‘Pre-nup’ fight scuttles merger of Colorado’s two largest MLSs

Inmannews - Fri, 05/25/2018 - 4:24pm
REcolorado and Information and Real Estate Services (IRES) began "complex and highly charged" merger talks in March 2017 on the heels of a declined acquisition proposal and a terminated data share. 
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Arizona agent uses real estate marketing skills for activism

Inmannews - Fri, 05/25/2018 - 4:11pm
Joined by colleagues at his brokerage, Keller Williams Realty Professional Partners, Rosene has leveraged his business network and background to support the grass-roots campaign, such as by mobilizing notaries needed to advance a ballot initiative.
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Nearly 60% of servicemembers can put zero down when buying a home

Inmannews - Fri, 05/25/2018 - 1:54pm
Active-duty servicemembers purchase homes on average eight years younger than civilians, despite a lower median household income, a May report from the National Association of Realtors (NAR) found. One reason may be that 56 percent are able to purchase a home without putting any money down, thanks to loans from the United States Department of Veterans Affairs. 
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What makes veterans a great fit for real estate?

Inmannews - Fri, 05/25/2018 - 1:07pm
In honor of Memorial Day, we wanted to know more about why real estate has become a good career choice for returning servicemembers. We asked these Chicago-area agents to share more insights about how serving in the military prepared them for a successful career in real estate.
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With Client Giant, high-touch client retention service gets serious

Inmannews - Fri, 05/25/2018 - 10:47am
Earlier this month, Jay O'Brien spun his gift for high-touch relationships into a new startup, Client Giant, which helps real estate agents, small businesses and larger firms develop client relationships. Next month, the company will roll out its services to new clients.
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Unwelcome guests: Airbnb, cities battle over illegal short-term rentals

American Apartment Owners Association - Fri, 05/25/2018 - 8:22am

The SUV slowly approaches an apartment complex in a quiet residential section of Miami Beach, Florida. On the second floor balcony, a group is gathered.

Code Compliance Officer Vijma Maharaj approaches, her body camera recording, and tells them she has bad news. The apartment they rented on Airbnb is illegal.

While tourist-dense South Beach, where the major hotels are located, largely allows short-term rentals, it’s a different story in large portions of the residential areas of Miami Beach, where rentals under six months and a day are banned.

The eight guests in this apartment are booked for two nights.

It’s a scene regularly repeated in Miami Beach as the city cracks down aggressively on illegal short-term rentals.

The renters, who book via the major vacation rental websites such as Airbnb, Booking Holdings’ and Expedia’s HomeAway, don’t get cited by the city, but the city usually requires the guests to leave the next day or as soon as they can relocate.

Airbnb said negative incidents like these don’t reflect the overwhelming number of satisfied hosts and guests in 81,000 cities and 191 countries, and its experience successfully working with lawmakers around the world.

From Miami Beach to Los Angeles, local laws vary widely, but complaints about quality-of-life issues caused by illegal short-term rentals are similar, according to public records and dozens of interviews with city officials, residents, analysts and others connected to the home-sharing industry. For years, LA has battled illegal party houses in mega-mansions. Other cities like New York have stepped up enforcement. Boston is pushing back against properties being rented out as commercial operations.

“You can’t throw a rock in the country right now without hitting a city that’s moving to more aggressively regulate short-term rentals,” said David Wachsmuth, an assistant professor at McGill University’s School of Urban Planning, who has studied Airbnb around the world.

“The fines are little bit higher in Miami Beach than in some other cities. But around the country —and around the world, in fact, what we’re seeing is a pretty consistent trend.”

Miami Beach’s law against short-term rentals has been on the books for years, but its $1,500 fine was not a deterrent, so the city increased it in 2016 to $20,000 for the first violation, rising to as much as $100,000 for the fifth.

Airbnb does not have a good record complying with local laws, according to Wachsmuth.

“I think very consistently the pattern that we’ve found is that Airbnb is happy to cooperate with regulators about collecting taxes,” he said. “They’ll collect the taxes to kind of level the playing field with hotels. But they will resist as strongly as possible any attempts to restrict how much actual activity is allowed on Airbnb.”

“The easiest way to stop all of this is if the home-sharing platforms simply didn’t send people into these neighborhoods.”-Dan Gelber, Miami Beach mayor

Two years of code compliance body-camera videos obtained by CNBC show raucous parties and unwitting tourists staying in illegal short-term rentals in Miami Beach, many of them advertised on Airbnb. One sign captured in an illegal Airbnb instructs guests to lie and say they are friends of the landlord if someone asks.

On the sidewalk outside the Miami Beach apartment, Maharaj called the Airbnb host, later identified by Maharaj as Rachel Perrea. As a CNBC camera crew rolls, Perrea falsely said the tourists are her friends and staying in the unit for free.

“Rachel told me you guys are friends and you didn’t have to stay there,” Maharaj asked the Airbnb guests. “Is that true?”

“That is not true,” one guest replied from the balcony.

The building’s owner and the company that rented the apartment were both issued a violation.

That company is Vacayo, which is well-known to city officials. The company and its co-founders are facing a total of $700,000 in fines at four properties in the city, which the company is challenging.

Vacayo is a New York-based management company that rents properties and then leases them to short-term tenants, using hosts to advertise them on platforms like Airbnb.

‘It is predatory’

Miami Beach Mayor Dan Gelber said situations like this are common and not good for the city. Officials from other large cities also have seen similar problems.

“We’re seeing commercialized, predatory companies that are trying to commercialize our residential communities in ways that are damaging to our citizens and our residents and our quality of life,” Gelber told CNBC. “It is predatory.”

“It’s people taking very nice properties, buying them and turning them into essentially a flophouse for as many people as they can put in there to extract as much income as they can in the middle of a neighborhood that wasn’t zoned for that kind of behavior,” the former prosecutor and state representative and senator said.

