Big Market Players Focus on Filling Homes with Renters

Hi folks,
   I like to consider my readers as quite familiar with the way the Real Estate market works, namely, the ebb-and-flow of buying properties and selling properties. With that being said, you know that Investors make up an important chunk of overall home purchases. However, per data from the National Association of Realtors (NAR), in early 2009, 25% of homebuyers were investors. Earlier this year (in February), they made up 22% of home buyers, but then, in July, that figured dropped to 16% Nationally.

   "Housing has morphed from a form of shelter to one of the most popular tradable assets, thanks to a huge influx of institutional investors in a mammoth, albeit decreasing, supply of distressed properties", writes CNBC Real Estate Reporter Diana Olick. Olick adds that this is why, "...it should come as no surprise the housing market is now nearly as volatile as the stock market". Indeed, it is volatile, but what happened to all of these investors?

   Not too long ago, large investors like funds Blackstone and Waypoint were buying properties by the bushel, and pushing up home prices. But now? Well, with all of the homes under management, they are working on filling the homes with renters, as Olick wrote in her article, "As investors shift, housing is the new stock market", now investors are focusing on filling those houses with renters.

   With the slowdown in investor purchases, Olick say that there could be a consolidation of investor firms (larger firms buying up smaller players). But the volatility remains. A contributor for Olick's story was Glenn Kelman, CEO of Redfin (an online real estate sales company), who said that, "We've seen more volatility in real estate in the past five years than we have in the past 500".

   Stay strong and Stay tuned!

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Regards,
Rob Eisenstein
HomeRun Homes - Rent to Own Homes, since 2002
"Located at the Corner of Technology and Real Estate"
Rent to Own Homes and Real Estate Blog for HomeRun Homes: http://blogging.lease2buy.com

HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com



TAGS: #RealEstateinvestor #buyingproperties #sellingproperties #homepurchase #Realtor #NAR #distressed #housingmarket #sales

5 Real Estate Investor-Endorsed Tips For Buying a Home

Hi Folks,
   The weekend is here. By a virtual show of hands, how many of you will be house hunting this weekend? For those of you that rose your virtual hand as a "yes" to house-hunting, do you feel anxiety about buying a home? Do you feel like you might not be able to keep up the payments, but you really love the home, and you turn a blind eye to any of it's flaws?

   "Most people only buy a couple homes in their lifetime. This lack of experience leads many home buyers to feel woefully unprepared...", says Justin Pierce, a real estate investor in Northern Virginia. It certainly is a big move for most of us, but as Pierce writes in his story on the Washington Post website, "you’re not getting married. You don’t have to make a lifelong commitment to a home", and adds that you can always move later "if you fall out of love with your home, as long as you buy right."

   Pierce writes that he buys a home "almost every month", and admits that even with his experience, "it’s hard to know whether to pounce on a deal or to walk away", but says that the process doesn’t have to be so complicated "if you keep things in perspective."

   There is a set of rules that he relies on when buying a house, and he says that these same rules can be used by anyone buying a house.Pierce shares his wealth of knowledge here to give us some great tips:

Tip #1: Determine your needs for the next five years:

The number one priority is affordability, says Pierce, who suggests that you consider all the costs (including maintenance and utilities). A great example is any unplanned expenses, such as your cesspool overflowing all over your basement the first week you move it (yes, that's what happened in our home!). The cost for removing the carpet that was just put down 2 days earlier, pumping the cesspool, and putting new carpet down was a $2,000 very unwelcomed surprise!). Pierce muses about the folks who buy "half million dollar McMansions and then fail to maintain them", urging you to "buy the right size home; bigger is not always better".

Tip #2. Get the facts:

Pierce says the the number one rule is "do not overpay for a home", and says that he never buys on future value (and refers to that as an illusion that got many of us in trouble). He suggests being realistic if estimating the cost of repairs the home will need. Conversely, he cautions us not to let a home inspection "scare you away from a good deal", and he provides an example of a friend who had the opportunity to purchase a $650,000 home at a short sale for just $520,000, but walked away after the inspector "found a laundry list of items that needed repairs". Albeit a "scary" looking list, as he called it, it was about $20,000 of work, leaving the remainder as over $100,000 in equity. Remember: "Get the Facts !".

Tip #3. Don’t fall completely in love:

"When I’m remodeling a home for resale and I’m faced with a decision to either improve the home’s insulation or make the home more beautiful, I’m almost always forced to beautify.", says Pierce, who says that people who lack experience will rely on their emotions. He adds that Real Estate agents are well aware of this, and this is why they try to "decorate and stage a home so that people fall in love and forget the facts". He cautions that if you fall prey to your emotions, you can get into "bidding wars and overlook discrepancies that need more attention". The final point he makes on this tip is that "It’s much easier to replace kitchen cabinets some time down the road than it is to reinsulate a home. But people aren’t concerned or willing to pay for what’s behind the walls. They should be."

Tip #4. Get professional help:

Pierce says that "Real estate agents, home inspectors, appraisers, lawyers, surveyors and contractors are all valuable resources but they’re no good if you disregard their advice.", and he says the key here is "to trust but verify. In terms of a Real Estate agent, speak with many different agents and ask for references, until you find one that you are comfortable with. Once you are working with an agent, ask your agent to go over comparable sales with you, and "not just spit out a value", as Pierce says, since this will "help you feel confident about your offer and reduce the risk of complications from a low appraisal."

