Living in Contra Costa County

I Want a Deal

Gene Riemenschneider Home Sales (Area Pro Realty) — Wed, 11 Nov 2009 17:52:01 -0600

This Post is very relevant to the local market here in Brentwood and East Contra Costa County. I have reposted courtesy of the initial writer.

Via JL Boney, III Columbia, SC Real Estate (Russell and Jeffcoat):

Well of course you do, in this day and age who doesn't? But the fact of the matter that all "deals" are relative to the situation. Your perception of what good deal is can be very different than than what the market says is a good deal.

These days with all the fuss over foreclosures, every buyer that makes their way off of the proverbial fence is looking for that turnkey home that's is pristine condition. They also have their minds made up that they are going to get that beautiful home for next to nothing due to the desperation of the economy.

Well, the fact of matter is that you may not see a good deal for what it is if you are paying attention to the market. Your money may not buy a mansion on a hill just because the market is not a hot as it once was in the past. You still pay market value regardless. Take those wonderful foreclosures for example. If a decent one hits the market in my area, they have multiple offers within a few days and they don't have to accept your low ball.

While no one likes to feel that they are being robbed in the process of making a purchase, you still have to accept the fact that not every market is desperate. Some are doing well, and here in Columbia a good home at a good price is still going to get a good offer. You have to be realistic about what you can accomplish. While you can get a great deal on a home compared to the price of that same home a couple years ago, you still have to pay market value for it today.

Columbia, SC Homes for Sale
______________________________________________________________________________________________________

JL Boney, III - Columbia, SC Realtor - Russell and Jeffcoat Realtors

I specialize in Columbia, SC real estate and the surrounding areas, including Blythewood, SC, Kershaw County, Fairfield County, and Lexington, SC. If you are in the market to buy or sell a home in Columbia, SC or any of the surrounding areas, I would love the opportunity to speak with to see how I can help. Thanks for reading and feel free to contact me if I can be of service to you.

Office- 803-788-1450 Cell- 803-730-9601 Email- jlboney@russellandjeffcoat.com

My Columbia SC Real Estate Website

My Columbia, SC Real Estate Blog

www.jlboney.com/columbiascrealestateblog.html

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Oakley California Housing Market Report - October 2009

Gene Riemenschneider Home Sales (Area Pro Realty) — Tue, 10 Nov 2009 15:08:37 -0600

Oakley California Housing Market Report - October 2009

The Housing Market in East Contra Costa County is still very tight. There are some very slight price decreases, but they might be simple seasonal anomalies and certainly are not an indication of the market going soft again.

This Oakley Housing Market Report for October 2009 compares the sales of single family home sales in October to those in September and the Active Housing Market in Oakley California.

Currently there are 100 Single Family Homes for sale in the Oakley Housing Market. The Average Asking Price on those homes is $305,868.00 and the Median Asking Price is $275,975.00. The Average Asking Price per SF is $142.00 and the Average Days on Market is 80.

The Oakley Housing Market was very active in October with 79 sales of Single Family Homes. The Average Price of the Sold Home in the Oakley Housing Market for October was $242,805.00 and the Median Price was $233,500.00. The price per SF was $116.00 (Asking Price for those sold was $113.00.) and the Average Days on Market was 56.

The Oakley Housing Market in spiked in October compared to the Oakley Housing Market in September in all but one area. The Average Home Price in September was $213,805.00 and the Median Price was $190,000.00. The Average Price Per SF was $117.00 (Asking price for those sold was $115.00.) with an Average of 58 Days on the Market. There were 67 Homes Sold in the Oakley Housing Market in September.

The very slight decrease in Price Per SF is probably an anomaly caused partly by seasonal market changes. Average Price and medium price were sky high, which indicates sales of higher end homes. The number of sales is up and we only have about a 1.5 month supply of homes which indicates a tight seller market. The Days on Market is decreasing.

Click to see other area Housing Market Reports.

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Brentwood California Housing Market Report - October 2009

Gene Riemenschneider Home Sales (Area Pro Realty) — Tue, 10 Nov 2009 16:42:11 -0600

Brentwood California Housing Market Report - October 2009

This Brentwood Housing Market Report for October 2009 compares the sales of single family home sales in October to those in September and the Active Housing Market in Brentwood California.

Currently there are 162 Single Family Homes for sale in the Brentwood Housing Market. The Average Asking Price on those homes is $543,822.00 and the Median Asking Price is $379,450.00. The Average Asking Price per SF is $227.00 and the Average Days on Market is 82. However, this numbers are skewed upwards by 11 estate homes on the Market selling for $1,000,000.00 to $5,000,000.00 plus. If we take out 11 Homes out of the Brentwood Housing Market the numbers look different. The Average Price is now $387,001.00 and the Median Price drops to $375,000.00. The Average Price per SF goes way down to $175.00 and the Average Days on Market drops to 74. Quite a change!

