1. Your property is not rental material. A remote location, limited space and other issues may make your home unattractive to renters at any price. Most renters are looking for a home that is near work, shopping and schools. They want a decent sized kitchen and bathroom and enough bedrooms to work with. If your home doesn’t meet these requirements, it may never be rented out in the first place.
2. You live too far away from the property. The farther you live away from your rental property, the harder it will be to monitor what is happening to it. Collecting rent, taking care of maintenance and eviction will all be made more difficult and costly if you live in another county – or state.
3. You don’t understand cash flow. The purpose of renting is to make a profit from your property, or to at least break even on the mortgage, taxes and maintenance costs of ownership. You must be certain to charge enough rent to cover not only the fixed costs but also to allow for emergency repairs and unexpected expenses. If you do not charge the appropriate rent, you can have excellent tenants and still lose money.
4. You are too lazy about screening applicants. All would-be tenants are not equal. Choosing a tenant that is solvent, clean and respectful of your property and the lease agreement is key to having a pleasant landlord experience. You must be prepared to ask for employment information, renter’s history and references – and check them!
5. You haven’t learned the legal side. Having a solid lease agreement will not only eliminate confusion about you and your tenant’s rights, but it can be a tool to help you recoup losses if the tenant and landlord relationship goes awry. There are many standard lease agreements available. You should either purchase and learn every item on it or have a customized lease form made by an attorney.
6. You think it is a no-hassle payday. If you think that you will hand a key to someone and begin receiving rent checks on the first of every month, you have not accepted the realities of renting. Tenants will need in-home repairs. They will need to be reminded to keep the yard clean. The home will need to be treated for termites. Heating and air conditioner filters will need to be changed. Being a landlord is a job, not a free paycheck.
7. You haven’t considered maintenance and repair issues. If you are handy, you may elect to do your own repairs and maintenance. If your talents do not fall in this category, you will need to find reliable handymen, plumbers and appliance repairmen to assist you in keeping the rental in livable condition.
8. You are too soft hearted to enforce your own lease agreement. “But Mr. Landlord, we’ve had a hard time this month. Perhaps we can pay half now and the rest on payday?” If you have a hard time saying no to this or other situations, you may not be cut out for this profession. While it is not necessary to be heartless, you must be willing to protect your interests, lest your tenant’s money problems quickly become your own.
9. You hate conflict. Sometimes a lease will not go smoothly. If you have tenants who damage the property, fail to pay rent on time (or at all) or cause other headaches, you must be willing to deal with the situation. The only alternative is to hire a property management company to handle your landlord issues for you, at a price.
10. You don’t want to go to court. It is possible for tenant problems to go far enough to warrant eviction. This means having the local law enforcement serve papers and, in extreme situations, physically remove the tenants from your property. It may be necessary to go to small claims court to attempt to collect unpaid rent and damages to your property. If the very idea of this makes you shudder in horror, perhaps you should not get into the landlord profession.

Home Staging Tips To Help You Sell Your Home Quickly

When you prepare to sell your home you need to consider what your house says to potential buyers.  Obviously, your house needs to be clean, uncluttered, and organized. Your house should have attractive curb appeal.  In addition to these selling tips, you should also look at your house and try to objectively determine the language of your house.  Does it speak to the potential market that it would most likely appeal to?

 If you live in a large house with numerous bedrooms and bathrooms, your potential buyer would most likely be a couple with one or two children or a financially established couple ready to begin a family.  You, on the other hand, may be downsizing because your children are grown and living in homes of their own.  Your house probably speaks a language that reflects your age. It may still have the same color scheme and décor that it has had for numerous years. Your decorating style may be satisfactory to your age group but may be very unappealing to a younger couple.  Even though it is the “bones of the house” that a potential buyer should be most concerned with, the fact is that buyers are influenced by the visual appearance of a house.  An outdated décor could negatively influence a potential buyers opinion of your house.

