American Apartment Owners Association

Why your flipped house might actually be a flop house

Thu, 03/23/2017 - 10:54pm

House flipping is hot again, with investors flipping property at the fastest pace in a decade. Yet behind their walls, that picture-perfect dream home could conceal a nightmare.

A flipped house is one that has been sold at least twice within one year. Real estate site Trulia said more than six percent of last year’s home sales were flips—the most since before the financial crisis.

With flipped property soaring in popularity again, so are the risks associated with buying a lemon, experts say.

“What you have to watch out for is if a house has been totally renovated, everything , not just the kitchen or a bathroom, but the whole house, “Frank Lesh, executive director of the American Society of Home Inspectors, told CNBC’s “On the Money” in an interview.

“That’s a good sign that it was probably flipped fairly quickly,” he warned.

In the speed to fix-up a house and re-sell it at a profit, corners could be cut. Work could be completed without required permits, or Lesh said, appliances or lighting could be installed without “proper connections in the electrical panel.”

In especially hot property markets, fixer-uppers that mask flaws are more prevalent, he said. “Because people are trying to turn around houses very quickly and if a market is hot, sometimes people forego the home inspection and that is never a good idea,” Lesh added.

Some quick turnover homes have only had cosmetic fixes that mask mechanical or structural issues that even trained eyes may not be able to catch.

“There are a lot of things that a home inspector can do but there’s just some that we can’t,” Lesh acknowledged.

“A home inspection is done over a few hours’ time period. So that’s sort of like taking a photograph of a moving train. We see it today, right now. So we can’t predict what’s going to happen.”-Frank Lesh, executive director, ASHI

According to ASHI—which since 1976 has represented 8000 certified and vetted inspectors— a home Inspection is a professional, written opinion of a home. It is based on a visual evaluation and operational testing of the systems and components to determine current condition.

Still, even some details can get past an expert.

“Keep in mind that a home inspection is done over a few hours’ time period. So that’s sort of like taking a photograph of a moving train,” Lesh said. “We see it today, right now. So we can’t predict what’s going to happen.”

Lesh said a home inspector could very easily “tell if an electrical outlet wasn’t installed properly,” but wiring can be trickier. “We can’t see behind walls,” he added.

Meanwhile, plumbing can be an even bigger problem for homeowners. Lesh told CNBC that sometimes, “slow problems that you may not see, like a small leak behind a wall because it wasn’t taped properly, could become a problem that an inspector just wouldn’t be able to see.”

During an inspection, there’s a limit to what an inspector can do, he explained.

“Although we run the water in the bathtub and the shower, we don’t get in the shower or in the tub and actually sit in there or stand in there. So it’s hard for us to actually live in the house, but we’re there for a few hours so we try to check it out as thoroughly as we can,” Lesh said.

In stressing the importance of a home inspection, Lesh added that “everybody should know that your house does not have a ‘check engine’ light. It’s not a car.”

Unless an expert can really dig into the home’s nooks and crannies, ” You’re just not going to know what you’re getting.”


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Do you really want to own a second home?

Thu, 03/23/2017 - 10:52pm

The real estate market is heating up again after the devastation of the great recession, particularly in retirement meccas like the Carolinas, Florida, Texas and Arizona. Much of the activity comes from retirees selling their family homes in the north and moving to the sunbelt. But a significant portion is also due to retirees and pre-retirees buying a second home at the beach or somewhere else in the sun. They might be anticipating the place where they will eventually move full time. If they can afford it, some people keep their main residence, but also want a retreat where they can get away from the world.

For some people, having a second home is part of the retirement dream. You stay in your hometown with friends and family, but also have a small bungalow at the beach or a condo in the sunshine. If you’re going to vacation in the same spot every year, it could be cheaper to own than to rent, but this isn’t always the case. And money is not the only issue. Here are some pros and cons to consider beforeyou purchase a second home:

Pro: You can use the property whenever you want. If you own the property, you can enjoy it at your leisure. You no longer have to spend countless hours rooting through hotel sites or home-share sites searching for something you can afford at the time you want to go.

Con: You’re tied down to one place. If you own a condo in Florida, then you’re probably going to Florida for vacations, whether you want to or not. Unless you have very deep pockets, it’s hard to justify – much less afford– an alternate vacation to Europe, Mexico or anywhere else.

Pro: There’s pride of ownership. Many people enjoy the feeling of owning their vacation spot, rather than renting, just like it feels good to own your own home instead of living in an apartment. In addition, as owner, you can invite your friends and family to join you on vacation, or let them use it by themselves when you’re not there.

Con: As the owner, you’re responsible when something goes wrong. Again, just like owning your own home, you are the one who has to step up when a window gets broken, the roof springs a leak or the refrigerator gives up. Also, you may be held liable if someone gets hurt falling down stairs or slipping in the shower.


Pro: You might make money renting out your second home. In many retirement meccas there is an active rental market, usually bringing in premium rents during the high season. The internet provides accessible opportunities to rent your place at your own discretion. And some vacation developments offer rental and management programs for the benefit of the owners, relieving you of that responsibility.

Con: Renting out your second home is a lot of work. If you use a management company to rent your unit, it will take a substantial cut of your revenue, depending on the services offered. If you do it yourself, then you’ve just bought yourself a second job.

Pro: You can make the property your own. You can decorate your vacation home the way you want and keep it nice. Plus, you can leave your stuff there, including beach chairs, sports equipment, extra clothes and other paraphernalia. You don’t have to jam your car full of stuff or pay fees for extra baggage on the airline each time you visit.

Buying a second home is a complex decision that requires careful thought. So keep in mind these three tips from second home owners:

Factor in how often you will visit. It might pay off to own if you spend at least three months each year in your second home. For example, a retiree from New York might spend every winter in Florida. However, if you will only have a week or two each year to vacation there, you will probably be better off renting.

Pick a retreat that is close to home. If you want your property to be a rental, select a place near your home, or no more than an hour’s drive away. That way you can stay on top of repairs and keep an eye on the local real estate market.

Consider who will maintain the property. It’s not easy to maintain two properties that are in different states. However, you could buy your second home in a resort community with a management company that will take care of rentals and repairs. You may not make a profit renting out your second home after the management company takes a substantial cut, but you might break even, which helps to defray the costs of owning a second home. You just might end up with a free vacation.



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Penn Study: Arts Improve Well-Being in Poorer Neighborhoods

Thu, 03/23/2017 - 10:49pm

A new study from Penn’s Social Impact of the Arts project found that cultural resources in lower-income neighborhoods are “significantly” linked to better schooling, health, and security.

“Going to a museum won’t cause you to lose weight or reduce your chances of being mugged, but communities with cultural resources do better,” Mark Stern, lead researcher of the project and professor of social welfare and history, said in a statement. “Our research clearly demonstrated that sections of the City are doing well on a number of dimensions of well-being, in spite of significant economic challenges.”

The study, which was funded by the New York Community Trust and the Surdna Foundation, looked at how New York’s “neighborhood cultural ecosystem” improved the lives of the city’s residents. The research controlled for economic well-being, race, and ethnicity, and found that creative nonprofits and for-profits, news outlets, bookstores, artists and other cultural centers led to:

  • 14% decrease in cases of child abuse and neglect
  • 5% decrease in obesity
  • 18% increase in kids scoring in the top stratum on English and math exams
  • 18% decrease in the serious crime rate

“This research confirms and builds on what we’ve seen about the power of art to shape communities and improve lives,” Kerry McCarthy, director of thriving communities at The New York Community Trust, said in a statement. “Our grant-making boosts the arts in neighborhoods that need it most, so we are thrilled to use the findings to hone this strategy.”

The trust plans to use the study in its grant-making, while NYC’s Department of Cultural Affairs will use it to help design a cultural plan for the city. The research was conducted from 2014 to 2016. You can read the study here.

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Renters Now Rule Half of U.S. Cities

Thu, 03/23/2017 - 3:01pm

Detroit was once known as a city where a working-class family could afford to own a home. Now it’s a city of renters.

Just 49 percent of Motor City households were homeowners in 2015, down from 55 percent in 2009 and the lowest percentage in more than 50 years. Detroit isn’t alone, of course: The rate of U.S. home ownership fell steadily for a decade as the foreclosure crisis turned millions of owners into renters and tight housing markets made it hard for renters to buy homes. Demographic shifts—millennials (finally) moving out of their parents basements, for instance, or a rising Hispanic population—further fed the renter pool.

Fifty-two of the 100 largest U.S. cities were majority-renter in 2015, according to U.S. Census Bureau data compiled for Bloomberg by real estate brokerage Redfin. Twenty-one of those cities have shifted to renter-domination since 2009. These include such hot housing markets as Denver and San Diego and lukewarm locales, such as Detroit and Baltimore, better known for vacant homes than residential development.

While U.S. home ownership ticked up in the second half of 2016, there are reasons to think the trend toward renting will continue. A 2015 report from the Urban Institute predicted that rentership would keep rising through 2030, thanks to demographic trends that include aging baby boomers who downsize into rentals.

In the shorter term, housing market dynamics will also play a role. Fewer than 1 million homes were on the market in the first quarter of 2017, the lowest number since Trulia began recording inventory data in 2012. The shortage makes it harder for renters to buy. Meanwhile, rental landlords, including large Wall Street players and mom-and-pop investors, continue to plow cash into single-family homes.

Those shifts are likely to present new challenges for cities unequipped to handle high rental populations. Detroit Future City, a nonprofit that highlighted Detroit’s shift in a report earlier this month, argues that the city needs an intentional strategy for dealing with the rising population of such households.

That could include providing new protections for renters or creating resources to help landlords keep properties in good repair. On a grander scale, the Center for Budget Policy & Priorities, a Washington-based research institute, published a proposal this month calling for a new tax credit for low-wage workers, seniors, and people for disabilities.

Most low-income families don’t rent by choice, said Nela Richardson, chief economist at Redfin. And plenty of higher-income households rent because they can’t afford to buy. “We don’t have enough affordable supply in either rental or for-sale markets,” said Richardson, adding that cities interested in promoting renter-friendly policies can rethink their zoning policies to encourage more construction.

At an even more basic level, city leaders should check old assumptions about the role renter households play in their communities, said Andrew Jakabovics, vice president for policy development at Enterprise Community Partners, an affordable housing nonprofit.

