Are More People Happy with Renting than Buying These Days?
Home ownership rates continue to fall despite economists predicting an up-tick after falling for years following the housing crisis. However, a reported 363,000 new renter households were formed in the first quarter of this year as compared with the same time last year. That’s about twice as many as the 177,000 new owner households. So, the question is, is that good news or bad news for the rental property investor? It appears good news, at least for the short term. “Rising home prices, student loans, delays in marriage and childbearing, and uncertainty about buying a home as an investment are weighing on younger households and motivating them to rent instead of buy”. States Laura Kusisto, writer for The Wall street Journal.
“Young buyers are caught in a quandary. Owning a home has many benefits, including tax breaks and the potential to build value, plus mortgage payments are often lower than rent for a comparable home — especially over the long term. But in some cities, rent can be so high that it's difficult, if not impossible, to save the recommended 20% down payment.” Writes George Petras of USA Today. People often compare rent to a mortgage payment. It should be noted however, when you rent you have no maintenance costs. Owning a home, on the other hand, can result in a significant annual outlay in maintenance, beautification, structural improvements, HOA expenses…. and the list goes on.
Zillow’s 2016 House Confidence Phone survey from January of this year showed that while Millennials most strongly associate owning a home with the American dream, only 9% plan to buy a home within a year. Interesting that Americans between the ages of 50 to 64, (56.9%), are the group who least associate home ownership with the American Dream. Could it be because they got so badly burned in the Great Recession? In the same survey the majority, (33.2%), of Millennials anticipated purchasing their first home in the next 3-5 years, with 9.4% either not sure, or never anticipate buying a home.
Preemptive Action Can Result In Bigger Profits
If you’re thinking about repositioning your rental portfolio, perhaps selling a single-family property to invest in a duplex or fourplex, or just trading for a newer model, HouseCheck has some sage advise for preparing yourself for the best possible outcome.
Guest Contributor - Rick Rickards, VP of Marketing and CMO, HouseCheck
Selling Your Investment Property? Inspect It First!
As a real estate investor, you’re no doubt familiar with the normal inspection protocol: After you sign a purchase contract on a house, you arrange for a home inspection to evaluate the condition of the property. Then you re-negotiate with the seller for some combination of repairs and/or price concessions. Even though this model has been standard real estate procedure for some time, it has a few inherent problems:
- Risk of the deal falling apart.
In the standard inspection model, all the involved parties — buyer, seller, and even real estate agents — are nervous about the home inspection. The buyer is wondering what the Inspector might find that could make the house unappealing…maybe even so unappealing that it could lead to cancellation of the deal. Meanwhile, the seller is concerned that the Inspector may turn up a previously unknown problem that could require a costly repair, thus eroding the proceeds from the sale. And of course, the real estate agent is anxiously hoping that all the work that’s been done to bring these parties together and orchestrate a deal doesn’t blow up in his or her face, sending everyone back to Square One.
- Time is NOT on our side, especially with a 1031 Exchange.
During the post-contract contingency phase, any deficiencies that the buyer wants corrected will need to be addressed very quickly…and that can be expensive. Getting contractors to commit to a tight deadline often leads to inflated costs, compromised work quality, missed deadlines, or some combination of the above…and that doesn’t make ANYONE happy.
- Renegotiation is difficult.
An investment property purchase agreement is normally cause for celebration! But the necessity for a renegotiation almost always signals disappointment…the Home Inspector has found something that made the original deal unworkable, and now one or both parties is facing the frustrating fact that their original expectations are not going to be met. Fortunately, there’s an easy answer to these issues:
- The SELLER-instituted Home Inspection.
When a home seller arranges for a home inspection before the house is listed, they receive a comprehensive list of any conditions that might impede a quick, easy sale once the property goes on the market. Armed with this information, the seller can take the time necessary to obtain multiple quotes for proactively repairing or replacing anything that might cause a cancellation or require costly, tight-deadline repair.
- Most importantly, the seller-instituted Home Inspection helps ease the trepidation the buyer feels about possibly buying a money pit. With the Inspection Report available to all parties, there’s no question about the condition of the property, and there’s no need to enter into a difficult second wave of negotiation precipitating repairs or concessions. Clearly, a seller inspection provides valuable benefits — but wait, there’s more! Some of the best Home Inspection companies also offer a bundled, transferrable Home Warranty, which provides even more buyer assurance, leading to a consummately pleasant transaction experience for everyone involved.
- The SELLER-instituted Home Inspection.
For more information on how a seller-instituted home inspection could help you sell a property when the time comes, contact HouseCheck, a Boise-area-based company building a national consumer brand around home inspections.
Toll-free: 844.94.CHECK. HouseCheck.net
Time To Prepare for Fall Cleanup!
It may seem like we are a long way off from Fall, but it’s really just around the corner. For those of you who own properties with lawns, this message is for you!
Unless other arrangements have been made, tenants are responsible to keep the yard irrigated, mow the lawn, prune small shrubs, and keep the planter beds weed free. In an ideal world, you have a tenant like the one featured below. However, most tenants will only attend to the minimum requirement. For a lawn to be healthy, it needs to be fed and weeded regularly besides being watered. We recommend you fertilize your lawn and treat it for weeds at least twice a year. This is a minimal maintenance program. We are scheduling lawn treatments for October. The cost for this service is $150 plus or minus 20% depending on the size of your yard. If you DO NOT want your lawn treated, please contact Pam@rentalsinboise.com to let her know to take you off the service list.
Sometimes we like to brag about our tenants. In response to our latest Tenant newsletter informing them of some upcoming exciting perks and partnerships, we received the above photographs from one tenant who apparently has a very green thumb, and pride-in-home, regardless of ownership.
What Are You Interested In?
This newsletter is intended as a resource and communication platform for you. If there is a topic, relevant to the management of your investment property, that you would like me to write on, please let me know!