American Apartment Owners Association

How to Set the Perfect Rent Price for a Rental Property

Mon, 04/10/2017 - 3:39pm

If there is something that many landlords struggle with it is how to determine the perfect rent price for their properties. Naturally, most of them would wish to set the prices as high as possible so as to recoup their investment.

Doing so, however, will make the tenants view the landlord as unscrupulous and they will stay away from the units. Ironically, pricing your rentals too cheap is also counterproductive. The low price will attract low-quality and at times problematic tenants.
So, just how can a landlord go about pricing his or her rental units? The following tips should offer insight on how to go about it.

8 Tips for Setting Rental Prices

Find Out What Similar Units are Charging An effective way to determine how much to price is by finding out what houses similar to yours charge. The similarity should be regarding the number of bedrooms, square footage, location, and amenities. You can get this information from popular listing platforms like Craigslist, Trulia, Zillow, and Realtor.com. Bearing in mind that the rent price can affect how long a property stays vacant as well as the average occupancy rate, focus on those houses that do not stay unoccupied for too long and have a high occupancy rate. Chances are these units have the right rental prices.

Consider the Square Footage of the Unit If your efforts of locating a property that matches yours prove futile, do not despair yet. You can use the nearby units to calculate how much you should price yours. All you need to do is find out how much the surrounding units charge per square feet and use that rate to calculate yours.

Set the Price Based on the Real Property Value A common way of determining what to charge is to evaluate what the actual cost of your asset is, and multiplying it by a standard 0.11. Whatever figure you arrive at, that should be the fitting monthly rent you should demand. For instance, if the evaluation values your rental property at $ 150,000, then an ideal monthly rental rate would be $1,650. Even though this approach fails to factor in variables like the neighborhood, design features or surrounding amenities, it gives a general idea of what to charge.
Consider the Location of Your Property Where your rental property is situated significantly affects the amount of rent you can demand. For instance, if it is in high-end markets, near prominent school districts, reliable transport network, or essential social amenities, you can attract a premium rate. That is because high-quality renters prefer staying in such areas and wouldn’t mind paying whatever amount you ask. However, if your property is in the lower class markets, where insecurity is high, and infrastructure is lacking or rundown, you will have a daunting task charging a high rent.

Look at the Condition, Size, and Layout of the Property Besides the location, there are other factors like the size, design, and condition of the property which will affect its ultimate price. For example, a two bedroom apartment might cost less than a three bedroom one in the same area. However, if the three-bedroom unit is old or in a worn-out state, while the two-bedroom one is new and refurbished, the newer property is likely to cost more.

Inquire from Property Experts Another useful way for you to ascertain the perfect rent is to ask credible experts in the real estate industry. These experts include property management companies, real estate agents, and rental housing associations. Since these authorities are familiar with the rental property industry, they are in the perfect position to tell you what to charge in different markets. When looking for an expert opinion, though, take the time to determine that you are indeed consulting a credible and reputable professional. Otherwise, you might end up receiving the wrong investment advice, which will hurt your real estate goals.

Ask Other Landlords Even though industry experts will give you sound advice, in most cases you have to pay for that information. If you prefer unsolicited rental advice, why not get it from the horse’s mouth. Talk to other landlords and ask them how much they charge. While at it, do not shy from seeking their opinion on what you should charge for your property. Depending on your approach most property owners would readily give credible suggestions.

Ask the Tenants If getting the information from the landlords proves impossible, or if you suspect what the owner told you was questionable, you could identify surrounding units that are similar to yours and interrogate the tenants there, to find out how much rent they pay.
Conclusion By following the above steps, you should be in a position to get an average market rate for your rental property. From there, it is up to you to decide how to price your units so that they remain both attractive to high-quality renters, and profitable to you.

 

Source: realtybiznews.com

The post How to Set the Perfect Rent Price for a Rental Property appeared first on AAOA.

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Is Rent Control Out of Control? A Guide for Los Angeles Property Owners

Mon, 04/10/2017 - 8:59am

Rent Control Cities and the Overzealous Code Enforcement Officers that Employ Them:

Rent control is out of control – don’t you feel that way?   If you have property in a rent control/ stabilized city, you have increased governmental regulation and interference, rental unit registration requirements, percentage limitations on annual rental increases, and other bells, whistles, and rules to follow.  Also, there are specific grounds for eviction delineated by local ordinance.

In some cities like Los Angeles, there is an ordinance called REAP which stands for “Rent Escrow Account Program.” According to the City Housing Department’s website, units are subject to inspection fees, and periodic inspection.    If a City, County, or State agency determines and issues a citation and notice to comply with an order to fix a substandard or uninhabitable condition and you don’t comply, you can be placed into the REAP program.   The REAP program is kind of like a city imposed receivership. The city takes over your rental cash flow until you remedy the alleged violation.

The Rent Escrow Account Program (REAP) exists to resolve the most persistent health & safety, and habitability issues found in rental properties in the City. In addressing these issues,  the goal of REAP is to help reduce blight, protect tenants from living in substandard housing, increases the life of the useful life of rental properties, and helps preserve the City’s valuable affordable housing stock.

According to the City, REAP encourages owners to make repairs and maintain their property in a safe and habitable condition. Tenants of affected units are given a 10% to 50% rent reduction depending on the nature and severity of the violations cited. Tenants have the option to pay their reduced rents to the landlord or into an escrow account managed by the Department.  If eligible, you may request funds from the escrow account for a variety of specific uses including to make repairs, pay utilities, or for relocation assistance.  Other resources are available as well to assist you with REAP.  Properties accepted into REAP will remain in REAP until all violations cited by the Department have been cleared, and all requirements for removal have been met. Once all requirements are met, the Department will recommend that the City Council authorize the Department to remove the property from REAP.

So if you don’t want increased regulation, then don’t invest in a rent stabilized municipality.  If you do, then follow the ordinances and rules so you are in compliance.

Political “Climate” Changes Affect the Performance of Your Investments: 

Finally, I believe it is important to have an awareness of the local, state, and federal political climate as it pertains to investment real estate.    You should actively participate in the political process to the extent you can.

For example, a California Assembly Bill, AB 1506 (BLOOM), was introduced in February of 2017,  and aims to repeal the Costa-Hawkins Act, which currently prevents cities and counties from adopting extremely restrictive rent control policies. The Costa-Hawkins Act was adopted in 1995 to curb extreme rent control, enabling property owners to raise rents on vacant units during a time where strict rent control laws were in place across California. If passed, this repeal would heavily affect the rental industry as it encourages local government to fiercely control rental rates and evictions.

Read the newspaper, attend town hall meetings and apartment owner’s conventions, and write to your elected officials.  More than ever before, grassroots activity and advocacy is increasingly effective in local, state, and federal politics, and politicians are feeling the heat of advocacy.  You should know what is going on in the city and state governments and the areas in which you invest.    Although bribes of local officials and inspectors are not kosher and when will could give you the choice of a purple or orange jail jumpsuit, I believe that political donations to political campaigns for PACs within ethical and legal limits can be a positive investment to get access to political leaders with power. You may be able to influence the political process in a way to protect your investments and your local community, and to influence outcomes to benefit your own real estate interests.

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 natebernstein44@gmail.com.  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 www.laquiettitleattorney.com, 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.

The post Is Rent Control Out of Control? A Guide for Los Angeles Property Owners appeared first on AAOA.

Categories: RSS

Is Rent Control Out of Control? A Guide for Los Angeles Property Owners

Mon, 04/10/2017 - 8:59am

Rent Control Cities and the Overzealous Code Enforcement Officers that Employ Them:

Rent control is out of control – don’t you feel that way?   If you have property in a rent control/ stabilized city, you have increased governmental regulation and interference, rental unit registration requirements, percentage limitations on annual rental increases, and other bells, whistles, and rules to follow.  Also, there are specific grounds for eviction delineated by local ordinance.

In some cities like Los Angeles, there is an ordinance called REAP which stands for “Rent Escrow Account Program.” According to the City Housing Department’s website, units are subject to inspection fees, and periodic inspection.    If a City, County, or State agency determines and issues a citation and notice to comply with an order to fix a substandard or uninhabitable condition and you don’t comply, you can be placed into the REAP program.   The REAP program is kind of like a city imposed receivership. The city takes over your rental cash flow until you remedy the alleged violation.

The Rent Escrow Account Program (REAP) exists to resolve the most persistent health & safety, and habitability issues found in rental properties in the City. In addressing these issues,  the goal of REAP is to help reduce blight, protect tenants from living in substandard housing, increases the life of the useful life of rental properties, and helps preserve the City’s valuable affordable housing stock.

According to the City, REAP encourages owners to make repairs and maintain their property in a safe and habitable condition. Tenants of affected units are given a 10% to 50% rent reduction depending on the nature and severity of the violations cited. Tenants have the option to pay their reduced rents to the landlord or into an escrow account managed by the Department.  If eligible, you may request funds from the escrow account for a variety of specific uses including to make repairs, pay utilities, or for relocation assistance.  Other resources are available as well to assist you with REAP.  Properties accepted into REAP will remain in REAP until all violations cited by the Department have been cleared, and all requirements for removal have been met. Once all requirements are met, the Department will recommend that the City Council authorize the Department to remove the property from REAP.

