Archive for June, 2008
Do you Need a Good Property Manager??
If you are one of the millions of homeowners that have been unable to sell your home, one viable option that may be worth consideration is renting your property. If you have entertained the idea of becoming a landlord, one of the first decisions you must make is whether to try it on your own or hire a property manager.
While hiring a property manager can be great asset for your new, “involuntary” rental business, it can also be an expensive nightmare. Carefully, review the factors to determine if you need a property manager, and if so, how to find the one that is right for you.
What does a Property Management Company Do??
Management companies deal with prospects and tenants. They market your rental property, collect rents, handle maintenance and repairs, respond to compliants and take care of evictions. A good company saves you time, money and worry, giving you a peace of mind that your investment is in good hands.
Do you Need a Property Manager??
Hiring a property manager has many benefits, but it can be expensive. In addition, relying on a third party is not for everyone. Ideal candidates for professional management include:
- Distant Landlords: If you don’t live near the property, management can be invaluable, if not necessary, for many issues that will arise.
- Hands Off: If you hate the idea of meeting and interviewing tenants, receiving late night calls about stopped up plumbing or view rental property as an investment…you probably need a manager.
- Too Busy: If you don’t have the time to landlord, work, and take care of the family, then management may be a good way to spend your money.
- Lots of Property: The more rentals you own, the more you deserve a manager.
- Section 8 or Affordable Housing: If your property participates in one of these programs, the rules are extremely complicated. It is usually worth hiring a manager that has experience with your particular housing program to insure full compliance.
- If you Can Afford It: A manager is always a great option, if you can afford the fee’s. Typically, managers receive 5%-10% of the collected monthly rent for the management of the property. In addition, most charge a fee equal to 1/2 of the monthly rental amount for procurring a new lease. (If the property rents on a yearly basis, the leasing fee would only be paid once per year.)
How to Find a Good Property Management Firm??
- Referrals from trusted colleagues or friends is always best.
- Check out the website of the National Association of Residential Property Managers. Click on Search Property Managers.
- Visit the Institute of Real Estate Management and click on Find a Member.
In conclusion, hiring a property management company can be a fantastic option, or not. If you have decided to hire a property manager, or if you would like to learn specifics about what you should ask beforehand, please check back with our blog on Tuesday, July 1st.
The topic will be “What Should you Look for When Picking a Property Management Company”?
How to Sell Your Home in 5 Days – CNN News
An interesting 2 minute video from CNN News offering a unique approach to selling your home FAST. In 5 days, as a matter of fact.
Bug Off — Plants that Naturally Repel Pesky Insects Away
Another unforeseen problem buzzing around foreclosures and the bad economy is the dramatic increase in the mosquito and garden pest population.
Many entire neighborhoods now feel the sting, as millions of vacant properties, along with those owned by cash strapped homeowners, have turned overgrown lawns, swimming pools, hot tubs, water gardens and koi ponds into insect breeding grounds.
Before you light the citronella candles or coat yourself in insect repellent, consider heading to your local garden center for relief. Some plants are natural insect repellents and keep summer bugs away, while improving the curb appeal of your home.
NATURAL “BUG OFF” PLANTS
Marigolds–Marigolds don’t have the greatest smell, but mosquito’s and other pests literally hate it. The bright, inexpensive and easy to grow annual is a proven workhorse in deterring pests around patio’s porches and vegetable gardens.
Catnip– In addition to being a favorite of your beloved feline, catnip is 10 times more effective than DEET when it comes to repelling the universally hated and dangerous mosquito. The annual plant grows easily in a sunny, dry location like the one found around most patio area’s.
Lemon Thyme– Smells and Tastes Great to Humans. Its lemon scent is a wonderful to smell as you walk or brush by and its lemon flavored leaves can be used in salads or recipes calling for lemon or lemon zest. This perennial grows great in most climate zones, requires little to no watering and thrives with a little sunshine.
Lemon Basil– Is another plant that smells great to people and is delicious to eat with summer tomato’s. Lemon Basil is a tender annual that needs watering. It is does self sow, but buy starter plants versus sowing seed packets for the best results with this yummy option to a pest problem.
To learn more about natural insect deterrents and repellents click here.
Video of US Home Prices Plotted on a Roller Coaster Ride
This video is a fun way to experience home prices since 1890. Feel the pull of appreciation and the drop of depreciation on this fun wild ride through the US real estate market.
Click Here to Take a Ride:
Free Home Buyer Toolkit
Purchasing a home is a huge financial undertaking that requires organization and complex calculations before you begin your home search.
