President Barack Obama’s housing plan represents the federal government’s recognition of the importance of the rental housing market, according to the National Multi Housing Council (NMHC) and National Apartment Association (NAA).

In that respect the organizations support the plan, specifically the initiative to use bulk sales of real estate-owned properties held by the Fannie Mae, Freddie Mac and the government. The organizations did warn against housing policies that emphasize homeownership at the expense of rental housing, noting that preferential policies contributed to the national economic crisis.

With regards to the plan, the organizations also noted that care should be taken to ensure the repurposed homes are maintained in good condition, suggesting that owners and rental managers will need to work together to take advantage of the opportunity.

“Importantly, the president’s proposal underscores our key message that while there might be an oversupply of single-family housing, there is a shortage of rental housing,” NMHC senior vice president of government affairs Cindy Chetti said in the statement. “Demographics and changing lifestyles have led to a structural shift in our nation’s housing preferences to more heavily favor renting. Renters could make up half of all new households this decade, more than seven million new renter households.”

These projections indicate investors may need the help of property management companies and other professionals to meet demand in the years ahead.

Rules announced in December by the Federal Housing Administration (FHA) have sped up the process of reviewing and approving many of the federal agency’s loans, according to Apartment Finance Today.

The rules changed the criteria for having market-rate construction and rehabilitation loans reviewed by FHA regional and national loan committees, so that loans for less than $25 million and fewer than 250 units are now exempt from the national committee review process. Previously, any loan for more than 150 units or $15 million had to be reviewed before approval.

According to the source, these reviews were slowing loan approvals significantly before the new rules were implemented. Some other changes were also made. One executive told the source a deal saved at least four to six weeks because of the change, allowing construction to begin.

Rental managers and property investors may want to keep an eye on these loans, since this change means that competing properties or investment opportunities might be begun and completed more quickly. The changes were made in response to the FHA’s increased role in industry lending.

The organization did note that a major, beneficial step would be the renewal and expansion of expired energy efficiency tax credits that encourage and assist rental managers and property owners who consider upgrading their properties to save on energy costs. Since the benefits of efficiency can be passed on to renters, this could also promote healthy competition in the market and benefit all involved.

The NMHC noted that rental housing properties are being relied on by more Americans than in the past, suggesting that the federal government take care when devising its housing policies to avoid an unbalanced approach that could jeopardize the gains rental owners and stakeholders have made.

The organization also suggested that an ongoing federal backstop paid for by users may be a necessity to provide the rental housing now in demand in the U.S.

Down Payments That Save Money

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There are other options available for buyers, and their down payment options. Another popular option that is also a money saver is for those that can provide 10% down for their new loan. There are programs available that include a 5/1 ARM loan, or Adjustable Rate Mortgage. This means that the interest rate of the loan will change for the duration of the loan after five years has passed. The others include repayment terms such as 15, 30, and even 40 year loans. There is PMI assessed on the payments for this type of down payment.

The next option for borrowers is to provide 20% down. This amount allows buyers to have marginal credit scores of 650 or higher, there is no PMI assessed on the loan, and like the other two options, this group would qualify for all of the other benefits listed. Higher loan amounts are also considered for this amount down, making it easier for those who have higher down payments to purchase homes that are considered high volume or bulk loans.

Rates by State

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California is the lowest state of all in the nation as far as property taxes are concerned, but that money is made up in different ways with high taxes on sales, gas, and non-food items. The property taxes in states make up an average of 20% of all state revenue, and for those states that have higher property tax rates, they usually have lower or no sales tax, like in Delaware, Oregon, and New Jersey.

It is interesting to note that the states with the higher property tax rates seem to be floating with the recession, whereas states with lower rates are either in a complete tailspin, or have found themselves to be in a precarious situation. While taxes are unique in each state, they are highly noticeable for properties that are considered high value or a bulk property. Bulk simply means a dollar amount over $500,000.00, with the exception of New Jersey, whose rate for taxation is approximately 16%. The lowest is California at just over 4%.

