Is It Really a Good Time to Buy a House?

Today, New York Times economics writer David Leonhardt has a good column on why it might be a good time to buy a home in some unlikely parts of the United States.

Leonhardt shows that the rent ratio — the price of the home divided by the estimated annual cost to rent one like it — in many metro districts has fallen enough to signal that it is a good time to consider purchasing a home rather than renting one. Housing market experts believe that if the rent ratio is lower than 20, a home is of good enough value to consider buying. If the number is higher than 20, a purchaser is counting on real estate prices to rise to make up the higher aggregate cost of paying a mortgage. (During the worst of the housing bubble, homebuyers in places like Ft. Myers, Fla., were bidding on homes with sky-high rent ratios in the 40s.)

Leonhardt’s analysis shows that homes seem to be a decent deal in markets like California’s Inland Empire and Las Vegas — the very markets that stoked the worst of the housing crisis. But those parts of the country are suffering from high, high unemployment and a long real-estate hangover. And Leonhardt’s analysis does not take into account the fact that many mortgage experts believe those markets still have a ways to fall. I took the markets the Times column indicates might be a good deal — with rent ratios below 20 — and overlayed the data with information from RealtyTrac indicating the proportion of houses that received a foreclosure notice last month. In places like Washington, D.C., and Seattle, just one in 1,800 homes received a foreclosure notice. But in Las Vegas, one in 69 did, meaning a whole lot of houses might be coming on the market soon.

***Article Source:Washington Independent

The 8 Rules for Flipping in 2010

It’s been a relatively tough real estate market for rehabbers/flippers for some time now, and with the home-buyer tax credit getting ready to expire at the end of this week, it’s likely only going to get tougher.

That said, for smart rehabbers who know how to buy right, rehab right, and sell right, there is still plenty of opportunity to make money in this market. My business is proof of this — over our past 10 rehab projects, our average DOM (days-on-market) before our first offer was under 10, and our average sale price was 97% of our list price. Given that the average DOM in my area is over 100 and average sales price somewhere around 85% of original list price, that’s not too shabby.

Do I have a secret? Nope. Just common sense and the will-power to stick to doing what I know is right and not doing what I know will be harmful to my business.

With the new homeowner tax credit getting ready to expire, and with the relatively large number of buyers that have been shopping the past few months likely to go away, I thought now would be a good time to recap an article that I wrote last year, “The 8 Rules of Flipping in 2009.”

I’ve updated a couple of these rules for 2010, but for the most part, the rules are the same. If you’re a house flipper (or plan to be in the near future), here are some tips that you’ll hopefully find very useful.

Know the 8 Rules for Flipping here: BiggerPockets

Common Buyer Fears

Whether you are a first time home buyer or someone who is looking to move up or down, getting into the market can be a fearful time.

Here are some of the most common buyer fears:

Do I have enough money to buy a home?

To first step to finding out how much home you can truly afford is to get pre-qualified for a mortgage. Also, take a step back and look at your finances. Be sure that you have enough money leftover after the purchase to keep your life running smoothly.

Will I have buyer's remorse?

There is no such thing as the perfect house, so you should prepare yourself for some mild feelings of "what if". You may have to give up a few "wants" to get a few "needs" when you buy your next home. Or if this is your first purchase, you may have to buy something a little short of your dream house, and build equity in order to move up at a later date.

How can an unhandy owner handle repairs?

Be prepared for repairs, maintenance, and updates. Even with a new home, there will be projects. Plan accordingly financially. And if all else fails, hire a professional.

What if I need to move?

Experts recommends that to build equity, you need to have owned your home for at least 3 to 5 years. The NAR recommends, "Look at your annual mortgage statement or call your lender to find out.

Ten Internet Places to Prospect, Brand, and Sell Your Real Estate Services Online

There is a worldwide web of opportunity for real estate professionals who are serious about cultivating and closing new business from online venues. While some prefer to do busywork without a focus be the professional that maneuvers around their idle vehicles and takes the path that leads to the money work.

