Property Selection – Watch Out For Big Ticket Items
by weichert
The Roof
The age and condition of the roof surface are important, but what is underneath? Is the original roof made of cedar shake shingles? If so, IT HAS TO GO SOMEDAY! You don’t want to incur the cost of tear-off and plywood installation unless you factor that into your numbers! Does it have a flat roof? If so, be very careful! Rochester’s climate is hard on flat roofs.Electric Service
If the meter is inside IT HAS TO GO OUTSIDE SOMEDAY! A ballpark estimate is $1200 per 100 AMP service (if you own a multi-family multiply $1200 times the number of units). (Incidentally, if you are moving meters outside have a separate meter box for each service – if someone tampers with a meter you won’t jeopardize the whole building!). Also, upgrading electric or restoring shut off service means bringing the electric box AND electric grounding up to today’s code (electrical certification required)! It’s not uncommon to spend $800 in-ground rods etc.Water Service
Is the main water line coming into the building a galvanized pipe? If so, IT HAS TO BE REPLACED SOMEDAY!Sewer Line
Is the main sewer going to the street in good condition? A camera inspection is well worth the $150 a licensed plumber will charge. (One investor I work with owns his own fiber optic cable, so he can investigate sewer lines himself!)How to Choose Investment Opportunities
by weichert
A word to the wise:
Define what expenses are factored into YOUR Net Operating Income. Don’t use anybody else’s NOI figure. COMPUTE YOUR OWN!!
Insurance on Rental Property
by weichert
Rental Property Insurance Rochester NY
Submitted by Curt Amesbury While almost everyone is familiar with traditional Home Owners Insurance, being the owner of a non-owner-occupied investment property is a little different. As a new investor (and assuming you have a general idea of the type, size, age and location of a property you might buy) I recommend that you talk to a few insurance agents. Landlord insurance can include coverage’s that Home Owners Insurance does not address, so ask questions and get an idea of what options you have. Decide upfront if you want to insure for replacement cost or to cover your investment. Those are two very different things in the insurance world!Property Management Selection
by weichert
Some criteria for selection could be:
- Is the firm run by a Licensed Real Estate Broker and a member of the National Association of Realtors? (If so there is an accepted Code of Ethics that governs business dealings).
- Does the firm have a legitimate brick & mortar location – not just a Post Office Box. Can you and tenants actually go there and find someone on duty during business hours?
- Does the firm report owner statements using a professional reporting system? Is it integrated with a standard database (such as Quickbooks or Excel).
- How much is the fee and what is covered? What type of extra charges can you expect? If you sign up, what is required for either party to exit the contract?
6 Reasons Your Agent Wants You Pre-Approved Before Showing You Homes
by weichert
Ever had an agent denied showing you a home because you weren’t pre-approved for a mortgage? It’s not because they’re mean, or they don’t value your business… it’s actually because they’re looking out for your best interests.
Let’s face it, shopping for a home before getting pre-approved for a mortgage is like walking into a grocery store without a wallet. You may have the desire to buy, but you lack the ability. Let’s cover some basics…What is a mortgage pre-approval?
In a nutshell, a mortgage pre-approval is written assurance from a lender or broker that you’re able to borrow money to purchase a home up to a certain amount. It’s based on the income, employment and asset documentation you supply at the time of application, in conjunction with your credit history. So let’s look at the 6 reasons you should get pre-approved.1. It carries more weight than a “pre-qualification”.
A pre-approval differs from a pre-qualification. With the former, the lender has actually checked your credit and verified your documentation to approve a specific loan amount (usually for a particular time period such as 30, 60 or 90 days). A pre-qualification can be useful as an estimate of how much you can afford to spend on your home, but it’s a less accurate indicator of your ability to purchase. A pre-approval always carries more weight.2. You’ll know how much house you can afford.
Getting pre-approved before you begin house hunting allows you to know how much house you can realistically afford. Knowing this narrows down the options and makes the selection process more efficient. Not to mention, it protects you from the unpleasant surprise of realizing the home you fell in love with doesn’t fit your budget.3. It adds clout to your offer.
In many markets, homes attract more than one offer. If the sellers are weighing one offer against another, they may lean towards the one accompanied by a pre-approval letter. That’s because pre-approvals instill confidence that the buyer is financially capable of purchasing their home.4. It could increase your negotiating power.