We found a new website by HGTV named Frontdoor.com, designed to make home buying an easier task. Frontdoor.com provides a user-friendly free toolkit for homebuyers and sellers that is packed with handy tools. Check out the rent vs buy calculator, home selection tips, financial calculators, home tour check lists, how to advice and much more.
If you are in the market for a home, take a minute to visit the HGTV Frontdoor website this weekend. In our opinion, it eliminates a lot of the confusion about the daunting task of home buying and frees up your time for more house hunting.
Gas Prices Impact Home Values
One of the unintended consequences of high fuel prices is the apparent effect upon home sales, urban planning and a shift to inner city living, as people flee the suburbs to cut their commute time and expense.
A new report, Driven to the Brink, issued by CEO’s for Cities, a non-profit group, points out the fact that high gas prices have been an overlooked factor when evaluating the reasons behind the housing crisis. The report finds that the decline in home prices has been more severe in metropolitan areas and suburbs that require lengthy commutes, and where there is a lack of public transportation.
That sentiment was also reflected in a poll of 900 Coldwell Banker agents. 96% of the agents surveyed reported that rising gas prices were a major concern for buyers and 78% said high fuel prices were driving demand for city living.
As real estate prices and sales volumes are studied, it certainly seems that the price of driving a car is changing the definition of location, location, location. Homes that are close to public transportation, jobs, schools and shopping are selling, even in today’s “buyers market”, as home buyers place greater importance on cutting gas bills and commute times.
What this means to sellers, buyers and investors is that people are looking at where the home is located in a new way. They are considering the price of gas and driving time before purchasing. Drivers paying $4.00+ per gallon for gas, do not take commutes for granted, nor will the allure of new construction, granite counters and stainless appliances pull them out to the suburbs, away from their jobs and schools.
In conclusion, gas prices are changing real estate values and the shift appears to be permanent. Vibrant cities with good public transportation have become a lot more valuable, while rural area’s and suburbs, built on $2.00/gallon gas, have lost their appeal. This shift is a tremendous opportunity for cities and developers who remix land uses, add higher density housing and better transporataion.
If you are selling or buying a home, you must understand the impact that gas prices have on the definition of location. You may quickly discover that the rising price of gas means living near the train station is the best thing for your bank account and your home appreciation.
Understanding Lease with an Option to Purchase
Lease Options, popular in the 70’s and 80’s, are resurfacing as financing options in the 2008 housing market. For those unfamiliar with lease options, I will outline what is a lease purchase or lease with the option to purchase? What are the benefits and drawbacks? What are the things to watch for?
NOTE: Please keep in mind that the information is an overview and is not meant to be construed as legal advise. Buyers and Sellers should always consult an attorney before signing any legally binding document.
ABC’s of a Lease with an Option to Purchase:
- The buyer pays the seller an option fee for the right to purchase the property on or before a future date. The amount of the option fee may be substantial or as low as $1.00.
- The purchase price can be fixed at the time of contract or set at the fair market value at the time the option is exercised. (Note: Most buyers will lock in the future price when the option contract is signed.)
- During the Lease Period, the buyer leases the property from the seller for an agreed upon rental amount.
- The term of the lease option is negotiable, but the term is usually from 1-3 years.
- The Option Fee is generally non-refundable.
- If the buyer does not exercise the option to purchase the property at the end of the lease, the option expires and the seller keeps the option fee.
- Usually, a portion of the rental amount is applied to the future purchase. (Example: If the lease is $1200 per month, the seller will apply a credit of $200 per month toward the future purchase price or down payment.)
- The buyer can not assign the lease option without seller approval.
- The Buyer is not obligated to buy the property.
ABC’s of a Lease Purchase:
- Includes all the standard terms above with the following exceptions.
- The option money is non-refundable and does not apply toward the purchase price or down payment.
- No one else can purchase the property unless the buyer defaults or the option period expires.
- The buyer is responsible for maintenance, all expenses for upkeep, taxes and insurance.
- The buyer is obligated to buy the property.
- The Seller can sue for specific performance in the case of buyer default on a Lease Purchase.
Benefits for Sellers and or Buyers:
- Lease Purchases or Lease Options are usually offered by distressed homeowners or builders.
- The Seller can often get a higher price than they would with a normal sale.
- The Seller is able to sell the home in a slow market. Think about it, if the property was easy to sell, the owner would sell it out right for the cash.
- The Seller benefits from locking in today’s prices and gets relief from paying the monthly mortgage.
- In theory, the Seller gets a renter that keeps up the property. Since the renter intends to purchase the property, they should take care of the home, as if it were theirs.
- The Buyer builds equity through a forced savings plan, as a portion of rent is credited to him, even though the lease payments may exceed market rents.
