Gurney's Inn
September 05, 2007

Realty Takes

The Death Of Sub-Prime

More on mortgages, the market, hurricanes and a crumb of gossip.

How does the sub-prime collapse affect those applicants for affordable housing?

Well, we are told that in East Hampton, affordable housing people don't use sub-prime lenders. Applicants are free to use anyone they want, but, for the most part, they use the financing that the town has arranged. East Hampton, in fact, screens all applicants for credit worthiness and income before offering them a property. The collapse of the sub-prime market, therefore, should have no effect on that town's affordable housing programs.

That said, it is possible more people could need affordable housing if unconventional mortgages dry up.

Another professional response, without attribution, about the mortgage crisis, real estate brokers and mortgage brokers.

The writer suggests that the difference between falling behind and being at the top of one's game is often about real-time, quality information and the ability to use it. Real estate professionals should be acutely aware of the opportunities inherent in today's housing market. Purchase investors, for example, are in an excellent position. Furthermore, rental markets are poised for dramatic growth. The thinking is that pricing pressures are providing some of the most exciting scenarios in years. Profitability is dependent on two major factors: finding the right real estate the real estate broker's expertise; and delivering the right financing the mortgage broker's expertise.

Again, we see the belief that real estate is still the best investment.

For example, at a modest seven percent annualized return, a property bought for $1 million will be worth $7.6 million in 30 years. As a result of the tax advantaged status of real estate, no other investment vehicle can provide this type of appreciation at the same rate of return.

And here is an idea to use a mortgage instrument as leverage. It's a little complicated, but it might be worth trying. Using a mortgage in this way, suggests the expert, can substantially increase your return on investment (ROI). For example, a cash buyer as described in the situation in the previous paragraph would recognize appreciation on 660%: $7.6 million -$1million (original purchase price). Gain of $6.6 million or 660%. On the other hand, the mortgage purchaser puts down $50,000. When that person sells in 30 years for $7.6 million, he has turned the initial investment of $50,000 into $7.6 million. The ROI is over 15,000 percent.

This is easier to understand than the ROI's (at least for this writer) and comes from Rick Koller CFO Tauscher Cronacher Professional Engineers via his publicist Cordes Public Relations Corp. It is advice as to how to safeguard your home before a hurricane strikes:

Check your roof and repair at signs of stress or leaks.

Waterproof your foundation.

Cut loose branches and branches of all trees near your house.

Grading and gutters and leaders are the biggest problems for water in basements. When water seeps in due to rising ground water, trench drains and sump pumps are the only solutions.

In extreme weather, it is not uncommon for a basement or roof to take on some moisture. Wind-driven rain can have water get under soffits and into spots that it normally wouldn't. If this event is a minor one every few years issue then sometimes dealing with it, airing it out effectively after the storm, and repainting and repairing is just part of the joy of home ownership. If it is an every time it rains issue, then you have a bigger issue.

Having a water infiltration problem looked at by a licensed professional engineer is a good first option. This will give you some ideas of what you might expect when you start to have contractors and waterproofing firms come into your home to provide solutions. That being said it is important to check the history of any contractor, as well as get a list of referrals you can speak with.

If you do have a big waterproofing job done, not all contractors will or can guarantee their work from any more water getting in. It becomes important to measure how cost effective it will be to spend $7000 or so for a waterproofing job that may not be guaranteed.

Any other news? We hear that Remax in Hampton Bays did not get its franchise renewed.

Yes, well, East End real estate is a strange and complicated business.

Contact us at and visit Realty Takes can also be seen at

The New Listing of the Week is offered free to brokers on a rotating basis. Please submit a JPEG photo of the property along with a WORD document with the listing information to, attn: Rick. There is no charge for the placement.

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