Tip #5. Don’t be afraid to pull the trigger or walk away:

OK, so you have all of the facts about a house that you are incredibly fond of, and if "the price is fair and affordable then don’t be afraid to seal the deal", says Pierce. On the flip side, if the price is above the market value or the price does not take into account the amount of work it needs, Pierce recommends that you, "remind yourself that there are plenty of other houses to choose from".

   Certainly some great tips here, but sometimes, when in the heat of battle and bidding for a home, it's easy to lose perspective. Pierce aptly sums up what your mindset should be during the process; "Remember a house is just sticks and stones and there are plenty of them out there. You make it a home."

   If you were going to add a "Tip #6", what would it be? Please share it with us here.

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


TAGS: #RealEstateInvestor #Homebuying #ShortSale #HomeEquity #BiddingWar #Agents #HomeInspectors #Appraisers #Lawyers #Surveyors #Contractors

The Fed Pushes Rent To Own For REO Foreclosures

Hi Everyone,
   I hope you had a great President's Day, especially if you were fortunate enough to have the day off.

   In some previous posts here over the past few months, we have discussed the connection that is music to the ears of Real Estate Investors, which is using Rent to Own for the immense amount of homes that are on the balance sheets of the banks, which are called REOs (basically, Real Estate Owned by the banks). Initially, we discussed this in "Feds Finally Keen on Rent to Own Housing", and then in the post titled, "From A Sad Foreclosure To A Happy Home". This is such a promising topic for everyone, not just Real Estate Investors, that it's important to revisit it here today, with some details and info from Joe Mont in his story titled, "Need a Foreclosure Cure? Try Rent-To-Own", and which appeared on TheStreet website.

   First, some info for those unaware of Rent to Own

   In a Rent to Own Deal, a Seller rents out their home to a Potential Buyer (a Tenant-Buyer), with a set price at which they will sell the home for during or at the end of a specified period of time. There is also an Option Fee, or an option-to-buy fee, which can run 3-5% of the value of the home.

   In the article by Mont, Brett Furniss, president and owner of BDF Realty, a Charlotte, N.C.-based firm that specializes in rent-to-own properties, says that there has been steady interest in these arrangements for the past few years, and says that "sellers realize that they can't sell their house for market value, so they are willing to entertain rent-to-own tenants, whereas in the past they just wanted to get the property sold"

   There are benefits for both sides on these deals.

   For the buyer, they have a vested interest in a property that they would like to ultimately purchase, and the time period of the agreement allows them to check out the area, the schools, and to build up their credit and/or their down-payment before making the purchase.

   For the seller, the mortgage is getting paid, and thus, the bleeding stops. They also have people in the home that they hope will take care of it as if it were their own, as well as taking care of the utilities, taxes, and as Furniss adds, "the risk of vandalism".

   "Fed Chairman Ben Bernanke shared his views on ways to escape the nation's foreclosure crisis", writes Mont. "Among the ideas in that speech" to the National Association of Homebuilders, was the topic of "rent-to-own properties". Additionally, says the Fed, Rent-to-own provisions could help renters and owners. "Bernanke supports the idea that a share of these creditor-owned properties be offered as "rent-to-own" properties rather than linger on the open market", adds Mont.

   Will the banks take this advice from Bernanke?

   We will see, however, as Mont writes, "the concept of rent-to-own and lease-to-own housing may be gaining traction among individual buyers and sellers". However, it is important to also look at the risks and the precautions.

   One risk that is important to understand is that of a financial nature, For example, if the buyer was unable to purchase the home by the end of the lease, or, if the price of the home is higher than the agreed upon purchase price (i.e, the seller could have sold it for more). Another such risk is the option money, and how it is credited towards a purchase or if any or all of it is refundable if they don't, says Mont.

   Some more good tips revolve around potential scams. A recently growing scam involves sellers who "pocketed their money even though the house was well on its way to foreclosure", writes Mont, so it is imperative to confirm ownership of the home. As always, involve your attorney and have them review all terms of the agreement. To learn more about Rent to Own, please see the E-book, "Secrets of Rent to Own", by clicking this link.

   So, after that mouthful, do you think the Fed will continue to push the Rent to Own path? If not, what would the reason(s) be?

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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: #REO #foreclosure #RealEstateInvestor #bank #housing #optiontobuy #properties #tenant #mortgage #leasetoown

Local Community Trends Influencing the Rental Home Market

Hello Friends,
   Welcome back, and hope your year has been going great so far!

   We are proud to share an article with you from Personal Real Estate Investor Magazine, in which I was quoted a few times. The article, "Look for Community Appeal", which was written by Teresa Bitler, appeared in the Trends in Rentals Section (in the November - December 2011 issue - Please see a copy of the article linked here).

   From the vantage-point of our website, Lease2Buy.com, I was asked to comment on the market trends that I have seen over the past 10 years of running the site, and more specifically, over the past few months.

The following two excerpts include my comments from within the article:

#1: "The housing market is definitely influencing the rental market, says Robert Eisenstein of HomeRun Homes. A growing number of people are in foreclosure, have sold their home through short sale, or can’t qualify for the necessary financing to purchase a home. Those people still need a place."

#2: "Eisenstein has also noticed a spike in requests for rent-to-own properties, possibly indicating that while people have been forced temporarily to enter the rental market, they would eventually prefer to own their own home."

   This is a great article, and very timely. The golden rule is to "know your market". Know the prices, demographics, employment figures, etc for the specific community that you focus on, either as an agent, investor, or both.

   How well do you know your local market?

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

TAGS: #RealEstateInvestor #rentalmarket #renttoown #properties #shortsale #foreclosure #financing

Where Are Real Estate Investors Putting Their Money?

Hi Folks,
   Glad to have you back.

