American Renters Getting Squeezed.

American Renters Getting Squeezed

Rents continue to inch upwards and many renters say they know it would be cheaper to buy a home than rent, but they can’t qualify for a mortgage, Reuters News reports.

With rising demand for rentals, landlords are increasing their rents and some cities are even posting double-digit percentage rental increases annually. Apartment rents have risen at their highest rate since 2007, with costs soaring over the last three quarters, according to the research firm Reis Inc.

Landlords feel they can charge more since vacancies have reached at a 10-year low at the same time that demand has surged. Asking rents have jumped nationally to $1,091 during the second quarter, the largest increase since the third quarter of 2007, Reis reports. The average effective rent is $1,041 for the second quarter, increasing 1.3 percent over the previous quarter.

“The improvement in rents is pretty pervasive,” says Ryan Severino, a Reis senior economist. “Even in places like Providence and Knoxville, which you don’t think of as hotbeds for apartment activity, landlords felt the market was strong enough to raise rents on their tenants.”

New York remains the market with the lowest number of vacancies and also the priciest place to rent by far. The monthly rent there averages $2,935, which is more than $1,000 higher than the second-priciest place to rent in the U.S., San Francisco.

Many finance experts recommend budgeting no more than 30 percent of household income to pay for housing costs. Yet nearly 40 percent of Americans are now paying more than a third, according to a U.S. Census Bureau survey. In New York, one-third of households spend more than half their pay on rent.

“We have falling incomes, rising rents, and nothing but substantial upward pressure on those rents,” says Chris Herbert, director of Harvard University’s Joint Center for Housing Studies. “And nothing in the cards suggests it will turn around anytime soon.”

Meanwhile, for those who are able, purchasing a home has never been more affordable. It’s cheaper to purchase a home than rent in basically every major U.S. city, according to John Burns Real Estate Consulting.

But securing financing remains a renter’s biggest obstacle to buying a home. Banks are pickier in what they require to qualify for a mortgage. Loans for home purchases reached a 12-year low last year as lenders tightened their credit standards, according to Inside Mortgage Finance. Now, potential borrowers often need an average credit score of 762 to get a mortgage backed by mortgage giants Freddie Mac or Fannie Mae, according to Morgan Stanley research.

Source: “Americans Squeezed by Higher Rents, Tight Credit,” Reuters News (July 5, 2012) and “U.S. Apartment Rents Rise at Highest Rate Since ’07,” Reuters News (July 5, 2012)

How Agents Are Investing in Their Business.

How Agents Are Investing in Their Business

Real estate professionals are investing in a number of tools to expand their reach to customers.

According to a new survey by ActiveRain of 2,000 real estate agents, 63 percent of respondents say they have their own Internet Data Exchange (IDX) Web site, which features home listing feeds from their MLS. Their average expenditure on an IDX Web site is $75 per month, according to survey respondents.

Additionally, 62 percent say they use tools that help them create comparative market analyses for clients (a $73 per month expenditure, on average), and 51 percent use customer relationship management software (a $46 average monthly expenditure) to help manage their customer leads.

The survey also found many agents still use direct mail for their outreach too. Forty percent say they rely on direct mail ($108 monthly expenditure), while about 45 percent say they use search-engine optimization, blogging, and social media (a $47 average monthly expenditure) for their real estate marketing efforts.

Also, 32 percent of respondents say they pay for online leads (a $155 monthly expenditure, on average).

Source: ActiveRain and “Most Agents Investing in IDX Web sites,” Inman News (July 3, 2012)

For Those Selling Farms, Big Money Follows.

For Those Selling Farms, Big Money Follows

Sellers are cashing in on a farmland boom taking hold across rural America.

“We’ve never been here before. It’s a windfall at the moment,” says Chuck Wingert of Wingert Realty & Land Services, a farm auction company in Mankato, Minn.

