MaMa Mai

What performance! You laugh, you cry and you sing along!!

Only play I have ever gone to that did encores!!!

If you have not seen it and you like old time music (ABBA) this is a must see. 

Sundance Ranch

Just spent a couple days at delightful place called Sundance Ranch, near Ashcroft, BC. The place is focused on 2 1/2 rides twice a day through some amazing country side. Mostly sage brush, hills and a huge river. With over 20,000 acres to ride on, so no two rides are the same. After the rides you can swim, play street hockey, horse shoes or enjoy a quite read.

The staff are amazing, every one is first name and no request to challenging. The facilities are rustic but hey, that’s part of the charm!

Lots of fun and well worth the four hour drive from Vancouver.

FHA (HUD) Loans

So, you are considering a property in the US, while the Canadian dollar is high, and in front of the possible inflation, as America wrestles with its government debt.

If you believe there is an increase in interest rates coming, then it would be wise to consider a loan that gives you a low interest rate today and a low interest rate in the future. With the HUD you can have 35 year term with fixed interest for ALL 35 years! Currently, this rate is just under 5%. Very nice!

As with anything, there are challenges with this loan. The key ones being that you have a longer process (takes about 6 months from contract to closing); require more extensive third party inspections (including a survey); the whole application process will cost you about $50,000; you must complete any required repairs before you will be funded; you may only pay yourself semi-annually; you MUST fund your capital reserves (as opposed to drawing the money out, differing the maintenance and getting to it later); and you must have an annual audit.

Now if one or more of those challenges is an absolute deal killer for you not to worry… we will talk about other funding sources in a later blog.

But for the moment let’s just consider the challenges:

1) 6 months to close… hmmm… well, fortunately in the US, there is a lot of product, so while in Canada that may be more difficult (still not popular in the US, by the way), there are choices for buyers. Plus, there are things you can do to be more appealing, such as have an increasing deposit as you work through the process. You can have a larger refundable deposit (no point in being silly :-)). You can share the reports and also the invoices as you get them. All of these things show that you are serious about this property.

2) $50,000 application fee… yep, almost 2.5 times what any other process would cost! But think about that – in any other process you would spend about $16,000 in fees. So the cost of this money is $34,000. Generally because the loans are guaranteed, the loan is approximately 1% point cheaper then regular loans. The smallest loan you would likely use is $3.5m and 1% interest on $3.5m in one year is $35,000. A Return on Investment of one year! I’ll take that any day of the week.

3) Required repairs must be done up front… this requires time and money. Fortunately, 80% of the repairs can be added to the loan. The critical item is getting the repairs done quickly so they can be verified and the deal closed.

4) Funding you reserved is simply good business if you want the building to be standing in 15 years and auditing the financials… well, unless you plan to be at the property bi-weekly, you definitely want to be sure that you are getting all the money to which you are entitled! An audit is a good way.

Though, in my opinion, one of the best reasons is the review process HUD uses. Kind of a Good Housekeeping stamp of approval. A sophisticated second pair of eyes if you will, helping to ensure (no guarantee, mind you) that you are making a sound purchase.

Next time, I’ll discuss Agency loans.