This is the fourth blog I have been a part of, and by far the most successful. On Sunday, while watching all my favorite teams lose in the last 2 minutes — why, Green Bay, why??? — I put pen to paper about why most blogs lose it in the 4th quarter. Sure, they start out strong, full of enthusiasm and self-congratulation, but more often than not they’re gone within 6 months.
Just got back from this year's Greenbuild conference, an absolutely HUGE annual builder's conference, this year in Boston, MA. There were probably 1,000 vendors selling everything from flooring, to rain barrels, to reusable shingles, concrete, desks, automated homes…you name it.
For a bunch of stuff, my wife turned to me and said, "Is that really eco-friendly?" Probably not.
Which boils down to one thing: call something "Eco" or "Green" and it sells.
So this year, I'm becoming the first "Green, Eco-friendly Landlord". Just ask me what I've done to go green and I'll get into the weeds about the flyash content of my cinder blocks. I'll talk about the eco-friendly asbestos and plaster I use. Will you buy it?
Apparently most people would.
I like reading a wide spectrum of news sources, some of which are heavily slanted in their coverage. I like to think that it's good. Helps keep the mind open to new ideas and different perspectives.
In this month's issue of The American, a right-leaning publication that covers politics, ethics, and the economy, they ran an interesting poll…What are the most prestigious occupations?
We're in the middle of some tough times. I got a call last night from another good friend who's just been laid off. That makes a total of about 30% of my graduating class at Babson College MBAs who are still looking for a job or who've been laid off. That's not encouraging.
Check out this report from last week, courtesy of Urban Land Institute's brain trust. If everyone's scrambling because of dropping home prices, it's probably time to buy.
I've also been reading more lately, comments from "experts" who say the market is going to drop again next year by 20%-30%. My problem with that is this: Those are the same experts who predicted in 2005 that prices would continue to rise steadily through 2010.
Take a look around you. In some Boston areas, home prices have dropped 40% in the past two years. That's the evidence that property is cheaper now than before. The big question is, do you think prices have dropped back to what you would consider "fair value" based on the economic conditions in your area? Are they at a place where a reasonable family on an average income (for your area) can afford a place to live? Or, have prices dropped below "fair value" in your estimation? These are the questions we should be using to decide whether or not to buy today. The "experts" forecasting…future guessing…crystal ball using…that's what got the country into this mess.
House Resolution H.R. 7126, proposed in September by Congressman Bill Richardson, would put a few new restrictions on landlords buying or selling homes in foreclosure.
Among the provisions are:
What does this mean for you? So far, it looks like Congress is putting reasonable restrictions on landlords who face foreclosure. If you're looking to buy up foreclosures to add to the number of rentals you own, this bill would require that you keep the existing tenants, which may not be such a bad thing.
Most foreclosed homes haven't gotten "tender love and care" in a while and need your cash for improvements. By retaining the old tenants but putting money into improvements, tenants see their homes getting better. This is a good way to retain good tenants. It's also a good justification to bump up the rents to market value if they leave.
So far, the bill is stuck in the House. But I'll keep an eye out.
The best answer is to look at what other rentals that are comparable to yours (comps) are being rented at. If you own a modern two-bedroom two-bath condo near public transportation with assigned parking, find comps in your neighborhood and see what they are renting for. Websites like www.Rentometer.com can provide general guidance, but a better technique would be to visit 2-3 comps in your area and take a look inside. A good rule of thumb is not to be the highest priced rental on the market. It's better to charge a moderate price and have it rent quickly to a high quality tenant than to overprice a unit and have it sit vacant or only get 1-2 tenants to choose from.
Inman News reported recently that 10 million homes are "updside down", meaning that they owe more on their mortgages than those homes are worth.
While that number certainly seems scary, it's helpful to put that number into context. There are about 100 million homes in America. There are 34 million rental units. So, about 1 in 10 homes is "upside down".
What does this mean for landlords? It certainly means there are a lot more "accidental" landlords…people who just can't sell their primary home and end up renting it out. Maybe there's been a job transfer, a divorce, death, or change in lifestyle. Any of these situations can put the typical homeowner into a financial squeeze where they simply cannot sell so they rent their home out instead.
Time will tell how much web-based property management succeeds as an industry. But, we're proud to be here, at this specific point in history. We were designed to help exactly the person who needs us most today…the accidental landlord.
It's great to read inspiring, and very true, commentary on the potential of the market we're in. My basic rule of life has been:
When everyone is running left, run right. When everybody sells, buy. When they panic, stay calm.
I've been blessed many times over and wanted to write a short note to the landlords out there who are struggling to keep their heads above water. Maybe you're wondering if you should hold on to your properties or sell. Is this landlord thing even for you? It's a terrible market if you're a seller. But, it's a great market if:
Basically, the cheap mortgages and real estate hype brought a lot of people into home ownership who should have probably stayed as renters. As a result, there's a shortage of high quality rentals and Congress is currently evaluating several stimulus packages specifically to help encourage the development of a more robust rental market. This could mean accelerated depreciation schedules, tax incentives, and renovation assistance. It's not clear yet, but the trend seems to be moving in our (landlord) direction.
On this cloudy night, there's a lot to look forward to. Hang in there.
"Thank God I've got some of my money in rental property. Otherwise, I'd be in serious financial trouble!"
–Joe T., Somerville, MA at about 9am this morning.