   Are Real Estate Investors buying homes? Condos? Apartment Buildings and Rentals? Well...kind of

   They are putting their money into real-estate investment trusts, or REITs (shares of professionally managed property portfolios), according to AnnaMaria Andriotis in her article, "Real-Estate Investors Target Neighborhood That Is Looking Up" on the wsj.com website.

   Andriotis cites data from Citigroup Global Markets, which shows that so far this year, investors have "poured roughly $6 billion into publicly traded funds of U.S. REITs which mostly buy commercial properties like apartment buildings, office parks and shopping malls". These figures are up 18% from all of 2010, 400% from 2009, and are at a "pace unseen since before the financial crisis" Further, she says that property REITs have compound annual total returns of 11%, compared to about 4% for stocks, over the past 10 years.

   Aaron Schindler, managing director at New York-based Wealth Advisory Group, says that REITs focusing on apartment buildings in particular have flourished, "thanks to tight mortgage lending, renters who have put off buying a house and foreclosed homeowners who are now renting instead". Further, according to the National Association of Real Estate Investment Trusts, tTotal returns on apartment buildings and self-storage properties average about 10% and 22%, respectively, year to date through Nov. 9.

   REITs also can serve as inflation hedge, since rents also tend to rise with inflation. P.J. Gardner, an adviser and founding partner at AGW Capital Advisors, an investment consulting firm, says that those increased rents get passed through to shareholders (and by law, REITs must pay at least 90% of their taxable income—rents less expenses—to their shareholders), and thus those dividends offset some of the risks.

   Real Estate Investor? What are your thoughts? Where are you investing?

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Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #REIT #RealEstateInvestor #ApartmentBuilding #Condo #commercialproperties #foreclosedhomeowners #renter #inflationhedge

Far-Reaching Impact of the HST on Canadian Real Estate

Hi Everyone,

   Happy Labor Day to you and your family. I hope you are resting and relaxing with your family and friends and enjoying some quality time together.

   As you all may know, our website and our company are headquartered in New York, but we cover the entire globe in terms of Rent to Own deals. After the United States market, the second largest market for Rent to Own deals is in Canada. As a matter of fact, just to let you know how large that market is, last summer I was interviewed for the esteemed "Canadian Real Estate Magazine" for a story on Rent to Own in Canada (FULL ARTICLE HERE). Apart from those that reside within Canada, there are also a substantial number of buyers and sellers of Canadian Real Estate that reside in the United States. Some of these buyers and sellers are Real Estate Investors with offices in Canada, so I felt it important to discuss a hot-button topic of our northern neighbors; the Harmonized Sales Tax, or "HST", for short.

   According to the website hstincanada, the HST is the "combination of Provincial Sales Tax (PST) and Goods and Services Tax (GST) into one unified tax", and in the Spring of 1997, New Brunswick, Newfoundland and Nova Scotia implemented a 15% HST (which has dropped slightly since then). However, despite the relative uniformity, the HST is not as cut and dry as it may seem, and as mentioned on the same website, some reports have shown that "implementing HST in the eastern provinces caused consumer prices to fall". Canada is a large country with multiple Provinces with diverse industries and requirements, and not all of the provinces favor the HST. The HST Controversy Hot-Spot is British Columbia (referred to commonly as "BC).

   Just last month, 55% of voters in BC elected to reject the HST, per a story titled "HST is Officially Defeated in BC" on hstincanada. What happens next? The former taxation system will be reinstated, but this will be quite expensive, costing an estimated $3 billion to repay "transitional funding" to Ottawa and to also bring back the administrative structure to process the PST. As is the case in every country, that money will be recouped by trimming some programs and adding new taxes.

   In regards to the relationship between the HST and the Real Estate market, let's review some background on the HST as it applies to the Real Estate Industry in Canada (Building and Construction, Realtors, Renovations, Existing Homes, etc.), since this will help paint a very clear picture of which ones are impacted by the HST.

   Earlier this year, Canada added some new mortgage rules, to stabilize high ratio mortgages and decreasing household debt, per the hstincanada article titled, "HST Impact on Housing Market". These new rules raised concerns over the affordability of housing, due to "two-punch combo of HST and regulations", as it was referred to in the article.

   The first punch of the of the "two-punch combo" - The mortgage rules translate into higher income requirements for buyers for higher ratio mortgages, and thus, higher monthly payments.

   Punch #2 - The HST, which is applied to the purchase of new homes (new homes, not existing homes), and is applied to "any amount over $400,000 with a rebate of up to $20,000", per hstincanada, and is also applied to "any legal fees, closing costs, and processing fees associated with buying a new home", as well as realtor fees and home inspections.

   In an article written by Sally MacDonald for the Daily Townsman ("HST vote a blow for real estate"), BC Realtor Jason Wheeldon points out the HST is "not applicable to existing housing", but says that "there is a lot of the market out there that believe that even if they buy a house that's two years old, they are going to be subject to HST, and there isn't any. It's only on new homes offered by the developer or the builder".

   Apparently, as told by hstincanada, the "added tax has been reportedly stalling new home projects and causing a decrease in the purchase of new homes in both Ontario and BC", and evidently, in the article by MacDonald, this has translated into confusion, says Wheeldon. He goes further and says that "market confusion" could stall the real estate market while the province reverts back to the PST. "I think people are going to review their big spending decisions and see if they are going to hold off for 18 months".

   It is important to note that from MacDonald's article, we are reminded that Real Estate is exempt under PST as well as the HST, and that the "return to the PST in 2013 will be positive for out-of-province homeowners", as per Wheeldon. He said that when it restores back, "it will benefit home owners, particularly recreational real estate. Recreational buyers were subject to the full HST with no rebates whatsoever".

