January 21, 2010

You Can’t Change Me! Using PDFs in Business

Posted to Adam Stuart

While the title to this post might be a little misleading as to what I’m talking about it actually makes quite a bit of sense. For the past few years as I’ve been working in Property Management and Real Estate transactions I’ve become very acquainted with the popular PDF file. PDF stands for Portable Document Format. PDF’s are great because they are not easily manipulated, they are relatively small (making them great to send as attachments in emails), and almost everyone that owns a computer has some type of PDF reader. The fact that the document can’t be altered is one of the biggest reasons we love them… hence “you can’t change me!”

There are expensive programs that you can purchase that allow the user to do all sorts of crazy things with a PDF file. I’ve seen programs that allow you to highlight, put in captions, bookmarks, comments, change the colors, create hyperlinks, etc. While these perks are interesting I don’t have a need to use them often. That said, I can’t justify spending several hundred dollars just so I can highlight a section of a PDF.

Awhile back I did some quick searching for a cheaper way to create a PDF from a word processing document. Cnet’s www.download.com has become a place for me to search for the latest and greatest, free or cheap software. While looking around I stumbled across a program called PDF reDirect. EXP Systems LLC created both a free and professional version of PDF reDirect. I have had the free version installed on my laptop for about a year and use it almost daily. The free version allows the user to create a PDF from just about any type of file. I have had success in creating PDF’s from Microsoft Word, Microsoft Excel, Microsoft Publisher, Google Docs, WebPages, images, screenshots, etc. I love this program. The professional version costs only $19.99. It adds quite a bit of functionality to the free version. On EXP System’s website they have a comparison chart where all the differences between the free and paid version are listed. You can see that chart by clicking here.

As a Realtor® I often need to send offers, rental applications, lease agreements, etc. that have all kinds of sensitive information within the document. As we know not all email is secure. One of the best features that PDF reDirect offers is a way to encrypt (password protect) sensitive documents. I am now confident as I send emails because the recipient and I have established a password that must be entered before the file can be displayed.

To download the free versions of this program please click here. If you know of any other programs that might be helpful please let me know. If you have problems installing or using PDF reDirect I’d be happy to help. I can be reached at adam@welchrandall.com or on my cell (801)388-3035.

Posted By: Adam Stuart


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January 05, 2010

Reasons Why Now Is the Time to Buy

Posted to Brad Sears

We keep hearing that now is the time to buy because of “low interest rates,” “low house prices,” “tax credits” and on and on. But, you may ask, “What does that mean to me?” The most practical way to look at it is, “How will all of this affect my family’s budget?” because after all, that is ultimately what makes a difference to us on a month to month basis.

Let’s say that you have given yourself $1200 a month to go towards housing. Most people have a pretty good idea of what quality, size and location of home they can expect for $1200.

First, let’s consider the impact of Low Interest Rates:
It has been said that when the economy is balanced and where it ought to be, rates should be between about 7 and 8%. Right now rates are at 4.875%. It also has been said (by virtually every economist out there) that rates are expected to rise significantly once the Federal Government ceases buying mortgage backed securities which is currently powering the market towards lower rates. At 4.875%, your $1200 per month would buy you a home worth about $180,000. However, when rates go to about 7.5%, $1200 will only buy a home worth about $140,000. Pretty big difference.

Next, let’s consider the impact of Low House Prices:
Home values have gone down. A home that is worth $180,000 today was worth, on average about $210,000 during the peak in 2007. Home values will go back up. They always do, especially here in Utah where the economy is more stable than many other areas in the United States. According to information gathered from the Historical Mortgage Rate Data page from www.mortgage-x.com, and illustrated in the chart below, we see that in 2007, $1200 per month would have purchased a home worth $156,000.

If you compare your purchase of a home now for $1200 a month to someone who purchased a home back in 2007 for $1200 per month, you would have $54,000 more of a home while you are BOTH paying the same $1200 a month! ($210,000 value compared to $156,000)

Third, let’s consider the Tax Credit:
The Federal Government is offering tax credits worth $8,000 for First Time Home Buyers and $6500 for Repeat Homebuyers (certain restrictions apply) for the purchase of a home. This money could be immediately used to make a principal payment on your mortgage loan knocking off possibly years of payments. You could set it aside for a rainy day fund for all the many expenses that can come from owning a home. You can literally do anything you want with it. This definitely sweetens the deal when considering purchasing a home now.