Homeowners have traditionally been regarded as more engaged, with more at stake in the long-term prospects of their neighborhood, Jakabovics said. That view can unfairly shortchange renters.

“It goes a long way just to make sure you’re valuing renters and making sure voices are heard when it’s time to allocate resources to schools or parks or transit lines,” he said.



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Using a VA home loan to buy rental properties

Thu, 03/23/2017 - 2:59pm

Members of the armed forces don’t shrink from a challenge. Which may explain why more of them own rental properties.

Nine percent of U.S. homeowners have investment homes, according to a National Association of Realtors study. But that jumps to 16 percent among owners on active duty in the military.

A lower-cost VA home loan — backed by the U.S. Department of Veterans Affairs — might help a service member or veteran who’s considering joining the ranks of rental property owners. Here are nine things to know about VA mortgages and investment homes.

The ability to use a VA loan to purchase rental properties is not unlimited.

In fact, a would-be borrower needs to understand that it can be done only in these situations:

  • If the home is a duplex, triplex or fourplex, and the service member plans to live onsite.
  • If it’s a single-family home with an apartment that can be rented.
  • If it’s a home that the enlisted person lives in for a time, then elects to rent out after a move or (more likely) a transfer.

As with any mortgage, VA loan rates, fees and terms can vary widely from one lender to another.

That’s something Grant Moon, a veteran and reservist, wishes someone had told him when he used VA mortgages to acquire his two rental homes.

A vet or service member who doesn’t shop around “could end up paying tens of thousands more over the life of the loan,” says Moon, the founder and CEO of VA Loan Captain.

His advice is to get loan estimates from at least three to five lenders. And, shop around for an agent who understands the program, is a good communicator and can strongly advocate on your behalf.

As with any mortgage, VA loan rates, fees and terms can vary widely from one lender to another.

That’s something Grant Moon, a veteran and reservist, wishes someone had told him when he used VA mortgages to acquire his two rental homes.

A vet or service member who doesn’t shop around “could end up paying tens of thousands more over the life of the loan,” says Moon, the founder and CEO of VA Loan Captain.

His advice is to get loan estimates from at least three to five lenders. And, shop around for an agent who understands the program, is a good communicator and can strongly advocate on your behalf.

Buying rental property with a VA loan often means you’ll be an onsite landlord. Can you handle that?

“If you have your tenants living right next door to you,” says Danis, “they have nonstop access to you every time they have a complaint.”

But the closeness also can be a good thing. “If you’re onsite every day, you’re not going to have any surprises,” he says.

If you’re in the military or are a veteran and aren’t necessarily in the market for rental property, maybe you should be. A VA mortgage loan offers the possibility of renting out your home when you move or are transferred, so you may want to think of the rental potential of any home you buy.

Scout out smaller, single-family homes in neighborhoods with desirable school districts, says Elizabeth Colegrove, a military spouse who runs the website The Reluctant Landlord. She says those houses are easier to rent.

“If you’re in the right neighborhood, people will take a 1980s bathroom,” Colegrove says.

Research the local rental market, too. Are rents going up or down? Are people eagerly moving into or fleeing the area?

To get a VA loan for a multi-family building or a home with an apartment attached, the numbers have to work without factoring in tenant rent.

Applicants “have to qualify on standing income alone,” says Kevin Parker, assistant vice president of field mortgage operations for Navy Federal Credit Union.

The lender wants to be sure that you’ll be able to make those payments every month with or without renters.

With rental properties, things can go wrong. Sometimes in clusters.

“My horror stories came within the first year,” recalls Moon, of VA Loan Captain. One tenant moved in, paid rent for a couple of months, then just stopped. That same year, roofing repairs cost Moon $10,000.

“If you’ve never been a landlord, it will be quite the experience,” he says.

Prepare for problems by banking money — as much as you can. If a tenant moves out, the home needs repairs, or you get transferred and want to hire a management company, you’re covered.

One of the attractive features of a VA loan is that you’re not required to make a down payment. So, if you’re planning on being a landlord, “keep that money in your reserves,” Moon advises.

For any active-duty service member, the question isn’t so much if a transfer will come as when. You need to have a plan in place for your rental property.

“If you’re active duty and you get transferred out of state, you’ll need a rental company to manage it for you.” says Danis, of Residential Mortgage. From a distance, “it’s almost impossible to manage it yourself.”

Moon recommends vetting at least three different management companies – preferably long before you ever need them.

“The standard [fee] is 7-10 percent of the monthly rent roll,” he says. “Yes, you’re giving up a chunk. (But) it’s the difference between eating well and sleeping well.”

When using a VA loan for investment property, you need to ask yourself: Is it worth giving up part of your mortgage entitlement?

How it works: If you’re eligible for a VA mortgage, you’re assigned a set amount — called an “entitlement” — which can be as high as $106,025 in most parts of the country. Each time you buy a home, the VA insures 25 percent of the purchase, and that amount is subtracted from your entitlement.

Once the entitlement is used up — on one property or over several — you’ll have to rely on non-VA financing for any subsequent mortgage or refinancing.

Or, you can regain a portion of your entitlement by selling a property and repaying its VA loan.

Want to learn more about how to qualify for a VA mortgage? Here are five things you should know.

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Top 5 Water Conservation Tips for Property Managers

Thu, 03/23/2017 - 11:07am

Reducing water consumption has become more important than ever. This is especially true in areas that experience frequent or long term drought conditions. Many property managers find themselves under water use restrictions or increased prices on water overages. The good news is that there are many ways to reduce water bills that are not occupant dependent.

Optimize Flow: One of the major unseen water wastes in a home occurs due to old, water dependent equipment and pipes. While updating your property’s plumbing and water dependent appliances can be a major investment, it also can create big savings in the long run when factoring in water bills and added value to your property.

Rain Man: Collecting rain can seem like a complicated and seemingly unnecessary thing to do. However, rain collection is gaining traction with increases in drought spells and duration. Collected rainwater can serve as a vital supply for your landscaping. This can be especially useful if you fall under water restrictions by your water company during a drought. Check out this useful page on Wikihow detailing how to set up a rainwater harvesting system. It’s relatively simple and can provide for years to come.

The Great Outdoors: A beautiful, lush green lawn throughout the year is appealing but it also serves as one of the single biggest sources of water waste and expense. Check to see if your county offers rebate programs for switching to drought resistant landscaping. If so, that can be an added incentive. You can also update sprinkler heads and adjust watering schedules as a quick and easy way to optimize how much water goes to the lawn. For other landscaping

options, focusing on native plants can help reel in water use. Research which plants are naturally found in your area and plant them in place of non-native species. Plants that grow wild in your region will be less watering dependent as they are more apt to thrive off of the natural rainfall. Another attractive option is to explore the world of succulents. These are drought resistance plants that come in a variety of colors, sizes and textures and can really add panache to any landscape.

Skip the Drip: Even with newer plumbing, leaks crop up from time to time. Even more challenging than a leak itself is knowing if you have one. First, check fittings under sinks, behind toilets and your outside taps. Some fixes are as simple as a few turns of a wrench, while others may require a new fitting or new pipes all together. Even more challenging and costly however, are the leaks that you can’t see. Afterall, so much of a plumbing system is unseen. Leaking pipes left unaddressed can lead to water damage and worse, subsequent mold. These are the leaks that result in costly repairs and unhealthy living conditions.

Before you see a dripping ceiling or smell a musty bathroom, consider looking to new technology to help you avoid disaster. AquaTrip is a permanently installed system that constantly monitors the entirety of a building’s plumbing. AquaTrip saves money by curbing potential water damage, reducing excessive water bills and controlling the potential for mold overgrowth. You can learn more about AquaTrip by visiting or call 1-844-4-AQATRP to find out how you can join the Pilot Program for savings up to 50% off!


Golden State Flow Management (GSFM) is the exclusive distributor of AquaTrip leak detection systems in the United States. In bringing AquaTrip to market, we bring with us our twenty years of experience in the conservation, management and optimization of water and its revenue. We are proud of our legacy of providing superb service and collaboration to our clients. AquaTrip gives us a unique opportunity to leverage that experience within a larger market and to offer the property management industry a truly innovative and useful product.

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Landscape Tips To Help With Finding Home Buyers

Mon, 03/20/2017 - 10:56pm

A functional and beautiful kitchen, flowing floor plan, plenty of storage, and spacious master bathroom will help win buyers’ hearts.

However, often before they see those areas, they see your landscape. It’s the curb appeal theory that I’m talking about. Some buyers will decide based on the look of the outside of your home whether they’ll even bother to come inside.

If your front yard is cluttered, your exterior paint is chipped, driveway cracked, you’ll find that the for sale sign in your yard won’t attract as many buyers as it could if you spent some time to clean up and create curb appeal.

Fortunately, you don’t have to hire a landscape company to come and renovate the entire area. There are things that you can do that are fairly simple and will attract buyers.

Start by removing dead plants, shrubs, and debris. Doing this step will create space in your yard and allow you to find a few potted plants to fill in the empty space to bring some color into your yard.

If you get a lot of fallen leaves, make sure you have someone rake and sweep up regularly. Remember your home is on the market every day, not just when it’s being held open. So, keep it up daily. Just like when you go out to eat, you like to dine in pretty restaurants that are clean; buyers want to see your house in its best condition and that starts at the street.

Treat your lawn to a fresh coat of paint. It might sound odd but you can, indeed, paint your lawn. Large patches of brown lawn can lower the value of your home or turn a buyer off completely. It might not be practical to completely remove your lawn. So, you might try hiring a company to spray paint your lawn. Companies that do this can match the color of your lawn so that it looks natural.

Some cities have used this method to clean up lawns on foreclosed homes. Painting lawns has been used on commercial properties for decades. The paint is typically made from a non-toxic vegetable oil so it’s not harmful to people and pets.

Lawn paint is similar to dying your hair. It’s a semi-permanent color that stays on the grass and won’t wash off but it will fade over time, usually about three months.

Fix broken windows and dents in the garage door. Take a walk around the exterior of your home and note which areas need repairs. If you have paint chipped areas get them fixed. It’s likely that the cost won’t be that much and yet the payoff of repairing these items will help improve your home’s overall value.

Add a splash of color. I saw a home the other day that had a yellow front door and a matching yellow umbrella in the front yard. Frankly, I don’t remember much else about the landscape except that I thought the home was charming. The bright yellow door stood out and the umbrella made it seem quaint. Nothing else about the landscape was that spectacular, but adding some eye-catching color made the home shine.