The city expects it will investigate more than 1,000 complaints of illegal rentals this year, up from more than 800 in 2017. So far this year, $2.4 million in fines have been issued, records show, but only about $183,000 has been collected.

“The easiest way to stop all of this is if the home-sharing platforms simply didn’t send people into these neighborhoods,” Gelber said. “It’s just that simple. They’re the ones who do it and they claim they have no responsibility because, ‘oh, we’re just an internet platform.’ But they’re not.”

In an interview with CNBC, Isabel Berney, co-founder and COO of Vacayo, said the company has exited leases in the prohibited zones.

“Right now, we are not entering any additional units in Miami Beach that are not fully compliant,” she said.

Berney said she was not aware that Vacayo host Perrea had falsely told code compliance that she was renting the unit to friends. “I mean, she probably was just put on the spot and she was probably scared, and I wasn’t aware of what she says.”

CNBC reached Perrea who said, “I’m really sorry but I can’t take this call right now.” The call was disconnected and she did not respond to a follow-up call.

Hosts like Perrea, who work on behalf of Vacayo, are independent contractors, Berney said.

“Ultimately, our whole mission is to help landlords,” Berney said. “We help landlords earn passive income. We’ve saved landlords from bankruptcy, from foreclosure.”

Responding to the CNBC investigation, Airbnb said it has removed listings associated with Vacayo from the site.

Wachsmuth said it would be relatively simple for Airbnb to block hosts who try to rent properties in the city’s prohibited zones. Both London and Amsterdam, for example, limit the number of days someone can rent a property, which Airbnb tracks, he said.

“I think the lesson is simply that the kinds of regulations that actually restrict the short-term rental market, Airbnb is not going to cooperate with that unless their back is really up against the wall,” he said.

‘A people-powered platform’

In an interview at Airbnb’s San Francisco headquarters, Chris Lehane, head of global policy, described the company as “a people-powered platform.”

“We’re a community model. We have about 5 million hosts globally, and a typical host here in the United States makes their home available 41 times a year and makes on average $6,100 a year,” he said.

“I’ve yet to see a program being run by any mayor, any elected official in this time of economic inequality that’s generating $6,100 for a typical middle-class family. All without the expenditure of a single taxpayer dollar,” he told CNBC. “That is what Airbnb is about at its core. Trying to use technology to create economic empowerment.”

“It’s really important to those hosts, it’s important to their economic model.”-Chris Lehane, head of global policy, Airbnb

Miami Beach has a long history with short-term rentals, he said, suggesting the practice should be allowed in the part of the city zoned for commercial use.

“I think what seems to me that would be a common sense solution for Miami Beach — happy to do this if they actually really want to sit down and have a constructive conversation — is you could take that 35 percent of the city that’s a residential area, make that an exclusionary zone. Allow the activity to be able to take place in the 65 percent of the city that’s actually explicitly zoned for this type of activity.”

Asked multiple times about the ongoing illegal Miami Beach listings on Airbnb, Lehane said, “the city council members themselves have talked about the fact that their law doesn’t actually work particularly well, as you probably know. Twenty thousand dollar fines on someone making their home available a few times a year to actually help make ends meet?”

In order to block the existing illegal properties on Airbnb, Lehane said, “that requires having to work with the city. Right? We don’t have a lot of the information.”

He disagreed with city officials who blame Airbnb, saying “Miami Beach hasn’t been willing to sit down and actually engage in a conversation.”

The city’s zoning map, publicly available, shows the areas in Miami Beach where short-term rentals are clearly allowed and prohibited.

Lehane said about 1,000 of the 5,000 hosts in Miami Beach are doing short-rentals on a full-time basis.

“So Miami Beach is certainly not part of our economic model in terms of its impact on us,” he said. “What it is, it’s really important to those hosts, it’s important to their economic model.”

Airbnb provided a list of 52 metropolitan areas ranked by the number of guest arrivals. Miami Beach ranked 18 on the list, and had 1.9 percent share of the total visits for that grouping. The Miami region was listed as the platform’s eighth most popular city for 2018.

Lehane blamed the influential hotel industry in Miami Beach and around the country for blocking the company’s attempts to work with city officials. He said Airbnb has completed more than 400 partnerships around the world, including working with Los Angeles on proposed restrictions to book a short-term rental.

“Miami Beach, up to this point in time, has just not had a serious desire to really want to engage on this, because at the end of the day, as the information that has come out reveals, they’re effectively working hand in glove with the hotel industry, which is incredibly powerful. And a hotel industry that really doesn’t want to see everyday people to be able to use their homes to make extra money.”

In a statement to CNBC, Katherine Lugar, president and CEO of the American Hotel & Lodging Association, said, “Airbnb’s illegal hotels are a growing problem in communities across the country, flaunting basic safety and security standards, zoning rules and taxes while also pushing affordable housing options further out of reach.”

“Instead of supporting common-sense regulations, Airbnb has opted to deploy a massive obstruction campaign of dirty tactics, deceptive messaging and personal attacks against anyone who raises a concern.”

Her statement said that “mayors and state legislators across the country are standing up to Airbnb and taking issue with Airbnb’s bullying, and the endless stream of Airbnb horror stories in the news.” incident, which says Miami Beach is the sixth most booked U.S. destination for domestic and international guests, told CNBC it takes swift action against any host that violates its policy.

For example, during the ride-along in Miami Beach, Maharaj told a young couple who made reservations via that the apartment was in the prohibited zone. The guests immediately alerted, which moved them to another location. The guests told CNBC they were originally booked at a different South Beach address, but informed via email shortly before their vacation to show up at an address in the prohibited zone.

“Upon finding out what this apartment owner did, which is certainly a violation of our terms and how we agree to work with properties, we have removed his property from the website because … we take this very seriously and always work with governments,” said Leslie Cafferty, head of global communications at

Party houses in the Hollywood Hills

While Miami Beach targets tourist rentals in prohibited zones, for years a different issue has plagued Los Angeles: raucous parties in mega homes in the Hollywood Hills and other sections of the city.