   From the angle of Housing Construction, MacDonald's article says that housing construction will suffer a blow over the next 18 months, and that the cost of labor (i.e. home renovations), will get hit with the full 12% HST (but not the 7% PST). Also, in the same story, Peter Simpson of the Greater Vancouver Home Builders' Association expects consumers will delay renovation projects until the PST is back in place (very similar to what Wheeldon mentioned above). Simpson recommends a system that "makes it neutral whether you do it now or wait".

   Things do not look much better from the perspective of foreign investment, as hstincanada points out that in BC, it is still a concern that "foreign investment will be lost and businesses will see a rise in expenses with the former taxation system reinstated which in turn will translate into higher consumer costs". To balance this out, they are hoping for the "supposed influx of provincial investments to balance out the economy".

   Are you either a buyer or seller of Canadian Real Estate or Real Estate in British Columbia? If you are, I would love to hear your "inside scoop" on what is really going on up there and what people are thinking. Even if you are a foreign Real Estate Investor and you buy homes in Canada, your insight would be incredibly helpful here.


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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: #HST #Canada #CanadianRealEstate #RealEstateInvestor #BritishColumbia #BuyHomesCanada #RenttoOwn

Is the HAFA Short Sale Program Working?

Hi All,

   The days of summer, heat, humidity, bugs, etc, are dwindling down. Prepare your parkas and get ready to pick some pumpkins!

   "Foreclosure Crisis"

   Just reading those words will make many folks shudder, thinking about the possibility that they can potentially lose their home. For those folks that can and want to stay put during the process vs give the deed back to the bank in lieu of foreclosure ("Deed in lieu of foreclosure"), the would probably be considering a Short Sale, or selling the house "short" of what is owed on the home.

   The long-running issue with Short Sales is that they can drag on and take months or even longer to complete, and they can be quite painful for both buyer and seller. As a matter of fact, back in July, we did a post titled, "Lengthy Short Sale Process a Painful Reality" (BLOG POST HERE or PODCAST MP3 HERE), and in sum, the Short Sale Process is like a modern day "Wild West".

   Then comes HAFA...

   "HAFA is an acronym for Home Affordable Foreclosure Alternatives" writes Elizabeth Weintraub for About.com in her story titled, "Is the HAFA Short Sale Program Right for You?". Weintraub says that the HAFA short sale program, which is part of President Obama's Making Home Affordable Program. is designed to "help underwater sellers either modify their loans or sell their homes as a short sale to avoid foreclosure". The program was created with a limited lifespan (effective from April 5, 2010, through December 31, 2012), but the goodies are in what the program promises, and as Weintraub writes, "HAFA promises short sale approval within 10 days and gives the seller up to $3,000 in cash at closing". Whimsically, Weintraub says that the program "has been touted as the answer to every short sale agent's nightmare." Let's take a closer look at the program and some of the benefits.

   Some of the key benefits provided by the plan are as follows, per Weintraub; Lenders must agree not to foreclose during the short sale process, Second lenders can no longer try to force a seller to commit short sale mortgage fraud by demanding payments outside of escrow, and Sellers will receive a government payment of $3,000 at close of escrow to cover relocation expenses. One of the most interesting benefits is that the Lenders that participate in HAFA waive the right to a deficiency judgment, and for someone selling a home for $100,000 below the mortgage amount, that is huge ! At interest to Real Estate Investors, all parties involved in HAFA would need to sign an "arm's length affidavit" (Seller cannot sell a friend or relative and buyer cannot sell the property for 90 days).

   Before a borrower can apply for HAFA, they first need to apply to HAMP (Home Affordable Modification Program), which requires all 5 rules be met in order to be eligible (only personal residences with a pre 1/1/2009 mortgage of below $729,750, with monthly mortgage payments of greater than 31% of the borrower's gross monthly income, coupled with some form of borrower hardship). Each of the 5 rules must apply. As Weintraub says, "If any one of the 5 rules do not apply, then the borrower is not eligible for HAMP."

   Now, this is where things get tricky. Weintraub says that "Eligibility and qualification for HAMP are two different animals", and that "If you are eligible for HAMP, it does not mean that you will qualify for HAMP". She adds a valuable insight; "Your goal, if you want to do a short sale, is to hope that HAMP will turn you down"..."Then you will be eligible for HAFA". If you are accepted into HAMP, she adds, and you stop making your loan modification payments, you can also apply to HAFA. "HAFA is a government-sponsored program, it's a lot more complicated than that", Weintraub says.

   To check eligibility, find out if your Lender participates in HAMP, since as Weintraub says, "lenders that participate in HAMP also participate in HAFA.". Who does participate? As of this post, Fannie Mae lenders, Freddie Mac lenders, and quite a large amount of other lenders (Bank of America, NA, CitiMortgage, Inc, etc.)

   If you are rejected for HAMP, then you can apply for the HAFA short sale program or Deed in-Lieu-of Foreclosure, but as Weintraub writes, "I don't know why anybody in their right minds would do a deed in-lieu". Basically, for HAFA, they pre-approve the price and permit 4-months to sell the home short via a Realtor. Similar to the HAMP, this is also only for personal residences with a pre 1/1/2009 mortgage of below $729,750, and in addition, the seller must be behind in payments or close to it, and previously rejected by HAMP.for HAMP.

   Is it Working? Is it Functional?

