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In 2017, upwards of 75 percent of independent rental property owners in the U.S. reportedly worked another job on top of being a landlord. That means the overwhelming majority of landlords are attempting to juggle more than they can handle at times. However, there are organizational and strategic concepts that can maximize efficiency and profitability.

Consider the following tips that bring property management tasks under three basic headings: organization, automation and outsourcing.  

Organization Matters

One of the things that tends to overwhelm landlords is thinking about the rental properties as an extension of home ownership. The rental seems like it involves many of the same tasks such as maintenance and repair.

By rethinking rentals in terms of a small business, the way these and other tasks are approached can become radically different. If this were a Mom and Pop store or a corporation, the necessary resources would be brought in to handle niche labor. Organize all of the tasks that the rental unit(s) require under categories that may include the following.

• Rental Advertising
• Applicant Interviews
• Background Checks
• Legal Documents (leases)
• Maintenance and Repairs
• Rent Collection and Bill Paying

Accounting

With a defined set of tasks organized under specific headings, it becomes much easier to visualize the breadth of work involved and what supporting resources would be needed.

Automation Matters

Industries across the globe are moving to automation as a way to increase productivity and lower costs. There’s no reason landlords working other jobs cannot do the same.

While fixing a burst pipe may not be a good candidate for automation, there are numerous tasks property owners undertake that no longer require valuable time.

• Advertising: Consider a process where an online advertisement is pre-written and posted when a lease expires.
• Rental Payments: Consider automatic withdrawal from tenant accounts or having them direct deposit.
• Bill Payment: Consider auto pay for every possible facet of the property, including utilities, taxes, insurance, mortgage and others.
• Maintenance and Repair: Consider an online form for tenants to fill out that provides real-time notification.

These and other tools can streamline the amount of time required to manage a rental property without incurring significant expense.

Outsourcing Matters

People who work regular jobs and also manage rental properties are entrepreneurs by nature. That go-getter personality leads many to take on more tasks than there is time in the day. That’s why outsourcing is so important.

Outsourcing things like accounting or legal services are no-brainers because they require specialized knowledge. But other tasks such as applications, background checks and maintenance may be good things to put on someone else’s plate as well.

As noted in the beginning of this article, if a small business mindset were applied, many of these tasks would be assigned to a designated resource. Consider operating rental units in this fashion by running a cost analysis and outsourcing. Roll in the labor costs that make sense and take some time to binge watch a Netflix series while your investment turns a profit.

If you’re ready to invest in a rental property, contact your trusted real estate professional who can point you to the hottest markets in your area. 

The drama of home and garden TV shows may be fun to watch, but no matter what you think, reality shows are not at all like real life. If you think it’s easy to buy a house that needs updating and turn it quickly for substantial profit, you might want to think again. 

That doesn’t necessarily mean, though, that you should shy away from the idea of buying a “fixer-upper” — just that you should approach such a home purchase with eyes wide open. 

Here are some valuable tips:

• Buying a house that needs cosmetic updates can make financial sense, particularly if you’re handy with a paintbrush, or don’t mind tackling DIY projects in your spare time. The willingness to make a house your home through ongoing TLC can be rewarding in terms of both dollars and good sense, if the structure is sound and all systems are in working condition.

• Modern appliances, updated lighting and water-saving plumbing fixtures and faucets — even new carpeting and tile — are all items that can be replaced over time as your budget allows. But if the existing home systems aren’t in working order, you may be in for big surprises that can be hard to handle. 

• Buy a house that needs a new roof, major structural work, new HVAC or major kitchen renovation only if you can roll the work into a home improvement loan and, preferably, complete the rehab before you move in. If a house isn’t habitable, it’s really not a bargain! 

• Always pay for a home inspection prior to making an offer. While an independent inspection is not a guarantee that all systems are “go,” it should allow you to plan the next move. The best strategy might be to walk away and look for another well-priced property.

