<br /><img src=”/wp-content/uploads/2016/06/5-22-realestateinvestment-300×276.jpg” alt=”5-22-realestateinvestment” width=”300″ height=”276″ class=”size-medium wp-image-1033 alignright” /><br />Thoughtful Moreno Valley investors find themselves in an increasingly uncertain environment. Although the official cost of living numbers indicate that inflation isn’t much of an issue, few Moreno Valley residents who mind the family budget are convinced. Even if that were currently the case, even fewer think it a situation that will last indefinitely. At the same time, dollars banked in savings accounts earn next to nothing. And at this point, many feel that trusting in the stock market requires nerves of steel. Last week, The Wall Street Journal was reporting that even the biggest hedge fund managers, convened in Las Vegas for their annual SALT get-together, were displaying “decided pessimism.” Unnerved by their inability to guarantee future value to their clients caused a “mood that was anything but festive.” <br /><br />It’s not surprising, then, that lately real estate is the ownership investment class type that’s on the rise. Moreno Valley investors may agree with analyst Grant Cordone, writing recently in Entrepreneur magazine: <br /><br /> Income-producing real estate is one of the few investment classes that, as a hard asset, has meaningful value. The property’s land has value, as does the structure itself, and the income it produces has value to future investors. Income producing real estate investments do not have red and green days, as does the stock market.<br /><br />These qualities are augmented by some of the outside factors affecting the nation at large. U.S. News’ Money feature gave property managers some good news about rental rates with its spoiler alert: “rental hikes are not going away.” It predicts a solid 8% increase for the year. That kind of income growth—which has already been steady and sustained for years—coupled with the “real” nature of investment real estate makes favorable comparison with most other investment classes easy to accomplish.<br /><br /><strong><em>During times when future events are as uncertain as they are today, the appeal of get rich quick schemes and other risk-laden ventures succumbs rapidly. Especially given the abundance of solid Moreno Valley real estate investment opportunities that are out there this spring, even those who haven’t really considered the idea in the past might be well-served to weigh the idea seriously. As an investment category, real estate comes out as the class act—one that’s easily accessible…in fact, opening the doors to the many Moreno Valley opportunities is just a phone call away!</em> </strong>
<br /><img src=”/wp-content/uploads/2016/03/3-1-16-propertymanagement-225×300.jpg” alt=”3-1-16-propertymanagement” width=”225″ height=”300″ class=”alignright size-medium wp-image-862″ /><br />Everyone who owns a rental property in Moreno Valley makes a continuing management decision concerning how much of the day-to-day operational responsibility to outsource. Some are inclined to tackle the nuts and bolts of tenant management, while others are content to leave it to one of Moreno Valley’s professional property managers. <br /><br />If the main motive for acquiring the rental was for its value as a long term real estate investment, there is an increased likelihood that one of Moreno Valley’s professional property management firms will get the nod. Beyond the dollars-and-cents dimension—which can boil down to a calculation on how you value your own time—there can be personal elements behind the decision. Do you enjoy keeping a close watch on all your business dealings? Or is minimizing the hassle factor a higher priority? Those are tradeoffs only you can calculate, or recalculate if your initial decision doesn’t work out.<br /><br />Another factor can come into play—one that’s seldom mentioned or written about. It has to do with another party in the business arrangement that is being created: the tenants! <br /><br />When all is said and done, setting up the way a rental property is to be managed is identical to creating the operations blueprint for any ongoing business enterprise. Both involve a customer relations element. As landlord, you are the proprietor, and the tenants are the customers. Every business that hopes to maximize its return on operations soon experiences why taking customer satisfaction into account pays dividends (at least, the more successful ones do)! <br /><br />By that yardstick, the decision on whether to choose professional property management is not only about a landlord’s willingness to expend the time and effort their personal involvement will require. That choice should also take the tenant’s satisfaction into account…and on that score, the years of experience that come with a veteran Moreno Valley professional property management firm can tilt the scales in its favor. <br /><br />Having a proven system for handling trouble calls in a timely manner is one obvious advantage—as is being able to tap the talent of professionals whose full-time job it is to take those inevitable situations in stride. <br /><br /><em><strong>Locating and helping you acquire choice Moreno Valley investment properties is one way I help my clients. Another is to provide a solid resource for new owners as they go about organizing their ongoing tenant-handling arrangements. Call me anytime to discuss today’s great current array of available investment properties—and the best ways you can make the most of them! </strong></em><br />
It’s a good thing that the human body is constructed the way it is, which is to make it difficult to do any real damage by kicking yourself. Particularly after many of us recall quite clearly how incredibly low Moreno Valley prices dived during the last decade’s real estate meltdown. When you see the bounce back the intervening years have brought, if you are at all investment-minded, you want to at least smack your forehead…
The good news isn’t just that the rebound looks to be progressing still, but that in the realm of Moreno Valley rental investments, the wished-for growth in underlying value of any investment property may be only half the goal. There is also the ongoing cash-generation to consider.
If you were to set out to search for a property to become one of the Moreno Valley rental investment income producers, one place to start out is to think about a two-part qualifying question:
Part 1: will you be actively managing the rental investment property? Realistically, do you have the time and inclination to do so? As a true investment rather than a sideline avocation, the answer to that question should take into account what your time is worth elsewhere. Whether you are a fully-engaged professional or a massively-overstressed soccer mom (or, heaven forbid, both!), the cost of hiring a professional management firm might be the better choice. Zillow notes a starting point for estimating management services at around 6%-8% of the rent number (which may or may not include services like re-leasing services).
