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Jun 23

“MEAN” LANDLORDS SUED

By Carole Ellis | News

Landlords who are opting to rent their properties out via Airbnb or similar sites in order to make higher profits than they would from monthly tenants are facing criminal charges in the city of Los Angeles. According to city officials, the issue is not that real estate owners cannot control how they leverage their properties to make money, but that the landlords in question evicted their tenants from rent-controlled buildings without giving them an opportunity to re-rent the units at pre-set prices. This is in violation of city law.

According to the tenants and to Mike Feuer, the city attorney, tenants found their former residences listed on short-term rental sites after they had been evicted. They are suing under the Ellis Act, which Los Angeles uses to protect tenants from being evicted too quickly if a landlord wishes to get out of the rental business. Feuer said, “In a city with a profound shortage of affordable housing, unlawfully converting rental units to operate hotels has got to stop.” He warned that his office would continue to seek out and prosecute violators.

The Ellis Act requires landlords to pay relocation expenses for tenants when they are evicted in order for a landlord to exit the business, but it also says that tenants themselves must be alerted that units will be rented out again if that will happen under the same owner in the next five years. It’s easy to see why the landlords wanted to move into a different area of the industry; they were able to charge $550 a night for some units. Feuer is on the attack these days, charging landlords all over LA with “running their apartment buildings as de facto hotels.”

Lesson Learned:

Some places are friendlier to investors than others, and a city like LA with such strict laws in place governing rentals may not be the best place to invest.

Point to Ponder:

Were the landlords in the right or in the wrong?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 23

Seriously: Giftology?

By Carole Ellis | News

When author John Ruhlin tells you that you need to give a client a gift, he’s actually thinking of your bottom line. “Gifts are the symbols of the value you place on a relationship,” Ruhlin wrote in a recent book, titled Giftology, that argues that the right kind of customer appreciation can not only bring existing clients back but will also bring new clients in – not for the swag, but because of what the swag says about you.

According to Ruhlin, people want the people who give them gifts to succeed “because we appreciate the generosity that was shown to us.” As a result, receiving a gift that shows some actual thought creates a situation in which the recipient is likely to go out of their way to try to further your success either by referring additional business, returning with their own business needs, or helping you out in some other way.

Of course, this type of gift giving is not always easy. “These are the gifts that become artifacts and heirlooms for clients and their families.” However, that shouldn’t scare you off, since Ruhlin also says that gifts that are too expensive make it appear that you are just trying to impress the recipient rather than actually give them something meaningful.

Lesson Learned:

Gift-giving, when properly done, can be a huge business-booster.

Point to Ponder:

Do you think this type of gift-giving is appropriate? Does it make good business sense?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 22

21.3 MILLION renters IN TROUBLE

By Carole Ellis | News

According to the Harvard University Joint Center for Housing Studies (HJCH), more than 21 million Americans are devoting about a third or more of their entire income to paying rent, and more than a third of that population is paying at least half their income toward housing costs. Most financial experts say that consumers should not dedicate more than 30 percent of their monthly income to housing costs. The statistics were released as part of the HJCH’s annual “State of the Nation’s Housing” report.

“When you have to dedicate such a high proportion of your income to rent every month, it forces you to make difficult decisions,” said one Harvard senior research associate. He noted that renters (and owners) spending a third to half of their income on housing are likely to forego or at least limit expenses on other essentials “like food, clothing, and healthcare.” Down the road, the issue could become much more significant than a short-term hardship decision because individuals who skimp on essentials usually are not in a position to save money for retirement.

According to the HJCH, average renters earn about $34,000 a year, meaning that an “affordable” rent, one that does not exceed 30 percent of their income, would be about $850 a month. However, in 2015, median rents on new apartments were $1,381, meaning that in order to hit the “affordable” benchmark, the average renter would need to be making an average of $21,000 more a year than they are presently.

Lesson Learned:

The ability to invest in real estate that will be considered “affordable” by federal standards could be a great means of getting lots of tenants and additional government support for your investing.

Point to Ponder:

Is it reasonable to say that anything in excess of 30 percent of your income is “unaffordable?” How much do you spend on housing?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 21

FAKE AGENT steals down payment from buyer

By Carole Ellis | News

A San Antonio woman is out $20,000 and her new home after trusting a man posing as a real estate agent. The buyer and local police allege that a man named Chris Hinojosa has been acting as a broker without a license in the city and accepted two separate “down payments” totaling $20,000 from a buyer on a –for-sale-by-owner property that was not his to sell. Although there are multiple warrants out for Hinojosa’s arrest, he remains at large at this time. The actual owner of the property had no idea that it was being shown or “purchased.”