And as if all of that was not reason enough, did you know that FHA loans are assumable? This means that if you lock in a 4.875% rate and later decide to sell your home, your buyer can assume your loan and keep your 4.875% rate so long as they qualify for an FHA loan! If you are selling the home for more than you owe, the buyer would simply need to pay you the difference separately which they can do many different ways. When you go to sell, imagine being able to offer a rate around 2.5% less than what they can get through any lender!! What a selling point!!

For more information about buying now and to view all the listed homes for sale in Utah, please visit my website at www.TheSearsTeam.com.

Posted By: Brad Sears


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January 05, 2010

Millstone Manor

Posted to Justin Stevenson

In the 84404 area there is a condo subdivision that is one of the greatest places to live in this area. This subdivision is called the Millstone Manor. The Millstone Manor was built in 1986 but looks and feels a lot newer than that. The location of the Millstone Manor is one that covers it all. With the condo location right at the month of the canyon is makes it easy to zip up the canyon to go skiing or snowboarding at the local ski resorts such as Wolf Mountain and Powder Mountain, also during the summer it allows you to fish and ski on the Pineview Reservoir. On the other hand the Millstone Manor is located close to I-15 as well as downtown historical 25th St. At the Millstone Manor during the summer you may see a lot of happy people because there is a pool located in the middle of the subdivision that helps keep the residents cool on those hot summer days. One other benefit we can’t ignore is the property backs right up to the Ogden River which makes Millstone Manor residents feel as if they are at one with the nature.

In the Millstone Manor subdivision there are currently six properties that are on the market for sale. Of these six there are many shapes and sizes. One property that I would like to tell you a little more about is unit number ten in building one. This property is a two bedroom one bathroom condo that has the best view of the river in the whole complex. This property is currently listed below the rest that are for sale. Unit number ten is listed at $72,000 and would make any family happy.

If you are currently looking for a property in the Ogden area then Millstone Manor is the place for you. If you would like more information about unit #10 that is listed for $72,000 please call or email at 801-710-8081 or justin@welchrandall.com.

Posted By: Justin Stevenson


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January 04, 2010

The Next 10 Years!

Posted to Steve Randall

Welcome to a new year! We survived the 2009 real estate market! In fact, we actually had some good news in last half of 2009 with unit sales rising in many parts of the country and some price ranges actually seeing some appreciation. In some areas in Layton and other parts of Northern Utah we saw some appreciation. We don’t want to be overly optimistic because we know that recovery will be slow and some economists fear a “double-dip” economic recession if unemployment numbers don’t show greater improvement. There will be some rough waters to navigate this year as well.

In 2010 we still face a higher than normal inventory, declining home values in most price ranges, high unemployment leading to delinquencies, short sales, and even foreclosures. Credit is still tight but the worst is likely behind us. Recovery will be slower than we all wish for, but still we will see progress in 2010 in the Utah housing market.

A recent Deseret News article outlines some of the changes coming to Utah in the next decade that will impact our lives in the next 10 years. Here are the full details of the article.

Utah, especially Northern Utah, will have some great things to look forward to starting with an estimated increase of 700,000 new residents in the next 10 years. The bulk of that population growth will be centered in Northern Utah. Additionally, Utah will draw some high tech jobs and companies as part of its “entrepreneurial heritage.” Research now being conducted at Utah’s major Universities will continue to draw top notch companies which will want to employ Utah’s highly educated work force.

Transportation will be expanded with new smart-car technology that will communicate with each other adding new features and greater safety. Utah Transit Authority (UTA) will have five new Trax lines completed by 2015. Real estate values will increase around the station locations. In addition, the Mountain View Corridor will be completed to Provo and I-15 expanded to accommodate the new growth coming to Utah. Each expansion of transportation will lead to more growth and an increased demand for new housing, existing housing and a strong rental market through the next ten years.

