after two complaints/warnings.

Posted: June 6th, 2008 under Area Information.

The LA Times published an interesting article today featuring a Santa Maria family whose home is going into foreclosure. I think the article gives a good example of how many people ended up finding themselves in this situation. The article also notes the large number of homes in foreclosure in the Santa Maria area.

If you’d like to read it, here’s the link:
Santa Maria house bought with no money down goes into foreclosure

Posted: June 5th, 2008 under Foreclosures.