So if you don’t want increased regulation, then don’t invest in a rent stabilized municipality.  If you do, then follow the ordinances and rules so you are in compliance.

Political “Climate” Changes Affect the Performance of Your Investments: 

Finally, I believe it is important to have an awareness of the local, state, and federal political climate as it pertains to investment real estate.    You should actively participate in the political process to the extent you can.

For example, a California Assembly Bill, AB 1506 (BLOOM), was introduced in February of 2017,  and aims to repeal the Costa-Hawkins Act, which currently prevents cities and counties from adopting extremely restrictive rent control policies. The Costa-Hawkins Act was adopted in 1995 to curb extreme rent control, enabling property owners to raise rents on vacant units during a time where strict rent control laws were in place across California. If passed, this repeal would heavily affect the rental industry as it encourages local government to fiercely control rental rates and evictions.

Read the newspaper, attend town hall meetings and apartment owner’s conventions, and write to your elected officials.  More than ever before, grassroots activity and advocacy is increasingly effective in local, state, and federal politics, and politicians are feeling the heat of advocacy.  You should know what is going on in the city and state governments and the areas in which you invest.    Although bribes of local officials and inspectors are not kosher and when will could give you the choice of a purple or orange jail jumpsuit, I believe that political donations to political campaigns for PACs within ethical and legal limits can be a positive investment to get access to political leaders with power. You may be able to influence the political process in a way to protect your investments and your local community, and to influence outcomes to benefit your own real estate interests.

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 natebernstein44@gmail.com.  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 www.laquiettitleattorney.com, 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.

The post Is Rent Control Out of Control? A Guide for Los Angeles Property Owners appeared first on AAOA.

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6 Ways to Boost Your Chances of Getting a Mortgage

Mon, 04/10/2017 - 8:43am

One of the most nerve-wracking aspects of purchasing a home is the mortgage application and approval process. Regardless of your financial history, waiting for the OK from a lender can be unsettling when you’re trying to close on that perfect home.

For first-time homebuyers in particular, unfamiliarity with the process means a lot of shots in the dark when contacting mortgage lenders, searching Google for house-hunting advice and questioning whether your credit history is good enough toafford a home.

Whether it’s your first home purchase or you’ve owned previously, the mortgage industry is constantly evolving to reflect the current economy and better fit consumers who are looking to borrow.

The Hispanic population is a growing portion of homeowners nationwide, with Hispanic homebuyers accounting for 60 percent of total homeownership growth in the U.S. since 2010, according to the National Association of Hispanic Real Estate Professionals’ 2016 State of Hispanic Homeownership Report.

But even with the strong growth in Hispanic homeownership, some homebuyers in the community and many other Americans throughout the country are not familiar with programs available to make purchasing real estate more feasible. You might even qualify for mortgage products you didn’t know existed, and loan programs geared at making homebuying more accessible are often underutilized.

Case in point: Veterans Association home loans. A March 2017 study by national mortgage banker American Financing found the majority of post-9/11 veterans have yet to use a VA home loan. Among them, most of the more than 1 million injuredveterans likely qualify for not only a no-down-payment loan, but are also exempt from having to pay a VA funding fee, which can be 1.5 to 3.3 percent of the loan amount, depending on the type of loan and the borrower’s military service.

Part of this is due to the process of transitioning out of the military, says Tim Beyers, a mortgage analyst at American Financing. “You’re just trying to check as many boxes as you can. You may not be paying nearly enough attention to the benefits that are afforded to you,” he says.

But it’s not just veterans who are missing out on opportunities to be approved for a more affordable mortgage. Fannie Mae’sHomeReady mortgage program, for example, incorporates less-traditional underwriting practices to account for boarder income when you have roommates and offers down payments as low as 3 percent.

Here are six things you can do to boost your chances of getting approved for a mortgage that best fits best your financial situation.

Begin months in advance. Few people purchase a home on a whim, and most start dreaming about it months, if not years, ahead. Set a timeline six months to a year in advance and become familiar with mortgage interest rates, predictions for where they’ll be when you to apply for a mortgage, the typical cost of homes in your city and the monthly payments you think you could afford.

Changes on your financial statements, such as an increase in your line of credit or a paycheck bump, can make you more attractive to lenders. But give yourself at least two months (or two statement cycles) between the changes and when you apply for a mortgage, says David Birulin, vice president of lending with BrightStar Credit Union in South Florida.

Find a guiding hand early on. Especially if you’re a first-time homebuyer, you’ll want to work closely with a real estate professional you can trust to guide you every step of the way.

“Someone who is experienced in the community, has a great reputation and is willing to help you really navigate through the process,” says Gary Acosta, co-founder and CEO of NAHREP.

When it comes to connecting with a mortgage professional, Birulin recommends asking how the loan officer or originator is compensated. Someone who works entirely on commission and makes more when you take on a bigger loan with higher interest may not be your best option when you’re looking for a lot of guidance in the process.

Start gathering your financial information. When it comes time to apply for a mortgage, you not only want to have all your relevant information – pay stubs, W-2 forms from the last two years, tax returns, residence history and more – but you want toknow what’s in your financial records as well, from positive credit histories to blemishes that could create a hurdle for loan approval.

Birulin recently began gathering information to prepare to purchase a new home. “There were some accounts I thought were cleared that weren’t cleared,” he says. By going through the information in advance, Birulin has been able to resolve issues that might complicate a mortgage approval.

Hhaving all your financial ducks in a row means all your ducks. From a room listed Airbnb to an Etsy shop, many Americans are getting additional income that should be accounted for.

“Make sure all the money that’s collected is deposited in one bank account, so that there is a way to track that and quantify that,” Acosta says.

Reduce debt. By getting a mortgage, you’re taking on a substantial amount of debt, so you want to have as little debt from other sources as possible. Student or car loans aren’t likely to be a deal breaker for mortgage approval, but heavy credit card debt or high existing monthly payments could be a problem.

Use your credit cards less. With your debt paid down, use your credit cards less in the months prior to applying for a mortgage. Even if you’re paying off your balance every month, lenders will look more favorably at a borrower who utilizes 30 percent or less of his or her total lines of credit, Birulin says.

Look for programs that work for you. Even if you only have a vague understanding of the types of programs you may qualify for, a trustworthy loan originator, loan officer or mortgage broker will explore every option with you to help you decide the best course of action. Many major banks and organizations like the VA offer information about all their loan products and programs online.

“A good bank will work with you to make sure that you’re getting the fullest extent of your benefits,” Beyers says, referring particularly to VA programs.

 

Source: realestate.usnews.com

The post 6 Ways to Boost Your Chances of Getting a Mortgage appeared first on AAOA.

Categories: RSS

6 Ways to Boost Your Chances of Getting a Mortgage

Mon, 04/10/2017 - 8:43am

One of the most nerve-wracking aspects of purchasing a home is the mortgage application and approval process. Regardless of your financial history, waiting for the OK from a lender can be unsettling when you’re trying to close on that perfect home.

For first-time homebuyers in particular, unfamiliarity with the process means a lot of shots in the dark when contacting mortgage lenders, searching Google for house-hunting advice and questioning whether your credit history is good enough toafford a home.

Whether it’s your first home purchase or you’ve owned previously, the mortgage industry is constantly evolving to reflect the current economy and better fit consumers who are looking to borrow.

The Hispanic population is a growing portion of homeowners nationwide, with Hispanic homebuyers accounting for 60 percent of total homeownership growth in the U.S. since 2010, according to the National Association of Hispanic Real Estate Professionals’ 2016 State of Hispanic Homeownership Report.

But even with the strong growth in Hispanic homeownership, some homebuyers in the community and many other Americans throughout the country are not familiar with programs available to make purchasing real estate more feasible. You might even qualify for mortgage products you didn’t know existed, and loan programs geared at making homebuying more accessible are often underutilized.

Case in point: Veterans Association home loans. A March 2017 study by national mortgage banker American Financing found the majority of post-9/11 veterans have yet to use a VA home loan. Among them, most of the more than 1 million injuredveterans likely qualify for not only a no-down-payment loan, but are also exempt from having to pay a VA funding fee, which can be 1.5 to 3.3 percent of the loan amount, depending on the type of loan and the borrower’s military service.

Part of this is due to the process of transitioning out of the military, says Tim Beyers, a mortgage analyst at American Financing. “You’re just trying to check as many boxes as you can. You may not be paying nearly enough attention to the benefits that are afforded to you,” he says.

But it’s not just veterans who are missing out on opportunities to be approved for a more affordable mortgage. Fannie Mae’sHomeReady mortgage program, for example, incorporates less-traditional underwriting practices to account for boarder income when you have roommates and offers down payments as low as 3 percent.

Here are six things you can do to boost your chances of getting approved for a mortgage that best fits best your financial situation.

Begin months in advance. Few people purchase a home on a whim, and most start dreaming about it months, if not years, ahead. Set a timeline six months to a year in advance and become familiar with mortgage interest rates, predictions for where they’ll be when you to apply for a mortgage, the typical cost of homes in your city and the monthly payments you think you could afford.

