Serena Russell ~ Bay Area Real Estate Specialist

Rents

Let’s get right to the point. You want the highest rent you can receive. After all this is a business you are entering into.  Define for yourself what this number is and find out how you can receive this level of rent.  This is very important since the rent needs to be  enough to cover your mortgage payment, taxes, insurance & other expenses.

Taxes, Fees, Assessments: Consider what these are and add them to your expenses.   Excellent neighborhoods may have higher taxes and parking fees but usually will attract higher paying tenants who will stay longer. Excellent schools will also attract longer term tenants.

Cash flow: Consider how much you are looking to receive after all expenses are paid. Keep track of what the homes are selling for in the area and the appreciation rates.  If the property needs work, consider how much it will cost for renovation before the property could be rented.

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Consider a longer lease to  lock in your rent for a longer period of time.  It might be better to know that you have guaranteed rent, than to have a vacancy for indefinite time.

Reserves: This should be the first step in purchasing rental property to make sure you have some reserve to cover you for the times when you don’t have renters.  Initially you might have to do some repairs, or renovations before you advertize the property for rent. You may have some lag time in between renters.   For this reason many banks are requiring 6-9 months of reserves to cover lost rents, insurance, taxes and other expenses.  Cash buyers may want to follow these guidelines as well.

Vacancies: There is little control when it comes to vacancies.  A lease will offer protection for a period of time. Try to find tenants willing to sign a longer lease. Areas that are popular to live, will tend to have lower turnover rates than other areas.

Jobs: Even quiet suburbs can have room for  business expansion.   For example take two areas Redwood Shores & Pleasanton. These sleepy towns welcomed some large companies and in turn these companies  created jobs, which led to more construction and more desirability, which led to higher home prices.  Plain truth is  people prefer to live closer to work & will factor in the higher cost  of living vs the long commute.

Location: If you plan to manage the rental yourself consider how far it is located from where you are.  You may  find it well worth your while to hire a manager if you are purchased more than one unit (as in a duplex, tri, or fourplex or more units as in apartment building.

Within any city or town are pockets of areas  which are more popular than others, such as near universities, beach towns or beach village communities, major financial district or job center.  These areas are usually easier to rent than others and would probably generate a higher rent as well.  However, these same locations could have higher turnover than others due to the nature of the tenants (students, visitors, vacationers etc).

Schools: Quality of the school as this can affect the value of your investment.   Great schools attract long term tenants.  Should those tenants leave for any reason, new tenants would be also easy to find. You may even have too many to choose from; this is good!

Amenities It always great to have neighborhood parks, malls, gyms, movie theaters, &public transport  nearby, however most suburbs are now well enough connected with these amenities already.

Many vacation rental properties are located in resort locations, where there are even more attractions for visitors and short term renters.  Vacation properties may have other considerations too  Nevertheless, many second home buyers are looking to purchase a vacation home which they also intend to rent out for additional  income  Multi-plex dwellings lend themselves well to this endeavour.

You may be aware of areas which already have  condos, business parks or malls established.  These are popular with many commuters and are often well connected to  train, rail or bus.

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Now is the time to buy: Begin by selecting your town or city of interest.. Then talk to renters  and homeowners in the neighborhood.

Renters will be far more honest about the negative aspects of the area because they have no investment in it.  Also talk with local store owners & restaurant workers , in the  local strip mall .  You may be surprised how much you will learn about the neighborhood.

2012 is the year of the investor /rental property owner/second home buyer.  Don’t miss out on the chance to make that purchase of a lifetime! Serena is a Realtor & property manager in the bay area. Meet with Serena for your free consultation, and to begin your search for that perfect rental property. Call or text (510) 303-2549.

So have you been wondering how many homes are available for sale in a given area?  As a member of many MLS (multiple listing services) I am able to obtain this information.  This type of information proves very helpful to new buyers who are statistical minded, or who want a bigger picture of the current marketplace.

I have prepared a chart showing the numbers of single family homes available i four popular east bay cities.

Tips for reading the chart.  There are 103 single family homes in the 200-300K price range and 124 single family homes in the 300-400K price range available for sale.  This figure can change on a daily basis as new properties get added and others sold off.

At these prices, the market is ripe for investors and first time buyers.  Come to a first time buyer seminar offered Saturday mornings at my office in Fremont.  Admission is FREE and refreshments are served. If Saturdays are not good, then other days/times can be arranged.

I hope this information is helpful to you.  Let me know if I can assist with providing other figures or types of information to assist with your real estate decisions.

Great reasons to buy a home around the holidays

You might be wondering if buying a home during the holidays is a wise idea. Here are some good reasons to consider buying your home during the holiday months.

