How to Increase the Rental Value of a Property

If you are considering becoming a landlord you will want to maximise the potential rent your property can yield. Although some pre-determined factors such as size and location will have a bearing on what you can charge, making sure your property appears finished to a high quality will ultimately impact the type of tenants and rental price you attract.

Start where you potential tenants will – at the front door. If your door looks flimsy that will signal worries about security and high heating bills to your prospective tenants. Similarly, if the paint is peeling off the door visitors won’t hold high hopes for what lies inside, so make sure your front door is solid and is well presented.

A fresh layer of paint can work wonders for a property inside and out, so after your front door check all of your window frames as well as any interior walls and doors. When you are renting out a property you may not want to worry too much about painting rooms the latest on trend colours, but you want the accommodation to look well-maintained.

If some of the rooms in the property are a little old-fashioned then a refit will substantially increase the rate you can charge tenants. However, fitting out kitchens and bathrooms with new suites is very costly. It’s worth bearing in mind that most tenants are willing to overlook an old-style bathroom suite or kitchen if everything is in good working order and the room itself has a quality finish. Make some easy and quick-impacting update yourself by installing chrome finish taps and towel racks and make sure all of the handles on your cabinets and cupboards match. If these look out-dated consider changing them to improve the feel of the room.

Finally, consider how your property is ‘dressed’. If you are renting out a fully-furnished property make sure all of your items are clean and matching where possible. Buying some new made-to-measure blinds for your windows will brighten up the house and give it a fresh finish. Blinds are suggestive of privacy and security to tenants and are importantly they are easy for tenants to maintain, meaning you won’t have a costly clean up, or need to buy new blinds should your tenants move out. If you are worried about the cost of buying blinds head online where you will find specialist retailers such as http://www.directblinds.co.uk/ who offer a wide variety of styles at very competitive prices.

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Centerpoint sale brings hopes of shopping on Mill

by Dianna M. Nanez

The sale of the Centerpoint Condominiums involved a web of complex legal entanglements dating to the fall of commercial lender Mortgages Ltd., but for downtown businesses the bottom line is simple.

Friday’s sale of Centerpoint means that by year’s end there will be 375 apartment units for rent.

Downtown Tempe businesses have struggled to survive the fallout of the recession. Even national outlets like American Apparel, which closed this past weekend, have failed. So for many businesses, the thought of having hundreds of shoppers living a stone’s throw from downtown sounds like a dream. It would help put an end to a real-estate nightmare.

Shannon Randle, manager of Churchill’s Fine Cigars, across the street from the towers, said many business owners had hoped the project would remain luxury condos and fill with wealthy homeowners who had discretionary income to spend. But after watching the project become an eyesore, reality has hit, he said.

“I’m at the point of saying, get them filled now, and rent them out for now,” he said.

Centerpoint’s troubles began in 2008 when the sole shareholder of Mortgages Ltd., the condos’ financial backer, committed suicide. A series of bankruptcy proceedings thwarted the sale, which was almost completed in the fall when Zaremba Group was slated to pay $30 million for the condos. The deal fell apart amid disagreements with the title holder over construction liens on the project. The new deal involved ML Manager, the seller, acquiring the liens from Zaremba with funds from the $30 million.

Angie Miller, a spokeswoman for Zaremba, acknowledged the disappointment of Tempe business owners who lament filling downtown with students who are likely to rent near Arizona State University.

“Obviously what was slated to be condos are now going to be rental apartments,” she said. “(But) we’re going to stay very true to the luxury concept. It really will be an economic boon to the Tempe community.”

Zaremba has changed the name of the project to West Sixth, in reference to the address 111 W. Sixth St. The 22-story tower will be ready for move-in by Aug. 1, Miller said. The second 30-story tower will be complete by December.

Randle hopes the towers open, but he questions whether the legal woes that have plagued the project are over. “I’ll believe it when I see it,” he said.

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Home prices near 2009 lows — and may fall more

By Les Christie

NEW YORK (CNNMoney) — Home prices took a big hit at the end of 2010, even as the rest of the economy gained steam.

National home prices fell 4.1% during the last three months of 2010, compared with 12 months earlier, according to the latest report from the S&P/Case-Shiller home price index, a closely watched indicator of market trends. They were down 1.9% compared with three months earlier.

“Despite improvements in the overall economy, housing continues to drift lower and weaker,” said David Blitzer, spokesman for S&P.

And things may get a lot worse, said Robert Shiller, a Yale economist and half of the Case-Shiller team, in a web conference after the report’s release.