Changes on your financial statements, such as an increase in your line of credit or a paycheck bump, can make you more attractive to lenders. But give yourself at least two months (or two statement cycles) between the changes and when you apply for a mortgage, says David Birulin, vice president of lending with BrightStar Credit Union in South Florida.

Find a guiding hand early on. Especially if you’re a first-time homebuyer, you’ll want to work closely with a real estate professional you can trust to guide you every step of the way.

“Someone who is experienced in the community, has a great reputation and is willing to help you really navigate through the process,” says Gary Acosta, co-founder and CEO of NAHREP.

When it comes to connecting with a mortgage professional, Birulin recommends asking how the loan officer or originator is compensated. Someone who works entirely on commission and makes more when you take on a bigger loan with higher interest may not be your best option when you’re looking for a lot of guidance in the process.

Start gathering your financial information. When it comes time to apply for a mortgage, you not only want to have all your relevant information – pay stubs, W-2 forms from the last two years, tax returns, residence history and more – but you want toknow what’s in your financial records as well, from positive credit histories to blemishes that could create a hurdle for loan approval.

Birulin recently began gathering information to prepare to purchase a new home. “There were some accounts I thought were cleared that weren’t cleared,” he says. By going through the information in advance, Birulin has been able to resolve issues that might complicate a mortgage approval.

Hhaving all your financial ducks in a row means all your ducks. From a room listed Airbnb to an Etsy shop, many Americans are getting additional income that should be accounted for.

“Make sure all the money that’s collected is deposited in one bank account, so that there is a way to track that and quantify that,” Acosta says.

Reduce debt. By getting a mortgage, you’re taking on a substantial amount of debt, so you want to have as little debt from other sources as possible. Student or car loans aren’t likely to be a deal breaker for mortgage approval, but heavy credit card debt or high existing monthly payments could be a problem.

Use your credit cards less. With your debt paid down, use your credit cards less in the months prior to applying for a mortgage. Even if you’re paying off your balance every month, lenders will look more favorably at a borrower who utilizes 30 percent or less of his or her total lines of credit, Birulin says.

Look for programs that work for you. Even if you only have a vague understanding of the types of programs you may qualify for, a trustworthy loan originator, loan officer or mortgage broker will explore every option with you to help you decide the best course of action. Many major banks and organizations like the VA offer information about all their loan products and programs online.

“A good bank will work with you to make sure that you’re getting the fullest extent of your benefits,” Beyers says, referring particularly to VA programs.

 

Source: realestate.usnews.com

The post 6 Ways to Boost Your Chances of Getting a Mortgage appeared first on AAOA.

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How Is the Price of Owning vs. Renting Affecting the Multifamily Market?

Mon, 04/10/2017 - 8:40am

Buying a home is one of the most pivotal moments of a person’s life. Most dream of owning their own home to gain equity in an asset that usually grows in value. Still others prefer the flexibility of renting a home that eases the risk should the housing market crash or a neighborhood lose value.

The truth is most people do not get to choose when they can buy a home. They spend years trying to save for a down payment while rising rents are eating into their incomes. But if one were able to time the housing market based solely on the cost differential between renting and owning, how do today’s prices and rents compare? In short, the ratio of home prices to rents has stayed flat for the fourth year in a row in most of the major cities as shown in the ratio of Case-Shiller index to Reis rent in the chart below. This ratio, however, runs somewhat counter to this trend in a number of metros.

Looking at the ratio of average apartment rent to Case-Shiller index for the 20 metros that S&P Case-Shiller collects the data for shows a remarkably volatile trend from 2000 through 2012. Most ratios fell dramatically as house prices rose, then soared as house prices collapsed, then settled lower and stayed flat from 2013 through 2016. The ratio of the weighted average of the 20 metro’s rents to Case-Shiller 20-city index ranged from 7.6 to 8.0 over the last four years. Most metros follow this pattern, but the ones included in this chart tell a somewhat different story.In many of the metros shown above, the trend lines show a decline over the last few years. This means that home and condo prices are actually rising at a faster rate than apartment rents. This is noteworthy, but not surprising. One of the main drivers of escalating home prices is a lack of supply of homes on the market. In contrast, an excess supply of new apartments under construction is easing pressure on rent growth. The top two markets shown above, New York City and San Francisco, saw condo and co-op prices rise more slowly in 2016 than in previous years, but rents declined for both metros in the second half of the year due to the increase in new construction.

A similar pattern is found in Detroit, where both rents and housing prices had plummeted during the recession. The declining ratio implies that housing prices are rising in Detroit, which is a good sign for the local economy.

The only other metro that shows a consistent downward pattern is Miami, where rent growth has also trailed the growth in housing prices, but only slightly.

Both Chicago and Atlanta show a slight uptick in the index that suggests that housing prices are not keeping pace with rent growth. In the case of Chicago, the ratio shows very little volatility even during the recession, which means that the prices of homes and rents moved at a very similar pace.

Housing prices in Atlanta declined more than others during the recession and were slow to bounce back at the start of the recovery. This is why the line seemed to spike in 2012. Home prices have recovered at a stronger rate over the last two years, but apartment rents increased at an even sharper rate as job growth in Atlanta has exceeded that of other metros.

Again, the black line showing very little change since 2013 is representative of most of the 20 cities included in this study, including Los Angeles, that is nearly parallel. This is a good sign that the market is balanced. This balance contrasts sharply with the booms and busts of prior years when the housing market was over-inflated and later crashed.

While this chart provides a timely measure of how the price to rent compares to the price to own, far more variables—mortgage rates, in particular—would be needed to make this critical decision. Even if the chart above showing slightly higher home price increases to rents suggests that renting may be less expensive today, the buying option might look ideal in retrospect five years from now.

 

Source: nreionline.com

The post How Is the Price of Owning vs. Renting Affecting the Multifamily Market? appeared first on AAOA.

Categories: RSS

How Is the Price of Owning vs. Renting Affecting the Multifamily Market?

Mon, 04/10/2017 - 8:40am

Buying a home is one of the most pivotal moments of a person’s life. Most dream of owning their own home to gain equity in an asset that usually grows in value. Still others prefer the flexibility of renting a home that eases the risk should the housing market crash or a neighborhood lose value.

The truth is most people do not get to choose when they can buy a home. They spend years trying to save for a down payment while rising rents are eating into their incomes. But if one were able to time the housing market based solely on the cost differential between renting and owning, how do today’s prices and rents compare? In short, the ratio of home prices to rents has stayed flat for the fourth year in a row in most of the major cities as shown in the ratio of Case-Shiller index to Reis rent in the chart below. This ratio, however, runs somewhat counter to this trend in a number of metros.

Looking at the ratio of average apartment rent to Case-Shiller index for the 20 metros that S&P Case-Shiller collects the data for shows a remarkably volatile trend from 2000 through 2012. Most ratios fell dramatically as house prices rose, then soared as house prices collapsed, then settled lower and stayed flat from 2013 through 2016. The ratio of the weighted average of the 20 metro’s rents to Case-Shiller 20-city index ranged from 7.6 to 8.0 over the last four years. Most metros follow this pattern, but the ones included in this chart tell a somewhat different story.In many of the metros shown above, the trend lines show a decline over the last few years. This means that home and condo prices are actually rising at a faster rate than apartment rents. This is noteworthy, but not surprising. One of the main drivers of escalating home prices is a lack of supply of homes on the market. In contrast, an excess supply of new apartments under construction is easing pressure on rent growth. The top two markets shown above, New York City and San Francisco, saw condo and co-op prices rise more slowly in 2016 than in previous years, but rents declined for both metros in the second half of the year due to the increase in new construction.

A similar pattern is found in Detroit, where both rents and housing prices had plummeted during the recession. The declining ratio implies that housing prices are rising in Detroit, which is a good sign for the local economy.

The only other metro that shows a consistent downward pattern is Miami, where rent growth has also trailed the growth in housing prices, but only slightly.

Both Chicago and Atlanta show a slight uptick in the index that suggests that housing prices are not keeping pace with rent growth. In the case of Chicago, the ratio shows very little volatility even during the recession, which means that the prices of homes and rents moved at a very similar pace.

Housing prices in Atlanta declined more than others during the recession and were slow to bounce back at the start of the recovery. This is why the line seemed to spike in 2012. Home prices have recovered at a stronger rate over the last two years, but apartment rents increased at an even sharper rate as job growth in Atlanta has exceeded that of other metros.

Again, the black line showing very little change since 2013 is representative of most of the 20 cities included in this study, including Los Angeles, that is nearly parallel. This is a good sign that the market is balanced. This balance contrasts sharply with the booms and busts of prior years when the housing market was over-inflated and later crashed.

While this chart provides a timely measure of how the price to rent compares to the price to own, far more variables—mortgage rates, in particular—would be needed to make this critical decision. Even if the chart above showing slightly higher home price increases to rents suggests that renting may be less expensive today, the buying option might look ideal in retrospect five years from now.

 

Source: nreionline.com

The post How Is the Price of Owning vs. Renting Affecting the Multifamily Market? appeared first on AAOA.