The Brentwood Housing Market was very active in October with 96 sales of Single Family Homes. The Average Price of the Sold Home in the Brentwood Housing Market for October was $317,090.00 and the Median Price was $302,500.00. The price per SF was $130.00 (Asking Price for those sold was $127.00.) and the Average Days on Market was 25.

The Brentwood Housing Market went up in October compared to the Brentwood Housing Market in September in all but one area. The Average Home Price in September was $298,939.00 and the Median Price was $282,200.00. The Average Price Per SF was $130.00 (Asking price for those sold was $127.00.) with an Average of 26 Days on the Market. There were 77 Homes Sold in the Brentwood Housing Market in September.

The Price Per SF stayed level which is probably an anomaly caused partly by seasonal market changes. Average Price and medium price were up. The number of sales is up and we only have about a 1.5 month supply of homes which indicates a tight seller market. The Days on Market is decreasing.

Click to see other area Housing Market Reports.

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Pittsburg California Housing Market Report - October 2009

Gene Riemenschneider Home Sales (Area Pro Realty) — Tue, 10 Nov 2009 13:57:01 -0600

Pittsburg California Housing Market Report - October 2009

This Pittsburg Housing Market Report for October 2009 compares the sales of single family home sales in October to those in September and the Active Housing Market in Pittsburg California.

Currently there are 123 Single Family Homes for sale in the Pittsburg Housing Market. The Average Asking Price on those homes is $223,990.00 and the Median Asking Price is $210,000.00. The Average Asking Price per SF is $119.00 and the Average Days on Market is 48.

The Pittsburg Housing Market was very active in October with 80 sales of Single Family Homes. The Average Price of the Sold Home in the Pittsburg Housing Market for October was $193,867.00 and the Median Price was $181,500.00. The price per SF was $111.00 (Asking Price for those sold was $107.00.) and the Average Days on Market was 22.

The Pittsburg Housing Market in October compared to the Pittsburg Housing Market in September is pretty close. The Average Home Price in September was $199,517 and the Median Price was $190,000.00. The Average Price Per SF was $112.00 (Asking price for those sold was $109.00.) with an Average of 46 Days on the Market. There were 76 Homes Sold in the Pittsburg Housing Market in September.

The very slight decrease in Price Per SF is probably an anomaly caused partly by seasonal market changes. However, the number of sales is still up and we only have about a 1.5 month supply of homes which indicates a tight seller market. The Days on Market is rapidly decreasing; the homes are being snatched up fast.

Click to see other area Housing Market Reports.

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Antioch California Housing Market Report - October 2009

Gene Riemenschneider Home Sales (Area Pro Realty) — Tue, 10 Nov 2009 14:11:16 -0600

Antioch California Housing Market Report - October 2009

This Antioch Housing Market Report for October 2009 compares the sales of single family home sales in October to those in September and the Active Housing Market in Antioch California.

Currently there are 176 Single Family Homes for sale in the Antioch Housing Market. The Average Asking Price on those homes is $227,827.00 and the Median Asking Price is $210,400.00. The Average Asking Price per SF is $116.00 and the Average Days on Market is 54.

The Antioch Housing Market was very active in October with 148 sales of Single Family Homes. The Average Price of the Sold Home in the Antioch Housing Market for October was $212,098.00 and the Median Price was $210,000.00. The price per SF was $116.00 (Asking Price for those sold was $113.00.) and the Average Days on Market was 24.

The Antioch Housing Market in October compared to the Antioch Housing Market in September is pretty close. The Average Home Price in September was $200,870.00 and the Median Price was $195,000.00. The Average Price Per SF was $107.00 (Asking price for those sold was $102.00.) with an Average of 26 Days on the Market. There were 161 Homes Sold in the Antioch Housing Market in September.

The Average Price Per SF was up over 3% in one month. The number of sales is still up and we only have a little over a one month supply of homes which indicates a tight seller market. The homes are being snatched up fast.

Click to see other area Housing Market Reports.

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Are we all headed for Public Housing?

Gene Riemenschneider Home Sales (Area Pro Realty) — Fri, 06 Nov 2009 19:02:46 -0600

Are we all headed for Public Housing?

The Feds have announced Thursday under Fannie Mae that homes in default would be taken over and leased back to the defaulters or the current tenants. The stated claim is that they are trying to stabilize neighborhoods and provide a transitional arrangement.

The occupants will be given a one year lease then go month to month. On one level this sounds very nice and practical but it raises big concerns. With the governments taking over the banks will they soon just take over the entire housing supply?

The Obama Administration admits they want government control of vast portions of the economy. They have taken over two car companies, regulated wages in some companies, bailed out banks and or financial service industries to only make them subservient to the government programs.

