Housing remains mired in a slump in most of the country, with nearly one in four homeowners under water.
Are you drowning in debt? When did you make your last mortgage payment? Call me today and let me tell you how I can assist you with your real estate.
As gloomy as the most of the housing market may seem with all the short sales, REOs and foreclosures, a handful of bold investors are attempting to make millions on flips of high-end houses.
Do you know the current value of your home? Call me today for a FREE home market analysis of your home.
monica.manocha@gmail.com
Friday, October 28, 2011
A homeowner or landlord??
HOUSE TALK OCTOBER 7, 2011
Should a First-Time Buyer Be a Landlord?
By JUNE FLETCHER
Q. I am a single professional in my 20s who rents with a few roommates. I read your comments about how Austin is a good place to invest in property, given the volatility of the stock market. I, too, am considering it. I am thinking of buying a three-bedroom, $150,000 house in a good neighborhood. With help from my family, I can put 20% down. If I rent out the extra two rooms, the income will cover the property tax and mortgage. But I travel a lot for work and I am not sure whether my company will transfer me or if I even want to stay in this area. Should I do it?
--Austin, Texas
A. I applaud your desire to invest in your financial future. And landlords get generous tax breaks while collecting rental income. But from what you've told me, I recommend holding off buying a home.
Managing a property—which includes screening tenants, collecting rents, paying bills and keeping the lawn mowed—while you are traveling is difficult. But my bigger concern is that you are not sure if you are even going to stay in the area. Unless you buy a fixer upper at a discount, rehab it and resell it quickly, the only way to make money in real estate is to hold on to a property until it appreciates. Even though prices have been rising in Austin, you will need to stay in the area for at least a few years to recoup your costs on a market-rate house.
Developments: Mortgage Rates Fall Below 4%
As a homeowner and landlord, you will have many expenses besides taxes and a mortgage. Assuming you put 20% down on a $150,000 house in Austin, you will have to pay an estimated $4,938 in closing costs, according to Zillow's calculator. You also will have to budget for repairs and maintenance—expect to pay between 1% and 3% of the home's purchase price each year—as well as for repainting and freshening the rooms when tenants move out. You will need insurance, and if you have a homeowners association, you will have to pay dues. When you sell, you will have to pay a broker's commission, probably around 6% of the selling price, and some fix-up costs.
Rental income will help to defray these expenses, but you cannot depend on a steady stream. There will be periods when one or more of the rooms will be vacant, and you may have to shoulder some extra costs to evict someone who doesn't pay the rent. You should have about six months of mortgage payments in reserve to cover these possibilities. You also should have cash on hand to handle expensive emergencies, like a furnace that conks out in a cold snap. Since you will have to tap family funds for a down payment, it doesn't sound like you have enough of a cushion yet.
That doesn't mean that you should give up on the idea of owning property. Just postpone it until you know where you will live and are on a more solid financial footing. In the meantime, continue to familiarize yourself with various neighborhoods and properties, talk to lenders and work with a real estate agent who understands your situation. Then you will be in a position to act when you are ready to put down roots.
Should a First-Time Buyer Be a Landlord?
By JUNE FLETCHER
Q. I am a single professional in my 20s who rents with a few roommates. I read your comments about how Austin is a good place to invest in property, given the volatility of the stock market. I, too, am considering it. I am thinking of buying a three-bedroom, $150,000 house in a good neighborhood. With help from my family, I can put 20% down. If I rent out the extra two rooms, the income will cover the property tax and mortgage. But I travel a lot for work and I am not sure whether my company will transfer me or if I even want to stay in this area. Should I do it?
--Austin, Texas
A. I applaud your desire to invest in your financial future. And landlords get generous tax breaks while collecting rental income. But from what you've told me, I recommend holding off buying a home.
Managing a property—which includes screening tenants, collecting rents, paying bills and keeping the lawn mowed—while you are traveling is difficult. But my bigger concern is that you are not sure if you are even going to stay in the area. Unless you buy a fixer upper at a discount, rehab it and resell it quickly, the only way to make money in real estate is to hold on to a property until it appreciates. Even though prices have been rising in Austin, you will need to stay in the area for at least a few years to recoup your costs on a market-rate house.
Developments: Mortgage Rates Fall Below 4%
As a homeowner and landlord, you will have many expenses besides taxes and a mortgage. Assuming you put 20% down on a $150,000 house in Austin, you will have to pay an estimated $4,938 in closing costs, according to Zillow's calculator. You also will have to budget for repairs and maintenance—expect to pay between 1% and 3% of the home's purchase price each year—as well as for repainting and freshening the rooms when tenants move out. You will need insurance, and if you have a homeowners association, you will have to pay dues. When you sell, you will have to pay a broker's commission, probably around 6% of the selling price, and some fix-up costs.