The time and money you put into cleaning up your front yard will help attract buyers and keep them from bypassing your home.


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Mon, 03/20/2017 - 10:53pm

A new report by the National Low Income Housing Coalition (NLIHC) finds a shortage of 7.4 million affordable and available rental homes for extremely low income (ELI) renter households, those with incomes at or below 30% of their area median income or the poverty guideline.

The GAP: A Shortage of Affordable Homes finds there are just 35 affordable and available units for every 100 ELI renter households nationwide and that 71% of ELI renter households are severely-cost burdened, spending more than half of their income on housing. After paying their rent, these households have insufficient resources left for other necessities like food, medicine, transportation, or child care. They are often one financial set-back away from eviction and homelessness.

NLIHC conducts this research each year to assess the availability of housing affordable to different income levels throughout the country. “This year’s analysis continues to show that the poorest households in our nation face the largest shortage of affordable and available rental housing and have more severe housing cost burdens than any other group,” says Andrew Aurand, vice president for research at NLIHC and lead author of the report. “The shortage disappears for households higher up the income ladder.”

The report, based on 2015 American Community Survey data, presents the availability of affordable homes for renter households in each state, the District of Columbia, and the 50 largest metropolitan areas. ELI renter households face a shortage of affordable and available rental homes in every state. The supply ranges from 15 affordable and available homes for every 100 ELI renter households in Nevada to 61 in Alabama. After Nevada, the states where ELI renters face the greatest challenges finding affordable homes are California (21 affordable and available rental homes for every 100 ELI renter households), Arizona (26 for every 100 ELI renter households), Oregon (26 for every 100 ELI renter households), Colorado (27 for every 100 ELI renter households), and Florida (27 for every 100 ELI renter households). The affordable housing shortage for ELI households ranges from 8,700 rental homes in Wyoming to 1.1 million in California.

The NLIHC-led United for Homes (UFH) campaign calls for rebalancing federal housing expenditures, 75% of which currently benefit higher income homeowners, to invest in affordable housing for the poorest households. The campaign calls for changes to the mortgage interest deduction that would benefit millions of additional lower income homeowners and generate billions of dollars in savings for investments in affordable rental housing.



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Shopping for a home? You better act fast

Mon, 03/20/2017 - 10:50pm

If you’re out shopping for a home this weekend, bring your checkbook.

There may still be ice on the ground in much of the nation, but the spring housing market is the hottest it’s been in a decade. Consumer sentiment in both the economy and the housing market is rising and that is translating into strong demand from homebuyers. The trouble is, the supply of homes for sale is incredibly weak and getting weaker. What is for sale is selling fast.

The typical home that sold last month went under contract in 60 days, eight days faster than one year ago, according to a new report from Redfin, a real estate brokerage. Nearly 15 percent of all homes listed for sale in February were off the market within two weeks, up from 11.7 percent last year. This is the fastest February market Redfin has recorded since it began tracking in 2010.

The speed and the competition are combining to push home prices higher. Redfin recorded a 7 percent annual jump in median sale prices in February. Homeowners now have a lot of equity. In fact, total home equity hit a new peak at the end of last year, according to research by the Federal Reserve.

“While great for homeowners, continuously strong price growth across the U.S. since 2012 has posed significant challenges for first-time buyers, especially given such low supply in affordable price-tiers,” said Nela Richardson, Redfin’s chief economist. “There is a silver lining on the horizon, however. Rising prices and increased equity may tip the scales for homeowners who have been delaying their decision to move up, which could add much-needed starter-home inventory to the market.”

More homeowners think now is a good time to sell, according to the latest housing sentiment survey from Fannie Mae. More also consider now to be a good time to buy as well, but the same is not true for renters. Confidence in home buying is slipping among renters as affordability sinks.

“Inventory conditions are even worse than a year ago, and home prices and mortgage rates are on an uphill climb,” said Lawrence Yun, chief economist for the National Association of Realtors. “These factors are giving many renter households a pause about it being a good time to buy, even as their job prospects improve and wages grow. Unless there’s a significant boost in supply levels this spring, these constraints will, unfortunately, slow or delay some prospective buyers’ pursuit of purchasing a home.”

Regionally, Seattle was the fastest market in February, according to Redfin, with nearly half of all homes going under contract in just 12 days. Oakland, California, and Denver followed with 15 and 18 days on the market, followed by San Jose, California, (21) and San Francisco (28). The majority of those homes sold above list price.

As for supplies, Rochester, New York, had the largest decrease in inventory, down 42 percent compared to a year ago. Buffalo, New York, down 38 percent; Seattle, down 35 percent; and Omaha, Nebraska, down 35 percent; also saw far fewer homes available on the market than a year ago.

On the bright side, Provo, Utah, saw the biggest jump in listings, up 31 percent from a year ago, followed by Knoxville, Tennessee, up 22 percent; and New Orleans, up 16 percent.


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The Downtown Comeback: 7 to Watch

Mon, 03/20/2017 - 10:46pm

The downtown resurgence is reaching across the country. In the post-World War II era, Americans fled urban areas in favor of the suburbs. That left many downtowns to face some neglect, rising crime, and industrial decay,® notes in a recent article. But it’s a new day for the American downtown.

Redevelopment since the mid-1990s are putting more downtowns back on the map. Vacant office buildings are being transformed into loft apartments and empty storefronts are becoming trendy cafes. More major companies are moving their headquarters back to downtowns too. All of this combined, property values are getting a boost.

“People, young ones especially, love historical buildings that reintroduce them to the past,” says Dan Cort, author of the book Downtown Turnaround. “They want to live where they can walk out of the house, work out, go to a café, and still walk to work.”®’s research team delved into the data of the nation’s 200 largest cities to find the downtowns that are seeing the most growth lately. They considered such factors as residential population growth of downtowns since 2012; the number and growth of restaurants and retailers; vacancy rates; number and growth in jobs; and home price appreciation since 2012.

The following cities made®’s top seven (listed along with the median home prices in each downtown as well as home price growth):

1. Pittsburgh

  • Median home price in downtown: $353,000
  • Home price growth since 2012: 31%

2. Indianapolis

  • Median home price in downtown: $309,400
  • Home price growth since 2012: 20%

3. Oakland, Calif.

  • Median home price in downtown: $688,000
  • Home price growth since 2012: 111%

4. Detroit

  • Median home price in downtown: $219,900
  • Home price growth since 2012: 150%

5. Columbus, Ohio

  • Median home price in downtown: $272,000
  • Home price growth since 2012: 20%

6. Austin, Texas

  • Median home price in downtown: $395,500
  • Home price growth since 2012: 6%

7. Los Angeles

  • Median home price in downtown: $617,500
  • Home price growth since 2012: 63%



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7 Steps To Increase Rental Property Cash Flow – Part I

Mon, 03/20/2017 - 12:21pm
7 Steps To Increase Rental Property Cash Flow

When it comes to owning revenue property one of the key aspects of being successful is ensuring you have sufficient cash flow to cover contingencies and to generate income.

The problem is, if you haven’t been in the business very long you may not know what you can do to increase those revenues. Well in this article I hope to give you several ideas to help you increase your rental property cash flow.

Not all of these are feasible or even applicable to everyone reading this, but I’m sure there will be a couple gems in here or perhaps realizations in here that will open your eyes to opportunities that you’ve overlooked, or may not have been aware of.

But before we start, let’s break down cash flow a little bit more and discuss what it is.

Cash Flow 101

When I work with new landlords, one of the first areas to look at with income properties is cash flow. If a rental property doesn’t create solid positive cash flow almost from the start, it can create a dangerous scenario for a landlord.

Too often, especially in hotly appreciating Real Estate markets investors get too wrapped up in simply acquiring property as the growth in values easily offsets the break even or even negative cash flow.

The reason I know this is because I was that investor way back!

We bought property after property with our eye on appreciation. If it broke even or made cash flow awesome, if it was negative cash flow we had other properties generating income to offset it.

We believed that the continuous growth in value was our winning ticket. And it was. Until 2007…

Suddenly the break even properties were now losing money as rents decreased due to lower demand. the negative cash flow properties became even more negative and even the properties that were positive cash flow started flowing less.

It created a scary scenario and we had to liquidate many properties at a loss to regain our balance and some we had to simply cover the monthly losses as there simply wasn’t enough equity to sell them. It was a harsh lesson, but a lesson none the less.

The lesson being Real Estate markets don’t always go upwards and appreciation may not always be there. However, positive cash flow properties help you through bad times and become even better in good times.

If we didn’t have as many strong positive cash flow properties as we did at the time, it would have wiped us completely out. In hindsight, we also realized if we had focused more on how to increase rental property cash flow initially, rather than buying with abandon we would have come through the downturn relatively unscathed.

It was a very important lesson about cash flow and the main lesson is Cash Flow Is King.

So What’s Cash Flow

I’ve previously written an article explaining the real Cash Flow from a property which you can find here, Do You Really Understand Cash Flow? It covers some of the misunderstanding new landlords have about cash flow and gives, in my opinion anyway, a more accurate way of how you need to evaluate cash flow.

Basically your cash flow is the money you have left over after you’ve deducted all of your expenses from your income. Rental income less mortgage payments less insurance less taxes less  less HOA or condo fees less reserve funds less vacancy funds. (I break out reserve and vacancy funds in the other article I linked to just above, if you haven’t read it yet, you may want to jump there and come back.)

If your cash flow is a positive number after all of your deductions you’re in the black, life is good and the bigger that positive number the happier place you can be in.

If however, the number is negative, you are in the red and need to seriously re-evaluate the property.

If your cash flow is negative you need to do one of two things. either sell the property, or increase the cash flow so it’s no longer negative. Alternatively you could feed the hungry little alligator that eats away at your savings and your sanity and let it fester and nag away at you, but trust me, the sooner you can cut it loose and move forward the better.

So after my extensive preamble are you ready for the most common way yet least done way to increase your cash flow?

Increasing Rental Property Cash Flow – Method One

When was the last time you raised your rents? Earth shattering idea isn’t it?

Disappointingly enough, that is the number one way to increase your cash flow. By simply increasing the amount of income coming in from your tenant.

Unions negotiate yearly cost of living increases into their contracts, inflation eats in to our yearly earnings and even rent controlled areas typically build in allowable yearly rental increases to their programs. Why aren’t you incorporating increases into your business?

