Real Estate Network

Posts Tagged ‘Rental’

Arnold, CA (PRWEB) November 15, 2011

Cedar Creek Realty, a vacation rental and property management company in Arnold, California reports that vacation rentals are being snapped up in the area.

“This was the best July we’ve ever had. It was record numbers for us,” said Kelley Stellar, vacation rental manager for Cedar Creek Realty in Arnold. “Many people who used to take their vacations to Hawaii, Europe or Tahoe are coming up to the Arnold area these days.”

Stellar believes this is partly due to the poor economy and partly due to the recent “discovery” of the Arnold area by young families in the East Bay of California’s San Francisco Bay Area.

Stellar estimates there are between 150 and 300 vacation rentals available in the greater Arnold area. Renters often just stay for the weekend, but week- and month-long stays are becoming increasingly common.

From a business perspective, experts believe that turning a second home into a vacation rental is a good way to supplement income. “It’s a great idea in this point in time,” Stellar said. “All of my rentals are second homes. Now, because of the economy, they have decided to rent them out for extra income.”

Stellar said that along with the booming rentals, home sales are also up in the area. “We get people who actually are up here looking to purchase a home to put it in a vacation rental program. They know that now is a good time buy.”

There are two main seasons for vacation rentals. During the summer, families come up for vacations and enjoy the lakes and rivers and exploring the mountains. In the winter, numerous skiers head to the hills. “From the third week in June (when kids get out of school) through Labor Day” is a booming time, Stellar said. “We start getting busy again when the snow flies around Thanksgiving. That lasts through Easter.”

Who rents?

People come from all over the state and beyond to stay in the cabins and homes in the Arnold area.

“Most people are coming in with two to three families,” Stellar added. “They rent the larger houses. Usually, it’s families. People in their 30s with children ranging from 5 to 13. We get a lot of them from the Bay Area.” Luckily for owners, there are very few younger renters, and the cabins do not receive very much damage. “We don’t get a lot of the 20-somethings up here,” Stellar said. “Almost all of them are families. I really don’t get a lot of damage. I might get a spill on the carpet from kids carrying a Coke. Really, it’s very good.”

Why Arnold?

“People have actually started to discover us,” Stellar said. “We have a whole lot to offer. Once somebody comes up here once, they go home and tell their friends and bring their friends up. Then they come back up year after year. They often use the same cabin every year. It’s kind of a tradition. It’s actually becoming a big draw.”

“If you’re taking a family of five to go skiing and go to Tahoe, you spend a bundle. You can come here instead and spend a lot less.”

“I think it’s more beautiful here,” Stellar said. “It’s a beautiful easy drive from the Bay Area. The people up here are incredibly friendly. There is so much to do. From Murphys all the way up, there is so much diversity.”

Blue Lakes Springs is one of the most popular rental areas because there’s a lot to do within the subdivision.

“Most people are looking for the recreation areas,” Stellar said. “Blue Lakes Springs is very popular because of all the activities they offer. Most families want something for their kids to do.”

This popularity of the vacation rentals has led to home sales rising as well, as some vacationers want a permanent home in the scenic Highway 4 corridor.

About Cedar Creek Realty

Mountain living is a unique experience. Cedar Creek Realty’s staff offers both the local knowledge and the big city expertise to handle the real estate needs of full-time residents and second homeowners from the San Francisco Bay Area. Every property has its history of ownership, slope nuances, and unique characteristics. Cedar Creek Realty combines insider perspective with extensive experience, garnered all across California, in the full range of real estate services from sales and marketing to rentals and property management.

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(PRWEB) November 16, 2011

Michael Pierson and Chris Eigel, principals of the prestigious Chicago real estate firm Prudential Rubloff Properties, are pleased to announce the formation of Prudential Rubloff Rentals, a new division in Southwest Michigan and Northwest Indiana established to market and manage vacation rental property.

As a market leader in Harbor Country and the surrounding communities, we were often asked to market and manage vacation rental property, said Pierson. By establishing Prudential Rubloff Rentals, we are responding to a need in the marketplace.

Eigel added, A rental division dovetails nicely with our brokerage services in Southwest Michigan and Northwest Indiana and was really a natural progression for us.

I am delighted to add such a valuable service to the comprehensive services we already offer through our New Buffalo, Michigan office, said Rob Gow, Branch Manager of the Prudential Rubloff New Buffalo office. We look forward to helping our new vacation rental clients achieve their goals.

To learn more about Rubloff Rentals for your vacation property, please contact Rob Gow directly at 269.469.8740 or send him an email at rgow@Rubloff.com.