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Home Ownership Is Decreasing In More And More U.S. Cities [Infographic]

Mon, 04/10/2017 - 8:35am

For many Americans, the thought of owning their own home is becoming an increasingly distant dream. According to U.S. Census Bureau data compiled by Redfin and published in Bloomberg, the American Dream is more tightly associated with a lease these days, rather than a mortgage. 52 of the 100 largest U.S. cities were majority renter in 2015 with 21 of them shifting to renter domination since 2009. The trend towards renting and decreasing home ownership can be attributed to many factors including the financial crisis, tight housing markets and demographic shifts.

Some of the cities with the largest shifts towards renting between 2009 and 2015 are included on the infographic below. Atlanta saw its share of home ownership fall from 51.3 percent in 2009 to 43.6 percent in 2015. New Orleans experienced a similar drop of 50.7 percent to 45.4 percent during the same timeframe. Detroit is well known as a working class city where most families can afford a home but by 2015, it too became majority renter with home ownership sinking from 55.4 to 49.4 percent.

Statista

Home ownership rates in selected U.S. cities in 2009 and 2015

Source: forbes.com

The post Home Ownership Is Decreasing In More And More U.S. Cities [Infographic] appeared first on AAOA.

Categories: RSS

Home Ownership Is Decreasing In More And More U.S. Cities [Infographic]

Mon, 04/10/2017 - 8:35am

For many Americans, the thought of owning their own home is becoming an increasingly distant dream. According to U.S. Census Bureau data compiled by Redfin and published in Bloomberg, the American Dream is more tightly associated with a lease these days, rather than a mortgage. 52 of the 100 largest U.S. cities were majority renter in 2015 with 21 of them shifting to renter domination since 2009. The trend towards renting and decreasing home ownership can be attributed to many factors including the financial crisis, tight housing markets and demographic shifts.

Some of the cities with the largest shifts towards renting between 2009 and 2015 are included on the infographic below. Atlanta saw its share of home ownership fall from 51.3 percent in 2009 to 43.6 percent in 2015. New Orleans experienced a similar drop of 50.7 percent to 45.4 percent during the same timeframe. Detroit is well known as a working class city where most families can afford a home but by 2015, it too became majority renter with home ownership sinking from 55.4 to 49.4 percent.

Statista

Home ownership rates in selected U.S. cities in 2009 and 2015

Source: forbes.com

The post Home Ownership Is Decreasing In More And More U.S. Cities [Infographic] appeared first on AAOA.

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How to Avoid Buying the Wrong Home in a Hot Market

Mon, 04/10/2017 - 8:27am

Many homebuyers are finding themselves in an unusual situation this spring: They have enough money and are preapproved for a mortgage, but can they actually secure a house?

The number of homes for sale in February fell for the 21st straight month compared with the previous year, with only a 3.8-month supply at the current sales pace, according to data from the National Association of Realtors. A six-month supply is considered a balanced market. The supply of homes for sale is even tighter at the lower price ranges.

That creates a major challenge for homebuyers, especially first-timers. If a prospective buyer isn’t careful, he could end up jumping at anything just to get a house, only to realize later that he bought a home that’s not right for his family.

“I feel that a lot of my purpose in the search process is making sure they don’t buy the wrong house,” says Dawn Rae, broker-owner of Florida Buyers’ Advocate in St. Petersburg, Florida. “If you can’t trust the person who is guiding you, you could buy the wrong house.”

Rae, who is the president of the National Association of Exclusive Buyer Agents, says the advice of a good agent who represents your interests is especially important in today’s tight housing market.

Her first recommendation for prospective buyers is to do significant research before they view homes. That includes deciding what features they want, what they can reasonably expect to get for their budget and what neighborhoods are acceptable.

“The more prepared you are, the more enjoyable it will be – and you’ll end up getting a home you’ll enjoy,” says Connie Durnal, a Redfin agent in Dallas.

She advises her clients to get as far along in the mortgage process as they can and write a draft cover letter to the seller so they can prepare a purchase offer quickly. With those issues out of the way, they can focus on choosing the right home.

“By relieving all this pressure, they’re not all wound up. They’re not bounding all over the place,” Durnal says. “It really lets them focus on the home.”

Rather than worrying about the process, prepared buyers can concentrate on whether the house fits their needs: Is it the right neighborhood? Is it the right size? Does the layout work for their lifestyle? By honing in on these issues, buyers are less likely to make a mistake and more ready to move quickly when they find the right home.

“If they have studied the market ahead of time … they will be more confident when they’re there, and they do see something that matches their parameters,” Rae says.

The market is moving quickly, which requires quick decisions from buyers and often submission of an offer as soon as they see a house they want. “The best houses are selling in three to five days, with multiple offers and even bidding wars,” says Victor Quiroz, of Berkshire Hathaway HomeServices California Properties in Southern California. But that doesn’t mean would-be buyers should settle.

“There’s always more housing coming to market,” Quiroz says. “Understand there will be more next week.”

Here are eight ways to avoid buying the wrong house in a competitive market.

Work with a trusted agent. Using an agent can give buyers an edge because the agent has access to information from the multiple listing service that buyers won’t find online. An agent can also help prospective buyers prepare their strongest offer.Line up your agent at the beginning of your search. If the agent doesn’t want to help you discuss you options before you’re ready to buy, find another agent.

Know what neighborhood you want. Explore and drill down into neighborhoods before you start seriously looking at houses. Ifschools are important, know the boundaries of the districts you want. Test the commute time from locations you’re considering. Don’t just research online, but also visit and talk to neighbors. Once you’ve chosen the neighborhood, you can narrow the search to the specific house.

Know the market. Know what types and sizes of homes are common in your preferred neighborhoods. This will help you know, when you see a listing or tour a home, whether you can expect a similar home that meets more of your needs to come along later. You also want to know how fast homes are selling, whether they are going for over asking price and what the sale price per square foot is, though your agent can help you with the numbers.

Know what home features are important. If you have a son and a daughter, settling for a two-bedroom house when you need three bedrooms probably doesn’t make sense. Buyers never get everything on their wish list, but you need to know which features are essential for your happiness.

See as many houses as possible. Once you decide you’re interested in buying a home, start going to open houses, even if you don’t have an agent yet. Open houses are an easy way to see lots of homes and talk to agents about options without making a commitment.

Know your budget. No matter your housing budget, you always discover that the features you want cost a little more. Plus, you could encounter a situation where you have to offer above asking price. Set a maximum for what you’re willing to spend and stick with it.

Always get a professional home inspection. In most areas, you’ll be asked to sign a contract to buy the house “as is” with the right to inspect. That means the seller is unlikely to make repairs, but you can withdraw from the deal if you don’t like what the inspection reveals. Before buying a home, you want to know the condition of the roof, ceiling, plumbing, electrical system and heating and air conditioning system. Knowing about foundation problems, water damage or termites is also important. You can typically use the inspection contingency to withdraw from the contract even if you don’t find major problems, giving you a few days to make sure you’re happy with the home once you’ve signed the contract.

Understand you may lose a few. Most first-time home buyers aren’t ready to move quickly the first time they see a home they like – or maybe even the second time. Even if they make an offer, they may not get the home. “It’s a learning process,” Rae says. “They see the home. They feel like they can’t move yet. It disappears.” Losing out on a few homes also may help you know the right one when you see it.

Source: realestate.usnews.com

The post How to Avoid Buying the Wrong Home in a Hot Market appeared first on AAOA.

Categories: RSS

How to Avoid Buying the Wrong Home in a Hot Market

Mon, 04/10/2017 - 8:27am

Many homebuyers are finding themselves in an unusual situation this spring: They have enough money and are preapproved for a mortgage, but can they actually secure a house?

The number of homes for sale in February fell for the 21st straight month compared with the previous year, with only a 3.8-month supply at the current sales pace, according to data from the National Association of Realtors. A six-month supply is considered a balanced market. The supply of homes for sale is even tighter at the lower price ranges.

That creates a major challenge for homebuyers, especially first-timers. If a prospective buyer isn’t careful, he could end up jumping at anything just to get a house, only to realize later that he bought a home that’s not right for his family.

“I feel that a lot of my purpose in the search process is making sure they don’t buy the wrong house,” says Dawn Rae, broker-owner of Florida Buyers’ Advocate in St. Petersburg, Florida. “If you can’t trust the person who is guiding you, you could buy the wrong house.”

Rae, who is the president of the National Association of Exclusive Buyer Agents, says the advice of a good agent who represents your interests is especially important in today’s tight housing market.

Her first recommendation for prospective buyers is to do significant research before they view homes. That includes deciding what features they want, what they can reasonably expect to get for their budget and what neighborhoods are acceptable.

“The more prepared you are, the more enjoyable it will be – and you’ll end up getting a home you’ll enjoy,” says Connie Durnal, a Redfin agent in Dallas.

She advises her clients to get as far along in the mortgage process as they can and write a draft cover letter to the seller so they can prepare a purchase offer quickly. With those issues out of the way, they can focus on choosing the right home.

“By relieving all this pressure, they’re not all wound up. They’re not bounding all over the place,” Durnal says. “It really lets them focus on the home.”

Rather than worrying about the process, prepared buyers can concentrate on whether the house fits their needs: Is it the right neighborhood? Is it the right size? Does the layout work for their lifestyle? By honing in on these issues, buyers are less likely to make a mistake and more ready to move quickly when they find the right home.

“If they have studied the market ahead of time … they will be more confident when they’re there, and they do see something that matches their parameters,” Rae says.

