How Landlords Save the World

January 18, 2012 By Leave a Comment

The title of this entry is over-the-top, I admit, but I am just here to stick up for the landlords out there who are trying to do some good. The word “landlord” in itself has some negativity associated with it, and the use of “lord” in this context is distasteful in our American sensibility. In media, landlords are portrayed as misers ready to make a buck on the poor and take advantage of families.

Please!

Let me tell you about the landlords, the real estate investors, I know.

First and foremost, there is a commitment to maintain the property and keeping the tenant happy and comfortable, even with the high occupancy rate and the increasing rents. I am not suggesting any altruism here, but it is cheaper to keep than replace tenants. It only makes sense that tenants stay for a long-run, and take care of the property, as it is their home. Fostering that environment is essential for positive tenant-landlord relations, which is the relationship you want in between any consumer and supplier.

A rental property is a huge financial commitment and a landlord idiot enough to not take care of it and ensure it’s livability is ill suited for the job.

Yes, there are many terrible landlords out there. The worse of them are the ones who neglect their properties, fail to keep up with safety codes, and don’t treat their tenants with the respect they deserve. Just like in any occupation, in any aspect of humanity, there are some bad apples.

For more on tenant-landlord rights in Massachusetts, go to http://www.mass.gov/ago/docs/consumer/landlordtenant073007.pdf

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Three Ways to Invest in Real Estate

January 11, 2012 By Leave a Comment

Investing in real estate can seem overwhelming and reserved for the very rich. In the current economic conditions and marketplace, it may even feel a bit too risky. But if you’ve ever thought real estate investing may be right for you, this is a great time to learn about your options and how it can be done by almost anyone.

Before we learn about our options, though, let me say that I believe real estate investing can be a long a cumbersome process if you are new to it. That is not a bad thing, and I think of a lengthy process as a series of checkpoints that will make me very sure of my decision at the end. But it does mean that you have to have a critical eye, some good research skills and an a greater-than-average supply of patience. If this sounds like you, then let’s review how you can get into the lucrative business of real estate investing.

Whatever your budget, real estate can be your investment vehicle.

1. All cash deal. If you have lots of cash, you may be able to find an investment property in your area and buy it without a mortgage. The advantage of this is that you will be a highly qualified buyer and you can probably secure a property for a bit of savings over a buyer who has to get a mortgage. Another advantage of a cash buyer is that her expenses are much lower, as there is no monthly mortgage payment. This enables her to be more flexible on the rent, giving her more options in choosing tenants.

The disadvantage of an all cash deal is that it is not taking advantage of very low mortgage rates. Borrowing is pretty cheap, and if all your cash is in one place, you can’t use it elsewhere. Leverage is a real estate investor’s friend.

2. Part cash, part mortgage. The down payment minimum is 20-30%, depending on various circumstances and your financial qualifications. My rule of thumb is that you should make money, or at least break even, with this kind of down payment. If you lose money on a monthly basis, the property is not worth the price, (at least not not for an investor). Your mortgage payments, any association fees and taxes should be covered by the rent.

The advantage here is that you’ll be taking advantage of the cheap borrowing costs, and you’ll own a property with an income without the whole cash outlay.

The disadvantage is, obviously, the cost of borrowing money and the higher cost due to your mortgage payment - same as the mortgage on your home.

3. Pool of investors with little cash. Gather a few friends and family, and pool your money together to buy one property. It can even be a small property at first, but at least get into the market. If ten friends get together with $15,000 each…you do the math. The advantage is that you are in the real estate market, getting a piece of the pie, however small. It is a start, or a great single investment you have. You can hire a real estate broker and an attorney to help maybe for a stake in the property instead of commission and fees.

The disadvantage is finding like-minded individuals and putting it all together in a legally binding agreement. To me, this is just a bit of leg-work, and not so much a disadvantage, but it does add to the complexity of the transaction.

Entering the real estate market as an investor is not simple at first, but once you are in, it gets easier and easier. If you’ve ever considered investing in real estate, this is a great time to get in. Just choose your strategy and do it!

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Top Three Reasons Why Property Investment Is King

January 4, 2012 By Leave a Comment

No one wants to hear this, but I’m saying it anyway. Real estate is the best long-term financial investment. Phew…that’s a relief.

With the real estate market in the dumps for several years now, it is not easy to get back into the pro-property mind-set. But, it is exactly at these times that you should be considering expanding your real estate portfolio.

One reason I know this is because while the real estate market is dragging in most of the country, it is dominated by the professional real estate investors. Don’t you want to learn a lesson or two from them?

The professional investor loves real estate above all other investments. There are three main reasons for this.

