On February 20, 2011, I was invited to attend a stakeholders meeting at El Torita Taqueria hosted by the neighborhood association of Benton Park West. I don’t live in BPW, but I list and sell homes in all city neighborhoods and the neighborhood wanted a Realtor’s perspective on some of the issues they were discussing that night.

I was really excited to be part of the discussion. It was also quite inspiring to hear about all the goals the residents and shop owners have for their neighborhood. Plus I got to sit next to Steve Patterson, my Urban Review Hero

The agenda for the evening was as follows: Introductions, Current Perceptions of Benton Park West, Stakeholders Reasons for Investing in the Area, Reasons People Invest in Other City Neighborhoods, Key Aspects to Build Benton Park West, Obstacles for BPW to Overcome, How can BPW differentiate itself from other neighborhoods, What Action Steps Can the Neighborhood Association Take to Make Progress
Above is Bryan Walsh from Aisle 1 Gallery which will be opening March 18 at 2627 Cherokee Street. One feature of the neighborhood that was highlighted throughout the discussion concerned the artistic vibe of the area. Cherokee Street, the southern boundary of the Benton Park West neighborhood is really beginning to develop a reputation as a grassroots arts community. So notable, in fact, is this little district that it will be highlighted during the SGCI conference in mid-March. From what I understand truckloads of conference attendees will be dropped off on Cherokee Street March 18th.

Those conference attendees will be visiting Randy Vines at STL-Style, stopping by the Casa Loma Ballroom to hear Printa Kucha Presentations or visiting Juan Montana at Cherokee Photobooth.

Benton Park West is bordered by three commercial district and is intersected by Arsenal. All along these corridors there are opportunities for commercial and retail development. Because Benton Park West is an up and coming neighborhood these opportunities are still affordable. And that, I believe, is what will make Benton Park West the next Tower Grove South. (I really hate to compare neighborhoods but I gotta do it). People love love love TGS because it is so walkable. It is surround by two commercial districts (South Grand and Morganford) and Tower Grove Park. Everything the residents want is there. That geographical fact is what contributes to the neighborhood identity and the intimate and cozy area. The same will be true for Benton Park West, as those commercial districts fill-in the neighborhood will take on a character unto itself.

What’s really cool about Benton Park West residents is that they don’t want to be any other neighborhood. They see the neighborhood for all that it currently has to offer (superior Mexican food, local arts, convenient location and great housing stock) and they just want to make it the best it can be. After what I heard last night, I wanted to move to BPW. The energy around that table was inspiring.

So, if you are interested in learning more about Benton Park West contact Linda (President of the BPW neighborhood association).

More Faces of Benton Park West

February is Clifton Heights Month!

Clifton Heights is located within a triangle: Hwy 44 to the north, Hampton to the east, Arsenal to the south.

Neighborhood Feel
Clifton Heights has a distinctively different feel from many of the other City neighborhoods in part due to the topography. Clifton Heights is hillier than many areas of the city. In addition to that, the architecture of the neighborhood is more Victorian, there is less brick throughout and the lots are larger. Despite being bordered some pretty busy streets, Clifton Heights is relatively quiet. The only major street that cuts through the neighborhood is Southwest, so there isn’t a lot of outside traffic. At the center of the neighborhood is Clifton Park and Lake. This area is encircle by Simpson Ave which is features some of the most beautiful homes in the city. Clifton Heights is most residential so there’s not a lot commercial activity going on but there are a couple a good restaurants within walking distance: Bartolino’s Osteria and Chris’ Pancake House

Market Snapshot

Last year within the boundaries of the neighborhood a total of 64 single family homes sold. Values of the sold homes ranged between $15,000 to $450,000 with the highest concentration of sold homes priced between $100,000-$160,000. The median sale price for the area was $121,500 and the average days on market was 78. In he current real estate market only 78 days on market is a sign of a sought after location. Note: the median and average prices seemed a little low to me so I sorted them by number of bedrooms. Viewed from this angle, you can see that 43 of the 64 homes had only 2 bedrooms, 17 homes had 3 bedrooms and only 4 had 4+ bedrooms. The majority of the inventory that sold last year was on the smaller side.

Available Inventory
Currently there are 28 single family homes listed for sale in Clifton Heights priced between $29,900-$198,900. Email me for a complete list.

More about Clifton Heights coming soon!

STLInvestmentSpotlight is now LIVE.

Each week STL Investment Spotlight will feature a new investment property, rehab or foreclosure with potential. This week’s pick is a multi-family in Clifton Heights.

This 2 family is in a sought-after neighborhood with updated kitchens and shiny wood floors. Estimated rents for these one bedroom units is $600. Additional info below.

Taxes: $1083
Estimated Rents: $600 each
Estimated Insurance: $1000/yr

5% interest rate
25% down ($36,225)
Annual Income: $14,400
Annual Debt Service: $9084

Cash Flow (not including maintenance or vacancy): $5316
Initial Investment repaid: approximately seven years

More information on this property:
http://tinyurl.com/4e6etra

Lately I have encountered more houses that NEED work (missing plumbing and systems-due to vandalism) and more people who WANT to do work. On that note, I asked Mark Anderson with Gershman Mortgage to write a post regarding some construction loan options.

