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Tenants’ finances may be stretched by rent growth

February 7th, 2012

Multifamily Executive reports that data from sources (including rental data firms MPF Research and RealFacts) suggests rental managers may need to stop increasing rents soon.

Property management companies and rental owners increased rents an average of 2.3 and 4.7 percent during 2010 and 2011, MFE notes, but the Bureau of Labor Statistics only reported 2 percent growth in wages year-over-year during the third quarter of last year.

This suggests rents may significantly outpace wage growth, analysts say, threatening to price residents out of their units. Data from RealFacts suggests this may be happening in some markets already, according to MFE, with one executive reporting that more tenants are moving out due to rent increases than in the past.

While rents did drop in some areas during the fourth quarter of 2011, however, the source notes that it is traditionally a slow quarter and may not be representative of a meaningful trend.

MPF Research’s Greg Willett noted that eventually, rent increases may cause tenants to feel they can no longer afford a property. Analysts question when that point will be reached, according to the source, although some signs indicate that wages may rise moe quickly this year than in 2011.

The Change With Government Backed Loans

May 27th, 2011

When the bubble burst in late 2008, the real estate market took a dive for the worst. As an effort to keep the market ?alive the government decided to lower interest rates, as well as back loans through FHA for high cost properties. The efforts of this move can be seen in many areas all throughout California, Florida, and other states that have many high end residential communities where the average property value is over $800,000.00.

Making Changes in FHA Loans

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The adjustments made with FHA mortgages is that instead of the government backing loans up to $850,000.00, it will now only take care of loans in the high $400,000.00′s. This is a huge drop and many property owners are concerned that it will hurt what little value they have left in their properties. For buyers this means that loans will not be offered in what is considered bulk amounts through FHA. Without the government backing these high priced loans, buyers will need to put out more money on a down payment, somewhere around 35%.

The Results of Change

The final results in these changes essentially mean that buyers will be deterred from looking for properties in expensive areas because they cannot afford the 35% down payment, whereas FHA allowed for a 3% down payment. While there is a ripple moving across the real estate channels regarding the backlash of this new policy, it should be pointed out that before the bubble blew the government backed loans cap was in the low $400,000.00s.

Overall, this should not be a huge shock to buyers or sellers in today’s market. Rather this is a growing pain moment while the consumer market is weaned off government guarantees. Since the policy implementation in early 2011, there has not been a spike, nor decline, in high priced areas.

How You Can Benefit from a Low Interest Rate Loan

November 22nd, 2010

photo credit: lumaxart

If you are looking to invest in real estate, now might be the time to do so. Interest rates are the lowest they’ve been in years, making it a very attractive time to buy.

Currently, 15-year-fixed mortgages are under 4 percent and 30-year-fixed are just slightly above. The last time this country has seen rates this low was in the early 1950s, so if you’re considering buying a home for yourself or a rental property, these low interest rates may make it possible.

As every investor knows, low interest rates translate into lower payments, and lower payments are greatly beneficial. Obviously, they require less of a financial commitment from you. With lower loan payments, you don’t tie up as much of your monthly income as you would with higher payments. If you’re buying rental property, you can pass your savings along to your tenants, which may be necessary during the current economic downturn. On the other hand, you could opt to charge a higher rent and use the excess money for other investments or to pay off your low-interest rate loan more quickly.

Depending on the property’s location, offering a low or very reasonable rent may or may not be necessary. Areas of the country that have remained relatively untouched by the downturn in the housing market may require no decrease in rent while it may be very beneficial in more affected areas. A lower rent may attract more tenants, giving you a variety of potential renters from which to choose.

If you are unsure of how to best gain from low interest rates, experts in property management can help you. If you are unsure how much rent to charge, they can offer advice and information to help you set rental rates that will benefit you and ensure you thrive economically as you lease your properties.