About Prudential Rubloff Properties

Prudential Rubloffs Harbor Country office is located at 439 S Whittaker Street in New Buffalo, Michigan and can be reached by calling 269.469.8300. Prudential Rubloff Properties has 16 sales offices with over 900 sales professionals and staff in Chicagos Gold Coast, Lincoln Park, Lakeview and South Loop neighborhoods, as well as suburban Evanston, Hinsdale, Lake Forest, Libertyville, Northbrook, Wheaton, Winnetka and Michigans Harbor Country. Prudential Rubloff is the exclusive provider of Prudential Rubloff Mobile, a free mobile application that allows users to explore all homes for sale, for rent or that have recently sold in the Chicagoland and Southwest Michigan areas from their mobile device. Prudential Rubloff is also the exclusive provider of Premier Market Watch, a consumer trend and analysis tool for neighborhoods and communities in Chicagolands Cook, Lake and DuPage counties. To receive Premier Market Watch reports, or to download the Prudential Rubloff Mobile application, please visit Rubloff.com.

Prudential Rubloff Properties is an independently owned and operated member of Prudential Real Estate Affiliates, a full-service residential and commercial real estate network with nearly 1,600 franchise offices and approximately 54,100 sales professionals in the franchise network in the United States and Canada. Prudential Rubloff ranked first in the Midwest and sixth nationally in the Prudential Real Estate Network in 2010. For additional information and the finest online residential real estate experience in Chicagoland, please visit Rubloff.com.

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Metro Atlanta (PRWEB) November 15, 2011

Atlanta, GA | Like many urban centers in the U.S. – is continuing to see a surge in consumers who are renting rather than buying.

With so many vacant properties especially new homes, condos and townhomes renters are getting much more for their money than they normally would, says Barry Britt, Managing Broker for REO Proformance Systems Coldwell Banker of Georgias top real estate team that focuses on Atlanta foreclosure and bank-owned properties in the metro area.

From 2000 to 2010 the new housing boom outpaced demand by more than 50% in the four major metropolitan Atlanta counties (including Cobb, Gwinnett, Dekalb and Fulton). In 2010 more than half of the 143,000 new houses, condos and apartments were vacant most available for rent.

What does that mean for the renter? Great things of course. For renters there is much more competition for their business which means they do get more for their money. We are seeing many owners of Atlanta foreclosure homes put those properties into the rental market, says Sandi Beursken, agent and Chief Administrative Officer at REO Proformance Systems. Owners of these properties such as financial institutions and mortgage companies, are aware of how challenging the real estate market is and, as a result, are looking to generate some positive cash flow for these non-performing assets.

The recession and slow-moving, jobless recovery has created many more renters. We know that home owners are still the majority in the 28-county metro area, but renters are closing the gap, says Britt.

However landlords and other property owners are seeing a dramatic increase in demand for rental property. This trend is resulting in both the stabilization of rents in some areas and rents INCREASING in others areas of Atlanta. In other words, landlords are actually seeing an increase in rental income as a result of this tough economic climate, says Britt.

But who are the new tenants? According to Britt these renters are potential home buyers who are choosing to rent rather than buy at this time OR other individuals or families who have damaged credit and cannot qualify for a home loan. Mortgage requirements are so tough right now that many families simply cant qualify, says Beursken. In fact she adds that the number of families who would like to buy but cant qualify is a major reason for this dramatic increase in the number of renters.

As we all have learned with all bear markets, there IS opportunity. There are so many compelling deals on the purchase of rental properties, says Britt. Our investor clients are searching and buying Atlanta foreclosure properties at remarkable prices – then getting renters in at a better rent rate than someone who bought rental property 4 years ago.

In fact, the long-term prospects for the rental market in a major metropolitan areas like Atlanta is excellent. This shift will slowly trend toward more stabilized rents as the number of available rental properties continues to decline. Much of the real estate boom in the Atlanta included properties such as apartments, townhomes and apartment, says Britt. As those properties become leased and fewer rental options are available, landlords will have more leverage over their rental rates.

REO Proformance Systems is a Gwinnett County-based real estate firm that specializes in foreclosure and short sales in the Gwinnett and North Fulton areas.

You can search for foreclosure properties for sale in Alpharetta, Duluth, Lawrenceville and many other Atlanta foreclosure real estate deals on their web site. You can reach them at 678-318-7911 to investigate selling your home via a short sale or if you are looking to buy a distressed property.