Farmland values have soared in recent years. Earlier this year, the Federal Reserve of Chicago reported that farmland values across the Midwest climbed 25 percent higher than a year ago.

But many owners of farmland are unaware about the bid up in values, real estate professionals report. For those who do realize it, they’re finding they can really cash in for big bucks: Farmland sellers are using the hefty profits to pay off debt, buy second homes, and make other investments, The Minneapolis Star Tribune reports.

For example, Kelvin Bonnema and his siblings realized now would be a good time to sell the farmland they inherited after the death of their parents. They sold their family’s 154-acre farm at $8,112 per acre, a country record in Kandiyohi County.

Source: “For Sellers, Farmland Provides Jackpot of their Dreams,” Star Tribune (Minneapolis) (June 30, 2012)

5 ‘Must-Do’s Project for July.

by Bob Vila

5 ‘Must-Do’ Projects for July

July ushers in the start of summer, which translates into outdoor living, grilling and staying cool. But this month, like any other, there are things you can do to improve your summer living; things that will bring you more opportunity for leisure-time pursuits, while still keeping your home and garden in peak condition.

Here are my five top “must-do’s” for the month of July:

1. Cool down – naturally

Installing a ceiling fan is a fantastic way to cut energy costs all year round. It helps circulate cool air in the warm summer months but can also help push down heated air in the winter, allowing you to dial down the thermostat and save money. It’s also the perfect weekend project for a homeowner, since you can accomplish the task in a few hours and enjoy the investment immediately. Some things to consider:

• When choosing a fan, note the size of your room. The blades need to be at least 18-24 inches from all walls, a minimum of 7 feet from the floor, and 10 inches from the ceiling. Choose a 36-inch fan if your room is less than 12 feet square; 42-inch if the room is between 144 inches and 256 inches square; and 52-inch if the room is more than 15 x 15 feet square.

• Choose a ceiling box approved for fans. Boxes for overhead lights are not strong enough to support the weight. Choose a metal box that can support the weight. If you have access from the attic above, you can install the box to additional framing between joists. If not, grab a brace bar at the hardware store. This will screw into the joists, and the ceiling box and fan will hang from the newly added support.

• Turn off the electricity at the breaker box. Putting the wall switch in the “off” position won’t cut it. To be safe, you’ll want to turn off the electricity at the breaker box. Then carefully remove the old light fixture and its ceiling box with a screwdriver. Make sure the wiring is in good condition, and consult an electrician to replace if necessary. Making sure the hole is between two ceiling joists, trace the outline of the ceiling box onto the ceiling and cut out the shape with a keyhole saw. It should be about 5 inches diameter.

• Always follow the manufacturers instructions. Attach the fan’s down rod with the ball end toward the ceiling and secure (usually with an included cotter pin). Next, connect the fan’s wires to the circuit wires: white to white, black to black, and the grounding wire to the green lead wire of the fan or a grounding screw. Secure all connections with wire connectors and tuck them into the ceiling box. Attach the canopy or medallion using the screws included and install the blades. Make sure all screws are tightened securely to prevent wobbling.

2. Keep up with the pool

Depending on how much of the job you hire out, maintenance, supplies and electrical costs can run between $1,000 and $3,000 a year, with opening and closing, cleaning, checking connections, adjusting pH, adding algaecide, surface repairs and liner replacements. Cost-saving green alternatives are available. Before deciding upon chlorine as your primary sanitizer (it’s a major pollutant), consider some of the natural water purifiers, which include saltwater, ionization, oxidation, sonic waves and certain types of plants. And if you’re thinking about heating your pool to extend its use into the cooler seasons, consider solar thermal heating. Of all the solar technologies, its payback is the fastest. For more on swimming pool construction, decking, maintenance and safety, check out Swimming Pools 101.

3. Nurture your roses

If you have roses, you know that, although hardy, they do require special care to lead up to their full potential. Since their roots go deep, frequent watering is important. So too is fertilizer, which you should lay down after each flush of new blooms. And to trick your roses into re-blooming throughout the summer, remove the spent blooms and cut the stem down to the first or second five-leaf set. For guidance on rose varieties and their growth habits, consider Roses: 11 Sensational Varieties to Consider.