What to look for when buying a new home as an entrepreneur

September 17th, 2010

photo credit: taberandrew

When you are in the market to purchase a new home, and you work from home, there are a few key things to consider while on tours of potential residences. Sometimes less is more, however you need to make sure you have all the necessities.
First, the size of your home needs to be that which will comfortably contain all family members and with room for guests. Another concern should be ample bathroom and storage space. When working from home there is sometimes extra merchandises that need a place to sit.
Another key point is the cost of the home. If the price is out of your range, then it’s not an option. Most do not want to carry the extra burden of a mortgage they may have trouble paying at some point. After you’ve confirmed your rates and final price, also measure the costs of maintenance, taxes and such.
Additionally, the neighborhood is very important, especially if you have children. Take a walk or drive around to see where the schools, parks and stores are. Also take note of the police and fire stations. You could also stop at a couple houses on the block of the home you are considering and ask them how long they have lived there and their thoughts on the community.
After you’ve narrowed it down to a few homes that fit the above criteria, now comes the time to critique the individual rooms. The room(s) for your home office should be of a size to fit your desk, chair, filing cabinets, and any additional boxes or important parts to your craft. Also confirm that there are enough electrical outlets and spots for cables to run for internet and/or phone lines. Whether is it a personal choice or for lack of electrical outlets, a room with big windows and sunlight streaming in for most of the day could also be an appealing option. But make sure to get the right blinds or curtains for your liking so that you can have the privacy and comfort of adjusting the view.
Finally, it’s mostly about personal choice. If you and your family are content with the home, then it’s a good place to start.

Tips for Saving Money on Closing Costs

September 14th, 2010

photo credit: Allen Elliotte

Many people are so excited at the thought of purchasing a home that they forget about the closing costs. The closing costs can consist of several fees charged to the seller, including attorney fees, survey fee, title insurance, recording fee, appraisal fee, and processing fees. Most homebuyers are shocked by how much they are charged at closing. Thankfully, there are some ways you can come away with more money in your pocket. The following are some tips for saving money on closing costs:

The first step to save money is to choose the right lender. You may want to work with your local bank, but if they are going to charge you $1,000 more than another lender, is it really worth it? Shopping around for a lender with lower processing fees can save you a ton of money in the end.

You may be required to have title insurance on the home you purchase, but it does not mean you have to use the particular insurance company recommended by your lender. Before you make a decision, take the time to research a variety of insurance companies to make certain you are getting the best deal.

You will also want to negotiate with the title company. Generally, it is the title company that records the documents with the county courthouse. The courthouse may only charge a mere $25 to record it, but the title company charges you $125 or more. Negotiate with the title company or research to find the title company who will charge the least.

Of course, you will also want to negotiate with the seller on the closing costs. This particular negotiation will take place when you are making the offer on the home. In fact, if your real estate agent does not recommend asking for the seller to help pay the closing costs, they are not representing you as well as they should. Most real estate agents will recommend the seller share at least a few thousand dollars of the costs.

Tips for Buying a Home with a Low Downpayment

September 3rd, 2010

photo credit: ansik

The old saying goes, there is good news and bad news. As an experienced 14 year mortgage consultant we’ll let the author give you some helpful tips and facts for buying a home with a low downpayment.

Good News Tip #1. A low downpayment could mean three to five percent using FHA loan programs. If you’re a veteran with eligibility VA loans offer 100 percent financing to those with reasonable FICO credit scores as does FHA.
Good News Tip #2. FHA and VA lenders allow you to purchase any type property. Condo, single family or multi-family, mobile home, manufactured home or modular home. You get to pick your town, your street, your neighborhood and so on. Both offer 30 year fixed terms. Both offer adjustable loans but you might want to think twice about going that route. Both are nice people to do business with.

Bad News Tip #1. Both loans have monolithic closing costs and fees which are recurring and non-recurring in structure. Some of these fees must be paid upfront. Most all FHA and VA fees and closing cost are non-recurring which means you only pay them once. They do not continue over the 30 year mortgage term. Recurring means ongoing.

Bad News Tip #2. Most banks and other lender funded loans also have tons of restrictions, fees and costs. If you like jumping through hoops you’ll get plenty of that action dealing with these types. The paperwork will give you writers cramp and a possible migraine. You’ll also need a permanent smile on your face for fear your chosen lender might say no.

Good News Tip #3. If you have the propensity to be your own person and are not choosy where your home is located, consider buying from a FSBO and deal directly with the property owner. If the home has no mortgage, terrific. Offer a small down and have the seller carry the paper for five years then refinance. Or, get all the mortgage information, see if you can assume the existing loan, negotiate a small down with the seller. No fees. No headaches.