In addition to strengthening your offer when compared to buyers who haven’t taken this step, getting pre-approved may give you the upper-hand when negotiating the price. If the homeowner is eager to sell, they may be more willing to accept a lower offer from someone they’ve been assured is financially capable of purchasing their home.5. It saves time.
Obtaining a mortgage is a lengthy process. Getting pre-approved ahead of time shortens the time between contract to close — this way you’re ready to proceed with finalizing the mortgage once you’ve found the home you want to purchase.6. Without it, most agents won’t work with you.
It makes sense, too. Right? Think about it: when you hire an agent, he/she will invest countless hours showing you homes over the course of your house hunt. If you were in their shoes, wouldn’t you want assurance that your hard work would lead to a favorable outcome for both you and your client?Home Flipping Shows Mislead Viewers
by weichert
9 Ways Home Flipping Shows Mislead Viewers
1. Tight turnarounds aren’t always realistic
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In order to realize as large a profit as possible, it’s important to flip the property as quickly as you can, otherwise paying the mortgage, taxes, and insurance quickly chips away at your bottom line. While sales tend to happen quickly on TV, the reality is that even if you have a willing buyer, getting pre-approved and securing the financing doesn’t happen overnight. For anxious sellers, that ticking clock is a constant reminder that every passing day means a little less money in their pockets.2. Finding a dedicated team isn’t easy
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As far too many homeowners know, not all contractors are created equal. For the most part, the artisans who make their way onto home-flipping shows are trustworthy, knowledgeable and willing to work nearly round-the-clock to get the job done. In reality, contractors may be working on multiple projects simultaneously and may disappear for days at a time. And as we all know, time is money.3. DIY doesn’t work for everyone
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Part of the appeal of these home-flipping programs is the ease with which the whole property comes together. But it’s more than just the time-lapse photography that makes it seem like anyone with a tool belt can renovate like a pro. While you might be tempted to take a DIY approach to keep expenses low, remember, these people know what they’re doing, whereas most homeowners are experts at other things. Sometimes tackling a task yourself will end up costing you more than if you’d hired the right person for the job.4. When trouble strikes, it’s not so easy to resolve
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Even with a careful home inspection, surprises (not the good kind!) pop up when you least expect them. Yet, if a sinkhole opens and threatens to swallow a sun porch, home-flipping show teams are ready to fix that issue like it’s no big deal. When it happens to non-TV-star homeowners, it’s not always easy to find the right subcontractor — especially when you’re under time constraints. And, once you do, can you even afford to deal with whatever unpleasant shocker has come your way? If you have to go back to the bank for more money, that will impact your time frame and ultimately your profit. (See number 1.) Home-flippers on TV seem to have bottomless bank accounts. Must be nice, right?5. Materials don’t arrive simultaneously
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When home-flippers begin a project, all the requisite materials are on-site and ready to go. If only this were the norm! Anyone who’s ever fallen in love with a special order item knows that it’s almost impossible to find everything you like in stock and ready for delivery. Some contractors are reluctant to start a renovation until all the supplies are in, which, again, can hurt your timeline and your profit.6. The back-and-forth is all done behind-the-scenes
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Never mind the fact that homes showcased on these programs never seem to lack for buyers, in many instances, there doesn’t seem to be any haggling to speak of when it comes to the asking price. Leaving out the art of negotiation does viewers a disservice as it makes it appear that buyers can’t wait to pay full price — or above it.7. The math is fuzzy
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In order to reap the biggest profit, you need to buy below market value, sell above it, and not put more money into the renovation than you’ll get back. As if that equation weren’t complicated enough, on television, you don’t always hear about the costs of buying or selling, inspection and appraisals fees, and other expenses that go into both sides of the transactions. Leaving out some numbers conveniently inflates the profit.8. Costs vary by area
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Renovating a bathroom in rural Tennessee is going to cost much less than it would in, say, Manhattan. Not only will the labor be less expensive, but the materials and delivery charges will also skew lower in non-metropolitan areas. Of course, none of that is addressed in the show and most often estimates on TV are far lower than those you’d gather in real life.9. You can over-renovate
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Once you’re in the home improvement groove, you may be tempted to splurge and really go all out, but you have to resist the temptation to overdo it and put in more money than you’ll ever get back. In the quest to make your flip as fabulous as possible, you never want to lose sight of the reason you started this project: to make money. Consider the return on investment for each improvement you make.New York State Law Passed Affecting Landlords
by weichert
The Governor signed new landlord-tenant regulations into law on Friday, June 16, 2019. These new laws will affect your rental properties. Here, at Weichert, Realtors-Lilac Properties, sat down with our attorney, John Nacca from Nacca Law on Monday to discuss the changes and how they will affect you as owners. We also attended his landlord conference conducted by our attorney on Thursday, June 20, 2019, regarding these changes to brainstorm the best ways to safeguard YOUR investment.