Taxes, insurance, bank fees, utilities they all keep going up and rather than shouldering the burden of these increases on yourself and your property, you need to pass at least a portion of these onto your tenants.

You’re already providing shelter and a safe comfortable home for people, you don’t need to shelter them from the real world and the real world of increases and costs that you have to deal with in your landlord business.

Now, if you’re providing zero value to your tenants and your properties are at slum level or barely above, you shouldn’t be reading my content. My content is for landlords looking to provide good rental properties and to improve their financial situations.

If you’re a landlord that provides value in the form of safe secure comfortable rental properties that are well maintained, you shouldn’t have a problem increasing rents as your tenants most likely understand the value you are bringing to the table.

And if they don’t, perhaps they aren’t the tenants for you?

Fears, Fallacies and Fallout From Increasing Rents

Increasing rents on your tenants can be a bit challenging for some landlords usually due to fears that are often over blown. The most common fear being, if I raise the rent the tenants will move.

It’s true, some tenants may leave you. Depending on the type of tenant they are, that can be a bad thing, or it could be a good thing. If you have good tenants, have properly positioned the increase, are increasing a reasonable amount and are providing good value for the tenants, it won’t usually be a problem.


Again, if your increases are reasonable and inline with the market it’s much easier for tenants to stay where they are than to incur the expenses involved with moving and they understand this.

If you’re like many landlords I talk to who haven’t raised rents in years the property may be renting out significantly under market and you’ve been leaving a lot of money on the table. Suddenly increasing the rent 20 or 30% to get it back up to what everyone else is currently charging may indeed be too excessive and may require a slow and gradual increase.

Raising rents to market rates does not make you a bad person, much like lowering your rates when the market is filled with vacancies doesn’t make you a great person. You’re simply a business person running a business that you need to keep profitable and if you fail at it the results affect not just the tenants you have, but your family as well.

Rent Increases And The Laws

This might be the only catch you have to watch out for. Depending on where your rental property is located you may have different rules and regulations pertaining to rent increases.

Increases may be dictated by rent controls, limiting how much you can increase per year. These increases may also not be cumulative, so if you miss out on a year, you never have the opportunity to increase that amount again.

Increases may be dictated by how often you can raise rents. In my area we can only raise rents once every 365 days. So if I discover I under valued the rents on my property when a tenant moved in, I need to wait a full year before I can increase the rent.

There may be caps on the amount rent can be increased. Local regulations may cap increases at a set percentage every year or even a dollar amount.

There may also be certain time frames for rent increases. You may require a full three months notice, or only 90 days from the notice period. Or it could be as long as six months or as little as 30 days.

Understanding local laws and regulations is part of being a responsible landlord. You need to find out these types of details so that any rent increase you provide to your tenant doesn’t get over turned through courts, landlord tenant hearing systems or any sort of tenancy tribunal systems that your area has in place.

Not understanding these rules could cost you not only your increase, but could also lead to additional fines or penalties for breaking the laws. So know your rules!

Wrapping Up Rent Increases

The last word about rent increase is that what goes up, must come down. Rental markets are not static, they do tend to change and you need to stay aware of what is going on with your local market.

If you’re in a smaller town or city where unemployment is growing and people are leaving the city you will soon see vacancy rates increase causing landlord to have to become more competitive with their rents.

This may require rent decreases to keep or acquire new tenant.

Bigger cities tend to be more stable, but examples of places like Detroit come to mind where unemployment went through the roof and vacancies sky rocketed.

If you’ve been diligently raising your rents when times are good and building up reserves and cushions for when times are bad you’ll be in a much better situation to when or if the market does slow down.

So do yourself a favor and start evaluating similar properties to yours today and see if you have some ground to make up and some rents to increase!

Increasing Rental Property Cash Flow – Method Two

Now the big question, have you, or are you considering increasing your rents after step one?

Remember, not all of the steps I’m providing can work for all landlords. You may have already been raising rents every year, you may already be doing several of the upcoming steps already, but I’m hoping a few of them are eye openers to you.

The important take away from all of this is you really need to treat your landlording as a business. This has been a continuing theme I’m always trying to impress upon people visiting my site.

If you treat this as a business you will be happily rewarded over time. And with any business increasing revenues (or at the very least maintaining the same level of profitability) is key to long term success and growth.

So after that preamble, lets talk about the second step for increasing your rents.

Increasing Your Cash Flow With … Garage and Parking

My ideal residential rental property is an up down suited property with a detached garage. With this type of property I have two suites, the upper and lower units, plus I rent the garage out separately for a total of three revenue streams.

The price for an upper unit with or without a garage is quite often the same as many landlords don;t break it out, but by separating the garage out as a separate unit I can generate anywhere from an additional $100 per month for a single dirt floor garage up to $350 per month for a two car heated garage. Your mileage can vary depending on where you’re located!

For my property with the large garage, that’s an additional $4,200 of income a year or almost three full mortgage payments. For the property with the small garage, it ends up being just over one mortgage payment a year. All with minimal extra work.

Soooo, do you currently have garages that you simply give away to your tenants? Which means you could be leaving multiple thousands of dollars on the table each year?

It doesn’t end there though, depending on your property you may have additional or different space to rent out. If your rental property is near a downtown core where parking is limited and  and expensive and street parking is restricted that extra parking pad at the back of your property may be very valuable.

I know of landlords within walking distance of our downtown core that get $300 and more for an off street parking spot which is a steal as parking in the core can easily cost $20 or more per day and covered heated parking is often $600 or more per month. That works out to $3,600 per year of additional income.

Recreational vehicle parking is also a huge opportunity. I remember viewing one property years ago that was on a large lot, had a two car garage and had an extended parking pad that ran down the side of the house.

The landlord there rented out the two suites, the detached garage and also rented out the back half of the parking pad to someone with a motor home for a total of four income streams on one property.

Now this wouldn’t work for every property, but what about yours?

Who Rents Garages and Parking?

When I broach the subject of garage rentals one of the questions I often get is who would rent a garage, or even a parking space? Well it’s often surprising or perhaps not when you look around.

If you’re targeting working class neighborhoods for your rental, which in my opinion are the best areas for rentals, you have droves of potential clients around you.

Whether it’s the mechanic who does side jobs and needs a place to work on or store vehicles, the woodworker who has far too many tools for his garage and needs a shop to the fellow who still has his Pontiac Firebird from high school and needs a place to store it so his wife can park in the garage during the winter, the list goes on and on.

I’ve rented garages out to tenants who use them to store vehicles to a handyman who stored all of his stock to a contractor who stored his equipment, additional vehicles and trailers in a garage. All to people who usually live within a few blocks of the property and like the convenience.

For the RV parking many cities have bylaws in place prohibiting street parking for trailers or motorhomes or restrict how long they can be stationary. With RV storage lots being further and further from cities due to the cost of land and the monthly prices going up as well, having something within your district suddenly becomes very attractive.

The more you think about it the more options and reasons there are someone may want to rent your local space. Even if it’s just for storage, whose costs also keep going up!

Long Term ROI With Improvements

Now you may be thinking this doesn’t apply to you as you don’t have a detached garage, or you don’t have a parking pad, but what if you added one? Or both?

There are many factors you have to work through to even see if this is possible, but if it is the most important one is would it be worth it? Maybe this is time for a little bit of math exercise by doing some dollars and sense?

Does it make sense for you to put money out to improve the property? To start you need to figure out how much rents would be for a garage or parking space. you can do some research on Craigslist or local papers to see if you can get a going rate for these types of spaces and then determine the yearly income it would generate.

If you see a typical single car garage rents for $125 a month that would be $1,500 worth of income per year.

From there how much would it cost to build a single car garage?

Prices vary every where, but let’s say you could get a simple garage in your region built for $5,000. Nothing fancy, but still worth $125 per month. In about three years and four months you would have that garage completely paid for and it would be generating a profit each month.

On top of that, the $5,000 investment could have added $5,000 or more to the value of the property. This makes it a win on multiple levels as you’ve increased the cash flow and the value of the property.

Now if this same garage cost $10,000 to build it would take almost seven years to recoup your investment, so it may not be quite as glamorous, but at the same time if it added $10,000 or more to the value of the property it may well make sense. The $125 per month may even cover any financing costs during that time making it an even swap initially.

It all comes down to the numbers. Maybe a garage doesn’t work but a parking pad does!

Wrapping Up Parking

Are you starting to think differently yet? Are you seeing some additional revenue ideas in your head yet? There are multiple ways out there to maximize your rent and we’ve barely started.

Oh, and if you currently rent out a garage or parking space, or plan on it, tell us about it in the comments at the bottom.

Increasing Rental Property Cash Flow – Method Three

We’re moving right along here with thoughts on improving your cash flow for your rental property, but now it’s time to look at an aggressive way to increase your cash flow almost immediately.

Now this isn’t for everyone and it may be exactly the wrong thing for some of you to do depending on how long you intend to keep your property, how long you’ve owned the property, how close it is to being paid off and and how old you are.

However, if you need to increase cash flow now to improve your situation this may be the solution you were looking for.

Now we’re talking about re-amortizing your current mortgage!

Understanding Amortization

Amortization refers to the length of your mortgage and these are often a 25 year term, although there are also 10 year, 15 year and even 30 year terms available in many places.

The longer the term, the lower the associated payment, but at the same time, the more interest you pay in total!

The important part to understand though, or really the two important parts, is that if you lower your monthly payments, you increase your monthly cash flow and it’s actually your tenants paying the extra interest.

The point being, if cash flow is your priority this is one of the quickest ways to increase cash flow.

Of course with any mortgage product there are likely other factors to look at as well. If you break your current mortgage, will it involve a penalty. Does the longer term work for your end goals. Will you get less favourable interest rates if you change the mortgage and much more.

Ultimately it is not something that works for everyone, especially if you’re priority is to get the mortgages paid off and then live off the eventual equity when retiring. So understand your personal plan.

Increasing Rental Property Cash Flow – Method Four

Not all methods to improve cash flow can be done immediately. Sometimes you have to wait for a vacancy or new tenants and it’s during those times you can really capitalize on some steps that can ensure a long term increase in cash flow.

Updates and Renovations

Over the years we’ve always targeted the better quality tenants in the market place for multiple reasons.

First better quality tenants tend to provide fewer headaches to us as landlords. They pay on time, they communicate better and they tend to stay longer. All great things.