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Article by Arthur Levine

Please feel free to use this article as long as credit is given to the resource box.© Copyright Arthur Levine 2008Words: 473Keywords: Fire Island, Real Estate Agent, Dream Home, Seller, Buyer

I wake up each morning prepared to do battle. I know that by the time I get to my real estate office on Fire Island I will have anxious calls from both buyers and sellers and renters wanting to know when I am going to have the perfect prospect or summer home for them. Sometimes they even call me at my home early in the morning or late at night demanding to know when I am going to have the house of their dreams or the buyer that just can’t live without their home at any price.

I am used to this by now, and to tell the truth I love it. That’s right, I love matching buyers with sellers and renters with leasers. To me it’s an art form. I love what I do, and I believe in my heart that I am good at it.

I get a tremendous amount of satisfaction out of putting the right people together, and helping them all achieve their dreams. It’s wonderful to see the smiles on their faces when we achieve a meeting of the minds. It’s great to be able to satisfy their wishes. But it doesn’t happen automatically.

We have to do a lot of research into what the buyer wants in a home on Fire Island, and what the seller’s objectives are before we can come up with the perfect match. What you don’t want to do is waste a lot of everyone’s time introducing people to each other that don’t have compatible goals and objectives and price points.

We are not interested in making House and Garden type tours of the neighborhood. We want to concentrate on finding the right home at the right price for the right buyer, and at the same time satisfying the seller’s goals and objectives.

What I have discovered is that there is almost always the right match for the right people if you keep in mind certain criteria that form the basis for making a happy transaction:

1. What are the buyer, seller, leaser, or renter’s price points?2. What type of community do they want to live in?3. How ready are they to consummate a transaction4. How closely does the prospective home meet their needs?5. How well does the proposed transaction meet the dreams and objectives of the buyer and seller?

If you can answer all these questions affirmatively, you are ready to make a real estate match on Fire Island.

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It’s interesting how rental real estate gets treated as an investment. Like Rodney Dangerfield, it gets no respect. While conventional investments like stocks and bonds get the Financial Post and the Wall Street Journal, do a search on “how to purchase real estate” and you’ll discover all kinds of no-money down schemes that seem designed to sell books and tapes instead of investment real estate. On TV there is Report on Business TV, but for real estate you’ll see flipping shows or infomercials. It strikes me as pitiful that such a solid investment vehicle gets such a bad reputation.

It is possible to buy with no money down, but it involves arranging a high ratio mortgage, and for rental property you only do that if you have equity in other properties. In other words, if you’ve got one property free and clear its relatively easy to arrange a line of credit at prime. A $ 100,000 property would cost about $ 400 per month, plus taxes and maintenance of about $ 200. In short, it would carry itself and give you income to pay the financing costs.

A more common method to buy income real estate is with a deposit. Usually is you can make investment property itself with less than 40% down its probably a good deal. These kinds of properties are easier to come across in stable markets.

There are lots of reasons to own investment real estate.

Reason #1 to own income real estate is because your renters buy it for you. Even if the other benefits didn’t accrue, that on it’s own justifies the investment. But the fact is, there are more benefits to buying rental property

Reason #2 is leverage. The most effective description of how leverage works comes from the book Buy, Rent, Sell, by Lionel Needleman (Needleman is not a fast talker; in fact, he’s an accomplished author and professor with many published books and articles on housing in Great Britain and Canada. His assumptions and math is a bit simplistic, and need to be tweaked for your local market, but the book is worth looking at).

He explains leverage in the following manner: John and Mary each buy a property $ 100,000. After a year both houses have increased 10% in value. Both buyers sell the properties and compare the profits.

John began with $ 100,000, and now has $ 110,000, which means he has earned a 10% return on his investment. Mary, on the other hand, put $ 10,000 down on her property, and mortgaged the balance for$ 90,000. When she sells she clears off the mortgage and totals everything. She also received a $ 10,000 profit, but since she only invested $ 10,000 in the income property, she’s made a 100% return on her down payment. As you may suspect, the real kicker is that while John invested in one house, kept it for a year and then sold it with a $ 10,000 profit, Mary acquired 10 houses, kept them one year, and then sold them for a $ 100,000 profit. Both started out with $ 100,000, but after a year John has only got $ 110,000 while Mary $ 90,000 more. The numbers are simplified in this example, but they decisively demonstrate the magic of leverage.

Reason #3 is taxes. In most tax zones costs incurred on investment real estate is comes off income. And, you can generally incur depreciation expense on the structure that in effect are paper losses that reduce the tax burden. Depreciation works like this: we know that the value of a durable item, like a structure, decreases with the years. Even if the property is maintained perfectly, an old house is not worth the same amount of money as a new house. This loss is depreciation, and you can use that depreciation loss to decrease the total tax payable.

