Ongoing Controversy Surrounds Short Term Rentals

In recent years renting privately owned homes and properties in residential neighborhoods for vacations, business stays, or housing swaps has been a popular option in lieu of a hotel room. However, rental laws don’t always allow for these sorts of transactions but that hasn’t been stopping the practice.  Both the Denver Post and  the Aspen Daily News have posted stories in recent days about the problems associated with these short-term vacation rentals – and why they might soon be made legal.

The biggest complaints about short-term rentals so far range from neighbors angry over noise, overloaded parking, and trash, to local property managers and owners of inns, bed-and-breakfast sites, motels and hotels worried about the competition.

These short-term rentals can also be unfair to those local business owners because when a rental property flies under the legal radar they don’t have to pay taxes or meet safety codes.

The flip side to the debate centers around property owners’ rights to utilize their properties.

It’s a heated and complex debate only made more confusing by the popularity of short-term home rental websites and home swapping websites.

What are your thoughts on this issue? Do you think legalizing short-term rentals in Colorado is a benefit to neighborhoods, property owners, and local business?

Read more: http://www.denverpost.com/news/ci_18744003#ixzz1Vy5Wbs6x

Read more: http://www.aspendailynews.com/section/home/148699

How Do You Know How Much Home You Can Afford?

I think most people know that right now might be a pretty good time to buy a new or first home. With some interest rates as low as 4.55% (for a 30 Year Fixed), & 3.69% (for a 15 Year Fixed) the option of buying over renting looks fairly positive (Bankrate.com).

However, how do we know how much we can afford? This article by Jason Hahn from Aol Real Estate gives us a few good tips on what types of loans you may be able to get to cost associated with new home buying.  This article gives us a the quick answer and the long answer on how to figure out what one can afford.

The Quick Answer

The rule of thumb is that most potential homebuyers can afford to buy a home that costs between two and two-and-a-half times their gross annual household income. So, for example, if a renter is looking to become a homeowner and this person earns $50,000 a year, they can afford a home that would cost between $100,000 and $125,000.

For those who can afford to put down a large down payment and have light debt loads or none at all, a buying a home up to four times their annual income might be reasonable. While this quick estimate offers a helpful lens through which to eyeball how much home you can afford, there are other ways to look at it, and they involve ratios, history and costs.

The Long Answer

It’s one thing to think about how much you might be able to spend on a home, it’s another to think about how much you’ll be allowed to. Or is it? Maybe the most complete, helpful way to assess what you can afford is to look at it from a lender’s perspective, which might be the most sober and insightful.

Mortgage lenders use two main calculations to decide whether you actually can pay them back: the front-end ratio and the back-end ratio. (They’re not nearly as complicated as they might sound.)

• The front-end ratio, or the housing expense ratio, is simply the percentage of your gross (that is, pretax) monthly income that will go toward paying the mortgage. Generally, conservative lenders want that to be less than 28 percent; others might push it to 30 percent or higher. But check with lenders to see what their actual thresholds are. (Since the housing bubble burst it’s a lot harder to find lenders willing to accept a 40 percent ratio, though that’s probably a good thing.) If you earn $5,000 per month, and the lender has a 28-percent threshold, the most they’d be comfortable with would be $1,400 ($5,000 x 0.28).
• The back-end ratio, or the debt to income ratio, is the percentage of your gross monthly income that will go toward paying all of your debt obligations: mortgage, credit cards, child support, car and student loans, etc. Some lenders want your total debt payments to be less than 36 percent; others allow as much as 40 percent or more. If you earn $5,000 per month and your monthly debt obligations now are $300, or 6 percent of your gross monthly income, your back-end ratio will be 34 percent ($1,400 + $300). Since that’s below the threshold of $1,800, or 36 percent ($5,000 x 0.28), you could be a good candidate for a loan.

Types of Loans

There are three main types of mortgage loans: conventional; FHA (Federal Housing Administration); and VA (U.S. Department of Veterans Affairs).

