Repomansblog

Rents Rising As Vacancies Fall

There is a bright side to the current real estate malaise for Boise Idaho investors who own or are considering investing in rental property.  The Wall Street Journal reported on July 9th that the national vacancy rate for apartments has fallen 8 percent from the first quarter to 7.8 percent at the end of June.  Rents rose 0.7 percent from April to June, the largest quarterly gain in two years.

Single-family homes feature lower vacancy rates than apartments- local vacancy rates are difficult to find, but I would guess in the 5-6 percent range for single-family homes. When analyzing cash flow, I always estimate 8 percent annual vacancy for my investors (equals 1 month per year) and is a safe number for affordable homes in the Boise Idaho area.

Idaho is also experiencing the falling home ownership rate as fewer buyers can qualify. And few investors are entering the market with tougher lending standards and larger down payments required, keeping the supply of homes for rent down.  These conditions should cause lower vacancies and upward pressure on rents for all types of rental property.

My advice- lock in those record low rates now and prosper in the future with postiive cash flow.  Current owners should always be looking to raise rents.  Research your competition, start high- you can always lower it, add rent increases to your long term leases, and make improvements that would merit higher rent.  Higher property taxes is always a good reason to notch up the rent.

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty in Boise Idaho  (208) 866-3481 
 

Posted at 10:39AM Jul 14, 2010 by Dan Rowe in Real Estate  |  Comments[0]

July 2010- Fantastic Buyer's Market in Boise Idaho

In my 20 years in real estate, I've never seen a better time to buy homes and real estate investments in the Boise Idaho area. I'm not just saying that because I want to sell you a home- I would be snapping up every bargain I could get with positive cash flow, and there are plenty.

Median home prices are at 5-year lows. The discounts off market are huge with 1 in 4 homes listed subject to short sale and nearly 11% of homes listed are government or bank-owned.  Interest rates are at once in a lifetime 40-50 year lows.

On top of all those great reasons to buy homes, your competition has dwindled drastically.  The Mortgage Bankers Association is reporting that purchase applications fell 15% in June and are 30% below April's number, when the tax credit expired. The number of buyers dropping by a third will surely help home buyers and investors negotiate even better bargains.

Contact Repoman for the best buys in Boise Idaho real estate!

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty in Boise Idaho  (208) 866-3481   

Posted at 11:03AM Jul 08, 2010 by Dan Rowe in Real Estate  |  Comments[0]

Home Buyer Tax Credit Not Over For Military Serving Overseas

Members of the military who served at least 90 days overseas between Dec 31, 2008 and May 1, 2010 have an extra year to get the home buyer tax credit.  That's up to $8,000 for first-time buyers, defined as not owned in the last 3 years, and up to $6500 for replacing a primary residence owned for 5 of the last 8 years.  There are income limitations to qualify, but most will.

To take advantage of this program, home buyers must have an accepted contract on a primary residence prior to April 30, 2011 and close by June 30.  If you know anyone who might qualify, please let them know. 

Have them call me and I'll show my appreciation for their service by paying for a 1-year home warranty ($350 value) at closing for those who hire me as their buyer's rep.

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty in Boise Idaho (208) 866-3481 

Posted at 12:39PM Jun 28, 2010 by Dan Rowe in Real Estate  |  Comments[0]

Boise Idaho Short Sales- My Biggest Challenge

One of my biggest challenges today is educating my buyers on searching for homes on the internet and short sales. 

The internet is a wonderful tool for searching homes for sale.  However, the ultimate source of homes for sale in Boise Idaho or anywhere in the US is the MLS (Multiple Listing Service) run by Realtors. This database cannot be matched for accuracy or completeness anywhere.  If the property is listed by a Realtor, then it is listed in the MLS and at the fingertips of every Realtor. 

Today, I have the technology to set a search for my buyer and send instant e-mails on any new or reduced listing that match their criteria. This means, if you keep checking your e-mail, you never miss any.  However, I usually filter out the short sales.  This is impossible for a buyer searching on their own because many listings don't disclose it in the public remarks.  Since over 1 in 4 homes listed for sale is a short sale, this adds up to major frustration for buyers.