Of course, when we invest in income property we expect that it will go up in price, and over the long run it often does. What occurs with the depreciation in that case? The tax collector was told the property fell in price through depreciation, but at the end of the process we sold at a profit. The taxman usually says that you’ve “re-captured” the depreciation and levy tax.

Re-capture is no fun. It’s like discovering that you’ve already spent the money that you intended on spending in the future.

There is a great solution. When you buy the investment you cut up the original investment between the building value and the property value. Without cheating you set the value of the land as low as possible and the structure as high as reasonable (do the math and you’ll see it pays to be reasonable on your splits). When the property goes up in price and you liquidate, you tell the taxman that you didn’t recapture any depreciation since the structure did depreciate, while the land increased in value. This profit is capital gain, and capital gain is usually taxed at lower rates than income like…rent. You depreciate the money you make when you earn it as rent, and pay tax on it when it comes from capital gain.

Owning income producing property also enables you to write off the costs of things that you might have bought anyway, from office supplies to a trip to see the property.

Reason #4 is capital gain. Capital gain doesn’t always happen, but it often does. As we’ve seen with leverage, the capital gain can be leveraged. Even better, the capital gain can, sometimes, be greater than what some folks earn in a year of work.

Reason #5 puts everything together by combining cash flow, leverage, and tax planning. Rental real estate generate cash flow. Initially the cash flow could be neutral or even negative, but after some time it will often becomes positive. When it does you need to pay income tax on the excess rent. The solution for that is to re-mortgage and incur additional interest cost, reducing your taxes. You also re-leverage your initial property. The next step is to take that money and buy another income property. You pay no income tax, incur more depreciation, and still earn a capital gain. Better yet, with two properties you spread the risk, and when the time comes to sell you can stretch out the timeline and sell the properties in different years to minimize tax.

It can’t be repeated enough that you need to buy income property wisely. You need to know the location and the potential tenant. Properties that are desirable and are in a desirable area stay rented. “Desirable” doesn’t have to be “mansion”, but warm, clean, dry and well priced are critical. Whether you buy a 1 bedroom apartment or a three bedroom house with a suite isn’t important.

Metrics are critical. The first is price-to-rent ratio. What that means is that you take the price, say $ 100,000, and divide the rent, say $ 1000/month, into that. In this case the result would be 100. Numbers between 75 and 175 are great, but never forget that projected capital gains and interest rates impact what numbers you go with. Low interest rates permit higher numbers, and solid capital gain projections will demand higher numbers. Over 200 is no good in almost every location unless all you need is dependable income, aren’t concerned about capital gain or don’t ever plan to sell.

Another excellent metric is the break even rate. This is the percentage of the price need for a down payment to allow the realistic rent to carry the property. The rent has to be a) market rent, not “hoped for” rent, and b) net rent, not gross rent. If the investment will carry at less than 45% down its worth looking at. Clearly, if interest rates are low the net rent will carry more, meaning the break even rate can be high. Remember that low rates don’t last forever, so unless you can lock in very long term you have to assume that the break even rate to be low in low interest rate environments, and can be higher in higher interest rate environments.

If you discover a piece of property that has a desirable price to rent ratio and a desirable break even rate (and is in a good area and isn’t a bad idea), its worth throwing the numbers onto a spreadsheet and determining the internal rate of return (a real estate investment metric that combines various income streams) and projected cash on sale. There are spreadsheets and programs that can calculate this for you, but the key is “GIGO” – garbage in, garbage out. Use correct taxes, the correct interest rates, your projections of income tax rate, and realistic estimates of capital gain and maintenance. Properties in bustling urban areas generally go up in value more than properties in rural or depressed locales. They also often have what seem to be inferior metrics – a downtown city condo could have a much worse price to rent and break even point than small house in a mill town. However, capital appreciation in a rural area is likely much riskier. Measuring mortgage pay down and tax benefits on a detailed spreadsheet let’s you fairly evaluate exactly how competing investments compare.

It would be foolish to ignore the issue of a property bubble, or crash. Buying on metrics both helps and hinders. It helps because if you are hard-nosed with break even rates and rent multipliers you wouldn’t purchase overpriced investment property (underpriced income property doesn’t really turn up in a bubble, and it doesn’t crash in value). It hinders because you can’t buy on metrics in a bubble, no matter how much you want to, because metric compliant properties don’t exist.

The other side of this is that when a market crashes there are lots of metric compliant properties, but often little mortgage financing and plenty of scared buyers and stressed sellers.

