position realty

Position Yourself For Success

Traits to Look for in a Potential Tenant

Finding a good tenant is essential, but it can also be tricky. It requires more than just putting an ad on the internet. To find a great tenant for your rental property, it pays to know what makes a good tenant.

So, we’ve created a list for you. These are 8 traits to look for in a potential tenant.

1. Openness Toward Background Checks It’s important for you as a landlord to know who you are renting to before you rent out your property. This is because you never know when a tenant is going to be reliable and worthwhile or seriously problematic.

A tenant background check is important for the following reasons:
• To find out if they have a criminal record • To choose the best tenants from your pool • To check their work history • To make sure that they will comply with your rules • To confirm your tenant’s rental history • To know which questions to ask during screening • To confirm their identity

2. Reasons for Moving Tenants move for various reasons. For example:
• To change their neighborhood • They had problems with neighbors • A job change/relocation • The need for more space • They had problems with their previous landlord

Contacting their previous landlord isn’t 100% reliable, as some might throw an array of unjust accusations. The only option is to ask them directly. Granted, the tenant may lie but some of the reasons are quite straightforward and oftentimes completely honest answers.

3. Personal Behavior You should call up tenant’s previous landlords to ask how they were personally. Good questions to ask them include:
• Did the previous tenant pay the rent and on time? • Did they do a reasonably good job of taking care of the rental property? • Was the person disruptive towards neighbors? • Was the unit clean and in good order when the tenant left? • Was the tenant evicted?

4. Ability to Pay Rent This is a no-brainer. The prospective tenant should be able to pay rent without struggling. To verify whether they can afford the price of the rent, you need to look at their proof of employment.

Look for a tenant who has good job prospects and a steady, reliable income. A good rule of thumb is that the price of rent shouldn’t exceed 30% of the tenant’s income.

Some red flags to look out for include a person who has long periods of unemployment or if the person changes jobs often.

5. Cleanliness A good tenant maintains cleanliness. It’s every landlord’s dream to get a tenant who will take good care of your property. You obviously wouldn’t want a person who is going to let trash pile up on the patio or leave food remnants building up in the microwave.

You can get a better idea of the way they would maintain your property if you get a glimpse of their car or if they allow you to meet them at their current residence. You could also include a cleaning clause in your lease as well.

6. Subletting When you are a landlord, it’s important to protect yourself against as many potential risks as possible. This is the same reason why you have to do a proper tenant screening before renting out your property in the first place.

But should you allow a tenant to sublet? Subletting happens when an existing tenant lets all or part of their home to someone else.

Allowing subletting is risky. Some tenants want to sublet as a way to earn extra cash or to avoid paying rent on a vacant apartment. Also, there’s no guarantee that they would pay as much attention to the tenant selection as you did.

It would be counterintuitive to be okay with your tenant getting a couple of tenants of their own.

7. Roommates It’s important to know how many people are going to be living with your renter. The tenant might be planning to move in with their significant other or even their entire family.

Should you allow roommates, here’s how to do it smoothly while protecting your investment:
• Consider updating your occupancy limit • Be prepared to consider a unit switch • Be cautious about creating new lease terms • Require potential roommates to be screened as tenants

8. Plans for residence Your final layer of screening is a simple practicality test. If they have a job nearby, verify that your house is not an impractical distance away. If they have a family, check that there is a room for everyone in the home. If they have a pet, confirm that they are willing to conform to the pet clause in your lease agreement.

Generally, tenants will have an excellent plan for residence, but it never hurts to check.

If your prospective tenant possesses most of these traits, then they are a great candidate for a long-term renter. They will most likely keep the home in good condition, and that they will be responsible and well-behaved.

Position Realty
Office: 480-213-5251

Nine Landlord Tips You Can’t Afford To Ignore

This is a great time to be a landlord. Monthly rents have been increasing for years, vacancies remain at historic lows, and renters are paying down any loans you have on the property while your equity continues appreciating every month. All is good! Now is the right time to fine tune and improve your processes.