“There’s a substantial risk of home prices falling another 15%, 20% or 25% more,” he said.

Shiller cited a few reasons for his bearish stance. The government is expected to reduce the presence of Fannie Mae and Freddie Mac in the housing market. These agencies currently provide loan guarantees for about two-thirds of mortgages. If they fade away, private mortgage money will have to fill the gap and the cost of mortgage borrowing will surely rise. That will hurt home prices.

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There’s also talk of possibly ending the mortgage interest tax deduction for many homeowners. Meanwhile, the weak economic recovery may be threatened by higher oil prices as a result of turmoil in the Mideast.

At the web conference, Shiller’s index partner Karl Case wasn’t much more optimistic.

“I see [the market] bouncing along the bottom with a slight negative trend,” said Case, an economics professor emeritus at Wellesley College.

A widespread drop
On a seasonally adjusted basis, the national index surpassed the low it hit in the first quarter of 2009.

The decline was widespread, with 18 of the 20 large cities covered by a separate S&P/Case-Shiller index recording losses for the year. The only gains were posted by Washington, which was up 4.1%, and San Diego, which saw prices climb 1.7%.

The biggest loser for the year was Detroit, where prices dropped 9.1%.

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“We’re really close to being at the bottom again,” said S&P’s Maureen Maitland. “Last year’s gains came courtesy of the tax incentives and the market is not holding up on its own.”

The impact of homebuyer tax credits ended back last spring, and the two quarters of data since then reflect that. Prices fell steeply during the third quarter, down 3.3%. When the credit was in effect, prices rose consistently, up four out of five quarters starting in the second quarter of 2009.

S&P reported that both the company’s 10- and 20-city indexes also fell month over month. In three cities, Detroit, Cleveland and Las Vegas, home prices have dropped below their January 2000 levels — yes, you’d have to go back to the past millennium to find lower prices there.

Eleven markets, including New York and Chicago, have reached their lowest levels since home prices peaked in 2006 and 2007.

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The losses were not unexpected, according to Brad Hunter, chief economist for Metrostudy, a housing market research firm.

“It’s clear now that, going back to last fall, the apparent strength was a false strength,” he said. “Now that the tax credits are gone, we’re back to where the training wheels are off, to normal consumer demand.”

He expects home prices to decline gradually throughout 2011, with markets picking up only when hiring increases substantially.

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Home sales inching up

By Les Christie

NEW YORK (CNNMoney) — Sales of existing homes recorded modest gains in January, the third straight month of month-over-month increases.

According to the National Association of Realtors, homes sold at an annual rate of 5.36 million in January, up 2.7% from December and 5.3% higher than January 2010 sales. At the same time, the median home price fell 3% to $158,000, compared to a year earlier.

It was the first time in seven months that the monthly sales total was higher than the year before.

“The up trend in home sales is consistent with improvements in the economy and jobs,” said Lawrence Yun, NAR’s chief economist.

The report was slightly stronger than expected. A consensus of experts surveyed by Briefing.com had expected sales to hit 5.23 million.

Yun pointed out that home sales have benefited from unusually favorable conditions: Mortgage rates are still very low; there’s a large supply of homes to choose from; and home prices have fallen to near post-housing bust lows.

One factor holding buyers back is the still tight mortgage lending.

“Buyers have been constrained by unnecessarily tight credit,” said Yun. “As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

NAR reported that all-cash sales went up to 32% of the total, up from 26% a year earlier. It estimated the percentage of investor purchases hit 23%, up from 17% a year ago.

“Unprecedented levels of all-cash purchases — primarily of distressed homes sold at deep discounts — undoubtedly pulls the median price downward,” said NAR president, Ron Phipps.

Whatever the source of the sales, they do have a welcome impact on supply. Inventory dropped 5.1% to 3.38 million units, a 7.6-month supply at the current rates of sales. That was the lowest inventory level in more than a year.

Normally, a five- or six-month supply is considered a good balance between supply and demand. That’s when sellers will start to regain some of the “pricing power” they’ve lost in the bust.

Right now, said Hoffman, “Sellers are desperate to sell and buyers bidding low.”

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Valley property management company deals with money issues

By: Jennifer Parks

PHOENIX – For the first time, we’re hearing what may have brought down the owner of the popular real estate and property management company known as “Phoenix Homes by David”.

Beverly Wright worked for David Oliverson, the Phoenix man who took his own life in January. Then it was discovered hundreds of thousands of dollars were missing from the company.

