Curbed SF – Dog sitter in San Francisco [Photo: nicolò] And you thought training them not to pee in the house would be the hardest part of pet ownership. Despite being one of the most pet-friendly cities in the country, finding a pet-friendly rental apartment can feel like searching for the Holy Grail. You love your pet, but finding an apartment that loves them back will take a lot of searching (and probably… read more…
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C.A.R. recently announced a new partnership with Aon, and introduced a new insurance plan that protects residential landlords’ monthly rental income from tenant non-payment, abandonment, eviction, death, and military leave.
Aon Rent Protect provides rent recovery for up to six months and reimburses landlords for up to $1,000 in legal expenses to help with the eviction process. Tenant rent default is difficult to predict in today’s economy, learn more about coverage details and landlord eligibility at www.aonrentprotect.com/ca.
A new TransUnion survey found that both large and small property managers are faring better than they did one year ago and are more easily attracting residents while increasing rental prices.
Nearly half of respondents (48 percent) said rental prices on the majority of their units had increased since this same time last year. Approximately 44 percent said rental prices remained the same. Comparatively, in the 2011 TransUnion rental survey, only 39 percent of respondents stated that such an increase occurred, with 48 percent saying prices remained the same.
Despite increasing rental prices, more property managers are finding it easier to locate prospective residents. Nearly 73 percent of respondents said it is not difficult to find residents. In the same 2011 survey, only 67 percent of property managers answered this way.
The percent of respondents stating vacancy rates for their properties are between 0 percent and 5 percent increased from 81 percent in 2011 to 83 percent in 2012. Large property managers saw this number increase from 60 percent in 2011 to 64 percent in 2012. More than 70 percent of small property managers said they have zero vacancy, up from 66 percent in 2011.
USA Today – The foreclosure crisis will drive 3 million former homeowners to rent single-family homes between 2010 and 2015, according to estimates by John Burns, CEO of John Burns Real Estate Consulting.
CNN Money – To help struggling homeowners, Bank of America recently launched a test initiative that will give some a chance to rent the very homes they risk losing.
The Apartment Owners Association is warning of a company called Successful Rent run by a lady named Sunny who is scamming rental property owners.
Sunny calls owners who have vacancies and claims she has prospective tenants from out of the country looking for homes. She then sends someone over who fills out the rental application and gives the owner or manager a fake cashier’s check to hold the apartment. She also says that she will run the credit report for the owner for free.
On the day of move-in, she calls the owner and says the tenant found another place and they would like their money back. The owner then writes a check for the deposit amount and a week or two later, gets a letter from their bank saying the original cashier’s check was fraudulent.
Median rents rose 3 percent from January 2011 to January 2012, but home values continued to fall, declining 4.6 percent during that period, according to the January Zillow® Real Estate Market Reports.
The Zillow Rent Index (ZRI) showed year-over-year gains for 69.2 percent of metropolitan areas covered by the ZRI. By contrast, only 7.3 percent of metro areas covered by the Zillow Home Value Index (ZHVI) saw home values rise.
In the short term, national monthly rents declined slightly from December 2011 to January 2012, falling 0.3 percent to $1,218. Home values fell 0.5 percent during the same period to $146,200.
Additionally, foreclosures ticked up slightly in January, when lenders foreclosed 8.4 out of every 10,000 homes. That was up from December, when 8.1 out of every 10,000 homes were foreclosed. Foreclosure re-sales also rose on both a month-over-month and year-over-year basis. Nearly one-in-five (19.5 percent) of homes sold in January were foreclosure resales.
Good news for new home and condo owners!
Earlier this week, the California State Senate killed SB 184 (Leno), a bill that would have, if passed:
The San Francisco Association of REALTORS® aggressively opposed the bill and, before it was considered, lobbied every moderate Democrat and Republican in the Senate.
SB 184 would have made serious inroads for rent control statewide by allowing local governments to ensure that a percentage of all new developments include homes permanently affordable to low-income households. The bill would have “clarified” the Costa-Hawkins Act by establishing by legislative edict that it does not apply to locally-enacted inclusionary zoning programs.
Over the past 30 years, local governments have exempted newly constructed rental housing from rent control laws; yet, many of those same governments adopted and enforced conflicting inclusionary housing laws (laws that impose rent control on 10 to 30 percent of the newly constructed rental housing).
The California legislature assured that new rental housing would not be subject to rent control in 1995 through the Costa Hawkins Act.
The reasons the San Francisco Association of REALTORS® opposed the bill:
Effective March 1, 2012 through February 28, 2013, the allowable annual increase amount is 1.9 percent. In accordance with Rules and Regulations Section 1.12, this amount is based on 60 percent of the percentage increase in the Consumer Price Index (CPI) for All Urban Consumers in the San Francisco-Oakland-San Jose region for the 12-month period ending October 31, which was 3.2% as posted in November 2011 by the Bureau of Labor Statistics.
To calculate the dollar amount of the 1.9 percent annual rent increase, multiply the tenant’s base rent by .019. For example, if the tenant’s base rent is $1,250.00, the annual increase would be calculated as follows: $1,250.00 x .019 = $23.75. The tenant’s new base rent would be $1,273.75 ($1,250.00 + $23.75 = $1,273.75).
The Rent Board has yet to announce the interest rate payable on security deposits for the 3/1/12 – 2/28/13 period.
Another way to produce residual income through real estate is as an investment property. The two biggest values of
To use this method, you buy a property with income. By income, I mean a POSITIVE cash flow. I am sure you realize that asking the owner of the property whether it has a positive cash flow may not yield the whole truth, particularly if the answer is no! So, how do you find out the truth?
You ask them to show you the bank records for the past 5 years and the expenses for the past 5 years. If they don’t have them or won’t show them to you, simply walk away from the deal. If they do show you the records, you simply add up the income per year to get net income and add up the expenses per year to get the net expenses. Subtract the net operating expenses from the net income to give you the net operating income. Now subtract the debt service fees and that gives you the cash flow.
Just as in foreclosures, you need to be known as “the buyer”. Get known by the CPA’s, attorneys, real estate brokers, mortgage companies, refinance companies, and anyone else that may be “in the know” about rental properties before these deals get out to the general public. Essentially, you need to have these “plump” deals referred to you.
Let’s take a look at a real life example. I have a friend who found out about a Co-op in the same neighborhood with the United Nations. The Co-op was 300 sq ft and going for $100,000. That is not a misprint! Trust me, this is prime real estate! She financed $79,200 and since she had at least 20% down, she didn’t have to have personal mortgage insurance (PMI).
The debt service costs her $6403 per year. During her first year, she made $1107 or 4.5% return. During her second year, however, she didn’t incur any closing costs, so she had $5683 or 22.9% return. As the years went along, the rental prices increased somewhat and she went from a 25.3% return in year three to a 30.6% return in year 5. Her five-year pretax average return was 22.2%!! If you had one of these deals each year for the next ten years, you would make