First, real estate investing can come in many forms, just like any other investments. There are small condos, multi-family buildings, commercial, residential, mixed use properties, different towns, neighborhoods, etc. For every budget, preference and style, there is an investment instrument.

Second, real estate has a certain tangible value that you just don’t see in other investments. Property investors love that there is an asset they can visit, fix and maintain. There is a satisfaction in knowing that you have some control and responsibility in the relative value of the property.

Third, although real estate is illiquid - meaning it takes relatively a lot of time and effort to sell it - it is a versatile investment. You can hold it, or resell it when the market turns your way. You can do extensive renovations and have a quick resell, or you can hold it with tenants for years to come. Whatever it is, you have options and you can make decisions based on the best scenarios for your needs and the market conditions.

All of this assumes that you have sufficient funds for a down payment and that your expenses on the property are covered. The major drawback in investment real estate are the unavoidable expenses in maintaining it and the difficulty of selling it if you need the cash.

But this said, it may be time to consider an investment property, especially in such a critical time in the market. Opportunities and possibilities are present, and real estate investing can be a perfect fit for long-term financial goals.

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Top Five Mistakes Sellers Make

August 5, 2011 By Leave a Comment

It can be a tough market for selling a home, but those conditions can get even worse if sellers aren’t careful. While a seller doesn’t control the real estate market, their actions can significantly contribute to how long and how much their home is sold for.

Underestimating Cleaning Up: It may seem obvious, but I can tell you real estate agents everywhere are nodding their heads in agreement as they read this. Inviting potential buyers in to see an unkempt home is like going on a job interview without freshening up after you cleaned your garage. How can the employer notice your fantastic talents and skills if they’re hidden underneath a sloppy exterior? How you show your home tells the buyer what type of care you, the seller, has put into the home?

If you can’t take the time to wipe the grime off the refrigerator doors, tidy up the kids’ rooms, take out the messy diapers, put away the food, and take the dogs out of the house for a while, then you’ll likely find buyers will quickly move on to the next home on their list.

Lingering During Showings: Yes, we all want to know how the open house or showing went, but hanging around during either of those events is not a good idea. Sellers who tend to linger during showings often make the buyers uncomfortable. Buyers like to have time to explore the home at their own pace and without feeling any pressure. Sometimes buyers want to sit on the porch or out in the backyard as they discuss the home’s possibilities. And if buyers are willing to sit for a bit and talk about the home, that’s a great sign. However, the chances of them doing that with the seller present is unlikely. Many times buyers will say, “Let’s skip the home if the sellers are there.”

If you’re selling your home, do yourself a favor and hit the road for a bit. Take a walk or head to the coffee shop. As soon as the showing is over, you can get all the details from your agent. That’s why you’re paying your agent! Let them do their job. Just make sure that your agent has all the home’s selling points and any additional features that make this home standout.

For Sale By Owner (FSBO) Trap: Some people are convinced that they can do it on their own. Maybe they can sell their own home, but it likely won’t happen without some headaches. Trained specialists are called “experts” for a reason. An expert real estate agent knows the market, has connections, guides you through the process, negotiates on your behalf, and will make the process of selling your home simpler.

One potential land mine that FSBOs face is the flood of people popping in to see their home. It sounds great that there’s so much traffic, but the problem is many times the people who pop into FSBO properties aren’t actually qualified for a mortgage or may not be serious buyers. Instead they’re just looking and satisfying their curiosity at your expense. Agents know to ask the right questions to make certain the lookers are truly potential home buyers.

Not interviewing agents: If you have kids, chances are you interviewed the nanny or babysitter. Taking time to seek out top real estate agents in your are. Setting up interviews with them is equally important. Choosing the wrong agent for the job will be a headache and slow the process down. There must be a connection, understanding, and good communication between the seller and the agent. There are lots of things that go on during the sale of a home, communicating with the agent should be one of the easier tasks.

Pricing a home incorrectly: This could be the worst mistake sellers make. Yet, this is where so much help can be found. Real estate agents see homes every single day. They know the neighborhoods and the comps. They are there to help you understand what homes have sold for in the recent past and what they’ll likely sell for during the current market conditions. Get a market evaluation from your agent and understand that what is a fair price for your home in today’s market.

Filed Under: Selling a Home Tagged With: , , , , , , , , ,

Top Five Reasons to Own a Home

July 5, 2011 By Leave a Comment

A soft real estate market that is ripe with all the conditions that should entice people to purchase a home still has some renters asking, “Why own my own home?”

Low interest rates, lower home prices and an improving job market still have some buyers sitting on the fence fearful of an uncertain real estate market. Real estate agents and even sellers are finding that prospective buyers (current renters) may need a little more “emotional” attention in these market conditions. They may need a little more explanation to ensure that they understand the benefits of purchasing your home rather than renting another.