“He fleeced this person,” said a local police sergeant, adding that “at no time did the victim sign a real estate title or any document recognized by the Texas Real Estate Commission.” The fallout for other local investors could be significant, since the police force is officially recommending that buyers not call “signs on the side of the road” if they want to purchase a home. At this point in time, it appears that the actual owner of the home is also suing Hinojosa.

Lesson Learned:

Make sure you know who you’re working with. While investors often work with other investors and third parties, don’t ever hand over cash or other forms of down payment without doing your due diligence on the sellers and agents as well as the property.

Point to Ponder:

Is it fair that the police are officially saying that home-buyers should work with licensed agents only?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 21

3 TITLE ISSUES that will COST YOU YOUR CLOSING

By Carole Ellis | News

According to a recent survey of title companies, about one in every three real estate transactions ends up needing “extraordinary work” in order to clear the title and make a closing possible. Although most investors are aware that divorces, bankruptcies, and tax liens must be dealt with before a title is clear, many do not realize that other hidden issues could be lurking in the wings. Title companies say that one of three homes will have one of these title issues that can cost you your closing:

Issue #1: Mechanic Liens
Since some forms of mechanic liens expire after a certain amount of time, many homeowners and even investors believe that they will not create a title issue. However, these liens, which are placed on a property when a general contractor begins work on it in order to ensure that they are paid, will cause a cloud on the title if they are present when you attempt to close on the property.

Issue #2: Child Support
Even if only one former spouse actually owns the home, if the spouse that pays child support has missed a payment and the recipient filed for that money, their lawyer likely placed a lien on the delinquent spouse’s property. Even after the debt is resolved, the lien remains until it is deliberately removed.

Issue #3: Unreleased Debts
Whether the issue is a small debt or a large one, anyone who files a lien against a home essentially clouds the title, and that is the whole point. A seller must clear the debt in order to sell. However, in many cases, the debt is cleared far in advance of any sale and the lien-holder forgets to release the lien. In these cases, a title company will have to help you resolve the issue and establish if the debt has been paid.

Lesson Learned:

You can’t afford a clouded title, so make sure that your property is in the clear and has title insurance any time you do a deal.

Point to Ponder:

What is the worst title issue you’ve ever encountered?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 20

how to BEAT RENTAL FRAUD

By Carole Ellis | News

Thanks to the rising popularity of online rental applications, more and more property managers are noting that there is a corresponding increase in online theft, fraud, and identity theft associated with rental applications. In fact, about one in every two property managers said that they’ve had an increase in online applications this year, and three in every four said that they had concerns about rental fraud. Two in five said they are not presently confident that they even have accurate information about their current residents.

To the greatest extent possible, beating online fraud relies on screening processes that some tenants do not support or enjoy. However, said Mike Doherty, senior vice president at TransUnion Rental Screening Solutions, the key is to do as many things as possible to verify identity and rental history before signing a lease.  “Credit history, prior rental payments, and other screening techniques allow property managers to make smarter and better objective decisions,” he said. He added that property managers must also constantly update and refine their fraud and identity theft protocols to keep up with evolving technology.

Lesson Learned:

Screen tenants as much as  you legally can, even if you have a very open acceptance policy, to make sure that you are renting to whom you believe you are.

Point to Ponder:

How invasive should tenant screening be when it comes to digging into a potential renter’s past?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 20

warning: the UGLIEST COLOR in the world

By Carole Ellis | News

If you want to make sure that people run screaming out of your home and never return, then you might want to consider painting the interiors with what Australian marketing company Blue Moon has identified as the official ugliest color in the world: Pantone 448 C opaque couché. The color, which Daily Mail described as a “dreary mix of tar, vomit, and olive but a shade of drab brown,” was identified via survey. 85 percent of consumers say that the main reason they buy anything is color, so if you want to make sure that your home is not attractive to buyers, consider Pantone 448 C. See it below:Pantone 448C via Pantone

The study was commissioned by a company hoping to decimate cigarette sales by packaging them in the most unattractive color possible. However, the ugliest color could also be used to make people throw away your business cards, walk right on by your curb-appeal-less house, or refuse to even view your marketing materials. Of course, if you’re an artist, then that changed everything. According to Curbed, since the announcement of the world’s ugliest color, artists everywhere have been pointing out that opaque couché dominates the Mona Lisa’s clothing and is prominently featured in several famous Van Gogh works involving olive trees. As an interesting side note: opaque couché actually used to be known as “olive green” but it was renamed after the Australian Olive Association registered a formal protest.

