South Orange County Blog from Bob Phillips

Tips for Finding New Tenants

Posted in Home Leasing, Home Renting, Orange County Real Estate, Real Estate Investing, Real Estate Tips by southorangecounty on November 25, 2014

Tips for Finding New Tenants

Mother and children outside home for rent“Here is the scenario: You have a great opportunity to boost your income by introducing your rental property to the real estate market.  The research is done, the investments are made, and now a vacancy is primed for amazing tenants to make it their new home. The problem you now face is, how do you find these amazing tenants?

Many landlords, property managers and real estate agents find themselves in this situation time and time again where the rental market competition is fierce. Statistics have shown that one-third of the population are renters and the common mindset has been shifting to this living scenario being the more preferable option. Furthermore, these renters are not just the college age demographic with little to no credit. There are nearly as many renters age 30-65 years old as there are renters who are under the age of 30.  This now begs the question, “How can one of these potential applicants become my new, great tenant?”

With such a broad span of ages regarding potential tenants, there should be an equally diverse range of methods to attract them to your vacant property.

Here are some of the most successful methods for filling a vacancy:

Word of Mouth

This is not the old game of telephone you played as a kid, where you give someone information, they pass it along to someone else, and you hope it returns to you the way you intended. Today, leveraging technology can turn anyone’s voice into the most effective megaphone you can imagine. Some of the most trustworthy tenants can come from those you know. Tell everyone you can about your vacancy through every channel at your disposal.

  • Check your phone contacts and text people that might know a potential applicant.
  • Use every social media network you have at your disposal. Post the rental advertisement on Facebook, Twitter, Instagram, etc. Be sure to include photos!
  • Incorporate your vacant rental property into small talk conversations as you go about daily activities. A simple “. . . my day has been going well, I’ve been looking to fill a vacant rental. . .” can open the door to find your new renter.

With any method you use do not forget the old adage, “a picture is worth a thousand words.”  Keep multiple photos of your rental property on your cell phone and share the photos any time you promote the vacancy online.

Know Your Target Audience

Is your vacant property close to schools, malls, business parks or other areas of interest in the city? Look at this information and use it to your advantage to find some high-quality applicants. If a college is in the vicinity, post flyers on campus and highlight features of the house that might be attractive to renters who may not have much experience living on their own. Do not just consider advertising in locations close to shopping, as a perk to consumers. Anywhere with a large number of businesses have employees who likely would be excited to have a short commute.

Know Your Policies

There is more to filling a vacant rental than just finding someone to occupy it.  The ultimate goal is find well qualified renters who will treat the property with care and pay their rent on time. You will want to filter out the riff-raff that can waste your valuable time trying to rent a property for which they are clearly not qualified. Worse, they could end up creating additional, unnecessary costs for the property. To establish a set of clear, concise and most importantly legal rental policies, there are a few steps you can take:

  • Begin by educating yourself on jurisdictional rental laws. These can be found by doing a search online and referencing a state’s government (.gov) guide and the city website. For example, California released an online guide to outline the responsibilities of landlords and tenants.
  • Once you know the essentials of what is legal and illegal when renting a property, the next step should be writing a set of criteria to be consistently applied with each applicant. This should be a ‘go-to’ document that can be easily read by applicants to know whether they are qualified before they request your time to view a property. Common elements of these criteria include: A base credit score for acceptance; status of rental history (prior evictions, poor payment habits, etc.); minimum, provable income per month; and specific criminal convictions that will result in a denial.
  • Make sure policies you create are compliant with federal regulations, set forth by the Fair Housing Act and also state and city regulations. Many of these requirements ensure no discrimination takes place during the application process –both intentional and unintentional.

When a clear, concise and legally permissible rental policy is available for applicants, they can decide before they apply whether your vacancy is a viable option. This alone not only protects you, but will help bring in more qualified applicants to view your rental property.

 Don’t Schedule ‘Interviews’, Plan ‘Viewings’

It is in our nature as people and within our society to know and trust people. This is a good thing, but when it comes to renting a property it can pose some potential problems. The ‘interview’ stage of filling a vacancy is based on perception and opinion by the renting agent. This type of subjective reasoning can get the best of us in trouble and even eliminate the greatest potential tenants.

If an applicant has found your property, they know your rental policy, and they are still interested in it; the next step is to use methods that can keep all applicants on a level playing field. The most common of these is performing a background check that will provide the same type of nonbiased searches on all applicants. These checks will provide objective information that can be backed by credible data so the decision does not fall on any kind of ‘gut instinct’ that can lead to an applicant feeling they were discriminated against. This is the time when many sections of your rental policy can be checked off to ensure the applicant is a good fit for the property.

Finding great tenants can be a game of patience, but the more preplanning that goes into it, the better you can expect the end result to be. If you can begin the process the right way, you can build the type of relationship that makes relisting properties few and far between.” ( End of Ryan’s blog post.)