Rental income will help to defray these expenses, but you cannot depend on a steady stream. There will be periods when one or more of the rooms will be vacant, and you may have to shoulder some extra costs to evict someone who doesn't pay the rent. You should have about six months of mortgage payments in reserve to cover these possibilities. You also should have cash on hand to handle expensive emergencies, like a furnace that conks out in a cold snap. Since you will have to tap family funds for a down payment, it doesn't sound like you have enough of a cushion yet.
That doesn't mean that you should give up on the idea of owning property. Just postpone it until you know where you will live and are on a more solid financial footing. In the meantime, continue to familiarize yourself with various neighborhoods and properties, talk to lenders and work with a real estate agent who understands your situation. Then you will be in a position to act when you are ready to put down roots.
Thursday, October 6, 2011
The Silicon Valley Housing Market Update
Sales of existing single-family Bay Area homes rose in August from the previous month and compared with a year ago, according to a report Friday. But part of the increase was attributed to August having more business days to record deals, and sales were below normal for the month, typically one of the busiest for home buying.
"Lower prices and lower mortgage rates have drawn more people off the sidelines" to buy homes, said Andrew LePage, a spokesman for DataQuick, the real estate information service that issued the report. "But there are still a lot of folks holding off waiting to see if prices have bottomed out so they don't buy and find themselves in the position of others who owe more on their home than it's worth."
A total of 1,183 existing single-family Santa Clara County homes were sold in August, an increase of nearly 9 percent from July and up nearly 12 percent from a year ago. In Alameda County, the 1,079 homes sold represented an increase of 2 percent from July and about 7 percent from a year ago. Contra Costa County's 1,210 sales were up about 10 percent from July and 12 percent year over year.
The median price of homes sold in August was up slightly from July in Alameda, Contra Costa and Solano counties, but sagged a bit in Santa Clara, San Mateo and San Joaquin counties, and was unchanged Bay Area-wide compared with a year ago.
The median price in August was $561,750 in Santa Clara County, $399,000 in Alameda County
Advertisement and $280,000 in Contra Costa County.
Many real-estate agents based in Cupertino, are encouraged by what they are seeing. They noted that five developers recently submitted bids on a Sunnyvale parcel of land in hopes of building new homes there. In addition, they are seeing a rise in the price of entry-level homes in Palo Alto, Cupertino and West San Jose -- areas that had been among the last to succumb to falling prices when the housing market tanked in 2008.
"I definitely am seeing improvement," Walker said. "Buyers are feeling more confident" about entering the market.
Sonia Dueñas and her husband bought a five-bedroom house in West San Jose in August for $810,000 after deciding "the time was right" for their family to move up from their townhome north of the city's downtown.
"It was a combination of things" that prompted the purchase, Dueñas said. "We felt comfortable with the interest rates, we qualified for the property without any issues, we were looking for certain things in a home, and it just happened to be the right one."
Besides, she added, "I have a boy and girl, and they were still sharing a room, so it was time to make a change."
But not everyone is finding it easy to get into the market. Robin Dickson, who works in the Danville office of J. Rockliff Realtors, said many mid-range buyers are having a tough time.
"The high end is becoming a little more solid, and the low-low-end investors are everywhere," she said. "But the difficulty in obtaining financing is really affecting the move-up buyers."
Because a lot of people, even with good credit, can't qualify to get a mortgage, cash is king, Dickson said. She said cash deals in her office are up about 30 percent compared with last year. She added that many buyers are looking at Brentwood and Oakley for housing options because, "you can buy so much more house for a lot less."
Kevin Kieffer, of Keller Williams Realty, said he is getting 20 to 25 calls a week from investors looking to buy low-end properties, mostly in Concord and Martinez.
"With what's going on in the stock market, people are looking for other ways to invest in property," he said.
However, some high-end home buyers are facing difficulties, too.
Sean Ryan, an entrepreneur specializing in software, two months ago paid $1.2 million in cash for a five-bedroom Danville house. But when he recently sold his previous home nearby, he said, it closed at about a 5 percent loss.
"We bought the new house with the understanding we could sell the existing home, but the market turned out to be a little more difficult than we thought it would be," he said.
Despite August's uptick in sales, "I don't think it means we're on a rebound," said Jeff Hansen, who handles home sales in Santa Clara County for Keller Williams Realty. But he added that it's hard to draw conclusions from just one month.
Comparing June through August, this summer's sales don't look too impressive. Santa Clara County had 3,573 single-family home transactions during the three-month period this year, which was 20 more than during 2010 and 227 more than in 2008. But over the past decade, the number of sales averaged 4,796, said DataQuick spokesman LePage, who believes the weak economy, political wrangling in Washington and worries about the nation's debt have caused many potential homebuyers to hold off venturing into the market.
"In a historical context, it's been a very slow summer," he said. And judging from the August sales data, "it definitely didn't finish with a bang."
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