In order to make your house speak positively to potential buyers you can make a few small changes that could yield large rewards. Window treatments in older homes are often outdated.  Changing them can make the entire house more appealing.  Very often kitchen appliances that are satisfactory to you will seem old and outdated to a young couple buying their first home.  Replacing them could be to your advantage. Color schemes often make a house appear outdated.  You can rejuvenate a dull room by painting it or by adding a splash of color with inexpensive accent items. If you have carpet in your home that has survived your children’s growing years it most likely needs to be replaced.  A couple looking for a home in which to raise their family are most likely looking for a home that is bright, cheery, fresh, and eager to be filled with activity. A nice yard is a bonus. If your house sits on a large lot make sure that you use this asset to attract buyers. If you have leftovers, such as an old basketball goal still standing in your yard, you need to remove them. Make your home and your yard a blank canvas for a potential buyer to visually personalize.

If your home is small and would be attractive to a single person or young couple buying their first home, you need to be sure your house speaks their language.  While the buyer may be looking for a small house, they will not give your house serious thought if it is cluttered and appears to lack sufficient space. Before opening your home to prospective buyers you need to make your home appear as spacious as possible. If you have too much furniture in your house, store some of it. When clearing clutter, don’t stash it in cabinets or closets.  Buyers open doors. Remove personal photos and collectibles so that the people looking at your home will be able to visualize the house as their home not your home. A first time homebuyer is often moving from an apartment. Your house should feel like a home not like an apartment.

If the house you’re selling is likely to be purchased by an older individual or couple it needs to speak a language that appeals to them.  One key element to attract older buyers is safety.  Make sure the entrance to your house is free of debris. No one wants to navigate an obstacle course to reach their front door.  If there are steps leading to your door, install handrails before putting your house on the market.  Older individuals and couple tend to prefer a décor that is simple and soft in color tone. Brightly colored walls and flashy décor could distract them from seeing the potential compatibility they might have with the house. Your home may be more appealing to them if it feels warm and serene.

When placing your home on the market, consider the age group that is most likely to show an interest in buying your home.  Do as much as you reasonably can to make your home speak the language of the potential buying population. This can accelerate the selling process for you.

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As a native of Florida and a resident for 27 years, I have dealt with several hurricanes as a renter, a homeowner, and a landlord.  While the storm itself can be scary to someone who has never lived through one before, most people who live in Florida get more anxious about their hurricane insurance.  A recent series of bad storms has made obtaining hurricane coverage in Florida an expensive and risky proposition.  If you’re a new resident or homeowner in Florida, here are a few tips to help you navigate the system.

Renters

Most rental insurance policies cover damage to household goods due to flooding or structural damage (that is, damage to the residence that resulted in damage to your personal property).  Because renter’s insurance does not cover any damage to a physical structure (ie. The house, condo, or mobile home that is being rented) the insurer’s liability for damage during and after a hurricane is pretty limited.  Thus, there has not been a lot of change to renter’s insurance policies over the past few years despite the changes to homeowner’s policies.

As a financial counselor, I recommend that all of my clients who rent their primary residence carry renter’s insurance.  One of my clients reluctantly followed my recommendation to get renter’s insurance, then two months later was relieved to discover that the policy would cover the furniture she had on a covered, enclosed back porch which flooded during Hurricane Ivan.

A typical policy costs about $15 a month; a small price to pay when you consider the amount of damage that just one broken window during a hurricane can cause.  Most policies have a deductible of about $500.  When shopping for a policy, make sure to read the fine print about how your deductible will be paid.  Some policies will cover things like spoiled food without assessing the deductible. 

Homeowners

Homeowner’s policies are much more complicated than a renter’s policy.  Typically insurance companies will charge two separate deductibles; one for hurricanes and one for all other disasters.  Usually, the hurricane deductible is set to 2% of the value of the insured property.  Be very careful with this; insurance companies typically change the value of a home every year.  By raising the amount they believe it would take to replace your entire structure, they are essentially raising your deductible on even a partial damage claim.

