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Ask Our Broker The Landlord Lure: Are You Cut Out to Be a Landlord?
Trademark Properties
wants to raise the rent. Can the
landlord accept a deposit that’s less
than the new monthly rental?
M
What happens nationally or in a metro area five hours any factors go into giving a house that preparation, preparation” should be a seller’s to mimic, says Slaughter.
from your home could be very different from the all-important selling feature known as mantra, says Holly Slaughter, brand manager Apart from the colors that may be most
curb appeal.A clean walkway, healthy with Realestate.com in Charlotte, N.C., and a popular in your neighborhood, shades of
results you see locally. grass and flowers, trimmed shrubs and a freshly former interior designer. cream and ecru are universally preferred col-
sealed driveway can make your residence more What exactly does a seller need to do? ors for a wood or vinyl facades, Slaughter
Q: If the previous owners of a foreclosure sign appealing to a potential buyer than a compara- Evaluate each element of your home’s exteri- says. Lighter colors also tend to make a house
a quitclaim deed, does that waive the redemption ble listing. or for needed repairs and possible repaint- look larger than darker colors, she says.
period during which they might be able to get It’s a mistake, though, to focus on the lawn ing.And choose a color palette – not accord- Richard C. Davis, owner of Trademark
back the house? This question comes from a state and landscape more than the exterior of the ing to your personal preference but with an Properties, a real estate company in
house itself.The condition of the brick or sid- eye toward grabbing the attention and inter- Charleston, S.C., featured in the new A&E
where the redemption period is 12 months. ing, shutters and front door all speak loudly est of potential buyers.The goal is to lure cable TV show “Flip This House,” has bought
about how well the current owners maintain them out of their cars and inside your home and sold many homes. He believes that home-
A: You have conditionally acquired a home through the rest of the home. Many potential buyers for a viewing. owners can be a bit hipper and opt for popu-
See ASK OUR BROKER, Page 2 will judge your house by its facade. Smart Certain color combinations are simply
See COLORS Page 2
sellers will take the time and spend money to more popular, even though some homeown-
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LANDLORD to finance your loan, work on
improving your credit rating. Be
for ResortQuest, a vacation prop-
erty management company in
Ask Our Broker
CONTINUED FROM PAGE 1 aware that lenders typically Nashville,Tenn. CONTINUED FROM PAGE 1
require larger down payments, Whatever type of real estate
fast.Will that continue? Who higher interest rates and stronger you’re looking to acquire, it’s
a foreclosure, but in your state the former owners can
knows? Over time, however, if finances when you’re purchasing best to work with a reputable
you invest in good properties, rental property.Visit several dif- real estate agent, search in areas get the property back if they meet certain require-
you should make money.” ferent lenders and compare the you find desirable and closely ments within a year. It may be that even if they sign a
In recent years, the decline in total costs of the loan carefully. examine properties in your price quitclaim deed, the owners will still have a right of
interest rates has significantly When it’s time to make an range. equity redemption under state rules. In other words,
lowered landlords’ largest cost – offer, base your bid on prices for “Find a real estate agent they may not be able to waive the redemption period,
the cost of capital – and capital- similar rental units/buildings in whose background is consistent
which is effectively what would happen with a quit-
ization rates that buyers and the area, which can be obtained with your objectives and who is
lenders use to value properties, from a local real estate agent. recommended by a friend or claim deed.
resulting in an increase in values, Remember that if you overpay within the local area,” says Eaton. It’s very much in your interest to have a clean title.
says Blumenfeld. for a rental property, it’s Additionally, try scouring the For this reason you should pay whatever it costs. Sit
“Real estate is a terrific busi- extremely difficult to recoup the area for foreclosures, running a down with a local real estate attorney and see if the
ness in that there are many money you could have saved had newspaper classified ad, and net- past owners can give up their redemption rights. Be
lenders who will lend 80 per- you pushed for a better bargain. working with local officials, bank
sure to ask if a payment from you to the former owners
cent or more of your price, so Choosing the ideal rental personnel or even other land-
you can control a property with property will depend on your lords who may have an inside is required to have a valid quitclaim deed.
20 percent or less of its value,” location, how much money you scoop on bargains in the area.