Here are five good reasons:

1.  December and early January are usually slower for sales and  sellers are motivated since they might not have sold the property in earlier months.

2. Rates are the lowest they have been in years and many options
are available, especially for buyers willing to put down 20% or more as a down
payment.

3.  There is  less competition to deal with which means less stress for you during the holidays.

4. Tax advantages: you may be eligible for deductions on points and mortgage interest if you close by the end of the year. Consult your tax advisor. deduction.

5. Lower prices & lower rates.

You should decide if this is a good time for you to buy.  Keep in mind, homes that did not sell over the summer are also available are great deals.  Furthermore, pricing might rise again after the New Year, so it might be a good time to find a bargain.

Good luck with your home search.

I hope you will find these tips helpful. Follow these tips to save on energy costs.

* Install these energy-efficient measures:
o Replace and recycle your old refrigerator and purchase energy-efficient models. Units only 10 years old can use twice as much electricity as a new ENERGY STAR® labeled model.
o Insulate ceilings to R-30 or higher if your attic has less than R-11 levels.
o Caulk windows, doors and anywhere air leaks in or out. Do not caulk around water heater and furnace exhaust pipes.
o Weatherstrip around windows and doors.
o Wrap heating and cooling ducts with duct wrap, or use mastic sealant.
o Install energy-saver showerheads.
* When buying new appliances, be sure to purchase energy-efficient ENERGY STAR® labeled models.
* Set the furnace thermostat at 68 degrees or lower, and the air-conditioner thermostat at 78 degrees or higher, health permitting. 3 percent to 5 percent more energy is used for each degree the furnace is set above 68 degrees and for each degree the air conditioner is set below 78 degrees.
* If your old air conditioner is on its way out replace it with ENERGY STAR® labeled energy-efficient model.
* Use compact fluorescent lamps. You can lower your lighting bill by converting to energy-efficient low-wattage compact fluorescent lighting and fixtures.
* Replace old windows with new high performance dual pane windows.
* Clean or replace furnace and air-conditioner filters regularly, following manufacturer’s instructions.
* Set the water heater thermostat at 140 degrees or “normal.” If you have a dishwasher. Otherwise, set it at 120 degrees or “low.” Check your dishwasher to see if you can use 120 degree water. Follow the manufacturer’s direction on yearly maintenance to extend the life of your unit.
* Fix defective plumbing or dripping faucets. A single dripping hot water faucet can waste 212 gallons of water a month. That not only increases water bills, but also increases the gas or electric bill for heating the water.
* Wash only full loads in a dishwasher and use the shortest cycle that will get your dishes clean. If operating instructions allow, turn off the dishwasher before the drying cycle, open the door and let the dishes dry naturally.
* Defrost refrigerators and freezers before ice buildup becomes 1/4-inch thick.
* Install shades, awnings or sunscreens on windows facing south and/or west to block summer light. In winter, open shades on sunny days to help warm rooms.
* Close the damper when the fireplace is not being used. Try not to use the fireplace and central heating system at the same time.

You can do most of these items yourself, and save on labor cost.  Thanks to many home improvement stores, you can easily purchase the supplies you need and install them in a few hours.  The satisfaction you receive will be well worth the effort.  Now good luck and HAPPY HOLIDAYS!

Why do so many people prefer credit unions to large banksing centers?

A credit union is a non-profit, member-owned financial institution that offers a variety of financial services similar to a bank. Your credit union offers checking and savings accounts, ATMs, loans and online banking services. Credit unions are insured by the National Credit Union Share Insurance Fund (NCUSIF), a private insurance fund backed by the federal government.
Member Owned

Every person with an account at a credit union is a member and this makes you a partial owner of your credit union. You will get to vote on who you want to serve on the Board of Directors and this board will help guide the direction of the credit union. This means you can provide input about what financial services you would like provided through the credit union.

Selection of Financial Services
Through your credit union you can open checking, savings and/or money market accounts (with direct deposit and wire transfer capability); get a credit card with low or no annual fee and lower interest rates. You can also get a mortgage or car loan.
In addition to the basic services that you expect at a financial institution, you may also find that your credit union offers notary services, credit counseling, financial education and investment services.

Better Interest Rates and Lower Fees
Credit unions offer higher interest rates on your savings, money market and CD deposits than you can typically find at banks. They also offer lower interest rates on your mortgage, auto loans and credit cards. These better interest rates are a result of the non-profit arrangement in which credit unions pass profits back to the members in the form of better interest rates.
Credit union members enjoy the benefits of lower fees–low or no annual fees on credit cards, free or low-cost checking accounts and free ATM usage.