• Remember that homes are priced under market for a reason. Sometimes the reason has nothing to do with physical problems and everything to do with the seller. Older homes in stable neighborhoods often represent great deals for sellers and buyers alike!

The best way to find a great deal, though, is to work with a professional REALTOR who is familiar not only with the local market, but who can advise you about real estate trends, financing options and the best ways to realize an appropriate return on your investment.

If you have dreams of becoming the next HGTV phenomenon, take the words of Chip and Joanna to heart: Their book confirms that they worked long hours, faced plenty of discouragement and experienced a fair amount of luck. In fact, as they note, their “overnight success” took many years!

After all, owning your own home, even if it does require some fixing, is still the American Dream!

Last week’s economic reports included readings on Case-Shiller home prices, pending home sales and construction spending. Weekly readings on mortgage rates and new jobless claims were released, along with monthly labor-related reports on job creation and the national unemployment rate.

Case-Shiller: Home Prices Maintain Rapid Growth

S&P Case-Shiller home price indices for March showed home prices continued to grow at blazing rates. Seattle, Washington held on to first place with a seasonally-adjusted annual rate of 13.00 percent; Las Vegas, Nevada reported 12.40 percent growth in home prices in March.

Analysts said Las Vegas markets benefitted from homebuyers relocating from high-priced coastal areas. Las Vegas home prices were 25 percent below their housing bubble peak. San Francisco reported year-over-year home price growth of 11.40 percent

Home prices were driven by short supplies of homes for sale and high demand among buyers, which led to bidding wars in high-demand areas. Rapidly rising home prices sideline first-time and moderate-income buyers who face hurdles of affordability and strict mortgage approval requirements.

While real estate pros and economic analysts expected home price growth to reach a tipping point where demand for homes would slow down, it hasn’t happened yet. Strong economic conditions and jobs data provided first-time buyers incentives to transition from renting to owning.

Pending Home Sales Slow in April

Pending home sales, which are sales under contract but not yet closed, dropped by -1.30 percent in April as compared to the March reading of 0.60 percent. Severe winter weather contributed to the lag, but analysts said severe shortages if available homes squeezed would-be buyers to the sidelines as they waited for more buying options. The National Association of Realtors® said that April’s reading was the third consecutive month of lower pending home sales.  

Construction spending rose by 1.80 percent in April and surpassed expectations of a one percent increase and the negative March reading of -1.70 percent. This could be a hopeful sign if accelerated spending is due to growing construction projects, but ongoing concerns over increased materials and labor costs may have contributed to builders’ cash outlay.

Mortgage Rates, Weekly Jobless Claims Fall

Mortgage rates eased last week, with average rates lower across the board. Freddie Mac reported the rate for a 30-year fixed rate mortgage fell by 10 basis points to 4.56 percent. The average rate for a 15-year fixed rate mortgage was nine basis points lower at 4.06 percent; rates for 5/1 adjustable rate mortgages averaged 3.80 percent and were seven basis points lower. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

First-time jobless claims fell last week to 221,000 claims filed. Analysts expected 225,000 new claims filed based on the prior week’s reading of 234,000 new claims filed. May payroll reports supported stronger labor markets as ADP reported 178,000 jobs added as compared to 163,000 private-sector jobs added in April. Non-farm payrolls, which measure private and public-sector job growth, rose by 223,000 jobs in May as compared to 159,000 jobs added in April. The highlight of May labor reports was an 18-year low of 3.80 percent national unemployment rate for May.

What‘s Ahead

This week’s scheduled economic reports include readings on job openings, mortgage rates and new jobless claims.

Buying a property out of foreclosure can be a very smart move, financially. But it can also be complicated, expensive, and stressful.

Here are 5 things to keep in mind before you take a first step in that direction:

Cash Or Preapproval Required

Buying a house that has been returned to the lender through foreclosure means dealing with bureaucracy rather than with a motivated seller. Large lenders are notorious for taking their time to approve a contract, even if the offer is for the exact amount specified.