1) The landlord process begins with a thorough screening of tenants. Whom you allow to move into your property always makes a difference in how profitable your business will be. No landlord likes having a vacancy but allowing the wrong tenant to move in can be more costly than a vacancy. The problems that bad tenants can cause are countless. If it’s a multifamily residence, one bad tenant can cause good tenants to move out. Bad tenants can move bad friends in to create even more trouble. Of course, the damage they do to the property can easily exceed your rent profits, the security deposit, and cause you headaches to make repairs. Besides the obvious screening for criminal backgrounds and credit reports, always follow up on references. Require at least two previous landlord references and place more weight with a landlord that doesn’t currently have him or her as a tenant. A current landlord is likely to give a bad tenant a glowing report just to get them out of their rental property. Also make sure all adults living in the residence sign the lease.

2) Go beyond the standard rental agreement to set your own rules. Certainly, your Arizona has minimum requirements that must be met to rent a property. Usually, these apply mostly to the landlord. You need to have your tenants sign a set of rules that you require them to obey. Common rules include not disassembling vehicles in the parking lot, no excessive noise after 10 pm, the number of days a guest is allowed to stay overnight, etc.

3) Understand and enforce security deposits fairly. Arizona allow one and one half months rent amoutn for a security deposit. Always have a walk through with a new tenant and take photos of existing damage. Have the tenant sign and date the written description along with signing printed copies of the photos.

4) Keep the property in good repair. Failing to make prompt repairs can give tenants the right to move out without advance notice, to withhold rent, or to make repairs themselves, and deduct it from rent. Stay in control of your properties by requiring tenants to promptly notify you of needed repairs and then you promptly making the repair.

5) Maintain a secure property. The best tenants insist that the property be kept secure from criminal activity. Often this only requires good outside lighting and shrubbery kept cut back. Larger properties might add security cameras as an additional deterrent to crime.

6) Notify tenants before entering their dwelling. Tenants have a right to expect privacy. Arizona laws allow landlords to enter under emergency conditions but you must give 48 hour notice before entering for any other reason.

7) Give notice of any known hazardous conditions. For older properties, the most common hazard is lead paint. Even if you don’t know if lead paint is four or five layers down, it’s wise to give notice of the potential so that you don’t become liable for tenants’ (especially young children) health problems. You may have other hazards such as an old covered well.

8) Maintain enough insurance to protect your investment. You need rock solid insurance to protect you from injury liabilities, discrimination lawsuits, fire, storm damage, and much more. Now is good a time to review your coverage.

9) Resolve disputes promptly. Conflicts can arise over rent, noise, mold, repairs, and a plethora of other issues. When a tenant has a complaint, discuss it with them quickly. Attempt to put a resolution in place as soon as possible. Doing so can avoid rent being withheld, moving out without notice, or even having the issue escalated to attorneys and courts.

Position Realty
Office: 480-213-5251

New Tax Law May Encourage Home Rentals

The new tax law brought welcome news for people who rent out their homes for short periods. And it likely will entice even more people to do it.

To be sure, the tax rules are complicated and the Internal Revenue Service and the Treasury Department haven’t issued the final regulations yet. But here are some ways short-term landlords could benefit:

Property-tax deductions
The new tax law caps state and local income-tax and property-tax deductions at a total of $10,000; previously there was no limit. But there may be a way around this new cap for people who rent out their home or vacation property for at least 15 days a year, tax experts say.

Here’s how it might work in practice, according to Stephen Fishman, a legal writer and author of several Nolo do-it-yourself legal guides, including one on short-term rentals.

Let’s say you pay $1,000 a month in property tax ($12,000 a year) on a home. Under the new rule, if you live in the home all year, you’re only entitled to a $10,000 deduction. But say you rent it out for three months. You can deduct 25% of your property tax, or $3,000, on Schedule E for rental deductions and income. You can then deduct the other $9,000 you pay in property taxes on Schedule A for itemized deductions, allowing you to deduct the full amount of your property tax, Mr. Fishman says.

If you’re in the top bracket of 37%, the difference in the amount you could deduct in this example would result in a tax saving of $740, Mr. Fishman says. If you’re in the 32% bracket, it would be a saving of $640, and it would be a saving of $480 in taxes if you’re in the 24% bracket, he says. “It’s not a gigantic amount. But it is an additional saving that you would not otherwise have, and that will probably encourage people even more to do short-term rentals.”