All in all, a balanced market is the optimum for purchasers, although buyers who acquire on metrics and exit the market near the peak often feel like they’ve hit the jackpot.

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Even if you have strong positive cash flow from your rental real estate, chances are you still have a loss for tax purposes due to the depreciation deduction.

This is a great tax strategy because your positive cash flow is sheltered from tax. But, it can be even better if you are able to take your losses against your other income (like your income from your job or the business that you run).

The general rule for rental real estate losses is that they are passive. This means they can only be taken against passive income. The income from your job and the business you run is active income so your rental losses cannot shelter this income. However, there are two exceptions to this rule.

** Exception #1: “Active Real Estate” exception. **

The Background on the Active Real Estate Exception

Rental real estate, in many cases, is held to provide financial security to individuals with moderate incomes. Because of this Congress believed that a rental real estate investment in which a taxpayer has significant responsibilities and which served a significant non-tax purpose should be treated differently than the activities meant to be limited under the passive loss provisions. So Congress created the active rental real estate exception.

- How It Works -

If you are active in your rental real estate activities you may be able to deduct up to $25,000 of your rental losses against other ordinary income. We say may be because there are income limitations which phase out the $25,000 deduction. The phase out will start when your adjusted gross income exceeds $100,000 and end when your adjusted gross income is at $150,000. This means that for every $2 over $100,000 of adjusted gross income you will lose $1 off the $25,000 deductible amount. For example if your adjusted gross income is $120,000 you will have to reduce the $25,000 exception by $10,000 and the most rental real estate losses you can deduct will be $15,000 for that tax year.

Don’t let your high income penalize you! Learn my tax secrets to increase your cash flow by uncovering the hidden cash flow in your real estate. Several of my secrets reveal how to legally get around these income limitations!

What constitutes active participation?

Active participation exists so long as you participate, in the making of management decisions or arranging for others to provide services (such as repairs), in a significant and bona fide sense. Also, you must have at least a 10% interest in the activity at any time during the year.

** Exception #2: “Real Estate Professional” exception. **

What is a Real Estate Professional?

First, let’s dispense with one myth: Real Estate Professional status does not mean you have to hold a real estate license. Rather, it is a designation you obtain by meeting certain specific requirements. If you qualify as a real estate professional you can deduct all your current year rental real estate losses against other income without limitations.

Requirement #1

The first requirement is that you spend more than 750 hours in real estate trades or businesses in which you materially participate.

What is a real estate trade or business? A real estate trade or business is defined as ANY real estate development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business.

The 750 hours test must be met for each activity. So for example, say you have three rental properties. The general rule is that you have to perform at least 750 hours on activities related to EACH of those three properties. Fortunately, there is an exception to this rule. If you make the election to aggregate all of your rental real estate activities into one activity, you only have to meet the 750 hours requirement once for the tax year.

What types of activities qualify as real estate professional activities? Activities such as:

- Searching for possible rental properties

- Attending real estate seminars or reading real estate books

- Meeting with real estate agents and viewing properties

- Meeting with mortgage brokers with regards to getting loans on properties

- Travel time to and from the seminars and your property searches

- Preparing your bookkeeping and tax information for your rental properties

- Time spend buying or selling properties (i.e. signing the closing documents)

- Studying and reviewing financial reports (Investor-type)

- Preparing summaries or analyses for personal use (Investor-type)

- Monitoring finances or operation in a non-managerial capacity (Investor-type)

An important note to the investor-type activities mentioned above is that these activities can only be counted towards real estate professional time if you are involved in the day-to-day operations or management of the activity for which you perform those tasks. Essentially, this means that if you have an independent property manager and your only real estate business is your rental properties, you probably will not qualify as a real estate professional.

Requirement #2

The second requirement is that you spend more time in your real estate trades or businesses than in ALL OTHER trades or businesses combined. Time spent as an employee in real estate activities is counted only if you are a more than a 5% owner in that business.

- What You Need to Do -

You have to meet the above requirements each year. So, you could be a real estate professional one year but not the next. Only one spouse needs to meet the requirements in order for a married couple to take advantage of the benefits provided by the real estate professional status.

The extent of an individual’s participation in an activity may be established by any reasonable means. Contemporaneous daily time reports, logs, or similar documents are not required if the extent of such participation may be established by other reasonable means. Documentation required includes the identification of services performed over a period of time and the approximate number of hours spent performing such services during such period, based on appointment books, calendars, or narrative statements.

If you are audited, the IRS will ask you to prove your real estate professional status. For more on how to be prepared, see my recent article titled: “Three (3) Things You Can Do To Be Prepared For An Audit”