Then there’s the paperwork, which can seem endless. Most lenders require that prospective buyers have cash on hand, or a pre-authorized loan in place in order to even submit an offer. 

There’s Little Room For Negotiation

Although in certain circumstances there may be an opportunity for some discussion about the price, that is not the norm in a foreclosure. The minimum price is usually written in stone, even during an on-site property auction, and the only direction is up! The days of buying foreclosures for a song are long past, if indeed they ever really existed. 

As-Is Condition Means Just That

Some buyers specialize in foreclosures while other investors run the other direction. There are pros and cons, of course, to every transaction. Sage advice is to always pay the fee for a property inspection on a foreclosed property, even if you have experience. A third-party evaluation is especially valuable if the home has been vacant for an extended period of time, if the utilities have been turned off, or if there are extensive visible defects.

Foreclosures can be like icebergs: What you see may be nothing compared to what lies below the surface. Also, with the findings in writing, always confirm that your loan commitment and insurance quotes will be honored in spite of the existing condition.

The Need For An Experienced REALTOR

Navigating the landscape of property foreclosures is a specialty field, and caution is the name of the game. As a prospective buyer of a pre-foreclosure, a short-sale or a foreclosed home, an experienced REALTOR is your best resource. A real estate professional will help you deal with all timelines and requirements, and has the knowledge and expertise to recommend lenders, inspectors, insurance agents and contractors to help you make a decision.

Always Consider Future Value

Although the initial price might be right, there are additional variables at play in every real estate transaction. What can you expect in terms of appreciation over the short term? What is the long-term outlook for the neighborhood? Will needed repairs and improvements add to the home’s value, or simply bring its condition up to standard? Do you plan to live in the home, or is it strictly for resale?

Your trusted real estate professional is the best resource to help you thoroughly evaluate all the information about every foreclosure.

While a kitchen herb garden or pot-grown tomatoes may be commonplace in both suburban backyards and on urban condo patios, an increasingly large number of homeowners look to backyard farming as a way to relieve some of the stresses of modern life. Other benefits include cutting grocery bills, living a more sustainable life, and teaching children about food.

The New Food Landscape 

Do new trends signal a return to simpler times, or are they a pushback against higher food prices and loss of control over the food supply? Is it a lasting change that will spread across the country or a trendy, elitist phenomenon?

The answers may not be simple, but a huge increase in the popularity of farmers’ markets and community gardens leads some analysts to predict that a major change in attitude as well as lifestyle is taking place in American neighborhoods. There is evidence that family health and nutrition improve when access to gardens and fresh food is made easier. It is as true in affluent neighborhoods as it is in disadvantaged communities.

In cities as diverse as Seattle, Boston and Fort Worth, Texas, community groups and activist neighborhoods have developed community gardens. Some of the more innovative offer food free for the taking to anyone in need. Seattle boasts more than one edible park, meant to help eliminate the city’s food deserts. Numerous community gardens throughout the Dallas-Fort Worth metroplex encourage pick-your-own plots that are open to all.

Growing Food for Personal Consumption

For homeowners who want to grow their own fresh produce and salad greens, the way forward is not always as easy. Zoning stipulations and HOA regulations sometimes specify that food plants are unauthorized landscaping elements. The times, however, have begun to change in many communities. 

New subdivisions in some cities offer community gardens for homeowners that are every bit as popular as community pools and clubhouses. They exist in million-dollar neighborhoods as well as more modest surroundings. Other cities allow some types of food gardens while discouraging plants like corn. Still others allow edible plants only behind a backyard fence.

The Future Of A Backyard Farm

The movement goes beyond growing edible plants, however. Keeping chickens and even goats is allowed by some municipalities, and urban farmers experience success with soil-free growing methods, including aquaponics, hydroponics and aeroponics.