Second, better quality tenants tend to treat the properties they live in better meaning less maintenance and repairs for us, fewer vehicles parking on the grass and generally better relations with neighbours.

To attract those better tenants though, we need to make our properties stand out from the competition.

At the very least this means new paint to freshen the property up and create a modern look. From there the next upgrades include flooring and then onto bathrooms and kitchens.

New carpet, laminate or even vinyl flooring can improve the look, the smell and the appeal of a property and can help ensure you attract the right tenants.

Upgrading the kitchens and bathrooms with newer faucets, countertops and even toilets also contributes to creating a space that stands out and attracts more tenants to the property.

But the big question is, What does this accomplish?

Well, if you have a nicer property than your neighbours rental, you can charge a bit more. We’ve been safely charging 10% premiums for our properties for years and this premium means extra cash flow right in our accounts.

It also helps you fill the property faster. It’s not uncommon for people to stop by our rentals and immediately remark how it’s the nicest they’ve seen and that they simply want it! That saves you time by reducing the time spent showing and reduces vacancy time.

Finally it also self weeds out the tenants looking for the cheapest places. If I’m priced $50 or $100 more than the competition the low end tenants don’t even bother calling as it’s already out of their price range. This saves me money and headaches long term which all contribute to my cash flow!

Wrapping Up Renovations

Before you start planning granite countertops and new hardwood for your rental, remember there are limits.

Regular rentals simply don’t require granite and it could take years to recoup replacing your flooring with high end hardwood, so make sure you work within the numbers to make your property successful.

If you can put $5,000 worth of renovation in place and in return your rent bumps up $200 more per month you will get your money back in just over two years. If you already make good cash flow from it to begin with it could pay for itself in one year or less!

We finished a renovation on a property this past summer that cost us just over $6,000 and involved a complete repaint, new floors and a redone bathroom complete with tile and since we generate around $500 per month cash flow it will pay for itself in a year!

After that year the extra income and the tenant who loves the property will pay us back for years to come.

The next 4 steps will be provided on Friday March 24, 2017. 




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AquaTrip: A New Level of Control for Your Properties

Mon, 03/20/2017 - 10:54am

Water damage, leaks and mold are the cause of major headaches for many in property management. More than inconvenient, they are often expensive and time consuming to repair. According to insurance industry data, pipe failures are the leading cause of water damage, costing an average of $5,000 per incident to fix with toilet overflows and leaks coming in a close second. While fire is often thought of as the most devastating and worrisome to many property managers, according to Travelers Insurance, water damage is ten times more likely to occur.

How do You Protect Your Properties?

AquaTrip is a permanently installed leak detection system that constantly monitors the entirety of a building’s plumbing. If an abnormality is detected, AquaTrip is able to shut off the water supply and maintenance will be notified of the issue. AquaTrip saves you money by curbing potential water damage, reducing excessive water bills and controlling the potential for mold overgrowth.

Using cutting-edge technology, AquaTrip is able to monitor even the lowest of flow rates while also being programmable to normal water consumption for its building. It is able to detect abnormal water flow due to leaks, plumbing emergencies or a faucet that’s

been left on. AquaTrip is equipped with an automatic shutoff valve that allows it to stop water flow upon detecting an irregularity. AquaTrip alerts the assigned point of contact for the building to the flow irregularity so it can be addressed promptly. When water is needed or ready to be supplied again, AquaTrip is easily switched back on.

AquaTrip provides a unique level of value for property managers. It prevents and curbs expensive and inconvenient water damage from taking place while also saving money on water bills by detecting even minor leaks. This cuts down on service calls and helps to save on expensive off-hours plumbing charges. Additionally, AquaTrip’s versatility

allows it to work on even older plumbing systems, giving you a window of control over aging pipes, too. AquaTrip’s ability to curb water damage and assist you in addressing leaks early on, has the added benefit of controlling mold overgrowth in your properties.

Join our Pilot Program today and get up to 50% off AquaTrip for your properties. Call 1844-4-AQATRP (844-427-2877) or visit us online at

Golden State Flow Management (GSFM) is the exclusive distributor of AquaTrip leak detection systems in the United States. In bringing AquaTrip to market, we bring with us our twenty years of experience in the conservation, management and optimization of water and its revenue. We are proud of our legacy of providing superb service and collaboration to our clients. AquaTrip gives us a unique opportunity to leverage that experience within a larger market and to offer the property management industry a truly innovative and useful product.

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Why Your Home May Not Be Selling, Even in a Seller’s Market

Thu, 03/16/2017 - 10:49pm

Houses are selling fast in your city, so you think yours will be easy to sell – and for top dollar. Never mind all that advice about curb appeal because these days anything is selling, right?

Well, not quite.

Even in a seller’s market – which many major U.S. cities are currently experiencing – some homes linger on the market for weeks or months, while the homes around them go into contract within days.

“If you haven’t gotten a contract after six showings, you’ve got to go back and see where the weakness is,” says Sissy Lappin, a real estate broker in Houston and founder of, which provides marketing tools to sell your home without an agent.

The answer almost always comes back to two variables: price and condition, though marketing can also play a role.

“If the house is priced right, it will sell, regardless of its condition,” says Pierre Shaheen, a Redfin agent in Hollywood, Florida. “Usually when the property doesn’t sell in a hot market, it’s the way the property is priced or the way it’s exposed,” Shaheen adds.

That exposure, or marketing, includes both modern and old-fashioned tactics. High-quality professional photos and easily accessible information help sell a home. But so do listing agents who know the neighborhood, says Lappin – although these days few prospective buyers ever meet a listing agent, since most homes use lockboxes where buyers’ agents can get the keys for a tour.

“Eighty-four percent of all homes are on a lockbox,” Lappin says. “I call this the dirty, disgraceful secret in real estate.”

A selling agent used to open all the drapes and blinds and make sure the home looked inviting before the prospective buyers walked in. Today, the blinds may stay closed, leaving the home’s first impression a dark and vacant house.

“A book is judged by its cover, and you only have one shot to make a good impression,” Lappin says. “It has to be light and bright and happy.”

Price, of course, is also important. Too many sellers set the price based on what they want to get for their home rather than what comparable homes are selling for. Or, they deem a home with a new roof and air conditioner updated, even if it still has a 1970s kitchen and bathrooms in need of renovation.

“You’ve got to price a home based on sold homes, not actives,” Lappin says. “You’ve got to look at the facts.” Today’s buyers have access to enough information via websites, apps and online home valuation tools to know what a home is worth before they come to look at it.

A home that’s not updated will sell – but only at a price that reflects its condition. “That’s not going to scare a buyer away because we’re going to present it at a price that reflects that it needs to be remodeled,” Shaheen says.

Even in a hot market, removing clutter, sprucing up your home’s curb appeal, opening curtains and using professional photos in the listing will help it sell faster. “You have to make the home look as presentable as possible,” Shaheen says.

Here are seven reasons your home hasn’t sold yet.

The price is too high. Any house, in any condition, will sell – if the price is right. But buyers expect discounts for dated kitchens, old plumbing, bad paint colors and, yes, even clutter. The danger of setting a price too high and then dropping it gradually is that when a home stays on the market too long, especially in a fast market, buyers assume there is something wrong with it and don’t even look at it. Your best bet is getting the price right the first time.

Your home is dark. A dark, vacant house does not give a good first impression. Closed drapes, dark paneling and an excess of dark leather furniture may not create the cozy look you intended. “When you walk in a home, you want it to make you feel good,” Lappin says. “It’s a dark, gloomy home, and it sets the immediate tone.” She often advises sellers to lighten up the space by painting dark paneling or cabinets white and removing big furniture and clutter.

Prospective buyers can’t get in to see it. If sellers restrict when their home can be shown, require a lot of notice or otherwise throw up roadblocks to buyers getting in, that makes the home harder to sell. Requiring prospective buyers to make numerous phone calls to get an appointment can also be a problem, as are listing agents who aren’t available when someone has questions.

The listing photos are bad. Many agents, including those at Redfin, hire professional photographers for photo shoots as part of their marketing services. Because most homebuyers use those photos to determine which homes to visit, the quality of photos can be crucial. “I’ve seen pictures of homes where there is so much clutter,” Shaheen says. “You have to clean stuff up. When we take a picture of the kitchen, the counter is completely empty.”

Your home is dated, and the price doesn’t reflect that. Lots of buyers will accept a home with original kitchens and baths – if the price is discounted to reflect the work they will have to do. But they won’t pay top dollar for a house that is not in top condition.

The home is uninsurable. This is an issue especially in states such as Florida, where you can’t get homeowners insurance without an inspection of the electrical, plumbing, roof and cooling system. But even in other states, insurance companies often refuse to insure a home that doesn’t meet basic standards. This cuts the pool of buyers down to those who can pay cash and then renovate the home to meet the insurance requirements.

Lenders won’t lend on the home. The Federal Housing Agency is particularly picky about what standards a home has to meet before it will issue a mortgage. But other lenders may also set guidelines on the condition of roofs, electrical systems or other components. If these parts of the home are in poor condition, a lender may not be willing to lend to a buyer interested in the home.



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5 Tips for Whipping Your Home Into Showing Shape

Thu, 03/16/2017 - 10:31pm

It can take a lot of work to prepare a home for the market, and the number one piece of advice for homeowners who are getting their home ready for showings and open houses is to get organized. You’ve cleaned. You’ve made repairs, freshened the landscaping, brought in fresh flowers and you’re ready for your photo shoot. At last, you’re ready to list your home.

The problem for most sellers, however, is that it can be almost impossible to keep your home in this condition at all times. And there will inevitably be last-minute showing requests that will leave you scrambling to accommodate them. The best way to keep your sanity and always make sure you’re putting your best foot forward is to get organized and make a plan ahead of time.

Here are five things you can do to get your home in shape for a showing.

1) Do a walk-through of your home. Identify all of the items that need to be put away. You’ve probably already decluttered and moved some items into storage, but there are still things you need on a daily basis that you won’t necessarily want on display for showings and open houses.

Clear off countertops and tables of personal items particularly in the kitchens and bathrooms. These could be an overabundance of countertop appliances, tooth brushes, cosmetics or family photos that you aren’t quite ready to pack up yet. Make room in your pantry, cabinets or storage areas so you can quickly and neatly tuck these items away, and pull them back out again when the showings are over.

