Renting/Leasing a Home - Karen's Perspective

State of the Real Estate Economy

House

Facts and figures are coming at us from everywhere. The important thing for you to know is what’s happening in your market, in your economy. Those are the numbers that will really affect your property values, what you can pay when you buy and what you can expect when you sell.

That being said, here are some interesting recent figures from Standard and Poor’s and the US Census Bureau.

According to David M. Blitzer, chairman of the index committee at Standard & Poor’s, average home prices across the country are now at the levels they were in the fall of 2003.

“It still looks possible that the housing market might bounce along the bottom for the foreseeable future before showing any real improvement that will filter through to the rest of the economy,” Blitzer stated. This statement, by the way, seems to be the one that I read most consistently, no matter what the source. I, personally, believe it will be three more years before we see a measurable turn around in the real estate market.

Data just released by the US Census Bureau states that the U.S. homeownership rate dropped to 66.9 percent during the second quarter of this year, hitting its lowest mark in more than 10 years.

08 / 02 / 2010
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Is it Better to Buy or to Rent?

Calculator

The New York Times Business Day put out a great calculator that I hope they never take down!

It shows costs accumulated for 6 years for both buying a home and renting a property.

What they determined (and I will argue a bit with their conclusions in a minute) is that it is better to rent if you’re staying less than 6 years but better financially to buy if you plan to stay in the home longer than 6 years.

I do, however, agree with their original premise that whether renting is better than buying depends upon many factors including how fast prices and rents rise and how long you stay in your home.

This is a very detailed calculator and I love it. A word of caution when you check it out because, as it’s set up, the default that you first see leaves out a few points I consider very important:

07 / 27 / 2010
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How is Your Ecomony Holding Up?

Highlights from an interview by Meredith Whitney currently on CNBC:

* A double dip in housing is a certainty
* State economies are plunging and are $200 billion underwater, will lead to 2 million in state-level layoffs leading to a low-end impact; raising taxes at state level will impact the top-end
* Retail sales have been stronger only due to consumers not paying mortgages, retail sales have already topped as is
* Second quarter bank results will finally catch up with accelerated mortgage foreclosures; charge-offs and delinquencies in credit cards are better due to mortgage non-payment cash flow going to other obligations. This will soon top as well.
* Structural employment issues in the US won’t get better any time soon

The experts are saying that the economy is going to get worse. How’s your personal economy? What are you doing to prepare and care for your family?

Again, if you’ve paid attention to global economics, I hope you’ve taken care of your personal finances. I focus on my own micro economy because I’ve done what I can to set myself up to ride this economic wave.

What have you done to prepare?

06 / 23 / 2010
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National Landlord Tenant Guides

Scales of Justice

Thanks for viewing my site. I put a lot of time and effort into getting important information that I really believe will be helpful for you.

Have you ever clicked on the “LINKS” tab located in the upper right hand corner of this page? You’ll find a ton of great links.

The one I want to talk about here is the National Landlord Tenant Guides. This is a FABULOUS site for landlord/tenant laws.

I just used it again, this time to see if tenants are allowed to simply call and tell me they’ll “be out by the weekend”. That’s better, of course, than when they don’t say they’re leaving or when they simply don’t pay and we have to go through the eviction process, but I did wonder when it happened again recently. I’m pretty lenient with anyone who has been a good tenant and a good payer, but I want to know my rights as the landlord.

So, I clicked the tab on the links section of my site and here’s what I read:

Abandonment of Lease:

03 / 24 / 2010
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Equity – New Work for Equity Requirements

equity. new work-for-equity requirements

Well, we recently got caught in another regulation change on our way to closing. Are you aware that there are new work for equity requirements? Do you even know what that means?

We do a lot of lease to own contracts for selling. We buy homes and put tenants under lease to own because they’re unable to get traditional financing. We work on their credit and give work for equity credits to help them raise their needed down payment. That’s been working beautifully for years. As with everything else in the 2010 finance regulations, new requirements!

1. For existing construction, which is generally our area: only repairs or improvements listed on the appraisal are eligible for work for equity. Any work or materials not included on the appraisal are not eligible.

OK, so here’s the problem. What appraisal? This means that, before I put a tenant in with work for equity opportunities, the lender wants me to get an appraiser to look at the work they will be doing and set a price for it. Ugh.