The banks are holding on to a large amount of inventory. I do not think it far fetched for them to start this type of program. Will it soon be like what they want for health care where we go to a board to see what we are allowed to live in (rented to us) at the government housing bank? Will they be deciding where we live and how? Barney Frank has changed his tune from making sure everyone can own a home (pre-housing melt down) to everyone has a home.

Right now there are not enough homes on the market. The market should take care of itself. Put the homes out there and get people in them. By limiting the supply of homes the only people that are profiting is those with cash, not middle class buyers looking for a place to live.

The housing policies are further eroding the middle class. Home ownership is an important part of building a strong country and community. Public housing is a disaster and the dream of social planners.

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Monterey Bay Aquarium

Gene Riemenschneider Home Sales (Area Pro Realty) — Fri, 06 Nov 2009 18:42:00 -0600

Monterey Bay Aquarium

Three of my boys are home schooled and Monterey Bay had the Home School Day on Monday November 2. So we packed up four of the boys (the other is in Public School) and headed down Sunday afternoon for a fun night at the Hotel first.

Public School day is FREE which put this right in out price range. The kids loved it especially the sea otters. The big hype is on the Sea Horse exhibit which I felt was so so. There is a large tank with sharks, big tunas, barracudas and a number of other fish.

Most of the fish are salt water, but they did have some nice looking trout; wish I had my rod and a fry pan; but they probably would have tossed me out.

What I did not know is there is a huge underwater canyon that goes 2 miles down right off the Monterey coast. The average depth of the world's oceans is 2.5 miles so what they have is an area with multiple habitats they can study close by.

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First Time Buyers - A Bigger Concern than the $8,000.00 Tax Credit!

Gene Riemenschneider Home Sales (Area Pro Realty) — Thu, 05 Nov 2009 18:26:44 -0600

First Time Buyers

There has been a lot of debate about the $8,000.00 Tax Credit for First Time Home Buyers. Should we keep it? Does it create home sales? Are we borrowing against future sales? Is it causing price increases?

However, right now there is something that should motivate everyone to buy a home as soon as possible. In 2010 the Bush Tax Cuts Expire. Why should this be a big concern? Because it will effect every tax payer in the country and it will make it harder to save for a home.

But if you get into a home now the tax deduction for Mortgage Interest and Property Taxes may actually save you enough money to make ownership more affordable than renting. The other consideration is that interest rates are still low but will probably start to go up at some point soon.

So if you want to save money now is the time to buy that new home.

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In Conclusion – Real Estate Investing – Part 15

Gene Riemenschneider Home Sales (Area Pro Realty) — Mon, 26 Oct 2009 17:34:28 -0500

Tax Strategies – Real Estate Investing – Part 15 - And In Conclusion

This is Part 15 of my Real Estate Investing Series. You can view the first 14 Parts here:

Are you planning for your Future? Real Estate Investing – Part 1

Starting at Home! Real Estate Investing – Part 2

Maintain Your Leverage! Real Estate Investing – Part 3

Picking Your Investment Property – Real Estate Investing – Part 4

Location * Location * Location – Real Estate Investing – Part 5

Cash Flow Analysis – Real Estate Investing – Part 6 A

Cash Flow Analysis – Real Estate Investing – Part 6 B

Cash Flow Analysis – Real Estate Investing – Part 6 C

Cash Flow Analysis – Real Estate Investing – Part 6 D

Passive Losses – Real Estate Investing – Part 7

Gross Rent Multiplier – Real Estate Investing – Part 8

Capitalization Rate – Real Estate Investing – Part 9

Comparable Pricing – Real Estate Investing – Part 10

Rates of Return – Real Estate Investing – Part 11

Growth or Income – Real Estate Investing – Part 12

More on Rate of Return – Real Estate Investing – Part 13

Tax Strategies – Real Estate Investing – Part 14A

Tax Strategies – Real Estate Investing – Part 14B

Tax Strategies – Real Estate Investing – Part 14C - The 1031 Exchange I

Tax Strategies – Real Estate Investing – Part 14C - The 1031 Exchange II

Tax Strategies – Real Estate Investing – Part 14C - The 1031 Exchange III

With this Post I am concluding the Series. But there are several things you need to know:

There is a lot more to learn about Real Estate Investing. This is an attempt to get very basic information out so people to give people systematic tools to look at investing. I hope to pick up again with more real estate investing information in the near future.
I have other tools for on Real Estate including information on Short Sales, First Time Buyers, and Bank Owned Homes.
I am starting another exciting series soon, probably Next Week on a surprise and unique topic I do not see a lot on.
I will be turning these post into an e-book with updated and new information. If you are interested in a copy of the ebook please let me know.
Be Sure to Get the Free Calculator to help you through this series.