Mortgage interest
The new law also caps mortgage-interest deductions for first and second homes purchased during 2018 through 2025. Under the new tax plan, you can only deduct mortgage interest on loans of up to $750,000 over that eight-year-period; the previous limit was $1 million.

However, “a rental property does not fall under those rules,” says Robert Gilman, a partner at New York-based accounting firm Anchin, Block & Anchin LLP. “On a rental property, you could have a mortgage of $10 million and deduct the full amount of the interest.”

“If the property is part rental and part residence, you can deduct the mortgage interest without limitation for the period of time that it’s a rental property—provided it rented for 15 or more days,” Mr. Gilman says.

Again, let’s use an example, courtesy of Mr. Fishman. Say you have a $1 million mortgage on a home you bought in 2018 on which you pay $60,000 interest annually. Only interest on loan amounts up to $750,000 is deductible, so you can only deduct 75% of that $60,000 as an itemized deduction on Schedule A, or $45,000. If you rent the home for three months or 25% of the year, you can deduct 25% of your mortgage interest, or $15,000, as a rental expense, not subject to the $750,000 limit. You get a $15,000 deduction on Schedule E, allowing you to deduct the full amount of your mortgage interest.

You can’t double dip, though, so if you claim a deduction on Schedule A, make sure you don’t also claim it on Schedule E and vice versa, Mr. Fishman says.

If you’re in the top 37% bracket, the tax saving from the difference in the amount you could deduct in the example above would be $5,550, Mr. Fishman says. If you’re in the 32% bracket, it would be a saving of $4,800; it would be a saving of $3,600 if you’re in the 24% bracket, he says.

Other deductions
Another benefit for owners renting out their homes is that the new law makes it easier than ever to deduct in a single year the cost of personal property like furniture or appliances used by renters, Mr. Fishman says.

Say you buy furniture or appliances for your home rental property. You can now deduct 100% of your tax basis (the cost times the percentage of the year the property is rented) in one year for purchases made during 2018 through 2022. In the past, you had to deduct the cost of the property over five or seven years, depending on the item—and all the items had to be new. Now they can be used as well, Mr. Fishman says.

Position Realty
Office: 480-213-5251

Source: Wall Street Journal

Disclaimer: Position Realty is not a tax accounting firm. Before implementing any ideas in this article you need to speak with your tax professional.

Selling An Investment Property? Read This First!

Recently, a family of my acquaintance were selling a condo that had been an investment property. They had owned it for five years, and it fetched a rent a third higher than the mortgage; however, it was in an old building that had had several expensive assessments, so the condo had not been cash-flow positive during that time. Plus, the property had nearly doubled in value, and the couple thought it was prudent to cash out, since prices in the area seemed to be softening. They started researching their options.

There are three reasons people like investing in real estate. First, it’s a great way to diversify a portfolio and build wealth. Second, average citizens can take out a mortgage to leverage their investment; this is a more exotic, less advisable option when it comes to securities. Finally, a piece of real estate can pay off in two ways: by appreciating in price and by bringing in rental income.

When spouses filing jointly sell their primary residence, $500,000 in gains is shielded from tax. But when you sell an investment property, as my friends were doing, you owe capital gains tax on the proceeds. This can take a big bite — the federal top rate is 20 percent.

However, there is a way to defer paying that tax. It’s called a 1031 exchange. It allows you to put off capital gains tax if you use the proceeds of the sale to buy other rental real estate.

Here’s what my friends found out:

In order to complete a 1031 exchange, you must engage the services of a firm that specializes in such exchanges before you close on the sale of your investment property. They will charge a fee to hold onto the money from the sale until you are ready to spend it.

After closing, you have 45 days to identify up to three “like kind” properties for the exchange. Like kind simply means real estate; in practice it can be anything from empty land to an apartment or a freestanding house. But it must be an investment property, not a timeshare, shares in a REIT, or a second home, and not renovations or improvements, either.

