Month: July 2017

Rent Subsidies Make Tenants Attractive: Rental Assistance Programs a Boon to Landlords in Hard Times

Rent Subsidies

Rent SubsidiesSome areas of the United States are seeing a glut of vacant rental properties. With increased competition for a decreasing number of tenants, many landlords are trying to entice applicants with goodies such as appliance upgrades or one or more months of free rent. Other landlords are willing to accept less rent for their units than they did in better times, when demand was up.

By some accounts, high vacancy rates and low rents will continue through the end of this year, when the jobs market is expected to begin to recover. This is bleak news for investors in residential rental properties, particularly for those who do not seize all available opportunities to fill their rental units. One such opportunity is in the form of prospective tenants who receive rental assistance through government programs. Due to biased opinions and generalizations, some landlords refuse to consider renting to such tenants. This is a costly mistake.

Section 8 Program

The largest and most well known rental assistance program is the “Section 8” housing voucher program of the U.S. Department of Housing and Urban Development (HUD). The amount of the voucher, or subsidy, that is granted is based on how much rent the tenant can pay in the private market. The program is designed to help families, the elderly, and the disabled whose incomes fall below 30 to 80% of the median income in the particular area.

HUD sets the fair market rental amounts each year in metropolitan areas and non-metropolitan counties for units depending on how many bedrooms a unit has. Usually, the fair market rent is set at an amount that is enough to pay rent and utilities at 40% of recently rented units in an area (but not including new units).

There are 28 metropolitan areas for which HUD has determined that 40% is not enough to allow voucher holders to rent housing outside a few low-cost neighborhoods; for those 28 areas, HUD sets the fair market rent on the basis of 50% of the recently rented units. Because HUD is not quick to lower the fair market rental amounts it has already set, landlords may find that the amount of rent approved by the Section 8 program in their areas exceeds the amounts that other landlords are asking.

A landlord can count on receiving a Section 8 check each month because the money comes directly from the government. Moreover, it is difficult for applicants to obtain Section 8 assistance. As a result, many tenants who receive it are highly motivated to fulfill their obligations under a lease for fear of losing their subsidy.

Other Rental Assistance Programs

State and local government housing agencies administer the Section 8 program. Some states and municipalities have rental assistance programs of their own, and the eligibility criteria track that of the Section 8 program. These are some examples:

Connecticut– The Rental Assistance Program of the Department of Social Services is the state’s principal program for assisting families with very low incomes in paying for safe and clean housing in the private market.

New Jersey– The State Rental Assistance Program, administered by the Department of Community Affairs is similar to the Section 8 program in eligibility criteria and operation. It includes set-asides for qualifying families as well as homeless, elderly, and disabled individuals.

Oregon– The HOME Tenant-Based Rental Assistance Program is administered by Community Action Agency Centers. Those who qualify receive housing assistance in renewable six-month or one-year terms; the assistance may include a refundable security deposit.

Due Diligence Prevents Tenant Problems

Landlords can overcome their hesitation about renting to low-income tenants by doing their due diligence before agreeing to rent to them. This means using the same process that they use for any other prospective tenant: proper screening,.

If a prospect with a rental subsidy passes the screening, the landlord can fill a vacant rental unit with a paying tenant and ride out the negative rental market.

Rent Subsidies Make Tenants Attractive: Rental Assistance Programs a Boon to Landlords in Hard Times

Rent Subsidies

Some areas of the United States are seeing a glut of vacant rental properties. With increased competition for a decreasing number of tenants, many landlords are trying to entice applicants with goodies such as appliance upgrades or one or more months of free rent. Other landlords are willing to accept less rent for their units than they did in better times, when demand was up.

By some accounts, high vacancy rates and low rents will continue through the end of this year, when the jobs market is expected to begin to recover. This is bleak news for investors in residential rental properties, particularly for those who do not seize all available opportunities to fill their rental units. One such opportunity is in the form of prospective tenants who receive rental assistance through government programs. Due to biased opinions and generalizations, some landlords refuse to consider renting to such tenants. This is a costly mistake.

Section 8 Program

The largest and most well known rental assistance program is the “Section 8” housing voucher program of the U.S. Department of Housing and Urban Development (HUD). The amount of the voucher, or subsidy, that is granted is based on how much rent the tenant can pay in the private market. The program is designed to help families, the elderly, and the disabled whose incomes fall below 30 to 80% of the median income in the particular area.

HUD sets the fair market rental amounts each year in metropolitan areas and non-metropolitan counties for units depending on how many bedrooms a unit has. Usually, the fair market rent is set at an amount that is enough to pay rent and utilities at 40% of recently rented units in an area (but not including new units).

There are 28 metropolitan areas for which HUD has determined that 40% is not enough to allow voucher holders to rent housing outside a few low-cost neighborhoods; for those 28 areas, HUD sets the fair market rent on the basis of 50% of the recently rented units. Because HUD is not quick to lower the fair market rental amounts it has already set, landlords may find that the amount of rent approved by the Section 8 program in their areas exceeds the amounts that other landlords are asking.

