Atlanta Real Estate Investor Blog » Opinion

Is now a good time to be a landlord?

admin — Wed, 11 Mar 2009 20:22:44 +0000

Last month, the delinquency rate for mortgages was at an all-time high, with one out of eight homeowners either late or in foreclosure. Across the country, home values have dropped on average anywhere between 8 and 30 percent. And in Atlanta, prices have fallen 12.1 percent, according to the S&P/Case-Shiller home price index.

For some, that paints a pretty bleak picture of the housing market. But for others, it looks like a time of great opportunity.

Why? Because, compared to their recent values, houses are cheap, and investors looking to hold rental properties for the long term are finding better and better deals.

For example, lenders have really started unloading their foreclosure properties at discount prices, which is a good sign for those looking at the long-term hold. Almost half of all deals today are either REO or short sales, and it is real estate investors who are increasingly taking advantage of that market.

In fact, our investor clients are telling us that they’ve never seen more foreclosure homes in better condition than now. Good properties are available, and at good prices.

Still, when looking at buying rental property, real estate investors should bear in mind:

A thorough inspection is absolutely mandatory. As anyone who as read an REO addendum to a sales contract can tell you, the selling lender makes no representation as to the condition of the property at all. As-is is the rule, and with a limited time to walk away without forfeiting your earnest money, you need to be certain the property doesn’t bring with it hidden repair costs which may affect your ultimate cashflow.
Bottom-fishing is OK. Right now, the banks are swamped with REO properties, and there’s nothing wrong with submitting low-ball offer after low-ball offer until someone bites. While there isn’t an average percent discount that lenders will accept, it still can’t hurt to make the offer.
It is still important to know your market and evaluate your specific deal. If the area ultimately won’t support the rental rate you need, then you’re probably offering too much.

Many personal finance experts have long-believed that real estate is a key component in building long-term wealth, and owning rental property is a fantastic way to earn that wealth slowly over time. With opportunities unseen for years, more and more investors are turning to rental property as a primary focus of an overall successful investment strategy.

Harlan and Associates has years of experience in helping real estate investors be successful, and ee’d love to be your Georgia closing attorneys. Want to know more? Just contact us today and we’ll be happy to discuss how Harlan and Associates can be of service
to you!

For Rent, originally uploaded by angi bbyx3.

Investors look at REO opportunities

admin — Thu, 05 Mar 2009 15:57:45 +0000

Earlier this week at county courthouses all across Georgia, thousands of properties were being called for foreclosure.

Metro Atlanta alone had a record number of scheduled foreclosures last month, with almost 8,500 homes slated to be sold on the courthouse steps. And today, those steps just aren’t as crowded as they used to be. Auctions once teemed with real estate investors looking for deals; today it is more common for the number of attorneys calling foreclosures to outnumber potential buyers.

Why? It’s simple: the deals for investors just aren’t there.

You see, if no one buys a property at the steps, it gets taken back by the lender. It becomes a class of property known as Real Estate Owned, or what’s more commonly-called REO. And once that property is classified as an REO, it’s listed on the lender’s books as a non-performing asset. That means the bank needs to sell it as quickly as possible. With record numbers of homes being foreclosed upon, that REO inventory is only expected to increase – and banks become much more motivated to sell.

Here at Harlan and Associates, we’ve handled hundreds of REO closings, and we’re seeing more and more every day.

Why? Well, most of our real estate investor clients are finding that the real deals are in post-foreclosure REOs – They say investing in REOs is the best way to generate instant potential equity in today’s market. It allows them to buy a property at a well-below market price and sell it for more than they paid.

Not only that, but there are more and more financing opportunities for investors buying REO properties. We’ve handled cash closings. There’s private money available. If the numbers are right, hard money lenders are always interested in lending on REOs. And earlier this month, Fannie Mae increased the number of properties an investor may finance, so more conventional non-owner occupant financing is available.

In other words, there are certainly opportunities for investors to profit.

Empty Nest Syndrome, originally uploaded by bitzcelt.

Take advantage of the first-time homebuyer tax credit

admin — Thu, 26 Feb 2009 14:50:13 +0000

There’s a new and better tax credit in town. Are you poised to take advantage of the coming surge in home sales?

Are you marketing your properties specifically to first-time homebuyers?

If not, you should be.

Last week, President Obama signed into law the American Recovery and Reinvestment Act. Under this Act, qualified first-time homebuyers will receive tax credits of up to $8,000 if they buy a principal residence this year. And it’s expected to bring 300,000 to 1,000,000 new homebuyers into the market.

That’s a lot of sales. And those sales should lead to even more as current homeowners look to trade up.