The market is moving quickly, which requires quick decisions from buyers and often submission of an offer as soon as they see a house they want. “The best houses are selling in three to five days, with multiple offers and even bidding wars,” says Victor Quiroz, of Berkshire Hathaway HomeServices California Properties in Southern California. But that doesn’t mean would-be buyers should settle.

“There’s always more housing coming to market,” Quiroz says. “Understand there will be more next week.”

Here are eight ways to avoid buying the wrong house in a competitive market.

Work with a trusted agent. Using an agent can give buyers an edge because the agent has access to information from the multiple listing service that buyers won’t find online. An agent can also help prospective buyers prepare their strongest offer.Line up your agent at the beginning of your search. If the agent doesn’t want to help you discuss you options before you’re ready to buy, find another agent.

Know what neighborhood you want. Explore and drill down into neighborhoods before you start seriously looking at houses. Ifschools are important, know the boundaries of the districts you want. Test the commute time from locations you’re considering. Don’t just research online, but also visit and talk to neighbors. Once you’ve chosen the neighborhood, you can narrow the search to the specific house.

Know the market. Know what types and sizes of homes are common in your preferred neighborhoods. This will help you know, when you see a listing or tour a home, whether you can expect a similar home that meets more of your needs to come along later. You also want to know how fast homes are selling, whether they are going for over asking price and what the sale price per square foot is, though your agent can help you with the numbers.

Know what home features are important. If you have a son and a daughter, settling for a two-bedroom house when you need three bedrooms probably doesn’t make sense. Buyers never get everything on their wish list, but you need to know which features are essential for your happiness.

See as many houses as possible. Once you decide you’re interested in buying a home, start going to open houses, even if you don’t have an agent yet. Open houses are an easy way to see lots of homes and talk to agents about options without making a commitment.

Know your budget. No matter your housing budget, you always discover that the features you want cost a little more. Plus, you could encounter a situation where you have to offer above asking price. Set a maximum for what you’re willing to spend and stick with it.

Always get a professional home inspection. In most areas, you’ll be asked to sign a contract to buy the house “as is” with the right to inspect. That means the seller is unlikely to make repairs, but you can withdraw from the deal if you don’t like what the inspection reveals. Before buying a home, you want to know the condition of the roof, ceiling, plumbing, electrical system and heating and air conditioning system. Knowing about foundation problems, water damage or termites is also important. You can typically use the inspection contingency to withdraw from the contract even if you don’t find major problems, giving you a few days to make sure you’re happy with the home once you’ve signed the contract.

Understand you may lose a few. Most first-time home buyers aren’t ready to move quickly the first time they see a home they like – or maybe even the second time. Even if they make an offer, they may not get the home. “It’s a learning process,” Rae says. “They see the home. They feel like they can’t move yet. It disappears.” Losing out on a few homes also may help you know the right one when you see it.

Source: realestate.usnews.com

The post How to Avoid Buying the Wrong Home in a Hot Market appeared first on AAOA.

Categories: RSS

Build to rent

Thu, 04/06/2017 - 10:50pm

Ah, that new-house smell. Fresh paint, flawless floors and brand-new appliances just waiting for homebuyers to do their final walk through. Except that the first occupants of some new homes aren’t owners at all — they’re renters. And they already know their landlord since he’s the builder.

The glory days for investors where they could cheaply buy a home in foreclosure and fix it up are at their end. From 2008 to 2012 foreclosures hit record levels, but  now that the foreclosure crisis is over, investors must find a new way to adapt to the evolving market.

That market includes soaring home prices according to a recent study by the National Association of Realtors, which shows that many metropolitan areas hit new highs in 2016. These conditions can make it difficult for investors to find profitable areas to invest in.

A growing trend within the real estate market, build-to-rent, seems to offer a clever solution. While this phenomena has been growing quietly for several years, it wasn’t until recently that it started to pick up steam.

One expert, HomesUSA.com President Ben Caballero, explained that he had never heard of builders renting out their inventory, but noticed the shift in the past year.

Some builders even left the sales market entirely, focusing solely on constructing rentals, said Caballero, whose company assists builders in marketing their sales and rental listings to Realtors through the Multiple Listing System.

Build-to-rent allows investors to buy newly built homes and rent them out instead of selling them. Because the homes are new,investors are able to charge higher rent prices and tenants often stay in the home for longer periods of time.

“In the SFR business, our clients are building large portfolios of rental properties,” said Greg Rand, CEO of OwnAmerica, a single-family rental investment brokerage. “And as it pertains to new home sales, one of the things that has arisen in the past two years is the build-to-rent trend, builders that are building single-family homes intentionally to create rentals out of them.”

Building homes to rent them out used to be thought of as just a niche, Rand explained. Now, however, it is being thought of as a substantial market segment.

And Caballero explained why builders could be choosing to rent out their new homes rather than sell them.

“I think it’s probably just the philosophy of taking advantage of the market escalation,” he said. “It might be a situation where they have inventory that they wanted to get off the market, and they might be able to lease something better than they can sell it.”

But the question remains: Why would builders move into the rental market during a time when homes are selling quickly and at higher prices than any time in the past decade? Rand said he understands why more builders are investing in build-to-rent.

“Builders — their life is a treadmill. They do a subdivision, they buy the land, they get the approvals, they build the properties, they sell the properties and when they’re done they’re out,” he said. “They’ve made their profit, if things go well they made a lot of profit, but they’re out and they have to go back on the treadmill and find another project.”

Really good builders have a pipeline of projects they are always lining up, however it is a never-ending process where if the builders can’t find something else to construct, it creates a problem — their employees and capital are still tied up in their business.

“Creating continuity for a builder is very hard, so a lot of them are getting excited about the idea of building and holding, which I had never heard of before except for in commercial real estate,” Rand explained. “Build a subdivision or buy a bunch of lots in a scattering of subdivisions and instead of building houses on them and selling them to homebuyers, they’re building houses on them and renting them to tenants and keeping them, which gives them the ability to create longer-lasting shareholder value by building a mountain of cash flow over time as opposed to just holding until they can equal the gap. That trend is really taking hold.”

But that’s not the only way builders are profiting from the growing build-to-rent trend. Rand said that all his clients looking at portfolios of rentals want to buy new if they can. This means that builders who construct a 25-unit subdivision are often able to sell the entire division to just one buyer, eliminating the cost and time of searching for multiple buyers.

“If they build and they want to hold, they could create the shareholder value over time,” Rand said. “If they build and they want to sell, they could sell the entire neighborhood in one transaction. It’s a very interesting twist.”

But why would investors want to rent out new properties instead of older ones? One real estate investment company, JWB Real Estate Capital, gives these reasons:

A house that is freshly built has a lot of money-saving advantages for investors. The property insurance is often less expense each year due to condition of the home. More insurance companies are offering lower annual costs for homeowner’s insurance to owners of new properties versus older homes.

Because many older homes have aged appliances, replacements will likely be necessary for a new investor. These costs are now always figured into the future goals of investors and can decrease passive income. A home that was recently constructed can often demand a higher rent price because of the age and location. Being the first investor on the market to own a home before it is deteriorated could secure a buy-and-hold future.

JWB also explained that the age of a home is a significant factor in whether renters will sign a long-term lease agreement. Because older homes experience faster rates of deterioration, renters grow tired of continuous issues, issues that would not be present in a new home.

And finally, JWB points out that the land value of a property increases over time, which means investors might have to pay more for an existing home. This would then lengthen the time required to earn back the money put in for the initial investment.

But despite these seemingly obvious upsides to renting out new homes instead of existing homes, rental prices for these new homes are still affordable, perhaps emphasizing their attractiveness.

“It’s surprisingly to me, the rents are not really that significantly different,” Caballero said. “I think that their rentals are really quite competitive. I’m not sure that they’re not leaving money on the table to be honest with you.”

RENTER NATION

Renter-occupied households account for 35% of single-family homes, according to the National Multifamily Housing Council. And the majority of those renters, 51%, are made up of those under 30.

“This is a seller’s market so what I’m finding is that anything that is put on the market that is reasonably priced and in reasonably good condition is selling, and rentals are no exception,” Caballero said. “When you’re in a good market, everything is moving quickly.”

The number of renter households increased by 9 million between 2005 and 2015, marking the largest increase over any 10-year period on record, according to the Harvard Joint Center for Housing Studies. This high demand for rental housing from Millennials is leading builders to construct entire neighborhoods just for rental housing, according to an article in the Wall Street Journal.

In the article, one expert explained how the growing appeal of renting reflects a new mindset about homeownership.

“It used to be that if you were an adult and didn’t own your own home, you were kind of a bum,” said George Casey, a former homebuilder and chief executive of Stockbridge Associates, an industry consulting firm. That stigma has now “been blown into a million pieces,” Casey said.

But not only is there a new mindset when it comes to renting, more families were forced into rental homes after the foreclosure crisis.

“The entire rental market has been very hot for several years,” Caballero explained. “What’s contributed to that is there’s been a lot of foreclosures for a number of years. There’s a lot of people out there that can’t qualify for a new home, they’ve been living in a home, they want to continue living in a home but they can’t buy one.”

With the rental market going so well, it makes sense that builders wish to capitalize on the market.