   According to a story by Jon Prior on HousingWire.com, the "Servicers completed 10,438 short sales through the government's Home Affordable Foreclosure Alternatives program since it launched in April 2010, according to the Treasury Department". The big loan services handling the majority of these deals were JPMorgan Chase (approximately 3600 completed), Wells Fargo, and Bank of America, to round out the top 3. It definitely looks like it's working...there is a story behind each deal, for sure.

   In terms of on-the-ground and in-the-trenches reality, Weintraub says it's "interesting to point out that very few borrowers tend to qualify for a loan modification", and says that, in fact, "almost every single short sale that I do in Sacramento is for a seller who was rejected for a loan modification."

   In the article from HousingWire.com, Prior added some comments from Pam Marron, a senior loan officer with Gold Start Mortgage Financial Group in Tampa Bay, Fla.". Marron said that "more and more homeowners in negative equity view a short sale as their only way out. Many, she said, are defaulting because banks require them to do so in order to qualify for a short sale". Marron also says that the growing problem in Florida is the "alarming increase in the number of short sale listings that are coming onto the market", with people that are "still employed but severely underwater and are having to short sale because they are not able to pay the vast difference owed between the mortgage amount and the value of these homes".

   One of the most interesting, yet disturbing, quotes from Marron was as follows"; "Banks are requiring homeowners to default in order to qualify for the short sale". It's crazy!

   Apparently, I think the program is working, but it should be extended, and Realtors and Real Estate Attorneys should be letting more homeowners know about the program. It's not news that is spread around as much as it should be. Hopefully, this post can help towards notifying more struggling families, friends, and neighbors that there are options for them.

   Can you help spread the word?

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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: #HAFA #HAMP #Foreclosure #ShortSales #DeedinLieu #loanmodification #bank #mortgage #realestateinvestor

Housing Factors Contributing to Market Direction

Hi Folks,

   Hope you've had an outstanding week.

   Today, I'd like to share a very interesting and very informative story that I came across that fits perfectly within the framework of our discussions here on our Blog. The story, which was written by Ruth Simon and Jessica Silver-Greenberg for the Wall Street Journal (and appeared on Yahoo Real Estate), is titled, "Why It's Time To Buy".

   The story discusses what it calls the, "five-year national housing bust", and discusses some positive signs, short-term concerns, long-term concerns, a 5-Year Outlook, and touches on the topic of Renting vs. Buying.

   Among the positive signs that were cited are the 50-year lows that mortgage rates have dropped to, as well as the affordability of homes. They also referred to the inventory of homes as, "A historic glut of homes", that has created a buyer's market. They did point to the fact that changes are coming, and mentioned a reference from Moody's Analytics that says the number of distressed sales will begin to fall in 2013 (and prices will increase). Additionally, Home Building is at "standstill" (lower chance of inventory/supply getting worse), and they also cited "Household Formation" (a Demographic Indicator) is on the rise, which promises, as they say, "to take a bite out of the glut in coming years."

   When looking at the overall movement of the Housing Market, the short-term looks bleak, as the authors point to Weak Job growth, the fact that Foreclosure sales encompass the lion's share of market, and that Home Prices will fall more in the coming months, per some Economists. For the longer term, they point to the positives of home ownership, such as the ability to deduct the mortgage interest on your taxes, and well as the ability to decorate, paint, and change anything that you want on your own home, "without having to clear it with a landlord." They added to this a, "5-Year Outlook", that points to the coming era of post-foreclosure overload (after the majority of the foreclosure-related inventory), has been cleared, and as housing economists say, "the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over."

Some of the more specific factors they names that will make or break local markets over the next few years, were as follows:

* Household formation is on the rise, per Moodys, and is projected to increase from 950,000 in 2010 to approx 1.2 million over the next decade.

* Higher demand for second homes, per Moodys, should begin, "sopping up excess inventory in much of the country over the next two years"

* Economic Conditions - "Rising incomes and increased employment tend to give more would-be buyers confidence and buying power."

* Mortgage financing is available for people with good credit, but, "nearly impossible" for people who do not meet the lending guidelines.

* Another interesting point that was mentioned was that, "higher down-payment standards are locking some would-be buyers out of the market.", and they pointed to a recent survey by Zelman Associates that showed that, "Just 35% of renters have the minimum 3.5% down payment needed for an FHA loan on the median-priced home in their market"

   As for the "Renting Vs. Buying" question that many people have pondered, the authors stated that, "Renting is still cheaper than buying in most markets, but rising rents and falling house prices mean that, in some areas, this won't be the case for long.". They said that according to Moody's Analytics, Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., and that for markets such as Dallas, Las Vegas and Sacramento", "the equation is likely to soon turn in favor of homeownership if current trends persist,"

   One very practical suggestion mentioned was as follows: to compare rental prices for similar properties", and to, "wait until the monthly outlays, including taxes and insurance, are equal." and additionally, they said, "You also could factor in the tax savings of owning, which would make buying more attractive even if the gross monthly outlay is slightly higher."

   In light of the Economic & Housing Market Analysis information, coupled with the Rent to Own perspective that we try to bring to you, this story was a direct hit for you...whether you're a homeowner, home seller, a realtor, or real estate investor. What are your thoughts and comments on this story?

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

TAGS: #Foreclosure #mortgagerates #realestateinvestor #rentalprices #renttoown #WallStreet

Top 10 Legal Real Estate Terms You Must Know

Hi Folks,

   Welcome to Wednesday. Can someone pass me a cold beverage? All kidding aside, it's hot out there folks, so take precautions, wear light colors, drink plenty of fluids, etc.