Short-term rentals are illegal in Los Angeles for less than 30 days in areas zoned as single-family residential neighborhoods. But that hasn’t stopped homes from being rented for party nights.

“Our neighborhoods have become de facto nightclubs.”-Estevan Montemayor, communications director, City of Los Angeles

In February, the City Council approved an ordinance imposing steep escalating fines on both homeowners and renters who have large parties that disturb neighbors. Violators can face fines of up to $8,000.

The City Council also gave preliminary approval to a new ordinance in May that limits the number of days a host can rent to 120 days a year. Qualified hosts can be exempted from the cap. Only primary homeowners can list their properties for short-term rentals under the new restrictions.

Final approval won’t happen for another several months.

“Overall we wanted to preserve our housing stock, we wanted to get bad actors out of the way, and control party homes that are primarily used for just house parties,” said Los Angeles Councilman Jose Huizar, who chairs the planning and land use management committee.

Lehane said Airbnb has worked with city officials to devise a law that makes sense.

“And I think that’s an example of the type of partnership and deals and relationships that we have done all over the world,” Lehane said.

Nevertheless, Cory Palka, senior captain of the Los Angeles Police Department, Hollywood division, said disturbances caused by short-term rentals are “probably next to homelessness, one of our biggest challenges in Hollywood.”

“Neighbors are furious that this has gotten so wildly out of control that it impedes their ability to have a normal lifestyle here,” Palka said.

Deputy City Attorney Steve Houchin has filed public nuisance civil charges against four Hollywood Hills homeowners since October. Two of these four locations are still listed on Airbnb.

CNBC found another Hollywood Hills home listed on Airbnb as “LA’s premier recording studio and creative space.” Listed at $3,300 a night, the home is equipped with an in-house recording studio, an eight-seat reclining chair movie theater, and a heated pool and hot tub. High-profile celebrities such as rapper Flo Rida are featured posing on the home’s Instagram page, which is known as “House Thirty Three.”

“I’ve never heard anything this loud,” said Natasha Ward, a longtime Hollywood Hills resident who lives on the street just below House Thirty Three. “It’s like being at a concert.”

There are noisy parties one or two times a month, Ward said. Large cars and vans that arrive full of people “gridlock” the narrow road leading up to the house, according to Ward.

Police records show 17 patrol calls to the home since the beginning of 2017. Ten of the calls were for minor disturbance parties and two were classified as group disturbances.

“That is an incredible amount of calls for service,” said Benjamin Thompson, LAPD Hollywood division senior lead officer. “It’s incredibly indicative of the misuse of the kind of public safety danger that is being cultivated at the property.”

Martin Gray, who said he manages the home’s recording studio and listed it on Airbnb, described the property as “not really a traditional Airbnb” and as more of a place “built to accommodate artists and record labels.”

Gray told CNBC he first listed House Thirty Three on Airbnb in January and that there have been a few short-term rentals booked through the platform. Record labels booked the home for March and April and did not use Airbnb to reserve it.

“A lot of the Airbnb stuff was just daily rates,” Gray said.

When CNBC informed Gray that short-term rentals at this Los Angeles address are illegal, Gray said he was surprised and did not know about the prohibition. He said he was unaware of the police calls to the home. The property’s owner did not respond to a request for comment.

“Our neighborhoods have become de facto nightclubs,” Estevan Montemayor, the city’s communications director, said. “And that’s not what they were built for, what they’re meant to be.”

Shots ring out

Further north in the San Francisco Bay Area, an incident in April illustrates the clash between residential peace and quiet and the nightmare next door.

Paul Larson, who lives in Millbrae, didn’t mind when he first heard the house next door was being rented through Airbnb. But then came the loud parties and the fears for his own safety.

In the early morning of April 22, a party with dozens, possibly hundreds, of partygoers culminated in eight loud gunshots.

“It sounded like they were coming from right outside the wall and it really spooked me,” Larson said of the gunfire. “I could hear commotion, I could hear yelling, I could hear scurrying.”

CNBC obtained surveillance footage captured on Larson’s video security system of the private road leading up to the Airbnb house. The videos show guests entering and exiting throughout the day and into the next morning, as well as the gunfire and subsequent commotion.

Police are seen walking and driving past the surveillance camera in the hours before and after the gunshots rang out.

“Nobody from Airbnb has reached out to me or any of the neighbors to apologize,” Larson said, saying it’s a source of frustration. He said he reached out to the Airbnb unit host hours before the gunfire. The host tried contacting Airbnb to voice her concern several times, but kept getting put on hold and never received a response, according to Larson.

“The chance of this happening under just normal circumstances if it was not an Airbnb is basically nil,” Larson said. “It’s all because of the Airbnb.”

In a statement to the mayor, vice mayor and Millbrae City Council, Airbnb said: “We have zero tolerance for this type of behavior and upon learning of this incident, we permanently banned this guest from our platform and suspended the listing. Additionally, we are reaching out to the San Mateo County Sheriff’s Office to offer our assistance.”

Other cities crack down

New York City, which Airbnb lists as its top destination for guests, has some of the tightest restrictions on short-term rentals in the country. It is illegal to rent out an entire residence for less than 30 days in New York City. Short-term rentals are permitted only if the homeowner is also staying there throughout the rental period and there are no more than two renters.

New York Gov. Andrew Cuomo signed a law in 2016 making it illegal to advertise occupancy for short-term rentals in buildings with three or more units. Violators are subject to fines up to $7,500.

But CNBC easily found what appear to be illegal listings on Airbnb in New York.

Wachsmuth was one of the authors of a 2018 report that analyzed Airbnb activity in New York City. The study, titled “The High Cost of Short-Term Rentals in New York,” found that 45 percent of all New York Airbnb reservations last year were illegal and two-thirds of revenue is from likely illegal listings. The report was funded by the Hotel Trades Council, which Airbnb says makes the findings questionable.

