Yesterday I wrote about why this is a good time to investigate investing in rental real estate. Notice I’m talking about investing in rental property, not buying and flipping. In the buy and flip scenario, there are equally good deals out there on the buying side, but the problem is, you can’t profit from it unless you sell it, and that’s a tougher thing to accomplish now than renting a property and getting relatively quick return on your investment.
If you think you might like to generate some income from rental properties, I’d suggest the next step is to do some reading on the subject. Amazon.com lists literally several hundred books on the subject (search for Rental Property Investment), so I’m not about to go into the details. The point here is that before you look at property, educate yourself on what it takes to make it a paying proposition. As a REALTOR, I can help you find a suitable property and buy it at the best price available. I can’t guarantee that you will make money with it. That is dependent on many variables that are unique to your financial situation. A visit with your tax advisor is also useful so that you understand how to handle the specific laws about real estate rental income and expenses.
If you find the right properties at the right price and are willing to do what’s necessary to keep paying tenants in the property, rentals can be a good long-term investment. If you want to handle the finances but not the management, you can call on a property manager to help you keep it rented and take those midnight calls when the heat goes out in the middle of winter. If you’d like to know more about the benefits and costs of property management, call CENTURY 21 Hecht’s Mooresville Property Manager, Rod Kerley at 704-502-1679 or see more about rentals at our website HERE.
If you’d like to investigate properties that are good candidates for rentals, let me know. Often, they already have tenants who want to stay in the property so you have instant cash flow. Just do the homework first so that we can make best use of the time you have to look at properties.
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As we undergo a significant change in how people obtain housing, one of the facts that’s becoming clear is that many people who were able to get loans to purchase homes over the last 10 years are now unable to do so. Others who bought homes under those circumstances are having to move from a purchased home to a rented one. That means that the residential rental market is very strong right now. That’s confirmed by the high level of activity of our CENTURY 21 Hecht Property Management Department who are staying very busy getting renters and managing properties their property owners.
Over the years, I’ve worked with a number of buyer clients who concluded that they would like to be landlords and own investment property. There’s no doubt that now would be a very good time to consider purchasing and owning investment property if you have not before. Properties can be purchased at very good prices, and that is one component in making a good investment property purchase. However, it’s important to understand that there is more to it that calling a REALTOR and telling him to find you a “good deal.” Properties are not listed with a “good deal” banner hanging down from the roof, or if in fact is does have a sign that says “GOOD DEAL!”, you’d be wise to be leary of that. All sellers want to get as much as they can from the sale of a property, so they’re not looking to give it away. Even bank owned foreclosed property is not an automatic good deal. If that were common, the good deals wouldn’t last a day on the market before they were put under contract.
The thing to remember about any owner of any property for sale is that they themselves don’t know what they’ll take for a property until they have an offer and have the chance to take it, counter it or walk away from it. That’s when people really get serious about what are their alternatives. If they think they have a good chance at getting a better offer and negotiating a better price and terms, then they’ll pass on an offer in hand. If they don’t think their odds are good for doing better, then they’ll at least counter your offer to see if you can find a price that both buyer and seller will find acceptable.
Today there are 211 Iredell County properties listed on the Multiple Listing Service that are priced from $65,000 to $130,000, a range that is attractive to many investment property owners. If you think you’d like to investigate this, let me know, and I’ll send you information on properties that meet your criteria.
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I recently read an article by Jed Smith, Managing Director, Qualitative Research for the National Association of Realtors, that was basically a review of the Zillow.com consumer real estate site. Of course, one of the purposes of NAR is to be an advocate for the value of REALTORS in helping the public buy and sell real estate. So, you might expect them to be somewhat hard on Zillow.com. In fact, I thought Mr. Smith gave a fairly even-handed review of the relative value of Zillow, in particular the Zestimates or estimates of home value. You can read the entire article HERE.
Like most things, the “Devil’s in the details,” and Mr. Smith goes through some of the details including the relative accuracy of the Zestimates. If you drill down into the Zillow.com site, you can see that they freely admit that these Zestimates can vary considerably in accuracy because they are based primarily on public information on past sales. They don’t consider the condition of the comparable properties, what’s going on around the comparable properties, any seller concessions ($ given for closing costs) or very importantly comparable properties that are currently for sale (the competition). These are all things that a REALTOR considers when advising sellers on listing prices and buyers on offer prices. Their estimates of accuracy are broken down a number of ways, but you can go HERE to see their accuracy estimates by North Carolina county. If you’re in another state, it is simple to back up and see your local information on their site.
I think the information offered by Zillow.com can be useful to buyers and sellers as the way they can initially dip their toes in the real estate waters before talking to a REALTOR. Once they get a general idea of the information they were seeking, they can go to a REALTOR and ask them to refine it. I don’t think anyone making such a large financial decision such as a real estate purchase or sale would be satisfied basing it on such rough estimates that could easily be off by 20%. Still, go there and give it a try. They have lots of other handy information about price trends in various communities. While you’re at it, check out Trulia.com for similar useful information. As a matter of fact, our own CENTURY 21 site has lots of local area information under the Area tab near the top of the home page.
