Is There Just too Much Misinformation in the Market?
We talk to investors and soon to be investors all the time only to find that there is so much misinformation floating around today about real estate investing. Perhaps this could be one of the reasons there are vacant properties sprinkled about town.
Now, I know that if you put 20 investors in a room, each one would have different opinions and views on what ‘works’ in the business and what doesn’t ‘work’.
Some of the myths we hear in the investing business…
MYTH #1 -The nicer and more expensive the house that I buy, the better the tenant I will get.
That sounds good, in theory. The only problem with this is that the higher the rent on the property, the less tenants there are that can qualify for the property. In my experience people that are renting for over $1000 a month here in Brevard County do not stay for an extended period of time. The majority of time they move in a year or less. They can afford to buy.
AND, It takes much longer to find a tenant for a $1200 a month rental than it does to find an $800 a month tenant. Our rental market is soft in the higher price ranges today. Homes being offered at over a $1000 a month are sitting empty 3, 6 and even more months.
MYTH #2 - If I build it, they will come. Every tenant wants to live in a brand new house.
Well, not so fast. They may want to live in a brand new house, but can they afford to pay the rent on a brand new house? Why have a house built just to put a tenant in it? And, who wants to put a tenant in a brand new house anyway? I don’t. And, I don’t care to do property management on brand new houses. When the tenant’s 6 year old son spills grape juice on the new carpeting, I’m usually the one that hears about it at the end of the lease term.
MYTH #3 - If I add top of the line appliances and upgrades, the tenant will pay more in rent.
The market can only bear what the market can bear. If homes in the area are renting for $1000 and you put yours at $1400 because of all the upgrades, yours will never rent.
MYTH #4 - The bigger the house I buy, the more people will be attracted to the home.
Bigger houses usually mean more people piling into the home so they can afford to pay the rent. A week ago, I was out showing houses to an out of town buyer. We looked a house for sale, that was a rental at $1500 a month. There were people and beds in every room. It reminded me of a teenage sleepover. There were at least 12 people living in this 3 bedroom, 2 bath, 1600 square foot home! They needed this many occupants to be able to afford the rent. The house was a mess. More people leads to excessive wear and tear on the property. And, more people mean more liability to the landlord.
MYTH #5 – People with perfect credit make the best tenants.
Well, you’ve heard me talk about this one before. People with perfect credit don’t need to rent from you and they won’t stay for long. These people will leave to buy a house.
MYTH #6 – I only want to buy a house that I would live in myself. It has to be a ‘pretty’ house.
You are NOT your tenant. All kinds of different people live in all kinds of different houses. Skip the pretty and focus on whether the property will produce income for you. And, not income tomorrow, or next year, income today! In my experience, tenants are looking for clean, affordable housing in somewhat decent neighborhoods. Provide them with one and they will rent it.
MYTH #7- I have to rehab the whole place before I put a tenant in it.
For what? In many cases you’re wasting your time and your money. Most of my rentals were built in the 60’s and the 70’s. Many of them have original kitchens and baths. Several of them have been rented with the same tenants for years. In some we have updated some kitchens and baths, but usually we update them with kitchens that we buy used from Habitat for Humanity. Why spend $30K on a rehab to put a tenant in, when you can spend $1000? On the rehab are you getting that much more money in rent? How long will it take to re-coop that $30K? Often times that rehab money is not bringing a higher paying tenant.
Often times what we think makes sense, in the investing business makes no sense at all. So be cautious and talk to a Realtor that knows and understands the investment side of the business before making a costly mistake.
This article is authored by
Sandy Shores Realtor, Melbourne FL Real Estate
Watch out for Those Deals That Are Too Good to Be True!
In the past 6 weeks we have been getting a lot of phone calls and e mails from people interested in buying ‘distressed’ property in Brevard County Florida. There is no question about it, currently in Brevard we have some exceptional deals on properties available for sale.
One woman last week asked me to help her find a $15,000 home. She indicated that she had heard that the banks were giving homes away. I asked what area she was looking in and what she was looking for in a home. I explained to her that there were many great deals available, but a $15,000 home was usually gutted and/or uninhabitable, if it existed at all. 
