3 Things That Kill Cabin Deals | July Market Update

This week Nikki is joining us from her 
family cabin — which inspired a really 
important topic that every
agent, especially in MN needs to understand heading into 
the second half of summer.

Second home lending. And all the ways 
it can go sideways if you do not know 
what to watch for.

This week we are covering:
✅ Interest rate update — mid to upper 
   sixes and what is driving the 
   volatility right now
✅ Iran tensions oil prices and how 
   the bond market is responding
✅ ICE housing data — more buyers are 
   entering the market
✅ Second home vs investment property — 
   the distinction that could cost your 
   client thousands
✅ The 100 mile rule — what qualifies 
   as a second home and the Minnesota 
   lake property exception
✅ The three deal killers in cabin and 
   second home transactions — well water 
   septic and heat source
✅ The VRBO trap — why clients calling 
   an investment property a second home 
   is a costly mistake
✅ Minimum 10% down requirements and 
   what triggers investment property 
   classification

If you have clients looking at cabins 
lake homes or second properties this 
summer this episode is required watching 
before you write that offer.

Need a Great Real Estate Coach and Mentor....
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📞 Connect with Nikki Erickson at Kevnik Mortgage:
📱 Call or Text: 952-484-1584
📧 Email: nikki@kevnikgroup.com
📘 Facebook | TikTok | Instagram: 
   @mortgagesfrommntoaz
🔗 Request Nikki's Renovation Loan PDF: 
   nikki@kevnikgroup.com

00:00 Introduction – Market Update July 21st
00:30 Interest Rate Update – Mid to Upper Sixes 
      & What Is Driving the Volatility
01:30 Iran Tensions Oil Prices & the Bond Market
02:30 Second Home Lending – What Every Agent 
      Needs to Know
03:00 The 100 Mile Rule – Second Home vs 
      Investment Property
04:00 Well Water Septic & Heat Source – 
      The Three Things That Can Kill Your Deal
05:00 Minimum 10% Down on Second Homes – 
      VRBO Trap Agents Need to Avoid
05:30 How to Reach Nikki Erickson at 
      Kevnik Mortgage

Transcript

SPEAKER_01 0:35

All right. Welcome to your weekly update of January. A little bit warmer than that.

SPEAKER_00 0:45

Hope you're doing better than I am. How are you today, Nikki? I'm doing great. All right. So from an interest rate standpoint, we've seen a lot of volatility in the market over the last week. Obviously, the tensions overseas in Iran and all the things that are happening there are making those interest rates just up and down, up and down as the bond market responds to oil prices and different numbers coming out from a CPI perspective that helped things a little bit. And now we have the ICE data from a housing perspective, which is saying that there's more buyers in the market now. So things have just been going up and down. We are in the mid to upper six range right now from a purchase standpoint. So we can get into the lower six range depending on the program and depending on what the qualifications are and how much you want to spend on a dot buy down. But for right now, as of today, we're in that more mid to upper six range. I have a feeling we're going to be there for a while. It did get me thinking though. I am actually at my family's cabin right now for a week. And it did get me thinking about talking about second homes and kind of some of the things that we see from a lending perspective that as an agent you might want to watch out for as you're kind of talking about deals, making deals, and making sure that when your client goes to buy that second home, that they understand everything that they're getting into. So from a lending perspective, some of the alerts that we like to, or some of the alerts that come up that are when we deal with second homes, is going to be where it is located in relation to their primary residence. So the Fannie, me and Freddie Mac, in fact, all the lenders FHA, VA are very, are very intuitive as far as are we calling this a second home or are we calling this an investment property? Most lenders, so most investors, Fannie, Freddie, VA, and FHA all state that the sec in order to be considered a second home, it has to be at least 100 miles from your primary residence. Okay. Or a reasonable amount of time, whereas we can reasonably think it's a second home. Why I say that is, especially in Minnesota, you may have a primary residence in Minneapolis, but then you could have a second home that's less than 100 miles away if it's a lake property, for example, because that's a reasonable expectation that a property on a lake is a second home. So there are some rules that come that um are part of the second mortgage or second home requirements. I'm sorry. So keep that in mind as you have clients that are looking for second homes. If we're over 100 miles, no big deal. Otherwise, we have to have a reasonable thought process that goes along with it. The other thing is when we come, well, a lot of second homes, especially in Minnesota, have different kinds of heat sources, different kinds of water sources, and different types of septic or sewer systems. So those are three things that can really tip trip us up depending on the type of lending that we're doing. So an example of this would be well water. If the property has well water, there is a well water test that is required on VA loans. The buyer should complete a well water test no matter what, but we don't necessarily need to see that from a lending perspective. So that's important to know. Septic systems are a huge issue that require a septic inspection, no matter if you're doing a conventional FHA or VA loan. One of the more important things is inspection and the appraiser notice it and on their end, they're going to um and they call that out, we're going to have to have an additional inspection be done on the septic. So just some things to keep in mind as we talk about second home lending. Um, minimum requirement on a second home is 10% down, which is why there is this very clear distinction of what's between an investment property and a second home. A lot of people say, oh, it's a second home, even though they're going to be doing a VRBO or they're going to be doing, you know, other things to that property. They want the lower down payment of the 10% down, but it's really actually going to be an investment property. So just some things to keep in mind as you're looking at second homes, cabins, things of that nature. Last one I forgot, heat source. So you have to be able to have a heat source that is a reasonable expectation that it will heat the entire home throughout, you know, the winter months. So some of those examples that I've seen are going to be like a wood-burning stove could be an acceptable heat source, or you know, obviously baseboard heating, furnaces, things of that nature that we normally see. But you can use a wood-burning stove as a primary heat source to count as compliant for lending purposes. So just some things to keep in mind. If you do have any questions, it's better to ask us and have us do the research than it is for you to guess and make a deal, and then they can't get lending for the home. Yep. And Nikki, uh, can you go back and just say you're septic?

SPEAKER_01 5:29

You froze a couple of times.

SPEAKER_00 5:31

Oh, yes. So the septic, if you we always require a septic inspection while we're while um for any sort of lending, the caveat to this is if the septic inspection comes back and the uh you guys have some arrangement of where the septic work is going to be done after closing, let's just say. With that being said, the appraiser goes out to the property and let's say they see issue with the septic just on observation. There may be some additional requirements and some additional inspections that need to be that need to take place and even some fixes that could need to take place before closing. So just an FYI for you.

SPEAKER_01 6:06

Perfect. Well, good. Well, you know, I know you're on vacation. So as usually, thank you so much for jumping on this call. If anyone has any questions, wants clarity or more information, or just to be in touch with a rock star lender like you, how do they find you?

SPEAKER_00 6:21

Uh, you can find me on Instagram, TikTok, and Facebook at mortgages from M N to A Z. You can also call me, text me at 952 484 1584, or you can email me at Nikki at Kevnik Group.com.

SPEAKER_01 6:33

Perfect. Well, again, appreciate your time. Everyone, go sell something until next week and enjoy your vacation. We'll see you next week. We'll see you next week. Bye.