“I can tell you that the rental market is good and it’s probably even better in some areas than the sale market, and I suspect that that’s part of the information that’s considered by these builders,” Caballero said.

He explained that while major investment hedge funds capitalized on this rising demand in the past, builders are beginning to recognize the opportunity for themselves.

And in fact, who better to keep up with these rentals than the very builders who constructed them in the first place and have resources at their disposal for the upkeep of the homes?

“They can buy the home at a good rate and then put it in their investment portfolio,” Caballero said. “And then in other cases builders are doing this as just additional business.”

In total, about 5% of all new single-family construction was built for rent in 2016, up from a historical average of less than 3%. And experts say the trend will only increase over the next few years as home affordability decreases and as more and more older Americans consider downsizing.

THE DOWNSIDE

The build-to-rent trend, however, does have a downside. Housing inventory is hitting new lows, lingering at a supply of just 3.6 months at the current rate of sales, according to a report from the National Association of Realtors, and building to rent will only strain that supply further. Rand explained that homebuyers are facing a whole new realm of competitors for the few homes that are available.

“Actually, another way to look at it is that homebuyers are competing with home renters, and because of the large number of home renters, they’re technically competing with home investors,” he said. “Homebuyers are competing with investors, but homeownership is competing with rentership.”

And investors tend to have deeper pockets than a single homeowner.

“If you’re in Dallas, Texas, and you’re looking to buy a $175,000 single-family home that’s really nice, there’s a very good chance that you’re competing with an investor to buy that property,” Rand explained. “When there’s new demand, and there is new demand on the investor side, new demand is going to create a shortage of inventory.”

But increased competition isn’t the only downside of the build-to-rent trend. brings.

As it turns out, some builders refuse to sell their homes to investors who intend to rent out the property.

“Years ago there was one entire subdivision that was build out for rent – it didn’t turn out to be a very nice subdivision because you had an entire subdivision of homes that are rental,” Caballero said. “There’s a percentage level of rentals that will, in their opinion, negatively affect the saleability of the subdivision.”

In order to protect their future sales profits, some builders are resisting the build-to-rent trend in order to keep the home values high in the subdivision they are working in.

Even so, build-to-rent provides an attractive option for builders and investors with an appetite for growth in a constrained market. For them, and a growing pool of renters, that new-home smell is more tantalizing than ever.

 

Source: housingwire.com

The post Build to rent appeared first on AAOA.

Categories: RSS

Build to rent

Thu, 04/06/2017 - 10:50pm

Ah, that new-house smell. Fresh paint, flawless floors and brand-new appliances just waiting for homebuyers to do their final walk through. Except that the first occupants of some new homes aren’t owners at all — they’re renters. And they already know their landlord since he’s the builder.

The glory days for investors where they could cheaply buy a home in foreclosure and fix it up are at their end. From 2008 to 2012 foreclosures hit record levels, but  now that the foreclosure crisis is over, investors must find a new way to adapt to the evolving market.

That market includes soaring home prices according to a recent study by the National Association of Realtors, which shows that many metropolitan areas hit new highs in 2016. These conditions can make it difficult for investors to find profitable areas to invest in.

A growing trend within the real estate market, build-to-rent, seems to offer a clever solution. While this phenomena has been growing quietly for several years, it wasn’t until recently that it started to pick up steam.

One expert, HomesUSA.com President Ben Caballero, explained that he had never heard of builders renting out their inventory, but noticed the shift in the past year.

Some builders even left the sales market entirely, focusing solely on constructing rentals, said Caballero, whose company assists builders in marketing their sales and rental listings to Realtors through the Multiple Listing System.

Build-to-rent allows investors to buy newly built homes and rent them out instead of selling them. Because the homes are new,investors are able to charge higher rent prices and tenants often stay in the home for longer periods of time.

“In the SFR business, our clients are building large portfolios of rental properties,” said Greg Rand, CEO of OwnAmerica, a single-family rental investment brokerage. “And as it pertains to new home sales, one of the things that has arisen in the past two years is the build-to-rent trend, builders that are building single-family homes intentionally to create rentals out of them.”

Building homes to rent them out used to be thought of as just a niche, Rand explained. Now, however, it is being thought of as a substantial market segment.

And Caballero explained why builders could be choosing to rent out their new homes rather than sell them.

“I think it’s probably just the philosophy of taking advantage of the market escalation,” he said. “It might be a situation where they have inventory that they wanted to get off the market, and they might be able to lease something better than they can sell it.”

But the question remains: Why would builders move into the rental market during a time when homes are selling quickly and at higher prices than any time in the past decade? Rand said he understands why more builders are investing in build-to-rent.

“Builders — their life is a treadmill. They do a subdivision, they buy the land, they get the approvals, they build the properties, they sell the properties and when they’re done they’re out,” he said. “They’ve made their profit, if things go well they made a lot of profit, but they’re out and they have to go back on the treadmill and find another project.”

Really good builders have a pipeline of projects they are always lining up, however it is a never-ending process where if the builders can’t find something else to construct, it creates a problem — their employees and capital are still tied up in their business.

“Creating continuity for a builder is very hard, so a lot of them are getting excited about the idea of building and holding, which I had never heard of before except for in commercial real estate,” Rand explained. “Build a subdivision or buy a bunch of lots in a scattering of subdivisions and instead of building houses on them and selling them to homebuyers, they’re building houses on them and renting them to tenants and keeping them, which gives them the ability to create longer-lasting shareholder value by building a mountain of cash flow over time as opposed to just holding until they can equal the gap. That trend is really taking hold.”

But that’s not the only way builders are profiting from the growing build-to-rent trend. Rand said that all his clients looking at portfolios of rentals want to buy new if they can. This means that builders who construct a 25-unit subdivision are often able to sell the entire division to just one buyer, eliminating the cost and time of searching for multiple buyers.

“If they build and they want to hold, they could create the shareholder value over time,” Rand said. “If they build and they want to sell, they could sell the entire neighborhood in one transaction. It’s a very interesting twist.”

But why would investors want to rent out new properties instead of older ones? One real estate investment company, JWB Real Estate Capital, gives these reasons:

A house that is freshly built has a lot of money-saving advantages for investors. The property insurance is often less expense each year due to condition of the home. More insurance companies are offering lower annual costs for homeowner’s insurance to owners of new properties versus older homes.

Because many older homes have aged appliances, replacements will likely be necessary for a new investor. These costs are now always figured into the future goals of investors and can decrease passive income. A home that was recently constructed can often demand a higher rent price because of the age and location. Being the first investor on the market to own a home before it is deteriorated could secure a buy-and-hold future.

JWB also explained that the age of a home is a significant factor in whether renters will sign a long-term lease agreement. Because older homes experience faster rates of deterioration, renters grow tired of continuous issues, issues that would not be present in a new home.

And finally, JWB points out that the land value of a property increases over time, which means investors might have to pay more for an existing home. This would then lengthen the time required to earn back the money put in for the initial investment.

But despite these seemingly obvious upsides to renting out new homes instead of existing homes, rental prices for these new homes are still affordable, perhaps emphasizing their attractiveness.

“It’s surprisingly to me, the rents are not really that significantly different,” Caballero said. “I think that their rentals are really quite competitive. I’m not sure that they’re not leaving money on the table to be honest with you.”

RENTER NATION

Renter-occupied households account for 35% of single-family homes, according to the National Multifamily Housing Council. And the majority of those renters, 51%, are made up of those under 30.

“This is a seller’s market so what I’m finding is that anything that is put on the market that is reasonably priced and in reasonably good condition is selling, and rentals are no exception,” Caballero said. “When you’re in a good market, everything is moving quickly.”

The number of renter households increased by 9 million between 2005 and 2015, marking the largest increase over any 10-year period on record, according to the Harvard Joint Center for Housing Studies. This high demand for rental housing from Millennials is leading builders to construct entire neighborhoods just for rental housing, according to an article in the Wall Street Journal.

In the article, one expert explained how the growing appeal of renting reflects a new mindset about homeownership.

“It used to be that if you were an adult and didn’t own your own home, you were kind of a bum,” said George Casey, a former homebuilder and chief executive of Stockbridge Associates, an industry consulting firm. That stigma has now “been blown into a million pieces,” Casey said.

But not only is there a new mindset when it comes to renting, more families were forced into rental homes after the foreclosure crisis.

“The entire rental market has been very hot for several years,” Caballero explained. “What’s contributed to that is there’s been a lot of foreclosures for a number of years. There’s a lot of people out there that can’t qualify for a new home, they’ve been living in a home, they want to continue living in a home but they can’t buy one.”

With the rental market going so well, it makes sense that builders wish to capitalize on the market.

“I can tell you that the rental market is good and it’s probably even better in some areas than the sale market, and I suspect that that’s part of the information that’s considered by these builders,” Caballero said.

He explained that while major investment hedge funds capitalized on this rising demand in the past, builders are beginning to recognize the opportunity for themselves.

And in fact, who better to keep up with these rentals than the very builders who constructed them in the first place and have resources at their disposal for the upkeep of the homes?

“They can buy the home at a good rate and then put it in their investment portfolio,” Caballero said. “And then in other cases builders are doing this as just additional business.”