Best of all, unlike the $7,500 tax credit enacted last year, this new tax credit does not have to be repaid, and it’s refundable. It can, and will, put money directly into your buyer’s pockets.

The highlights:

The credit is available to first-time homebuyers. That’s anyone who has not owned a principal residence in the last three years.
The credit does not have to be repaid, and it’s refundable.
The credit is equal to 10 percent of the purchase price, up to $8,000.
The credit is available for homes purchased between January 1st and December 1st this year.

As a real estate investor, now is the time to take advantage of the first-time homebuyer market. From concentrating your sales marketing at those potential first-time home buyers to converting your lease/option tenants into owners through wrap financing, there are many different ways you can turn this new law to your advantage. It might be just the thing to get your deals closed!

At Harlan and Associates, we have years of experience in helping real estate investors be successful. We’d love to be your real estate closing attorneys in Atlanta Georgia. Want to know more? Contact us and we’ll be happy to discuss how Harlan and Associates can be of service to you!

1 Circle Arrow, originally uploaded by *Seuss*.

How long until we reach bottom?

admin — Mon, 01 Dec 2008 15:33:01 +0000

According to economist Mike Shedlock, and based upon data from Japan, the housing market won’t hit bottom for another seven years.

We’d love to be your real estate closing attorneys in Atlanta Georgia. Want to know more? Contact us and we’ll be happy to discuss how Harlan and Associates can be of service to you!

Number 7, originally uploaded by HelenPalsson.

Audio: Do you know how much your house is worth?

admin — Sat, 15 Nov 2008 02:55:10 +0000

On NPR’s Talk of The Nation: With home values in a steep decline, many homeowners have been forced to sell their houses for less than they paid for them. Still, experts insist that owning a home in a failing economy can be a good thing. Dean Foust and Robert Shiller explain why.

Robert Shilleris a Professor of Economics at Yale. He also co-created the Case/Shiller Home Price Index. It’s a very good listen on today’s housing market.

We’d love to be your closing attorneys in Atlanta Georgia. Want to know more? Contact us and we’ll be happy to discuss how Harlan and Associates can be of service to you!

what?? i can’t hear you!, originally uploaded by wackocatho.

Bailout!

admin — Fri, 19 Sep 2008 15:32:19 +0000

Unless you’ve been living under a rock recently, I’m sure you’re aware that the federal government is working on a massive bailout of Wall Street. This plan is intended finally to cure the financial markets of all problems related to the housing industry, mortgage-backed security issues in the secondary market, and restore confidence to an otherwise shell-shocked marketplace. Read more: CNN | Bloomberg | MarketWatch | The Wall Street Journal.

While the details of the plan are still being worked out, there are a number of things I believe that can be predicted with some amount of confidence:

The plan will cost the taxpayers much more than is currently being said. Treasury Secretary is currently predicting that the amount needed to bail out Wall Street will be in the “hundreds of billions” of dollars. Don’t believe it – it’s more than likely going to be much, much more.

The bailout, as currently being discussed in the major media, provides for the creation of a Resolution Trust Company-like entity. This entity, backed by the U.S. Government, would then take on all of the bad assets currently held by the financials – bad assets such as non-performing mortgages, depreciated REOs, and the secondary-market paperwork that accompanies them. In essence, the government bails out all the bad debts, the financials get a chance to wipe their slates clean, and everyone gets to move forward as if nothing ever happened.

The issue is this: for several years now, lenders have been doing everything they could to minimize these losses on their books. They’d shift them to Enron-like off-the-book entities. They’d change accounting rules so as not to recognize losses.

But now that the government is stepping in to back all of those bad debts with taxpayer money, you can expect every bad loan and potential loss will come out of the woodwork and be handed off to Uncle Sam. Think about it this way: if you had the opportunity to offload every potential bad debt onto someone else, wouldn’t you?

Hundreds of billions? My guess is that it will quickly escalate into the trillions of dollars.

The plan will not have any measurable impact on the day-to-day real estate industry. There’s a big difference between “on the ground” real estate and secondary market real estate. Stuff that’s on the ground are things like everyday home sales and mortgage loans. Secondary market stuff are all of the things that happen on Wall Street that are tied to those sales and loans: Mortgage backed securities, CDOs, tranches and so on.

While it is certainly true that the on-the-ground problems have led to the crisis on Wall Street, the current bailout plan does nothing to address the fundamental problems that are now systemic in the real estate market: there is still a glut of homes for sale, and it will not change. Foreclosures are skyrocketing, and it will not change. Home values are plummeting, and it will not change. Mortgage loans are difficult to come by for most, and it will not change.

In other words: the problems are too ingrained in the real estate market, and simply bailing out the lenders won’t make any difference whatsoever.