It is very important to note that no policy will cover flood damage.  In order to be covered in case rising water damages your home, you must purchase separate flood insurance.  If your home is in a FEMA flood zone (typically anywhere 7 or less feet above sea level) the cost of flood insurance will be very high, and a hurricane rider on your homeowner’s policy may be impossible to get.  If this is your situation, you might want to look into Citizen’s Insurance.  This insurance “company” is subsidized by the state of Florida and covers anyone who cannot get hurricane coverage through another insurer at a reasonable rate.  In order to qualify, you must three letters from insurance companies stating that you have been denied (or dropped) for insurance or three quotes for insurance that are more than double the rate you would pay to Citizen’s. 

Expect to pay about 1%-2% of your home’s value per year in premiums if you do not live in a flood zone, and between 2% and 5% if you do live in a flood zone.  When shopping for a policy, look carefully at the deductible formula and any “caps” or limits on your coverage for household goods, accessory buildings, landscaping, and swimming pools.

What is Staging? Put simply, staging a home is fixing it up so that it will sell more quickly. That seems like a very simple explanation but it’s actually a little trickier than that. A good example of staging is model homes. They “stage “the home so that it is easier for a home buyer to picture themselves living there. It is important to make it appealing to as many buyers as possible, so these companies use lots of neutral colors, updated looks and spacious furniture placement. Home builders have used this technique for decades and there is an increasingly large market for professional home stagers, who will come into your home and stage it for a small fee. Don’t despair, this doesn’t mean that you can’t do it yourself.

Start by walking around your house, inside and out. Try to look at it from someone else’s point of view. Jot down any notes or thoughts you have to help you remember the little things. Here are some questions to ask yourself as you walk around.

1. Does my house have curb appeal?
2. Does it look like it’s been well taken care of?
3. Are there any obvious repairs it needs?
4. When I enter the house, do I want to see more?
5. Is my flooring dirty or worn?
6. Do any of the rooms look cluttered?

For the home sale, you want to remove all your own personal style from your house. This way anyone can picture themselves living there. The rooms that sell a home are the kitchen, bathrooms and master bedroom, give them a luxurious feel. Painting can be both cost effective and dramatic. Use neutral colors. Only leave the furniture in each room that you need; if the room is an office, make sure there is a desk in there, for example. If you have a lot of “stuff”, consider storing some of your things in a storage unit temporarily. Invest in small items like towels for the bathroom, flowers for the table, etc. If you live in a competitive market, you may want to bear in mind that there are also other expensive items that influence buyers: new flooring, tiling and kitchen appliances.

These are just a few tips to get you started. If you’re still confused, remember that there are a lot of resources out there. Television stations like HGTV feature a few shows that explain and demonstrate the staging process from beginning to end. This may be a good time to ask for an outsider’s point of view. Probably the best person to ask would be your real estate agent. Real estate agents can give you a professional, realistic idea of how much or how little your real estate market requires you to do. It is easy to be intimidated by the instability of our nation’s economy. Keep in mind; people still need homes to live in, if they fall in love with yours that will be the one they buy.

Image by Allie_Caulfield via Flickr

Investors are able to capitalize on the real estate marketplace, where other’s such as house flippers will not.
Pricing is perfect for an investor to buy a home at rock bottom prices.  Homes are priced at the lowest they have been in almost 30 years. With the economy in the state that it is in, the deficits some homes now carry are motivating people out of their homes. Because of this they are selling quickly at prices many did not believe they would see their home asses for, and others are selling below the depreciated appraisal rates. This is the optimal time for the real estate investor to purchase the properties they have been wanting, or considering.

The old adage – buy low, sell high – this is the buy low.

This window won’t be open for much longer. Once a market has bottomed out, like the US real estate has, it can only go in one direction. Attention is focused on growing and re-energizing this particular aspect of the economy in the United States, which means it is only a matter of time before it works. Although the market is still stagnant, foreign investors are looking at the markets such as Austin, Texas, that have been limitedly affected by the problems, to buy property for the long term investment. This strategy is very sound. This will enable these investors to have a significant profit when they are ready to sell.

Consider this fact, because of the economic issues in this country starting with the housing market, some of the homes are valued today at half of what they were when the home owner purchased the house in the first place. If the investor purchases it today, and holds it through the next two to three years, they will turn a profit potential of 50% at the close of the sale.