From Bob Phillips:  I have been helping my landlord clients get their rental properties successfully leased for almost 4 decades.  I have the resources to thoroughly screen prospective tenants, and have an outstanding record of successful tenancies.  If you’re about to rent a property you own, give me a call, and let’s discuss the possibilities.

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What’s Ahead For Mortgage Rates This Week – November 24, 2014

Whats Ahead For Mortgage Rates This Week November 24 2014Last week’s scheduled economic news included the NAHB/Wells Fargo Housing Market Index, Housing Starts and Existing Home Sales. FOMC meeting minutes were released along with weekly Freddie Mac mortgage rates and weekly jobless claims.

In addition, the National Association of Realtors® suggested that FHA should lower its mutual mortgage insurance premiums (MMI) as its fund for paying claims has normalized since recession.

Homebuilder Confidence Nears Nine-Year High

The National Association of Home Builders/ Wells Fargo Housing Market Index achieved a reading of 58 for November. This was two points higher than the expected reading of 56 and four points above September’s reading. This was the fifth consecutive month of readings above 50.

Readings above 50 indicate that more builders are confident about housing market conditions than not. Components of the index improved with builder confidence in present sales of new homes up 5 points to a reading of 62, confidence in sales over the next six months rose by two points to 66, and the reading for prospective buyer traffic rose four points to 45.

Housing Starts Slow, Existing Home Sales Suggest Stronger Housing Market

Housing starts were lower by 2.80 percent in October at a seasonally-adjusted rate of 1.01 million against an expected reading of 1.03 million and September’s reading of 1.04 million homes started. October’s reading was affected by a 15.50 percent drop in multi-family construction, but single-family home construction increased by 4.20 percent. Analysts noted that the multi-family sector is notoriously volatile.

The National Association of Realtors® reported that the seasonally-adjusted annual rate of existing home sales for October exceeded the expected reading of 5.15 million with 5.26 million existing homes sold. October’s reading also surpassed September’s reading of 5.17 million previously-owned homes sold. October’s reading represented a 1.50 percent increase over September sales of existing homes, and was the highest reading since September 2013.

The median price of previously-owned homes rose to $208,500 in October, which represented a 5.50 percent increase year-over-year. The inventory of homes for sale is higher with a 5.1 month supply of homes available, which was a year-over-year increase of 5.20 percent. Higher inventories of homes available and low mortgage rates were seen as factors contributing to more home sales.

Builders, Realtors® Call for Lower FHA Premiums

Kevin Kelly, chairman of the National Association of Home Builders and the National Association of Realtors® called for the FHA to lower its mortgage insurance premiums. The cost of FHA loans, which require borrowers to pay an upfront mortgage insurance premium and annual premiums that are pro-rated and added to monthly mortgage payments, were seen as an obstacle to first-time and moderate income homebuyers. This request was based on a report that indicated the FHA fund for paying mortgage insurance claims is in the black for the first time since 2011.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported that average mortgage rates fell across the board on Thursday with the average rate for a 30-year fixed rate mortgage lower by two basis points at 3.99 percent, and the average rate for a 15-year fixed rate mortgage lower by three basis points at 3.17 percent. The average rate for a 5/1 adjustable rate mortgage dropped by one basis point to 3.01 percent. Average discount points remained the same for all loan types at 0.50 percent.

The Commerce Department reported that new jobless claims fell to 291,000 from the prior week’s reading of 293,000. Analysts expected a reading of 280.000 new jobless claims, but this was the tenth consecutive week of readings for fewer than 300,000 new jobless claims. The four-week rolling average of new claims rose by 1750 to a reading of 287,500. The four week average reduces the volatility of weekly jobless claims and provides a more accurate reading of unemployment trends.

What’s Ahead

Next week’s scheduled events include the Case-Shiller 10 and 20-City Home Price Indices, FHFA’s House Price Index and New and Pending Home Sales reports. There are no reports set for Thursday or Friday due to the Thanksgiving Holiday.

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Thinking About Buying Rental Properties?

4_Quick_Tips_On_Becoming_A_Young_Real_Estate_InvestorThinking About Buying Rental Properties?

While housing is still very affordable in many areas of the country, it seems like a good time to purchase real estate as an investment — that is, to own rental property. Should the average American consider this as a legitimate means to grow their financial portfolio?

In a word, yes. Even during the housing recession you heard the experts maintaining that real estate was still a valuable investment. There are many reasons to take the plunge and invest in rental properties. Here are a few.

It’s a good time to buy property. Rates and property prices are generally low right now, which means you can get a great mortgage rate and a good price on a property you like. But rates and prices are slowly building all across the country. This is both a plus and a minus: every eighth of a point rise in rates means your purchase power goes down. You’ll get less property for the money, and as home prices rise you’ll pay more for less as well. But keep in mind

that property you purchase now will cost more in the future. As the market continues to recover, your investment should appreciate steadily.

Your expenses are offset in several ways. By buying a property and renting it out, your tenants will be covering a large portion of the costs you incur. Over time, rents will increase as you pay off the mortgage, leaving more income as profit. In addition, you’ll benefit from tax breaks and incentives* on depreciation and expenses.