Utah’s economic growth will outpace the US economy in the next 10 years with the real question being how well will the US economy do in the next 10 years. Utah’s advantage has always been in its educated, reasonably priced work force. That advantage is expected to continue into the next decade.

To review the top 10 stories for national real estate trends in 2009, we refer you to Steve Harney’s blog which we have highlighted in a previous blog post. For the statistics on how we in the Beehive State did in 2009, please refer to this NAR report for Utah.

One thing we know for sure is that there is nothing to fear in 2010 that a buyer, seller, or investor with the right information cannot use to their advantage. For those in Northern Utah who want to know how the recent market changes have impacted home values, please contact us for a free, no obligation, Competitive Market Analysis. Welcome 2010!

Posted By: Steve Randall


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December 31, 2009

The Close of the Year Brings the Close of a Transaction

Posted to Ogden, Steve Randall

Yesterday I attended what most people call “a closing.” In this case the client was the family Trustee for a home where the parent had passed on, leaving the property vacant. The home that sold was located in the Day Break Complex in South Ogden. During the time we were at the “closing” the escrow officer asked if this would be my last “closing” for the year. I pondered for a few seconds realizing that this year was almost over and that I would be starting over with more closings… but all would be into 2010.

The client and I began to talk about “closings” in general and I thought it would be good to review the differences between “closing” and “settlement” because it can be important to know the differences.

Yesterday, we were actually at “settlement” even though most people (including most agents) call it a “closing.” Settlement is where the parties involved in the transaction meet with a title escrow officer who reviews the paperwork including lending documents and the HUD-1 Statement to be sure all is in order. The Buyer and Seller meet with their respective real estate agents in a comfortable conference room… normally at different times and often with different title companies. Once the documents are all signed and there is total agreement, the property is then recorded by the County assessor and the money is sent to the parties as outlined in the Settlement process which took place earlier.

The recording process and the distribution of money is called “closing” in Utah. In this case both processes took place on the same day but in most cases there can be a 24 to 48 hours difference in time between settlement and closing.

Once the house is “closed,” the buyer becomes the new owner of the property and can begin to move in. The transaction is for all general purposes considered to be complete.

Closing is the ultimate goal for the seller and the buyer as the seller gets the money for the property and the buyer is anxious to receive title to the new home.

As we close this year we wish everyone a happy and prosperous New Year with many successful “settlements” and “closings.”

Posted By: Steve Randall


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December 30, 2009

The Absorption Rate of Homes and Pies!

Posted to Ogden, Steve Randall

Each week we pick up five or six pies made by our Layton Marie Calendar’s Restaurant to serve to our clients when they visit our office. So if you are ever hungry just stop by the office and ask for a piece of pie! It is our way of saying thanks to our valued customer base. The interesting thing about pies is the rate at which they sell is dependent on the time of year and the specific holiday. Shortly after Thanksgiving I asked our local manager, Diane, how many pies she sold over the three-day Thanksgiving weekend? I knew they were busy and I was thinking that they might have sold 500 pies or more! I cajoled Diane let me know her count and was shocked to learn that she lead the restaurant chain with 9,645 pies sold in that three day period! On a subsequent visit after the Christmas Holiday, Diane reported that they had sold over a 1,000 pies which was good for this particular holiday but nothing like Thanksgiving. I learned that selling pies, like selling real estate, is dependent on the time of year and the particular holiday. Thanksgiving is the holiday that leads the way as the best time to sell pies.

In real estate we also measure the rate of sales just like Diane did with her holiday pies. The rate of sales is called the “Absorption Rate” and before we give any of our sellers or buyers information on the best time to list a home or to buy a home we always look at the absorption rate for their particular neighborhood. The newly updated MLS system allows each of our agents to quickly calculate the rate of homes for sale in any area and also gives the rate of sale by the price range homes are listed.

In a balanced market the rate of sales ratio is between five and six months of inventory. A lower ratio number means that inventory is scarce and the market favors the Seller. When the number is above six then inventory is more plentiful and it becomes a Buyer’s market forcing Sellers to compete on price, home condition, and the payment of some or all of the closing costs. Knowing the absorption rate is critical information for any Buyer or Seller to know. The Absorption rate is also an indication of whether prices are appreciating or depreciating… and the rate of that change.