This of course assumes they maintain the home, and landscaping. This also assumes the market is back at full and robust strength by that time. Should either of these factors not be accurate, there is still a significant potential for profit, as the market is only going up from here.

American investors are also finding this to be a good time to invest in property. This investment would put them in competition with few people right now, and makes the time to buy today. If you know the value of investing in real estate, then speak to your realtor and visit their listings today.

An investment in property is most easily assessed by looking at the yield - that is, the rental income expressed as a percentage of the price. You can then compare the yield with that on other investments – such as cash or equities. Yield indices are also available from various sources for different types of property (commercial, residential, industrial), so you can compare the properties you are looking at with the market as a whole.

Typical yields will differ between types of property. For instance offices tend to have lower yields than industrial property. The values of prime property also different from those of secondary properties – prime properties being major blocks in a highly attractive location, such as large town centre offices.

Of course the yield is not the only return on a property. Investors in real estate hope for capital appreciation as well, over time. That’s included in the total return indices. However, since this factors in future movements in the market, total return is not a figure that you can really use to evaluate an investment prospect.

Having assessed the yield, it’s next time to look at qualitative factors that might affect your investment. For instance, what is the quality of the asset? That’s not a question about the design or build quality, as far as the investor’s concerned, but about the reliability of the income.

For instance, you need to look at the quality of the tenant. A Fortune 500 company or major professional firm is obviously higher quality than a small start-up business. You also need to look at the quality of the agreement – what’s the length of tenure? Are there any break clauses? Does the rental agreement make specific provision for rent reviews? (In the UK, many agreements specify upwards-only rent reviews.) Some rentals are set by reference to the turnover of the tenant – particularly in retail property – where again you’ll want to take a view on the quality of that income and the likelihood of it increasing (or, conversely, falling).

If you’re looking at buying shares in a real estate company you won’t be able to see the exact details of all rental agreements, but you should still be able to get a feeling for the quality of the tenants. Companies will often disclose major provisions of their leases to investors, too.

If you’ve bought a property just on the basis that you think the price will go up, you could be on a hiding to nothing – particularly in today’s market. On the other hand, if you’ve done your research properly and have bought a property that has a good yield and high quality covenants, whatever happens to the market overall, you should have an investment that will deliver you value over the long term.

You will only need a listing agreement if you are selling your house (or property); it is a contract to allow your agent to list your house for sale. Basically, it makes them your agent in the transaction. It is vital to remember that real estate agents are the employees of a real estate broker (Century 21, or Remax, for instance) a listing agreement is actually between you and the broker. Most of the time you will work with the real estate agent, but the broker supervises their work. The broker is also legally responsible for the agent’s actions. Whom ever your listing agent is, remember that they earn their commission when they present a qualified buyer. This can become an issue if you have a listing agreement, and than change your mind about selling after the agent has done the work to find you a buyer. In a case like that, you may still owe them commission.

There are three different types of listing agreements.

The first type of listing agreement is an open listing agreement. This is when a homeowner (or seller of property) can sign an agreement with as many agents/brokers as they like. This benefits the owner because, in theory, they can have many agents working for them at once. The commission in this case would go to which ever agent brought in the buyer. In the real estate field we say this is being the “procuring cause” of the sale. The downside of this kind of agreement is that because they are not guaranteed their commission, your agents may not work very hard for you.

The next type of listing agreement is an exclusive listing agreement. Just like it sounds, it gives the agent or broker the exclusive right to list your property. In these cases, an owner can only sign with one agent or broker. It is important to note here that despite its name, there are certain conditions that must be met by the selling agent in order to earn their commission. They must sell the property before the termination date. Every exclusive listing agreement must legally include a definite termination date; it can be any length of time but usually is between 90-180 days. Also, in these types of contract the owner reserves the option to sell the property themselves. If the owner sells the house themselves they do not have to pay the agent a commission.

The third type of listing agreement is the exclusive right-to-sell listing agreement. This one is similar to the exclusive listing. It must have a definite termination date and a seller can only sign with one broker. Real estate agents are encouraged to have sellers sign this type of contract, because no matter who sells the house, they will get the commission. Some home owners have tried to get out of paying the commission by getting in contact with a potential buyer themselves, waiting until the listing agreement time has expired, and than making arrangements themselves with the buyer. Don’t do this. Not only is it unfair to a hardworking agent, but most exclusive right-to-sell agreements include a “safety clause” that assures that they can still get their compensation if this happens.