Why you don't want to waste your time on short sales(unless pre-approved by the bank):

• Price not real- the majority of all un approved asking prices are countered higher by the bank.
• It takes on average 4-6 months for the bank to respond-  this means you can't lock in at these record low rates, time a move with a sale, or even plan a move.
• Seller has no money to make payments- so while you are waiting 4-6 months for the bank to respond, no maintenance is being done by the seller and the value could fall.
• A 4-6 month bidding war-  the seller continues to market  and accept other offers while you wait and when the bank finally does respond, only the highest offer has a chance.

I certainly don't blame my buyers for searching on their own, but I must keep reminding them- if it is listed by Realtors and it matches your criteria, you've already got it.  I make it easy to find the best home in your price range, that meets your basic needs, situation, time-frame, financing and as many of your desires as possible. 

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty  (208)866-3481

Posted at 01:50PM Jun 25, 2010 by Dan Rowe in Short Sales  |  Comments[0]

Future Housing Shortage Possible in Boise Idaho

CNNMoney.com reported on June 15th that some experts are saying the next big real estate problem could be a shortage of homes.  The article reported that new home starts are currently half the number needed to meet the country's average population growth. 

A decline in household formation has been observed on a national scale and some interpret this to mean pent-up demand for housing, as the young move back in with parents and teaming up on purchases is more common.

This got me to thinking about our Boise Idaho market.  The number of new homes being built has been steadily decreasing since 2007.  You can see the charts for Ada & Canyon Counties in my Market Monitor, which is password protected for clients. 

Then I looked at the number of new homes sold going back 10 years in the MLS:

The current levels of new home sales in the Boise Metro are just 30% of the annual average for the decade. Current sales were arrived at by doubling first half of 2010. Room for improvement.

As we saw in the previous boom, new construction is slow to react to increased demand, due to the lengthy development process.  This caused extremely low inventory levels of existing  homes and drove prices to double-digit annual increases in the Treasure Valley.  I am hopeful that improved affordability will fuel population growth in Idaho and start driving prices again.

The best time to buy would be before that happens- like now with rates near record lows.

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty in Boise Idaho  (208) 866-3481

Posted at 04:19PM Jun 22, 2010 by Dan Rowe in Real Estate  |  Comments[0]

The Power of OPM (Other People's Money) Never Stronger

Put simply, using OPM is borrowing to buy real estate. This is also called leveraging investments.  With rates near record lows, we may not see in our lifetimes a better time to borrow long term. 

The goal of investing is to make the highest return on the smallest investment, balanced with risk. If you had $100k to invest in Boise Idaho homes, you could buy one home with cash or four with 25 percent down, assuming you qualify.  Compare the two scenarios if homes appreciate 10 percent over time:

Scenario 1)  You buy one $100k home for cash 
($10k gain divided by $100k investment =10 percent return = $10k profit)

Scenario 2)  You buy four $100k homes with 25 percent down 
($10k gain divided by $25k investment = 40 percent return = $40k profit)

That is what leverage and OPM can do for you. 

The ultimate use of  OPM is getting other people to buy homes for you by renting them out.  Right now, I can show you many homes for sale in the Boise area that will rent for more than the payments plus vacancy and maintenance, paying you a cash return every month and paying down your loan more with each payment.  Using other people's money to buy and paying them back with other people's money!  What a trick!  On top of that, you get the tax sheltering benefits of depreciation and a decent overall return, regardless of when prices rise. 

Speaking of Risk...   How risky is buying real estate 10-30 percent below-market in Boise Idaho at the lowest prices in over 5 years?  And locking in a 30-year fixed rate at the lowest rate in nearly 40 years?  And choosing from a huge selection of foreclosed homes to find those most likely to appreciate, deliver the lowest vacancy and maintenance costs and the highest liquidity? Call me today for money-making homes and real estate investments in Boise Idaho.

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty in Boise Idaho  (208) 866-3481  www.repomandan.com

Posted at 01:06PM Jun 16, 2010 by Dan Rowe in Investments  |  Comments[0]

Mortgage Rates May Rise Soon

Mortgage rates currently near record lows is the greatest reason of all, and there are many, to buy a home or real estate investment now in the Boise Idaho area.  A low interest rate can mean many thousands in savings, even over just a few years.  For investors looking to hold until the market recovers, low rates are key to producing a cash return until appreciation kicks in. 