“He did embezzle the money and I guess he thought he was going to go to jail for it,” said Wright. “I believe it’s probably around $300,000.”

The money belonged to hundreds of Valley tenants and property owners, people like Jerry Raether, who used the property management company to collect rents and deposits.

“At the end of the day, I’m out money,” Raether said.

What’s got him and Wright even more upset, the Arizona Department of Real Estate tells ABC15 they allowed the mother-in-law of the two step-sons who inherited all Oliverson’s assets to do an audit on the books.

Her name is Betty Stephenson, she works for West USA, a company that’s told Raether they can’t pay him back, but still want his business.

“I said I wasn’t comfortable. Part of this business I lost with somebody else, part of the family tree,” he said. “Why would I want to put more money with another part of the family?”

The state tells ABC15 it revoked the original company’s license and closed the investigation.

If people like Raether want their money back the state says you’ll have to handle it in civil court.

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Obama wants big changes in mortgages

By Ben Rooney

NEW YORK (CNNMoney) — The Obama administration on Friday officially unveiled its plan to remake the mortgage market and reduce the government’s role in housing finance by winding down Fannie Mae and Freddie Mac.

The highly anticipated “white paper” outlines steps the administration says will help draw private capital back into the mortgage market, curb unfair lending practices and make federal support for borrowers more targeted.

The plan would phase in changes over a period of years and push back the most dramatic restructuring, which would require congressional approval, until as late as 2018. (Colin Barr: The long goodbye)

“We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market,” Treasury Secretary Tim Geithner said in a statement.

Fannie and Freddie are government-sponsored enterprises that buy home loans that conform to certain standards and convert them into assets that can be sold to investors. They stand behind the vast majority of mortgages in the United States.

The two institutions, which were publicly traded at one time, were rescued by the government in 2008 as the downturn in the housing market led to staggering losses on bad loans. The two companies have received about $150 billion in taxpayer aid since then.

Three options for the long haul: The paper lays out three possible long-term solutions for restructuring the mortgage market after Fannie and Freddie are gone. These options will now frame the debate in Congress over how to proceed with more significant reforms.

Under one option, the government would only guarantee mortgages backed by the Federal Housing Administration and other programs for lower- and moderate income borrowers.

The other options also include backing of FHA loans, but propose additional steps to reform government support for the housing market.

One proposal would create a “backstop mechanism” to support the mortgage market during a crisis. The other focuses on providing insurance for mortgage-backed securities.

In a conference call with reporters, Geithner said it could take between five and seven years to wind down Fannie and Freddie and put in place a permanent solution.

Near-term changes: Meanwhile, the paper also outlines a number of steps the government can take now to begin overhauling the way Americans borrow money to buy a home.

The plan recommends requiring Fannie Mae and Freddie Mac to price their loan guarantees to the same standards as private banks.

It also says Congress should allow a temporary increase in those firms’ conforming loan limits to expire. Currently, Fannie and Freddie are allowed to buy loans worth up to $729,000. If the increase expires on schedule in October, the limit would fall to $625,500.

In addition, the plan calls for gradually increasing down payments for loans backed by Fannie and Freddie and shrinking their loan portfolios.

Fannie Mae: the long goodbye
The administration is also seeking to raise federal insurance premiums on mortgages. Obama’s 2012 budget, which will be submitted to Congress on Monday, will include a proposal to raise federal insurance premium on FHA loans by 0.25%.

Critics argue that such steps will raise borrowing costs for homeowners and shock the housing market. But the administration maintains that gradual implementation of reforms will not disrupt the economy.

“We have to do this carefully and responsibly,” said Shaun Donovan, secretary of Housing and Urban Development.

The paper also details steps to protect consumers from unfair mortgage practices and ensure that federal aid for low-income borrowers is more effective.

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Bright spot for mortgages: Missed payments ease

By Les Christie

NEW YORK (CNNMoney) — Mortgage delinquency rates among U.S. homeowners have fallen to their lowest levels in a few years, according to a report Thursday from the nation’s mortgage bankers.

The quarterly National Delinquency Survey from the Mortgage Bankers Association (MBA) reported that the rate of mortgage borrowers at least one payment past due or whose homes have been repossessed by their banks declined 0.22 point to 13.56% at the end of December, their lowest level since late 2008.

Loans one payment past due were at 8.22%, down considerably from the 9.13% mark at the end of the third quarter and the lowest rate since the end of 2007, the beginning of the recession, the bankers said.