4. Decorate some clay pots

Since outdoor entertaining will be an ongoing affair this month, do something to dress up your patio or deck and play off your own skills and personality by transforming unused clay pots into decorative accents for your patio, deck or front porch.

5. Have some fun with some kid-friendly DIY

Few summer DIY projects are as easy to complete — or provide as much fun — as a backyard sandbox. With just some basic home improvement knowledge, you can build a simple backyard sandbox complete with benches for sitting, holes to trickle sand through and a beach umbrella holder for shade. Just follow the how-to here.

Investing In Real Estate Doesn’t Have To Be A Local Endeavor

Investing In Real Estate Doesn’t Have To Be A Local Endeavor

If you are looking at investing in real estate, please take this word of advice – real estate investing doesn’t have to be local. Many real estate investors make this mistake, and as a result miss out on a world of opportunity. Sure, there are some appealing reasons to buy properties in the city your live in, but there are even more reasons to expand your borders. In this article – which is the second in our series about mistakes real estate investors make – we will go through some common misconceptions real estate investors have about localized investing, and then talk about why you need to look outside your own backyard.

Why Real Estate Investors Invest Locally

There are a number of reasons why real estate investors tend to invest where they live, but here are the top ones:

1. They know the area
2. They can easily view properties
3. They can manage the properties themselves
4. They feel that there is less risk involved
5. They are not able to find a trusted partner

Now these are all good reasons for real estate investors to stick around home, however, we argue that things are changing in the marketplace and as a result there might not be as much validity to these arguments anymore. Let’s go through each of the reasons just mentioned and take a closer look.

This is typically the #1 reason investors state when we ask them about why they choose to invest locally. When we ask them what it means to “know” an area, they tell us that they know all about the home prices, rents, and so on for their neighborhood. When we ask them how they learned this information, though, they tell us they keep an eye on things via the internet. They are constantly on sites like Zillow keeping tabs on the value of their home, along with other homes in the area. Guess what, Zillow and all those other real estate websites cover other markets too. That’s right, the internet can provide you with all sorts of information on property values, rental rates, schools, crime, and so on – pretty much everything you could possible need to “know” an area.

Sure viewing properties a long distance away from where you live can be tricky. Do you really want to fly around the country checking out real estate opportunities? Most investors probably don’t, but there is a compromise. The key here is that you need to have some people in the area to help you out. If you can’t be there to personally see every property, what you can do is have your agent send you a detailed video tour of the house. This video should go through ever part of the house and give you an adequate understanding of the general condition of the home and its features. We wouldn’t recommend stopping there, though. If everything looks good on the video, you should also have someone you trust (ideally a property manager), go through and take a look at the home. They should be looking at the home in terms of suitability as a rental property. A good property manager will have looked at hundreds of homes in the area and should have an intimate knowledge of what tenants look for in a property.

We’ve found that this process tends to work out better anyway, as many real estate investors get too caught up in the details that they like to see in a property, rather than what a tenant wants. Remember you aren’t going to live in the house. If you don’t feel comfortable buying a house sight unseen (sort of), then use this process to weed through potential homes and save the trip out to physically view the property until you are ready to buy.

Most new investors believe that managing properties themselves is the way to go (i.e. they prefer to be a landlord instead of being a true investor).  They think, “who wants to pay 6-10% off the top to some property manager who doesn’t really do anything?” Typically what happens is after a year or two – quicker if multiple properties are involved – the investor learns to hate property management. Who wants to take phone calls from tenants about clogged toilets, or bug tenants about paying their rent? We’ve found that most successful real estate investors end up hiring a property manager anyway. Why not save yourself the headache? The key is finding a good property manager who has experience managing a large number of properties in the area. A good property manager will be worth much more than what you pay them.