Finding a First Apartment

April 1st, 2010

First apartments are very exciting ventures but don’t let the excitement sweep you up and cause you to lose sight of the big picture. The first step to finding your first apartment is creating a list of your needs and your wants. Make sure to be practical and put only those things you need on the need this, then rank your wants and always keep this in mind when apartment shopping. With a list of priorities you’re less likely to be swayed by the pool and exercise room while forgetting important details like security and neighborhood.

The next step is obviously the budget. Look at your income and your expenses and try to figure out what you can afford. A rule of thumb is that your housing should be somewhere between 25 to 30% of your gross income. But if you can find a place that suits your needs and most of your wants for less you should definitely go that route. Most people looking for their first apartments have nominal savings and spending too much on housing is not going to help that situation.

Then you’ll want to look at the area in which you’re planning on living? Find crime statistics for the region, look at bus routes, proximity to work, school, grocery stores, parks and anything else that interests you. This is something that a lot of first time apartment hunters skip as they only review finances and amenities but safety and proximity to attractions is important.

Finally you’ll want to shop and see. Look at as many properties as you can and you may find your priority list shifting a little bit. See who is offering the best deals and as if they have any incentives attached as many landlords are trying to get tenants and will throw in some freebies.

Qualifying for your First Mortgage

March 31st, 2010

Before you go looking for that American dream and scouring the newspapers and open houses for that perfect home you should first find out how much home you can afford.

Lenders use a certain formula to determine how much they’re willing to lend you, but you can roughly count on three times your total annual income, before taxes. Of course this is just a rough estimate and a lot of other considerations will be evaluated first. And you don’t have to buy a home that falls in that price range, it’s not only allowed but in most cases you’re better off if you purchase a home that is less than the amount the mortgage lender approves you for.

Before you meet with a mortgage lender it is a good idea to get your credit rating in order, pay down your bills, and set aside a down payment.

The first step is checking your credit reports for any errors and cleaning up any black marks on your rating. The higher your credit rating the better.

Your next step is to pay down or off your debt. Mortgage lenders will look at your budget and your debt and use this to determine how much they’ll lend you so it really is a benefit to have as much debt paid off as possible.

And finally, having a down payment used to be optional or very minimal for home buyers but after the housing crisis that has changed and having a down payment can affect the interest rate you’ll be asked to pay.

Getting approved for a mortgage shouldn’t be an impulse decision, you need to prepare for your mortgage meeting so you can get the best deal possible on this huge investment.

photo credit:?tomeppy

Tips to Finding a Deal When Buying a New Home

March 29th, 2010

There are a lot of home deals on the market now, the problem is real estate is still not a sure bet and if you already own you will probably be stuck trying to sell your current home. But if you’re still ready to buy here are some tips that can help you find the best deals.

Patience

In the past real estate was about acting quickly and getting the deal before anyone else now its about waiting to get the right price and the right property. If you do your research and are willing to wait you can probably find your dream home at a reduced price.

Old Listings

Look for listings that have been on the market for 90 days or more. The rule of thumb is that listings more than 90 days old are stale and you can usually get a better deal. There doesn’t seem to be a correlation between houses on the market longer than 90 days and deeper discounts but the more owners pay that double mortgage the more likely they are to take a discount.

Look for Fixer Uppers

Many people give up on their little DIY projects when they realize their home is losing value, others just don’t care after a while. These homes can typically be bought for deep discounts and the reap the bigger rewards by doing the work yourself.

photo credit:?quimpg

Tax Tips for Landlords

March 18th, 2010

As tax season approaches there are a number of items a landlord must keep track of for tax time. Keeping meticulous records of everything will make your job easier and will help with taxes. Make sure to pay particular attention of the following items and you’ll find your taxes are easier to manage.

Purchase price. It should go without saying but sometimes the obvious needs to be stated, keep track of the actual purchase price of your property including all the additional fees that come along with a purchase.

Depreciation. This is a less concrete figure to keep track of but it’s important to keep track of your depreciation throughout the year so you get the most benefit out of your taxes.

Expenses. Every expense you have associated to your buildings needs to be itemized and documented as these are key deductions come tax time. Don’t forget to include your advertising, cleaning costs, maintenance and repairs.

Rent and other fees. Rent is something most landlords know to keep track of and all the good ones keep accurate records but it’s not just the rent that needs to be taken into consideration. All fees coming in to the landlord or your property management company need to be recorded for tax season.

photo credit:?Josh Thompson