That, according to Michael Fratantoni, vice president of research and economics for the MBA, was very welcome news.

“I think we’ve turned the corner as concerned with loans 30 days late,” he said. “It indicates that the economy has improved.”

10 surprise foreclosure hotspots
A second factor in the improvement is that mortgage underwriting has gotten so much stricter over the past few years, in the wake of the housing market collapse, that many of the loans most likely to fail have already done so.

The most dangerous years for mortgages are the third and fourth years, when delinquency rates peak, according to Fratantoni. The crop of mortgages entering into those dangerous years should not default as much because borrowers were so well qualified.

Another positive element in the report was that the percentage of seriously delinquent borrowers — those 90 days or more late and considered very likely to lose their homes to foreclosure — dropped precipitously over the last three quarters of the year, to 3.63% from 5.02% at the end of March 2010.

That should translate into far fewer borrowers losing their homes to foreclosure in the future.

Improvement in the economy, if it continues, should usher in a period of lower delinquency rates, according to Jay Brinkmann, the MBA’s chief economist. The quarter’s positive news was tied to the increase in hiring last year, when the private sector added about 1.2 million jobs.

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“You need a paycheck to make a mortgage payment,” Brinkmann said.

The biggest negative in the report was that the percentage of loans in foreclosure inventory hit an all-time high. These are loans in which the banks start to reacquire properties by scheduling auction sales.

Mortgages can exit this process by having the loan modified, the property sold through a short sale or transferred voluntarily to the bank, or sold at auction.

The MBA attributed the rise of loans in foreclosure inventory to the robo-signing issues that began to emerge in September. Banks deliberately slowed or suspended the foreclosure process, keeping them from exiting the category. That was especially true for states in which courts are involved in the process.

The delinquency rate was headed in the right direction even without adjusting for seasonal factors. Historically, the fourth quarter, explained Brinkmann, usually sees a jump in missed payments.

“In the fourth quarter, the first heating bill arrives and homeowners choose keeping the place warm,” he said. “They make up the payments later.”

This time, even the non-seasonably adjusted total past due rate dropped, from from 9.39% during the third quarter to 8.93% in the fourth. Brinkmann traced the gain the the improvement in the overall economy.

Of the states, Mississippi had the highest overall delinquency rate, with 13.3% of loans in some state of default. Nevada, at 12%, and Georgia, at 11.89%, also were very hard hit.

Florida, where the courts have substantially slowed the foreclosure process, has the highest percentage of loans in foreclosure inventory with 14.18% awaiting some kind of resolution. Nevada, at 10.06%, was second, and New Jersey, at 7.23%, was third.

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Grab a second-home bargain

By Paul Sullivan

FORTUNE — People selling second homes in sunny locations couldn’t have asked for a better marketing pitch than the winter of 2011. With snow turning Northern roads into ice rinks and closing airports and schools, the Sunbelt would seem to be more desirable than ever. The only glitch is the real estate hangover from the Great Recession.
But new data from Florida suggest that this may be the year when buyers and sellers come together. “We’ve outperformed January 2010 by 85%,” says Judy Green, chief executive officer of Premier Sotheby’s International Realty in Naples. “It’s almost as if someone just turned on a faucet and the people are out there. They’re making deals.”

Before leaping in, though, you need to ask yourself two questions: Why is this happening now? And how can I take advantage of it?

The “why” is a function of both the market and of sentiment about Florida. Interest rates remain historically low — the average 30-year fixed-rate mortgage in Florida was recently 4.9%, according to Bankrate.com — and banks are lending again, if cautiously. Now that rental prices in the coastal areas are rising, people who have dreamed about owning a second home in (or relocating to) the state see this as their moment to act — while sale prices remain off their highs.

Indeed, the uptick in sales hasn’t yet translated directly into pricing power for sellers. According to Florida Realtors, sales were up statewide in 2010 by 29% for condominiums and by 5% for homes, but prices were down 15% and 4%, respectively. (This is better than last year, when prices were down 24% for homes and 34% for condos.) A January report from Moody’s Analytics said home prices in Naples will not return to their pre-recession peak until 2038.

Those numbers mean that there are plenty of bargains to be found, and even an occasional steal. Allison Turk, an associate at EWM Realtors, just sold a house on the exclusive North Bay Road in Miami Beach for the second time in five years. In 2005 the home fetched $1.3 million; this time it went for $690,000.