While these alternative methods are usually found under roof, some aquaponics systems — which incorporate growing fish and plants together in a closed loop system — thrive in simple outdoor hoop-house structures. The growth of food-based “cottage businesses” is also worth watching. 

In short, as huge farms disappear from the scene, smaller home-based farms may take their place, not only in the Midwest, but in cities large and small from coast to coast. If you are in the market for a new home with a garden-friendly yard or want to create greater sustainability in or near your home, contact your trusted real estate agent today to see what the housing market has to offer.

When buying a home, there are certain steps a buyer should go through before the home sale is official. First the buyer makes the offer, then the offer is accepted.

Next the buyer schedules the inspection and home appraisal. Finally, everyone is ready for closing.

It’s easy to overlook the impact of some of these steps, but when it comes to a mortgage, the home appraisal is actually quite important. Banks want to see that they are lending money for an investment that is worthwhile, so that appraisal is a crucial step to getting financing. Here is what buyers need to know about how the appraisal could affect their mortgages.

Understanding The Home Appraisal Process

The home appraisal gives a home valuation expert the chance to evaluate the home a buyer’s considering to determine its market value. Home appraisers are highly trained, state-licensed professionals that know how to evaluate homes and assign value to them.

The appraiser will use various approaches to determine the final appraised value. The appraisal typically happens after an offer on the home was approved but before the lender loans the money.

The Appraisal And Mortgage Approval

The appraisal is one factor that a mortgage lender considers when deciding whether or not to approve a final loan request. Even if a borrower had preapproval, a low appraisal could cause the mortgage to fall through.

Why is this? A lender only wants to lend enough to cover what the home’s actual value, and if the appraisal comes in lower than what the borrower is asking for, the lender can deny the loan.

If the lender does not deny the loan completely, they may refuse to lend more than the home’s value. In order to buy the home at the agreed price, the buyer may need to come up with the difference in cash at closing.

What Can Buyers Do If The Appraisal Is Low?

If an appraisal comes in low on the home someone wishes to buy, the buyer shouldn’t panic. It is possible to get a new appraisal at a higher value.

First, consider the condition of the home. Did the seller let some things fall into disrepair? If the seller fixes those items, a new appraisal may be higher.

Does the home look rundown or cluttered? This shouldn’t affect the appraisal, but it can sometimes cause the appraiser to trend lower. Sometimes, simply asking for a second opinion might get a slightly different appraised value.  That said, if the appraisal is low, make sure to evaluate the purchase price. Is it in line with current market conditions and the overall condition of the home?

If the answer to that question is no, then the offer may be too much for the home. The appraisal, in this case, gives the buyer the opportunity to reevaluate the purchase decision.

When it comes to mortgage approval, the appraisal is one of the critical steps in the process. If a buyer has shopped wisely, the home should pass with flying colors, and soon the home sale process will be over.  As always, your trusted real estate professional is the best resource for appraisal information in your local market.

Last week’s economic reports included readings on sales of new and previously-owned homes along with weekly readings on mortgage rates and new jobless claims.

Home Sales Lower in April

Sales of new and previously-owned homes were lower in April. The Commerce Department reported sales of new homes at a seasonally-adjusted annual rate of 662,000 sales. New home sales were 1.50 percent lower than for March, but were11.60 percent higher year-over-year.

Analysts expected new home sales to rise to 682,000 sales based on the March reading of 672,000 new homes sold.  Sales of new homes are calculated based on a small sample of sales and are typically subject to adjustment. Year-to date sales were 8.40 percent higher year-over-year.

New home sales were downwardly revised for the past three months, which could indicate a slowing in the market. Higher interest rates and rising home prices may be taking a toll on buyer enthusiasm. Fewer buyers caused the inventory of homes for sale to increase to a 5.40month supply. Real estate pros typically consider a six-month supply of available homes a normal inventory of homes for sale.