Real estate listing agreements are quite lengthy. Make sure you read it through slowly and carefully and ask questions about anything you don’t understand. Even a very basic listing agreement should include the following:

• Identification of the subject property.
• Acceptable terms of sale
• Grant the broker authority
• Determine the broker’s compensation (this can be a percentage or a set dollar amount)
• A termination date (not required on an open listing)

It is so important to read and do your homework when entering into the real estate listing agreement. These contracts are there to simplify the home selling process and to prevent any future problems. Make sure that your contract reflects what it is that you expect your agent and broker to do, and that you understand your responsibilities as well.

Working for an appraisal management company can also provide many benefits for those that choose this line of work. An appraiser with experience in appraising houses and commercial properties can work for an AMC based on their previous experience and qualifications. This can be a smart move for appraisers that want to deal with a single company, feel loyalty from the company, and access to lenders without having to be represented on many of the fee panels.

Another added benefit for those working for an AMC is that underwriters and mortgage brokers will not be calling for information or use of services. The company assigns the work and appraisers are usually not contacted directly. This helps the appraisers stick to one set of rules and requirements for the job. Independent appraisers must look at all of the different requirements from lenders that may conflict with each other.

Some of the other benefits that come when a person chooses to work for appraisal management companies presents a double-edged sword. Appraisal management companies provide quicker turnarounds than other appraisers can offer. These turnarounds are typically three days or less. Some appraisers do not mind the speed of the business, while others prefer it. Some lenders also require that an appraiser work for an AMC in order to even acknowledge their services. Larger banks are often the ones to use only those that work for an AMC.

Appraisers that work for an AMC will also be surprised about the lack of communication between the lender and the appraiser. The lender that ordered the appraisal will work directly with the AMC and the AMC will contact the appraiser. Some appraisers prefer to work this way because it means no phone calls to check up or ask questions. The disadvantage of this lack of communication is that some appraisers may need to contact the lender if problems occur.

So where does that actually leave us today?  It leaves us working harder and expecting less.
It leaves us reevaluating the products we develop and how we market them. We are back to the basics of asking ourselves what needs does the market have and how can we serve them? And how will we fill the need better than our competition? And, oh yeah, how does the internet come into play?

I always start with this guiding principal when determining a product’s position: Good, fast, cheap, you get two out of three.  Good being a quality product.  Fast being exceptional service. And cheap being a price leader. With a combination of any two you can create an effective value proposition.  With all three you are trying to be all things to all people and will ultimately serve no one.

In the past, resort real estate development was driven by a developer’s vision for a great piece of property and desire to create a grand lifestyle.  A place for people to love and cherish. A place they would bring their friends and family. And often a place envisioned and created without understanding if it filled a need in the market.  Not all, but many, ended up being monuments of opulence and irrational splendor that served a narrow market of extreme wealth and “ego ownership”.

In the current market there are buyers, believe it or not. These buyers are the ones who serve as the shepherds to the sheep that ultimately pull the trend back. These shepherds are driven by ideals and philosophies that are deeply rooted in their generational up bringing.  They are the boomers, but not the boomers we saw in droves signing reservations in tent city. These shepherds are conservative individuals who are prudent and pragmatic. They are far more calculating and much less impulsive. As much as they can afford the lavish, they are not going to be looking for their fourth McMansion. They are not ones that follow trends but are the ones that quietly create them. They are what we call the “know me” wealth, not the “show me “ wealth.  Unless you know these individuals personally, you would never pick them out of the crowd.  They are private. They are discerning. And they are wealthy. Very wealthy.

So what are they looking for?  Probably the same attributes they found when they bought their Toyota Avalon or F150. They want quality, reliability and value.  They are utilitarian. Yet they enjoy acceptable luxuries. They are natural researches and moved by trust and connections. When the time is right they will have been planning for years and will be armed with far more knowledge than you are. They will be looking for a quality product without empty promises or future guarantees.  This will lead them to established communities with reputable leadership. They will see right through your marketing façade and will cut to the chase about being in control of the process.