In total, about 5% of all new single-family construction was built for rent in 2016, up from a historical average of less than 3%. And experts say the trend will only increase over the next few years as home affordability decreases and as more and more older Americans consider downsizing.

THE DOWNSIDE

The build-to-rent trend, however, does have a downside. Housing inventory is hitting new lows, lingering at a supply of just 3.6 months at the current rate of sales, according to a report from the National Association of Realtors, and building to rent will only strain that supply further. Rand explained that homebuyers are facing a whole new realm of competitors for the few homes that are available.

“Actually, another way to look at it is that homebuyers are competing with home renters, and because of the large number of home renters, they’re technically competing with home investors,” he said. “Homebuyers are competing with investors, but homeownership is competing with rentership.”

And investors tend to have deeper pockets than a single homeowner.

“If you’re in Dallas, Texas, and you’re looking to buy a $175,000 single-family home that’s really nice, there’s a very good chance that you’re competing with an investor to buy that property,” Rand explained. “When there’s new demand, and there is new demand on the investor side, new demand is going to create a shortage of inventory.”

But increased competition isn’t the only downside of the build-to-rent trend. brings.

As it turns out, some builders refuse to sell their homes to investors who intend to rent out the property.

“Years ago there was one entire subdivision that was build out for rent – it didn’t turn out to be a very nice subdivision because you had an entire subdivision of homes that are rental,” Caballero said. “There’s a percentage level of rentals that will, in their opinion, negatively affect the saleability of the subdivision.”

In order to protect their future sales profits, some builders are resisting the build-to-rent trend in order to keep the home values high in the subdivision they are working in.

Even so, build-to-rent provides an attractive option for builders and investors with an appetite for growth in a constrained market. For them, and a growing pool of renters, that new-home smell is more tantalizing than ever.

 

Source: housingwire.com

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A startup that pits apartment hunters against each other could create upheaval in the rental market

Thu, 04/06/2017 - 10:48pm

A startup that lets renters compete in apartment auctions is about to grow a lot bigger.

Rentberry is an online auction site for long-term property rentals — think Craigslist meets eBay. It aims to streamline the rental negotiation process for both tenants and landlords by bringing the process online.

Rentberry expands nationwide later this year, from about 100,000 property listing across a handful of US cities (including New York, Miami, and Los Angeles) to more than 1,000 cities. As it grows upwards of 50,000 users, the startup has the potential to raise prices and create upheaval in the rental market.

To get started, a landlord lists a property on Rentberry and includes a suggested price, photos, and a description. Interested tenants submit a credit score, a completed background check, and a custom offer on the apartment. The seller selects a winning applicant from the pool.

On April 2, Rentberry announced plans to start charging 25% of the difference between the posted and negotiated rent to whoever gets the better deal ― the landlord or tenant ― every month. The startup currently charges a one-time fee of $25 for every signed lease agreement.

Rentberry debuted last summer to the anger of affordable-housing advocates and desperate renters. Its auction-based model pits urban dwellers (in already precarious housing markets) against each other, driving prices ever higher. Alex Lubinsky, CEO of Rentberry, said landlords using the service could expect to see an increase in rental income of 5% on average.

Nine months later, Lubinsky found the opposite to be true. He tells Business Insider that tenants on Rentberry saved 5.1% on rent on average compared with what landlords originally asked. That’s because the site lets users place bids that are lower or higher than the posted rent.

Eventually, Rentberry will take a cut of those savings when it starts charging the monthly 25% finder’s fee. Lubinsky doesn’t expect the new fee to hurt business, because landlords and tenants could still save by using the site. They also save time, by applying and signing rental agreements through a web form, and eventually paying rent on Rentberry’s website.

Though landlords may end up leasing an apartment for less than the posted rent, Lubinsky says it’s a fair trade-off for the visibility that a listing on Rentberry provides. They attract a greater number of applicants and can be choosier about picking the most reliable candidate.

Lubinsky calls his company a “middleman” for the rental market, for better or worse.

 

Source: businessinsider.com

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A startup that pits apartment hunters against each other could create upheaval in the rental market

Thu, 04/06/2017 - 10:48pm

A startup that lets renters compete in apartment auctions is about to grow a lot bigger.

Rentberry is an online auction site for long-term property rentals — think Craigslist meets eBay. It aims to streamline the rental negotiation process for both tenants and landlords by bringing the process online.

Rentberry expands nationwide later this year, from about 100,000 property listing across a handful of US cities (including New York, Miami, and Los Angeles) to more than 1,000 cities. As it grows upwards of 50,000 users, the startup has the potential to raise prices and create upheaval in the rental market.

To get started, a landlord lists a property on Rentberry and includes a suggested price, photos, and a description. Interested tenants submit a credit score, a completed background check, and a custom offer on the apartment. The seller selects a winning applicant from the pool.

On April 2, Rentberry announced plans to start charging 25% of the difference between the posted and negotiated rent to whoever gets the better deal ― the landlord or tenant ― every month. The startup currently charges a one-time fee of $25 for every signed lease agreement.

Rentberry debuted last summer to the anger of affordable-housing advocates and desperate renters. Its auction-based model pits urban dwellers (in already precarious housing markets) against each other, driving prices ever higher. Alex Lubinsky, CEO of Rentberry, said landlords using the service could expect to see an increase in rental income of 5% on average.

Nine months later, Lubinsky found the opposite to be true. He tells Business Insider that tenants on Rentberry saved 5.1% on rent on average compared with what landlords originally asked. That’s because the site lets users place bids that are lower or higher than the posted rent.

Eventually, Rentberry will take a cut of those savings when it starts charging the monthly 25% finder’s fee. Lubinsky doesn’t expect the new fee to hurt business, because landlords and tenants could still save by using the site. They also save time, by applying and signing rental agreements through a web form, and eventually paying rent on Rentberry’s website.

Though landlords may end up leasing an apartment for less than the posted rent, Lubinsky says it’s a fair trade-off for the visibility that a listing on Rentberry provides. They attract a greater number of applicants and can be choosier about picking the most reliable candidate.

Lubinsky calls his company a “middleman” for the rental market, for better or worse.

 

Source: businessinsider.com

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Landlords better protected by large security deposits than small claims court

Thu, 04/06/2017 - 10:18pm

The information in this column is intended to provide a general understanding of Texas law, not as legal advice. Readers with legal problems, including those whose questions are addressed here, should consult attorneys for advice on their particular circumstances.

Q: Prior tenants of my rental property left a big mess when their lease expired. I spent $2,000 cleaning the place. How can I collect from them or let others know? I don’t suspect small claims court is a good option since there would be no way to enforce payment.

A: If contacting and asking them to pay won’t work, your only other workable option is to sue in small claims court. But you are correct that even if you win a judgment in small claims court, it will be difficult, if not impossible, to collect. Texas law goes to great lengths to protect the properties of people who owe money to others.

Even so, if you want to let the world know they are problem tenants, you can sue and obtain your judgment. According to the Experian website, the judgment you obtain will be collected by the national reporting companies and will appear on their credit report.

You would clearly be going to a lot of trouble and expense to help other landlords you don’t know and will never meet. That is a decision you will have to make.

The next time you rent the property, be sure to get a large security deposit and conduct a proper background check, including a credit check, on any prospective tenant.

Q: Both of my parents’ wills were probated, and thereafter my brothers and a sister all filed quitclaim deeds in favor of another sister, giving her my parents’ house. Is there some document showing her as the sole owner, or are the probated wills and quitclaim deeds the proof?

A: The probate records for your parents’ estates and the quitclaim deeds are the documents that establish your sister as the owner of the house. If she sells the property prior to her death, a title company will review the history and hopefully conclude that she is the rightful owner.

If your sister dies before she sells the house, some sort of probate will need to occur (or she might sign and record a transfer on death deed), and then the next owner or owners will be in the same position as your sister where they would rely on the probate records and prior transfer documents to establish that they have become the new owners.

It should be noted that quitclaim deeds are rarely used in Texas. If you do a quick search online, you will see that some lawyers call them “worthless.” They are sometimes used to clear up title when there are problems, but they are typically never used to convey title.

In this regard, you may want to meet with a real estate attorney to determine if steps can be taken now, while all the siblings are alive, so that the chain of title is clean.

Source: houstonchronicle.com

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These are the best places for Millennials to rent

Thu, 04/06/2017 - 10:12pm

RealtyTrac today released its first quarter 2016 Single Family Rental Market Report, which ranked the top 15 counties for renting single family homes to Millennials.

The study, based on 448 counties across the U.S. with populations above 100,000, ranked the counties by studying in which counties annual wage growth increased more quickly than annual rental rate growth.

The study showed that in the 15 top counties, the Millennial share of the population increased at least 10% from 2008 to 2013.

Here are the top 5 ranked counties with the best markets for renting to Millennials:

5. Okaloosa County, Florida of the Crestview-Fort Walton Beach-Destin metro area with 10.5 annual gross rental yield and Millennial population share increase of 22.2%.

4. Jackson County, Missouri of the Kansas City metro area with 11.1 annual gross rental yield and millennial population share increase of 13.5%.

3. Bell County, Texas of the Killeen-Temple metro area with 11.9 annual gross rental yield and millennial population share increase of 20.6%.