The answer to that Part 1 consideration will give you a firm basis for estimating the answer to Part 2: What is the price range of the properties you should consider. Managing the rental yourself will increase the bottom line, but that’s only one of your rental’s operating expenses. The complete operating budget will include maintenance (generally ballparked at 1% per year of the property’s value), insurance, taxes, and any HOA and gardening fees.
The next step is to investigate what the income stream is likely to be. The local classifieds will show what comparable Moreno Valley rentals are going for. There are also a number of online information sources like Rentometer, craigslist, Zillow and Trulia that should supply a good approximation of today’s market. Once you find where those rates stand, you’ll be able to pencil out the cash-generating potential of candidate property.
At every step of the way—from first looks at the many promising Moreno Valley rental investment properties, to introductions to the kind of reliable local tradespeople who make a landlord’s life easier—I offer my clients fully-engaged service and advice. Give me a call!
Last week’s reporting showed the same kind of upward movement that’s become commonplace for Moreno Valley real estate investment news watchers. A standout: Corelogic’s finding that national home prices in May increased by 6.3%, marking the 39th consecutive monthly year-over-year increase.
Actually, to a lot of us, that looked stronger than expected: the steady increase in U.S. sale prices had seemed to have leveled off in the 5% range for the most part…Corelogic’s own Chief Economist had prognosticated, “We expect house prices in our national index to be up about 5 percent in the next 12 months” just 30 days ago.
Those who track U.S. real estate investment performance for its Moreno Valley implications, two other interesting observations were noteworthy. First, even including distressed sales, prices have now risen to within 8.4% of the April 2006 peak—what is generally considered an unsustainable “bubble.” Yet it’s impossible to find any expert who believes the current price levels are indicative of anything of the kind; nor that the expected continuing rises would expose those making residential real estate investments to equivalent risk levels. Except in a very few localities, there is scarcely any “bubble” speculation to be found—even as national price increases continue to outpace inflation.
Part of the reason is that supply continues to be tight; distressed property sales continue to decline; and overall U.S. economic conditions are perceived to be improving, however gradually. Corelogic also keeps track of sales and momentum for different price ranges, which perform differently, as real estate investment analysts know. The lowest-priced tier, which represents to most modestly priced 25% of homes, has now actually surpassed its pre-crisis peak…and the highest end of luxury residences (the top 25%) are within 5.7% of their peak.
The second point made in last week’s reporting was continuing good news for those whose real estate investment portfolios include rental properties. Apartment vacancy rates “are down to their lowest level since the 1980s” according to Economist Frank Nothaft. “Rents are up, and apartment building values are at or above their prior peaks.”
The robust performance wasn’t confined to multiple-unit housing, either. Following the housing crash—between 2006 and 2013—3,000,000 detached single family homes were added to the nation’s rental stock. They now make up 40% of the market. In terms of their real estate investment performance, the combination of rising rental rates and shrinking vacancy rates are exactly what investors hope to see. For regular homeowners, too—even those with no plans to sell anytime soon—those 39 straight months of steady price appreciation is comforting news.
And if you are watching this summer’s Moreno Valley real estate listings for the investment opportunities they represent, I hope you’ll give me a call!
“WHY YOUR RENT CHECK JUST KEEPS GOING UP” was the headline in CNN Money’s real estate special report last month, which could have explained to Moreno Valley renters why it is that U.S. rents keep rising faster than home values. After all, that doesn’t seem to make sense!
The list of reasons was long, and taken all together, fairly convincing:
- Millennials are renting longer
- Housing inventory is tight and getting tighter
- The housing crash scared those who would otherwise have become homeowners
- Baby Boomers are downsizing
- Rental construction slowed when confidence sank after the housing crisis
It all comes down to demand and supply—less of the latter, more of the former. Although the author may have exaggerated a detail or two (“…there just aren’t enough ‘For Rent’ signs to keep up with the demand”), more than one Moreno Valley renter will probably agree with the gist of the piece: rents have been on the rise long enough that it makes you want to think about the alternative: buying.
Some of the more extreme cases are urban: in San Francisco and Denver, for instance, renters have seen yearly increases of 15% and 11.6%, respectively, according to Zillow. Moreno Valley renters can find themselves in something of a bind, though—since those higher rent bills make saving for a down payment more difficult. It’s just one reason. Per CNN, “There are a bunch of things keeping renters on the sidelines, meaning “the folks that would be normally making the switch to become homeowners are still taking up the rental units.”
The result: more units remain occupied, vacancies go down; rentable units remain scarce…so prices renters pay continue to go up.
Will this Catch-22 situation persist forever? Most likely not: the broad economic news is that this year’s steady job growth coupled with the pronounced turnaround in builder confidence is likely to loosen the supply stranglehold. Last Tuesday, there was also the kind of news that can prompt builders to really get going: government data showed purchases of new U.S. homes surged (particularly in the Northeast and West), with sales of new homes soaring 24% so far in 2015. That’s the best showing since 2007.
Of course, before supply outstrips demand, the situation puts landlords in an advantageous position. Moreno Valley investors who bought rentable properties during the downturn can now enjoy steady returns from their properties, or decide to sell in a robust market. If you are leaning in that direction, it’s the perfect time to give me a call!