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Novato Market Report November 2009

Gene Riemenschneider Home Sales (Area Pro Realty) — Wed, 04 Nov 2009 16:10:30 -0600

Novato Market Report November 2009

Set down grab a cup of coffee and some No Doze. You are about to get some numbers to make your head spin and sleepy, unless of course you are excited about the Novato Housing Market and trying to buy or sell a home in that area.

The Novato Housing Market offers some of the best buys on Luxury Homes in Marin County with Excellent Schools and a fantastic life style.

This Novato Housing Market report looks at single family home sales in Novato and compares September figures to October figures looking for sales trends; and examines at the current Active Novato Housing Market. As the Novato Housing Market covers a number of Luxury Homes I decided to also take separate looks at homes priced over $750,000.00.

In September there were only 36 homes sold in the Novato Housing Market. On Average those homes had 3 bedrooms, 2.61 bathrooms and were 2,159 SF. The Average List Price was $655,727.00 and the Average Sold Price was $651,767.00; with an Average Days on Market of 107. The Median Numbers are similar with 4 Bedrooms, 2.5 bathrooms and Median SF of 2,034. The Median List Price was $625,000.00 and the Median Sold Price was $635,000.00; with a Median Days on Market of 69. My Favorite Number is Price Per SF which is $302.00.

For homes over $750,000.00 in the Novato Housing Market in September the Average number of bedrooms was 4 and bathrooms 3.3 with 3,275 SF. The Average List Price was $992,655.00 and a Sold Price of $965,950.00; with an Average of 88 Days on Market. The Median Numbers are 4 bedrooms, 3 bathrooms and 3,023 SF. The Median List Price was $929,000.00 and the Sold Price was $897,500.00; with 58 Days on the Market. Average Price Per SF is $295.00.

In October there were 50 homes sold in the Novato Housing Market; and this number may go up with late reporting. On Average those homes had 3 bedrooms, 2.68 bathrooms and were 2,267 SF. The Average List Price was $679,303.00 and the Average Sold Price was $667,788.00; with an Average Days on Market of 96. The Median Numbers are similar with 4 Bedrooms, 3 bathrooms and Median SF of 1,996. The Median List Price was $599,000.00 and the Median Sold Price was $597,500.00; with a Median Days on Market of 66. Again my Favorite Number is Price Per SF which is $299.00.

For homes over $750,000.00 in the Novato Housing Market in October the Average number of bedrooms was 4 and bathrooms 3.41 with 3,177 SF. The Average List Price was $1,017,795.00 and a Sold Price of $998,052.00; with an Average of 89 Days on Market. The Median Numbers are 4 bedrooms, 3 bathrooms and 2,918 SF. The Median List Price was $850,000.00 and the Sold Price was $830,900.00; with 61 Days on the Market. Average Price Per SF is $314.00.

How does this compare to the Current Novato Real Estate Market? The Average Home has 4 bedrooms and 3 bathrooms with 2,537 SF and an Average Asking Price of $826,071.00. The Average days on the Market is 103. The Median numbers are similar with 4 bedrooms, 3 bathrooms and a list price of $709,000.00 and 72 Days on the Market. This is an Average Asking Price of $325.00 per SF.

For homes priced over $750,000.00 in the Novato Housing Market the Average numbers are 4 bedrooms, 3.64 bathrooms, 3,419 SF; with a List Price of $1,166,431.00 and 101 Days on Market. The Median Numbers are 4 bedrooms, 3 bathrooms, 3,292 SF, and priced at $950,000.00; with 86 Days on Market. The Average asking Price Per SF is $341.16.

So what do all these numbers mean. Here are a few highlights I see:

The Average Price is going down slightly, but on the high end homes the price is rising.
The Market is picking up. Currently there is a 4 month supply of housing. This is a balanced Market.
Homes that sell tend to sell fast. There are some homes weighing down the Average Days on Market numbers. The Median Days on Market better reflects a properly priced home.
The Sold Prices are almost as high as the List Prices in some areas and those numbers are getting closer. People are not making extremely offers on over priced homes.

Click here to see our Premier Novato Listing for November. One of the Best Buys in town priced at $282.00 per SF - Horse Property - Pool - Wooded Estate with a flowing creek.

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Cash Flow Analysis – Real Estate Investing – Part 6 A

Gene Riemenschneider Home Sales (Area Pro Realty) — Fri, 14 Aug 2009 17:12:52 -0500

Cash Flow Analysis – Real Estate Investing – Part 6 A

This is Part 6 A of my Real Estate Investing Series. You can view the first 5 Parts here:

Are you planning for your Future? Real Estate Investing – Part 1

Starting at Home! Real Estate Investing – Part 2

Maintain Your Leverage! Real Estate Investing – Part 3

Picking Your Investment Property – Real Estate Investing – Part 4

Location * Location * Location – Real Estate Investing – Part 5

Part 6 is Cash Flow Analysis. This area can be dry and complex, therefore I am breaking it down into several parts. You may go to my web site and get a Free Cash Flow Calculator and down load a copy of the live example at the same time. Today I am going to focus on the basic Annual Cash Flow Analysis.