1. Question and Answer websites

2. Call to Action in your Blog Posts

3. Discussion Forums

4. Facebook "like" Pages

5. Syndication of Real Estate Listings

6. Announcements in Your Blog Posts

7. Microblogging

8. List Building

9. Micro Websites

10. Referrals

***Article Source: Active Rain

The Question: What are the future trends of real estate?

The Answer: One of the things that I see changing and the difficult process that we have in getting a sale together is getting the buyer onto the paper, getting that paper to the seller and getting the sale completed; we have this back and forth process.

Many times you hear you don’t do things verbally because real estate is not done on a verbal basis, so right now we have a serious revolution of the way that contracts are being evolved. There are several companies starting to come out with E signature options, like Doc You Sign, Dot Luke. A lot of them started off as form software and now they’re adding a tool whereby you can go online and stamp the contract with your signature; that eliminates the back and the forth. So if you have a contract that’s gone back and forth four times, by the time you’re done with that, the fax looks terrible! You can’t read it, and it’s got to be re-done.

Well now what I can tell him to do is go to his e-mail and log in, or go to this website, log in, click the button, review the contract, click the button and boom – it’s back on my lap. I can forward that to the listing agent and he can forward that to his seller or print it as a PDF or fax it to him.

So it’s just phenomenal new tools that are coming out that the industry is about to embrace within the next couple years, that are going to make it a really clean, simple process.

***Article Source: Realtor.Com

Real Estate Outlook: Faster Recovery?

It's been a long time since we've seen the Wall Street Journal run a front-page article suggesting that the national economy appears to be rebounding faster than most analysts forecast. But that happened last week.

And over the past couple of years, we haven't seen retail sales -- a key barometer of consumer confidence -- jump by almost two percent in a single month. But we saw that last week as well.

And then there's real estate: The latest Federal Reserve "beige book" on economic conditions nationwide, issued last week, said something we haven't heard in a long, long time. Housing activity is up in 11 of the 12 bank districts.

All of this, of course, sounds like promising news for home sales in the coming months. In fact, Freddie Mac's economists see total sales this year at least 10 percent higher than last year, even with the possibility of higher mortgage interest rates.

But there are complications in the mix: The Fed's "beige book" report essentially said, yes, housing is on an upward path at the moment, but what happens to sales after the home purchase tax credits expire mid-year?

Will expansion elsewhere in the economy be able to sustain sales and prices?

Lawrence Yun, chief economist for the National Association of Realtors, has similar concerns. In his latest commentary, Yun says steadily rising employment will be essential to keeping housing positive once the credits disappear.

***Article Source: Homes 101

Renting: The new American dream?

NEW YORK (CNNMoney.com) -- The American dream of home ownership has turned out to be the American nightmare for those who could never really afford a home in the first place.

Many borrowers are now in deep trouble as home prices have plummeted and the payments on bubble-era adjustable rate mortgageshave shot up. Foreclosures are still continuing at an alarming pace.

If the so-called Great Recession has taught us anything, it's that buying a house is not a divine right. It's a privilege to be earned only after you've saved up a nice chunk of cash for a down payment and are in a healthy enough financial position to keep making those monthly mortgage payments.

So for many consumers, renting is not necessarily the worst thing in the world. That's worth keeping in mind now that some experts think home prices are close to bottoming and fixed mortgage rates are still fairly low.

Sure, we've all been taught that buying real estate is the smartest thing you can do in order to build wealth. That's probably still true for the long haul.

But like with any investment, you should only make a purchase if you can afford the near-term hit that comes from doling out all that money now. Plus, you have to be able to stomach the possibility that the value of the house may actually fall over a short period.

And guess what? It seems many people are in fact coming to the realization that, for now at least, it makes more sense to rent instead of buy.

Thomas Toomey, CEO of UDR, said that favorable demographics will also probably drive more people to rent than buy. He pointed to the increasing number of retiring Baby Boomers who may look to downgrade from bigger houses to apartments.

He also said that record-high college enrollment levels are a boon for UDR and other apartment owners. Most recent college graduates, particularly those finding work in cities, are not in a position to buy a home.

