Important Announcement

I am pleased to announce that I am now affiliated with Red Realty in Smyrna, Tennessee.  It was a hard decision to make, but I feel that I will be able to serve all my clients and customers positively and professionally through this company.

I will still focus on residential clients, but will also have the ability to serve commercial and industrial clients through Red Realty.  If you have any questions, please feel welcome to contact me at (615) 477-8483 or by email  broth@realtracs.com.

I look forward to helping you in any future real estate transactions.

It’s a Buyers Market

There’s no doubt that we have a buyers market in real estate today.  With the lending crashes and rampant foreclosures, times are tough on homeowners.  But let’s look at this in realistic eyes.

Over the past months, there’s been more and more foreclosures, doom and gloom in the media about the housing market, but home buyers have to understand that this isn’t the golden carrot hanging in front of them.  Many of my colleagues and I are starting to see some ridiculous offers on homes for sale.  Buyers have to be aware that while yes – they want to get the best price possible – there is a realm of reason that must be present.

If you want to offer extremely low prices that probably won’t be accepted by any rational home seller, then make the offers on a bank-owned property so you don’t waste your time or the sellers time.   Put yourself in the sellers position.  Many sellers are taking job transfers and have to sell their home, so they can’t afford a ridiculous offer.  To waste your time, the Realtors time, and the home owners time making an offer that probably won’t go through, it’s costing everyone money, gas, and time.

This is where your Realtor comes in.  We can run the numbers and find a good median point to where the offer can flow into a contract.  By offering a ridiculously low price, you’re not only telling the homeowner that his house isn’t very nice, but you also make them question why you want to buy it in the first place.  If you’re going to buy a home to live in, you have to plan on what it’s going to be down the road.  Whether you live in the house a few years before you take another job or transfer or move up, or if this your home that will last 10 to 15 years or maybe longer, real estate is a long-term commitment.  Investors will risk their money in short-term investments, but homeowners should secure their money in long-term investments – just like in the stock market.

Don’t insult the seller.  Don’t waste your time.  None of us want to leave money on the table, but don’t kill a deal before it ever gets started.

How to Keep Your Home Cool Without Getting Hot Under the Collar

I just helped fellow agent Kathy write a post for Banks.com about how to keep your house cool in the worst heat of the summer.  Here’s a link to the post, but some tips:

• Turn your thermostat on the water heater down to 105 degrees (from 140 range) to save energy.  You won’t notice a difference in the shower, but you will on your utility bill.
• Use compact fluorescents for your lighting because this reduces the power you use, plus the bulbs put out less heat.  A 23-watt compact flueorescent puts out the same light as a 150-watt incandescent – that’s bright!  Watts equal heat, so on a 23-watt you can touch, but a 150-watt will take your skin off from the burn, therefore your energy bill is reduced.

Go read more tips that we came up with at Banks.com.

Creating “Wake-Up” Money for College Savings

Financial freedom occurs when your annual investment income (your money at work) exceeds your annual lifestyle expenses.  At this point, you have “Wake-Up Money.”  Wake-up money can also be used to pay for the future educational needs of your children or grandchildren.  Here are 10 tips for creating a real estate investment savings option. 

1. Buy residential properties – houses and condos. Stay away from land and commercial real estate unless you are an experienced investor or are buying as a business “user.”
2. Buy “mainstream” houses and condos. Buyer properties that are at or below the average sales price. Buy properties that appeal to most buyers. Avoid high priced or unusual properties. Buy houses with at least three bedrooms and condos with at least two. If possible, buy properties with a garage.
3. Don’t buy with partners, unless you have to. If you have to have partners, make sure they have the same goals and values, are of similar age, and have job, geographic, and marriage stability.
4. Believe in the long run.  Real estate markets are cyclical but the long term trend has been up. Hnag in there for the long run. The great investor’s lament is “I should never have sold that property.” The other investor’s lament is, “I could have bought that property for $xxx!”
5. Take care of your property and it will take care of you.  It’s your “golden goose.”  If you don’t like property management or are too busy, either hire a professional property management firm or buy condos or townhouses. They take a lot less management. The homeowner’s association takes care of most of the property maintenance.
6. Get started early.  Put time on your side. Albert Einstein was once asked what he thought was the most powerful thing in the world.  His reply, “compound interest.”  Don’t wait to buy real estate.  Buy real estate and wait!
7. If you don’t have the money, make a plan and commitment to get it.  Consider borrowing your investment money out of the equity in your personal residence.
8. Know your “enough.”  How much investment money do you need?  Know when you are ready to stop accumulating property and start paying off what you have – and enjoying life!
9. Work with knowledgeable people. Pick Realtors, accountants, attorneys, and property managers who know what they are doing.
10. Have a goal and a plan. Contact your agent and begin to develop a customized plan to start creating investment wealth.

Even if your child or grandchild does not go to college, you have still created “wake up money” for your own retirement.

Buying Rental Property Has Benefits

With foreclosures on the increase (read: Rampant) right now, people who are losing their homes also have to find a place to live and are turning to rental properties to move their families.  This opens a great opportunity for potential buyers with good credit and down payment money to create wealth through residential real estate investment.  Whether you’re looking to have wake-up money in your retirement years or starting a college fund for your children or grandchildren, real estate in the long run is one of the best investments there is.

I shared this list with my friend Kathy who has published it on Banks.com.  We’re telling a national audience about the Benefits of Residential Real Estate Investments, and I wanted you to hear about it too.