So how do we change our marketing strategy?

For starters, marketing starts with the product. Provide a product that meets a market need.  Do research, talk to your peers and listen to what the market tells you.  Then decide if you are good, fast or cheap.  My prediction is people will want a smaller, more modest product by a credible company and they will not want to wait for it. They will want built product or resale inventory more than homesites and they have no desire to be first so throw the reservations out the window, urgency is gone. They just want to feel comfortable with their purchase and believe they own a solid product at a fair price, hence the Toyota Avalon. They are not looking for market approval and will buy what they want, when they want despite the negative media coverage.

Additionally, their habits have changed. They are going to want information with substance and if you do not have it they will move on.  And they will move on to the next web site as well.  Studies have shown that these buyers are no longer tech laggards and research their purchase decisions online.  Additionally, they will trust a stranger’s review online far more than your own paid marketing efforts (by 82% according to a 11/08 McCann Survey). Many of these buyers are starting their efforts with online search and your Web site alone is no longer enough.  You need a comprehensive strategy to distribute your content online with what we call Digital Presence.  A strategy that leverages all of your content as well as the content provided by others. You can’t stop others from mentioning you in blogs or posting wedding and hole-in-one videos on youtube so you better become a part of the off-site conversation as well.

So has the market changed marketing?  Absolutely.  And if you think the internet will not play a factor with your demographic then don’t change a thing and let me know how that works for you.

The substantial drop in home prices throughout the United States was fundamentally the start of all this fiasco, and by that I intended to say 50% in some regions.  Go talk to an individual who lives in California, Arizona, Nevada, or Florida and there is a good chance you will find them imploring for the basement to come.

I will go out on a limb and say that the particular date cannot be foreseen for certain.  You inquire of Cramer from MSNBC and he’ll say that we shall discover the bottom in the middle of the summer 2009, yet that quotation is not about local markets, but about the nation.  One of the safest indicators for a basement of the market are the foreclosure auctions and what sort of activity is being seen there.  If purchasers are capable to purchase homes at introductory offer, there is a good possibility we have some elbow room for a decrease.  On the other hand, if the auction turns into a real auction in which there are bidding wars, then we are discovering the starts of a bottom.  My experience, as of late, with the auctions is that the same houses that sold at auction months ago with no contention are now getting outbid for by competitive buyers and investors.  As this is becoming progressively customary, we should realize that the time is now to get in.

Purchasing auctioned houses is not as simple as going down to the steps of the courthouse and waiting for a property to become obtainable.  For most general purchasers or investors, you have to go through a realty agent.  You may not be aware, that real estate agent in all probability had to go through another real estate agent who is representing the bank and perhaps needed to go through another agent to get to that one.  Wouldn’t it simply be smoother to talk with the bank?  No, it’s not.  Financial institutions do not possess the time allotted for questions or phone calls about the thousands of properties they put up on the market on a weekly basis.  What about talking direct with the financial institution’s agent?  Perhaps, but…  This agent is also very busy and will likely have a trying time trying to field questions and phone calls when adjusting all info for the approaching auctions.  You will need to acquaint yourself with this person as well as you have time for.  If you can found a kinship where that agent will convey with you future auction lists, that would be even better.

In many instances that individuals do not recognize is that auctions, and other investments that eventually will have a waiting line out the door, is settled on a who knows who and how voluntary they are to convey that info.  As a prospective investor, you want to get to know an individual, like the previously mentioned agent, who is closely associated with the auction, the financial institution, the agent, etc.  In this fashion you are privy to selective information that you would usually not accept and would otherwise have to pay for via real estate payments.  On top of that, if you can encounter an individual that can find you that information along with physical data about the house itself such as, condition it is in, neighborhood, what is involved, how much to remedy it, comparables in the area, etc.

There are countless directions that can be taken when determining on an auctioned property.  The elementary factor for an investor is to establish relationships with people so that you, the buyer, are buying the greatest merchandise for your money.