There are going to be risks involved no matter where you invest. In fact, at the end of the day if you only invest in one place your risk is going to be much higher than if you invest in multiple locations – a little thing called diversification. We find that when investors talk about “risk” they really mean “comfort” – they are more comfortable investing locally and therefore in their mind it is less risky. In reality, this argument is actually one for why you should invest in multiple real estate markets.

There are a multitude of  investment providers who are looking to sell turn-key investment properties to investors, and even manage the properties post-sale.   However, finding a trusted operator/partner is not always so easy. If an investor can find a trusted partner in their city of choice, the investment can be a breeze. A good operator will be able to assist the investor from choosing a property, to financing it – all the way through to the ongoing property management. A good investment provider truly is a partner, and will remove most of the burdens involved with investing remotely. As an investor, you will want to look for an operator with a lot of experience. Furthermore, you will want to ensure that they have a successful track record – not only in the acquisition of investment properties, but also with the property management side.

Why You Need to Invest beyond where you live

Now we’re not telling you never to buy local properties. If the market fundamentals for your area look good, by all means – go for it. What we urge you to avoid is to only look in your city, and stop the search there. The country (and world for that matter) is a huge place with thousands of individual real estate markets. Chances are, the best market to invest in is not the city you live in. Once you get over the initial fear factor involved with investing in places you aren’t necessarily familiar with, there will be a world of opportunities open to you. You will likely be overcome by the sheer volume, and sometimes that too becomes a struggle for investors. This is why companies like ours (HomeUnion Services) exist – to help investors weed through the multitude of opportunities.

Don’t be afraid to ask for help. The biggest hurdle is to accept that investing in real estate doesn’t have to be local, then the rest will come.

Turn Your Garage Into a Fun Fitness Recreation Area.

Turn Your Garage Into a Fun Fitness Recreation Area

When I was a little kid, I spent countless hours every week in my friend’s garage playing basketball. The ceiling was only 9 feet high, but I was so tiny the garage felt like a basketball gymnasium. Although I didn’t realize it at the time, my friend’s family garage renovations were quite innovative. My friend’s father installed paper-thin carpet over the concrete floor and nailed a regulation-sized basketball hoop into one of the walls. The floor was still hard enough to dribble a basketball, but it also offered a much-needed layer of protection. It was hands down the coolest garage on the block.

If you are planning on converting your garage or carport into a unique recreation area, the first step is to remove all existing items from the garage. Assuming you do not have many flammable items like paint, gasoline, cleaning fluids, ammunition and detergents, a self-storage unit could be a good option for hanging on to garage contents remotely. If you do need to store flammable items, other options include having a portable storage unit delivered to your home or moving those items into an attic or basement.

At any rate, once the garage is cleared out, the possibilities are endless. A family in Seattle recently converted their garage into a full-blown gymnasium. This was an expensive project, as they decided to elevate the roof and add skylights; nonetheless, it was a particularly imaginative garage renovation. They installed an aluminum piping system with monkey bars, two sets of hanging swings and heavy-duty gymnastics mats for safety. In a geographical region like Seattle, where the weather is not always conducive to playing outside, this family thought outside the box and turned their garage into an awesome kids’ gym.

Some more obvious options include turning your garage into a weight room, a billiards room, or an arts and crafts room. But the potential doesn’t stop there: Depending on the size of your garage and your carpentry skills, a climbing wall or a small bowling alley might not be outside the realm of possibility. Just be careful that the stuff you displace is still safe. Don’t take your car out of the garage in your Honolulu home to build a playground if you’ll have to leave it outside to rust.

Sourcel; Zillow

About to Buy a New Home? Don’t Show It to These People.

About to Buy a New Home? Don’t Show It to These People

A listing agent may have shown a prospective buyer a specific house two or three times. Now the buyer wants another showing, which is surely a good sign that she’s ready to make an offer. The buyer also tells the agent that she wants to bring her new boyfriend, best friend, out-of-town parents or co-worker with her to the showing.