Signs of improvement in the economy could lead the Federal Reserve to raise key interest rates, driving up mortgage rates, according to Stephen Stanley, chief economist at Pierpoint Securities LLC.

More consumers are paying their bills on time. American Express past-due accounts have declined 34% from a year ago.  Target reports the lowest delinquency rate in 2 years during the 2nd quarter.

The Fed's reasons to remove the emergency measures- including the zero rate- are mounting.  Fewer banks report tightening lending standards this month and borrowing rose for the 2nd time in 3 months.
Source: Bloomberg, Bob Willis, Anthony Feld 5/28/10

I've been saying it for years- Rates can't stay this low forever!  Just take a look at Freddie Mac's index of interest rates over the last 40+ years.  This is one of those opportunities that will have you kicking yourself later for missing it.

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty in Boise Idaho  (208) 866-3481    

Posted at 10:32AM Jun 14, 2010 by Dan Rowe in Real Estate  |  Comments[0]

Record Number of Foreclosed Homes For Sale in Boise Idaho

Today we hit another all-time high for the number of foreclosed homes listed for sale in the Boise Metro area. This is most unusual for June- the last 2 peaks in REO inventory have come in mid-winter the last 2 years.  The home buyer tax credit played a large role in this, artificially stimulating purchases and changing the normal seasonal ebb & flow of supply & demand. 

Nearly 650 foreclosed homes are currently listed in the Boise area, representing 9.87% of all homes listed for sale.  Should you worry about our pending doom?  No.  The sale of a foreclosed home represents the end of the foreclosure process, the recycling into the economy as a home or investment.  The actual problem, owners not making their payments, happened many months before.  The majority of these homes entered the pipeline as a short sale many months ago and for whatever reason, failed to avoid foreclosure. 

A peak in foreclosed home inventory would indicate that we are most of the way through the foreclosure bubble in the Boise area.  However, a long slow climb is ahead.

Home buyers and investors should be ecstatic with this news- Flexible prices, huge selection, cheap money- what more could we ask for?  Maybe an expert real estate broker with a catchy name to help you take advantage of the situation. These low rates won't last forever- buy now.

Dan "Repoman" Rowe ABR CRS GRI, Broker of Dan Rowe Realty (208) 866-3481 

Posted at 12:17PM Jun 11, 2010 by Dan Rowe in Foreclosures  |  Comments[0]

Home Ownership Rate Declining

According to a study by the Federal Reserve Bank of New York, homeownership rates are down 2% from the 2006 peak, but could fall another 5% in the next few years. 

The study subtracts home owners who are underwater from the official rate calculated quarterly by the Census Bureau. At the end of 2009, the official rate was 67.2%, but the effective rate is around 62% after subtracting home owners likely to lose their homes from the total. Source: Wall St Journal

For investors considering rental properties in the Boise Idaho area, I see a bright side to this.  This large number of home owners becoming renters again will likely translate to lower vacancy and higher rents.  Locking in at today's historically low rates for the long term, an investor is likely to do well.  Especially combined with a super below-market buy on a foreclosed home with help from Repoman!

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty (208) 866-3481

Posted at 09:45AM Jun 10, 2010 by Dan Rowe in Real Estate  |  Comments[0]

Home Loan Applications Down 35% Since Tax Credit

The Mortgage Bankers Association reported today that purchase application are now 35% below their level of 4 weeks ago, as homebuyers have not yet returned to the market following the expiration of the home buyer tax credit at the end of April.  This is the 5th straight week of declines.

They also report historically low mortgage rates, based on a weekly survey:
30-year fixed mortgages averaged 4.81% this week. 15-year fixed averaged 4.26% for the week.

Buyers & investors- now is the time to reap huge rewards from reduced competition, more flexible prices and once-in-a-lifetime low rates.  Also, home prices are at 5-year lows and the number of foreclosed homes for sale in the Boise Metro just hit an all-time high of 629 yesterday.. 

It is a GREAT time to buy!  And the best bargains are at www.repomandan.com

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty, Boise Id  (208) 866-3481 

Posted at 02:33PM Jun 09, 2010 by Dan Rowe in Real Estate  |  Comments[0]

Latest News on Boise and Idaho Foreclosures

RealtyTrac is reporting that Idaho ranks #6 for most per-property foreclosures in the nation in 2009.