I believe my example is very conservative and realistic in this market. The numbers are simplified over some other analysis. I will go into some of the reason for the simplifications latter on. This assumes a new home purchased at $200,000.00 with 20% done and a 30 year loan at 6%. I am assuming a monthly rent of $1,800.00.

MONTHLY PROJECTED RENTS: As an investor enter your monthly rents on line 1, projected or actual. For most of you this will be one amount. If you have more than 1 unit on the property you will need to add in the different rents to get a monthly total.

ANNUAL PROJECTED RENTS: Projects out the annual rental rate based on one year.

ESTIMATED EXPENSE MODIFIER: Here I project annual operating cost. This is a very subjective number with a lot of variables. If you have a large unit with a history you may be able to project expenses into more detailed categories. Those categories should include vacancies, maintenance and repairs, taxes, management fees, insurance, and any other cost you may have. If you have a single family home or a small property with a few units your cost can fluctuate from year to year. You may have no vacancies for a long time and then have trouble finding a new tenant. You may have almost no maintenance cost then have an unexpected issue come up. I have used the figure 25% as many lenders used to discount 25% of expected rents when projecting income on a property. I suspect this is high and I am not sure if it was meant to include property tax cost. I have not included property tax in this figure.

ESTIMATED EXPENSE: This is the projected expenses in a dollar amount rather than a percentage. I suggest you budget in 25% expenses and when they are less bank the extra money against future years when you may have unexpected expenses.

ESTIMATED PROPERTY TAX & ASSESSMENT %: This is the projected property tax and assessments for a single year on a percentage basis. In California this is generally a fairly predictable number. The tax basis for your home will be the purchase price. Generally speaking the basis can only go up 2% a year from your starting basis, it may go down in a depreciating market. Taxes are limited to 1% of the tax basis. However, a number of cities and local districts have been able to get around this limit and attach other assessments. In this area I estimate property taxes and assessments at 1.25% of the tax basis (purchase price in year one.) There are a number of other factors that can come into play, but this is the basics for most people.

ESTIMATED PROPERTY TAX & ASSESSMENT $ VALUE: This is the projected property tax and assessments projected on a dollar basis. Remember this will change from year to year, but in California it will usually not go up more than 2% a year over the initial basis.

NET OPERATING INCOME: This number is your operating income after expenses. Remember this number will actually vary year to year based on actual expense.

DEBT SERVICING: This is your debt service or the cost of your loan on a month to month basis. In this example this is a 30 year loan, fixed at 6%.

BEFORE TAX CASH FLOW: This number represents the before tax net cash flow. Some may be looking at these numbers and be discouraged.

The thought goes through the head, all that investment and all that work for a measly amount of money. Well don’t be. We are going to look at some other aspects latter that will open your eyes. Keep in mind these things:

This is a conservative estimate.
I am looking at long term investment strategies now (Buy and Hold).
If you have a long term fixed loan the debt service will remain fixed, but it would not be unreasonable to expect rents and property values to rise.
In the market a few years ago this would have been a negative number for most investors, now is a great time to invest.

Watch this blog for further updates in the series.

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Picking Your Investment Property – Real Estate Investing – Part 4

Gene Riemenschneider Home Sales (Area Pro Realty) — Fri, 24 Jul 2009 15:57:14 -0500

Picking Your Investment Property – Real Estate Investing – Part 4 This is Part 4 in my Real Estate Investing Series. You may wish to start with the earlier Parts:

Are you planning for your Future? Real Estate Investing – Part 1

Starting at Home! Real Estate Investing – Part 2

Maintain Your Leverage! Real Estate Investing – Part 3

All Real Estate is Local:

All Real Estate Investing is local. You have heard that there are three key things in Real Estate: “Location, Location, Location!” I will give some advice in here that may not apply to your specific location. For example: I do not like Condo’s as an investment property, but in San Francisco, New York, other urban or tourist sites a condo may be a good investments. I will cover Location in Part 5.

What are your Investment Goals?

What are your Investment Goals? Generally you will have one or more of three main goals in Investing in Real Estate. Those Goals will be Long Term Capital Gains, Short Term Capital Gain (flipping) and Annual Return on Investment. Your exact goal may be a mixture of these goals. Your goals should be influenced by your tax and other financial/social situations too.