Financing Fixer-Uppers

You should know that the low price of a house that needs work reflects the simple economic principle of supply and demand - with a twist.  On the supply side, there are tons of houses that need everything from ‘a little work’ to ‘a full rehab’.  With a large supply, we also see a large demand.  However, the pool of folks that want to purchase these properties is much larger than the group that can.  Out of the group that can there is an even smaller set that decides to follow through once they’ve examined their options.  If you fall into this last category, you are part of a small group with a huge inventory to choose from.

If you have the cash on hand to purchase a fixer-upper and to do the work needed to spruce the place up, by all means get out there and stimulate our economy.  If you need a mortgage, let’s take a look at your options so you can decide if purchasing a fixer-upper will work for you.

Standard FHA

Both first time and repeat home buyers can take advantage of FHA loans.  The advantages are the low down payment of 3.5% and the looser credit guidelines when compared to conventional financing.  If you are looking to purchase a house that needs work, you need to know up front that FHA has strict standards when it comes to the condition of the house you buy.  I’ve seen FHA appraisers require sellers to scrape peeling paint, fix broken windowpanes and install handrails.  This makes a standard FHA loan not compatible with the house in sub-standard condition.

2810 Michigan: Presently listed at $89,900. Recently renovated in great condition. Would easily qualify for FHA financing.

Conventional Financing

If you were considering FHA but you determine the property you want will not meet FHA guidelines, you will want to check with your lender to see if a conventional loan with 5% down is a viable alternative.  It is fair to say that a conventional appraisal is not ‘nit-picky’ in the way that FHA can be over certain property conditions.  However, this does not mean that anything goes.  In order for a property to be considered suitable for financing, it must be in ‘livable’ condition at closing.  The definition of ‘livable’ is interpreted by the individual appraiser who views the property.  In general, the property must have a useable kitchen, functional bathrooms and working systems including electric and plumbing.  It is important to point out that if the property has had copper pipes stolen, attached light fixtures not in place or holes in the wall that you may require a rehabilitation loan in order to purchase the property.

FHA 203k

In many ways, the 203k cousin to the standard FHA loan looks similar - 3.5% down, looser credit guidelines, etc.  However, the 203k product allows you to purchase a property in rough shape and also finance the necessary repairs.  The closing costs can be double what you would normally pay, given the extra work involved for the bank and title company.  In addition to the cost, the amount of time and energy you will need to put into the process can make taking on a 203k loan quite stressful.  You need to be prepared to select a contractor, specify exactly what work will be done and provide the lender more paperwork than on a normal loan.  Underwriting will take longer, so you should avoid offering the sellers a quick closing.  If you were planning on doing some of the work yourself, the 203k guidelines will not allow it.  All materials and labor associated with the loan must be tied to an approved contractor.

203k loans come in two varieties – “Streamline” and “Full”.  I have had better luck with the streamline program, which is for smaller projects with a total cost under $35,000.  The larger scale, full 203k loans are much more difficult to work with, but if you are prepared for a tough process and the property needs a lot of work, it may be the best option.

1718 Virginia: is listed as a Handyman Special. The price is $129,00. per the marketing remarks the property needs some updating and is being sold as-is.

Homepath Renovation

Some Fannie Mae foreclosures will indicate that they are eligible for Homepath Renovation Financing.  These properties have known condition issues that will prevent nearly anyone from obtaining normal financing.  Locally, I do not know of a bank that can do these loans.  Based on the research I’ve done, you can expect an even tougher process than the FHA 203k.

4044 DeTonty: Presently listed at $79,900. This property is approved for HomePath Renovation Mortgage Financing

The Best Option for “Light” Fixer-Uppers

As I joked earlier, the best way to buy a house that needs work is to pay cash.  It’s unrealistic for most of us, so an option a lot of my clients choose is to simply put less money down than they were planning on.  This will only work for a property that qualifies for either normal FHA or Conventional financing, but it is great if you planned to put 20% down or more.  There are ways to put as little as 5% down and still avoid PMI, so take the path of least resistance if possible.  Without a renovation loan in place, you’ll be able to call the shots and do what you want, when you want with your property.

Finally, I wanted to address one of the most common questions I hear from new clients regarding ‘getting a little extra’ (from the bank or home seller) for minor home improvements.  Five years ago, when I first got started in the mortgage business, we had programs called 110% and 105% loans.  Not only did the borrower not need to put any money down, but they got cash on top at closing.  These were some of the programs that hurt the housing market the most.  Getting a little extra is just not possible anymore because, with very few exceptions, zero money down is a thing of the past.  Lenders these days consider the value of your property to be the lesser of your purchase price or your appraised value, so that tosses out the idea of ‘instant equity’ as well.  The only way to finance repairs is to take specialized loans that, as we’ve seen, require additional fees and some extra work on your part as the borrower.  If you are prepared and ready to learn more about these options and others, please give me a call or visit my website.