   As a Buyer of a home, a Seller of a Home, a Real Estate Investor, a Real Estate Agent, etc, there are some terms you need to know before you step into a deal. We have provided a concise list of the most important terms that we need to know.

   The list is not in any specific priority order, as they are all quite important. Always remember to consult a local Real Estate Attorney before getting involved in any and all types of Real Estate arrangements.

1. Quitclaim Deed - This is a document that is used to, "clear up issues involving possible multiple owners of a property", per Sophie Martin, MBA, from the UNM School of Law, who says that with this special form of deed, "someone who might have an interest in your property agrees to hand it over to you."

2. Fee Simple Absolute - Per Martin, this is the, "best and most common ownership of property: full right to possess the property now and into the future."

3. Tenancy in Common - "When you and a partner (or partners) go in on a piece of land, you each own a portion of the whole which you can will or sell to others.", per Martin. Additionally, it means that, "each owner has a fee simple title to his or her share and that title can be sold or willed to someone else.", says Rick Snow, Broker/Owner of First Choice Realty. Snow adds that Joint tenancy commonly has, "rights of survivorship", where multiple parties may own property together and, "if one dies the remaining owners absorb the deceased parties share."

4. Title insurance - Snow describes Title Insurance as, "indemnity insurance against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens." Basically, a form of protection.

5. Escrow - "An arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party receives and disburses money and/or documents for the transacting parties", as defined by Snow.

6. Default - Defined by Snow as, "the failure to comply with some aspect of the contract and either seller or buyer can find themselves in default under the provisions of the contract. Remedies to the non defaulting party should be spelled put on the contract."

7. Easement - A "permission to cross someone else's land.", which is referred to as the proper definition, per Mike Arman, a Real estate salesman and Mortgage Broker for over 20 years. Arman says that the easement holder does NOT own the land, "and cannot cut so much as one blade of grass without the owner's permission.". He also says that they cannot be unilaterally revoked or blocked (Arman says, "next stop is court."). Arman says he *specifically* suggest, "NOT purchasing ANY property which relies on easements or a chain of easements for access". Sophie Martin adds that the most common easements are held by utility companies.

8. Flood Zone - Deemed quite important, per Arman, who says that you need to be, "1,000% sure of the flood zone your prospective property is in - homeowners insurance does not cover flooding, and flood insurance will be expensive and WILL be required by your lender.". Arman says flood insurance comes from NFIP, "which is administered by FEMA (of Katrina fame), which is now a division of DHS".

9. Subject to availability of suitable financing - This is "Hand written on the contract for purchase and sale", says Arman, who says that this phrase can, "save the buyer's good faith deposit if suitable financing is not available - and the buyer defines "suitable financing", so it can also be used as an "out"". Arman says, however, that the problem is that, "sometimes decent financing simply is NOT available - and 99.9999% of buyers go looking for financing AFTER they've signed the contract and put up a (big) deposit. Lenders often won't waste their precious time on pre-approvals, come back when you've signed a contract so we know you are serious." Additionally, he adds, "Bingo - someone is going to be out five or ten grand when they can't get a loan because of a credit bureau error from 1937."

10. AS IS. - As described by Timothy G. Wiedman, D.B.A. Division of Economics & Business Doane College in Crete, Nebraska, "In an era of bank foreclosures and generally falling prices for real estate of all types, many properties are being sold "as is."". Wiedman says that Buyers should view the term as a, "warning to be cautious, and property being sold "as is" should be professionally inspected _before any commitments are made." He points to a a court case that can provide guidance, which is "Prudential Insurance Company of America v. Jefferson Associates, Ltd." which, he says, went to the Texas Supreme Court in 1995. Wiedman says that "When property is sold "as is," the buyer _may_ get a great deal. On the other hand, the buyer may later discover defects that will be expensive to correct -- and have _no_ ability to recover damages from the seller."

   I hope these terms have been helpful. I cannot stress this point enough: Always remember to consult a local Real Estate Attorney before getting involved in any and all types of Real Estate arrangements. Do you have any important Real Estate Legal Terms to add to this list? 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: #realestateinvestor #legal #Deed #titleinsurance

Property Flipping Redefined?

Hi Folks,
   Glad to have you back !

   There have been so many changes to Federal, State, and Local legislation over the past few years since the financial meltdown, that it had me wondering if all of these changes have redefined what is traditionally referred to as, "Property Flipping". To those of you who are unaware of what "Property Flipping" is, it is basically purchasing a home and flipping it, or selling it in a short period of time, preferably for a profit (the goal!).

   We spoke to an investor who gave us his view from the front lines for his input on this question. "I feel that property flipping has been redefined by legislation through the government and lenders playing the game of shadow inventory", says Phillip Vincent, a Realtor and Real Estate Investor in St Louis MO. Vincent says that, "They try and control the market thru these tactics. So as to not flood the market with all the home that are actually on their books."

   Vincent tells us that as an investor, "we look to purchase properties monthly, that we will fix up, re-hab, and bring back to market. These properties are taken from eyesores on the street to one of the nicest on the block. I have been called an ambulance chaser by fellow Realtors, for buying properties on the cheap, but I feel the cit(ies) we live in are made better by what we investors are doing."

   In addition, he tells us that legislation has affected, "the amount of auction, bank homes we have to choose from.", and says that, "We are currently having to look at dreaded short sales for our next projects."

   Are you a Real Estate Investor? How has legislation helped you or harmed you? We'd love your input on this topic.

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

Real Estate Market Forecast For 2011

Hi Folks,

   Happy Friday. How was your week? Did you meet all of your goals?