Then, the appraiser must look at it after the work is done to confirm the work and the value. Ugh.

02 / 10 / 2010
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Carbon Monoxide Detectors – required after 1/1/10

North Carolina map

Because we have rental properties, this applies directly to us and our business. Because so many of you also have rental properties, I’m posting this information I received from the City of Greensboro.

If you live or own outside of North Carolina, please be sure you keep track of the ordinances in your area. Real estate related laws are changing at lightening speed!

CITY OF GREENSBORO

FOR IMMEDIATE RELEASE

New State Law Requires Carbon Monoxide Detectors in Rental Properties, Homes

GREENSBORO, NC (December 18, 2009) – Carbon monoxide is a silent killer. It’s odorless, colorless and tasteless, and according to the Centers for Disease Control and Prevention, more than 400 people in the US die from carbon monoxide poisoning each year.

Because of the dangers of this toxic gas, beginning January 1, 2010, a new state law will require carbon monoxide detectors to be installed in all existing rental units with fossil fuel appliances or fossil fuel fired heating systems.

Specifically, the law requires that:

Owners of existing rental units shall provide at least one carbon monoxide detector on each level of each unit.
The detectors can be electrically hardwired or battery-operated.
All detectors must be approved by a nationally recognized testing laboratory.

Also, beginning January 1, 2011, all new homes being constructed must have a carbon monoxide detector installed outside of each separate sleeping area in the immediate vicinity of the bedroom(s).

For more information about this new law, call the City of Greensboro’s Engineering & Inspections Department at 336-373-2155.

01 / 05 / 2010
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Vacant House Insurance

Do you have a vacant property? Has it been vacant for more than 30 days? If so, you may not have insurance coverage.

Some insurance companies cover vacant properties for up to 90 days. Ask your agent about your vacancy coverage.

Vacant house insurance is generally more expensive than regular homeowners insurance for a number of obvious reasons. First, there’s no one living in the house to watch and protect it. Vacant properties tend to be a target for thieves, vandals and vagrants. And, the potential for water damage and infestations of animals or insects goes up.

If you can have someone check on the house daily, the risk factor of insuring the home decreases significantly. Also, if you can maintain active security systems, your property is more protected and your insurance rates are lower.

11 / 23 / 2009
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Owner Financed Homes Qualify for $8000 Tax Credit

There’s a lot of action going on with the $8000 tax credit and we’re getting lots of questions concerning whether or not our Agreement for Deed qualifies.

“Yes”, is the answer! We close with an attorney and submit a HUD-1 with the buyer’s tax return so the return can be amended.

The following comes from the IRS web site:

Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example; a contract for deed, agreement for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer’s payment obligations?

A. If the taxpayer obtains the “benefits and burdens” of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)

So, if you’re in a lease-to-own situation, you may be able to give the owner a nice downpayment that enables them to owner-finance and qualify you immediately for the $8000 tax credit.

*Start owning today!

09 / 29 / 2009
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5 Things that can Hurt Your Chances of Getting a Mortgage

1. Credit Report errors

The key to getting the best mortgage rate is good credit. One in four adults have serious errors on their credit reports. The Fair Credit Reporting Act requires credit-reporting agencies to fix these mistakes but it’s up to you to find the problems and to ask for the errors to be corrected. We discussed Increasing Your Credit Score in an earlier post.

Order a free copy of your credit report from each of the three reporting agencies:
Experian
TransUnion
Equifax

Tell the credit reporting agency about any errors you find.

08 / 14 / 2009
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How to Find a Rental Property

The number 1 way to find the perfect rental for your family in the area you want to live is:
walk the neighborhood! Find where you want to be and walk it, talk to neighbors, they know which properties are rentals or if a neighbor is hesitant to advertise but needs to rent.

Years ago, my husband and I drove by some ADORABLE 1920′s bungalows in downtown Pasadena, CA. We stopped the car to look because they were so beautiful and the location was perfect. There were amazing rose trees all along the walkway in the center courtyard that connected the 6 individual bungalows.. My husband said, “I’m going to go knock on the door to see if anything’s available.” I couldn’t imagine we’d be so lucky. But, we were! Of course the residents knew each other and the woman who answered the door told him that one was actually available but, because they were so desirable, they were never marketed but rented by word of mouth. We lived there (and loved it!) for years.