Lesson Learned:

Consumers have said time and again that they hate brown in marketing materials because it makes them dull and boring. Avoid brown in your marketing materials unless you have a solid basis for thinking your product is an exception.

Point to Ponder:

Do you think that olive green is really that bad?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 17

THIS SECTOR is now a BUYERS’ MARKET

By Carole Ellis | News

If you’ve been waiting for a market shift before you purchase your own personal mansion, then your time may be now. According to the Wall Street Journal, the number of luxury homes currently for sale is on the rise, and that means deals are on the way for potential buyers in this market. WSJ defined luxury homes as properties priced between $500,000 and $750,000, and noted that the inventory in this sector increased almost 16 percent year-over-year in March. Furthermore, real estate priced in excess of $1 million increased 12.6 percent year-over-year.

This increase in available inventory means that more expensive homes will spend more time on the market, which is not good news for sellers because that means more holding costs in a sector that already usually stays on the market longer than the “average” home. It can be particularly frustrating in otherwise “hot” markets, like Portland, Oregon, where the media is dominated by news of quick sales and bidding wars. Luxury sellers are being left out and their buyers are not only looking for bargains, but they’re also hesitant to take on new expenses in light of stock market volatility, said National Association of Realtors (NAR) chief economist Lawrence Yun. Foreign buyers are also presently hanging back as the dollar gains strength, removing yet another buying sector from the market and lowering competition.

Lesson Learned:

Watch inventory trends so you don’t get stuck with properties you don’t want to hold. If inventory appears to be rising in your sector, you might want to reevaluate your exit strategies or start looking for ways to make your properties cash-flow while they’re in your possession.

Point to Ponder:

Do you think that luxury homes are ever a good investment, or should they be mainly personal purchases?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 17

BUYER’S REMORSE: the NUMBER ONE CAUSE

By Carole Ellis | News

Whether you’re buying a home of your own or an investment property, a certain often-overlooked issue could give you serious buyer’s remorse. According to the U.S. News & World Report, the most-often cited cause for buyer’s remorse is the time of commute for the homeowner, and as more homebuyers realize how important it is to be in close proximity either to their work or to good transit options that will take them to work and avoid traffic, more and more sellers who are not in these locations are finding it hard to sell their properties.

This is a particular issue for homeowners and investors working in major metro areas of the country and in the surrounding suburbs. For example, in Atlanta, Georgia, a property may appear to be only 15 or 20 minutes from the downtown area because it is only 15 or 20 miles out, but during rush hour, that relatively short drive can balloon to one or even two hours on a bad day. “I always ask people how long they are willing to commute,” one agent said, noting the difference between how many miles and how many minutes.

Of course, a longer commute may be worth it to a homeowner looking for better schools, a more affordable home, or good public transit to work is an option. According to a recent survey from HNTB Corp, more than half of Americans will actually pay more for a home in good proximity to public transportation, be it bus or train. Nationally, homes near transit stops outperform other comparable homes in a metro area by more than 41 percent.

Lesson Learned:

You can get buyer’s remorse from a commute even if you are not the one making it. Be sure to drive before you invest!

Point to Ponder:

Would you pay extra for a home near public transit?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

 

Jun 15

NEVER LEAVING – most popular cities for permanent homes

By Carole Ellis | News

Most of us love the idea of enjoying our actual home so much that we opt for the “staycation” over a “vacation.” In certain cities, that sentiment is far more prevalent as residents report that their hometown is so great they’d rather “stay in” than go out of town this summer. Not surprisingly, Florida boasts a particularly high number of these towns thanks to a gentle climate and lots of sunny beaches. However, they are scattered all over the country. Check out the list, then let us know if your hometown should be on it!

  • Orlando, Florida
  • Fort Lauderdale, Florida
  • Tampa, Florida
  • Salt Lake City, Utah
  • Scottsdale, Arizona (my favorite!)
  • Atlanta, Georgia (my hometown!)
  • Las Vegas, Nevada
  • Minneapolis, Minnesota
  • Petersburg, Florida
  • Honolulu, Hawaii

Lesson Learned:

Happy residents make happy and eager homeowners. Buying in a city with positive sentiment can be a good investment.

Point to Ponder:

Where would you be most likely to “staycation” if you could move anywhere?

Thank you for reading REI Today!

Your comments and questions are welcomed below.