1. Cash Flow.  The rent provides income.  A wise real estate investment will pay for itself on a monthly and annual basis, while paying the note. Your ultimate goal is to own property “free and clear,” which creates maximum cash flow.
2. Leverage.  You can own $150,000 worth of real estate with only 15-20% cash. You can borrow cash from one property to buy another. Your short-term goal is to use leverage to acquire a portfolio of real estate. Your long-term goal is to pay the loans off and own your properties “free and clear”
3. Debt Reducation.  Real estate is one of the few investments where someone else will make your payments. In essence, the tenant makes the payments and reduces your debt.
4. Tax Savings.  You are allowed to depreciate the house and write off your expenses in order to reduce your taxes*.
5. Appreciation.  Over time the value of houses and condos have risen. The average value of home has traditionally doubled in value every 15 years**.

*Consult your accountant or tax attorney to specifics related to the tax benefits of investing in real estate.

** The government Office of Federal Housing Enterprise and Oversight figures appreication rates for Metropolitan Statistical Areas around the county. Check this site to see what appreciation rates have been in your area.  Using their figures, the following data shows appreciation of a $100,000 home purchased in 1982:

1982 – $100,000
5 years – $135,800
10 years – $150,100
15 years – $196,000
20 years – $243,600
25 years – $316,700

I will talk more in the future on the college saving aspect.

 

Look Long Term When Buying a Home

I received an email earlier today from a colleague at Bob Parks Realty, LLC.  He gave an example of the long-term value of real estate that made a lot of sense.

In Middle Tennessee in the past 10 years, the average value of a 2000 square foot, 3-bedroom, 2-bath, 2-car garage home built in 1990 has appreciated as follows:

• 1997, $142,130
• 2002, $155,440
• 2004, $168,178
• 2006, $195,218
• 2007, $200,688
• 2008 (1st quarter), $198,300

You can see that from 2007 to 2008, home values on average depreciated about 1 percent, BUT in 10 years the home has gone up 41 percent.  Clearly, real estate when you look at the long term can be one of the best investments you can make.

In a related topic, this is the first time in more than 25 years that interest rates are at a historic low at the same time the supply of homes is up.  Typically if rates are low, inventory is also low and when rates are high, there are plenty of homes on the market. 

I believe we are at the bottom of curve for home values and we will see home prices coming back up in the near future.  If you’re sitting on the fence, in my opinion this is the perfect time to buy.

Market is Improving

The real estate agents in our office gather weekly to review new listings, hear about changes in our forms and state law, and share ideas and lessons learned.  We also review how our “sales board” has done that week – from new listings to homes that have gone into escrow.

For the past six or nine months, the board has has been fairly dismal when compared to the same time the year before.  However, this week we saw a huge improvement in the market – at least four times the homes sold last week than the week before.  Phones have been ringing around the office, people are in and out more (showing homes to potential buyers).  We believe there’s been a turnaround in the market, despite the dire news from the media.

When I review the homes pending, I see a lot of homes that have been on the market 100 days that are now selling. If you’ve been delaying making a home purchase for prices to go down more, I believe we’ve reached bottom. 

Relay for Life Charity Auction

UPDATE:  The auction netted over $7,000 toward Relay for Life and the American Cancer Society.  In all, Bob Parks SMYRNA raised over $9,000.

Many of my colleagues have posted about the upcoming auction our office has planned that will benefit the Relay for Life.  All proceeds go for research where we hope a cure for cancer will be found.

Every single person has known someone who has either fought cancer and survived, or fought and lost the battle.  We don’t know all causes of cancer – it strikes both infants and the elderly – but we do know that it can be a devastating disease both on the patient and their families.  Won’t you take a few moments to read about our auction and make plans to attend?  Your support in this would be greatly appreciated.

Bob Parks Realty is hosting a live auction on Thursday, April 24th starting at 5:30 p.m.  The location will be Dugger’s Food & Fun in Murfreesboro.(1738 W. Northfield Blvd. Murfreesboro, TN.  37129).

If you are unable to attend and would like to bid on some of the items please let us know and we will make contact with you when the items are up for bid.

Office Holds Car Wash

The Bob Parks Realty office in Smyrna held its first car wash today to raise money for the Relay for Life. Proceeds will be donated to the American Cancer Society. 

We will hold another car wash next Saturday, April 12 from 10:00 a.m. until 2:00 p.m.  The wash will cost $5, but additional donations are welcome.  In case of rain, it will be held on Sunday, April 13th instead.

Hope to see you there!

Using a Realtor When You Buy

You often hear that sellers should be very picky when choosing an agent to market a listing, but little advice is given to buyers on how to find a real estate professional.  In fact, most offices require their agents to work “floor time” or an “opportunity schedule” so that a licensed professional is always available if a customer calls looking for an agent.  This results in many clients simply letting their fingers do the walking to find someone who will help with one of the biggest financial decisions of their lives.

However, when you choose a Realtor to work with when you purchase a home, that agent needs to be just as professional, informed, and experienced as one you’d get to list your house.  My friend Kathy listed some questions on her site this week for buyers to ask Realtors when choosing who to work with.  There are some great questions to ask a buyers agent when you’re considering a home purchase.  For example,

• What percent of your business is by referral?
• What is the absorption rate of this market?
• Do you hold the ABR designation?
• Can I call your last buyers or sellers and ask their opinion of your work? Or ask to see copies of letters or thank you cards given to you from buyers or sellers.

I encourage you to read the entire post and I reiterate what Kathy said in that any knowledgeable real estate agent should be able to answer these questions intelligently.