Well meaning as these confidants might be, they may inadvertently side track the home search or kill off the opportunity for what could have been the perfect home for the buyer. Here’s why, and what you can do to avoid it.

You’ve Been on a Journey—Without Your Friends or Family

As a buyer, you often go on a journey through the home buying process. It starts with dipping your foot in the water and feeling out the real estate market. The journey ends with a solid knowledge of the recent sales, the details on the neighborhood or neighborhoods where you want to buy and concrete information on the values and what you should be paying. You may have toured hundreds of homes and even made a few offers before you’re ready to buy. But now you are ready and willing to pay the market price for the house and location.

Now you feel it’s time to show someone the home you want to buy. You bring in a third party. But here’s the potential drawback: Your friends and family haven’t been on your homebuying journey. They’re most likely not familiar with the market, the current home values or the neighborhood. Without that information, they might instantly think you’re paying too much — and they’ll be quite vocal about it. Your well-meaning friend or parents from another state might think your dream home is really a nightmare.

Maybe You Shouldn’t Show the House to These People

Do you have a friend who lives in a brand new home with a designer kitchen and spa-like baths? He might be quick to disapprove of the Formica countertops and knotty pine cabinets you already know need to be replaced.

Maybe you got the house for a lot less than the listing price. Or you and the seller negotiated an amazing credit to replace the furnace, upgrade the old electrical panel or replace the dry-rot filled deck. Chances are, the people you bring to tour the property won’t know, care or perhaps even understand these details. They’re just seeing a house and a listing flyer with the price. They don’t know the history on how you got there.

The point is, think carefully before bringing someone to see the home you’re about to buy — especially if the property needs work or is very expensive. Your well-meaning advisers may reignite last-minute doubts and anxieties you’d already worked through. Without meaning to, they can cause you to get cold feet based on emotion rather than reality.

What Should Agents Do?

Real estate agents, especially the buyer’s agent, understand this phenomenon and sometimes are conflicted when their buyers ask to bring someone to a showing. It sounds like a huge conflict of interest because most people assume the agent just wants to make the sale. So for an agent to tell a buyer not to show their parents the home would never fly.

A good agent will accommodate and even encourage you to bring someone to a showing. But the agent will also prep you to take what your friends say with a grain of salt. Only the buyer, the seller and the real estate agents involved in the transaction truly understand all the details of the deal and how it got to its current point. Your agent has been on this journey with you, and a good agent will have steered you clear of enough properties to know this is a good match.

Whom Should You Bring?

So whom, exactly, should you take to a final or near-final showing? Ideally, you should ask someone who recently went through the same process. New homeowners will have the details of their search and memories of how it went down fresh in their mind. Their experience may have brought to light issues that you need to think about. Or perhaps they recently had to make a similar decision that you’re facing. Ultimately, they’ll understand where you’re coming from and how you got there.

Your sweet parents who live out of state are probably not ideal advisers. However, they may have offered to gift you money toward the down payment, and of course they’ll want to see the house. Depending on how you’ve structured the deal with your folks, they might even technically be investors. If that’s the case, they have some say in the matter, and you should take them to the showing.

Be Clear in Your Intentions

Have you already made your decision, and you just want to share your excitement with your friend? Great. If so, be clear up front by saying something like, “I know you may think this has some issues or you may not love the house, but I do and I know the market really well and the deal is done.” It’s not that you’re closing the door on a conversation; you’re just directing it so it will be helpful.

Alternatively, maybe you’re bringing someone by because you want approval or feedback. If so, be clear on exactly what you want to ask. Also, think about whether the person is truly qualified to answer your questions. Your dad’s uncle Ken, who used to be a handyman for the local elementary school, may be well-meaning and a sweet guy. But is he really the right person to assess the condition of the back deck or the plumbing? Probably not.

Source Zillow Blog