Real estate agents appreciate working with clients who are informed about the area in which they have an interest because it saves both the agent and the client much time in sorting out the many decisions that have to be made. Ultimately, each property is unique and needs to have professional knowledge and experience applied to making recommendations to clients before they sign the dotted line.
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Our CENTURY 21 Mortgage representative, Kim Peschock, is sending me weekly updates of their mortgage rates. That’s one way we stay informed of the mortgage market. Her summary received today shows that rates have edged up a bit from last week. They’re still outstanding at just under 5% for a 30 year fixed mortgage for conventional loans. Jumbos (over $417,000) are around 6.125% for a 30 year fixed loan. VA/FHA fixed rates are around 5.5%. That’s up .o5% from last week.
We say “around” these rates because each person’s income/debt/credit history is different, so the lenders will take the borrower’s whole picture into account to set the rate. Understand though, that the above rates are not “teasers.” If you have a solid financial picture, you should be able to get those rates.
I’ve been reading a bit of chatter in the financial news that suggests that rates may continue to go up by small increments. Of course, every homebuyer wants to have a great rate, but the differences in rates from time to time should be kept in perspective. For example, at 5% and 30 years, each $1,000 borrowed requires a monthly principle and interest payment of $5.37. At 5.5%, the same loan requires a monthly P&I payment of $5.68. So, a $200,000, 30 year loan will cost $1073.64/month at 5% and $1135.58/month at 5.5% or $61.94 more. For some that’s a small difference. For others, that may cause them to adjust their price range downward.
Here’s some perspective- some years ago when we went through a similar economic downturn, I had a mortgage at 11%. I know others who had even higher rates.
You can get more info on mortgages and different plans by calling Kim at 704-500-9087 or going to her web site at http://KimPeschock.c21mortgage.com.
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Hooray! One of my Mooresville listings went to contract over the weekend. That’s wonderful news of course. However, it’s tempered by the fact that the sale is conditional on the buyer getting a USDA loan. I’ve written about these before because it is just about the only game in town where a buyer can still under the right circumstances get a 100% mortgage loan, and it does not require private mortgage insurance. I just closed one like that a couple of weeks ago.
In this situation, I advised my sellers to be cautiously optimistic. The advice for caution is because one of our mortgage reps sent us an email last week saying that her company had been told that for the time being there was no more USDA money available. When I got the offer with that stipulation, I called the buyer’s agent and told her about the communication we’d gotten about these loans. She says she double checked with their lender, a mortgage broker, and was told that they still believe they’ll be able to underwrite the mortgage with a USDA loan. Nothing on the USDA loan web site says otherwise.
My sellers are anxious to get their house sold and move on. They have a growing two-year-old and limited space, so they want to find a larger home in the Mooresville area, and I’m looking forward to helping them with that, too. So, we’re holding our breath until we can get a more solid commitment from the lender.
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I just got back from Greensboro where I was installed on the Board of Directors of the NC Association of REALTORS . It’s gratifying to be considered worthy of the job of representing your peers on such a board. This is the latest in my REALTOR board evolution. A few years ago, I was asked by the President of the Charlotte Regional REALTOR Association to represent Iredell County on the Multiple Listing Service Board of Directors. That is an appointed position. So, I went about the task of meeting each month to work on lots of issues related specifically to the MLS and the computer systems we use. Last year, I was asked to be one of the folks running against able competition for the Iredell seat on the CRRA board. Fortunately I won that election, and as it turned out started immediately when the previous Iredell rep decided she needed to resign for personal reasons. So, for several months I’ve been meeting with both the MLS and the CRRA boards- the better part of a day a month plus preparation time. In the meantime, I was also asked by the CRRA President to agree to be one of our delegation from Region 8 of NCAR, the largest region in the state, which represents all CRRA members (Mecklenburg and Iredell Counties).
Last night was our NCAR installation meeting, and today was our first meeting of the 2009 Board of Directors. As a working agent, it’s easy to miss what these organizations do for the benefit of REALTORS and current and future homeowners. That’s probably true of many organizations in which the general membership take for granted many benefits that in fact require much hard work, money and deliberation. My experience is that if you get a chance to serve in a similar role with any organization, you’ll ultimately acquire a true appreciation of the inner workings, problems and benefits of the group.
Getting involved is a good thing! I’m sure it makes me a better and more effective REALTOR.
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Found out from John Fuller, the architect of the soon to be J. Hoyt Hayes Memorial Troutman Public Library, that they’ve had to move the bid date out several days because of the hugh volume of interest from general contractors in building the library. They had planned on at least 30 GC’s to bid, but apparently that number has gotten substantially larger. That can only help moderate the cost of the building. As recently as last summer we were worrying about the rise in construction costs.
