HomeRun Homes Rent to Own Homes Blog

My photo

HomeRun Homes is a centralized marketplace which helps people Find or Sell a Rent to Own Home, both Nationwide and Globally to the thriving Rent to Own Market. http://www.lease2buy.com
Showing posts with label renting. Show all posts
Showing posts with label renting. Show all posts

October 6, 2011

Real Estate Investing - Angles and Analysis

Good Morning,
   How is everyone doing this morning? Fine, I hope!

   Where do I even start in terms of this topic? It is such a broad topic, and if you ask 10 different people, you might wind up with 10 different answers and multiple opinions.

   Let's look at some of the angles of Real Estate Investing. Basically, the bottom line is that you purchase a property, hold on to it in hopes that the price will appreciate (possibly renting it out while you wait to recoup all or part of your monthly payments), or, you purchase a property and "flip" it, which means buying and selling a property quickly for a profit.

   Where can you find properties? Foreclosures have spiked, and the homes that are foreclosed upon are often sold on the steps of the local courthouse (depending on where you are). The problem here is that these are very risky investments. In a story written by Veronica Chufo on the DailyPress.com ("Real estate investing: Is now the time to buy?"), some investors and real estate agents weighed in on the process and the risks involved.

   In the article by Chufo, Greg Hatcher, an investor and real estate agent with EZ-Vest Realty, pointed to the fact that a majority of these homes are "underwater" (the value of the home is less than the outstanding mortgage). This means that it would not be a good investment, says Hatcher. There is also the potential for liens on the property, says Hatcher, which would need to examined via a Title Search. One other risk Hatcher mentions, which is probably one that we are all quite familiar with when discussing foreclosures; "an investor can't see inside the house, let alone have an inspection, as a traditional buyer could". In sum, Hatcher says that we would only recommend this to very experienced investors and those that "have cash that they can afford to chance".

   A Less-Risky ("safer?") route is to find sellers that must sell, but do have home equity. Hatcher says that real estate agents could be very helpful in your search.

   When you find an investment property and you're ready to purchase it, it's time to think about financing. Hatcher says that investors often must have a larger down payment (of about 20 percent), and that they also need money "in reserves and cash for upgrades and closing costs". He said that with lenders, "The theme would be cash is king", since they look for buyers who have liquid funds (lines of credit, cash in the bank, money available in 401(k)s or IRAs, per Hatcher).

   What you do with the property boils down to the local market, financing, and your own desires. The typical decision is "Flip or Rent", and this is analyzed by Chufo. Flipping was popular during the Real Estate boom, but has slowed down dramatically, because the "buyer pool has shrunk because lending requirements are stricter", writes Chufo.

   The other flavor is buying a home and renting it out (and sell them when the market rebounds). Other buyers, as Chufo refers to them, are "keep and hold" investors (they will act as landlords by renting the properties instead of reselling them). Patti Robertson, a HomeVestors franchisee in Norfolk and president of the Tidewater Real Estate Investors Group, adds that investors are getting "more rental income now than ever before", and she points to higher rental payments vs. lower housing costs. Specifically, she said, "Rents more than cover mortgage payments", and provides "instant cash flow". Of course, it would be a disservice not to mention Rent to Own, in which the home is rented out with an option to buy at a predetermined price during a specific term, i.e. 12-months, 24-months, etc. (Learn More on Rent to Own Homes Here).

   To determine rent/hold or flip, Hatcher says that a real estate agent would need to conduct a "market analysis on comparable properties", and a post-rehab value of 75-80% of market value would be favorable to a keep-and-hold investor, but he says that a "flipper" would need a property at a market value (post-rehab) of about 60%.

   Investors are still out there scouting for deals, says Chufo. Hatcher suggests that new investors should try to joint venture or partner with more seasoned investors, and can network with other investors via a Real Estate Investors Association (an REIA). One investor, Maryann Krzywicki, has done her homework, and found a business partner. She feels it's a good time to invest, "because it's a buyer's market". Chufo also quotes Patti Robertson (an investor for over 4 years), who is also positive on Real Estate Investing, and says that, "Most people have their money in the stock market right now earning zero, or in the bank earning half a percent. Real estate is on the bottom. It has to go up," she said.

   Are you a Real Estate Investor? Are you a potential Real Estate Investor? What is your experience with the Real Estate Market? Please pass along any tips to our friends that are reading this article.

Would You Like Our Blog Posts Sent Directly to your E-mail? Here's How:
1. Locate the "Follow this Blog by Email" box on the Right Side of your Screen.
2. Type your E-mail address in the box, and click "Submit"
3. Check Your E-mail and Confirm Your Subscription...it's That Simple !

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: #RealEstateInvesting #foreclosure #fliphomes #renttoown #underwatermortgage #financing #renting #lending #landlord #keepandhold

June 9, 2011

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

February 2, 2011

How Do you Handle Tenants?