Below are MAJOR changes to the existing regulations and also new regulations:
- Before initiating a non-payment proceeding, the required notice has been changed from a 3-day oral or written demand to a 14-day written demand. The written demand must be served in accordance with the statute
- Court dates must be scheduled at a minimum of 10 days out as opposed to the prior 5-day rule
- We must give written notice by certified mail if rent is not received in full before the 5th of the month
- Tenants can redeem (pay the outstanding base rent) up to the point of lockout
- Execution of Warrants (lockouts) is now 14 calendar days as opposed to 3 business days from the date of service of the warrant
- Month-to-month tenancies have to be terminated in writing as follows:
- 30 days if the tenancy has been less than 1 year;
- 60 days if the tenancy has been more than 1 but less than 2 years;
- 90 days if the tenancy has been more than 2 years
- Any cure period for lease violations has been changed to a 30-day cure period
If you liked further clarification, you can keep an eye on the Nacca Law website as they will be posting a summary of the law on their homepage in the coming days. Below is a summary of some changes you will be seeing. For further information, the bill can be found here.
As always, please don’t hesitate to email Caitlyn with any questions you may have! **We are not attorneys and this information is not to be construed as advice**
6 Reasons You Should Avoid Buying a For Sale By Owner (FSBO) Home
by weichert
The following are 6 reasons to avoid a For Sale By Owner (FSBO) home.
1. Are you sure it’s legit?
Unfortunately, scams abound and the real estate industry isn’t immune. If you don’t have an agent looking out for your best interests, it’s easy to be duped. For example, would you know what a proper sales contract looks like if real estate is not your field of expertise? Depending on the state in which you reside, there are a number of legal forms that must be completed. In addition to a contract, property disclosures, occupancy agreements, and lead paint records are just a few documents that must be signed. Because sellers aren’t bound by a code of ethics as Realtors are, there’s no way to be certain they won’t try to take an unsuspecting buyer for all he or she is worth. No would-be buyer should suffer sleepless nights wondering where that escrow money ended up.2. Full disclosure
Obviously, when you’re making a significant investment you want access to as much information as possible. Real estate agents have the ability to get you the answers you need. Whether it’s about repairs made to the home or liens against the property, the more you can find out, the better off you’ll be when it comes to negotiating. Plus, no one likes an unpleasant surprise. Remember: Knowledge is power. On your own, would you know what to ask a seller? And, more to the point, would you know if a seller is hiding key information? It’s a risk better off not taking.3. Are you a skilled negotiator?
In the course of doing business, you’ll probably have to go back and forth quite a bit — and not just about the price. What if repairs need to be made? Are you ready to haggle over who takes care of a leak or a structural issue? What if you can’t agree on the closing date? When you have an agent, he or she will handle all that for you.4. Is money an issue?
The main reason sellers choose to sell their homes themselves is to save money by not having to pay an agent’s commission. So what happens if your seller is strapped for cash but problems pop up during a home inspection, and they can’t afford to fix them? This, in turn, raises a red flag as you start to wonder if they took the cheap way out when making important home repairs.5. Are you ready to deal with the homeowner all the time?
When it comes to arranging the home inspection or any other viewings of the house, your agent can serve as your go-between so you don’t have to contact the homeowner repeatedly. Unless you’re completely comfortable making all those appointments yourself, you should probably have someone representing your best interests.6. What’s the timeframe?
When a seller hires an agent, you know they’re serious about making a deal. With an FSBO, are you sure the sellers are really going to get moving? Some may have put the home on the market just to see what offers it could attract. If you’re an interested buyer, you need to know that the seller is just as eager to make a move; otherwise, you’re wasting your time and getting your hopes up for nothing. Of course, there are reputable sellers out there, but when it comes to making one of the largest investments of your life, you don’t want to take any chances. Having a real estate agent working on your behalf at every stage of the transaction can offer peace of mind and ends up saving you money and countless headaches. CurtisAmesbury Weichert, Realtors-Lilac Properties Broker/Owner Rochester, New YorkNearly 25% of New Homeowners Purchase Property With Less Than 5% Down
by weichert