The actual absorption rate is calculated as follows according to the MLS definition:

Absorption Rate is the ratio of the number of listed properties (Actives) to the number of sold properties over a given length of time. Absorption Rate is an indication of Inventory or Supply.

Total No. of Current Actives X No. of months back
————————————————————————— = Absorption Rate
No. of U. C.’s + No. of Sold’s

In a closing today in South Ogden, the absorption rate for this price home was 11.68 for the past 30 day period. That means this area was a strong Buyer’s market. The Seller’s property was priced for the current market and sold before year end while three other properties in the area remain on the market with no offers. In this case the Seller paid closing costs and the property was maintained in good condition so that it stood out against other homes currently for sale. Just like pies move faster at Thanksgiving, homes in the summer months move faster as well. Add the additional incentive of the tax credit and home sales really increased up to the end of October. The Absorption rate for the summer was in the eight range versus an eleven range after Thanksgiving.

While a lot of people normally pull their homes off the market in the winter in Northern Utah, the tax credit may be just the incentive this winter season to keep the home on the market so that buyers will have more inventory to choose from.

If you would like more detail on appreciation rates for your area or the absorption rate for your neighborhood in order to make a decision to buy or sell, please contact our office.

Posted By: Steve Randall


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November 25, 2009

Time to Give Thanks

Posted to Justin Stevenson

Every year during the week of Thanksgiving I always sit and think of all the things I am thankful for in my life. I am grateful for many things like family, friends, sports, and a wonderful job. One thing I am always thankful for is the opportunity of owning my home. My wife and I have owned our condo for the past two and a half years and it has been great. The feeling you get when you buy a home is something that is hard to explain but it is a feeling of satisfaction. Knowing that you are paying for your home versus paying for someone else’s home when you rent is such a great feeling.

Many people may feel that now is not the time to buy, but they are wrong. Now is the best time to buy. With interest rates as low as 5-6%, the first-time home buyer tax credit of $8,000 extended until April 30, 2010 and now the new tax credit for people who have lived in their property for at least 5 years can now receive a tax credit of $6,500 when they buy new property. If free money is not an incentive for you to buy a home I don’t know what is! For those who don’t qualify for the tax credit you can still take advantage of the low interest rates. Either the tax credit or low interest rates or both…now is the time to buy.

For more information about the tax credit and how it works and who qualifies for the tax credit please contact me by email at justin@welchrandall.com.

Posted By: Justin Stevenson


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November 17, 2009

For Rent!

Posted to Justin Stevenson, Ogden

Renting a property may sound easy to some people but to others it is one of the hardest things they ever have to do. Also many people are scared to rent out their home because of all the horror stories that are out there. I am not saying that horror stories don’t exist in renting out your home, but if the property is managed right many of the headaches that owners of rental properties normally have can be handled. In the current real estate conditions, many people are turning to property management companies to help them with their investment. The key to successful property management is a good system for every procedure along with a good support team. Many times investors who have rental properties lack the ability to enforce the contract that the tenants sign. As a Property Manager there is a fine line between a friendly relationship and business relationship and it is very important to always have control of the business aspect in the rental property.

One important step when it comes to renting out a property is making sure that the prospective residents are qualified for the property. As a member of the Good Landlord program here in Ogden city, one of the requirements for a landlord is to run a background on every client that would like to rent the property that is over the age of 18. The screening process can really make or break the future of that rental property. There are a few things that we check to make sure that we are renting to good qualified residents. The first thing we check is their credit to make sure there are not any outstanding collections or bankruptcies. The next thing we look for is to make sure that the client does not have any criminal background. One other thing we check is their rental references from a past landlord. Finally, one of the last things we check is the client’s income and their current place of employment. Now, each property management company and landlord has different expectations or qualifications for the clients that would like to rent their properties. It is just a matter of setting the standard and sticking to that standard for every client.

I enjoy being in the business of property management and I love helping people with their investment properties. I take pride in the skills and training I have developed over the years that I have been doing this and I am grateful for the experiences I have had. If any of you have any questions about property management please contact me by email at justin@welchrandall.com.