Sales of previously owned homes were also lower in April; the National Association of Realtors® reported seasonally-adjusted annual sales of 5.46 million homes as compared to expected sales of 5.50 million and March sales pace of 5.60 million sales of previously-owned homes. While fewer sales can relieve demand and ease rising home prices, it appeared that potential buyers are waiting for more options.

Sales of pre-owned homes were 2.50 percent lower than for March and were 1.40 percent lower year-over-year; this was the second consecutive month for a lower year-over-year sales reading. The inventory crunch of pre-owned homes for sale has reduced the average sales period to decrease to 26 days.

Mortgage Rates Rise, Sideline Buyers and Sellers as New Jobless Claims Rise

Freddie Mac reported the highest average mortgage rates in seven years. 30-year mortgage rates averaged 4.66 percent; rates for a 15-year fixed rate mortgage averaged 4.15 percent and rates for 5/1 adjustable rate mortgages averaged 3.87 percent.

Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages. Mortgage rates have not risen so fast at the beginning of the year for 40 years. Analysts at Freddie Mac said that home sellers, as well as buyers, may be sidelined as inventories of homes shrink and mortgage rates rise. This could mean that sellers as well as buyers will wait until market conditions and mortgage rates ease.

First-time home buyers accounted for 33 percent of existing home sales; this was lower than the average of 40 percent. First-time buyers are important to real estate markets as their purchases of pre-owned homes enable homeowners to buy their next homes.

New jobless claims rose to 234,000 claims filed as compared to expectations of 219,000 new claims filed. 223,000 new claims were filed the prior week.

What‘s Ahead

This week’s scheduled economic releases include readings from Case-Shiller on home prices, construction spending and pending home sales. ADP and Non-Farm payrolls and the national unemployment rate will also be released.

Is it worth it to add smart appliances or automated features if you’re selling a home? Just how much connectivity do buyers want? And what exactly do the terms refer to in terms of home updates.

Although smart homes and home automation are sometimes used interchangeably, they actually refer to two basically different concepts about how appliances and home systems can operate. Then there is the need for “connectivity,” adding another dimension to any discussion of futuristic home features.

Home Automation

According to a Texas-based Direct Energy blog, home automation has a long history, beginning with the first labor-saving devices that operated with electrical current. “Automatic” washing machines and hot water heaters certainly made life easier at the time, a time long before wireless technology and integrated home entertainment systems.That may be simplistic, but the truth is that any device that operates without human intervention can be termed automatic. 

Today, however, automation commonly refers to home features that are controlled by computer, or that can be set to operate in specific ways: motion-detected lighting, robotic floor cleaners, dishwashers and ovens with delay settings, and the wide range of room monitors, security cameras and voice or motion-controlled devices.

Smart Technology

Computers introduced American homes to smart technology and the Internet of Things. Today, almost every home has several “smart” devices, even if they are simple ones.  

Case in point: A programmable thermostat, common sensor-operated smoke detectors, and a backyard irrigation system with a timer control can be termed smart devices, albeit maybe only “elementary” smart.

Today, most smart technology is also controllable by wireless remote device. But the true definition of smart is any product that incorporates sensors or data storage, microprocessors or controls that allow autonomous operation. An internal operating system is employed to assure that the product operates as programmed, either through user interface or initial setup. Modern smart technology allows for broad integration of devices, in effect creating a “genius” network.

Connectivity

The third piece of the technology puzzle is connectivity. Both home automation and smart technology can be “connected,” for greater flexibility and integration, but it’s not necessary. And, just because homeowners can change a setting via smart phone or battery-operated remote doesn’t necessarily make an automatic appliance or home product smart. 

Connected products interact with one another over a network; the network collects and shares data, and is designed to monitor and allow some degree of control over the functioning of network-connected products or systems. 

For instance, a smart home with sophisticated lighting controls might automatically sense lower light levels at dusk, triggering an adjustment to window shades and turning on both interior and exterior lighting.

