Monthly Archives: May 2013

Single Family Home Rentals

Life of Riley Index.pngThe Life of Riley was a TV show from the 50’s starring William Bendix but the title’s origin came from an expression meaning that a person was living the “good life.” Most people envision themselves living the good life by retirement but don’t really have a plan to get there.

There’s a rough rule of thumb used to estimate how much net worth a person would need by the time they retire to generate a certain income. The target annual income is divided by a safe, conservative yield to determine the investable assets needed.

A person who wanted $100,000 annual income generated from a 5% investment would need investable assets of $2,000,000. If a person had $500,000 now, they would need to accumulate $1.5 million more by the time they retire. If it was estimated to be 15 years away, they would need to save about $100,000 a year, each year until retirement.

It is a sobering example that could be depressing without a plan. It might be easy to say, “I should have started sooner” which may be true but there is still hope.
Gradually, over the next several years, accumulate rental property and allow the tenant to retire the debt for you. The equity in each property will grow from the amortization of the loan each time a payment is made. It also grows as the property increases in value due to appreciation.

Single family homes as rentals offer the investor an opportunity to meet their retirement and financial goals for the following reasons:
•The ability to borrow large loan-to-value mortgages
•At fixed interest rates
•For long terms (easily up to 30 years)
•On appreciating assets
•With significant tax advantages
•And reasonable control not offered by alternative investments.

Naples Area Market Update

NABOR BULLISH ON SUMMER REAL ESTATE MARKET

Naples, FL (May 24, 2013) – The housing market momentum continues to remain strong heading into summer. NABOR leaders site three major results as the “Trifecta Factor”: 1.) overall inventory continues to decrease 2.) the average days-on-the-market is lower and 3.) median home prices continue to increase. The Naples Area Board of REALTORS® (NABOR®), tracks residential listings and sales within Collier County (excluding Marco Island) and releases a monthly and quarterly report of activity.

“For the last few years we have continued to see strong home sales in the summer,” said Mike Hughes, Vice President and General Manager of Downing-Frye Realty. “The notion of strong sales occurring only during traditional ‘season’ is no longer, and we are very bullish on the real estate market heading into summer due to the environment of low inventory, the tightening up of days on the market and the increase in median prices. If people have been waiting to list, now may be the time.”

Brenda Fioretti, Managing Broker at Prudential Florida Realty agreed and added, “This is the first time in a long time that we have seen such a drastic decrease in the average days on the market. The three Trifecta Factors continue to remain positive for the Naples area real estate market because it creates a prime opportunity for home owners to jump into the market and sell.”

The NABOR® April report provides annual comparisons of single-family home and condominium sales (via the SunshineMLS), price ranges, and geographic segmentation and includes an Overall Market summary. The NABOR® April sales statistics are presented in chart format, with these overall (single-family and condominium units) specifics:

– The overall median closed price increased 18 percent from $186,000 at the end of April 2012 to $219,000 for the 12-month period ending April 2013.

– Overall pending sales increased 5 percent from 10,166 units to 10,678 units for the 12-month period ending April 2013. Overall pending sales increased 27 percent in the $300,000 to $500,000 category from 1,405 units to 1,781 units and 13 percent in the $500,000 to $1 million category, from 1,070 units to 1,214 units, and increased 21 percent in the $1 million to $2 million category, from 450 units to 545 units, respectively for the 12-month period ending April 2013.

– The average DOM (Days on the Market) decreased 14 percent overall from 183 days in April 2012 to 158 days in April 2013.

– Overall pending sales in the Naples coastal area increased 11 percent from 1,913 units to 2,122 units, and closed sales increased 12 percent, from 1,695 units to 1,894 units, for the 12-month period ending April 2013.