What Type of Investment Property:

What type of Investment Property should you get? Unless you have a lot of experience or other direction, start investing with 1-4 unit residential properties. This means a single family home, duplex, triplex or a four-plex. There are lending advantages for starting with properties that contain only 1-4 living units. It will also be easier to manage for a beginner. You may go to my web site and get Free Property Management Tools for 1-4 residential unit properties.

I live and work in Brentwood Ca in East Contra Costa County. In this area I do not think condominiums are the best investment property. There are several reasons for this:

• Most Condos have rules and it can be far more restrictive than single family home living. If you tenant breaks them you will be held responsible, not the tenant; this can include financial penalties. Of course you can pass them on to the tenant, but this can be difficult.

• You will have to pay HOA fees, usually monthly. This money will not ad to your equity and will decrease your liquidity. Remember Maintain Your Leverage! Real Estate Investing – Part 3.

• In general condos do not appreciate as well as single family homes. They are generally not in as high demand as Single Family Homes.

• Some condo associations place restrictions on rentals. You may not be able to rent your condo out at some point.

However, if you have limited funds to invest a Condo may be your best choice. The association will handle much of the maintenance.

If you are getting started and want to start with the basic single family home I suggest getting a three bedroom, two bathroom home, with a garage and preferably single story. A home of this size and style will be in demand now and in the future, for both short term and long term investments. It is large enough for a family buying its first home and yet small enough for someone single. Retired people or people with disabilities are always looking for single story homes. If a home does not have at least two bathrooms and a garage it is considered economically obsolete. In short people expect at least two bathrooms and a garage. Remember the preference and market worth may vary in different market areas.

You may wish to look for larger and nicer homes for an investment property. This is fine, but if you are looking for returns on your rent consider the rental market. Generally the bigger and nicer the home the more trouble you will have getting the right sort of tenant to pay the sorts of rents you will want. In this area there is probably a strong demand for four bedroom and three bathroom homes on the rental market. If you have a large luxury home the amount of rent you can get based a unit price (price per SF) will tend to go down. Also people that can afford to rent a home of this size may also be people that can afford to buy, so they may not provide a stable tenant. I had a client who was considering a larger home and I pointed out for what he wanted to put out he could get two smaller homes and obtain larger gross rents.

If you can find a good Multi-unit property with 2-4 units, either a duplex, two homes on one lot or more; this is the type of property that can provide excellent returns. In this area most of these properties are in older areas as most new neighborhoods are not zoned for these types of properties. However, there are some homes in Brentwood 10 to 20 years old that have detached studios over the garage. Some large lots also contain in-law units or detached studios.

Unless the rents can justify it you are not shopping for high end amenities or upgrades. Generally speaking as a rental property you want nice livable, but standard fixtures. If buying to sell or flip you may consider adding certain upgrades that will have an immediate appeal and positive price return. Most charts and articles I see state that any upgrades or remodels will only provide a marginal price increase, not justifying the expense. In many cases this may be true, but often times the homes will be purchased as fixer uppers needing the work anyway. Depending on what is being replaced or installed higher quality may cost the same (or even less) in labor, while adding only marginally to the overall cost; but will have very nice appeal on the rental or resale market. Some higher quality materials will also have a longer life, saving money in the long run on the rentals. In Maintain Your Leverage! Real Estate Investing – Part 3 we talked about keeping repairs cost effective. Watch the pricing on material and shop around. Watch for sales if you know you will need some materials. Often time’s contractors will discount you if you get the materials and have them on site. Contractors do mark up the cost of materials.

There are other considerations when buying the investment property. In the future it might be something you want to have for yourself or a family member; in which case more consideration might be given to size, style, and other factors that ad cost you might not normally want to incur.

Subscribe to the blog to keep current with this series and other exciting real estate and area post. You may get Free Investor Tools at my web site.

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Maintain Your Leverage! Real Estate Investing – Part 3

Gene Riemenschneider Home Sales (Area Pro Realty) — Fri, 10 Jul 2009 22:50:26 -0500

If you have not Read the First two parts Link them here:

Are you planning for your Future? Real Estate Investing – Part 1

Starting at Home! Real Estate Investing – Part 2

Any form of investing is about making a profit. How profit is defined and types of profits might be a little more complex than you think. These factors can be influenced by your cash on hand, tax bracket, over all income, short term vs long term goals, and the property itself.

Although the first impulse of many investors might be to put down as much money on the property to keep the payments low there are other considerations:

• The investor may not have a lot of money to put down.

• The investor may want to hold money back for repairs and or a reserve against unanticipated problems.

• By holding money back you have cash for other investment opportunities.

• The less equity you have in the property the less risk you have against another extreme economic down turn or uninsured loss to the property. The mortgage holder could be left holding taking the loss.

• The Investor may have a higher tax bracket making it more advantageous to hold back cash and maximize the deductions form mortgage interest.

