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!

Real Estate Advertising: Advertising Tips For Your Home

Effective Marketing is the key to a successful sale in many cases. A poorly worded ad in the local Real Estate newspaper or an Internet ad that doesn’t compliment your home can be devastating the sale of your home. Realtors have made a living off of marketing properties better than anyone else can.

There is more to an effect ad than just cramming as much information into it as possible. Too much information will cause some buyers to rule the property out before they take a look. To little information will cause potential buyers to wonder if there is something wrong with the property. So you really must walk the razor thin line of advertising know-how when creating the most tantalizing ads to market your home.

Here are 10 simple tips for creating the perfect ad.

  1. Make a list of the features you like most about your home. You know the home better than anyone else and you will know the qualities of the home that appeal to you. These same qualities will likely resonate with potential buyers.
  2. Avoid anything derogatory in your description of the property. Don’t draw attention to that leaky faucet or a crack in the ceiling. This doesn’t you shouldn’t disclose the fact that the tap is leaking but it shouldn’t be addressed in your ads.
  3. Practice economy of language. If you cannot describe you home in less than 120 words then it is likely that people will not completely read your ad. This means they may miss a vital piece of information in advertisement that could have singled you home out.
  4. Focus your language on the key features of your home. Such as the kitchen, bathrooms and living areas.
  5. Point out unique features like specialized landscaping.
  6. Use a photo in all advertising. Make sure the photo is clear and balanced.
  7. Do not leave the car parked in the driveway, leave toys on the floor or have a cluttered kitchen sink in any of your photographs.
  8. Generally but not always try to use a photo of the exterior front of the home.
  9. Do not oversell your property. This means that you should not portray you quaint family home in the suburbs as an Arabian Palace.
  10. Most of all your ads should be engaging and fun.

Luxury Real Estate on California’s Central Coast: Carmel-by-the-Sea Defines Unique

When it comes to unique luxury real estate in the central coast of California, Carmel-by-the-Sea is a location that quickly comes to mind.

120 miles south of San Francisco sits this quaint little town is home to some of the most exclusive residential neighborhoods to be found in the central coast, housing celebrities like, actor-director Clint Eastwood, Doris Day, and Jennifer Aniston.

However, you do not have to be famous to live here, but the rich and the famous do enjoy the lifestyle that Carmel offers.

Downtown Carmel, A Shopper’s Delight

Downtown Carmel has every type of restaurant, boutique and gallery imaginable, and Carmel’s distinctiveness is unsurpassed. It is no wonder that this sanctuary is a hot spot for tourism from all corners of the world. Each year thousands of vacationers flock to the Monterey Peninsula to enjoy its splendor. Renowned for its European charm, white sandy beaches, spectacular vistas, art galleries, and performing arts, Carmel is intoxicating and alluring.

The Central California Coast is an Oasis of Splendor

Other surrounding areas of interest include: Big Sur, Carmel Highlands, the incredible Monterey Bay Aquarium (rated as one of the top aquariums in the world), wine vineyards with tasting rooms for the wine enthusiast, and the infamous Pebble Beach which is home to one of the world’s most prominent golf resorts, where famous golf tournaments like the AT & T Pebble Beach National Pro-Am, where amateurs, stars of the screen and sports make their appearances teeing it up on three different courses.

Exclusive Carmel

Popular for its exclusiveness, it is no wonder celebrities of all ages, artists, writers, and honeymooners retreat to this oasis by the sea for romantic getaways. It is the perfect place to enjoy hanging out in a local pub, walk the gnarled tree-lined streets, sip espresso in a neighboring cafe, or simply relax and enjoy Carmel’s picturesque old-world charm.

Carmel-by-the-Sea is a treasure chest filled with gems guaranteed to satisfy the person looking for variance in luxury living. It is easy to enjoy the sophistication of San Francisco, the glamour of Hollywood, while experiencing the feel of a European village, nestled in one of the most beautiful landscapes in the world.

With breath-taking ocean vistas, dramatic white sandy beaches lined with lush green cypress, and uniquely different architecture, it is no wonder that luxury buyers from all over the world are drawn to this oasis by the sea.

If you are considering relocating to California’s central coast, Carmel-by-the-Sea might be the perfect place to experience the good life.

Management Tips for Out of State Landlords: Effective Ways to Manage Property While Living at a Distance

Real estate investing can be a powerful tool to create wealth, but it can also be an investing nightmare. Difficulties abound for landlords, but these difficulties multiply when the landlord resides in another state.

Important Lease Provisions for Out of State Landlords

Landlords can make their job easier by adding a few key lease provisions to their standard leases if they know that they will have limited ability to access the property due to their location. First, landlords should require tenants to be responsible for all repairs. While this might require the landlord to lower the asking rent, it will prevent the late night calls and the impossible task of organizing workers in another state. Typically this provision can be written in such a way that it cover all repairs up to a certain dollar amount.

