The Only Reason for Not Selling Your Boston Area Condo

April 17, 2012 By Leave a Comment

I’ve been writing a lot about how this is a great time for Brighton (and most of the Boston area) homeowners to sell their condo. But I own a condo in Brighton and I am not selling it. It is only fair I give a balanced view and tell you the only reason I think you should not sell your Brighton or Allston or Somerville condo.

Rents are going up, occupancy rates going down. This is a great market for landlords. That’s it. That is the reason to not sell. But there are two caveats. You need to want to be a landlord and you need to be able to afford to buy without selling.

Being a landlord is not terribly difficult and I enjoy most of it. But many people are uncomfortable with the idea of other people having rights to their home, collecting rent, and being responsible for the condo remotely. A bigger issue for some is the risk of not getting the rent and still having to pay the mortgage and condo fees. That’s a risk you must be comfortable taking or you are going to be miserably anxious.

Next caveat is in regards to your financial ability to buy. Real estate purchases require larger down payments and they have stricter mortgage guidelines. You need to have the cash to make the down payment, AND you must have enough income and assets to offset the debt and expenses of the rental condo to obtain a mortgage.

Can you get through these two hurdles? If so, I am the first to say DON’T SELL your Brighton condo! Enjoy your income property for years to come. I believe it will prove a superb investment.

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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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The Strategy for Home Hunting Without Fear

June 27, 2011 By Leave a Comment

As any daredevil, extreme sports addict or adrenaline junkie knows, well-grounded preparation for the specific task at hand is what takes the fear out of trying.

The sometimes risky sport of home buying is no different.

Those who’ve suffered the agony of defeat in what’s likely the most dangerous consumer game, learned the hard way that sheer fearlessness isn’t enough to become and remain a homeowner — through good times and bad.

With the rules of the housing game changed forever, preparing to just squeak by the home buying ordeal isn’t enough to achieve a decisive and lasting victory.

The idea isn’t just to buy a home. The goal is to keep your own roof over your head.

Preparation is key, according to the National Association of Realtors (NAR).

From NAR, here’s how to get ready to be and remain a homeowner.

• Create a wish list. Write down housing wants and needs. Include all the physical characteristics you want or need. Include style, size, layout and room configuration. Look at the number of bedrooms and bathrooms, and the basic amenities you must have. Include critical features such as location and services and a home’s proximity to good schools or public transportation lines.
• Browse for housing. Realtor.com and other Web sites offer home valuation features and neighborhood data on trends in local markets. Use features to determine how a listing compares with nearby, comparable properties in terms of value, actual sales prices, home features, neighborhood characteristics, and more.
• Work with an expert. Finding a professional real estate agent who will represent your best interests can make the difference in location, negotiating the best offer, and closing the home of your dreams. Look for a full time real estate agent, who has uploaded telling photos and videos of their listings and look for agents with good Web sites to market your listing.
• Get the complete picture before you visit. You can’t know everything about a community from an online listing. Schools, crime, and proximity to shopping and work all impact property values. NAR says talk to a Realtor and go to Realtor.com to explore communities.
• Make sure the property details are reliable. Buyers need know when a listing has experienced a price change. Look for Web sites like Realtor.com that updates listings frequently, including price changes. Fresh and reliable information is critical. Realtor.com time stamps listings to help buyers make better informed decisions. Get email alerts and stay on top of changes so you can be first to act.

Written by Broderick Perkins

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So You Want to Be a Landlord?

June 2, 2011 By Leave a Comment

Today I rented out my condo in Brighton. Every time I visit a great investment property it makes me want to own more and more. The way I feel about real estate is the way I feel about books - you can’t have too many.

But unlike books, investment properties can be demanding in way and at times which are inconvenient, and they can’t be ignored. They can sap your energy and money, and this illiquid asset can sometimes feel more like a liability.

Are you thinking of becoming a landlord? For some years I’ve advised so many people to hold on to their property if they can afford it. Selling often made for a loss sellers were not ready to take. But before potential sellers make this decision, I would have them really consider the responsibilities of being a landlord.

Lets start with finding a tenant. The best way is to work with local agencies specializing in renting, and hope the timing is good enough to find someone who will be a good tenant.

Next, you need to be realistic about the rent. My recommendation is to go just below what all the other ads advertise for a similar home, and find a better tenant. It will cost less than the risk of having an unreliable or destructive tenant.

So you found a tenant, signed a lease, paid the agent who found this tenant. Now what? Be ready to let your home go, and start thinking of it as an investment, rather than your home. For me, this meant painting my very beautiful turquoise kitchen a boring off-white, and I had to get used to the idea that the woodwork will not be the same next time I see it.

Your wonderful new tenant moves in, you’re getting paid monthly, and it is all bliss until something needs to be fixed, something else falls apart, the building has issues, and there is a special assessment in the condo complex. But you take care of it all and you are happy to be covering the mortgage with the rent you receive. Then you get a 30 day notice to vacancy. Get ready to go through it all again…

You start to show the investment property again to all these prospective tenants, only to find out how your former home is not treated the way you would have treated it. Some things are broken, some are scratched, and the appliances are not as new as you remembered.