There are advantages for putting a larger amount down:

• The overall monthly payments are minimized. If month to month finances are an issue it might be best to keep payments minimal.

• People in certain income situations cannot deduct “Passive Losses.” Therefore, you do not want to take a paper loss on the property. By putting more down you will lower the interest deduction. More on this latter.

• You may get a better loan and terms with a larger down payment (but not always).

When purchasing an investment property you always want to give careful consideration to how much cash you should use for the down payment. It is also important to pay attention to closing cost. Closing cost will take more cash out of pocket.

Many properties will need repair when you purchase them. This is not a bad thing as often damaged properties will price much lower. However, keep your repair cost to a minimum. Remember you are not fixing it up for you to live in. (Usually) Make sure the cost of repairs/remodels/upgrades justifies the return on rent or resale. This really depends on your market area, the demand for homes, what is considered standard materials.

For Example you hardly ever see Formica in any homes anymore. I would not recommend putting it in. If Formica is already in a home and still in good shape you may want to leave it. In this area, on the lower end Tile Counters are the Standard and even there you are seeing fewer and fewer homes with the smaller white tiles. On repair or replacement I would give strong consideration to larger tiles with narrow grout lines. Each situation is unique and you have to weigh cost against benefit and what the market expects.

When doing repairs, if you are capable consider using as much sweat equity as possible, especially when you are a new investor. You do need to have the basic skills. Often Home Depot, Lowes, and other stores offer classes on home repair and things like tiling. You can save a lot of money if you do it yourself, but it needs to be done well. Now if your time is limited you have to weigh how much it is going to cost you keeping the home off the market while you are doing the work. Most tools are not that expensive compared to the cost savings of doing the work yourself. Invest wisely in other tools you might need or see if you can rent the tools. Some people are very adept at working on homes and it is like hobby (like some people like to fix up cars), a very profitable hobby.

If you cannot do the work yourself or as you get more and more properties you will need to hire someone else to do the work for you. Talk to other investors and Realtors as to who to use. For some smaller work you may want to hire a Handy Man, they will be cheaper. But you may have to use a contractor for larger jobs. In general I find smaller contractors will do fine work at less of a price since they do not have the overhead. Be careful about advancing too much money, there are too many stores about contractors taking the money and going broke.

When working with contractors make sure you have a detailed written estimate and agreement with the contractor, make sure they have all the insurance they need (including worker’s comp), and check to see if they are licensed and bonded. When signing a contract have the contractor agree to indemnify you and hold you harmless for any losses (For example if neighbor trips over the contractors tools and sues this will obligate the contractor to defend you.) On larger jobs you may want them to get you put on the contractor’s insurance policy as an additional insured. As you have many properties and ongoing contractor needs you may want to have a master agreement signed covering all of the contractor’s work for you and get the additional insured endorsements on the policy, make sure the contractor’s insurance is always up to date and in force.

I am sure you get the idea about keeping cost down and keeping money in your pocket, but there is a flip side to this too. Don’t be Penny Wise and Pound Foolish. Sometimes you have to spend a little money to save money. Longer lasting and better quality materials may save you money in the long run. A good well paid worker is better than an underpaid worker that screws things up. You want people you work with on a regular basis to think well of you and feel appreciated, this goes beyond money and includes treating them with respect and paying attention to what they have to say to you.

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Starting at Home! Real Estate Investing – Part 2

Gene Riemenschneider Home Sales (Area Pro Realty) — Fri, 10 Jul 2009 14:06:06 -0500

If you have not read Are you planning for your Future? Real Estate Investing – Part 1 you may wish to start there.

This may seem beyond obvious but if you want to invest in Real Estate you should start by buying a house for you to live in yourself if you do not already own one. You would be surprised by the number of people that call me and want to invest in Real Estate with a rental property, but not for them to live in.

There are some cases where I understand that this may not be possible. As an example one person I spoke with needed to live close to his work, but home prices were prohibitive for him to buy a quality home, but he could afford an investment property in an out lying area.

Here are several reasons why you should buy your own home first:

• You can get the home with little or no down payment.

• You will get a better interest rate on an owner occupied home.

• Through FHA you can get good rehab loans on owner occupied properties.

• Why should you be paying rent to someone else when you need to build equity in a property of your own?

• If you go to flip the home after living in it you can avoid Capital Gains Taxes without having to do a 1031 Exchange. (I am not a tax expert and all tax issues should be reviewed with a tax expert. The tax rules are always in flux.)

• Your own home can provide capital for further real estate investments. This is hard in our market where there is not a lot of capital appreciation in home values, but long term it works and it can even work in this market with the application of sweat equity in the home. Either by flipping the home and buying another primary residence with the profits or by pulling money out with a refinance or Home Equity Line of Credit for the down payment on another home. Another option is to buy another home down the line as a primary residence and to turn the current home over to a rental.