She told me that she saw homes that were going to be auctioned off. I explained that yes, often times people get great deals on these properties, but if they were being sold on the steps of the courthouse, they are not always being sold with clear title. They could be buying a home with encumbrances or liens remaining on the properties, thus they could become responsible for those liens.
It is crucial in this market, that people do their homework first. These deals are not always what they may seem. We seem to be seeing the crooks coming out of the woodwork again, trying to sell books and tapes teaching people to ‘get rich quick’ off of other people’s misfortunes.
Now, don’t get me wrong, I am not opposed to buyers picking up great deals on foreclosures and short sale properties. I think there are some great buying opportunities today.
Just be careful.
And, be sure to enlist the experience of a knowledgable realtor that can help you steer clear of these “deals that just seem to be too good to be true.” Because, if they seem too good to be true, they usually are.
This article is authored by
Sandy Shores Realtor, Melbourne FL Real Estate
Howling in the Night, With A Crazy Man Running Down the Street in His Underwear
Last night I went to bed at my usual time, 10:00PM. When I hit the pillow, I was dead to the world. It was a very busy week and weekend.
At about 11:30 PM I thought I was dreaming. I heard what sounded like a baby wailing at the top of it’s lungs…no, it was two babies. Well, you know how often times we incorporate real world sounds into our dreams? Well, I started dreaming that I was out in the middle of a field, running towards a baby that I couldn’t get to quickly enough. I ran and ran and ran…and couldn’t reach it. The cries persisted until they startled me awake. I sat up in bed and I could hear this painful cry or whine or howl…I couldn’t figure out what it was. It was a unsettling.
I got up and went to the front door and looked out. There were two alley cats standing on my front porch, with their backs hunched, howling. Now, they were definitely at the wrong house. It’s my next door neighbor that loves cats, not me. I opened the door and attempted to shush them away. They looked at me as if I was crazy. They stood there and began howling even louder. My husband headed outside. They wouldn’t budge! It was the strangest thing! I just wanted them off the porch so we could go back to sleep.
Now, I know that my story of two kitties howling doesn’t compare to Mary Douglas’ mountain lion she had at her door with a half dead deer in it’s mouth (yuck!).
But, had I been more awake at the time, it probably would have been pretty funny to have taken a video of my husband running down the street, at midnight, flailing his arms and yelling at two lost cats, in his joe boxers!
This article is authored by
Sandy Shores, Melbourne FL Realtor
For Rent – 2748 Golf Lake Circle, #811, Melbourne FL
$645.00 Rent, $700.00 Security Deposit
Available March 15, 2009
2 bedroom, 2 bath ground floor, end, corner unit in quiet community
Centrally located, walk to the grocery store
Screened porch overlooking the pond, feed the ducks and the turtles
If this property doesn’t suit your needs,
we currently have other properties available for rent
from $645.00 per month to $795.00 in the Melbourne area.
This article is authored by
Sandy Shores, Melbourne FL Realtor
Brevard County Real Estate & Investing
Palm Bay Florida Real Estate News
Favorable Investor Guidelines from Fannie Mae
According to the Florida Association of Realtors Fannie Mae has changed their guidelines and now real estate investors can own five to ten properties, instead of only one to four. The change goes into effect on March 1, for qualified homebuyers.
Investors must have good credit for at least the past 12 months.
Here is a link to the new Fannie Mae guidelines. I think it will be instrumental in allowing additional investor opportunities in buying real estate across the country.
This article is authored by
Where Are these Lowball Offers Coming From?
Our real estate market here in Brevard County is flooded with short sales and foreclosure properties. There are some absolutely fantastic deals for buyers today. There are short sales at under $100,000 that are 1700 square foot homes, 3 bedroom, 2 bath, 2 car garages, on .23 acres, 2-3 years old, many never lived in. The deals are phenomenal!
