Spring 2010 Newsletter: Volume 21, Issue 2
$8,000 STIMULUS FINALLY ENDS!
At last the stimulus designed to take renters and make them homeowners will expire at the end of this month. We have experienced a very strong leasing market in North Texas, but many of you have been hurt by tenants buying homes and vacating your rentals. GTF mails tenants near the end of their lease a huge renewal package of information against home ownership hoping to get a renewed lease. Recently it's been difficult to out compete the $8,000 tax refund, so hopefully its end will help with renewals. Jobs remain the most talked about sign of recovery, and despite record high unemployment today it seems to not be getting worse. Many point to Texas job growth as the reason Texas will lead us in any recovery, so as my Grandmother used to say "it could be worse." What is worse are the costs associated with finding tenants in that until supply is limited, quality renters demand quality make readies. We also have new required Dallas rental registrations that all rental property owners must submit asap. Many other area cities require not only registration but also inspection. Rick@gtfrealty.com is an expert on all of these requirements and can help with your questions, so can your property managers.
Each year it becomes more complicated to own and manage rental properties. Recently we had sweeping changes from EPA regarding lead paint containment guidelines when performing maintenance. All GTF sub contractors have been going to certification classes to remain in compliance with these changing laws. It is often very risky to use a non certified, un-licensed, uninsured contractor, and GTF does not use laborers like this. We strongly suggest you don't either.
| Activity Statistics Dallas/Ft. Worth Market |
|
|---|---|
| Previously owned homes sold in D/FW | Jan 2010 -6% Feb 2010 -5% Mar 2010 +11% |
| % of market sales from foreclosures | 23% |
| % of mortgages in default ion D/FW | 6.24%, up from 4.27% last year |
| Average days -sell Average to lease |
79 days 54 days |
| D/FW Unemployment Rate | 8.4% higher than the rest of TX |
| New Home Sales New Home Starts Results |
-20% 1st Quarter +60% in 1st Q D/FW Oversupply |
| Dallas Apartment Rental Rates | Down 8% says rentjungle.com |
1st Quarter = A 12 Year Best
The 1st quarter Dow was up 4.1%, the S & P 500 up 4.9% and the NASDAQ up 5.7%. If this trend continues in the stock market, we will have a fantastic 2010. Many feel the financial meltdown is behind us, and quarterly earnings reports are coming back very strong. Interest rates still remain historically low especially for income investors which may further fuel dividend stocks despite likely tax changes on these earnings next year. These likely tax increases may make investing even more difficult as payroll gets reduced to make up for small business owners' tax increases. At least that's what they say in Texas.
Get There First Updates
Sometime in May you may receive your 2010 tax statements with your estimated property valuations. Don't even look at it, just fight to have it lowered. You can do this every year, and you only pay the consultant if he/she is successful at saving you money. Most charge 33-50% of the first years savings. Two local companies our clients use are John Hirschy at 972-304-0909 or Alan Hodges at 214-948-3200.
Insurance discounts are now available for all your property insurance needs. Because of GTF's unique professional certifications (CRMC,MPM,RMP), insurance companies perceive us as a lowered risk for investors who use our services. Allstate Insurance for example now offers GTF clients significant discounts on most property and casualty insurance. Their number is (972) 271-1413. They are a very responsive company, and I have moved all my rental property insurance over to them. You're in good hands!
I have concern when it's announced that the DFW area is the second largest home building city in America (14,130 starts in 2009). All this as we weather the worst recession in 80 years! Among the many reasons real estate investing is so risky in North Texas is that we always have land to build on. It would be great if an ocean or mountain pass would land lock us somewhere. Nationwide home purchases by investors continues to rise each month indicating that people are buying rental property again. The rule of thumb is "you make your money when you buy" and having a leased rental is always best.
At the end of last year 10.3% of Texas homeowners had missed a payment which translates into 150 of our owners who would be in that situation. If you are not making your mortgage payment please call me at ext 3 so we can reduce any future personal liability you may have after foreclosure. Yes, there is even a procedure to follow in Texas to give back a rent house and recent Federal Law protecting tenant's rights will also be helpful for you to know. There is nothing worse than trying to collect rent from a tenant getting registered letters from your mortgage company (even thought the tenant is legally required to pay).
Apartment concession in North Texas average one months rent and yet when leasing a home no concessions are offered. I believe rents on homes should be priced below market to out compete the attractiveness of all these concessions. There is nothing worse than thinking you have your home leased and then in 48 hours you find before they come to our office to sign their lease an apartment made them an offer they can't refuse. GTF works hard to get tenants to come in immediately after you approve them, but until you receive the lease do not shut off utilities until you confirm the lease has been closed. We find more and more deals fall through because of outside concessions, and it's something we have to deal with. I also encourage you to offer lower rents for 2 year leases.
INDUSTRY TRENDS
Our expertise with our new software, appfolio, gets better each month, and I apologize for it taking a few months to get the owner statements just right. This has been the biggest undertaking our company has taken on in 29 years, and it is getting better. You can access real time reports about your property by going to the website gtfrealty.appfolio.com/portal. Enter your e-mail address and click send access e-mail. When you get the e-mail you can click the link to access your reports. We are working hard to have every owner on the ACH payment system to insure no delays in funding caused by US mail. This is a free service from GTF, so if you still receive paper checks, PLEASE call me at ext 3 or e-mail me your routing and account numbers. Soon you'll see how much faster your rent can be in your bank account. I returned a few weeks ago from speaking at a property management convention in Sydney, Australia. It is amazing when you learn about the laws and regulations in other states and countries how lucky you are to have the Texas Property Code on your side. Last week I made a presentation at The California State Property Management convention, and here again people were amazed at the laws we have to manage properties in Texas. As they say, "Don't Mess With Texas!"
Mark H. Kreditor, MPM
Broker