Property taxes can make a difference when purchasing a home. If the loan is impounded, those taxes are added to the monthly payment, along with the homeowners insurance. This has made purchasing a home in some cases a non-option.

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When it comes to looking for a home, there’s more than just price and location to consider. Those are certainly important, but you also have to take a look at HOA fees, interest rates, and other factors. Fortunately for people who are interested in buying real estate right now, interest rates are remaining steady. There was past speculation that they were going to rise, but the economy has not yet recovered enough to allow that to safely happen. While unfortunate news for the economy as a whole, it’s great news for people who want to buy a new home, or for investors looking to make a purchase. If you fall into one of those groups, make sure to check around and see what kinds of rates you can get.

Even though the interest rates as a whole are under five percent, there are exceptions based on credit ratings and other issues. In addition, some banks look at a buyer differently than other banks, so you don’t want to assume that you’ll be given the same offer no matter what bank you talk with. If you don’t check around, you could end up paying too much because you didn’t spend the time to see if there were better lenders out there for your specific situation. That’s particularly true of people who are investing, instead of buying a primary residence.

They generally have to meet specific requirements that are a bit different from people who are only buying a home to live in, but every bank is different. Talk to several lenders so you can find the right one for your specific situation. Even if you don’t qualify at a particular lender, there will be others where you might. That’s especially true if you have a decent down payment, so don’t give up on buying now and getting a great interest rate.

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In today’s market, consumers are increasingly aware of their own environmental impact. Those that are not are still certainly aware of the savings an energy efficient home enables. However, traditional energy efficient techniques, such as solar panels and personal wind turbines, have not gained widespread support. This could be because people view both solar panels and wind turbines as items that are difficult to install and expensive to maintain. However, if someone is building a new home, or planning a remodel, they should definitely consider passive solar energy.

The idea behind passive solar energy is that a house’s walls, floor, and windows can absorb, store, and circulate the heat from sunlight in the winter. During the summer, the same technology allows the house to deny heat. A completely passive solar energy system would not have any electronics, such as fans or thermostats, to assist it, but many houses use them as backup or auxiliary systems. This impressive effect utilizes five design elements that consumers can incorporate into almost any house.

The first, and most important, is having large south-facing windows that will let in the sunlight. The sunlight then falls on some dark material that absorbs the heat. The material can be either the floor or a wall. The heat transfers from the wall or floor to the “thermal mass”, which is either stone or brick. The thermal mass stores the heat, like bricks by a fireplace, and distributes warmth throughout the house. Most systems use one of the three natural distribution methods (convection, conduction, or radiation) or fans and ducts. Finally, a “control,” such as awnings and low-emissivity blinds, helps to keep the house cool in the summer.

Together these measures create a home that has a self-regulating climate system, which can save people money and help save the planet, as well.

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.

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One of the big changes that we’ll be seeing is an end to the first time homebuyer tax credit. Not an entirely shocking announcement as this tax credit was so generous it was pretty clear that it would not be permanent.

Another change will be that the government’s purchase of mortgage backed securities will end. In 2008 almost all loans in the secondary market were bought by the government by stepping out of the market, mortgage rates are almost certain to rise, causing a whole slew of repercussions.

To make matters a little bit worse guidelines are being tightened on loans. The goal is to lessen defaults but it will ultimately mean fewer people can purchase a home and the qualifications will be more stringent.

Of course this is just the FHA’s announcement about their plan, it’s not a certainty at this point but it does seem fairly certain that things will go forward.

photo credit:?Kamal H.

Make sure you find a tax advisor – this might be a tax accountant, a tax attorney or some other similar profession – who is clear on the rules and regulations in the jurisdiction where you are buying the property. Things can vary from area to area. Once you have found an appropriate consultant, get them to explain the relevant tax laws to you in regards to investing in real estate, and in particular in areas like tax deductability of various expenses (including your borrowing expenses), and the implications of any capital gains if you decide to sell the property at any particular time. Doing this in advance can not only save you unnecessary problems and expenses, but it could even make you a lot more money out of your investment – and surely that’s the point of investing.? photo credit:?Robert S. Donovan