And, you have 180 days in total — or until tax day (with extensions) for the year your property was sold, whichever comes sooner — to close on the sale of one of those three properties. For example, if you closed January 1, 2018, the new property must be purchased by July 1. But if you closed in December 2017, you only have until April 15 of 2018, unless you get an extension on your taxes.

Now let’s do some math.

In order to get the full tax deferral, the value of the new property should be equal to or greater than the sale price of the old property. Keep in mind that you owe capital gains on the mortgage payoff, as well as the cash that comes from the sale of your original property. You can, of course, put some cash into a new property and keep the rest, known as “boot.” But in practice, if you go much below the sale price the tax advantage can be quickly eaten up by closing costs and fees. As a rule of thumb, if the boot, the amount you take home, is greater than the total capital gains, it’s not recommended to do an exchange.

The main issue that wards people off of 1031 exchanges is the time crunch on finding a suitable new property. It can be daunting if real estate is not your primary occupation. It would be best to research your options before putting your existing property on the market. In fact, you can do a “reverse exchange” by buying the new property before selling the old property — provided you are confident of selling it in time.

Position Realty
Office: 480-213-5251

Why Not Sticking to Your Late Fees is Hurting Your Landlording Business

A grace period is additional time given to the tenant to pay their rent before they will be charged a late fee or given eviction notice. For example, rent may be due on the 1st of every month, but the tenant has until, say, the 5th to make their payment. Grace periods can be anywhere between 2–“X” number of days.

Giving a tenant a grace period allows the tenant to spend more of their money instead of budgeting their money to pay the lease payment on time. With a grace period you will not be able to serve the tenant with an eviction notice until 5 days after the grace period. Most landlords have a mortgage on their properties so the longer it takes to evict a tenant is lost money paid to your mortgage company.

If rent has not been paid by the 1st, tenants will get a late fee, currently 10% of the lease amount. Additionally, we charge them an extra $10 per day after that until they have paid their rent in full. For example, on the 1st they receive a one-time 10% late fee after 5 PM, on the 2nd an additional $10 is added to the 10%, on the 3rd an additional $10 is added to the total, and so forth. Every day gets a little more expensive.

Stick to Your Late Fees—No Matter What

When your tenant pays late, it is vital that you follow through with the late fees. This bears repeating: It is vital that you follow through with the late fees. Don’t waiver, as the late fee’s sole purpose is to motivate your tenant to pay as quickly as possible. Take away that motivation, and good luck getting your rent—that is, until the tenant gets around to paying it. If there is one simple piece of advice in this entire book that you should listen to it is this: always follow through with late fees.

Let’s be real: The number one reason most tenants are late on their rent is not because of an emergency or some unforeseen necessary expense, but because of priorities. They are late because paying rent on time has not been made a priority. The best way to make timely payments a priority is by following through on the late fees. Tenants, and America in general, usually live above their means. In other words, there’s always more month than money. Therefore, every month requires sacrifice and prioritization of bills: food, clothing, rent, cable, a new TV, a game console, tattoos, medical bills, Starbucks—these are all expenses your tenant is internally trying to prioritize.

Naturally, the bills with the highest penalty for negligence are usually prioritized the highest. Those will be the bills that get paid first. So the question is, is the consequence for paying rent late greater than or less than the consequence of having the cable turned off or having to go without their daily coffee or smoke fix? Despite what tenants think, late fees are not about lining the landlord’s pockets. Late fees are designed to give rent a place of high priority because of the consequence. You may feel bad or think you’re being cruel by charging a late fee, but by following through, you are helping your tenant prioritize the most important bill they have: their housing.

This last month we had a tenant call us a couple days before her grace period was up to let us know that she had some unexpected expenses come up, wouldn’t have the full rent in time, and wanted to know if she could pay the rest at the end of the month. We told her we needed to follow her lease, and the lease says her full rent payment is due the 1st and late after the 5th.

Any rent not paid would trigger both late fees and eviction notice. Guess what? On the 5th her priorities suddenly changed, and she paid her entire rent payment. From past experience, this particular tenant knew that we take non-timely rent payments seriously.