“I’ve been doing research on Airbnb for years now,” Wachsmuth said. “And the vast majority of that is independent, university research. And the fact of the matter is that everybody who studies this, almost without exception, comes to very similar conclusions.”

“Cities all across the world are cracking down because they see the same facts that we see. And those are the facts, although they happen to be inconvenient for Airbnb,” he said.

Airbnb faulted the data collection and methodology used to compile the report calling it “deeply flawed and inaccurate.”

In 2017, New York doubled its number of inspections of potentially illegal short-term rentals, said Christian Klossner, executive director of the Mayor’s Office of Special Enforcement.

“The city has dedicated a significant number of resources, we’re ramping up enforcements,” he said.

Court battles

Regulatory efforts in other cities have wound up in court.

Last year, Airbnb and HomeAway, reached a settlement with San Francisco, in which the companies agreed to enforce regulations from 2014 that require hosts to be registered. The companies also will collect data from people who list their units for under 30 days, information San Francisco can use when determining who can register.

The goal of the agreement was to limit the number of “commercial de facto year-round hotels,” said Omar Masry, senior analyst at the San Francisco Office of Short-Term Rental Administration and Enforcement.

“We tend to see a strong correlation with quality-of-life issues, noise and parties,” Masry said about commercially operated listings. He added, they “rarely see this with short-term rentals playing by the rules.”

Since the rules went into effect last September, he said the number of listings has dropped from around 10,000 to 4,000. The city has been working closely with Airbnb to identify illegal listings and remove them from their platform.

“We’ve seen a massive reduction in illegal listings including many folks who we had seen operating … high-volume short-term rentals across the city,” he said.

Commercialized operators

While Airbnb points to scores of hosts who earn extra income from short-term rentals, CNBC found companies around the country who have rented properties from landlords and turned them into Airbnbs.

For example, the New York short-term rental report found that the top 10 percent of hosts earned 48 percent of all revenue in 2017, while the bottom 80 percent earned just 32 percent.

Boston is facing a similar issue as it has one of the highest short-term rental densities in the world, which has grown by 100 units a month since 2015, according to Boston’s Alliance of Downtown Civic Organizations.

More than 70 percent of Airbnb listings in downtown Boston are operated by outside professional companies, according to an analysis by ADCO.

“It certainly has hurt a lot of downtown Boston,” said Ford Cavallari, ADCO’s chairman.

Using data from Inside Airbnb and author Tom Slee, who has collected Airbnb data, the organization found Boston’s Airbnb market has nearly four times more investors operating rentals than other cities, including New York City and Washington, D.C.

“They don’t have the same interest or commitment in the neighborhood so in the end you face a threat to the fabric and quality of life in the neighborhood,” said Martyn Roetter, chairman of the Neighborhood Association of the Back Bay.

A proposed ordinance released in May would impose a 120-night-per-year limit on owner-occupants of two and three family buildings. The limit applies to a second unit. Owner-occupants can use the unit they live in for short-term rentals with no limitations.

The biggest policy change, though, would prohibit investors who don’t live on the property from renting out a unit for a short-term rental.

In a May 15 letter to Boston Mayor Marty Walsh, Airbnb said it has tried to work toward a “balanced solution” with the city.

“We are concerned that despite your administration’s hard work to create meaningful economic opportunities for everyday Bostonians — including building thousands of units of new affording housing — the introduced ordinance would in one fell swoop prevent thousands of Bostonians, particularly renters, who depend on home sharing to make ends meet from doing so,” wrote Williams Burns, Airbnb’s Massachusetts public policy director.

Burns said the proposed ordinance would disproportionately impact renters, discourage tourists and business travelers, and allow “big hotels to continue price gouging consumers.”


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The ups and downs of month-to-month lease agreements

American Apartment Owners Association - Fri, 05/25/2018 - 8:15am

Paying for a traditional or monthly lease can put a dent in one’s pocket since it’s a constant expense which weighs on your finances and future investments.

Traditional leases last 12 months, 18 months or 24 months. Property owners operating on a six-month lease is rare and costly. The lease’s structure is too unyielding for tenants who must relocate immediately or within 3 months. The month-to-month lease solves that problem, yet it’s not as trendy as it once was due to the pros and cons below. Still, renters who can find a month-to-month lease property should consider the possibility.

The highsFlexibility

Month-to-month agreements are flexible. Renters need no timetable to leave. Reasons include moving, relocating, becoming a homeowner, construction, marriage, divorce, roommate issue, or a drastic life change. Renters can segue between month-to-month and home/apartment lease easily. Moving from lease to lease is slightly difficult.

No penalty

Tenants don’t pay a penalty for breaking the agreement. Renters only deal with paying next month’s rent if they don’t leave by the 15th of the current month or the 1st of next month. Home and apartment leases require a fee and/or paying rent for the remaining months for breaking the lease before agreeing to the terms. This is because a typical contract lasts the entire duration with endless stipulations, so breaking it before the end has consequences.

Lovely lodging

Today’s month-to-month apartments are stylish and chic, assuming tenants can afford it. Short-term apartments and corporate apartments use the month-to-month system, and many provide furniture. This is ideal for renters who don’t have belongings or prefer to keep belongings in storage until it’s time to relocate or their home is move-in ready.

The lowsUncertainty

Renters gain flexibility at the expense of sacrificing money and uncertainty. Month-to-month agreements cost more than traditional leases because of it. Renters can leave at any moment, and the property owner’s strategy is to strike while the iron is hot. Besides higher rent, renters must worry about the proprietor’s aspirations too. Proprietors can equally terminate the lease at any moment for any reason. It’s difficult to find accommodations when renters have 30 days maximum to move.