If you have kids, you might want to invest in a few extra storage bins so toys can be easily tossed in and then hidden out of sight.

2) Keep a stash of clean linens handy. A set of clean white towels for each bathroom can be set aside and brought out right before a showing or an open house. You can even keep a fresh, neutral bed spread and extra throw pillows in the linen closet to be ready at a moment’s notice. A freshly made bed with crisp white linens makes bedrooms feel more welcoming to potential buyers. You may have just rolled out of bed and ran out the door to make way for a showing request, but you definitely don’t want potential buyers to know that.

3) Stay on top of general cleaning. If you put off regular cleaning, it can be overwhelming when you’re in a time crunch. Showing a clean home is of utmost importance. Nothing can turn off a buyer faster than a home that’s dirty and disorderly. If you’re able to keep up with general maintenance it will save you time and headaches. When your agent calls for a showing, you’ll just need to wipe down the counters and throw the dirty dishes in the dishwasher before you’re ready to go.

4) Lock up your valuables. You never want to have to worry about your possessions going missing during a showing or an open house; although, unfortunately, it can happen. Even the most experienced and diligent real estate agent may not be able to keep her eye on everyone and everything at all times. For peace of mind, it’s always best to lock up your valuables including jewelry, small electronics and items of sentimental value.

5) Put on the finishing touches. Fresh flower arrangements, a bowl of colorful fruit in the kitchen or a crisp white orchid in the bathroom can actually make a difference in the way your home shows by adding color and personality in a very neutral way. If you have time, open doors and windows to bring in fresh air, or light a few fresh-smelling candles. Keep everything neutral and avoid strong smells that could turn some people off.

Selling your home can be stressful but you’ll be better prepared to tackle the unexpected and present your home in the best light if you are organized and have a plan.



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Guide for the Perplexed Investor – How Do I Achieve a Clear Title When Purchasing Distressed Property from Tax Deed Sales?

Thu, 03/16/2017 - 3:20pm

Clear title to real estate often requires a quiet title process and a court proceeding.   Purchasing real estate through tax deed sales can be lucrative for investors and anyone hoping to purchase a home at a discount. Just do the simple math and check out the comparable sales in the neighborhood. Tax deed sales, though, require several steps before an individual can claim full ownership of a property.

A tax deed purchase provides the buyer with bare legal title to the property, but it is not necessarily a clear and marketable title. You must consult with a title insurance company officer. Will they insure the title in its current state or do you need to take additional steps to remedy the title situation? If not, you many purchasers have to file a quiet title action to clear the title.

Follow that up with a consultation with an experienced real estate attorney. In many cases, properties that are sold through tax deed sales are also affected by other liens, including mortgage holders and prior judgment lien creditors. There could be prior IRS tax liens showing up on the title.

To obtain clear title, the buyer must complete the following step-by-step process that addresses these claims on the property. You must take affirmative action because it is your property.

  1. Read through the records provided during the delivery of the title after purchase. These records could list some liens on the property, but they are not required to list all claims on the property. Obtain a formal property profile and preliminary title report from 2 sources.
  2. Hire a lawyer and consult with a reputable title company to conduct a title search and analysis of the state of the title to the property. Conduct several period checks to see if additional items have appeared on title.
  3. Wait until the end of the time period for challenges if the title search determines that there are claims by other parties on the property. Parties with potential claims on the property are allowed only a limited   amount of time to challenge your right to the property. In California, prior title owners have one year to challenge the sale to complete a redemption. A challenge is determined through a court proceeding, and parties are limited in terms of the grounds upon which they can base a challenge.
  4. Use an attorney to file a quiet title claim with the county court in the county where the property is located. Individuals can file quiet title themselves, but it is recommended to use an attorney. If the title is in the name of an LLC or corporation or trust, you must use an attorney in Court.
  5. Pay any necessary quiet title-filing court fees to the county court clerk, and pay a process server to serve all interested parties on the title or who may claim an interest in the property. After the quiet title action is filed, you record and serve a lis pendens notice.
  6. You have the burden of proof and persuasion to prove in court your right to a superior claim to the property. Other parties with a claim on the property might not contest your quiet title claim if they do not believe they have a claim that is superior to your claim, and a tax deed purchase may provide a solid foundation for receiving clear title in comparison to most other encumbrances. Other parties may challenge your claim, and could file a counter suit or cross- complaint.    If the court rules in your favor, you have clear title to the property.

Tip for the wise: You can and should perform a title search before you purchase a property to avoid buying properties with other claims against them.  It is recommended to get a title report from 2 reputable title companies or title sources to cross-check the information and make sure you have complete title information.

If you prevail in the quiet title action and any cross complaint filed against you, then you must record the judgment in the County where the property is located.   If no party appeals the judgement or otherwise successfully challenges the trial court ruling, then you are on your way to achieving clear and marketable title.   


Copyright 2017 Nate Bernstein, Attorney at Law. LA Real Estate Law Group. All Rights Reserved.

The author of this article, Nate Bernstein, Esq., is the Managing Counsel of LA Real Estate Law Group, and a member of the State Bar of California and his practice concentrates in the areas of complex real estate litigation, commercial litigation, employment law, and bankruptcy matters. The contact number is (818) 383-5759, and email is  Nate Bernstein is a 22 year veteran Los Angeles real estate and business attorney and trial lawyer. Mr. Bernstein also has expertise on bankruptcy law, the federal bankruptcy court system, creditor’s rights and debtor’s bankruptcy options. He previously served as Vice President and In House trial counsel at Fidelity Title Insurance Company, a Fortune 500 company, and in house counsel at Denley Investment Management Company. Nate Bernstein created, a leading educational resource on quiet title real estate litigation. Nate Bernstein is a local expert on real estate law and economic trends in the real estate and leasing market, business law, and bankruptcy law. Nate has personally litigated more than 40 major real estate trials, and has settled more than 200 complex real estate and business cases. 

Any statement, information, or image contained on any page of this article not a promise, representation, express warranty, or implied warranty, or guarantee about the outcome of a legal matter, and shall not be construed as being formal legal advice. All statements, information, and images are promotional. All legal matters are factually specific, laws change on a daily basis, and courts interpret laws differently. No express or implied attorney client relationship shall be inferred from any statement, information, or image contained any pages of this website. No attorney client relationship is formed until the client or the client’s representative, and the attorney signs a written retainer agreement.

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A 27-year-old realtor and landlord explains the 4 things to look for in a good investment property

Thu, 03/16/2017 - 2:15pm

Dana Bull and her husband bought their first home, a condo in Salem, Massachusetts, just nine months after graduating college.

But after deciding they wanted to be in Boston instead, where most of their friends were living at the time, they rented out the condo and used the income to cover rent and expenses in the city.

“[I]n our first two months of being landlords we had a mouse problem and one of the guys put a shot glass down the disposal, so we had our first taste of it [then],” Bull, now a realtor with Sotheby’s International, told Business Insider.

“But ultimately, we were like ‘You know, it’s frustrating to have to deal with the maintenance and have this whole other thing that we have to worry about … but it’s a lot easier than our full-time jobs, which are extremely time-consuming and stressful … so we started thinking, ‘Hey, maybe there’s something here,’ and that was really where it all started.”

Today, the couple earns passive income from their six homes and 18 apartments in Boston and the North Shore.

Despite working in one of the most expensive rental markets in the world, Bull says there are four important things every investor should consider in a rental property, regardless of location.

1. Projected income

If you’re getting into real estate investing, you’re probably hoping to get a nice return. But at the bare minimum, you want to cover that monthly mortgage payment. So how much rent should you plan on charging? Bull says she always goes by the 1% rule.

“Basically … if you are buying a property for $400,000, your hope is to ultimately be able to get $4,000 a month in rent. So that’s where you get that 1%. You’re buying for $400,000 and your monthly income is $4,000,” she said.

In some parts of the country, where property is less expensive and rents are higher, she says you may want to go by the 2% rule.

2. Current tenant situation

One of the first things to take note of at a potential investment property is the tenant situation. You don’t want buy on a whim and get stuck in a nightmarish situation.

“What’s going on … Are they tenant at will? Are they under market? Do they pay? Get some clarity around that,” she said. “Some of these properties, they get really bad in terms of hoarders and just mis-managed, bad situations. So try to wrap your head around what’s going on there.”

3. Overall condition

“It’s impossible to find a perfect property,” Bull says, so be aware of what needs fixing and whether you’re prepared to shell out the money and time to get it done.

“A new roof? OK it’s expensive, but it’s not hard to do. It can be done in a matter of a week or two,” she said. “Re-plumbing an entire house? That’s a different story.”

4. Utilities

If you’re looking at multifamily property, like an apartment building or a duplex, you’ll need to find out if the utility systems, like water and electric, are separate for each unit or lumped into one, she said.

You’re in the clear if the systems are separate, but if they’re not, then you’ll likely have to pay to separate them or foot the bill every month for the whole building.



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7 Steps To Marketing Your Luxury Vacation Rental Online

Thu, 03/16/2017 - 11:04am

The dramatic rise in popularity of vacation rentals has been in greater part thanks to AirBnB, a company that has largely popularized short-rentals around the world. While suffering a severe and acute backlash in sporadic cities that have seen demand for housing increase due to landlords’ desires for short-term profits from vacation-goers over long-term tenants, the company has stayed the course, friction or not, growing by leaps and bounds.

However, the story of AirBnB chronicles the greater inclination of travelers from around the world to opt for short-term villas, vacation rentals and condos over traditional hotel suites. And why not? For the most part, these offer a significant step up to the traditional hotel experience that includes more space and more amenities, for an often-better price considering the increased number of guests that they can usually accommodate.

It’s clear that vacation rentals are here to stay, offering tremendous year-over-year growth as landlords and home owners come to the realization that furnished and serviced properties located in sought-after vacation destinations can often produce 5 to 10 times the rental income over unfurnished properties rented to long-term tenants. It’s apparent that there’s an enormous amount of profit to be made in this industry when it’s done the right way.

Still, while there are some viable options when it comes to marketing a standard vacation rental online, it’s the luxury market that can often seem somewhat difficult to penetrate. Most people don’t turn to sites like AirBnB for a luxury villa or high-end home. That might be why it recently gobbled up Luxury Retreats, a company that specializes in extremely posh vacation homes around the planet, for a reported $200 million.