   The question for today is: "Where Do You See The Real Estate Market Headed in 2011 ?" In order for us to gain the proper perspective, we spoke with professionals from 3 pieces of the Real Estate "Pie": A Real Estate Advisor, A Real Estate Investor, and A Real Estate Attorney.

   The Real Estate Advisor that we spoke with is John Rymer, of Rymer Strategies in Tampa. Rymer discusses the continuous, "downward pressure in the form of added supply from foreclosures and banks finally disposing of long-distressed condominiums in many sunbelt locations", as well as the, "tightening of credit standards" from the, "GSE's (Freddie and Fannie) and overly zealous overlays from the major mortgage banks that have made mortgage approval the most difficult in generations."

   Rymer tells us that, "As any renter will tell you, patience has been well rewarded in this downturn and strategic buyers who jumped in during 2008 - 2009 have been penalized are now gun shy about putting more money, or recommending to other to put money into real estate.". In addition, Rymer reminds us that the, "affordability of homeownership is at a 50 year record.", and warns that, "Sooner or later greed always overcomes fear". "Will 2011 be the year that we see a significant uptick in housing?", questions Rymer, rhetorically, "and replies, "Perhaps not until late in the year, but headlines seem to focus on the negative, so look for any good news to be buried on page 6."

   For the perspective from a Real Estate Investor, we spoke with Marc Sherby, the "Sheriff Sale Guru", who believes that foreclosures will continue to be one of the, "hottest segments of the market in 2011, in spite of the robo-signing incident." Sherby has seen a drop-off in foreclosures at the end of Q4 in 2010 due to banks, "checking and rechecking their paperwork.", but says that, "as the lenders get their paperwork houses in order and as the continued sales are carried out, and as new properties are coming up for sale there will most likely be a deluge of housing on the market. That is why I see the market headed to another record year in foreclosures, as do most experts."

   Sherby says that for those who are educated in purchasing foreclosures, "the buys will be extremely good to great as banks chop prices even further to move product from their non-performing assets inventory.", and says that while retail prices are still dropping in some markets, some others are stabilizing.

   Troy Doucet a Real Estate Attorney, provides our Real Estate Attorney perspective, and says that he sees the Real Estate market, "continuing to stagnate this year into next.", and states that, "as the pressure of debt continues to grow on state and local governments, we will begin to see interest rates rise. As interest rates rise in the bond markets, rates will rise for homebuyers, meaning buying a home will become more expensive and will discourage buyers." Just as our other commentators have said in this article, Doucet also points to the number of foreclosures and the, "lender's shadow inventories of homes" as major contributors to the, "market's stagnation."

   How about your point of view? What do you think about the 2011 Real Estate Market? We'd love to hear your comments.

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: #realestate #foreclosure # shortsale
 
 

What Can Go Wrong During a Real Estate Deal?

Hi Folks,

   Glad to be back with you, and I hope you're week has been smooth sailing so far !

   Now, to take a look at some things that can go wrong and dampen your spirits, today we are looking at the wide spectrum of things that can go wrong during a Real Estate Sale. For the purpose of this story, I broke this down into 3 categories: Interpersonal Issues, Foreclosure-Related Issues, and all Other Issues that do not fall into the other two categories.

   Human beings tend to fudge things up on their own without much help. "The worst problem I ever encountered in a real estate deal arose from the Sellers trying to be nice people and letting the Buyer stay in the house the weekend before the closing", says Michael D. Caccavo, an attorney in Vermont. As Caccavo explains, " The Buyers got in, found a lot of problems that they hadn't noticed during inspection, and most of all claimed the plumbing, which was mostly galvanized pipe, needed to be replaced with copper. They raised the issues over the weekend, and continued pressing for concessions during the closing, including several long conversations with the realtor who was away on vacation. The closing took 4 hours instead of 1 and the realtor caved and gave back a lot of commission to the buyer just to make the deal happen". Learning a hard lesson, he says, "Never again will I allow a client to let the buyer stay in the property before closing".

   Vickie Smith of Ark Essentials Publishing says that she had a bad experience she bought a home and then the previous owner took over a month to vacate, and she says that during that time, "we were paying the mortgage and he lived there rent free. After two months he picked up his Bully Barn. We should've had some stipulation that he paid $x per day until he totally vacated!". Adam Kruse, a Broker with The Hermann London Group, says that he had someone who had to postpone their divorce at the last minute so the sale of their home could go through before the foreclosure happened, and he says that, "it was a really touchy deal, and we actually ended up closing it."

   Jennifer De Vivo, a Realtor with the De Vivo Team at Charles Rutenburg Realty, provides some things that can and will go wrong sometimes with Foreclosure-Related deals. As De Vivo, says, "Foreclosures cause people to do funny things that can ruin months of work in an instant". De Vivo describes one of the worst stories she has come across: "Once a week out before closing a vandal busted the garage door open. At first it was a dent, but then they came back and practically destroyed it leaving it hanging horizontally. The worst of it was that when I called the listing agent (I represented the buyer), they did absolutely nothing. I took matters into my own hands and pasted no trespassing signs in bright orange throughout the home exterior. My husband and partner went with one of our helpful investor clients and righted the garage door. My buyers were troopers through it all and still bought the home which was in foreclosure and the absentee owner was oversees.

   De Vivo also describes another incident: "We had another incident where we represented a buyer in a short sale situation. We closed on a home on a Friday, and over the weekend the original owner came in and stole the entire kitchen and bathroom vanities, even the toilets! Luckily my partner called the title company on Monday morning minutes before the title had been filed and was able to cancel the deal and get our clients' money back. Whew!"

