How The Heck Did I Become A Landlord?

Hi Folks,
   Hope all is well, and your Holiday spirit is brimming over the top!
   OK, I certainly agree, the title of this post may be silly, but the topic is anything but silly.

   Amy Hoak did a great job addressing the "Accidental Landlords" in her story for the WSJ. Hoak defined one such landlord as "a landlord not by choice but because of circumstances beyond control", namely, the real-estate crash, in which this particular homeowner was suddenly faced with a choice: "sell for $100,000 less than what she paid, or hold on and hope that prices recover." She chose to hold on, rent the property, and thus, became an "Accidental Landlord". The chaos that ensued was a nightmare, that was harassing neighbors, and made complaints about everything from loud music to dust on her mailbox.

   "Becoming a landlord when a property proves difficult to sell is also a gamble that housing prices will rebound fairly soon, and that the ultimate sale price will more than cover expenses incurred in the meantime.", says Hoak, but with that gamble also comes legal responsibilities, expenses, and "unforeseen headaches"

   Lisa Eckert, a property manager for Coldwell Banker Bain, in Kirkland, Wash, commented in Hoak's article that she thinks we will see "a lot more owners becoming landlords" due to the economy, and says that people are "turning to renting out as the last-ditch effort". For example, Rick Sharga, executive vice president of Santa Ana, Calif.-based Carrington Mortgage Holdings LLC, says that rents are rising and there are millions of potential home buyers who are unable to qualify for mortgages.

   If you find yourself at the threshold of becoming an "Accidental Landlord", there are some tips that were shared that can help you survive, such as high costs (such as taxes, insurance, possible homeowner association dues, maintenance, etc.). For some landlords, Hoak writes that they might be better off hiring a Property Manager. Basically, a Project Manager, who will handle the maintenance, along with collecting the rent and other related services to managing the property, all for a fee that varies regionally and locally.

   Some of the additional tips that will help both new and seasoned landlords survive, include having a strong and enforceable contract, as well as full documentation of all correspondence, expenses, etc, should they ever need paperwork to bolster the reason for an eviction.

   My favorite quote from Hoak's piece came from Jerry Arnold, who has been renting out a condo he owns in Seattle since 2009, and he said the following about renters; "Nobody treats a property like an owner".

   Mr. Arnold, you are correct. However, there is one other group of people out there that also will treat a property like an owner; tenant-buyers, who are signed on to a Rent to Own contract. Basically, why just rent out a home that you can't sell? Why not rent it out with an option to buy, or Rent to Own?

   Does that make sense? What do you think about that statement?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #landlord #realestatecrash #rentproperty #risingrent #housingprices #PropertyManager #eviction #RenttoOwn #contract #renter #tenant

Property Managers Thrive as Rentals Soar

Hi Folks,

   Hope you all had a great weekend, whether you were doing Holiday shopping or anything else to relax this past weekend.

   For quite some time, many honest and hard working Property Managers were being grouped into the same category as some bad apples in their field. However, since people are having difficulties purchasing homes due to mortgage rules, etc, rentals are soaring, and in conjunction, Property Managers are flourishing.

   If you are not sure of what the functions of a Rental Property Manager are, they "handle such tasks as screening tenants, helping landlords set rents, resolving disputes and ensuring lawns get mowed. They charge homeowners about 8 percent to 14 percent of the monthly rent, depending on the manager and city", as told by Hui-yong Yu on businessweek.com.

   Time for some hard facts from Yu in the article, "Once ‘Ugly’ Property Management Grows as U.S. Home Rentals Surge", Renter household formation "surpassed new owner-occupied homes in 2007 for the first time since 1985 and has held the lead since", per the U.S. Census Bureau data". Additionally, U.S. apartment vacancies fell to a five-year low in the third quarter, according to Reis Inc., a New York-based real estate research company. Supply and Demand - less vacancies means less apartments available, and thus, higher rents. Diane Castanes, a partner at Phillips Real Estate Services in Seattle, mentioned that “When rents go up, that gives people enough cash flow to hire professional management,”

   “There has been a dramatic shift toward renting,” Chris Herbert, research director of Harvard University’s Joint Center for Housing Studies, and as Yu said, services for rental properties are thriving "following a surge in foreclosures and stiffening of mortgage standards". This led to an explosion in membership in the National Association of Residential Property Managers over the past five years, according to the Chesapeake, Virginia-based trade group".