That acquisition was important for a number of reasons. It’s clear that AirBnB isn’t in the luxury market. While luxury rentals do occur on its platform, it’s few and far between when compared to a site like Luxury Retreats. However, it’s clear that the market is well-established for high-end rentals. In a recent conversation with Niko Contardi, co-founder of eliteLYFE, one of the major players in the luxury villa rentals marketplace, I posed the question about how they market luxury vacation homes online.

Contardi, whose company specializes in ultra-high-end rentals in the $2,000-per-night-and-up range, offered some keen insight into marketing homes in the luxury segment. The biggest problem that most people face is that luxury homes don’t operate according to the same rules as “regular” vacation rentals. For those rentals, AirBnB is a clear and very viable option. So are sites like VRBO, HomeAway and others. Yet, luxury rentals don’t quite operate the same way.

The fact is that there are certain, very specific, ways to market a luxury vacation rental that might often differ from a standard rental. For those that are in-the-know, the luxury accommodations market is a behemoth, with large-ticket expenditures that often result in significant ancillary income streams. Those that are spending big dollars to rent a luxurious villa are also splurging on things like exotic cars, private jets and superyachts, just to name a few.

However, any way that you slice it, the greatest concern for those that are renting in the luxury market, is service. That might be why we’ve seen the proliferation of sites like Luxury Retreats, eliteLYFE and Oasis, just to name a few. Considering that it takes a lot to satisfy the world’s most discerning travelers, companies that have developed proven platforms and services that include things like pre-arrival planning, concierge services, butlers, private chefs and daily housekeeping services, amidst other things, prosper in this space

For those that try to go it alone, there’s a long road ahead. Prepping, furnishing and outfitting a luxury vacation rental for any competitive destination takes a significant amount of work. Once that’s done, you have to market and service that rental. Who will check the guests in? What about maintenance if something goes wrong? Housekeeping? Will there be concierge services or pre-arrival planning? Clearly, this is a significant demand of your time if you were to do it on your own. Yet, that doesn’t mean it isn’t possible to do.

As the industry has grown, big-named hotel brands and resorts have also taken notice. Subsequently, they’ve taken the plunge into building resort-style properties in sought-after destinations, charming workers from nearby five-star resorts to come man their ultra-luxurious resort-style homes in places like Costa Rica or the Dominican Republic, building websites and brands with an unmatched service level that caters to the one-percenters in the world.

Clearly, it is possible to go it on your own. If you have the time and the energy to deal with the nearly insurmountable amount of work and headache that this often takes, you could make a proverbial killing in the market. Many of the people that do build their own sites and brands around their home also leverage companies like Contardi’s eliteLYFE or Joe Poulin’s Luxury Retreats to help drum up additional business. These companies are actively marketing homes in the best areas, drawing in the right crowd through relevant ad spends or social media awareness.

How To Market Your Luxury Vacation Rental Online

If you’re wondering how you’re going to get the word out on your luxury vacation rental or villa, there are some steps you need to take to ensure a world-class experience for your guests. This isn’t some rent-it-and-forget-it process. In the luxury sector, you need to ensure that you address all the finite and meticulous details of renting a home and provide an experience that guests will remember you by.

Hotel chains like the Four Seasons, Ritz Carlton and the St. Regis (hotel chains that also provide posh luxury villa rentals in certain select destinations) didn’t become renowned overnight. They’ve been delivering an unmatched luxury service for ages. Similarly, if you want to succeed with marketing your luxury vacation rental online, you have provide that five-star experience to your guests and do it repeatedly, time and again, month after month and year after year.

Step #1 — Create A Refined Traveler Experience

Discerning travelers that rent luxury villas or vacation rentals demand a refined experience. This means ensuring that the interior and exterior spaces are to a five-star standard. What’s a five-star standard? First, guests demand something relatively new. Don’t try to market an older property that seems dated or hasn’t been renovated, and expect the guests to be happy. People that enjoy luxury travel will notice the small details. Scuffs on the walls or used-and-abused furniture, and things of that nature, just won’t fly.

Simply put, imagine yourself renting this home. How would you feel after a long flight, coming in to see something that might not have been accurately depicted in photos or videos of the space? Take the time to dot all your i’s and cross all your t’s. Develop high-end interiors and exteriors with beautiful furnishings and ensure that the property is renovated and up to date. Opt for the best cable package and the highest-speed internet service. People take notice.

Step #2 — Create A High-Quality Guest’s Manual For Your Property

The second step? Ensure that you have a so-called user’s guide for your property. You might know how to use the 3 remotes that control your media and entertainment center, but you can’t expect others to know how to do that. Take photos of the remotes and highlight the buttons that control what. Outline everything in a step-by-step fashion. Let them know about things like the internet access code, the days that trash is picked up and so on.

You also want to let your guests know about the area and nearby activities, attractions and so on. What are your favorite restaurants nearby? What are some local tips that most travelers aren’t aware of? It’s the little touches that really resonate with people. As much as you think they don’t pay attention to those things, guests do take notice. Be sure to capitalize on this by building a detailed guest’s manual for your property.

Step #3 — Take High-End Photos And Drone Videos

Hiring a photographer should be your priority once everything else is in order. Not only do you need quality photos, but you also need videos as well. An interior walk-through will help give people an accurate sense of the space, much more so that standard photos on their own. People have learned not to trust photos by themselves, so you’ll need to have some kind of walkthrough that will depict how the space looks aside from those nicely Photoshopped pictures of the best angles.

If you can, add some drone videos to the mix. Hire a drone operator to capture the exterior surrounding area of the home, lifting up to convey a better sense of the area and everything around it. This speaks volumes and is much more effective than Google’s Street View. Spending money here is important. Don’t try to cut corners and do this on the cheap as you’ll most certainly get what you pay for here.

Step #4 — Ensure Everything Is In Proper Working Order

Does everything in the home work? Do you have a checklist for inventory? Have you gone through and tried the washer and dryer or the iron? Can you connect to the wifi? Not only do you need to check this before you have your first guests come through, but you need to create a checklist for turning over the property after each rental. You can’t simply set it and forget it. Every luxury hotel brand runs through a maintenance checklist after each guest departs.

Check the air conditioning to ensure that it’s working. What about the ceiling fans? How about all the windows and doors? Have you tried the heat or the fireplace in a while? Does the dishwasher work properly? How about the sound system or the Apple TV? All of these details matter when marketing a luxury vacation rental. You have to sweat the small stuff if you’re going to succeed at any degree.

Step #5 — Define A Service Level To Include Daily Housekeeping, Maintenance, Support And Concierge

Find the best of the best. If you don’t hire a company like Luxury Retreats or eliteLYFE to manage your rental, you need to define a service level. Who’s going to take care of the daily housekeeping? What about maintenance? Who will guest call in the middle of the night if the power goest out? Will they call you? What about concierge services? What happens when guests want to book a restaurant or an excursion nearby. Who will help them?

These are all things that are important in the luxury villa and vacation rentals space. You need to define a service level. How are you going to service these clients? Will you provide access to a personal chef? What about a butler? How much will these cost and will you offer these as a staple or will you offer them as upgrades? There are a tremendous amount of items for consideration here when marketing your luxury vacation rental online.

Step #6 — Build A Dedicated Website With Real-Time Availability

Clearly, you need a website. You should also consider starting a blog as part of that site. You will also need real-time availability of your space. People don’t want to have to guess. And, when you create your website, it needs to be high-end. Hire a professional to do this and don’t try to do it on your own. This is also where those photos and videos will come in handy. Accurately depict and describe your space, and take them time to detail all the pricing and any extra fees there might be.

Of course, you’ll also need to ensure that you do things like register for Transient Occupancy Taxes (TOT) and charge any TOT to the guests that might be checking in. Be sure to pay the TOT to the relevant authorities and tell guess what that TOT rate is on your site. Go into detail about all the service levels that you’re offering and the price points that you’re offering them at. Don’t leave anything up in the air.

Step #7 — Market Your Property Online Through Various Channels

The next step? Likely the hardest part of your journey in marketing a luxury vacation rental online, is actually marketing it online. This is where you need to put on your digital marketing hat. Are you going to use social media? Maybe you’ll turn to one of the Instagram influencers or possibly run ads on Facebook. Maybe you’ll turn to Google and engage in some PPC marketing through Adwords or something else.

Maybe you’ll create a YouTube video and leverage YouTube video ads as one of your desired channels for online marketing. Or, maybe, just maybe, you’ll contact any number of the luxury villa rental companies that can help you along in getting the proverbial word out. Focus on reviews and the customer’s experience and word will spread. And always remember what Warren Buffet once said that, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” 



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Why millennials are flocking to FHA mortgages

Thu, 03/16/2017 - 10:59am

The Trump administration may not be fond of Federal Housing Administration-insured mortgages — the president canceled a cut in fees for new loan applicants as one of his first official actions — but millennial homebuyers apparently are big fans.

A new analysis of loans closed during January found 35 percent of millennials — those born between 1980 and 1999 — opted for Federal Housing Administration mortgages to finance their purchases, well above FHA’s overall market share of 21 percent.

The analysis was conducted by mortgage technology company Ellie Mae, tapping into its massive database of lenders’ transactions across the country. Meanwhile FHA itself found that 82 percent of its home-purchase borrowers recently have been first-timers.

Why the strong attraction for FHA, especially at a time when competitors Fannie Mae and Freddie Mac have introduced new programs offering low down payments? Turns out it’s all about the total package of features for young buyers — not just the small cash outlays required up front.

Twenty-eight year-old Bradley Barron and Amy Gina Kim, who is 30, both work for tech-related companies in the Los Angeles area. They are new homebuyers and they’ve chosen FHA financing over conventional bank or Fannie-Freddie alternatives. Like many young couples, they’re carrying a lot of student debt — both have master’s degrees — and both now have well-paying jobs.

“We entered the working world with major student debt and no assets to our name,” Bradley said. Their jobs are “great,” he noted, but “we don’t have 10 percent to 20 percent” to put down. Both he and Amy are frustrated that they pay a substantial amount every month in rent that does not contribute toward building equity or an investment nest egg. So “the faster we get into a home, the less money we throw away on rent.”

They consulted with Steven R. Maizes, a vice president of mortgage lending for Guaranteed Rate, a large national retail mortgage banker, who walked them through the pros and cons of their alternatives. FHA turned out to be the answer.