A word of caution here is in order. Many people in the last few years have pulled a lot of money out of there homes with nothing to show for it. The only time to pull money out of a home is for capital investment in another home, long term home improvements (improvements that will last like an addition), or drastic emergencies. When pulling money out always access your ability to pay the mortgage on the new loan realistically.

• No one will take better care of the property than you – the owner.

• You may wish to buy a duplex or other multiplex home; living in one unit and renting out the others. For series investors this may be a very good option if you are starting out with little cash.

• Even if all you do is hang on to your primary residence and build equity the home is an investment that can prepare you for retirement. When you are ready to retire sell the home and buy a home to live in that is either a down size (therefore cheaper) or in another part of the country where homes are cheaper.

If you have equity in the when you retire reverse mortgages can be an option. I do not sell reverse mortgages and only recommend people purchase them when the absolutely need the money, not for Mad Money. You still retain your unused equity in a reverse mortgage, it will end any ongoing house payments you have, the lender cannot get assets beyond the house if they end up paying you more than the house is worth, and you get to stay in your home. The down side of reverse mortgages is large up front fees and you may not have the equity in your home left to pay for assisted living or other things you may need when you move out.

Reverse mortgage products are always changing and I suspect there will be more diverse reverse mortgage products on the market in the future.

Here is more information on First Time Home Buying. Please contact me with Questions.

If you are buying your first home and intend to sell or flip it in a few years or a few months, or buy another and rent your first home out, wisely consider how much money you invest in upgrades and improvements. We all want nice homes and many of us are willing to pay lots of money for upgrades to those homes. This is great if it is for your own pleasure and enjoyment, however, the return on investment if you plan to sell or lease the home should be strongly considered.

For more real estate information and regular updates on this series please subscribe to my blog. You may also get Free Investor Tools at my web site. Be on the look out for Part 3.

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Are you planning for your Future? Real Estate Investing – Part 1

Gene Riemenschneider Home Sales (Area Pro Realty) — Tue, 07 Jul 2009 13:44:27 -0500

I think Real Estate investing is one of the best investments people can make. There are many types of investments, all have their ups and downs; both in terms of price and other issues tied to investments. Real Estate is an actual commodity, it will not disappear; and they are not making anymore of it. (Well technically they are making these great islands in the Middle East . . .)

Right now I think Real Estate is a particularly good investment. Right Now you can buy homes very economically, at a good interest rate and see immediate returns on your investment in excess of 10%, plus obtain long term appreciation in your property value. Many people think interest rates will soon climb and we will have massive inflation in this country. Locking in Real Estate now at a relatively low interest rate will help you to make short term and long term profits.

Frequently I get contacted by buyers or individuals who want to get involved in Real Estate Investing that have paid for material advertised on infomercials and/or late night televisions. In general this information is not accurate and/or not as easy to implement as people think. The real money in these investment courses is selling the investment courses. Some of the “success stories” or examples are a little hard to believe and as a person involved in real estate sometimes I can see the “other side of the story” not in the ad.

I am sure that sometime, somewhere, someone does come across one of these great investments, getting the owner to carry back 100% of the financing; bailing out a person and buying a home for much less than actual market; some other troubled sale well below the real market; picking a property up for pennies on the dollar at a tax sale, and more I have not mentioned here. These kinds of deals are hard to come by, especially with little or no cash, and even harder to come by in a depressed real estate market. Yes they can be done. Usually they work best for experienced investors with cash, and lots of it.

If you have taken a Real Estate investment course like those mentioned above I think you have some really good qualities that you need to put to work for you:

You have a desire to get a head.
You understand the value of hard work and are willing to work for that reward.
Many Realtors enjoy the hunt and the process; they live for the big commission check instead of the safe pay check. It is not just the money; it is the thrill of success. Many of these people are very smart, but could not make it in a traditional highly controlled business environment. Many of you investors also appreciate the thrill of the hunt, and these get rich quick scammers play on that. There are ways to get the thrill and really make money.
You are smart and have a basic understanding of real estate and the importance of building the real estate portfolio.

I will go into the types of investments mentioned above as I go through this investment material. However, the information here is for serious people wanting to start in investing in real estate or building an extensive real estate portfolio. I believe in old fashioned American Values, you earn money by working hard and making wise decisions. I also believe that those that work smart and make wise decisions will get a bigger return on their investments.

This information is not for people looking to get rich quick with schemes that are little better than buying lottery tickets. Yes some people do succeed that way, just as some people win big with the lottery. I will provide you with strategies for starting with little or nothing down, but remember the more assets you have to start with the easier it is to get going.

Stay tuned for Part II. If you cannot wait, contact me and we can go over your situation now. Subscribe to this blog in order to get updates as they are posted. You may get Free Investor Tools at my web site.

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