The One Alternative

We do offer our tenants one alternative to the late fee penalty, but it requires their planning ahead and communication. We call it the rent extension, and it is not something we advertise to our tenants. However, if a tenant calls us before the 1st to let us know they will be late on their rent, we will offer them a rent extension up to the 10th for a $20 penalty. If they don’t follow through on the 10th, they are hit with the full late fees and eviction notice. The reason for the rent extension is to reward responsible behavior:

1) They planned ahead to deal with the problem,
2) They communicated, and
3) They initiated the communication, rather than waiting for us to call them once the rent was already late.

Position Realty
Office: 480-213-5251

Seven Secrets To Successful Single-Family Rental Real Estate Investing

Real estate investing in general, and single-family real estate investing in particular, is very different from buying stocks, commodities or most other investments. Real estate is a leveraged investment that has the potential for delivering excellent returns because the cash down payment is a fraction of the retail value, yet it is also a hands-on venture where you make more decisions that affect your returns.

On the other hand, stocks and other investments increase or decrease in value solely based on market conditions, and the only decision you make that affects your returns is when to buy or sell. While tax law treats real estate as a passive investment, it is really more of a business venture. Both short and long-term returns on your real estate assets are directly affected by your knowledge and the choices you make.

Consequently, it is critical that you approach single-family real estate investments with a clear understanding of what it takes to be successful. You must evaluate your purchase options and make a selection based on criteria that have proven through the years to increase the odds of success.

Key Considerations As You Plan Your Purchase

When considering your first (or next) single-family real estate investment, keep these seven pointers in mind:

1. Don’t let emotion cloud your decision making.

If most or all of your real estate experience to date has been buying and selling your personal residences, keep in mind that you were purchasing for a different purpose with a different set of criteria in those instances. Buying a home for yourself and your family is an inherently emotional endeavor. You “love” the large kitchen, your spouse is “wild about” the main floor master bedroom, the kids are “so excited” about the pool.

With investment real estate, it’s all about the numbers. If the combination of the purchase price, estimated renovation costs, expected rental income and market conditions support a purchase decision, you can feel comfortable moving forward.

2. Buy based on current returns, not future appreciation.

Will the property have a positive cash flow the day the renters move in? That’s the evaluation criteria you must use. Trusting that area rents and home values will increase over time and that that is where you’ll get your return is a recipe for disappointment, if not disaster. Optimism is an excellent personality trait, but in single-family real estate investment, it can lead to big losses. The best deals make money from day one, and long-term appreciation is a bonus.

3. Budget realistically.

As a property owner and landlord, there are expenses you will incur in order to maintain the value of your asset, so you must plan accordingly. The most obvious of these expenses is the upkeep on the property. However, there are other costs you should budget for. One that is often overlooked is vacancy expense.

In a perfect world, your property would be rented continuously with no gaps. However, the reality is that you may lose a tenant on short notice and have to pay the mortgage for a month or two before a new tenant has moved in. If you have not budgeted for vacancy expense, this interruption in your cash flow can come as an unwelcome surprise and a hit to your financial planning.

4. Know your sub-markets/neighborhoods.

Choosing to make a single-family rental investment in a particular metropolitan area simply because a national article states the market, in general, is positive can backfire if you don’t get the details on the specific sub-market or neighborhood where you intend to buy. While the key financial indicators for a city such as job growth, population growth and others may be on the rise overall, that doesn’t guarantee that the specific community you are interested in is enjoying the same kind of upswing. In fact, one sub-market may be growing because businesses are moving there from the area you have in mind. Be sure you have an in-depth understanding of all the forces at work. The key to success in real estate has always been location, location, location.

5. Learn about local regulations and federal laws.

All forms of investing are governed by regulations. However, with stocks and commodities, understanding those regulations is your broker’s job. In real estate investing, the responsibility for understanding everything from local annual registration and inspection requirements to federal fair housing laws falls to you. The time to learn about these legal issues is before you make your purchase. Failing to understand your obligations until after you’ve missed a deadline or violated an ordinance can be very costly.