“The vast majority of these (millennial) buyers, in the absence of getting a gift from a family member, simply don’t have” enough down payment cash, plus money to cover closing costs and post-closing money left over in the bank as reserves, said Maizes. FHA’s total package — which has some downsides as well as upsides — clinches the deal for many young first-timers.

So what’s FHA’s total package? Start with the down payment. FHA’s minimum of 3.5 percent is low, but it’s not best in class. Fannie Mae and Freddie Mac have programs requiring just 3 percent down, but they come with a variety of eligibility requirements, such as income cutoffs in some cases. VA (U.S. Department of Veterans Affairs) and USDA (rural loans from the U.S. Department of Agriculture) allow for zero down payments, but also have major restrictions: veterans status or geographic limitations.

What about credit? Here’s where the differences get really important for millennials, many of whom have middling scores compared with other generational groups. FHA accepts much lower scores than Fannie and Freddie — even below 600 FICOs. The average millennial first-time purchaser closing Fannie or Freddie loans in January had a FICO score of 748; the average for millennial purchasers using FHA was 690. Paul Skeens, president of Colonial Mortgage Group in Waldorf, Md., said that as a rule, whenever low-down-payment borrowers have FICO scores below 720, “FHA is going to give (them) the lowest payment.”

Now for debt-to-income ratios, which are often a weak point with young, debt-burdened borrowers. Fannie and Freddie typically won’t go higher than a 45 percent DTI (monthly gross income compared with total recurring monthly debt), while FHA can stretch well over 50 percent — even to 56 percent, according to Skeens — provided there are “compensating” positive factors in the application, such as extra-strong income or multiple months of reserves. This flexibility on DTI to the high side is especially helpful for millennials with student-loan debts because FHA includes monthly payments on student loans as part of its debt calculation, even if payments are in deferred status.

One glaring drawback to FHA for some applicants: Unlike the private mortgage insurance that comes with low-down-payment Fannie and Freddie loans, FHA premiums are noncancelable for the life of the loan. But most first-time buyers don’t remain in those starter houses for long periods of time, so that’s not likely to be a deal-killer.



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Landlord Insurance 101: A Guide to Rental Property Insurance for Owners

Mon, 03/13/2017 - 10:09pm

More and more Americans are becoming landlords – either by necessity or choice – but do they know what it takes to insure their rental property?

Consider the trend: For more than a decade, homeownership rates have declined while rentals have increased. According to a recent report from Harvard University’s Joint Center for Housing Studies, the nation’s homeownership rate has fallen to just under 64 percent. Plus, the number of new rental households has increased by roughly 770,000 annually since 2004.

Many homeowners who couldn’t sell their homes during the housing crisis decided to rent them out, says Bob Freitag, a North Carolina-based public adjuster.

“A lot of these new landlords didn’t know that they needed more than their existing homeowner policy to insure the property,” he says.

Now that the housing crisis has passed — and interest rates remain low — the idea of buying a second home as a rental property sounds lucrative to many who may be new to the real estate market.

Regardless of the situation that turned you into a landlord, it’s smart to talk to an insurance agent to make sure you have the proper coverage.

“Consider whether your needs or your circumstances have changed,” says Robert P. Hartwig, past president of the Insurance Information Institute. “And if they have — or if you don’t understand something — call your agent. A simple conversation can save you thousands of dollars in e future.”

Landlords and insurance: Getting the right policy

Rule No. 1: New landlords need to call their insurance agent as soon as they decide to rent their property.

“Some insurance companies don’t even want to insure rental properties because of the added risks,” Freitag says. “So you may need to find a new insurer all together. At the very least, you’re going to make significant changes to your existing policy.”

An average homeowners insurance policy doesn’t cover the property if the homeowner is not living there, according to Trent Zachmann, chief operating officer of Renters Warehouse. That’s because renters occupying a property carry a different set of risks and liabilities than homeowners do.

For instance, insurance companies know that homeowners generally take better care of a property than renters, which means they file fewer claims and are cheaper to insure. What’s more, once a house or condo is being rented, the insurance company considers this a commercial use of the property, which changes the insurance equation a bit.

Types of landlord or rental dwelling policies

What type of policy will you need?

“You’re going to need what’s called a landlord or rental dwelling policy,” Zachman says, “and there are some distinct differences between that and a traditional homeowner’s policy.”

But not all dwelling policies — sometimes called tenant occupied dwelling insurance — do the same things. Dwelling policies usually fall into three categories: DP-1, DP-2, and DP-3. Here’s how they break down:

  • DP-1 policy is the most basic and affordable dwelling policy you can buy, and it covers risks like vandalism and theft.
  • DP-2 policy expands coverage to risks like fire and windstorm damage.
  • DP-3 policy is the most comprehensive of all three, covering all perils unless they’re expressly excluded.

Freitag suggests landlords purchase a DP-3 policy. Not only does it cover the broadest range of risks, but it also pays out full replacement costs on a claim as opposed to just “actual cash value.” The difference is critical, he says.

For instance, let’s say a fire causes $10,000 in damage to your 20-year-old rental property. If your dwelling policy only pays out cash value the insurance company will consider the depreciated value of the home, which could cause 20 or 30 percent depreciation on the final claim payout.

However, if your policy pays out full replacement costs, the insurance company will reimburse you for the present-day cost of rebuilding or making repairs, regardless of the home’s age.

Freitag doesn’t favor a cash-value policies, because landlords often need out-of-pocket money to make repairs after filing a claim. “Make sure you tell your agent that you want a policy written for replacement costs,” he says.

Landlord policies may protect against loss of rental income

Landlord policies may also cover the loss of rental income, which is a critical consideration for landlords.

For instance, extensive fire or water damage may make your rental property uninhabitable for several months. If your dwelling policy covers loss of rent — sometimes called fair rental income protection — the insurance company will reimburse you for that unexpected financial hit.

“Make sure you ask your agent to include loss of rent in the policy,” Freitag says. “It only costs pennies on the dollar and it’s incredibly worth it if you need it.”

How much does a landlord insurance policy cost?

Many variables go into pricing a dwelling policy for landlords, but according to Melissa Neis, vice president of Chicago-based Parr Insurance Brokerage, it will probably cost between 20 percent and 30 percent more than a typical homeowner policy.

“That’s because the insurer is taking on more risk,” Neis says.

According to a 2016 study by the National Association of Insurance Commissioners, the average homeowners insurance premium across the United States in 2013 (the most recent data available) was $1,096. So a landlord policy will cost between $220 and $330 more per year than a traditional homeowners policy.

Important to note: No matter what type of dwelling policy you purchase, it will not cover the possessions of your renter (such as clothes, electronics or furniture.) Neis suggests landlords require tenants to carry renters insurance, which will protect you against a potential lawsuit if a tenant’s possessions are destroyed.


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Bedbugs Still a Constant Risk

Mon, 03/13/2017 - 10:08pm

Bedbugs are a growing issue in the United States and are showing no signs of slowing down. When you consider that the insects were practically nonexistent 20 to 30 years ago, it’s even more shocking to see where we are today.

In 2015, the National Pest Management Association (NPMA) conducted a survey of pest management professionals that found that 99.6% of pest professionals had treated for bedbugs in the past year.

While this staggering figure speaks for itself in terms of the prevalence of bedbugs, the survey also looked at where pest professionals are most likely to find the bugs. Not surprisingly, apartments and condominiums ranked at the top of the list.

Beating out single-family homes and hotels/motels on the list, apartments and condominiums, unfortunately, make great homes for bedbugs because of the insects’ behaviors, habits, and preferences.

Why They Like Us Bedbugs are considered a “human” pest because they’re attracted to the heat that emanates from our bodies, our natural body odors, and the carbon dioxide we emit. They feed on our blood primarily, although they will feed on any warm-blooded host. That said, bedbugs can most often be found in areas where humans are present.

These bloodsuckers are one of the pest world’s best hitchhikers. Even though they seek our body heat when it’s time to feed, the bugs don’t like to remain on our bodies for long periods of time. Instead, they prefer to hide out on our clothes or in our luggage, traveling from place to place before settling into a new home.

As a result, bedbugs are tough to detect. It’s almost inevitable they’ll find their way into one of your buildings over time, and once inside, they can move from unit to unit. And they can live for up to a year without a meal, so they’re not going to disappear on their own.

That’s why the key to helping mitigate the chances of a bedbug infestation is to conduct regular, proactive inspections and contact a pest management professional as soon as you suspect bedbugs may be present. This can be difficult in multifamily buildings because it requires residents to conduct inspections on their own. However, most pest management companies will be more than happy to have a professional come out and conduct an educational program for residents and staff.

How to Detect the Presence of Bedbugs Some easy steps can help residents detect signs of bedbugs:

• Cracks and crevices around beds and other resting areas are the most likely places to find bedbugs. This means mattress seams, sheets, and furniture are all likely locations for bedbugs. Make sure to check these spots on a weekly basis.

• Bedbugs are flat and round, but very tiny. Adults are about 2 millimeters to 3 millimeters in length and brown in color, but they can appear reddish if they’ve fed recently. Remove any bedbugs you find immediately.

• When moving from place to place, bedbugs will defecate and leave behind small, rust-colored ink stains that can be seen with the naked eye. Look closely for these marks when conducting an inspection.

• Generally nocturnal in nature, bedbugs usually feed at night once they sense a host is asleep. This makes it tough to prevent bites, but if you wake up with small red bumps on your skin, it might be time to call in a professional.

• If bedbugs are reproducing, you may be able to find clear skin casings lying around from developing nymphs. You might also smell a musty, sweet odor. If you discover these signs, don’t try to resolve the issue on your own, as the indicators show that bedbugs are already reproducing in your building.

• Whatever you do, don’t bring in secondhand furniture. Often, there are bedbugs already living on such pieces that will be happy to have a new home—your units.

Once you suspect signs of bedbugs, it’s important to take action immediately. There are a few different options for treating them, but the recommended technique differs depending on the exact needs and circumstances of your building.

The upper echelon of bedbug detection, however, comes in the form of a canine inspection. Because dogs have an incredibly keen sense of smell, when trained they can accurately point their handlers to the areas where bedbugs are present. Indeed, dogs are the fastest and most accurate detectors of bedbugs.

Although bedbugs can certainly be a risk to the reputation of your business, being aware of the potential signs and actively working to spot them—and resolve issues proactively—can make a world of difference.


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