Why Do It

In general, rental property is better positioned for this downturn than most other properties. According to the National Multi Family Council, U.S. apartments have provided the highest risk-adjusted long-term returns of all real estate asset classes and with less volatility.

5 Reasons:

1. Because investment income property is a cash flow business it has benchmarks and standardized methods for determining value. Cash flow provides the investor with an objective evaluation tool. 
2. Leases are generally one year, rental income makes relatively quicker adjustments than long term AAA leases or larger shopping malls etc. Apartment buildings have 12-14 month development cycles and can react in a timely fashion to the needs of the market place. 
3. Apartments have a lower cost of capital and availability of debt capital thanks to Fannie Mae and Freddie Mac. Its a matter of policy. 
4. Demographic trends are favorable. As a result, demand for rental housing in the U.S. is expanding at the strongest pace since the mid-1980s.  3 million new renter households were created as a result of new household formation, declining rate of home ownership, foreclosures bringing new renters to market and the echo boomers coming of age.

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March pending home sales in the Sarasota, Florida market rose by an unexpected 3.2 percent. Some believe that the southwest Florida real estate market might be forming a bottom. Pending single family homes in Sarasota and Manatee counties are currently near 2,500. Condos for the same area are near 750.

The increase in sales is largely due to falling home prices. Buyers who couldn’t buy in 2004 and 2005 are finding some tremendous deals out there right now. As sellers adjust themselves to the realities of the current market, buyers are responding.

Some consider this a perfect storm for buyers. There are plenty of properties to choose from, many distressed sellers, interest rates are historically low and prices have retraced dramatically.  

Realtors are also seeing what seemed a bygone boom phenomenon: multiple-offer situations. It is not uncommon to put a property on the market at an aggressive asking price and immediately receive multiple offers.

Let’s compare 2008 and 2009 home sales in Sarasota, FL: Continue reading this post

HomeGain is delighted to announce that Sherry Chris, President and CEO of Better Homes and Gardens Real Estate, will be joining our already star studded cast of guest bloggers.

Sherry is a frequent speaker on major real estate industry panels, such as Inman Connect, Bloodhound Unchained, ReBlog Camps and REtechSouth to name just a few.

Sherry is an engaging personality and blogger as well as an adept user and evangelist of social media.

We should be receiving Sherry’s first post in a few days.

In the meantime you can follow Sherry on Twitter @BHGRE_Sherry

Louis Cammarosano

homegain.com

I get a lot of homebuyer inquiries from my website and one common theme from all of them is their desire to ‘find a great deal.’ Regardless of price range, virtually every potential buyer that I communicate with mentions either ‘foreclosure’, ‘short sale’, or ‘deal’.

I am sure most of you know what a foreclosure is but sometimes I run into people who don’t know what short sale means. Essentially, a short sale occurs when the proceeds of a real estate sale are insufficient to cover the liens or financial obligations owed on the property.

For example, if a home is worth $500,000 and the homeowner has a $600,000 mortgage on the property and the owner cannot make up the difference then a short sale is required. For a sale to take place the mortgage holder would have to agree to take less than what is owed to them due to an economic or financial hardship on the part of the borrower.

This process can take months to accomplish. If you are looking to purchase a property in short sale make sure you have plenty of time and patience. If you need to move into a home quickly it might be best to exclude short sales from your list.

Below are some Sarasota foreclosures and short sale statistics:

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I’ve been looking through some recent reports to try and sleuth out the general economic level of malaise and I’m am happy to say that we are not yet feeling the pain in a serious way. The San Francisco Apartment Association magazine prints a nicely detailed economic overview by Mat Sheridan. The first chart shows us that the San Francisco employment rate is less that the state unemployment rate by a little less than half. At 4 to 5%, our jobless rate is painful, but not devastating. Our vacancy rates are still less than 5% and we are among the top rental markets in the country.

I have this theory…..San Francisco is host to huge commuter busses that stop in most areas of the city. They pick up workers from Google, Apple, EBAY, Genentech and other south bay companies. The commuters are picked up in central locations throughout the city and driven to work and back. This has brought huge numbers of well paid employees whose only alternative to living and in San Francisco and working in the south bay was to endure a hour plus commute or take Caltrans.

The bus alternative is a no cost convenient way to live in San Francisco and work in Silicon Valley. The net of this, (my theory) is that San Francisco and Silicon Valley are becoming economically interdependent and this has fueled our rental boom. The health of the tech industry is even more closely aligned to the economic health of San Francisco than ever before. The human typography of this city has been undeniably altered.

San Jose as a Leading Indicator

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We’d like to welcome Howard Bell of YourPropertyPath.com to our team of HomeGain Guest Bloggers!

Howard holds a certification in financial planning and offered goal oriented financial planning and investment advice. Today he enjoys applying these business development, business planning and sales strategy skills to the property management arena for the last five years.

He is also an active blogger of macro economic discussions and Trade talk for the San Francisco real estate industry. Howard’s blogs are full of news, rants and strong opinions about real estate markets.

He  is the editor/founder of a real estate information site with over 450 articles in 42 categories, helping people deal with the complexity of owning and managing.

Look for Howard’s first blog post later today!