Real Answers to Real Estate Questions
Q: I want to rent my single-family home to a family with a Section 8 voucher. What is the process, advantages and disadvantages with this program.
A: Unfortunately, there exists a prevailing stereotype that Section 8 Voucher holders are destructive, slow or non-payers and lease violators which makes it difficult for Section 8 Voucher Holders to lease decent units in stable neighborhoods. As with any renter, the source from which they pay their rent does not determine what type of tenant they are. Again as with any renter, you must carefully screen the prospective renter for payment and previous rental history. The Section 8 tenants must pay you, the landlord, 30% of their income towards the monthly rent. The Section 8 Voucher program will pay the remaining balance to you electronically through direct deposit, guaranteeing majority of your rent. The terms in the lease agreement are monitored by the housing authority, the administrators of the program, for compliance. Annual unit inspections are required and provide the landlord the opportunity to assess the condition of the unit by a qualified inspector at no cost. Another advantage in renting to a Section 8 Voucher Holder is that there are always hundreds of holders who are desperately seeking decent rentals from which to select.
Q: I’ve heard so much about predatory lending. How can I recognize a predatory lender?
A: Predatory lenders are not easily recognizable. They are legitimate businesses therefore the only way to determine if a lender is attempting to exploit you is to shop around and compare loan offerings. Most predatory lenders target low-income populations, particularly low-income minority homeowners whose properties can be used to guarantee the loan (collateral). If the loan is not paid according to the unreasonable terms, the home is then seized and sold to repay the loan, usually for more than the loan balance.
One of the characteristics of a predatory lender is that they use a very aggressive marketing approach; alluring mail offers, telephone campaigns, radio and television commercials, even the internet. Their offerings are appealing and tempting to persons who are struggling financially and have been rejected by prime lenders, banks. The costs associated with the loans offered by predatory lenders are usually as close to the highest rates permissible by law with interest rates capping at 24.99%. The maximum legal interest rate allowed by law is 25%.
To protect yourself from a predatory lender, become an informed consumer. Know the status of your credit, and for what you can qualify. If you must borrow money, before you sign a loan agreement, seek advise from someone or a housing counseling agency that can examine the terms of the loan and help you make a good decision. Now be mindful that all sub prime lenders are not necessarily predatory lenders. There are many reputable lenders who will target customers with less than perfect credit, although their loans will cost slightly more than a prime lender.
Q: I’ve gone to one lender for a loan and was turned down. I’ve heard that it’s not wise to keep letting lenders put your credit record because it looks bad. Is that true? What should I do?
A: When you apply for credit, an inquiry is made by the creditor to a national reporting credit agency to determine if you are credit worthy. This is called an inquiry and is recorded on your credit report. The more inquiries on your credit report he lower your credit score will be, because the creditor will assume that you have the potential to over extend yourself. Therefore, you are perceived to be more of a risk. In some instances, “inquiries” will not have a negative impact against your score, particularly when shopping for an auto loan. It is expected that an educated consumer will shop for the best auto loan.
If turned down by a creditor, before applying to another, investigate why you were rejected and work on curing the cause.
Q: I live in a row house. My neighbor’s and my fence are joined. I want to change fencing but my neighbor doesn’t. What can I do? I don’t want to start nothing wth my neighbor that I can’t finish, but I want my new fence.
A: Since your fence is connected to your neighbors’, and you cannot convince your neighbor to support your desire to change the fence, the next step would be to establish the boundaries of your property and have your new fence installed within those boundaries. If your property line is not apparent, order an updated survey of your property to determine where the fence can be legally installed . By all means, exhaust every avenue to get your neighbor’s support. In any event, remember the old adage, “Strong fences make good neighbors”.
Q: What is investment property? Why are people investing in real estate rather than the stock market?
A: Investment property is any real estate that is not occupied by an owner who invests money in the purchase, improvement and development in expectation of income or profits.
To earn more money is the primary reason why persons invest in real estate. Today, it’s a highly profitable market. Studies show that a majority of U.S. wealth is a result of real estate investments.
Most investors start with small properties and work towards investing in larger properties as they become more experienced. However, investing in real estate requires a lot of work. Understand what it takes; choosing the type of real estate investment that interests you, such as single, multi-family or commercial properties; learning how to manage the properties, then getting professional assistance from an experienced investor or accountant, who can provide a comprehensive analysis of your anticipated profits.
Dr. Bessie E. Swann has nearly 30 years experience in the field of community revitalizaiton and economic development. She is also the recipient of national, state and local awards recognizing her work in the field. She is currently the the Managing Partner of Bessie E Swann & Associates ( Organizational/Management Consulting LLC) and the Executive Director of Wheeler Creek Community Development Corporation, which received the U.S. Secretary of Housing and Urban Development’s 2002 Gold Award for Best in Living.
Submit your questions to info@wheelerce.org.
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