High vacancy

The proprietor may experience vacancy and financial drought. There is no set time for another tenant to fill the vacancy after the previous one leaves. Sadly, this invites unwanted vandalism. When another tenant does fill the void, the landlord may raise the rent to recoup money lost during the vacancy. Meanwhile, it’s obvious renters pay more for furnished apartments. Don’t expect free month’s rent, special offers, or free prizes upon entry because the stay is temporary, not long-term. Since property owners lose tenants continuously, these apartments need something else like lease apartments to keep them afloat.

Very expensive

Lastly, property owners can raise the rent when it’s convenient provided the owner gives the renter notice first. The renter can accept the increased payment or leave within 30 days. This effective strategy works as it gains additional money from tenants or removes a problematic tenant without legal recourse. Conversely, a long-term lease locks the rent rate in for the duration of the contract. Owners can raise the rent when the lease expires, saving renters money.

Property owners view month-to-month renting as a risk not worth the reward, hence the decline. If month-to-month option fits the narrative, expect to research thoroughly for short-term apartments. Today’s month-to-month rental agreements are short-term contracts, and renters/tenants must understand the benefits and consequences first before signing one.



The post The ups and downs of month-to-month lease agreements appeared first on AAOA.

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Interest Rates and Real Estate Investing

American Apartment Owners Association - Fri, 05/25/2018 - 8:12am

A recession is coming. But not quite yet. Certainly, we’ll see another recession but for now, the Federal Reserve continues trying to keep the U.S. economy balanced with moderate inflation and moderated economic growth. Their primary tool for doing this is the federal funds rate. Back in March, the Federal Reserve raised interest rates by a quarter of a percentage point and signaled that the central bank is on track to raise rates twice more in 2018. The rate increase in March marked the sixth time since the financial crisis that it has raised rates. At the conclusion of its May policy meeting, the fed left interest rates unchanged. Currently, U.S. interest rates are at 1.5 percent to 1.75 percent, the highest in a decade.

Increasing interest rates certainly affect the real estate investment business. If you are borrowing money as a mortgage to become a landlord, your business costs will increase but rents are also likely to continue increasing. If you are borrowing money to rehab and flip houses, your cost of interest will increase but it is still a seller’s market with selling prices on the increase (although slowing and expected to slow further).

Lending Money Is Where the Money Is At

As always, there is risk when it comes to any kind of investing, including real estate investing. One way of minimizing that risk while increasing earnings is by becoming the lender as interest rates rise. Great sources of funds for this are IRAs, 401ks, and other retirement accounts. The secondary lending market (alternative to bank loans) has become much stronger over the past several years.

While the federal interest rate remains extremely low and bank mortgages are around slightly above four percent and heading higher, private lenders are earning between eight and twelve percent. Of course, with that comes a higher degree of risk. Earning the higher interest rate means lending to higher risk borrowers. However, investing retirement funds in a first mortgage provides a high level of security when it is secured by the house or other property. Security can be further increased by loaning no more than 70 percent of the property value and requiring the property buyer to invest the other 30 percent. Naturally, the lower your risk, the lower interest rate you’ll be able to charge.

Alternative Retirement Investing

Investing retirement funds is not limited to Wall Street stocks, bonds, and mutual funds. There are many alternatives. One is a self-directed IRA that can be managed by a third party such as PENSCO, one of the dominate self-directed retirement account custodians (you can learn the significant difference between custodians and administrators at this link). These types of accounts allow you to invest your retirement funds in alternative investments such as real estate. You can either directly purchase the real estate or loan money secured by real estate. You can also buy stocks in private companies and have many other investment opportunities.

There are very specific rules that you must follow when making alternative investments. One of the most important is that you can’t invest in a company that you personally own/operate nor businesses owned/operated by direct family members. That’s where a self-directed IRA custodian comes in. You can place your retirement funds in a trust with the custodian and direct the custodian how you want your money invested. Unlike a financial adviser, custodians won’t give you investment advice. You have to specifically tell them where you want to invest. Just like a traditional IRA, you don’t financially benefit until you reach retirement age. But upon retirement, you can sell your assets and begin drawing your retirement pay.



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Study: Which Property Type Has the Best Price Growth?

American Apartment Owners Association - Fri, 05/25/2018 - 8:07am

Part of the American dream is owning a home—and another part is establishing a business so you can be your own boss. Whether you’re fixing and flipping or buying and holding, you’ll want to understand price growth in any market where you’re investing so that you’ve got a good idea of how your asset is appreciating (or not).

HouseCanary examined the top 100 metropolitan statistical areas (MSAs) in the United States by population and looked at which ones had the highest year-over-year price growth for three property types: single-family homes, condos, and apartments. We found that all property types are seeing price increases in certain parts of the country, which also correlates with U.S. Census migration data.

Home is Where the Cash is

The single-family home (usually surrounded by a white picket fence) is the quintessential symbol of housing in America. It’s where you can raise your two-plus kids and give a dog space to run around the yard, and in some metro areas, single-family homes are a better investment than other types of property.

Most of the housing stock in the United States is represented by single-family homes. Generally speaking, home prices are growing faster in Florida and the West than they are in the Southeast and Northeast parts of the country.
Condo in the City

We see this pattern reflected in the best markets for condos, too. Condos are multifamily units that are available for individual sale and ownership. Unlike an apartment building, a condo building is managed by a homeowners’ association (HOA) and allows for individual ownership of units, while an apartment building is owned and managed by an individual or company and does not allow individuals to purchase units, instead renting them out either short-term or long-term.

Note: One MSA in the top 100 by population (Buffalo, New York) was excluded from our condo research because there weren’t enough condo properties to draw a year-over-year price growth conclusion.

Price growth for condos is generally higher across the board than price growth for single-family homes—but not everywhere. So although condos might seem like a less risky, more lucrative investment than single-family homes, it really depends on where you’re looking.