Excellent Customer Service
Since each customer of the credit union is also a member, the customer service level at credit unions is known to be excellent. In an American Banker Gallup poll, credit unions consistently ranked higher in customer service than banks.

Local credit Unions.  Find one in your neighborhood.

1. Alliance Credit Union – San Jose
Serves members in the San Jose, CA and Wilmington, North Carolina areas.
www.alliancecreditunion.org
2. KeyPoint Credit Union – Sunnyvale
Provides a full range of financial services.
www.keypointcu.com
3. 1st United Services Credit Union – Alameda County
Provides financial services to members in Alameda, Contra Costa, and Kings County, CA, and Churchill County, NV, as well as online banking.
www.1stuscu.org
4. Pacific Advantage Federal Credit Union – Burlingame
www.pacadfcu.org
5. Sandia Laboratory Federal Credit Union – Livermore
www.SLFCU.org
6. KeyPoint Credit Union – Sunnyvale
Provides a full range of financial services.
www.keypointcu.com
7. 1st United Services Credit Union – Alameda County
Provides financial services to members in Alameda, Contra Costa, and Kings County, CA, and Churchill County, NV, as well as online banking.
www.1stuscu.org
8. Star One Credit Union – Sunnyvale
www.starone.org
9. San Francisco Federal Credit Union – San Francisco
For city and county employees of San Francisco.
www.SanFranciscoFCU.com
10. Cal State 9 Credit Union – Berkeley
Member-owned financial cooperative serving California State & University employees in the nine SF Bay Area counties.
www.calstate9.org
11. Redwood City Sequoia School Employees Federal Credit Union – Redwood City
Serves the financial needs of its membership and is the primary source of their lending and borrowing needs.
www.rcsse.org
12. Palo Alto Community Federal Credit Union – Palo Alto
www.pacommunityfcu.com
13. Valley Credit Union – San Jose
www.valleycu.org
14. San Francisco Police Credit Union (SFPCU) – San Francisco
www.sfpcu.org
15. Silverado Federal Credit Union – Angwin
www.silveradofcu.com
    Patelco Credit Union – San Francisco
Delivers service through its 38 branches and nationwide network of ATMs and service centers.
www.patelco.org
16. Commonwealth Central Credit Union – San Jose
Member-owned, cooperative financial institution formed to encourage savings and make loans at competitve rates. Serving Santa Clara County, CA.
www.commonwealthcu.org
17. Sterlent Credit Union – Pleasanton
Locations in Hayward, Oakland, Pleasanton, Sacramento, and San Ramon.
www.sterlentcu.org

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August 23, 2011

Fewer distressed property sales in July; California pending home sales decline, C.A.R. reports

LOS ANGELES (Aug. 23) – California pending home sales dipped in July, as did the share of sales of distressed properties, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

Pending home sales:

Pending home sales in California fell 1.7 percent in July, according to C.A.R.’s Pending Home Sales Index (PHSI)*.  The index was 117.0 in July, down from June’s index of 119.0, based on contracts signed in July.  The index was up 4.9 percent from July 2010.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

“While pending home sales dipped in July, all indications show we should continue at the current level for the next couple of months,” said C.A.R. President Beth L. Peerce.  “Pending sales have been ahead of last year’s level for the past three consecutive months and should be on track to finish the year even with last year’s pace.”

Distressed housing market data:

• The total share of all distressed property types sold statewide fell to 44.5 percent in July, down from June’s 46.9 percent.  The share of distressed sales also was down from a year prior, when distressed sales totaled 47.7 percent of all home sales.
• Of the distressed properties sold statewide, 17.5 percent were short sales, a decline from last month’s share of 19.3 percent and last July’s share of 20.9 percent.
• At 26.7 percent, the share of REO (real estate-owned) sales was down from June’s 27.3 percent figure, but was up slightly from the 26.3 percent reported in July 2010.
• Non-distressed sales made up the remaining share of home sales in July at 55.5 percent, up from 53.1 percent in June and 52.3 percent in July 2010.

California Association of Realtor’s  efforts to address the issues related to the difficulties of the short sale process are starting to gain traction.

Late last week, the Federal Housing Finance Agency (FHFA) announced it has directed Fannie Mae and Freddie Mac to establish consistent policies and processes for the servicing of delinquent loans.  The alignment will help servicers do a better job of resolving delinquencies in a more consistent and expeditious manner, keep more consumers in their homes whenever possible and minimize losses to companies and taxpayers.