Toomey added that cities are also interested in building more apartments closer to where people work for environmental reasons.

"So if you look toward the future, it's not just demographics and people making a conscious decision of whether they can afford a home that will lead to more renters. Cities want more apartments for younger and older generations," he said.

Of course, that's exactly what you'd expect the head of a company that owns apartments to say. But I also agree with him. And I'm curious to hear what you think.

***Article Source: Yahoo! Real Estate

New Real Estate Marketing Technologies

Although many may not believe it, the real estate industry is actually one of the most tech savvy industries around today. The necessity to cover numerous territories and the demand to provide all inclusive services makes the real estate professional almost dependent on the technologies available to them.

This dependency has pushed many real estate professionals to jump on new technologies and quickly become familiar with the various ways to maximize their time and build their businesses by attracting new buyers, sellers and investors. The bi-product of this trend has been a strong demand from the real estate industry for technology companies to continue pushing the envelope to build faster, more efficient and more effective real estate marketing technologies.

New Marketing Technology for Real Estate Professionals

Technology for the real estate industry has evolved so quickly over the past 10-20 years. We can still remember pagers being ‘high-tech’. Every Realtor seemed to have had one as it allowed them to be even more accessible than most real estate professionals probably intended. These types of technologies changed the way we thought of and worked with a Realtor. Now, our real estate agent is more accessible than ever, which leaves them with less time in the day to focus on important aspects of their business, like marketing their business and their clients’ properties.

Where Is Real Estate Marketing Technology Headed?

The way we see it, real estate marketing is going to continue to evolve and improve to a point where just about every step of the marketing process becomes so automated that a Realtor can literally start and complete an effective marketing campaign in minutes from their phone or computer. We are a long way off from this currently, but with the addition of new technologies like the one mentioned above it will not be long before homes start marketing themselves.

***Article Source: Real Estate Marketing Blog

Does a Pool Add Value to a Home?

This is one of those questions like the chicken and egg type debates. It depends. It depends on where you live, what type of pool it is, the condition, and a couple of more small details. Understanding more details about pools will help evaluate what value it brings to your home. Whether you are looking at purchasing or selling a home with a pool, it is good to ponder this question and see best how to manage the answer.

Where you live makes a big difference in the value added of a pool to a home. Obviously, the longer “swimming” season you have, the more value a pool can have. A pool as a part of a home in Florida is much more valuable than a home with a pool in Minnesota. Some areas like Arizona seem to almost require a home to have a pool. The climate can also affect the cost of a pool. The warmer the climate the less energy used to heat the pool. Also sunnier climates can utilize solar panels to heat the pool.

The type of pool construction affects the longevity and upkeep costs related to the pool as well. Vinyl covered pools typically last about 10 years. A gunite pool can last 20 years if well maintained. Concrete pools can take a great deal of upkeep in areas with seismic activity as cracks must be kept up with on a continuous business. Fiberglass pools can also be a good choice for longevity but may not be available in a custom shape. Hence the reason why many home owners choose gunite so that a pool can be made to fit the landscaping shape of the yard.

The condition of the pool and the pool pump should be evaluated any time a buyer is looking to purchase a home with a pool. A pool inspector can evaluate the overall condition of the pool and pump. The pool inspection is somewhat limited as the inspector can not look under the ground at the pipes. A pool inspection is normally $100-$200 dollars and worth the peace of mind it can offer. When you are purchasing a home with a pool, find out who the current owner have been using as a pool service and ask to see maintenance records. This will tell you a lot about how well the pool has been maintained.

***Article Source: Talk To CJ

Just when you thought it was safe: Foreclosures spike

NEW YORK (CNNMoney.com) -- The housing market has seen some positive signs recently, such as stabilizing home prices and increased sales, but foreclosures continue to haunt the market.

In the first three months of 2010 foreclosure filings rose 7%, to more than 930,000, compared with the previous quarter, according to the online foreclosure marketing firm RealtyTrac. That is a 16% jump over the first three months of 2009.

Foreclosures started off the first quarter with modest gains but spiked in March to a record 367,000 filings. Plus, nearly 258,000 of those filings were for bank repossessions, the highest quarterly total RealtyTrac has ever reported.