The Data in Apartment 13

Unlike condos, apartments cannot be purchased by individual buyers; instead, they are owned by a company or individual and rented out unit by unit, either to long-term renters or short-term occupants (like vacation rentals). But like condos, price growth has been higher for apartments than for single-family homes—and also like condos, if you don’t choose your investment market wisely, then you might end up buying an asset that decreases in price year-over-year instead of increases.


Condos and apartments tend to increase in price more than single-family homes in areas where the population is growing, but they’re not always a safe bet—condo and apartment prices can decline year-over-year in markets where population growth is slow or markets where more people are migrating out than are moving in.

Price growth is strongest in the West and in Florida, and less robust in the Southeast, while parts of the Northeast may require even more digging to find a good investment deal. Pay attention to where people are moving and try to secure investment properties in those markets if you’re hoping to make the most money from your real estate investment upon sale.



The post Study: Which Property Type Has the Best Price Growth? appeared first on AAOA.

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Fast Facts for Managing Prospective Renters’ Expectations

American Apartment Owners Association - Fri, 05/25/2018 - 8:01am

Surveys gauging how renters use technology to rent and live at apartments are taking on a sense of urgency at SatisFacts and Because more renters are finding their homes on mobile, tablet and desktop applications, the leading multifamily research firm is going back to the well more often.

Since the first technology-oriented survey emerged in 2011, consumers are spending more time online prospecting for apartments. Enough that SatisFacts is monitoring what is becoming the norm in multifamily every two years.

Lia Nichole Smith, SatisFacts Vice President of Education and Performance, recalls that apartment hunting required much more legwork when she started in multifamily 16 years ago.

“Before people would jump in their cars with their apartment book, spending a whole Saturday going around with dog-eared pages, collect all the information, tons of paper and all the leasing folders that we would give them,” she told an audience at the Texas Apartment Association Education Conference & Expositionin San Antonio. “But we are starting to see more people spend time up front doing their own research, going online to look at websites before making contact.”

Seven years ago, before Smith climbed from a role in Operations to join SatisFacts and help lead research, the company wanted to get a better feel for the emerging trend of online renting. The 2011 Online Renter Study asked renters nationally to rate the importance of using technology to find their next home, earning a 3.87 on a scale of 5.0.

A follow-up in 2015 yielded a surprising 4.01.

“We revisited the survey in 2015 and were very shocked at the dramatic difference that had taken place as people looked for help to find an apartment,” she said. “We didn’t want to wait another four years, because who knows what might happen.”

In 2017, SatisFacts released its third Online Renter Study in six years and the rating climbed again, this time to 4.15, including a nation-leading 4.33 in Texas. The next study is slated to launch the end of this year.

The surge explains how renters feel about multifamily’s ongoing shift to technology, Smith said. The lead survey question asks the importance of an apartment community being committed to utilize the internet and new technologies to enhance communication, service and the resident experience.

“With a 4.15, the narrative here is that it is important,” she said.

In survey vernacular, over 4.0 means that it’s getting very close to extremely important. Thus, the array of available technological tools that include online renting, payment portals and community bulletin boards is becoming more desirable.

“Over time, residents are saying that because life in general has become more technology driven, I need that to be present in every aspect of my life,” Smith said. “Things like having a portal where residents can pay rent on line (are important). If you do not have a really robust resident portal, if you don’t have the online options for your residents you’re going to have a tough time going forward when it comes to retention.”

And if a resident can’t find those convenient features, they’ll go somewhere else, she added.

“As rents go up, your residents are expecting more. We’ve got to make sure residents are getting their money’s worth.”

Generally, more renters are signing leases online. When asked last year if they had rented their current apartment without visiting the community first, 12.7 percent said they had, compared to 4.1 percent in 2011.

Also, when prospects use technology they want to control communication and have as little face-to-face contact as possible. LiveChat, Skype and Facetime are not and continue to drop in favor of email and texting for younger and older audiences, Smith said.

“Least important is live chat,” she said. “They don’t want to be sold yet. They’re not ready yet to start interacting with you. I think we will see that shift a little bit, but renters want to gather as much information on their own. They want to make the first move.”

That means that websites must be more about information and less about marketing, she said. Because prospects typically have their minds made up about what they are looking for they really want to know if a community has it, what it looks like and if it’s affordable.

Once they lease, residents want an open door to communication. A whopping 94 percent favored using a portal if the community offered it and 83 percent said they’d use it to rent online. More than three-quarters say they want to fill out service requests online rather than make a phone call to the front office or maintenance line.

“That’s a huge number,” says Smith.

“The desire for remote contact is widespread,” she added. “They want as little face-to-face interaction as possible. Personal interaction is saved for escalated issues. The ones who come into office have more urgency than someone who has a general question.”

Smith expects renters to further embrace technology and online tools in the future. In return, multifamily operators have to make the leasing process as simple and crystal-clear as possible, starting with the website.

“It’s all about transparency,” she said. “Because your renters are looking at multiple sources and collecting information upfront, there has to be transparency. This is who we are, what we are about.”

Important information they can’t find in a deformed apartment listing booklet.



The post Fast Facts for Managing Prospective Renters’ Expectations appeared first on AAOA.