Phil Wood, President & CEO of John R. Wood Realtors stated, “The condominium market in the $1 million to $2 million category is extremely strong as indicated by the fact that condominium pending sales increased 40 percent from 169 to 237 for the 12-month period ending April 2013. In addition, condominium closed sales increased 13 percent from 165 to 187 for the 12-month period ending April 2013. These are encouraging statistics indeed.”

The Naples Area Board of REALTORS® (NABOR®) is an established organization (Chartered in 1949) whose members have a positive and progressive impact on the Naples Community. NABOR® is a local board of REALTORS® and real estate professionals with a legacy of nearly 60 years serving 4,000 plus members. NABOR® is a member of the Florida Realtors and the National Association of REALTORS®, which is the largest association in the United States with more than 1.3 million members and over 1,400 local board of REALTORS® nationwide. NABOR® is structured to provide programs and services to its membership through various committees and the NABOR® Board of Directors, all of whose members are non-paid volunteers.

The term REALTOR® is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribe to its strict Code of Ethics.

Marco Island Market Update May 2013

MLS statistics, released by the Marco Island Area Association of Realtors for Marco Island only properties, compares April 2013 with April 2012 activity.

Here is a recap of what happened in the Marco Island Real Estate market.
– Sold single family home sales down 2 percent (49 vs. 50).
– Sold condominium sales up 42 percent (85 vs. 60).
– Sold single family vacant lots up 28 percent (23 vs. 18).
– Pending single family home sales up 35 percent (73 vs. 54).
– Pending condominium sales up 35 percent (100 vs. 74).
– Pending single family vacant lot sales up 133 percent (42 vs. 18).

Inventory
– 347 Single family homes (down 6.5 percent from 2012).
– 491 Condominiums (down 19 percent from 2012).
– 256 Single family lots (down 17 percent form 2012).

Summary

A staggering $101 million dollars worth of real estate closed on Marco Island in the month of April alone.

The high-end market is particularly strong with multiple sales occurring in excess of $2 million dollars for both homes and condos. This high-end momentum continues to push average prices upward, but we are seeing slight increases in average sales price and median sales price in the broader market as a whole.

The pending sales continue to climb, and strong sales have continued through May.

The inventory continues to shrink but should stabilize somewhat as we enter summer and sales ease a bit.

With summer approaching, now may be one of the best times ever for you to search out your piece of Paradise.

Call, email or text any time with any questions, to discuss your thoughts, or if I can help in any way!

Present a strong offer

It’s interesting that the housing climate has changed so quickly. Some buyers, who think they’re still in the driver’s seat, find the market is now going up and they’re losing the home that they really want.

Multiple offers are increasingly more common and buyers are frustrated because even full-price offers don’t guarantee that they’re going to get the home. In an effort to personify a contract offer and add emotional appeal, buyers are including a personal letter to the seller.

In most cases, the seller wants to maximize the net proceeds from the sale by getting the highest price with the least expenses and an assurance that the home will actually close on time without surprises. When a seller is faced with multiple offers that may be close to the same net, an emotional appeal might make the difference in them accepting a particular offer. That’s where the letter comes in play.

It should be a relatively short letter that gets to the point. The tone of the letter should be humble while positive and definitely, shouldn’t mention that you may have lost other homes due to multiple offers.
1.Try to identify a common feature or characteristic of the home that is important to the seller and you.
2.Don’t criticize the home or tell them about all of the improvements you need to make to justify your offer.
3.Do verbalize why living in this home is important to you and your family.
4.Assure the seller that you can indeed qualify for the home and that if they accept your offer, the sale will be consummated.

After writing the letter and eliminating the non-essential parts, read the letter a few times to your spouse or friend. Polish the verbiage and check the spelling and grammar. If your handwriting isn’t attractive and easy to read, print it. Use nice paper to appeal to the tactile senses. Attach the letter to the offer so they’re considered simultaneously.

Being pre-approved with good credit, adequate financial resources, good employment, sufficient earnest money and a reasonable offer with minimum contingencies will favorably position you. A personal letter might be the deciding factor in your favor.