• Conventional loans are the most common way to buy a home in the U.S., hence the name. They typically require a down payment of at least 10 percent and sometimes up to 20 percent, in addition to a pretty solid credit score. However, these mortgages present lenders fewer hurdles than the other two.
• FHA Loans are a bit more forgiving, in the sense that they require down payments as low as 3.5 percent and are usually a bit more flexible with credit scores. Their thresholds for front- and back-end ratios differ from conventional loans, though.
• VA loans are great for U.S.military veterans and those now serving. Those who qualify don’t have to make a down payment and aren’t required to get private mortgage insurance.

That’s a quick overview, but the takeaway is: Explore your loan options to make sure you find the best fit.
Potential homeowners also need to figure in the other costs associated with a mortgage, like [property taxes, homeowners insurance and closing costs. It’s also important to note that the house you buy will be considered by your lender as collateral on the mortgage loan. In other words, should you be unable to repay the loan, the lender can foreclose on your mortgage and seize the house.

Home-Related Costs

The mortgage isn’t the whole story. Owning a home is expensive and it’s crucial to know that from the get-go. Things like maintenance, utilities, furniture, and association fees are among the month-to-month costs that you’ll incur along with the mortgage when you buy a home.

Use Your Weapons

There are tools to help you determine how much home you can afford, even beyond this guide. Mortgage calculators and home ownership calculators are easily found online and can narrow down how much house you actually can afford.

And use common sense. It’s easy to get swept up by the ocean of numbers that figure into a discussion of affordability, but don’t forget the basics. How much are you comfortable paying toward your home each month, really? Can big plans for the future affect your financial circumstances? How long do you plan on staying in the home? What would be the consequences of not being able to make your mortgage payments?

Owning a home is great, but carefully consider how much you’re willing to give up for it. You might find that renting is your best option right now. Knowing what you want to spend might be worlds apart from knowing what you can pay, so use every resource you can to help determine how much you can afford to spend on a new home.

Source: Jason Hahn, AOL Real Estate, 6/29/2011

http://realestate.aol.com/blog/2010/06/29/how-much-home-can-i-afford/

Bankrate.com

Condo Buying: Why Bigger is Better!

Here is a great article by Ann Brenhoff of AOL Real Estate. The previously held thought was that most Americans are downsizing in terms of home sizes, however this article  states that when it comes to buying a condo, buying a large condo may not be a bad idea.  

Here are three examples.

1. More homeowners to share the financial burdens.

Every condo complex is governed by a homeowners’ association that sets monthly dues to cover the common expenses such as landscaping, facility maintenance and exterior building upkeep. HOAs are required to maintain a reserve should an emergency arise, and they also can pass assessments — sometimes in the tens of thousands of dollars — to cover the cost of major complex repairs.

Do the math: If you buy a unit in a smaller complex, a greater share of the burdens will fall on each homeowner. It’s simple long division: 12 unhappy and financially strapped homeowners sharing a repair of $100,000 comes out to more per homeowner than when that $100,000 repair is divided by 50 unhappy and financially strapped homeowners. And if one of those homeowners falls under the financial wheels of the recession big rig and can no longer pull his or her weight, the missed payments need to be made up by the rest of the pool.

2. Some lenders require that a certain percentage of the units within a complex be owner-occupied.

If they aren’t, the lenders won’t fund mortgages to new owners. What this means is that those who need to sell their units have to find a cash buyer. Again, being in a complex with more units helps skew the odds in your favor. There have been complexes where, in order to avoid these situations, the existing homeowners actually buy a troubled unit to keep the complex mortgageable. Again, the complex has to be large to do this.
3. More of us are still buying big than buying small. 

Just 2 percent of all buyers bought units under 1,000 square feet last year, according to the National Association of Realtors. Compare this to the 16 percent who bought homes 3,001 square feet or larger. The median size of a home sold in 2010 was 1,780 square feet.

Popular wisdom says we are all downsizing. We may be trying to shrink our mortgages, and builders may be dishing up smaller new homes in the interest of shaving something off the price to remain competitive, but the numbers don’t lie. Buyers like big more than they like small.

Ann Brenhoff, June 16, 2011

http://realestate.aol.com/blog/2011/06/16/condo-buyers-why-bigger-is-better/

US Citizens perception on real estate market recovery

According to a recent online survey conducted by property search and marketing site Trulia and foreclosure date site RealtyTrac, consumers do not expect the housing market to recover in the near term due to the threat of housing prices double-dipping nation wide.