6. Build a relationship with a local handyman or contractor.

Every rental property will need repairs and maintenance — if not immediately, then certainly over time. Before you complete your purchase, you should invest some effort in researching and connecting with experts in the area that you can call on as needed. Waiting until a pipe bursts to find a plumber can increase both your stress level and your repair costs.

7. Set aside funds for capital expenses.

As a property owner, you will have a variety of smaller, ongoing operating expenses, everything from fixing dripping faucets to making minor repairs. But items such as rooves, HVAC units and driveways eventually wear out. These things have longer lives and higher price tags and are known as capital expenditures or “capex.” These kinds of expenses can run from thousands to tens of thousands of dollars, so it is important to budget and set money aside on a regular basis to cover them.

Preparation: The Key To Investing With Confidence

Investing in single-family rental properties can be intimidating, especially if you are new to the process. The key to forging ahead confidently as you identify, vet, purchase, update and operate a rental is having done all your homework in advance. The considerations above are a great start.

Source: forbes.com

Position Realty
Office: 480-213-5251

US Housing Flipper Make 50% Gross Returns

Property investors were bullish on the U.S. housing market in 2017, flipping more homes than in any year since 2006, when the real estate bubble that helped upend the global economy was still inflating.

Investors flipped more than 207,000 single-family houses and condos in the U.S. last year, Attom Data Solutions said in a report, which defines flips as sales that occur within 12 months of the last time the property changed hands. More than 138,000 investors flipped a home last year, the most since 2007.

“The long up-cycle that we’re in is giving more and more people confidence to try their hand at home-flipping,” said Daren Blomquist, senior vice president at Attom. Rising home prices are “pulling more people onto the bandwagon.”

Buy, Sell
Investors flipped more than 207,000 homes in the U.S. last year, the most since 2006.


Source: Attom Data Solutions

Today’s home flippers appear to be more conservative than bubble-era investors. The average flip generated gross returns of 50 percent in 2017, compared to 28 percent in 2006. Thirty-five percent of flippers financed their acquisitions last year, the highest share since 2008 but far lower than the 63 percent who used loans in 2006.

Still, red flags show up in local markets. Flippers in Austin, Texas; Santa Barbara, California; and Boulder, Colorado, earned gross returns of less than 25 percent (which don’t include the cost of renovating the homes), suggesting that investors in some markets are depending on slim margins. Flips represented almost 13 percent of home sales in Memphis, Tennessee, in 2017, more than twice the national average, a sign that some flippers are becoming overconfident, Blomquist said.

Source: bloomberg.com

Position Realty
Office: 480-213-5251

Should You Buy A Home For Your College Kid?

If you’re about to send your child to college, you’re undoubtedly suffering from sticker shock. And it’s not just from the cost of tuition and mandatory fees and books and a meal plan and parking, but also from housing. Maybe, especially, from housing. The mouse – hole your dorm – bound child will live in for at least the next year come August or so might as well be the Taj Mahal for what it costs to shelter them in much less extravagant environs.

The high cost of student housing – not just in the first year when they are typically living in on – campus housing – is just one of the reasons people are increasingly looking to purchase property for their college kids to live in. Is this a consideration for your family? We’re breaking down the particulars.

Financial savings

Yes, it may be that buying a property for your college kid to live in is a smart financial decision. “Average prices per year for housing are more than $9,000 in college towns,” said U.S. News & World Report. “In highly desirable college towns outside major cities, housing costs can be much higher. Monthly housing prices in Berkeley, California, home of the flagship of the University of California system, can reach more than $3,000, making the price tag for the academic year more than $27,000. In Cambridge, Massachusetts, outside of university – rich Boston, the four – year price for housing can exceed $100,000 as well.”

If that has you getting ready to search for homes for sale RIGHT THIS SECOND, “Don’t forget to factor in the additional costs of homeownership besides the mortgage, like maintenance expenses, homeowners’ association fees, insurance and taxes,” they said. You may find that buying a home doesn’t make as much financial sense as you think.”