   This is where this story becomes extremely interesting.

   "Property management may have a role to play in fixing the housing crisis", said Reggie Brown, chief executive officer of All Property Management LLC, a Seattle-based Web service, in a segment of Yu's article. A few months back, the FHFA, which regulates Fannie Mae and Freddie Mac, was looking for ideas on "handling foreclosed homes held by the government", to the tune of about 248,000 as of June.

   Brown "filed a suggestion with the FHFA that the homes be put up for rent with property managers hired to oversee them", which was a fantastic idea. "What’s going to change is the percentage of U.S. households that are rental versus owner-occupied,” he said. “It’s now almost 40 percent, but that number is definitely going to grow.”

   From our standpoint, this is a great idea on many levels. With the proposal from Brown, coupled with our proposal to Rent to Own these homes (to generate immediate revenue), I definitely feel this would make a large impact on the Housing Market.

What are your thoughts on this?

Would You Like Our Blog Posts Sent Directly to your E-mail? Here's How:

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #PropertyManager #rentalproperties #foreclosures #RenttoOwn #screeningtenants #homeowners #owneroccupiedhomes #apartmentvacancies #FHFA #Rentals #mortgagerules

Low Housing Inventory As A Common Denominator

Morning Folks,

   Glad to have you here with me.

   This morning, the New Residential Sales figures were released for this past April, and there has been a nice bump over the past month in the sales of new one-family homes, specifically 7.3% above March. Over the longer term (since April 2010), there was a drop of over 23%. Does this come as a shock?

   According to 3 separate sources, not really, as they all cite low inventory as the common denominator.

   Barry Goodhart, a Property Manager, says that there is "less inventory for buyers to choose from", and thus, "The decrease in new houses coming on the market should help support".

   Ken Pozek, a residential real estate agent in Suburban Metro Detroit, says that they are having an "Amazing" sales year, and that, "low inventory is making this a crazy market!"

   Finally, Ken Koenen, LLM Attorney at Law, says that he has, "little faith in the numbers provided.", and that, "too much inventory is owned by the banks", and that, "they are controlling the market place at their whim."

   What are your thoughts? Were you happy about the increase over last month? Concerned over the big drop from last year? We'd love to hear from you.

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #residential #homes #propertymanager

The Home Building Process, Part 2 of 3

Good Morning,


   Today, we will be covering part 2 of our 3-part series on the Home-building process. In part 1, this past Wednesday, we took a look at the process from the first meeting between a future property-owner, the building company and general contractor. For a different perspective, now we will look at some additional tips from both a property manager and from an interior designer.

   From the angle of a property manager, we spoke with Blake Appleby, President of Cornerstone Property Management, Inc. in Colorado, who has almost two decades of experience managing large mountain homes, and he provided some additional pointers to be aware of during and after the process.

   Primarily, Appleby states that it is important to give consideration to where snow or rain will shed from the roof, to avoid snow, ice, or rain shedding on entry ways, decks, in front of garage doors or other areas that might interfere with basic usage of the home, as it can result in, "snow removal nightmares and added expense." He also reminds us that, "Complex roof designs can lead to ice build up and subsequent roof leaks in winter months."

   In addition, Appleby suggests using climate appropriate building materials on the exterior home, which will also save time and money (taking into consideration the, "temperature fluctuations, amounts of moisture, harmful direct sunlight and any other factors that might cause the exterior to deteriorate more quickly than normal."), and additionally, to install a leak detection system.

   As far as the interior of the home, he suggests keeping the use of technology as simple as possible, and while the latest gadgets are "impressive in the showroom", home integration can be very complex. Appleby suggests to, "stick with simple dial thermostats for climate control.", and to avoid computer controlled lighting.