Posted By: Justin Stevenson


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November 09, 2009

Location, Location, Location

Posted to Justin Stevenson

When it comes to real estate one of the most important things you look for is a good location. As I sit down and talk with clients they are always looking for the best location for their families. I have not always lived in this great state of Utah but I am starting to enjoy what Utah has to offer. I grew up in the busy state of California where I would have to travel long distances to get to the great outdoors, but here in Utah it’s right in your backyard. Being in Real Estate we have the opportunity to travel from city to city and see what each city has to offer. Each city has something a little different than the other, if it is farm land, mountain trails, ski resorts, city life, or a subdivision it is all great here in Utah.

One of the best opportunities we have to check out other locations and properties is on a day we call Halloween. Going from house to house and from one neighborhood to the next you have the chance to see what is out there. Even though candy is involved I always like to evaluate a home and see what styles I like and dislike so when it comes time for me to look for a new house for my family I know what I am looking for. It does not matter if you are not in a position to make that next step and move into your dream home yet - it doesn’t hurt to start looking. As the famous Boy Scouts’ motto goes “always be prepared,” so it is always good to prepare for the future.

Utah is a wonderful place and has great locations where you can find happiness in raising a family. I always thought growing up that I would never move out of California and leave the beach but now that I see what Utah has to offer, I am proud to say Utah is a beautiful place to live.

Posted By: Justin Stevenson


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November 03, 2009

Home Prices Again Show Appreciation in South Ogden and Riverdale!

Posted to Ogden, Steve Randall

While most of us prepare to head to the polls to vote today, there is some good news for residents living in South Ogden, Riverdale, and some Ogden areas. Single family homes in zip codes 84405 and 84403 show home prices appreciating at 3.3% and 3.8% respectively. South Ogden has shown appreciation in each quarter this year while the Riverdale areas appreciation rate started in the second quarter of this year.

In other areas of Weber County, prices this year have declined from 1.9% in North Ogden to as much as 23.4% in the Marriott/Slaterville area. There are still negative pressures for South Ogden and Riverdale due to unemployment concerns and an economic recovery for the private sector but these areas at least may be showing price appreciation and may have reached their low point in value last year.

To track home values since 2003 for any Zip code in Northern Utah just click here. This is a great day to exercise our rights as citizens to choose our elected officials. Enjoy that right by voting and go to the polls knowing that recovery has started in some areas of Northern Utah. For market information about your specific neighborhood or your home please send me an e-mail.

Posted By: Steve Randall


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November 03, 2009

First Time Home Buyers Now Enjoying Incentives! What is the future of Interest Rates?

Posted to Steve Randall

This week we have two clients that are closing on their homes in Layton and Syracuse. These first time home buyers will be enjoying the benefits of low interest rates and the $8,000 tax credit. During the last two weeks they have been able to lock their loan rates in the low 5% range and obtain seller concessions to cover most of their closing costs. The absorption rate, which measures the rate at which homes are selling, have temporarily changed from a Buyer’s market to a Seller’s market in some cities in Davis County. This is a result of buyer pressure to use the tax incentives and low interest rates before the tax credit is set to expire at the end of this month. Interest rates have returned to their lows of earlier this year.

In today’s Wall Street Journal, the future of interest rates are discussed with the general consensus that interest rates will increase in the future, reducing the affordability of new homes. In general, lower interest rates caused by the government’s backing of security based bonds will not last forever. There will be a raising of the interest rates in the months ahead even thought it will be slow and gradual. In the past, low interest rates have been followed by steeper increases in rates. High unemployment numbers and a very fragile economy will keep the Federal Reserve conservative in these increases.

The point is this, first time home buyers should not delay their purchases but should take advantage of the $8,000 tax credit, which is likely to be extended into 2010, and low interest rates while they last. Homes have never been more affordable than right now and waiting will only add to the risks on increased mortgage costs. For more information on how fast homes are selling in you specific neighborhood, please contact me directly.