Tax savings

You can enjoy a tax write – off on a second home, which could make a college town purchase much more affordable in the long run, but you have to be careful about how the property is used and the way it is reported on your taxes. “Many homeowners look forward to purchasing a second home that can be used for vacations, rental income, investment purposes or as a primary residence during retirement. Current tax laws offer several tax breaks that can help make second – home ownership more affordable,” said Investopedia. “If you already own, or are thinking about purchasing a second home, it will be in your best interest to understand the tax breaks and how they work. Different tax rules apply depending on how you use the property, for either personal or rental use, or a combination of the two.

As long as you use the property as a second home – and not as a rental – you can deduct mortgage interest the same way you would for your primary home. You can deduct up to 100% of the interest you pay on up to $1.1 million of debt that is secured by your first and second homes (that’s the total amount – – it’s not $1.1 million for each home).”

That would mean adding rent – paying tenants/roommates to the mix would be off the table. Keep in mind also that you can deduct property taxes on a second home. You will want to talk to your tax advisor about the tax situation in the state in which you are considering making a purchase.

Appreciation

Is your child attending college in an area that is appreciating nicely? It might be a good investment to purchase a property that you can sell after graduation for a nice profit, or hold onto for passive income by turning it into a rental for future college students.

Depreciation

Then again, there is the chance that entrusting your child, and your child’s future roommates and friends, with a property you own could spell financial disaster if the home is not maintained. Worried about college parties that trash the place and/or illegal activities like drug – taking in the home, which could endanger your child’s future? If you’re thinking about buying a property for your child (and possibly other people’s children as well) to live in, you need to have an honest conversation with him or her, and with yourself, about the responsibilities involved. Is your offspring responsible enough to make smart decisions and properly care for a home?

To roommate or not to roommate

There are additional questions and potential concerns around the roommate issue. Yes, allowing your child to live with friends will provide companionship that is important for college students and will cut down on your monthly costs – and perhaps even provide some monthly income. But consider these questions from Bader Martin:

“If your child will have roommates, how much do you plan to charge them and can they be depended upon to pay their share of the rent on time each month? What will you do if a roommate – renter moves out and how long are you willing to carry the mortgage without replacing the roommate? And will your child and roommates occupy the property all twelve months of the year or only during the school year? What are your potential liabilities if a roommate is hurt on the property or loses personal possessions in a robbery or fire? Are you adequately insured?”

Retirement strategies

Individual real estate markets differ widely, and what seems like a good investment in one city may be totally undoable in another. Having an alternate or future use for the property in question can tip the scales. In some cases, parents purchase a condo or townhome in the city for their college student child to live in, with the intention of keeping it in the family for the child post – graduation, for another child intending to attend the same college, or even as a place for themselves. Another growing real estate trend has parents following their child to the city in question as part of their retirement plan.

“Increasingly, parents are also considering the move as part of a long – term plan in which they also participate,” said U.S. News & World Report. “If your child goes to school in a city whose lifestyle and cultural offerings are pleasant to you as well, why not retire there? Schools from Berkeley and Cambridge to Chapel Hill, North Carolina, and Bellingham, Washington, can be pleasant places to retire. The property you purchase could thus be part of your long – term retirement strategy.”

Stability

Having to find a new place and move every year, find storage, and put down new deposits is a drag for anyone. Buying a home that your child can live in for his or her entire college experience provides stability as well as a fixed expense they (and you!) can count on.

In – state tuition

If your child is attending college out of state, you’re being hit with even higher expenses. “About 17 percent of students attend college out – of – state, and they pay dearly for it,” said Parenting. “The typical out – of – state tuition rate at a four – year public university is three to four times more than the in – state rate.”

For this reason, parents often explore options for in – state tuition, like purchasing a property – but with varying success. “Most states have established residency requirements designed to prevent out – of – state students who become residents incidental to their education from qualifying,” said FinAid. Buying a home in the state is a good start, but likely won’t be the only commitment that needs to be made in order to get that elusive in – state tuition. It’s a good idea to learn all you can about the requirements for the school and state in question before making a purchase for this sole reason.

Position Realty
Office: 480-213-5251

What You Should Know About Home Inspections

For many first-time buyers, buying a home can be a scary experience. They know they’ll be maintaining or improving a home with little to no maintenance experience, so the solution is to buy a home in perfect condition. So they hire a home inspector to point out all the flaws.