   As a Real Estate Investor, Jeff Swaney has come across additional issues during Real Estate deals.

   Swaney says that Appraisal problems, which he calls, "the most rare issue from the past" is becoming more common now. He describes this as follows: "The lender orders an appraisal and then rejects their own ordered appraisal due to their underwriter initiated computer based desk top review (also called an Auto Valuation Model, or AVM). The problem for the buyer is that most standard purchase and sale agreements have an appraisal contingency, but NOT a lender initiated AVM value contingency. This means that a buyer would be contractually required to buy the home even if the lender cuts the value and the loan amount. The reason is that the actual appraisal was OK, but the lender did not like it. If the buyer has this situation occur, they must close and pay the difference in loan amounts out of pocket, or they will lose their earnest money. Buyers need to be aware of this possibility and have their agents draft a lender induced valuation reduction contingency in their contract, or they face significant exposure.

   Liens that are filed, but not yet recorded at the local courthouse, is another major issue Swaney has seen. he says that, "There is typically a gap period between the time a lien is filed and when it shows up in courthouse records. Most closing agents will require a seller to sign a gap provision that affirms the seller is not aware of any liens that have not been paid off against the house. The buyer's title insurance policy should discuss this as well. I have been to closings where prior liens were not caught and the title becomes "clouded" causing a delay or cancelling of the transaction.

   Finally, Swaney points to issues with Home Owners Association (HOA) liens, and says that, "For most foreclosures, junior liens are wiped out after the foreclosure auction or lawsuit. The only normal exceptions are property taxes and state and federal tax liens. HOA's get around this provision by simply reassessing the past due liens against the next homeowner. Beware of this because the second most powerful group to fight is the local HOA! You could find yourself as a seller stuck with paying an old (prior owners lien) off if you sell a property purchased at the local foreclosure auction. This can cause transactions to fail as the seller is not willing to pay the past bill and wants to fight the HOA. Good luck doing that. The HOA's know that it will cost you more to fight the bill than just pay it!"

   Real Estate Deals are tough! That's why it is a field that requires determination, guts, and meticulous attention to details...and sometimes a little bit of luck. Any comments? Suggestions?

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: #realestate #foreclosure #realtor #realestateinvesting

Real Estate Resolutions for 2011

Good Morning,


   Well, we have made it through another year! The last post of the last month of the last day of the year. It seems so final, but only until the door opens on the New Year, and it is a new beginning.

   In keeping with the "new beginning" mode, we thought this would be a great time to present some resolutions from our peers, and here are what a few of them have told us about their resolutions:

   Gregg Goldsholl, an agent with Houlihan Lawrence brokerage in Larchmont, New York: Price every listing for today's market - not what the seller wants to get, Work smarter not harder. Make sure buyers have financing before going out, Continue to provide killer client service, Do the things that lead to success. There are no shortcuts.

   Kelsey Lane, a Realtor with Keller Williams Realty Silicon Valley: I am getting my green designation through the National Association of Realtors - that is only part of the resolution though. The other part is that I am going to educate sellers, as I am helping them get their homes ready to sell, that we should be using as many green remodeling techniques as possible (for example, no VOC paint, light fixtures that accommodate CFL's attractively, SmartStrand carpet made from corn, etc.)

   Leonard Baron, a San Diego State University Professor and Real Estate Investor: Buy some more properties in 2011 - I bought 8 in 2009/2010. Interest rates are very low, housing prices are very low, vacancy is very low, so investment returns on properties are very high. Anyone who wants to do real estate for the long term, and you should NEVER buy real estate for the short term, should be out there learning, understanding, and then buying property.

   A lot of my own personal and business resolutions are closely related to those listed above. What are your resolutions for the New Year? Do you have any that differ from what was listed in this article? Please share with us here, as we would love to know.

Wishing You a Happy, Healthy, and a Prosperous New Year !

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

Caribbean Islands, Architects, Builders, Construction, Pending Homes Sales Up...

Hi Everyone,

Hope your week is going great so far. We have a few new and exciting features that we wanted to inform you of today.

For starters, we have been receiving a lot of comments and requests for a new section for Jamaica, the Bahamas, Trinidad, etc. The amount of requests alone would not warrant a section for each of these countries, however, we have created a broader category for the Caribbean Islands.

The new section for the Caribbean Island Homes Wanted is located at: http://www.lease2buy.com/homes_wanted_listing.php?state=Caribbean+Islands

The new section for the Caribbean Island Homes Available is located at: http://www.lease2buy.com/homes_available_listing.php?state=Caribbean+Islands

Please note that these are freshly created sections, and therefore, they are not populated yet, so you may now begin posting your Rent to Own Homes as well as your requests for Rent to Own Homes.

The next features that we have added are in the Home Services section, and the new services that we have added are "Architects" (See it Here)and "Builders & Construction" (See it Here), which covers the full process from the design of a home, all the way on up through building the home. Additionally, we have added an "Announcements" Section (See it Here), which is ideal for announcing Real Estate Investor Meetings ! If you need to add your services to any of these sections, you can do so via this link: http://www.lease2buy.com/homeservicesinfo.php


The final new feature we have included is a "Share This Property" button, which is included on the page of every "Homes Available" Ad. This button will let you share the link to your home with all of the popular Social Bookmarking Websites (for example, Digg, Delicious, etc.). The goal: Putting your property in front of as many eyeballs as you can !

For some other news, Pending Home Sales hit a 6-month high in April. This is good news as we are now headed into the summer months.


Being the bearer of all of this good news is fantastic! I wish I could bring news like this every day...maybe I can?


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