A landlord can count on receiving a Section 8 check each month because the money comes directly from the government. Moreover, it is difficult for applicants to obtain Section 8 assistance. As a result, many tenants who receive it are highly motivated to fulfill their obligations under a lease for fear of losing their subsidy.

Other Rental Assistance Programs

State and local government housing agencies administer the Section 8 program. Some states and municipalities have rental assistance programs of their own, and the eligibility criteria track that of the Section 8 program. These are some examples:

Connecticut– The Rental Assistance Program of the Department of Social Services is the state’s principal program for assisting families with very low incomes in paying for safe and clean housing in the private market.

New Jersey– The State Rental Assistance Program, administered by the Department of Community Affairs is similar to the Section 8 program in eligibility criteria and operation. It includes set-asides for qualifying families as well as homeless, elderly, and disabled individuals.

Oregon– The HOME Tenant-Based Rental Assistance Program is administered by Community Action Agency Centers. Those who qualify receive housing assistance in renewable six-month or one-year terms; the assistance may include a refundable security deposit.

Due Diligence Prevents Tenant Problems

Landlords can overcome their hesitation about renting to low-income tenants by doing their due diligence before agreeing to rent to them. This means using the same process that they use for any other prospective tenant: proper screening,.

If a prospect with a rental subsidy passes the screening, the landlord can fill a vacant rental unit with a paying tenant and ride out the negative rental market.

How to Open Your Very First Real Estate Office: Homes and Properties for Sale

All salespersons have dreams of glamor and money. They all want to be like the successful Broker who drives the Mercedes, wears the diamonds and dresses like a movie star. As you think about where you are in your life, you make a decision to further your career and open your own office

The basic salesperson makes between 55-70 percent in commissions. The salesperson must pay all of his expenses and still give the Broker a percentage. A salesperson or Agent must be a licensed Real Estate Agent for two years before they can be a Broker in most states.

The reason for this is to get as much hands on experience as possible. But after that time, they may open their own office. Obtaining a Broker’s license is fairly easy and you can go through a internet online course and take the study and then go to a state office for the final exam.

Allied Real Estate

After you pass the board exam, you will get your license in the mail. But during this time, you may look for a suitable office. A office in a good location, at the right price and with much available traffic. The cheapest office in the worse area is a waste of money.

Steps involved

So once you sign a short lease, have your sign put up and apply for your business license, you are set to begin. Never consider placing a sticker sign on the window. If you want a professional office, then look that way.

Go to the auctions and buy the best furniture that you can afford with beautiful accessories, such as pictures and vases. The Broker’s office should be in top condition, as it is the meeting place of many deals. Putting many desk in the office and setting up a phone system is your next step.

The phone company generally will install all the phone system for a free or minor cost as the monthy cost is expected to bring much revenue. A smart Broker in today’s times will charge the agent for the phone. The Broker sets up the basic installation and the agent is responsible for contacting the phone company and setting up their own phone.

So now you have the office, furniture, phones and signs. Your next investment will be in computers and office equipment. Always, buy good quality equipment as this will be used daily. There are many used computers that are top of the line, that can be place in the office. All computers need to be set up with the MLS (Multiple Listing Service.)

Smart Business Sense

Many Brokers begin their business on their own and intend to hire agents along the way. It is not necessary to have agents on role when you open. Setting up a business plan, offering discounts to regular clients and hosting welcoming parties are much more important in the beginning.

Letting people know who you are through many local newspaper advertisements, holding open house and of course having high quality signs. Never think about using paper signs as they are a sign of a Broker in trouble.

Many Brokers of independent offices, offer discounts in commissions and they ask for referrals in exchange. This is highly profitable in a world of many foreclosures and impending bankruptcies. Having experience in Short Sales and REO’s is desired. A well planned office and pleasant atmosphere will return much financial reward.

Pros and Cons of Investing in Vacant Land: Buying Oceanfront or Golf Community Lots for Investment

Investors who are looking to diversify from stocks and bonds often look to real estate to provide stable long term returns. Some of the potential vehicles for real estate investment are rental properties, both commercial and residential, and vacant land.

Vacant land may be in the form or large tracts of farm land, undeveloped industrial property or single lots for homes. Vacation areas may have unfinished developments, where there is a substantial potential for growth and capital appreciation.

Oceanfront locales and golf communities often divide up large areas for housing development and sell the individual lots to people wishing to build homes. The lots can be used immediately to build vacation or permanent homes, or can be held for capital appreciation.

An Example of Land Investment

Using the example of a oceanfront or Oceanside property, an investor may look at housing developments in a vacation area (such as Hilton Head Island). There are often a number of developments that have yet reached completion, and investors may have the option to buy a lot before the property is built up.

If there are no restrictions on building, the owner can choose to build on the property or hold it with the hope of capital appreciation.

Positives of Owing Investment Land Property

  • Land that has not been built on is likely to be much cheaper than prime vacation area property that already has been improved. It provides an opportunity for those with minimal capital to acquire a piece of desirable location.
  • This provides a lower cost way for people to buy a lot at today’s prices with the intention of building their dream home sometime in the future.
  • In times of capital appreciation, the smaller price allows for a much higher percentage return when sold. Even if there is no increase in the value of the land, the owner still has the option to build on it. If there is significant deflation in prices, the amount at risk is less than a lot with a house.
  • If the land can be bought for a low price, it may be possible to turn around and resell it quickly, that is, flip the property. Flipping works during high growth periods (sometimes called “bubbles”).