While deciding to own a home or rent one is very personal, many tend to let fear of the unknown be the driving force in making their decision and that can later create an unhappy decision.

Here are five top reasons to at least consider owning your own home.

1. No more landlords: This may be a highly influential factor depending on a potential buyer’s experiences. Many renters have poured a ton of money into a home that they’re living in to keep it at the standard of living they enjoy, only to find that their landlord is soon planning to sell the home. Their hard-earned cash and money invested into their rented home will then only benefit the seller.

2. Making a home your style: This is much more difficult to do in a rental. Yes, as I just mentioned, you can make some modifications, but many things that can be done to a home you own can’t be done to one you’re renting. Taking into consideration Homeowner’s Associations or planned community development restrictions, owning still provides more control and flexibility over renting.

3. Weighing the costs of homeownership: Of course, with homeownership you won’t be calling the landlord to come fix your toilet or dishwasher. So, having a financial reserve is important to carry you through the months when you run into unexpected troubles. Websites such as GinnieMae.gov offer price charts that help you compare how much you’ll save by buying or renting. It’s a helpful tool that allows you to analyze factors such as how much tax savings you’re likely to receive, how much possibly equity you’ll gain, and how much your rent may increase.

4. Long-term plans tilt the scale toward owning: In a recent Tampa Bay article, Walter Molony of the National Association of Realtors said, “For people with long-term plans, the rent vs. buy equation is tilting heavily toward buying because housing affordability is at record highs dating back to 1970,” he explains. “Homes are undervalued in many areas—selling for less than the cost of replacement construction—and rents are rising at a faster pace. Many people are considering ownership now as a hedge against inflation.”

5. Low interest rates and affordable homes will not last forever: If you’re not ready to buy or simply can’t afford to own a home, even the historically low interest rates and exceedingly affordable home prices might not move you to take the leap into homeownership. However, understanding that these conditions won’t last forever is important. Sometimes when conditions persist, we tend to think they’ll always be this way.

Distressed sales will begin falling in 2013 and that would then cause home prices to creep upward, predicts Moody’s Analytics. With little activity on the homebuilding front, and still a heavy supply, it’s not expected to increase much more. Also, the number of new households each year is rising, which is expected to help alleviate the oversupply in the coming years.

Written by Phoebe Chongchua

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How to Find Your Gem in a Depressing Housing Market

June 9, 2011 By Leave a Comment

Are you sick of all the statistics and news about the housing market? I find it makes people constantly doubt their decisions about their own homes and about their decision to buy or sell.

“Yesterday I heard this,” and “The news reported that,” is what I hear constantly from buyers and sellers who are losing sight of what the real estate market is all about.

Real estate to you, to me, and to any individual is located ONLY in the neighborhood where you live or where you are considering buying a home. That’s it! Your real estate market can be a one mile radius, and it does not directly relate to what you are hearing on a national level.

This is not to say markets don’t influence each other. All the markets are highly connected, and a depressed market in one city affects another town and so forth. There is no doubt that what is going on elsewhere affects us - real estate or otherwise.

Yet, when buying or selling a home you make a big mistake when you try to make sense of the national numbers.

So how do you shop for your gem with the depressing news and exauhsting statistics in the background…not to mention everyone’s unsolicited advice?

First, focus on the neighborhood and learn the facts. How many houses are selling? What is the average time on market? What is the average sale price? What is the sale price to ask price ration? (In other words, on average, for how much less than asking are homes selling. For example, on average, homes sell for 96% of asking price, or 4% under asking). Your real estate agent should be able to put together all those numbers for you, and make sense of them as well. (Or just send them to me and I’ll make sense of them for you).

Don’t like numbers? Just keep looking at homes and compare them to each other in a small area. Look at houses you don’t think you’ll buy just to learn.

If you do this, you’ll be able to spot a great deal on a home when it comes on market. Don’t be shy to make a great offer when such a home comes on market. If you love a home and you know it is priced well compared to recent home sales in the immidiate area, make a strong offer to secure the property.

The goal is to find the home you love and to buy it at a fair market price, not to see how much less than asking you can get it for. Don’t fall victim to the national housing market cynicism.

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Home Sellers: Avoid These Very Common Mistakes

June 7, 2011 By Leave a Comment

In a buyers’ market, selling your home can be a frustrating lesson, especially if you make costly mistakes that can slow your sales opportunities.

According to an article by Zillow, about 36 percent of homes nationwide sold for a loss in January. As spring rolls in and buyers head out to shop for their perfect home, they’re doing so with a critical eye because of the many choices due to excessive inventory.

If you avoid common seller mistakes, you can save yourself time and money. Let’s take a look at a few of these problem areas.