The directive will streamline and expedite borrower outreach, align mortgage modification terms and requirements, and establish a consistent schedule of performance-based incentive payments and penalties.

The updated guidelines also prevent servicers from seeking foreclosure at the same time a borrower is being considered for a loan modification.

FHFA, Fannie Mae, and Freddie Mac said these directives are in response to concerns about servicer performance raised throughout the industry and government.

C.A.R. has been meeting regularly with industry regulators, lenders, and servicers to press for improvements to the short sale process and will continue to do so until significant improvements are made.

More info:  http://www.fhfa.gov/webfiles/21190/SAI42811Final.pdf

According to the California Department of Realtors,

Length of Time to Close – Back to Pre-Peak Levels

By Sara Sutachan, senior research analyst

For four years in a row, the time it took to go from contract to close was 30 days for a normal transaction between 2005 and 2008 according to C.A.R.’s Annual Housing Market Survey. In the last two years, with the current tough underwriting standards for mortgage loans, escrow is taking a bit longer—about 40 days. But actually the length of time it takes to close escrow is the same as it was in 2003 (just prior to the mortgage frenzy of ’04, ’05, and ‘06). This shows the market returning to somewhat normal conditions as escrow companies are taking their time to review, document, and close the transaction.

For distressed sales, the length of time to close escrow is about 5 days longer than for non-distressed home sales. And because we know that not all distressed sales are created equal, the problems in closing are largely with short sales as it takes these transactions about 50 days to close escrow, versus 35 days for REO or foreclosure sales.

Note – all numbers are based on medians.

Your purchase of a triplex is a great way to cash flow and at the same time increase your wealth as the property gains value.  Let’s look at some of the reasons why multiple units are a shortcut to financial freedom. If one house is a good investment, would not two, four, six or eight houses be even better?

Investing in a triplex, a property that contains three units separated by dwelling walls may provide ownership advantages over single-family rental dwellings.

A triplex has multiple tenants contributing rent each month and might ease your cash flow shortages should one unit become vacant, when compared to a vacancy with a single-family home. Your purchase of a triplex may increase your wealth as the property gains value.

After the first few months of operation, your monthly rents should take care of your debts and expenses. You’ll have more positive cash flow and you’ll be able to use it any way you want.

Consider three separate yet attached units perfect for multi or extended families, those that want to live in one unit and rent the others or rent the entire house for serious cash flow!

Occasionally there are multi-unit properties with an architectural design that permits one unit to be kept as a vacation home (and maybe a vacation rental, too) while the other units are rented out to long-term tenants. This kind of flexibility is nice for an absentee owner who wants to get some enjoyment from a property at the Lake while still trying to generate income when the place is not being used. While most multi-unit structures do not lend themselves favorably to this type of arrangement, occasionally there are properties that work well for this purpose.

So what are the major advantages of this type of investment and how can it lead to financial freedom? Read the rest of this entry »

These days, using a personal computer is just a normal part of life. You may have e-mail or online accounts that require a password, or you may have pictures, videos, or documents stored online or on your hard drive. You may even maintain a blog or website. Like your physical assets, these “digital” or “cyber” assets can have both sentimental and economic value. Chances are, nobody else knows your cyber assets even exist, and if they do, they may not know where those assets are stored or how to access them. It’s important that you make plans for the disposition of your cyber assets in the event of your incapacity or death. If you don’t, your survivors may have to deal with time-consuming and costly searches, or worse, the assets may be overlooked and lost altogether.

What happens to your cyber assets at your death depends on what type of asset it is, and while the laws regarding cyber assets are not well settled, there are some broad guidelines. Domain names, once registered, become your personal property under property law, and your websites and blog content are yours under federal copyright law. These types of cyber assets are clearly defined by law and are transferable to your heirs (e.g., through your will). On the other hand, certain online accounts, such as e-mail accounts, Facebook, Twitter, eBay, or PayPal, may not be classified as property in the legal sense; you are merely given a license by the website when you agree to its terms of service. Under these terms of service, transferability of your accounts may be limited or even prohibited altogether. Terms of service vary widely from site to site. Some sites, such as YouTube, will allow persons with legal power of attorney to access your accounts, and they post instructions on how to do so. Other sites, such as Facebook, will put your accounts into a “memorial state.” Many sites, however, will terminate and permanently delete your accounts upon notification of your death. You should read and understand all terms of service and make any necessary legal arrangements so your heirs will have access to your accounts.

Note: On the flip side, you may have certain private accounts to which you want to ensure that no one is given access and which will be terminated immediately upon your death.

Article courtesy of my friend JR Pablo. To find out more email JR Pablo jrpablo@patelco.org