There are caveats when it comes to how one should take advantage of the opportunities in Florida. Cash buyers are going to have an easier time negotiating a deal, particularly if they are using the place as a second home. Banks want to see a down payment of 20% to 25% or sterling credit for those financing. Rates are also incrementally higher for people who will use the property as a second home or a rental.

Single-family homes are where prices are firming up the quickest. “They’re easier to finance,” says Michael Timmerman, senior associate at Fishkind & Associates, an Orlando real estate consulting company. “Many condominium associations did the same thing individuals did [during the boom] — they said, ‘We don’t need to fund these reserves.’ Now buyers are worried about special assessments.”

The real estate recovery in Florida isn’t complete by any means. But in a decade smart shoppers will be boasting about the deals they got in 2011 — preferably by the pool.

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Let’s try this again: Mortgage bond ratings return with scrutiny

Posted by Katie Benner
Mortgage-backed securities are back, but Moody’s, Standard & Poor’s, and Fitch are approaching their job rating them with very different tactics.

The big three credit rating agencies are in trouble for not taking taking risk seriously enough when they examined bonds made from residential mortgages before the housing market crashed. They’ve been roundly criticized for their overly generous assumptions about housing market hazards (Prices go down? No way!), and for the abysmal way that AAA-rated, mortgage-backed bonds performed during the financial meltdown.

Now it looks like those same agencies are arguing to see who can be the toughest on those very same securities.

Redwood Trust (RWT) is getting ready to bring to market a $290.4 million residential mortgage-backed security. It’s called Sequoia Mortgage Trust 2011-1, and among other things it features a top AAA rating from Fitch. But in the prospectus filed with the Securities and Exchange Commission, Redwood mentions that it had “terminated” its request for Moody’s to rate Sequoia because Moody’s thought the loans in the pool were riskier than Redwood thought they were. Moody’s wanted a 10% subordination level in order to stamp the deal with an AAA rating. (Think of subordination as a protective cushion should mortgages in the pool start going bad). Fitch agreed with Redwood that a 7.5% subordination level would be fine.
Redwood can’t comment on the deal until it closes in early March. Fitch did not return calls for comment.

Given that we’ve yet to see meaningful rating agency reform since the financial crisis, Sequoia Mortgage Trust 2011-1 doesn’t come as a huge shock. Redwood got to choose its agency, and it went with the one that saw its mortgages the way it saw its mortgages.

But what is interesting is that Moody’s went ahead and issued a report on the deal anyway, even though it can’t officially rate the bonds. Moody’s read the prospectus and calculated that at least 18% of the 303 mortgages in the pool are located in the San Francisco Metropolitan Statistical Area, a definition used to identify the Bay Area’s earthquake prone region. “If a major earthquake were to strike the San Francisco MSA,” writes Moody’s in a report embedded below, “the decline in the values of damaged properties, and the likelihood that borrowers could abandon properties whose value has plummeted, will likely result in either losses to senior certificate holders or deterioration of the credit quality of the certificates to junk status.”

Noting that only 12% of homeowners in the area with a fire policy are covered for earthquake shake damage, Moody’s decided that the natural disaster risk, though small, couldn’t be ignored. Yes, the loans in the pool are very strong. They’re predominately primary homes sold to people with high incomes with 30-year fixed rate mortgages. “But an earthquake event is binary,” says Linda Stesney, a co-author of the Moody’s report. There is no gradual deterioration of credit risk when a natural disaster hits. It’s an all-at-once event that impairs the pool beyond the damage one might assume is a black swan-free world.

In a separate report, Standard & Poor’s agrees that an earthquake, mudslide or even employment prospects could disproportionately affect the San Francisco MSA, and adds that they would have looked for more credit enhancement than Redwood wanted to give.

There’s only about a 6% chance that an earthquake with the magnitude to seriously damage the homes in this pool could happen over the next five years, according to the US Geological Survey, but 6% is still higher than the odds many gave the idea that home prices could ever fall.

Now when investors think about buying a piece of the Sequoia deal, they have a little more than the AAA-rating from Fitch to go on.

This isn’t the first time the rating agencies have publicly disagreed, and absent hard and fast reform they have been encouraged to publish unsolicited ratings. When Redwood brought an RMBS to market last year (Sequoia 2010-1H), Moody’s gave it an AAA rating and S&P put out a long, dissenting report. Certainly this strategy won’t win them customers, but maybe it can help win them a little respect in a world that rates them as junk.

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Arizonans receiving little help from mortgage program

Arizonans receiving little help from mortgage program.