Once a tenant moves out, you need to repaint, fix and scrub before the new ones moves in. No big deal? Maybe sounds like fun? Well, often there is just a few hours to do it. This year I was extremely lucky with two days.

This scenario is the best you can hope for. The bad things that happen include real serious damage to the property and not getting the rent. In some States this means immediate eviction, in Massachusetts it means losing a lot of money.

All this being said, I love it! Owning investment property is one of my favorite aspects of the real estate world. Although I only break even on this condo, it is worth holding on to it. But I know this is not for everyone.

It is imperative to be a good landlord if you are to find good tenants. For this you need to be okay with all the hassles and the risks, the inconveniences, and the demands. Just know what you are getting into.

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Make the Best Offer on a Hot Property

May 31, 2011 By Leave a Comment

Yes, even in a buyer’s market, a buyer is not in total control of the outcome of an offer to purchase. There are many situations in which properties are hot, and they will have several offers from buyers.

Situations in which you, as a buyer, may not be holding all the cards include buying properties in the communities where prices have remained stable and the market hasn’t tanked. In my area, Greater Boston, there are many such communities and my properties’ values have held up pretty well. The rest of the country has other such areas; this is due to both their economic condition and the availability of housing.

Another situation in which a buyer has to be competitive is in properties that have been priced really well. I am not talking about a listing agent telling you that a property is “priced to sell,” I’m talking about your buyer agent telling you, “We gotta go see it TODAY!” Some sellers are not in the mood to sit on the market and would take the price they believe they’ll get rather than hope for something else. Some sellers just need to move quickly or get rid of the property for all sorts of reasons. The seller’s life is of no concern to they buyer, just focus on whether you like the house and if the price is right.

For a great source of hot properties, look at the price reductions in your market and reconsider visiting those homes that have had the price adjusted. A house that has sat on the market for weeks suddenly become attractive when the sellers finally lower the price. Sellers either get sick of sitting on market or they found their new home, and they are ready to move. Many overlook this source of great property deals.

Here are a few tips that will help you be a competitive buyer and secure a hot property, once you’ve found it:

First, know what you want ahead of time. You may not have the luxury of thinking about it for more than a few hours once you find a hot property. Don’t mole it over endlessly, because you will have to either put in an offer or let it go. Once a well-priced properties come on market, you need to make a quick decision and be happy with it. If you are uncomfortable with that, either you are not ready yet or it is the wrong property. Remember, just because the price is great, doesn’t mean it is the right property for you.

Second, get your pre-approval ready well ahead of time. A strong buyer has his or her finances in order and a proof of his or her ability to secure a mortgage. The seller’s agent may ask to see it - and I have mixed feelings about sharing pre-approval letters - but whether or not you show your pre-approval, you must have it ready. In a multiple offer situation, it may help you secure a property and prove you are a good bet for the seller.

Third, make a good offer. If you are not a seasoned real estate investor, don’t try to play around too much. You should buy a property for market price, and if you are very lucky, maybe a bit under. But, don’t make a low-ball offer on a hot property; you’ll be wasting everyone’s time and you risk losing out to a better buyer.

All this being said, it is imperative you know what a HOT property is. Just remember that not everything that glitters is gold, and it is up to you to identify if something is hot. If it is, prepare to make it your own.

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

Home Sellers Can Get More Out of the Offers For Their Home

May 27, 2011 By Leave a Comment

Today’s market can be a difficult one for many sellers to navigate. While your real estate agent can advise you, the ultimate decision of what offer to accept is entirely up to you.

This decision can come with quite a bit of pressure. Even in the most favorable of markets this can be a difficult time. How do you know when to accept an offer?
Here are some questions to consider:

• Is the buyer pre-qualified/approved? Selling will require an investment of time and money. You may need to find a new home or a temporary rental. There’s nothing worse than buying a new house only to find out the deal to sell yours has fallen through.

• Do you need to move? The urgency of your move may dictate what offer you accept. Many sellers need to move quickly for a new job. You may need to sell to avoid foreclosure. If you are in a rush, you may need to accept an offer that is less than ideal.

• How much do you owe? You don’t want to sell your home at a loss. And be sure to take closing costs into consideration. Many markets experienced high levels of depreciation over the last year. If you are underwater on your loan, now may not be the time to sell.

• What is the market climate? Are you likely to get another offer? How long has your home been on the market? Have you had many showings? All of these are factors to consider when contemplating what offer to accept.

Above all, ask yourself if this offer was a reasonable offer. There are buyers that may attempt to low ball you. They may see that your home has been on the market longer than your competition. They may know that it’s a strong buyers market. In response they offer a much smaller amount for your home than it is worth. You are not obligated to accept these low ball offers. However, if you are in need of selling now, every offer warrants consideration or a counter offer.
In the end, you must accept an offer that works for you. You may be willing to accept a lower amount in exchange for a faster closing date. Or you may wish to hold out for the highest dollar amount.