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Lennar chair and Zillow CEO talk predictions for near-future homes

Inmannews - Fri, 05/25/2018 - 8:00am
In 15 years, built-in WiFi and a speaking door lock could be as common in an typical home as the fridge.
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Startup YINC launches blockchain-powered home services app

Inmannews - Fri, 05/25/2018 - 5:45am
The home services marketplace startup YINC, in the works since 2016, chose an interesting time to launch. The startup made its first publicity push this week, the same week Facebook — the one competitor capable of crushing nearly any startup with its scale — added home services to Facebook Marketplace through partnerships with startups HomeAdvisor, Handy and Porch.
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How to make your brand the ‘silver bullet’ of real estate

Inmannews - Fri, 05/25/2018 - 3:00am
Rather than looking to tech to solve your problems, to act as your "silver bullet" in real estate, start looking in the mirror. It’s you — your unique, authentic, real self — that's the real silver bullet.
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5 steps to prep a show-ready listing every time

Inmannews - Fri, 05/25/2018 - 3:00am
What can sellers do to make a positive and memorable first impression on buyers and agents? What can they do to eliminate (or at least tame) the scrutiny and instead inspire buyers to visualize a future in the home?
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Keller Willams NYC without a team leader after months of shakeup

Inmannews - Fri, 05/25/2018 - 3:00am
Back-to-back departures of its top leaders has Keller Williams NYC’s midtown office without a captain at the helm of its ship. Founder Ilan Bracha told Inman that the brokerage remains continually profitable however and one of the largest and most successful in the city, dispelling rumors it is shutting down.
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5 ways to win at luxury real estate marketing

Inmannews - Fri, 05/25/2018 - 3:00am
In this edition of "Let's talk marketing," Melinda Goodwin discusses luxury real estate marketing with real estate strategist, professional speaker and owner of Woodman Consulting Group, Aaron Woodman.
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6 facts you should know about VA loans

Inmannews - Fri, 05/25/2018 - 2:10am
If you're not already familiar with what VA loans are, who can utilize them and how they can help your business, read on — we've got a lesson for you.
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How this VR real estate startup began with Navy family life

Inmannews - Fri, 05/25/2018 - 1:16am
San Diego-based real estate agent Lauren Taylor, a proud Navy wife, serves a special homebuyer niche -- military families relocating to Southern California who must find a home at a moment's notice. The challenge of helping her clients view a large number of homes in a short amount of time led her to conceptualize and launch a virtual reality technology platform, Savvy Homes Portal, to show properties from a distance.
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7 Ways to Get a Loan for an Investment Property

American Apartment Owners Association - Thu, 05/24/2018 - 5:07pm

Over the past three years, home flipping has regained its popularity as real estate investors started dipping their toes into the market. It’s no surprise that home flipping was at an 11-year high in 2017, according to Attom Data Solutions, a property database curator. It said $16.1 billion went toward the purchase of homes for flipping that year.

As a real estate investor, knowing how to get a loan for an investment property can be a big deal. It can mean the difference between success and failure. If you’re interested in expanding your real estate empire — whether you’re flipping houses or using an investment property to generate regular cash flow as a landlord — it’s important to understand your options.

Here are seven options to consider for funding your investment property purchase or upgrade.

1. Home improvement loan

For the most part, getting a home improvement loan makes sense if you’re upgrading something you’ll keep for the long term.

“The only way I see it working is if this is your one project for the year,” said Sam Wilson, a real estate investor and co-owner of Southern Home Buyers.

Home improvement loans also can be useful for income-producing properties. If you rent out properties that you’ve had for a while, you might have enough equity to get a loan based on the rental property’s value. However, if you borrow too much or lose a tenant and can’t cover the payment, you could end up losing your property.

Wilson pointed out that a home improvement loan can come with perks, such as a lower interest rate, but the drawback is it takes time to get through the system.

“Do you have 30 days to wait around for the bank to underwrite you, appraise the property, and get it through their loan department?” he asked.

If you’re working within a short time frame, you might not have time to take advantage of a home improvement loan. You’ll need to find other solutions.

For those who can afford to wait for the process to play out, a home improvement loan can be helpful, Wilson thinks. It might not be the best option if you need to complete a project quickly so you can flip the house, or if you have a small window of time before a new tenant moves in.

2. Home equity line of credit

Rather than relying on getting a new home improvement loan, Wilson suggested people use an existing home equity line of credit.

“If you have a home equity line of credit on your primary residence, you could utilize it as soon as you need it,” Wilson said. “There are no completion hurdles to overcome for more funds, and no waiting around for projects to start.”

Having that capital available at a relatively low interest rate is a huge advantage. Because the line of credit is based on your primary residence, you don’t have to worry as much about the difficulties that come with trying to persuade a bank to fund an upgrade if you’ve invested in a fixer-upper.

As with a home improvement loan, it’s possible to get a line of credit based on your long-term investment property. If you have enough equity built up in an existing rental property, you can use it for collateral instead of relying on your primary residence.

“With a true investment project, like a home you’ve bought cheap but needs lots of work, it’s going to be in such a condition that most banks won’t lend on it beyond its current value anyway,” said Wilson. “That can make getting a home improvement loan impractical for any real estate investor.”

The downside to using a home equity line of credit from your primary residence or your rental property is that you are putting your investment at risk. If something goes wrong and you can’t make payments, you could lose your home or your income-generating property.

3. Cash-out refinance

Looking for a way to get more out of your existing equity? A cash-out refinance can be one way to get the money you need.

Refinancing your home or rental property could result in a lower interest rate and payment. Also, with a cash-out refinance, you can increase your cash flow, based on the equity you have.

The downside is that, as with a home improvement loan, you’ll have to wait for the appraisal and underwriting process to work itself out. You might not have the time for that. Also, if your investment property doesn’t have enough equity to provide the funds you need, you’ll have to use the home you live in as the source of equity.

Using your primary residence for a cash-out refinance if you’re buying a property to flip can be risky. You could end up losing your home while being stuck with a fixer-upper that isn’t habitable.

4. Hard money lending

Many people focus on traditional bank lending when trying to figure out how to get a loan for an investment property, according to Lucas Machado, a real estate investor and the president of house-flipping startup House Heroes.

Instead, he pointed out, many real estate investors turn to more creative home loan solutions such as hard money lending.

“This is used a lot by investors who flip homes,” said Machado. “The investor borrows from private individuals or businesses to fund their real estate investments.”

These nontraditional loans often are higher than the current value of the home, so there’s money left over to make upgrades that enable investors to sell the home quickly. The hope is that the home sells for much more than its purchase price after the improvements are made. The loan can be paid off and the investor has a little capital left over so they can move on to the next project.