Harris Interactive; a market research firm conducted an online survey on behalf of these sites from April 15-19, 2011. This survey collected 2,018 responses fromU.S.adults. Of these respondents 1,257 were homeowners, 704 were renters, and 57 identified as neither.  This survey found that 54% of respondents believe that the housing market will not recover until 2014 or later. This finding is up actually, from the 34% found in a similar study in November 2010.

Trulia CEO Pete Flint said that although many experts predicted an improvement in the housing market this year, “we’re actually backtracking”. This is not good news for many sellers.

“Foreclosures still continue to be a major part of the housing market, and as a result housing prices continue to drop. Even with mortgage rates still below 5%, the fact is, against a backdrop of joblessness, (even high affordability has) made consumers more skeptical where the housing market is concerned.”

Flint also said that those renters, who previously said that they were interested in buying a home, are now more inclined to wait 2 years before buying.Flintpredicted that it would be another 18 months before home prices began to stabilize.

I expect the rest of 2011 to be volatile said Flint. “Buyers can expect a big summer clearance on real estate”.

RealtyTrac senior vice president Rick Sharga expects prices to bottom this year. Sharga said that they are not expecting prices to bounce off the bottom. “(Prices will) flat-line there for the next couple of years and (we won’t see) prices increasing in any real manner until, best case scenario, 2014” according to Sharga.

It seems though more of the survey respondents are a bit more optimistic. Though most survey respondents thought 2014 was going to be the end of the tunnel for the housing market, 24 % believe the market will recover in 2013, 15% say the market will recover in 2012, this is down from 6 months ago. A small 3% think that the market will recover this year, which is also down (10%) from 6 months ago and 5% thought the market already recovered.

Not Flint or Sharga believed the possibility that the mortgage interest deduction would be eliminated was what was keeping buyers away from the market.

All the same, roughly 40% of surveyed  renters said they would never purchase a home.

To read more on this topic, view the full article at Inman News. http://www.inman.com/news/2011/05/18/most-us-adults-dont-expect-real-estate-recovery-until-2014-or-later

Make Your Property Profitable!

After nearly three years of an economical draught,  The US economy is slowly recovering, and employment figures are showing promising signs. However, Americans are still feeling as though their pocket books are under pressure. When looking at ways to pump up finances, homeowners might want to consider their best asset – Their home.

This article, from Dailyfinance.com, says that making money with one’s home does not mean using the equity in the home as a cash machine, but rather actually finding additional ways to generate income from the property.  All the ideas presented carry a common theme. This common theme is that some portion of the property will be rented out.

Dawn Kawamoto, of Dailyfinance.com says that depending on a person’s location, home owners can potentially make “$50 a month to upwards of $5,000” (Kawamoto, “How to Turn Your Home into an Income Property”). It would also be wise of the home owner to thoroughly examine “their plans with their insurance broker, check their city and county ordinances — especially in areas with rent control — and potentially have a real estate attorney weigh in on the matter if the arrangement with the tenant will be long term.”
“”Because you are now considered a landlord, you may be liable if a tenant is injured on the property,”   said Loretta Worters, vice president of the trade association Insurance Information Institute, in an email  interview. “Therefore, you may need to purchase landlord insurance. Most landlord insurance policies  cover the landlord’s legal fees should a tenant file a lawsuit. This type of policy would also pay out in     the event of a judgment against a landlord, protecting his or her personal belongings and assets, if the tenant prevails in court.” She noted most typical homeowners insurance policies would not cover such  events.”

The following are links to some different ways to make some money from your property:

* Renting out the backyard to campers or gardeners

*Renting out the driveway or garage for cars or storage

*Renting out a slice of land for a cellular tower

Read more at http://www.dailyfinance.com/2011/04/18/how-to-turn-your-home-into-an-income-property/

Thanks for reading our blog! We hope you find this information useful!

Tips for Winterizing Your Home!

Its Winter in Colorado! And as we know, some of our coldest and snowiest months are yet to come!  Mavi has come up with a short list of helpful tips to keep your rental/ home free from freezing pipes and cold weather. These items will be helpful to prevent any potentially disastrous winter time accidents.