Again, think of it like this: the fuel of the real estate boom was the easy access to, and ready availability of, mortgage loans. Lenders made very imprudent choices in who they lent money to. Do you now expect them to go back to those very same lending guidelines that got us into the mess we’re in now?

To be sure, the bailout is intended to prevent a collapse of the financial system as a whole – but it will not be a curative panacea for all that presently ails the real estate market. Far from it.

We’d love to be your Georgia Closing Attorneys. Want to know more? Contact us and we’ll be happy to discuss how Harlan and Associates can be of service to you!

old crazy man of union square, originally uploaded by killthebird.

Flameout on Wall Street

admin — Mon, 15 Sep 2008 14:01:58 +0000

In one weekend:

Lehman Brothers: Bankrupt.
Merrill Lynch: Sold to Bank of America.
AIG: Massive Restructuring.

And according to BoA: The financial system is facing unprecedented stress.

We’d love to be your Georgia Closing Attorneys. Want to know more? Contact us and we’ll be happy to discuss how Harlan and Associates can be of service to you!

75/366 – Collapse, originally uploaded by Lily 0_0.

Is the Fannie/Freddie bailout the end of real estate woes?

admin — Mon, 08 Sep 2008 20:27:37 +0000

With this weekend’s seizure of Fannie Mae and Freddie Mac by the government, many were celebrating the end of the housing crisis.

Certainly, the takeover of the two GSEs – who between them have lost around $12 billion since last summer – is an historic move by the government to prop up a housing industry that is weathering its worst downturn since the great depression. And it shows a long-term commitment by the government, and by extension us the taxpayers, to keeping the housing gears going.

But it is certainly not a miracle cure for all that is ailing the real estate market.

Instead, the actions by the Treasury Department can be seen as preventing the collapse of Fannie and Freddie – institutions which own or back nearly half of all mortgage loans in the United States, and which were called “insolvent” by former St. Louis Federal Reserve president William Poole.

Had either of these two companies failed, the ramifications in the mortgage markets, not to mention the overall economy, would have been absolutely catastrophic. In one fell swoop, the great majority of mortgage lending would have ceased.

In fact, the recent troubles plaguing Fannie and Freddie had directly resulted in higher mortgage rates. And with the two companies explicitly backstopped by the U.S. Government, mortgage rates will certainly fall.

But while lower mortgage rates could spark some demand for homes, it’s not going to do anything to slow or stop the wave of foreclosures which has left the market glutted with REO properties – properties which often sell at significant discounts, putting downward pressure on prices.

It’s not going to provide much help homebuilders who still are sitting on nearly a year’s worth of inventory.

And it’s not going to help the ordinary home sellers with their homes on the market, competing against foreclosures and developers, in an increasingly-crowded marketplace of unsold homes.

Nor will it provide any assistance to the millions of homeowners who are upside-down in their homes.

These two issues: depreciating home values and increasing foreclosures which have a more meaningful impact on the real estate market, and once we see a turnaround in them, we can feel more confident about the industry as a whole.

Mince no words: Placing Fannie and Freddie under government’s control will help. Just don’t call it a bottom.

We’d love to be your Closing Attorneys in Georgia. Want to know more? Contact us and we’ll be happy to discuss how Harlan and Associates can be of service to you!

Karl, The End Is Near, originally uploaded by sarahandsean.info.

Not my house!

admin — Wed, 06 Aug 2008 16:37:21 +0000

Perception and reality. It’s an interesting thing how people will believe what they want, despite any and all facts to the contrary.

Real estate web site Zillow.com released a survey today showing the difference between what we want to believe and what’s really going on in the real estate market. And according to the survey, conducted by Harris Interactive, 62 percent of Americans believe that their homes have maintained or increased in value in the past year when in fact 77 percent of homes have actually seen their home values fall.

It’s called the “Not My House!” sentiment, and Zillow created a Home Value Misperception Index to measure it – by taking the difference between the percentage of homeowners who believe their home increased in value and the percentage that actually did.

Nationwide, that Home Value Misperception Index sits at 32.

In the south, a whopping 48 percent of homeowners thought that their homes gained value in the past year. 23 percent thought their home’s value stayed the same.

The truth: only 26 percent of homes increased in value in the south, which led the nation with a Home Value Misperception Index of 36.

It’s an interesting statistic, though not actually useful for much. Still, it illustrates an important point to real estate investors and ordinary home sellers alike: that in buying or selling a home, you have to be realistic about that property’s value – and the chances are more likely than not that you aren’t.

The Misperception Index - Click to Enlarge

We’d love to be your Atlanta closing attorneys. Want to know more? Contact us and we’ll be happy to discuss how Harlan and Associates can be of service to you!

NO, originally uploaded by ukmcbo.