Sole-focused, comp-based pricing. Yes, recent sales count. Studying and understanding the comps in your area will give you an idea about how much buyers were willing to pay for homes in your neighborhood in the recent months, but relying strictly on the comps is a mistake.

Take a close look at the homes that are currently listed for sale. How does your home stack up? What are the benefits of buying your home compared to the others on the market? What makes your home stand out? Are you conveying this information to buyers?

When you do review the comps, see if you can notice any particular benefit listed for the sold homes that may have attracted buyers and ultimately caused the sale to close at a higher price. The typical advantages include: good schools, neighborhood parks, walking distance to retail stores, close access to freeways, quiet neighborhood, bright rooms, open floor plans, and new appliances. Now, take a look at your home from that buyer’s perspective and search for a few more unique features worth noting.
List your improvements and upgrades. If you’ve put in a tankless water heater for instance, be sure to mention it. While only so much can appear on the Multiple Listing Service, if you have plenty of additions to your home make a bullet-style list, print it out, make copies, and leave it for open house guests. This additional sheet will help buyers remember specific details about your property and it will help your home stand out from the dozens of others that they might be viewing.

Listing home for sale based on what you paid. Do you sell a car based on what you paid for it originally? Not typically. Yes, I understand cars depreciate but when it comes to real estate, many people, until recent years, had been trained to think that homes only appreciate. Well, houses most certainly can build equity, but there’s been a sharp lesson about how they can lose value too. Getting what you paid or more for or a home depends on many factors, including when you purchased it, current market conditions, economic factors, length of ownership, improvements, and how much time you have to sell.

Listing your home based on how much is still owed can cause a seller to list the home for too high of a price. This can quickly result in a painful cycle of price reductions signaling to buyers that there’s plenty of room to negotiate on price. In the last month, 23 percent of homes listed on Zillow had price reductions.
Not making curb appeal into web appeal is another mistake. Curb appeal is the art of making your home appeal to buyers from the moment they first see your home. Some sellers think of this in terms of making their home appealing when buyers come to an open house or drive by it. But these days, curb appeal must transfer to web appeal, too.

That means that any and all pictures of your home should create web appeal — an instant attraction — drawing the buyer into your home for an in-person look. If your photos or videos are not properly composed with pleasant lighting and free of clutter and distractions, they won’t appeal to buyers browsing the web. With so many of the searches for homes originating online, it’s worth it to invest in the best photos you can of your home. After all, a picture is worth a thousand words … and a video of your home can be worth even more if it convinces the buyer to get in the car and make the drive to see the “real” thing!

Written by Phoebe Chongchua

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This Miscalculation Cost My Buyers a Home

June 6, 2011 By Leave a Comment

“Our offer was rejected,” I told my buyer, Janie, on the phone one evening after she and her finance Chris put in an offer for a small ranch they loved in one of the area neighborhoods.

“Are you kidding me? What? Aren’t they coming back with a counter offer, something?” She was so upset, and I was in as much disbelief as she was that it was a done deal. We lost out on the house they wanted and that was that. There was nothing I could do to change it.

The crazy thing was this was not 2005 when buyers were writing deposit checks and over-the-asking-price offers at the open house. This was 2010, when prices were spiraling down and getting a loan was like pulling teeth. Properties’ days on market were triple that of two year earlier so how come our offer was rejected? What home seller in their right mind would say no to highly qualified buyers?

A home seller with two other offers, one of which was for the asking price from buyers no less qualified.

This was my fault, I gave my buyers some bad advice. When we discussed the price we should offer, it didn’t occur to me there would be two other offers, and that the seller would not try to negotiate a bit. The seller’s listing broker said other offers were coming, but from past experiences with this broker, I had reason to doubt it. Besides, everything was just sitting there…housing inventory was at a high. I was representing buyers in a buyer’s market, we had the upper hand.

Wrong. It may have been a buyer’s market, but regardless of the real estate market conditions, the seller is the one who sets the asking price of his or her home and sometimes they set it low enough to attract buyers to the table the first day on market. My miscalculation was to look at the whole market and be influenced by all the news and depressing office chatter around me rather than focus solely on this specific property and how well it was priced compared with other like properties.

Had I done this I would have acknowledged that this was a hot property and not been so cynical.

It is hard to believe that there are hot properties, but it is up to your agent and you to recognize when you see one. The problem is that in a down market all homes look overpriced and in an up market, everything is hot. We’ve gone from one extreme to the other. But to make good decisions, focus on the specific neighborhood in which you want to buy and ignore national and even statewide statistics. They are meaningless noise in your quest.

As for Janie and Chris, they didn’t fire and referred their friends to me. We found a great home they loved just as much.

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