 

-   Heat should be kept at a reasonable temperature during the winter months (at least 62 degrees) and should not be turned off when the home is empty (i.e. Vacations)

-   During exceptionally cold periods, it is recommended that you leave your kitchen/bathroom faucets in a slight drip to keep water flowing through and prevent freezing.

-   Hoses should be detached from any exterior spigots/faucets. Keeping a hose attached during extreme cold can lead to freezing pipes.

-  Any applicable heat tape needs to remain attached to pipes, water heaters, etc. and remain plugged in. Any exterior baseboard heaters that warm a utility closet must remain turned on and set at a reasonable temperature (again, at least 70).

–  If you are a Mavi tenant:   If you live in a community where snow removal is not provided (check your lease) you will be responsible for shoveling/de icing any drive ways, sidewalks, walkways, etc. If any fines are incurred from respective towns, cities, or home owner’s associations, these will be your responsibility.

 

 

Mavi Unlimited Property Management

303.665.8944

admin@maviunlimited.com

 

Denver Metro Residential Vacancy Rates

It would seem to me that the vacancy rate would somewhat mirror the unemployment rate. If you lose your job, you probably will not be able to afford rent. Right? That certainly was my thinking. We were bracing for a 9 % to 10 % vacancy rate, which would certainly lead to a further decline in rental rates. Being that rental rates had already begun to deteriorate in 2009, that was not the best news for our clients or for us.

Up until about 9 months ago, the vacancy rate seemed to be trending in that direction.  Tenants that lost their jobs were moving back in with family or friends. Our vacancy rate was starting to inch up a bit, and then by mid summer it all seemed to change.

We are currently sitting at a vacancy rate of just over 3%. What we have learned is that you can do without a car, and even a job, but you must have a place to live. We have quite a few tenants and clients for that matter that are unemployed, but they are still paying their rent. How is that possible? Cashing out stocks, spending savings, help from family/friends, charities and unemployment are just a few options to mention.

Another statistic that seems contrary to the basic laws of supply and demand is the 3% vacancy rate. In our experience, when the vacancy rate was around 5% or lower, we would start to see upward pressure on rents. Less supply, higher rental rates right? Not exactly. Rental rates certainly seem to be leveling off, but to date no real increase to speak of.

Tenants are more realistic and quite frankly more savvy than in the past and are no longer willing to get themselves into a bad financial situation. Even if they are gainfully  employed, there is still a pervasive feeling of fear regarding the economy. That said, to date we are not seeing an increase in rents, but as I stated previously, they have begun to level off.

5 Easy Ways to “Fall” Proof Your Home!

Now that summer has gone and fall is upon us, it is time to start gearing up for colder temperatures. After reviewing various DIY websites the top 5 things you can do to get your home ready for fall are these:

1. Cover up or store patio furniture to protect it from the damage of strong weather.

2. Prepare your garden for colder temperature by mulching flower beds and bringing container plants inside to protect them from freezing.

3. Clean out your gutters.

4. Seal any cracks in between windows and doors to avoid losing heat.

5. Have your fireplace cleaned. “Not having your chimney clean before winter use increases the chance of chimney fires due to the buildup of creosote and soot.”

Moving…

In my opinion, the worst part of finding a fab new place is the MOVING that goes along with it! I have found that when the time comes to pack your belongings up, it is a great opportunity to do some deep cleaning!

First, look at what you have. Make piles for what you use sometimes, rarely, or never. I have gotten to the point where I only keep the things that I use all the time! But this is solely because I hate moving so much and will do anything to pack/unpack, lift, and carry as little as possible.

This method of packing/moving is also an easy way to reduce clutter in your home and reduce the number of not so willing people you have asked to help you move, making the situation a little more tolerable for everyone involved.

Mavi Unlimited would love to hear your tips for making moving easier!

Mavi Unlimited Can Help You!

What do Property Managers do?

Property Managers provide the necessary tools to build, repair, and maintain a residential or commercial unit for rent. One of the most important aspects is providing a liaison between the owner and tenant.  Other faucets include  managing the accounts and finances of the real estate properties, and participating in or initiating litigation with tenants, contractors and insurance agencies.

Mavi Unlimited is dedicated to helping you with your investment! www.maviunlimited.com