Written by Carla Hill, RealtyTimes

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

Bad Service from a Real Estate Agent

May 26, 2011 By Leave a Comment

Bad service offends me. For me, one of the best parts of the reach of social media and the internet in general is how word travels fast and far, no one gets away with disappointing people too much. This has increased competition to the point that as consumers we expect great service. At least we should.

Currently, I’m in a disagreement with a local place of business which provides classes for toddlers and babies. I signed-up weeks ago for an art class for my two-year-old, and after one class I realized this is not for us. It was poorly done in various ways. In requesting my money back and trying to elegantly bow out of this class without offending anyone, I’ve been put through a ringer of nonsense, store policies and at exhausting email exchanges.

What I can’t believe is that there was no guarantee. You did a terrible job, should you get paid? If you say yes, then you are doing some bad business and you are not going to last. Not in today’s world of accessibility to opinions.

As a real estate agent, I never got paid unless I did my job 100%. Not 98%, but 100%. And I didn’t get half paid for a half job. The real estate agent gets paid only once there is a successful closing on home. And whether it took me 10 hours or 1,000 hours doesn’t matter. It is in our contracts with the buyers and the sellers.

This is why cynicism about the role of a real estate agent gets me so annoyed. The overwhelming majority of agents have incredible dedication to service. I’m not saying they are all great at what they do, but they are about service. Well…

And then there are the crappy agents, the ones who can’t wait for you to just pick a house and sign the paperwork, the ones that don’t care if you have doubts, but instead do a “sales” job on you to get you to closing no matter what. These are the real estate agents everyone hears about, but keeps working with them. Why? When a seller or buyer has a bad agent, why don’t they fire them?

Why are some of these self-serving agents so successful? This is what I don’t understand, not in this day and age. I know a few moderately to highly successful real estate agents who manipulate and push, who are so focused on the closing check that they just blitzkrieg through a sale…as if it was about them!

These agents are the exception, but I ask of all of the home buyers and home sellers to trust your gut and if you don’t like your agent, fire him or her, or call the manager. Interview several agents before you pick someone, and never ever go against your own instincts and needs. Tell your real estate agent, your lawyer, your doctor and your landscaper, and your toddler’s activity center what you want and need.

Don’t just watch your time and money wasted and then complain. Instead, be an active participant in creating an efficient market with high standards for service.

Speak up! Have you had some bad service recently? Every worked with a bad real estate agent?

 

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

Checklist for a Home Buyer in a Competitive Market

May 25, 2011 By Leave a Comment

Not every market is struggling. The truth is that many desirable neighborhoods and zip codes are still experiencing healthy inventory levels and conditions that promote multiple offers. As a home buyer in these markets, how can you be competitive?

  • First, and perhaps most importantly, be ready to buy. Readiness is not impulsiveness, however.
  • Before you begin your home search, be clear on your objectives. This means knowing your budget (and how much wiggle room you really have), what amenities are must-haves, and what things you can do without. By having a clear plan of action, you’ll know a good deal when you see it and won’t hesitate to act. Many would-be buyers miss out on their dream home because of hesitation. They need “the night to think about it” or “to see a few more” before they make a decision. If the home is a good price and in a desirable location, one night could mean missing out on the house altogether.
  • To take the preparation stage one step further, be absolutely sure you are pre-qualified and pre-approved for a loan. Do this before you even set foot in seller’s house. Why? You wouldn’t be the first buyer you puts in an offer on their dream home, only to find out financing has fallen through. Lending is tight right now. You may not qualify for as low of an interest rate as you would think. And for others, you may not qualify at all!
  • And if you were pre-qualified or approved months ago, be sure to stay in contact with your lender, so that there are no surprises when it comes time to make an offer.
  • Communication doesn’t end there. Keep in contact with your agent about new listings and showings. Homes come on the market all the time, and in hot neighborhoods they don’t last long. If you wait even a few days, a home could be scooped up by another eager buyer.
  • Next, bid competitively. This is where your agent can be invaluable. They have access to your market’s stats, which show for how much comparable homes have been selling. This means you may be able to come in a little under list price and still be competitive, or it may mean that the property is already underpriced, and to beat out any other offers, you need to offer more than the asking price.
  • Competitive doesn’t mean handing everything to the seller on a sliver platter, though. Sellers may ask for certain concessions, such closing costs terms, as-is purchases (without an inspection contingency in the offer), and requests regarding closing dates. Some of these requests may seem reasonable to you, but don’t be afraid to stand your ground if others are too far-fetched.
  • And finally, stick to your guns. It can be easy to lose sight of your true end goal, which should be the home you love at a reasonable price. This means that your predetermined budget, well, it must remain your budget. Don’t overpay for a house simply because you’ve gotten caught up in the excitement of a bidding war.

Use these simple tips to help you navigate a tough market. Before you know it you’ll be signing on the dotted line for your new dream home.

Written by Carla Hill

How competitive is your real estate market? Have you lost out on an offer to a higher bidder?

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