Hi Folks,

   Hope you're having a great week. If you're getting hit by this huge ice storm, please drive carefully today !

   A great deal of any business in the Real Estate industry deals with tenants. Today, we're going to take a look at some tips for handling and managing tenants; easy tenants and difficult tenants.

   Let's start out with a personal favorite, the "Easy Tenant". According to Jacob J. Gabrie, a Commercial Shopping Center Manager and a Broker and CEO of Town Center Realty Group in California, "They deserve lots of respect", since, "these are those that I don't have to constantly contact to remind to pay rent, they don't complain and really are the reason why a job like mine is as fantastic as it is". As Beth VanStory says, "With good tenants, I think the most important thing to do is be responsive and address issues promptly"

   Now, for the flip side, the "Difficult Tenant". Gabrie says that he deals with this group firmly and "head on", and says that they lie regarding when the rent is coming, about providing a certificate of insurance, etc. Basically, as he describes it, "You give them an inch they take a mile- but that is the nature of these type of group."

   VanStory tells us that she recently had a, "very challenging experience and learned two valuable lessons". The first lesson is to "Always thoroughly screen your applicants.", for example, as she says, "insist on speaking with previous landlords or property managers.", "Insist on a credit report.", and "If the law in your state allows, ask to see a bank statement.". VanStory points to her bad experience, where she failed to do this as she was in a rush, and says, "If I had done a thorough check I would have found out that my tenant had grossly misrepresented himself. I would not have rented to him had I done a thorough background check."

   The second lesson mentioned by VanStory is to, "Use the law", and at the sign of the first problem, "begin to engage in every legal process available to you.", and, "Make sure you thoroughly understand the law." She said that with her bad experience, since she, "wanted to "get off on the right foot" and "be a nice landlord."", it cost her money.

   VanStory says that, "It's not about being nice, it's about protecting your asset and it's a business. If the rent is late by whatever grace period you define (ours is days), immediately issue a "Pay or quit" and start all the legal documentation you will possibly need should you have to move to eviction." Similarly, Gabrie says that he maintains, "experienced collection and risk management executive on my staff who helps me keep this group in line as well- something that is not common in the industry."

   Ultimately, it boils down to how much of a risk do you want to take? With less due diligence, your risk remains high, so if you have the means and resources to dig deep within the confines of the local laws, then definitely do so.

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

Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com





TAGS: #tenant #landlord #creditcheck

January 12, 2011

Taking the Plunge - 3 Tips on Buying Your Rental Property

Hi Folks,

   Happy mid-week to everyone, and we ask that you arrive safely to wherever your destination is, should you need to commute in the Northeast today.

   You know, if you're renting a property, and the homeowner gave you an option to buy the property...well, how do you know when you are truly ready to buy the home? That is the question we are addressing today, along with 3 tips to help you along.

   "As a tenant with an option to own there are some fundamental principles you should consider before buying a property.", says Brian Rademacher of Re/Max Advantage Plus. First, make sure the property, "is a good fit for your lifestyle and family. Do you ultimately envision this property as your home?"

   Secondly, says Rademacher, "contact a real estate professional to review the option to purchase contract and perform a current market analysis. With declining real estate values in many markets the purchase price on the option contract may be higher then the current market value of the property.", and he suggests that if this is the case, that you should, "show the owner the current market analysis and discuss lowering the purchase price to meet the current market value.

   As a final tip, Rademacher suggests that you, "talk to a mortgage professional to determine if you are qualified to obtain a loan to purchase the property. Find out what your mortgage payment would be and if your mortgage commitment would fit into your monthly budget." As Greg Cook, a Mortgage Professional, says, "Owning a home costs more than renting. Most of the time an "all-in" mortgage payment (including taxes and insurance) will be more than the rent they might currently be paying. But that's only part of it. The tenant is now responsible for maintenance, repairs and all those other little expenses that come with homeownership." Cook also recommends to any tenant looking to , "make that jump" to find out from a, "first time home buyer specialist how much the mortgage payment would be on the home they are buying, add an additional $100-$200 each month and then take that difference between rent and homeownership expenses and put it in savings."

   "Having seen several option agreements over the years, ask yourself a 2 pronged question", says Thomas Redmond of Redmond Realty. "1st, What is important about staying in this property and the community at this time and 2nd, Are the terms in my option agreement favorable or extremely favorable when considering my local market as well as my ability to purchase elsewhere during the option period." Redmond says that if the answer is, "yes I want to stay here for a couple of years or longer but your option favors to the landlord, who likely prepared the option agreement, then renegotiate or let option expire."

   "As long as renting is not substantially cheaper than owning it would be worthwhile to become the owner and start reaping the tax benefits and building equity.", says Lenny Layland, Broker/Owner of Investorlando Realty. Layland says that the owner, "should be doing everything possible to help this happen (assuming they want the tenant to exercise the option). Credit counseling support, paying closing costs and rent credits are possible ways."