Over the past couple of months I have seen a trend with buyers. Buyers are not interested in what comparable homes have been selling for in an area. They are interested primarily in what THEY WANT TO PAY for a property. PERIOD! It seems there is no rhyme nor reason to the numbers that buyers are attempting to throw out there to purchase these properties. Now, don’t get me wrong, when I buy real estate, I want to pay the lowest price possible. I think we all do. But, I keep hearing buyers say that they know they can pay pennies on the dollar for a property. Just where are they getting this information? Late night TV?
Some of these low ball offers are being signed off on by desperate home sellers on short sale listings. Then, they are forwarded to the third party lenders for approval, where they will never have a chance of being accepted! These offers are clogging up the system and back logging the lenders and title/escrow/closing companies or attorneys offices.
Well, I suppose that turnabout is fairplay. In 2005, sellers were asking outrageous prices for their homes and getting their price, because homes were in such short supply.
In 99% of the cases, today’s lowball offers are being rejected.
Maybe it’s that 1% chance that their hoping that their offer will be accepted.
This article is authored by
Sandy Shores, Melbourne FL Realtor
FEMA Flood Maps are Changing and Some Owners Aren’t Happy
Some homeowners are finding that they have to go out and shop for flood insurance on their home, when they were never required to have it before. The change is because FEMA, the Federal Emergency Management Agency is converting their flood insurance maps to digital maps. In the process, they are finding that some areas of the country have been rezoned, as the digital maps are much more precise than previous maps.
Some areas that were not considered to be in flood zones have now been classified as high risk areas. And, this doesn’t necessarily have to do with whether an area has had a recent flooding problem. Homeowners are not happy! And, some areas that were considered high risk, no longer require flood insurance.
Mortgage companies require properties located in high risk areas to purchase separate flood insurance policies, in addition to their regular homeowners insurance policies. Some homeowners, not in high risk flood zones voluntarily carry flood policies as a precaution.
This article is authored by
Sandy Shores, Melbourne FL Realtor
Appraisals Will Be Done By AMC’s
According to Florida Association of Realtors, beginning May 1, 2009, a new federal regulation will mean that mortgage lenders will no longer be able to call or hire their own appraisers to do appraisals for them. The appraisals will be handled by a separate party, or an outside appraisal management company. Lenders and realtors will not be allowed to have any contact with these AMC’s. The theory is that a lender or realtor will not be able to put any undue pressure on an appraiser to make sure that an appraisal reflects a specific contracted sales price.
But, the question being raised is, “Who will be monitoring the appraisal management companies?
This article is authored by
Sandy Shores, Melbourne FL Realtor
Perception is in the Eye of the Beholder
There are variations of this traveling across the internet,
and each time I see it, it tickles me!
Yourself …
This article is authored by
Sandy Shores, Melbourne FL Realtor
Brevard County Real Estate Investing
We Work Hard, But Are We Getting Paid?
My daughter came home from school the other day and said, “Mom, did you know that there are kids in my class that don’t have a savings account?” Now this is coming from the kid that makes us pay her interest when we’re running short on cash and haven’t made it to the bank to withdraw some money.
Do you pay yourself first? Do you pay yourself at all?
We come home with a paycheck. It gets deposited to a bank account. We sit down and write out a check or get online to pay our:
mortgage or rent payment
car payment
our electric/heating/fuel bill
water bill
cable bill
telephone bill
cell phone bill
marketing bills
credit card bills
grocery bill
gasoline
and then the rest goes towards your entertainment costs
dinner out
that $4.00 drive through coffee each morning
…and when we’re done, often times there’s nothing left of that paycheck for US.
What went wrong? (I know that some are saying that there wasn’t enough of a paycheck to start out with. And, maybe that’s so.)
I remember as a kid, I was taught to pay myself FIRST.
We work hard and we pay everyone else, BUT we neglect to pay ourselves!
So, in essence does that mean we’re working for free?
When you come home with that next paycheck, figure 10% to 15% of the check and put it away and save it. If you can, budget for more (provided that you’re not up to your neck paying minimum payments on high interest credit cards).
Learn to pay yourself first and then pay everyone else.
You’re worth it!
This article is authored by
Sandy Shores, Brevard County Real Estate
Brevard County Real Estate Investing
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