Posted By: Steve Randall


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October 28, 2009

Fernwood Hollow Subdivision

Posted to Brad Sears, Ogden, Salt Lake City

Over the years many homeowners have taken their search for homes north of Salt Lake City for the simple idea of getting more home for their money, a chance to escape the fast paced city life and a quiet place to raise a family. The little extra commute time was a small sacrifice compared to all the benefits. Years down the road each little town and city got more populated, faster paced and a lot busier. Now people are moving further and further north for a chance at a life they grew up with. However, I’d like to tell you about an amazing neighborhood nestled in the upper hills of East Layton called Fernwood Hollow. Located only 20 minutes from downtown Salt Lake and 15 minutes from downtown Ogden, this East Layton neighborhood encompasses this lifestyle and a more convenient location.

Fernwood Hollow is a matured East Layton subdivision that offers peace and tranquility, and is hidden away by the vast amount of trees and gullies. It seems nearly invisible from the busy fast paced city life. All the homes have their own unique look, lot sizes range from .50 to over 1.00 acres and home prices range from $230,000 to $800,000.

This East Layton neighborhood is close to hiking, biking and horseback riding trails as well as within 7 minutes of three water parks (Layton Surf and Swim, Cherry Hill and Lagoon A Beach a division of Lagoon Park). Cherry Hill and Lagoon Park also offer many other activities, rides and more. Snow skiing, water skiing and camping are all within a 30 minute drive.

Fernwood Hollow has quick easy access to Highway 89, I-84 and I-15.

Visit my Fernwood Subdivision website to view a full tour of the neighborhood, plat maps, school information, local business, demographics and available homes for sale.

Due to the popularity of East Layton and Kaysville the averages show that homes in this particular neighborhood sell within 4 months which indicates good movement and a stable market according to the absorption rate. To view the homes for sale in this neighborhood, visit my website and click on the Fernwood Hollow Subdivision.

Posted By: Brad Sears


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September 01, 2009

What Two Factors Sell a Home

Posted to Steve Randall

For the past several weeks we have been running about Northern Utah showing properties to those who want to take advantage of the $8,000 tax credit. The rules are that you need to be in your home by November 30, 2009 to qualify. This is free money to incent the purchase of real estate. As a result we are busy trying to find just the right home.

One of our clients is looking for herself, her mother, and her aunt and we have looked at homes in Weber and Davis Counties in the $150,000 range. Several of these homes we have liked have already gone under contract because there are other buyers out there as well. Lesson learned is that if you like it make an offer now and not come back in five days after looking at other homes.

As we have looked at many homes I have watched my buyer carefully review each home with an open mind thinking to herself how this home might meet her family’s needs. We have been to some very good homes and a couple that we wonder will ever find a buyer. One home we visited was in such bad condition that we opened the door… were hit with smells that made us turn right around and leave. As we backed out of the driveway and pulled away an officer turned on his squad car lights and pulled us over. He wanted to make sure we weren’t the owners… or dealing drugs as some of the neighbors had complained about after hour visitors. We assured him that we were upstanding citizens and he let us move on to our next house! What drew our buyer’s attention to this house? It was the price. What turned her to another home? It was the condition of the home.

This may be an extreme example, but the two factors that attract buyers in this market are price and condition. If it is not priced to sell and the condition is not good… buyers move on to the next property. The best advice to give our Sellers is to price it right and see that the condition of the house is the best it can be.

Later we visited a home that was priced right and in very good condition and that is the house she made the offer on! Now you know… Price and Condition!

Posted By: Steve Randall


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August 13, 2009

Home Value Code of Conduct (HVCC)

Posted to Steve Randall

New legislation and policies governing the lending process are now in place and having an impact… good and bad. One of these changes is the new Home Value Code of Conduct or HVCC. The intent of this change is to give appraisers a space, free from outside influence, to give lenders a correct value for a home. The intent of the change is good but there are always unintended consequences with any new piece of legislation.

Before HVCC, lenders were able to choose their appraisers and could exercise some influence on those decisions made by the appraisers. In addition, Realtors could also contact appraisers and send comparison properties used in setting the listing price which also had an influence in the appraiser’s decision. In most cases this system worked well but there were also many cases where some felt the appraisers were being unduly influenced.

HVCC changes how the process work so that lenders and Realtors are limited in their contact with appraisers .