   In summary, Rademacher says that it's a good time to buy, "if the property is a good fit for your lifestyle, has a sound option to purchase contract, is priced at current market value, and meets your budget and mortgage qualifications." By analyzing these 3 items, Cook says that, "Not only will they now have an idea of what sacrifices or lifestyle changes will need to be made but they will have built up their savings which, from a lender perspective, is only a good thing.

   Redmond makes a very positive statement, in saying that you need to, "Remember you bring a lot to this transaction so do not discount your position with tenant mentality.  You can take charge help the seller to help you for the best possible outcome."

   We hope these tips have been helpful. Do you have anything to add to this list?

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: #optiontobuy #mortgage #rental

December 15, 2010

Crazy Hazy Appraisal Madness

Hi Folks,
   Hope your week is coming along great, so far.

   Well, considering the fact that we put a man on the moon and that we have found cures to a vast amount of the illnesses that have plagued mankind, you would think we would have this appraisal thing licked by now, right? Well, not exactly !

   To bolster this argument, this morning, I read a story on Yahoo Finance about a couple that were looking to purchase a specific home, and who shelled out $1600 for 7 appraisals, each of which was different than the other...and some of them by substantial amounts. Ultimately, due to this fiasco, the couple wound up renting the home that they actually wanted to purchase, but could not due to the scattered and lower appraisal(s).

   Since a majority of the trades on the stock exchange are done via computer, isn't there a way to have a universally-accepted appraisal program that spits out a figure? Perhaps there can be 3 programs (as with credit scores/FICO), with a Low, Middle, and a High. In that case, lenders can choose to accept the middle price, an average, or some other computation. I realize that my Appraiser friends are turning bright red with anger, but it should be a system that is created, organized, and computed by Appraisers, and they would still need to go on-site to verify all features of the property.

   Please don't yell at me for this one...but I am a stickler for automating procedures to minimize variation and errors. What are your thoughts on this proposal?

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


Tags: #appraiser #appraisal #finance

November 1, 2010

Rent, Buy, Or Rent to Own ?

Hi Folks,

   I Hope you had a safe Halloween with a lot of treats. Please forgive me if my style of writing is a little odd today, as the sugar rush is quite fierce this year. It is the First of November, and any way that I look at it, I am now a year older!

   A few months back, we covered the topic of, "Rent vs. Buy" in a separate post, and a few weeks ago, we followed up on the topic with a post titled, "Revisiting the Rent vs. Buy Debate". Molly Line of FoxNews recently ran a story titled, "Shattered Dreams: To Rent or Buy, That is the Question", of which I thought might be of interest to you.

   In the above-mentioned article, Line asks the question, "...is it really wiser to buy during a time of economic uncertainty? Or is renting a better bargain?". She spoke with some experts who point to the fact that people who are buying now have their financial "house" in order, and it would make sense for them to buy a home. On the other side of the debate, Line points to the positive side of renting, which means, "no property taxes, no upkeep costs, no paying for a new roof or dishwasher."

   Ultimately, there is no fine line that delineates a region of the country where people are just buying or renting...there are just trends (see http://blogging.lease2buy.com/2010/10/revisiting-rent-vs-buy-debate.html). The financial condition of the prospective buyer, the prospective tenant, or the prospective tenant/buyer (in the case of Rent to Own), would seem as if it would override most factors. Do they have a lot of debt? How is their credit? Do they have a job? Do they need a job? Just some food for thought.

   Please send us your comments and suggestions, as they always prove valuable for your fellow readers here.

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

October 1, 2010

Steps to Acquiring a Loan

Hi Everyone,
   It's October...'nuff Said ! Since I am a Halloween baby, it's my birthday month (please don't ask my age!).

   Not Long ago, we were quoted in an article on the new "Currency" site from American Express, titled, "3 Steps to Getting a Loan", and the article could serve as useful to any of our readers that are interested in procuring a loan.

   The author, Christina Couch, summarizes the 3 steps as, "Stimulate Your Score", "Steady Your Finances", and "Readjust Your Debt Ratio".

Under the "Readjust Your Debt Ratio" step, Couch writes:
"...if you still can't get a traditional loan, you're not out of options. There are other financing opportunities to investigate, like renting with the option to buy. 'Deals like that typically last for 12 to 36 months and require tenants to pay a non-refundable option fee instead of a down payment—and usually, that fee is a lot cheaper,' says Robert Eisenstein, president of HomeRun Homes, a real-estate firm in Lake Ronkonkoma, New York.'There are a lot of creative ways to buy, and a lot of very specific mortgage programs out there, if you don't qualify for traditional loan products,' Eisenstein says. 'You just have to do a little homework.'"

   Head on over to the new American Express "Currency" Site to have a look around at some really great articles (as well as the one mentioned above).

   Next Week (Monday 10/4), the Pending Home Sales Index will be released. These are key figures, so let's monitor them together.

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