They estimate over 17,000 properties were foreclosed in 2009, which is 1 in 37 houses, double what it was in 2008 and nearly four times what it was in 2007.

However, Idaho is a long way from #1 Nevada with 1 in 10 properties foreclosed in 2009 and not that far from the national average of 1 in 45.

I have noticed that RealtyTrac gets major free advertising from the media by putting out these dramatic-sounding statistics.  For example- 1 in 37 homes is only 2.7%. Doesn't sound so dramatic does it? It's not good, but it's not that bad either, compared to 2.2% nationwide.

What about the Boise area?

According to the Census Bureau, there are approximatley 80,000 households in the city of Boise. Today, there are less than 200 foreclosed homes listed for sale- That is 0.25% of all households.

In the Boise-Nampa MSA, I estimate there are approximately 210,000 households. With less than 600 foreclosed homes available, that is only 0.28% of all households.

I am using only active homes to make my point, because only current supply affects prices.  There are many foreclosed homes with contracts pending or not yet marketed that would add to the number, but the foreclosure bubble is not near as dire as the media makes it sound. Just wanted you to know.

Who knows where the best buys are?  Repoman!

Dan Rowe ABR CRS GRI, Broker of Dan Rowe Realty in Boise Idaho   (208) 866-3481 

Posted at 02:52PM Jan 22, 2010 by Dan Rowe in Foreclosures  |  Comments[0]

Kuna Idaho Housing Update- Nov 09

You could say the Kuna housing market is closer to recovery- price stabilization and eventually appreciation- than any other city in the Treasure Valley.

The city of Kuna is experiencing the lowest overall supply of homes since the boom of 2005-2006.  As of Nov 1st, Kuna is showing only a 2.5-month supply of homes, the lowest in the Boise Metro and nearly 1/3rd of a normal 6-month supply.  The last time this happened, homes in Kuna were appreciating at a double-digit annual pace.

But prices are not rising yet, due to the foreclosure bubble.  There are currently 249 homes listed for sale and 96 under pending contracts in Kuna.  Much like the rest of the Boise area with high percentages of distressed sales, over 35% of the homes for sale in Kuna are short sales priced for liquidation and racing to avoid foreclosure.  Foreclosed homes (REO) make up 3.6% of all homes for sale.  These conditions are keeping prices soft on all homes.

Another sign that prices are poised to rise is in the new construction sector- Kuna has less than a 2-month supply of new homes, based on the pace of sales.  New construction represents 33.8% of all homes for sale in Kuna today.

What does this all mean to you?

For buyers, it is a fabulous time to buy a home at a bargain price in Kuna, especially with interest rates near 35-year lows.

For future sellers, great prospects for appreciation after the foreclosure bubble peaks.  I say future sellers because now is not a good time to sell with prices way down, unless you plan to re-buy and can use the tax credit for current homeowners.

Ask me about Kuna home bargains in short sales, HUD, VA and Bank-owned homes.

Dan Rowe ABR CRS GRI, Broker

(208) 866-3481

danrowe@cableone.net

Posted at 02:42PM Nov 17, 2009 by Dan Rowe in Real Estate  |  Comments[0]

Single or Multi-Family Rentals?

Many real estate investors think it will be easier to have multiple units all in one place for economies of scale and ease of maintenance and all that.  However, there are many other factors to be considered on real estate investments. The drawbacks should make you think twice when comparing multi-family properties to single-family homes.

Let us start with resale issues:  The pool of potential buyers greatly affects the liquidity and potential value of your investment.  When selling, multi-family properties appeal to mostly investors, a much smaller group than homebuyers. This factor certanly will affect your re-sale. Plus, investors looking only to make money will generally pay less than a homebuyer who just wants a place to live. 

Another issue affecting resale is the availablilty of financing.  The more plentiful homebuyers have access to hundreds of financing programs with as little as zero down and at lower rates than investors.  The smaller pool of investors have many fewer financing options and need a much larger down payment, especially on 3 or more units.

Another point on liquidity:  You cannot sell just one unit of a four-plex, but you can sell one of four homes if the need arises.

Diversification:  Which is safer? A four-plex in one location or homes in multiple locations.