Groundbreaking is still scheduled for Tuesday, February 3rd at noon at the corner of Brown and Church Streets in Troutman. See my post from January 13 HERE for more info, drawings, plans, etc.
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The Downtown Statesville Development Corporation is hosting the 2009 North Carolina Main Street Conference January 28 – 30 in Downtown Statesville. This conference organized by the NC Dept. of Commerce will bring 300 to 350 people involved in downtown revitalization from across the state into downtown for a three-day conference. Check the conference link above for more details, speakers, etc.
I’ve got a soft spot for small city downtown areas and the difficulty they’ve endured over the last 30-40 years, especially since the creation of the interstate highway system and the tendency to “sprawl” residential communities away from town centers. As a Mooresville resident who drives through our downtown every day on the way to my office, I’m constantly aware of the coming and going of downtown businesses. The outlying shopping centers that have sprung up near interstates and bypasses have done continual damage to these downtown businesses, and now the economic downturn has added to the difficulty of these businesses trying to stay afloat.
There have been lots of studies and books written about this phenomenon and how to keep it from destroying the core of small cities- lots of folks hate to see it happen. Last year Statesville Chamber of Commerce representatives visited Greenville, SC to find out how they have successfully revitalized their downtown area. If you’ve not been there in recent years, it is worth a trip just to realize that a small city can in fact have a great downtown. It took them over 20 years to get it done, but I think they got it right. I hope that Statesville and other small cities can figure this one out. When I was growing up in Troutman many years ago, going to downtown Statesville was a real adventure, and it had all the stores that a family needed to get their routine shopping done. Statesville has some wonderful main street architechture and beautiful old homes on the outskirts of their downtown that deserve to be maintained.
Mooresville is one of those small cities (large towns?) that has residents who have a town mailing address but never visit the downtown area. Those living around Lake Norman or near I-77 have so many shopping opportunities around the interstate exits that they never choose to explore the downtown area, even though they complain mightily about the crush of traffic around exit 36 at Highway 150. For Mooresville, the addition of nice restaurants in the downtown area is giving those people another reason to come “in to town.” For many years I worked in downtown Charlotte. Back in the 70′s and 80′s, people who worked downtown complained about the town “rolling up the sidewalk” at 5:00PM and the doughnut effect of having little life downtown but being surrounded by more vibrant areas. They eventually got local leaders involved in turning that situation around, and now downtown Charlotte is once again strong and full of people all the time, including people who’ve moved back to the town center to live.
So, at least we’ve got some models of success to study. The economy may slow us down, but we need to eventually find the answer to downtown revitalization. Who wants to live in a town with a hole in the middle?
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We’ve had our first real snowfall in the Lake Norman area. We woke up with weathermen on television running around excitedly like little kids. That’s normal for our area. We happen to be often right on the border of frozen winter storms, and the poor weather forecasters catch the dickens for predicting snow (or ice) then seeing nothing or at least just cold rain. When the subject turns to snow and how much we get, we have to say, “it depends.” Some winters we have a number of significant snows. Others not so much. It also depends on the track of the storm. Our storms usually come up from the southwest as if they were traveling I-85. If it’s a large storm, we can get a significant amount of snow on either side of I-85. Other times, like it did this time, it may go under or south of us. You just can’t assume that the further north you are here, the more freezing stuff you’ll get. This time, Lake Norman got little, and Charlotte got a fairly good snow (we consider 2 inches or more a “fairly good snow”). Don’t get me wrong. In years past, we’ve had snows over a foot deep, but usually it is maybe 6 inches and is gone by the third day. We rarely get snow after snow. My idea of a good snow is here to day, gone tomorrow!
My Yankee transplant friends like to joke with us about how we get freaked out over a little bit of snow, but they’ve admitted to me that they are glad that they don’t have to deal with months of gray, dirty snow covering the ground all winter long. A place like ours where you can have a nice pretty snow one day, then have a sunny 50 degree day the next is just right to me.
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Posted in Uncategorized on January 20, 2009 |
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I hope you got a chance to see President Obama take the oath of office and make his first speech as President. Say what you will about him, but the man can sure enough deliver a speech. Leadership is largely the ability to clearly define a goal, understand what needs to be done to achieve it, inspire people to do what needs to be done, and give them confidence that they can achieve the goal. I think President Obama has the abilities needed to lead us out of our current difficulties. From an economic standpoint, it is comforting to look back and recognize that we’ve been through 10 recessions since World War II, and they’ve averaged 10 months in length. Some lasted longer, and some were shorter, but they all eventually ended with an economic upturn. People suffer during each recession. President Obama appears to understand that and has as part of his goals to limit the damage both in degree and duration. Given his acceptance by much of the rest of the world, I think he’ll be able to work with other leaders and countries to get us all to a better place. The cowboy “go it alone” approach just didn’t get the job done. President Bush was accused of being “all hat and no cattle.” President Obama isn’t a cowboy, but I believe he’ll be able to round up a good herd and get them going in the right direction.
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