Now the process is that lenders contract with an AMC company who chooses an appraiser and works directly with appraisers. This lessens the outside influences on appraisers and the intent is to give appraisers a path to more accurate appraisals. The intent of the law is good.

There are unintended consequences however that are not good for both buyers and sellers. For example, using the AMC as a middle man means that appraisers are getting less money for appraisals because the AMC is taking a part of that revenue for their services. Now appraisers must do the same work for less money. Some local appraisers may turn down work and as a result appraisers from outside the area are doing those reports. Appraisers may travel 60 to 130 miles to do appraisals in areas that they do not know well. Furthermore, HVCC causes each appraiser to be cautious in the choosing of comps (I would too in these circumstances).

The net result is that appraisals are taking longer and may be lower than the market value causing some transactions to fall apart. As long as our sellers and buyers are aware of the possible bump they are normally OK and can make the needed adjustments.

We had a home in West Point, Utah that had this very issue hit them this month. The seller had to adjust the price and the buyer had to give up some closing costs to make the transaction work.

Posted By: Steve Randall


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August 11, 2009

How Precious Is Your Time?

Posted to Brian Morris

How precious and important is your time? If you had 20 to 30 hours of extra time, what would you do? Would you spend more time with family; how about skiing, hiking, biking, fishing, knitting or even earning more money? How much would you be willing to pay per year for an extra 20 to 30 hours? I want to spend some time speaking to self-managing real estate investors and how they can recapture 20 to 30 hours of their lives.

Before doing so, let’s make some assumptions and form a foundation on which to build our discussion. Let’s assume you own a small duplex that has gross rents of $1,000 per month. Your property is a good property, but there are the normal wear and tear issues you attend to. Although your vacancy rates are low, you still advertise your property two or three times per year because of expired leases, skip outs or evictions. When vacancies occur, you do spend time doing extra cleaning so that the property is ready to show to interested parties. You also take calls from potential renters, review applications, and perform credit and background checks. You typically have no problem collecting rent, but you do need to call tenants from time-to-time to remind them they are past due. Occasionally you post Pay or Quit Notices for residents who still don’t pay after your reminder call. In short, you do quite a bit of work maintaining and operating your property; possibly more than you assume.

Throughout your ownership of the property you have probably wished that there weren’t so many issues. You haven’t taken any extended vacations for fear that something would go wrong with no one there to handle the problem. If you have taken a vacation, you may have received a call from your resident about a dishwasher not working or a plumbing leak. There have been times when you have an important deadline at work and are interrupted by an issue at the property that needs your immediate attention. Isn’t it wonderful to be an investor/property owner?

Now let’s discover how you can relieve yourself of those responsibilities and let the property generate income. You can typically hire a property manager or management company for 7% to 10% of the gross monthly collections. The services these companies provide can include the following:

  • Advertise your property with “For Rent” or “For Lease” signs. They also will advertise the property on websites and/or do virtual tours giving more exposure.
  • Screen and select prospective tenants. Note: make sure management company will abide by all fair housing laws.
  • Negotiate lease agreements and ensure all paperwork is filed properly
  • Collect rents, security deposits and other funds in the operation of the property
  • Serve termination, pay or quit and/or other notices as necessary
  • Employ legal counsel to enforce and protect your interests as a property owner
  • Dispatch facility management personnel on service requests
  • Work with service and supply vendors for the operation and maintenance of your property
  • Perform repair services in the absence of the owner. Note: these repairs should only be completed after written notice is previously sent.
  • Perform and complete emergency repairs related to “water,” “blood,” or “fire” so that the property is protected and owner liability is reduced

Again, assuming that, as we did in the beginning, you collect $1,000/month for rent you would spend $70 to $100 per month for management services. But where are you recapturing the 20 to 30 hours? Well, at a going labor rate of $40/hour if you divide that into your monthly management fee, you will have 1.75 to 2.5 hours per month to attend to other pursuits. Over the course of the year, that will be 20 to 30 hours. How many times have we caught ourselves asking for a little bit more time in our lives? Many people can generate one, two or three thousand more dollars in 20 to 30 hours, which definitely offsets any management fees with a little extra to spare.

Again, How precious and important is your time?

Posted By: Brian Morris


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