- The Buyer hopes to build equity, if the property appreciates during the option period.
- Buyers usually make a small down payment, with little to no qualification, which makes lease purchase a good way to ease into home ownership.
- If the Buyer defaults, the Seller does not refund any portion of the lease payments or the option fee.
25 YEARS OF REAL LIFE EXPERIENCE:
I have written dozens of Lease Purchase or Lease Option Contracts during the 1980’s real estate crash in Texas. During that entire period, I never saw one person actually purchase the property they had an option on.
The primary reason is often the reason they try to buy with a lease option in the first place…they can’t qualify for a loan. The second reason for default was that prices continued to fall during the option period and they could buy another home for less money. The third reason was that the property was in poor condition when they leased it and things became worse with the passing of time.
If a Seller can not sell, then a lease option or lease purchase may be a sales tool to consider. They generally generate more monthly cash-flow than renting alone and an option fee is the sellers to keep.
But note, history proves by a large margin that the tenant will not become the owner, unless their credit situation has improved and the property values increase above the option price.
Bottom Line: Chances are that 95% of the time, the Seller will get their house back at the end of the option period.
Foreclosures–Don’t Buy Into the Hype
Be forewarned, that the evening news, websites, radio shows, TV programs and foreclosure bus tours that tout foreclosures can be purchased for a bargain, or worse, that they will make the purchaser wealthy in coming years are little more than “paid for” hype. Don’t buy it.
In my 25 years of real estate experience, I have discovered that for the most part, foreclosures are no bargain. They are laden with serious problems and lengthy delays, making them “deals” for only those pro’s with patience and a strong stomach.
Foreclosed homes are not wonderful, like the media would have you believe. The large asset departments that handle foreclosures (REO’s) are managed by employee’s with hundreds of files and no incentive to help the sale close. They don’t care if the property sells or not, they earn their paycheck, holidays and vacations, in either case. The truth is that only one of every three offers made to a lender will actually end in closing and Buyers should expect to wait weeks to learn if their offer was accepted.
In addition to the hassles of dealing with the “could care less” personnel at the lending institutions, getting these homes inspected is also a challenge. In many cases, entry before the sale is not even possible. No effort has been made to clean the homes or remove the abandoned trash. The utilities have long been disconnected. And, all lenders have a “as is” clause in the sales contract, which states that the lender is not responsible for the condition or repair of these homes, even if they are obvious and necessary.
Another problem with buying foreclosures is that the owner who lost the home long stopped caring about the property, and in some cases, even retaliated in anger.
- Always assume if something broke or stopped working, the owner didn’t spend money to fix it.
- Some angry people actually retaliate by attempting to destroy the house. They smash holes in walls and ceilings, plug the drains and turn on the water to flood the home, rip through the sheet rock to steal copper and wiring to sell as scrap.
- They steal the appliances, light fixtures, kitchen cabinets and HVAC units to resell.
- They leave anything and everything behind that they do not want. In many cases, this even includes helpless animals which are discovered locked inside the abandoned homes.
Buying foreclosures is not for the faint hearted and it is a myth that bank-owned properties are a bargain. In truth, REO’s are a messy hassle and the cost of repairs often exceeds the value of the home, after the repairs are done.
I don’t care what commercial you watched or which seminar you attended, if you they haven’t told you this information, they did not prepare you for the reality of the purchasing a home lost to foreclosure.
Thank you for visiting InfoTube Homes for Sale.
Cocoa Based Mulch Kills Cats and Dogs
I have recently addressed the benefits of landscaping and a fresh coat of mulch as it applies to curb appeal and home sales. In doing my research for the blog, I received a warning about the potential danger of a mulch, made from shredded cocoa shells, that poses a lethal threat to our four-legged friends and I felt compeled to pass the info along to all well meaning homeowners.
Cocoa Mulch, which is sold by Home Depot and other garden supply stores, contains a lethal ingredient called “Theobromine”. Theobromine is the ingredient that is used to make all chocolate, especially dark or bakers chocolate, all of which are highly toxic to dogs.
Cocoa Mulch is known for its fine texture and sweet smell, which makes it an attractive choice for landscape. Sadly, the ingredient that provides the nice chocolate smell also attracts pets.
Cocoa beans contain stimulants that may cause gastrointestinal upset, increased heart rate, restlessness, seizures and DEATH. Puppies are curious by nature and are especially at risk.
Word of Caution: Check what you are using in your gardens and be aware what your gardener is using around your pets. If you smell Chocolate Pop Tarts, remove the mulch and reapply with a safe, bark or synthetic mulch.