Appreciation works in your favor. Your investment will be appreciating on the entire value of the property. If you put 25% down on a $400,000 property, you may be paying 4.5% interest on the 75% you borrow, but a 3% appreciation on the value of the property is on the entire $400,000, not just the $100,000 you put down. Compare that to your return on an investment in the stock market.

Diversity in your investment portfolio is a good idea. See above. And remember that by spreading out your investments, you’re more likely to reap the benefits of a changing economy.

You can invest in your retirement. If your $400,000 investment appreciates 3% per year for the next 20 years, just think of what you can do with the money when you sell the property upon your retirement. Or perhaps you bought a property you would want to retire to.

It’s true that being a landlord can be stressful for many people. However, the benefits of investing in property usually outweigh the negatives for most landlords. I am always available to review your goals and to help you determine the strategy and options that can benefit you the most. In addition, I’m also experienced with the management of rental properties and am available to relieve you of that chore.

Call, text, ( 949-887-5305 ) or email me ( BobPhillipsRE@gmail.com ) today to start to explore the possibilities.

*I am not a tax advisory expert. The information contained in this article is for informational purposes only and may not reflect current tax year rules and regulations. Consult your tax advisor or the IRS for current tax year rules, restrictions and regulations.

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Foreclosures Across California Reach Eight Year Low

Initially posted by re-insider.com, on November 14th, 2014

“While California’s real estate market has remained flat throughout the year, recent changes have revealed that things may be making a turn for the best. In addition to September’s jump in sales, a new study has found that foreclosures across California have hit their lowest mark in over eight years – the latest sign that our economy is finally catching up with the housing market.
Foreclosure home
According to San Diego-based research firm DataQuick, fewer foreclosures were initiated across California in the third quarter of 2014 than any in the past eight years. This is largely an outcome of a recovering market and a declining number of toxic loans made between 2006 and 2007.

The study found that during the July-through-September period, there were a total of 16,833 Notices of Default (NoDs) recorded – 691 fewer than the second quarter of 2014 and a 17.1% drop from the same time last year.

One should also note that the recent drop in foreclosure starts is actually part of a larger trend. Prior Q3, DataQuick found that Notices of Default were declining during the second quarter of 2014 – the lowest since the fourth quarter of 2005 when only 15,337 NoDs were reported. Similarly, NoDs have dropped significantly since their peak in 2009, when a total of 135,431 NoDs were recorded.

“This home repo pipeline isn’t exactly drying up, but it sure is diminishing. Its negative effect on the overall market is only a fraction of what it was several years ago, and is really only still noticeable in some pockets of the hardest-hit markets of the Inland Empire and Central Valley,” said John Karevoll, a CoreLogic DataQuick analyst.

Do you think this is an indication of a stronger market in Q4?” ( End of re-insider.com’s article.)

From MY vantage point, it looks as though this quarter is turning out to be a fairly “normal” one for Southern Orange County. The type that frequently leads to a more robust Spring home buying season – which in this area usually starts between the last week of January, and February 15th.

If you are thinking of BUYING your next home anytime soon, there are two things to consider right now – today. First, there aren’t going to be many foreclosure houses to look for – less than 2% of available houses – and second, you’ll have much better negotiability on regular, non-distressed properties before that Spring buying season begins.

Give me a call – at (949) 887-5305 – or shoot me an email – to BobPhillipsRE@gmail.com – and let’s talk about your real estate goals.

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What’s Ahead For Mortgage Rates This Week – November 17, 2014

Negotiation Tips: How to Ask the Seller to Pay the Closing Costs Last week’s housing related news was lean, with no scheduled reports released other than Freddie Mac’s primary mortgage market survey.

We’ll start with some good news. The University of Michigan / Thompson-Reuters Consumer Sentiment Index reported its highest reading in more than seven years. November’s reading of 89.4 surpassed the expected reading of 88.0 and was higher than October’s reading of 86.9

Mortgage Rates Near 4.00 Percent, Weekly Jobless Claims Up

Freddie Mac reported a one-basis point drop in the average rate for 30-year fixed rate mortgage from 4.02 percent to 4.01 percent; the average rate for a 15-year fixed rate mortgage also fell by one basis point to 3.20 percent.

The average rate for a 5/1 adjustable rate mortgage rose by 5 basis points to 3.02 percent. Discount points for all three loan types held steady at an average of 0.50 percent.

Weekly jobless claims rose by 12,000 to 290,000 against expectations of 280,000 new jobless claims filed and the prior week’s reading of 278,000.

Last week’s report was the ninth straight week that new jobless claims came in under 300,000. The reading for the four-week rolling average was 285,000 new jobless claims, which represented an increase of 6,000 new claims.

What’s Ahead

This week’s number of scheduled economic reports will be more robust. The NAHB Housing Market Index, Housing Starts and the National Association of REALTORS® Existing Home Sales reports will be released.

The minutes of the most recent Federal Open Market Committee (FOMC) meeting of the Federal Reserve will also be released along with weekly mortgage rates and jobless claims data.

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