2. Richmond City, Virginia with 13.7 annual gross rental yield and millennial population share increase of 27.6%.

1. Milwaukee County, Wisconsin with 15.7 annual gross rental yield and millennial population share increase of 16.4%.

This is a table shows all 15 best Millennial SFR markets:

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Source: housingwire.com

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Landlord uses ‘beware’ sign to warn alleged drug-dealing tenants

Thu, 04/06/2017 - 9:10am

A fed up Staten Island landlord put the writing on the wall for a pair of tenants accused of peddling drugs from her home.

“Enough was enough,” said building owner Donna, who decided last week to take a DIY approach to dealing with the situation.

“Beware! Drug Dealers Downstairs!” warned a handmade sign, written in red ink, and taped outside of her New Dorp building.

“I knew it was going on and they kept lying to my face. This has been going on for two years and they wouldn’t stop,” said Donna, who asked to be identified by her first name only.

On Thursday, just days after Donna put up the sign, narcotics officers swooped in and busted the tenants, sisters Linda and Christine Genise, on drug charges, officials said.

“When the police came, I thought it was someone coming to collect on someone they screwed over. When I saw it was the police I was so relieved,” Donna said.

Cops said they found heroin and Oxycodone in the Genises’ apartment. The sisters, both 52, were being held at Rikers Island Saturday in lieu of $2,500 bail each.

Donna, whose sign was first reported by the Staten Island Advance, said the Genises were annoyed, but undeterred.

“Oh, they were pissed,” she told The Post Saturday. “The sign was up, but they still dealt [drugs]. Nothing was stopping them.”

The sisters have rented the downstairs apartment from Donna for four years.

“Believe it or not, the first two years, they were amazing tenants. Always paid their rent,” she said.

But now, the apartment is trashed, with broken outlets, burn marks on the vanity, holes in the walls, Donna said.

The landlord said she suspects they have been dealing drugs for about two years. She has been trying to evict them since January.

“I didn’t want any of this to happen,” Donna said, but she had no choice, because the alleged activities puts her family at risk.

“ I have a 2-year-old kid with Down Syndrome; I had no choice but to take legal action,” she said.

There were 1,075 opioid-related overdose deaths in the city last year, up from 753 such deaths in 2015. Staten Island has been especially hard hit by the crisis, with more than 100 overdose deaths last year, up from 69 in 2015, the Advance reported.

Source: nypost.com

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Prevent and Prepare for Springtime Pests

Mon, 04/03/2017 - 10:49pm

Warm weather is on the way, but it brings increased pest activity from insects, arachnids and other annoying invertebrates. It’s easier to prevent nuisance bugs from establishing an infestation, but if they’ve already invaded your facility, don’t panic. Get to know the most common springtime pests and determine how to deal with them with these tips.

Common Springtime Pests

Three key types of pests stay mostly dormant over the winter and emerge in spring, says Jim Fredericks, Chief Entomologist and Vice President of Technical and Regulatory Affairs for the National Pest Management Association: ants, termites and flies. All three lay low when the temperature dips under 50 degrees F. and resurface when the weather is dependably warmer, especially after rainstorms.

“Ants are the No. 1 nuisance pest in the United States,” Fredericks explains. “They don’t completely die out during the cooler months but might be outside of the structure in mulch or landscaping, hiding under rocks or inside using insulation to stay warm.”

Termites can destroy wood in structures year-round but are typically more visible during spring when they emerge to mate and start new colonies, Fredericks says. Flies typically remain dormant all winter but are able to move again and invade structures as temperatures start to rise. “Termite infestations, particularly subterranean termites, build shelter tubes that come out by the building’s foundation. It’s basically a thin mud tube that extends out of the ground a foot or so into the structure. That’s one sure sign of termites,” adds Gene Chafe, General Manager for Senske Services, a landscape maintenance and pest control provider.

Cockroaches and bedbugs are active all year because they’re most active indoors but should still be covered for in spring pest management activities, Fredericks says.

Proactive Steps to Prevent Infestations

The best thing to do is have an integrated pest management program in place that anticipates pests common to your area, inspects accordingly and takes action proactively, Chafe says. Pest management providers can inspect your property on a weekly or monthly basis and identify emerging outbreaks and conditions that encourage infestations, such as moist wood that can attract carpenter ants or leaves blown up against the foundation that provide nesting areas.

In addition to implementing a smart pest management strategy, make sure any screened windows are in good repair to keep flies out. Move garbage cans or designated refuse areas away from the building if possible and keep your compactor room or trash chute clean. Seal entry points and install door sweeps to keep out ants.

Outside, Chafe recommends inspecting your irrigation system while it’s running to check for standing water. Prune bushes 18-24 inches away from the structure and trim trees so that they don’t touch the building. Consider thinner ground cover, as thicker plantings can hide ground-nesting rats and other invaders, Chafe adds.

How to Expel Intruders

Once an infestation has settled in, you need to call in a pest control professional to sort it out before it gets even worse. Practitioners of integrated pest management will start with the least toxic methods to control the population, says Chafe.

Don’t try to take care of the infestation yourself, Fredericks warns. Different insects require different treatments and using the wrong one could backfire. He also suggests checking out the pest guide at pestworld.org to learn more about the habits, habitats and potential threats posed by different species.

Source: buildings.com

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Hidden Costs That Can Diminish Your Rental Property Profits

Mon, 04/03/2017 - 10:07pm

When purchasing their first rental properties, many investors believe that the assets will effortlessly bring in money. However, they soon discover the hard way, that owning rental units attract a myriad of costs, which can significantly dent the amount of rental income. It is, therefore, important for a rental property investor to understand what these associated costs are, and how to best avoid or keep them in check.

Unscrupulous or untrustworthy contractors As a landlord, you will have to work with contractors to grow and excel your rental investments. Some of these partners are property management companies, real estate agents, attorneys, accountants, as well as, service and repair contractors. Enlisting and retaining the services of these professionals naturally requires money, which ideally, should come from the rental property.
Hence, it is important that you get reasonably priced partners and contractors, who understand that for them to get their pay, your business needs to flourish. As such, their primary concern should not only be to get paid, but rather to help you grow your rental investments.

Problematic renters As ironic as it may sound, even though a tenant is supposed to give you income if you get a wrong one you might just realize that a large chunk of the rent goes to waste. For instance, the tenant might make you waste precious time to demand the rent each time it is due or compel you to spend countless hours mediating conflicts between him or her and other tenants. Similarly, you might incur costs evicting the tenant or fighting off legal suits filed by the renter.

A straightforward and economical way for you to avoid such costly inconveniences is to put in place a thorough tenant screening procedure to help you identify and qualify high-quality renters, who will pay the rent promptly.

Property maintenance One of the pains of a landlord is ensuring that the property is rent-ready and in the perfect habitable condition possible. While maintaining and servicing the rental units can be smooth and manageable, at times the cost can spiral out of control, more so, if the property is old and severely worn out. In such a case you might have to finance endless and costly repairs before the building becomes habitable.

If you wish to control such losses, make sure you carry out careful property inspection to evaluate the condition of the property before purchasing it. Moreover, only hire reliable, competent and affordable service or maintenance technicians, who will give the right solution. Lastly, inform your tenants through the rental agreement that they will be liable for certain types of property damages.

Insurance costs It makes perfect business sense for a property owner to protect his or her investment against any possible event. The challenge, however, sets in when the insurer considers the owner as an investor instead of the primary occupant. As a result, the owner has no option but to settle for the costly special landlord insurance coverage, whose premium averages about twenty-five percent more than the regular homeowners’ policy. Not only does this bite a huge chunk of the rental income, but it gets complicated if the resident terminates the lease before the full term, and the house goes for long without getting a new occupant.

A prudent way of managing such costs is to factor in the insurance premiums in the monthly rent and doing all you can to keep your renters happy so that they stay to the end of the lease. Furthermore, have in place effective measures that guarantee you always have prospective tenants who are ready to move in, immediately when the units become vacant.

Increased taxes Most states and municipalities have homestead exemptions where they offer tax breaks to owners who live in their properties. In contrast, however, they impose heavy tax burdens on the investment properties. Naturally, the tax burden will have an impact on the amount of rental income a landlord gets from his or her investment. Fortunately, there are other costs related to the rental properties which can entitle you to tax breaks. Talking to an experienced and credible rental property taxation expert can help you to identify such perks.

Miscellaneous Damages Another common yet difficult to predict cost are those that occur in the middle of another activity. For instance, a window could break during property maintenance or an AC unit could get damaged during servicing. Since it is practically impossible to foretell if and when you will incur such expenses, it becomes relatively difficult to keep the costs in check. Nonetheless, you can try to be extra careful when handling the repairs, and only let someone with the right experience and competence manage the repairs. If you hire a maintenance or service specialist, go for one who has adequate insurance coverage and offers service warranties.

Conclusion Most first-time rental property investors hardly think about the hidden costs associated with their investment until after they have purchased the units. Even though by then it might be too late to reverse the investment decision, it is still possible to keep those pesky costs in check. You only need to know what expenses are denting your income and take the necessary reactive measures to control them. Still, taking the time to assess and evaluate the property before purchasing it remains the best way to keep most of these hidden costs at bay.

Source: realtybiznews.com

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