Negatives of Land for Investment

  • Unlike commercial or other residential real estate, no rent can be collected on vacant land, since there are no structures. It is possible to collect something if there are easements for power lines or other utilities, but this may compromise the ability to build or sell the land.
  • There are expenses associated with land, primarily taxes, but there may also be costs of maintaining the property (cutting grass or other upkeep). Lots in desirable developments may have owners’ association fees or mandatory country club memberships.
  • If the property cannot be flipped, the owner expecting a quick profit may be stuck with a property they have to sell at a loss, if they can sell it at all. If the property is financed, the investor may be forced to default on the loan and lose the entire amount of his equity.

Buying a lot is a quick way to invest in real estate, but without the income that comes from renting the property is a risky strategy for the novice investor.

Haunted Real Estate

Haunted houses abound in fiction. In films, a haunted house provides such terror to the occupants that they flee, usually in the middle of the night, never to return to a house once considered as a dream home. Movies such as The Amityville Horror and Poltergeist play on this theme. Moviegoers could be excused for thinking that a haunted house is a place of horror that display a constant, maddening series of events that eventually drive the owners crazy – or kill them. Such is, fortunately, rarely the case offscreen.

However, there are prospective homeowners who don’t mind sharing their new residence with a ghost. Some even seek out a haunted place to purchase.

A Real Haunted House

Owners of a truly haunted house can boast, with justification, that at their house, it’s Halloween all year long. Some houses simply have a “feeling” to them; some have poltergeist activity; some offer an actual apparition. The reasons can be numerous – a murder has taken place on the premises; someone died in the house under painful, yet natural, circumstances; the house is built on, or near, a cemetery; the house was the favorite residence of a now-deceased owner.

Whatever the reasons, the form of the hauntings varies, as stated above. This may be one of the draws for buyers. Another draw can be that haunted houses can be cheaper than other houses of the same type (not everyone wants to live with a supernatural roommate). Or, some may simply enjoy having a house with a distinct difference.

Listings

Some houses, known to be haunted, mention nothing of paranormal events. Some proudly state that the house is haunted by an entity. This varies from state to state, depending on the disclosure laws. Even when a house is not haunted, or rumored to be, a murder may have taken place in it; this can certainly have an effect on the marketability of the property.

For those who are actively seeking a haunted house to buy, this site offers listings (for buyers and sellers).

Another site lists not only haunted real estate, but haunted lodgings. (The list of haunted lodgings is far larger than the list of haunted real estate; only one haunted house for sale is listed.) San Diego Paranormal offers a service to connect potential buyers to sellers across the United States. The form includes such details as preferred state, number of bedrooms/bathrooms, price range, financing, and down payment – all very important to the still-living occupants.

For those who are looking for a house with its own atmosphere – and those who aren’t frightened by bumps in the night, cold drafts of air, footsteps, disembodied voices, or objects disappearing and reappearing, a house with a ghost may be the way to go.

Are Real Estate Agents Making Too Much Money?

This is such a loaded question. On one hand real estate agents make a lot of money for selling a home–somewhere in the neighborhood of 6 percent of the price of a home is paid in commissions–this rate varies and is alway negotiable. On the other hand, real estate agents spend a lot of time, energy and money on tasks they receive no compensation for… A real estate agent can drive a person around house-hunting for weeks on end–who knows if that person is really serious or “just browsing”. No one but the agent pays for the gas, time, use of vehicle, etc… The agent has to pay for advertising, signs, phone, etc… I guess you can tell that I am a real estate agent (actually, a real estate broker) so I can be a bit defensive about this.

But I have to sit back and take a look at the ENTIRE picture. This is where my opinion begins to wain a bit…

Housing values have increased tremendously in most areas of the country. Additionally, people are making more money and spending more money everyday. Incidently, like Dick Cheney, I do not attribute this to the government–in fact, I say it is in spite of the government…and their spending. At any rate, the average American stays in their home 5-7 years–that’s quite a few homes selling over and over again…and quite a few commissions.

My main pet peeve is that real estate commissions have gone up at a much higher scale or rate that normal cost-of-living increases given to employees. That translates into a very beneficial situation for the agent.

I know that real estate commissions are negotiable–but I do not see many agents negotiating them. I have a problem when a homeowner has to come off their selling price by thousands of dollars–and the agent refuses to budge on their commission percentage.

I feel this trend is going to cost the agents more and more money in the long run as homeowners are going to wisen up to the trend of selling their own home. This is unfortuneate because most agents are highly skilled and worth every penny–and also don’t think twice about helping the seller save a buck or two.

The way the system (or lack therof) works now is that the successful sale pays for all the wasted time spend on “dead” customers–ones that never buy–or listings that never sell.

Take some time to discuss commission arrangements with your real estate agent and see where they stand. The agent that is upfront and honest…and will to not be so rigid will turn out to be the agent most looking out for your best interest!