With hard money lending, though, Machado explained that you usually need to bring some of your own capital, typically a 20% down payment. You probably will pay a higher interest rate because hard money lenders put their own finances on the line. Also, many of these alternative mortgage lenders have provisions that allow them to repossess the home if you don’t make payments on the loan.

5. Partnership

Do you know people who have a lot of capital available? If so, you could enter into a partnership with them to get the money you need.

“One common form of partnership for real estate investing is when one partner supplies the funding and the other brings the opportunities,” said Machado. “The partners then split the profit upon completion of the project.”

This option also might work if one partner has very good credit and can secure a loan, while the second partner manages other aspects of the investment. However, you need to come to an agreement with your partner to make this work. You both need to be happy with the distribution of profits in proportion to what you bring to the table.

6. Seller financing

If you’re buying a home, you might be able to convince the seller to finance the deal, Machado said.

“Even though the seller doesn’t make money at the time of the sale, they could receive the advantage of ongoing income while you pay off the loan,” he said. “However, you might have to pay a higher price for the home and pay a higher interest rate because they offer creative financing.”

When using seller financing, you run the risk of putting some money into the home to fix it up or bear some of the administrative costs that come with being a landlord. You could lose that money if you can’t make payments and the seller repossesses the home.

7. Personal loan

Is your home improvement project relatively small? You might benefit from an unsecured personal loan for home improvements. If you’re a real estate investor looking to make upgrades for tenants, you can get a personal loan fast and at a reasonable rate if you have good credit.

Personal loans don’t require an appraisal, and some lenders, such as Avant, can send the money to your account within a couple of business days. Borrow the amount you need to upgrade the home and move on to the next project.

Personal loans often are unsecured, so you don’t have to worry about losing the property. However, you might not qualify for a personal loan large enough to complete a total remodel, so the option might not make sense if you’re an investor trying to flip a fixer-upper.

How to get a loan for an investment property

No matter your situation, you need to present yourself as a good risk.

When getting a home improvement loan from a bank or an online personal lender, you need good credit to gain access to the best rates and terms.

As you approach hard money lenders or work with a partner or seller for financing, you need to show that you’re smart and hard-working. You can get a loan for your investment property without having good credit, but you have to prove you have a plan to be profitable so that nontraditional lenders can have confidence in you.

If you’re considering a loan based on equity instead of a personal loan, it’s important to ensure you have enough value in your home to qualify for your desired amount. As a result, you could end up taking out a home equity loan on your primary residence. As Wilson pointed out, this can be a good way to access ready money, but you have to be careful that you don’t lose your home.

There are options for real estate investors looking for a little leverage to help increase profitability. Whether you need a home improvement loan to upgrade a revenue-producing rental property or you hope to buy a home to flip it, research your options and decide which one works best for you.



The post 7 Ways to Get a Loan for an Investment Property appeared first on AAOA.

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The Challenges of Residential Instability

American Apartment Owners Association - Thu, 05/24/2018 - 5:06pm

Homelessness is a critical issue facing the nation, but a new report examines the challenges of “housing instability,” and how communities can intervene to deal with the problem before it reaches the point of homelessness.

That’s the topic of the Urban Institute report “Family Residential Instability: What Can States and Localities Do?” authored by Brett Theodos and Sara McTarnaghan of the Urban Institute and Claudia Coulton of Case Western Reserve University. The report is compiled from a roundtable meeting convened by the Urban Institute and the Annie E. Casey Foundation, drawing upon the insights of “more than 40 practitioners, advocates, public officials, researchers, and funders” who “shared practical insights about successful strategies and pitfalls of policy and program solutions to address family residential instability.”

As the report points out, there are many problems faced by families who may not yet be homeless, but who are suffering from residential instability. Moreover, the reasons behind this residential instability can vary significantly depending on both the individual and the region where they are located, among other factors.

The report first focuses on a factor related to residential instability—residential mobility. Moving isn’t necessarily a bad thing, but the report defines residential instability as “when the frequency of residential mobility in a household or individual is high or occurs over short intervals.” Residential instability can also be a sign of housing insecurity, “which refers to households that have difficulty remaining adequately housed because of problems affording or maintaining their housing.” The report continues to say that “Mobile households frequently have periods of homelessness, including living on the streets, in shelters, or doubled-up temporarily.”

The Urban Institute report found five primary contributors to residential instability: neighborhood dynamics, housing unit conditions, household characteristics, metropolitan area and housing market dynamics, and cross-cutting systems (such as “the availability of housing assistance and other social safety net supports, the criminal justice system, and labor markets”).

The report explains that those affected by residential instability are often forced by circumstance to accept whatever housing they can find, and “they often end up in worse housing conditions and drained of financial resources.” Low-income families, in particular, are often forced to move frequently and have less control over where they wind up, which can affect both the parents and children within a family.

So, how can communities help address the problem of housing instability? One key factor is working to improve housing supply and availability—no easy feat, given how many markets are currently struggling with housing inventory shortages. “States and localities can work toward these aims by supporting landlords, creating sufficiently strong landlord-tenant laws, and enforcing housing codes,” states the report. The Urban report also recommends communities make use of federal resources, focus resources on the segments of the housing supply most in need of resupply, and work to preserve and subsidize existing affordable housing.

The report also highlights the importance of examining both landlord-tenant laws and the enforcement of housing codes. “Rather than simply enforcing housing codes in ways that cause greater displacement, more proactive engagement of code enforcers in low-income neighborhoods is needed,” the report states. “Smarter, more effective code enforcement will rely on both carrot and stick approaches to address housing quality and conditions. Smarter code enforcement will hold people accountable and provide low-cost financial loans or grants for landlords who lack the resources make needed improvements. This may be in exchange for limiting the rent increases which can result from upgraded properties.”



The post The Challenges of Residential Instability appeared first on AAOA.

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