Something to the effect of “tenant shall be responsible for all repairs under $1,000 or repairs that result from their negligence” will take care of 95% of all potential home repairs. The goal of this clause is to prevent tenants from calling landlords for clogged toilets or broken door knobs. While a tenant will still call for things like a broken furnace or hot water heater, these are larger items that will require less frequent attention.

The second provision revolves around the lease termination and dispute resolution. The lease should state clearly that the tenant is solely responsible for finding a replacement tenant at their own costs if he/she chooses to vacate the property before the end of the lease term. Many times leases state a specific fee, which may be one or two months rent. This can still be problematic for an out of state landlord because that fee might not cover the cost of commuting between states to market the property and find the right tenant.

Out of state landlords should consult a real estate lawyer to craft an appropriate lease. Landlords should be sure to inform them that they will be out of state and they would like this property to function essentially as if the tenant owns the property.

Tenant Selection

Out of state landlords should be meticulous when it comes to selecting the right tenant for their property. In addition to a credit check, landlords should run a detailed check of their references and their last two landlords. Avoid tenants that appear to move often or tenants with pets or small (potentially destructive) children. While this advice might seem controversial, remember finding a self-sufficient tenant looking to stay long-term is the goal. Ideally, a tenant moving from a home or relocating for work would be good examples of what landlords should be looking for.

Property Management

Consider a property management firm instead of trying to be an absentee landlord. Property management firms will charge a fee (6% – 10% of gross rents), but will save landlords a lot of potential headaches. In addition to cutting down on phone calls, good property management firms can provide a landlord with rental data, yearly maintenance recommendations and an easy to use accounting summary around tax time. Being cheap should not be a reason to sacrifice peace of mind. If real estate is not an investor’s primary pursuit, he/she should strongly consider letting someone else manage the investment.

Tough tenants and properties challenge out of state landlords on a daily basis. Strong leases, tenant selection and potentially the help of a management company can ease these burdens significantly.

Patrick Mackaronis: The Business of Real Estate: Investing

patrick mackaronis

The following is a guest post on real estate investing from Brabble CEO and Founder Patrick Mackaronis. Pat is well-versed in investments and entrepreneurship, and runs a high-level social media startup in New York City.

Enter Patrick Mackaronis

Deciding to invest in real estate can, for the long term, yield a profitable return. Along with market conditions, it is important to remember that there are other factors that can influence your success. To have a prosperous real estate investment business, you must have a detailed strategy and you must know the local market.

Real Estate Strategy

The most important aspect of real estate investing is to remember that this is a business, and all businesses take time to grow. A good business plan, cash reserves and patience are key components to a successful real estate business. A business plan will outline exact goals and the steps needed to get there, and will also delineate your exact financial position. A clear plan will serve to guide your business through both downturns and growth.

Cash reserves are essential to run your real estate business properly. Having reserves on hand will make the difference between waiting for a suitable tenant versus renting to just anyone, or selling your property at a very reduced price instead of waiting for market conditions to improve. You will also need cash reserves for building repairs, appliance replacement, yard work or general maintenance items that may be necessary.

The Real Estate Market

Perhaps the most important piece of real estate investing is to know your market. Knowing the market does not mean having knowledge of national trends and figures; while this is indeed important, it is more important to know the local trends and numbers. This means knowing the median sales price for single family homes and condominiums, as well as the median rental fees for your area. Sometimes prices can vary from one neighborhood to another, so it is important to do the research prior to making an investment.

Stay current on houses listed for sale and what the prices are, as well as the final sales price. In certain markets houses are selling significantly below list price, while in other markets houses are selling at or above list price. The U.S. Department of Housing and Urban

Development has a fair market rental tool for rental market analysis in your area. Remember, national trends do not provide an accurate reflection of local market activity.

Foreclosure Investments

Foreclosure investing can be tricky. Unlike regular real estate investments, these properties have the potential to be fraught with hazard. For the most part, houses that have been through foreclosure will need more work than regular houses to make them worth market value.

It is important to remember that foreclosure properties might have other surprises, as well. Federal tax liens, unpaid property taxes and incorrect property information are just a few issues you might be facing. It is imperative to thoroughly research all applicable state laws prior to making a purchase. Also research the property for sale as much as possible. Incurring hidden costs is not favorable for any business, but it can be especially devastating in the real estate investment business.

When considering purchasing foreclosure properties, remember that there may be hefty competition from other investors. Typically, foreclosure properties can be bought at a public auction which takes place in or in front of the local courthouse. If there is a bargain to be had, you may find yourself in a bidding war with others, ultimately driving the house price higher than intended. Be certain you know exactly how much you can spend, taking into account expenditures for repairs and maintenance on the property.

Real Estate Decisions

When treated as a business and approached with caution, real estate investment has the potential for long term financial growth. Always do your research and avoid risks, no matter how big the alleged payoff. Remember, this is not just a business, this is also your future.

Patrick Mackaronis can be reached on Twitter at @patty__mack, or through the Patrick Mackaronis blog.