   In keeping with the interior of the home, we spoke with Jo-Ann Capelaci, an interior designer with Colours & Concepts Interior Design, in California. Capelaci recommends that you, "Ensure that the interior design reflects the style of the outside of the home.", and to select all interior finishes, i.e. flooring, tile, cabinets, paint, etc, and to "produce a book to include all specifications". She suggests doing this before construction begins, if possible.

   Additionally, Capelaci suggests preparing the flooring plan, tile floor plans and elevations, electrical and lighting plan and furniture plan, select the furniture, window treatments, lighting and accessories, and to prepare the budget for these items and purchase them so that when construction is complete, these items are all ready. She suggests to, "enlist the help of a design professional, even if it is to confirm your choices and make recommendations.", since, "Designers truly do see things in a different way and assist clients to do things they might not have even known were possible"

   In closing, Appleby added another fantastic tip - To make sure that you "have records of the make and model of boilers, HVAC units and any other critical components in the home.", because if you need a service call, this can limit the amount of time with no heat, hot water etc. Additionally, Appleby adds that it is important to keep up with "basic preventative maintenance", such as cleaning gutters, dryer vents, changing HVAC filters and having your heating and cooling systems serviced once a year.

   We hope these tips have been helpful. Tune in on Monday for the final part of this 3-part series, where we will speak with some people who have gone through the actual process of building their own home, which will provide a very unique perspective for those of you interested in doing so.

Have a Great Weekend, and Happy Rent-to-Owning !

Examining the Home Building Process, Part 1

Good Morning,


   At the request of our readers, we are beginning a 3-part series on the Home-Building process. We always receive a lot of questions about how the process actually works, and we have made contact with some solid resources to bring you some pretty good information that should be incredibly useful to you.

   David Spetrino of Plantation Building Corp (in Wilmington, North Carolina), uses a 10-step process that brings buyers from start to finish. The first step involves meeting their potential customer to identify their wants and needs (this is where you describe your custom dream home and the ideal “move in date,”). They need to know, for example, if you enjoy entertaining in your home, if this is a primary home or a vacation home, and if you would you describe your ideal home as formal, casual, or a hybrid of both styles. They will also ask you if you have any “green” requirements (environmentally-friendly)

   Next, they will discuss where the home will be located. If you have a lot ("home site") already, that's fine, and if you provide them with the address or community of choice, they will do the research regarding setbacks, zoning, architectural standards, etc. After this, they move on to the professional service agreement, estimate preparation (where they collect bids from their trade contractors and vendors), and ultimately, the construction contract (which involves the construction schedule and your financing). Spetrino makes it a point to note that, "the bank that provides the construction financing may not always be the bank that retains your long term mortgage. You have likely provided your lender with tax returns and related financials. Your bank will want us to supply them with a copy of the construction contract, set of construction drawings, specifications and the budget."

   During this process, the General Contractor comes into play, and there are some pointers provided by Arlene Battishill, a licensed general contractor in Los Angeles. Battishill notes that any proposed home site must be zoned for residential use, and you will need an accurate legal description of the parcel, soil testing, and a structural engineer’s review of the architectural plans to determine if any special reinforcement will be required. Once a licensed general contractor (“GC”) is hired, cost estimates can be made, and once acceptable, the architect or general contractor will submit the architectural plans to the local government building department for evaluation. Once all changes are made and the building permit fees are paid, construction can begin.

   From this point on, Spetrino's company works out the full details, and then begins construction. They provide, "regular updates, photos, and twice monthly, a ‘cost report’ that tracks budget and schedule." Over the course of construction, sometimes changes need to be done, and these requests go into a written format, officially known as the ‘change order.’ Once the "Big Day" arrives, a thorough "inspection and orientation of your new home" is completed. After one month, they schedule a follow up walk through to make sure that you are completely happy, and they also schedule a one year walk through.

   Battishill notes some of the costs of the process, for example, purchasing the land, the fees paid to all of the required consultants, fees to the local government and then the cost of construction. She notes that financing should be obtained well in advance of construction, and to assume that you will need 25-50% more money than the budget calls for to ensure successful completion, as cost tends to overrun in the construction of new homes.

   Please join us on Friday for part two in this series, where we have some additional pointers and points of view from a Property Manager and an Interior Designer.

   Have a Great Day, and Happy Rent-to-Owning !