Blumenfeld says.“If that property can borrow, your ability to man- Once you’ve acquired a prop- Q: My spouse and I make about $85,000 annu-
increases in value by 25 percent, age the property and more than erty, you’ll need to develop a ally and have almost no debt. We live in an
you will more than double your a little bit of luck and proper management plan or hire a man- expensive California area and spend $1,500 a
money. But if it decreases by 25 timing. agement company to ensure that
month for rent. One of us wants to buy a house
percent and you have to sell, you “If an owner is looking to sell the property is maintained
will lose all your money and may or refinance a property, then according to the lease with the now, the other wants to wait until market drops.
have liability to the lender if you those areas where values have tenant, says Persley. Should we buy or wait?
had to guarantee the loan.” increased most dramatically are Persley says it’s also important
The moral of the story? The the best,” says Blumenfeld, who to take stock of your tenants. A: In your situation there are two issues. First, no one
rewards are great, but so are the added that the residential rental Realize that “a good tenant is knows what will happen to property values. Second,
risks.“If you want to be success- market in Florida and on the worth his weight in gold, but a
your income, while solid by most standards, is likely to
ful, you have to make a real com- West Coast has been impressive- bad tenant could cost you their
mitment,” says Blumenfeld.“The ly strong lately.“If an owner is weight in gold.” be insufficient to buy a typical home in your state.
more time you spend, the more looking to buy more properties, To guard against the bad The Office of Federal Housing Enterprise Oversight
information you will have and then areas where values haven’t apples, Persley recommends has just reported that California home prices increased
you should be able to acquire moved up as much are better. If requiring a deposit that includes an average of 25 percent in the past year.The California
properties more efficiently and an owner is looking to hold his first month’s rent, last month’s Association of Realtors (CAR) says a typical home in
get better terms from lenders.” properties, keep them managed, rent, an amount to cover possi-
that state sold for $540,900 in July.
Before you take the rental rented and maintained, then sta- ble damage “plus a little extra to
property plunge, it’s essential to bility is probably the best envi- cover an eviction and other legal According to CAR, the minimum household income
crunch the numbers and deter- ronment.” expenses.” She also suggests put- needed to purchase a median-priced home at $540,900
mine possible cash flow or loss. Nicole Persley, a real estate ting each property you own in a in California in July was $125,670, based on an average
First, estimate your expected agent with Real Estate of Florida, Limited Liability Corporation effective mortgage interest rate of 5.73 percent and
rental income, calculated by Boca Raton, says low-income (LLC) to protect your personal assuming a 20 percent down payment.
researching local newspaper rental property in areas where assets in the event of a lawsuit.
In contrast, says CAR, the minimum household
classified sections and determin- the community is more geared Lastly, realize that your per-
ing current rental prices for to renting than purchasing is a sonality will greatly affect your income needed to purchase a median-priced home at
comparable properties.Then, good bet. success. $218,000 in the U.S. in July 2005 was $50,650.
subtract taxes, mortgage pay- “If the property is up to code “Having a great deal of Imagine that you bought that California typical home,
ments, insurance, management and in excellent condition, you patience and good intuition are put down 20 percent ($108,180) and then had a
fees, maintenance, repairs and can get tenants who are eligible very important personality traits $432,720 mortgage.At 5.73 percent interest the month-
other expenses.Your goal is to at for Section 8 government assis- for a landlord,” Persley says.“The
ly payment for principal and interest over 30 years
least break even, which will still tance [funded by the U.S. experience needed is more com-
allow you to profit from any tax Department of Housing and mon sense than formal educa- would be $2,520. Closing costs, property taxes, insur-
deductions available to rental Urban Development], which is tion training. But a strong per- ance and utilities would be extra. Please speak with
property owners. Over time, basically a guaranteed rent check sonality is essential, so tenants local brokers for details.
your property may appreciate in each month,” she says. do not feel they can take advan- © Content That Works
value. Vacation homes are another tage of you.”
Next, talk to a tax advisor popular option for first-time © Content That Works Do you have a question or a quandary about buying, sell-
about the tax ramifications of rental property owners. In the ing or renting? Peter G. Miller, author of The Common-Sense
your investment. Get an attorney last 12 months, resort-area prop- Mortgage, specializes in providing real solutions to real estate
to review all contracts and agree- erties, for example, have appreci- dilemmas. E-mail your questions to
ments prior to submitting an ated at more than twice the peter@contentthatworks.com.
offer for a property. national rate, says Dave Eaton,
Before shopping for lenders director of real estate operations