Valuation:  Single-family homes are appraised based on comparable sales at their highest and best use, which is as a home.  Multi-family properties are valued based on income and what investors are willing to pay for that income, which can be substantially less in a slow market.  Raising the rent may be the only way to increase value on multi-family propeties.

Vacancy costs:   I have no specifics to back it up, but from all the reports I get, single-family homes have the lowest vacancy rates, with generally more stable renters. 

Maintenance costs:  Renters of single-family homes have more of a presumption of ownership and generally take better care of the property than apartment dwellers, in my experience.  Apartment renters don't own lawn mowers either. 

Multi-family properties can be a great investment, but these are not minor drawbacks.

Dan Rowe ABR CRS GRI
Broker of Dan Rowe Realty in Boise Idaho 

(208)866-3481  

danrowe@cableone.net

Ask me for the best available investments in the Boise Idaho area.   

Posted at 01:13PM Oct 16, 2009 by Dan Rowe in Investments  |  Comments[0]

Specials in Foreclosures- Boise Idaho Area- Freddie Mac

As a real estate broker in Boise Idaho, I often see special terms offered by institutions on their REO properties that they've taken back in foreclosure.  I can think of four seperate special offerings on government and bank-owned homes right now. Stay tuned to my blog for more details on each.

Today, let's talk about Freddie Mac.  Freddie Mac is a nickname for FHLMC or Federal Home Loan Mortgage Corporation, also known as Homesteps.  Freddie Mac buys mortgages from lenders, helping to complete the big circle of money that connects borrowers, lenders and investors.  With so many foreclosures, Freddie Mac has a very large inventory of REO, that is- real estate owned. This is a problem when you're in the business of owning loans- not homes.

In order to move inventory, Homesteps is running a special on REO homes. Time is running out to take advantage of this program. To qualify, the home must be under contract by October 30th, 2009 and closed by the end of 2009.

• All prices include up to 3.5% for your closing costs, reserves, points. This covers all but your down payment! 
• Also included a 2-year home warranty worth $1100

For more details and restrictions, see homesteps.com

There are at nearly 40 homes in the Boise area owned by Homesteps that qualify for this program.  Let me also clarify that, as a buyer's agent, I ask the seller to pay your closing costs on every home. However, they are not often included in the asking price.  

Contact me today for a list of Freddie Mac's repos, other foreclosures, or all homes that meet your needs and price range in the Treasure Valley and SW Idaho.

Dan Rowe ABR CRS GRI, Broker

(208) 866-3481

danrowe@cableone.net

 I Welcome all questions.

Posted at 04:17PM Oct 14, 2009 by Dan Rowe in Foreclosed REO Homes  |  Comments[0]

Do You Qualify For A Home Loan? Know The Math

If buying a home is in your future, before you go looking at any homes for sale, it is imperative that you get pre-qualified for financing.  Not only because it puts you in the strongest possible bargaining position, but many sellers will not consider your offer without a letter from your lender.

The debt-to-income ratio is all important in determining how much you can borrow. In general, your maximum house payment, including principle, interest, taxes & insurance, can be no more than 30% of your gross monthly income before taxes. For example, if you make $3,000 per month, your maximum payment would be $900 PITI (principle, interest, taxes and insurance). You may need a professional to help you back out taxes and insurance and calculate the maximum loan amount based on current interest rates and down payment, but as a general rule of thumb you can buy a home equivalent to 3 times your annual income. With current low rates- maybe a little more.

Your debt ratio is also crucial. Debt is defined as consumer debt that lasts longer than a few months: installment purchases, car payments, student loans, child support, minimum payments on credit cards if you carry a balance. I use 41% as a rule of thumb, but it varies with the lender and type of loan. This is how it works. Your total house payment plus your debt can be no higher than 41% of your gross monthly income. For example: On $3,000 monthly income the maximum debt would be $1230. Back out the $900 and any debt over $330 will reduced the maximum payment that you qualify for. If you had a $500 car payment, your maximum payment could be only $730.

Again, these are general rules of thumb and you should consult with both a lender and a Realtor concerning your unique situation.

Dan Rowe ABR CRS GRI, Broker

(208) 866-3481

danrowe@cableone.net

Posted at 11:20AM Oct 14, 2009 by Dan Rowe in Financing  |  Comments[0]