The problem is — no perfect home exists. Air conditioners break, plumbing pipes leak, and roof tiles blow off in the wind.

If you’re buying a home, start with a reasonable expectation of what home inspectors can do. Their job is to inform you about the integrity and condition of what you’re buying, good and bad.

A home inspection should take several hours, long enough to cover all built-in appliances, all mechanical, electrical, gas and plumbing systems, the roof, foundation, gutters, exterior skins, windows and doors.

An inspector doesn’t test for pests or sample the septic tank. For those, you need industry-specific inspectors.

Here’s what else you need to do.

1. Make sure the inspector you hire is licensed. The responsibilities of home inspectors vary according to state law and their areas of expertise.

2. Ask what the inspection covers. Some inspection companies have extensive divisions that can provide environmental for radon and lead paint. Be prepared to hire and schedule several inspectors according to your lender’s requirements and to pay several hundred dollars for each type of inspection.

3. Some inspection reports only cover the main house, not other buildings on the property. For specialty inspections such as termites, make sure the inspection covers all buildings on the property including guest houses, detached garages, storage buildings, etc.

4. Attend the inspection and follow along with the inspectors. Seeing problems for yourself will help you understand what’s serious, what needs replacement now or later, and what’s not important.

5. Don’t expect the seller to repair or replace every negative found on the report. If you’re getting a VA or FHA-guaranteed loan, some items aren’t negotiable. The seller must address them, but otherwise, pick your battles with the seller carefully.

A home inspection points out problems, they also point out what’s working well. It can help you make your final decision about the home – to ask the seller to make repairs or to offer a little less, to buy as is or not to buy at all.

Position Realty
Office: 480-213-5251

Phoenix Real Estate Market Report ~ February 2018

Back in February 2017 (same time last year), the number of new listings on the market was 10,016 listing as compared to 9,940 listing in February 2018 which is a decrease of only 76 listings or -0.8%. More concerning is the number of active listings was 22,307 listing in February 2017 as compared to 19,278 listings in February 2018 which is a decrease of 3,029 listings or -13.6%. In February 2016 there were 24,916 listing, in February 2015 there were 26,174 listings and in February 2014 there were 28,778 listing. Every year since February 2014 the number of active listings has decreased approximately 2,500 listings. As for the number of sold transactions, we had a record high of 7,073 sold transactions in February 2018 as compared to 5,519 transactions in February 2014. As more new listing come on the market the number of sold transactions also increases but if the number of new listings decreases in 2018 there will be fewer transactions which will increase the appreciation rate for the Phoenix market.

The Phoenix Housing Market ended 2017 with an overall annual appreciation rate of approximately +9.0%. If inventory remain low throughout 2018 and a strong demand for housing continues we can expect the market to continue to appreciation above the national average. From December 2017 to January 2018, the average sold price increased from $309,327 to $315,070 but we saw a decrease from January 2018 to February 2018 to $308,715 which is a -2.0% decrease. Historically, the real estate prices don’t start to increase until February or March as the buying season begins and with the low inventory of homes we can expect to continue to see the market appreciate. Another sign we are in a healthy market is the current percentage of foreclosures and short sales sold remains at only 1% of the total market. Since March 2017 (12 months ago), the average days on market has decreased approximately -2.6% (down from last month) and the number of sold transaction has decreased approximately -24.5% (up from last month).

Since March 2017 (12 months ago), the number of homes for sale on the market have decrease approximately -13.3% or 22,246 homes for sale on the market to a gradual decrease of 19,278 homes (Down 2,968 homes). Historically, 19,278 homes for sale represent the lowest number of homes this market has seen for over a decade. Property owners are not putting their homes on the market because the overall macro economy remains strong and they are holding off to accumulate additional appreciation from the market. This low number of homes for sale indicates we are in a seller’s market (low supply and increased demand).

Real estate prices will continue to increase and interest rates are planned to increase in 2018 so if you are thinking about buyer a home this year will be the time to buy before you get priced out of the market. Give us a call to discuss your best buying or selling strategy, TODAY!!

Position Realty
Office: 480-213-5251

Info