Confused? Actually, there’s no real need to be. No matter what you call them, the home features that make living better are all desirable!

Multi-generational households and the growing preference on the part of many retirees toward “aging in place”have altered home design in recent years. Interiors are more open, more functional and more adaptable that they were even a decade ago. Spaces tend to be less formal; living space is better integrated with work space like the kitchen, and rooms tend to serve more than once purpose, both for quiet pursuits and for family gatherings.

Universal Design

Home design has gained a new dimension — planning for the future and for a changing lifestyle. Universal design features and amenities that were once off the radar are now very much the focus. Even younger buyers are tuned in to accessibility concerns. Wider doors and hallways, easy to navigate stairs or single-level living, doorless and curbless showers, motion-activated faucets and lighting — these are just a sampling of what may soon become mainstream in American homes.

Add the popularity of home automation and connectivity, and today’s home is uniquely suited for all ages. If you’re thinking of remodeling an existing home, some of these features are well worth the extra cost. Not only do they offer living options, but they also promise great ROI should you wish to sell.

The New Face Of Home

If you are currently looking for a home to buy, view the existing floor plan with an eye toward modifications that would make it more accessible and multi-generation-friendly. Consider the possibility that you might someday share the home with aging parents or with grown children and grandchildren. 

Integrated “apartments”with separate entrances, “granny pods”or separate guest houses, dual master bedrooms, and “au pair”quarters are just some of the ways to offer future flexibility. They are common across the country, but also across price ranges, as sensible and cost-effective alternatives to home health care or retirement housing. 

Renovate For The Future

Renovations that reflect the changing face of family life are always good choices for return on investment in remodeling. Because the traditional family is no longer the norm, any home that offers such options is desirable. If you have questions about what features are important to buyers in a specific market, speak to a real estate professional about trends that go beyond energy savings and sustainability. 

No matter what choices you make about a home update, rely on professional advice and insist on reliable contractors. There is no substitute for quality materials and first-class work. Whether you’re adding space or rearranging it, planning for your future in the home or hoping to appeal to the right buyer, spending a lot or a little, you won’t go wrong with universal design features. Aging is, after all, a reality that we all face sooner or later.

Are you in the market for a new home? If you are considering a mortgage, you may be curious about mortgage insurance, commonly referred to as PMI or MI. Let’s explore the topic of mortgage insurance, including how it works to reduce risk and how it benefits you as the mortgage borrower.

Mortgage Insurance = Risk Reduction

You might not know this, but the toughest part of the home buying process for many individuals and families is coming up with the required down payment. For example, if you were to buy a $200,000 home, you may want to invest $40,000 or $60,000 or more in the down payment. The remainder would be borrowed in your mortgage, which you would then pay off each month.

Most mortgage lenders require a minimum of 20 percent as a down payment. In the example above, this means having $40,000 cash on hand before you buy the home. If you can’t come up with this much, your lender may require mortgage insurance be purchased to protect them in case you default on the loan.

Mortgage Insurance Can Help You Qualify

Since mortgage insurance reduces the lender’s exposure to risk, it can help you in a number of ways during the qualification process. First, you can put less in your down payment than you had initially intended, which can increase your buying power and the size of home you can afford. Mortgages backed with a private insurance policy tend to be approved a bit faster than those that aren’t. Also, if you decide that you don’t need it later, many mortgage insurance policies can be canceled, which saves you a bit of money.

Look For Supplemental Benefits

Finally, don’t forget to ask your mortgage lender about any supplemental benefits offered with your mortgage insurance policy. Some policies protect you in the event that you lose your job or provide a partial claim advance if you can’t pay your mortgage. Note that not all policies have these benefits, so be sure to ask.

While it is true that mortgage insurance provides benefits to lenders, it also offers significant benefits to you as the borrower. To learn more about mortgage insurance or to get pre-approved for a mortgage so you can buy a home, give us a call today. Our friendly team of real estate professionals is happy to help.