"It looks like the log jam is finally breaking up," said Rick Sharga, a RealtyTrac spokesman. "A lot of foreclosures had come into the process and then just stopped."

***Article Source: CNN Money

Real Estate Trivia Every Newbie Ought to Know

Q: What is the least affordable metropolitan housing market in the United States?

A : California's Los Angeles-Long Beach-Glendale is currently rated as the most expensive metro area in the nation.
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Q: What holds the title as the tallest reinforced concrete building in the U.S.?

A: 311 South Wacker Drive in Chicago was completed in 1990 and is 65 stories high.
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Q: What are three of the best indicators of real estate market trends?

A: Existing home sales, new home building and mortgage interest rates.
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Q: What three things are necessary in order to purchase a home?

A: Some cash, a dependable income and good credit. If you fall short, don't despair--homeownership may still be possible.
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Q: What is a VA home loan?

A: The Office of Veterans Affairs guarantees small or no-down payment mortgage loans made by lenders to U.S. veterans.

***Source: Real Estate Keswick

Health Care Reform Bill Guide for Landlords, Property Managers and Property Management Companies

President Obama signed a sweeping health reform bill The Patient Protection and Affordable Care Act on March 23rd. According to the Congressional Budget Office, it is expected to reduce the federal deficit by $124 billion.

Meanwhile its long term impact on landlords, property managers, property management companies and real estate professionals is not clear. If you fall into one of the above categories, you have to consider whether you are an independent contractor, employee or employer as it has different impact on you.

How Health Care Reform rolls out and what happens to who and when:
In 2010

1. Insurance Companies
1. Insurance companies have to remove life-time caps on illness costs, cannot drop you if you fall ill and cannot deny coverage to kids with pre-existing conditions
2. Independent Contractor Property Managers, Real Estate Professionals and Employees
1. Children up to the age of 26 can stay on their parents plan.
2. Medicare D participants receive $250 credit
3. Retirees between age 55-64 are offered re-insurance program
3. Employers Property Management Companies
1. If you own a property management company that offers health insurance, you get a 35% tax credit from premium paid
2. Small employers can get tax credit up to 50% of premium paid

In 2011

1. Insurance Companies
1. Insurers cannot raise premiums without providing justification or will be taken out of state insurance exchange pool
2. Independent Contractor Property Managers, Real Estate Professionals and Employees
1. Medicare D participants receive 50% off brand name drugs while in doughnut hole
2. Employees contributions to Flexible Spending Plans are capped at $2,500 limiting the amount that can be used to purchase health care with pre-tax dollars.
3. Penalty for non-qualified withdrawals from Health Savings Account (HSA) increases from 10 to 20 percent and 15 to 20 per cent for Archer Medical Savings Accounts (Archer MSAs)

In 2013

1. Independent Contractor Property Managers, Real Estate Professionals and Employees
1. If you are single filer and earn at least $200,000 per year or a joint filer earning at least $250,000 you will pay additional Medicare tax of nine-tenths of one percent called Hospital Insurance tax on income above these amounts.
2. Itemized deductions for unreimbursed medical expenses rises from 7.5 to 10 per cent. It has an impact on individuals who itemize deductions.
2. Employers Property Management Companies
1. New Medicare tax is to be withheld by property management companies

In 2014

1. Independent Contractor Property Managers, Real Estate Professionals and Employees
1. All individuals are required to carry health insurance or pay an IRS penalty of $750 per individual or 2% of income whichever is greater
2. Subsidies for payment of insurance cost are offered and family of four earning up to $88,000 (four times the federal poverty level) will get a subsidy.
2. Employers Property Management Companies
1. Employers or property management companies with 50 or more employees are required to provide health insurance or pay a penalty of $2000 per employee per year. State exchanges enable employers like property management companies to purchase insurance at rates similar to employees of big companies.

In 2018

1. Insurance Companies
1. All insurance plans offer preventative care with no co-pays and no deductible

***Article Source: Real Estate Investing Blog

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