Regular Inspections Protect SW Florida Rental Home Assets, Naples, Bonita Springs

Regular Inspections Protect SW Florida Rental Home Assets, Naples, Bonita Springs. Suppose you have put your SW Florida home on the market, but the number of showings is signaling that your asking price is not attracting much buyer interest. In most cases, you will notch the price down to a competitive level. That’s simply responding to the real life market in real-time.

But if you have no need to sell within a limited time frame—and you are disinclined to accept what the market is supporting at the moment—you have the option of waiting. If you also aren’t in residence at the property, you have another option, too: you can turn the property into one of the SW Florida rental homes that keep cash coming in while the market continues to improve.

To make the most of the home rental solution, one major management issue is a systematic approach to maintenance. If you hire one of SW Florida’s experienced property management firms, that will be high on their priority list. If you decide to take on the job yourself, it will fall to you. Although good tenants can be considerate, watchful guardians of your property, to assure that your asset that retains its value when you aren’t in residence, regular inspections should be part of the rental home arrangement. Surprise landlord visits are to be avoided, but when regular inspections have been agreed upon and advance notice given, there should be no reason for anything other harmonious cooperation—particularly if generally agreed-upon good practices are followed:

• There should be no ambiguity about why routine inspections are necessary. Every home needs to have its systems and structural integrity proactively maintained. No matter how thoughtful and careful a tenant may be, Father Time needs to be held at bay in ways the owner is most likely to spot.
• If at all possible, at least one of the responsible tenants should be present during inspections. Not only does this deter any possibility of accusations of theft or other mischief from materializing, it’s also that much easier to foster an atmosphere of cooperation instead of confrontation. At its best, a successful inspection yields more than a checklist of items to be attended to. It gives the tenant assurance that their quality of life is part of your goal as landlord.
• When issues arise that should be photographed—for communication with maintenance professionals or for legal documentation—care should be taken that they never include personal items (like family photos, pets, people or valuables). This is a privacy issue that is universally observed, but too easily overlooked. Don’t!
• If the above Communication and Teamwork ideas run up against a reality where the property is being neglected in any substantial corner, personal on-the-spot confrontation is generally regarded as likely to yield negative results. You will have documented the problem, and the best way to handle it is to address the issues with the tenant formally—and in writing.

Regular Inspections Protect SW Florida Rental Home Assets, Naples, Bonita Springs. When SW Florida properties convert into SW Florida rental homes, they can also acquire an extra asset—because that’s exactly what a good tenant is. And if the time comes to ultimately list the property, it might find a whole new group of prospects—investors interested in SW Florida rental homes that come equipped with long-time tenants. Call me!

SW Florida Landlords & the Professional Property Management

SW Florida Landlords & the Professional Property Management. Everyone who owns a rental property in SW Florida makes a continuing management decision concerning how much of the day-to-day operational responsibility to outsource. Some are inclined to tackle the nuts and bolts of tenant management, while others are content to leave it to one of SW Florida’s professional property managers.

If the main motive for acquiring the rental was for its value as a long-term real estate investment, there is an increased likelihood that one of SW Florida’s professional property management firms will get the nod. Beyond the dollars-and-cents dimension—which can boil down to a calculation on how you value your own time—there can be personal elements behind the decision. Do you enjoy keeping a close watch on all your business dealings? Or is minimizing the hassle factor a higher priority? Those are tradeoffs only you can calculate, or recalculate if your initial decision doesn’t work out.

Another factor can come into play—one that’s seldom mentioned or written about. It has to do with another party in the business arrangement that is being created: the tenants!

When all is said and done, setting up the way a rental property is to be managed is identical to creating the operations blueprint for any ongoing business enterprise. Both involve a customer relations element. As landlord, you are the proprietor, and the tenants are the customers. Every business that hopes to maximize its return on operations soon experiences why taking customer satisfaction into account pays dividends (at least, the more successful ones do)!

By that yardstick, the decision on whether to choose professional property management is not only about a landlord’s willingness to expand the time and effort their personal involvement will require. That choice should also take the tenant’s satisfaction into account…and on that score, the years of experience that come with a veteran SW Florida professional property management firm can tilt the scales in its favor.

Having a proven system for handling trouble calls in a timely manner is one obvious advantage—as is being able to tap the talent of professionals whose full-time job it is to take those inevitable situations in stride.  

SW Florida Landlords & the Professional Property Management. Locating and helping you acquire choice SW Florida investment properties is one way I help my clients. Another is to provide a solid resource for new owners as they go about organizing their ongoing tenant-handling arrangements. Call me anytime to discuss today’s great current array of available investment properties—and the best ways you can make the most of them!    

What’s More Important to SW Florida Renters than Interest Rates?

What’s More Important to SW Florida Renters than Interest Rates? You’d think that the single most influential factor governing a potential SW Florida home buyer’s decision on whether to buy now or hold off would be the ongoing bottom line—that is, the amount of an anticipated monthly mortgage payment.

Maybe not.

The New York Federal Reserve argues otherwise. Not just a little bit otherwise; “dramatically” otherwise.

To cut to the chase (and that’s a good idea, for reasons that we’ll get to later), what is more likely to impact that decision—especially for those who are currently renters—is the size of the down payment. It follows that SW Florida home renters are more likely to be encouraged by any relaxation of down payment requirements than they are to be discouraged by a rise in mortgage interest rates (with the resulting increase in the monthly payment).

Upon reflection, the Fed’s finding isn’t so surprising. The slow-motion economic recovery and stall in wage growth has made it tougher than ever for the average SW Florida home renter to scrape together a traditional 20% down payment. That would be why the FHA began to loosen down payment requirements (they started doing that in late 2013).

The details of the NY Fed’s study—Survey of Consumer Expectations—involved asking respondents how they would react to different home-buying scenarios. They measured the resulting “WTP”: Willingness to Pay, and found out…well, they found out a number of complicated things that we can leave for the statisticians to figure out—but one that stands out is that for renters (and we could easily imagine many of our own SW Florida home renters are among them), the amount of a proposed down payment is much more important than the interest rate. Everyone who has ever lived with an income that’s about equal to their expenditures understands why: rent money spent gets you nowhere, mortgage payments are different. They represent, in part, retained value.

The reason that earlier we immediately cut to the chase was because the language in the study itself is part English, part FedSpeak (a language created by Fed spokespersons for the apparent purpose of foiling attempts to decipher meaning). For example:

“…since there is generally no exogenous variation in these variables that is independent of confounding factors (such as economic conditions or household characteristics), it is difficult to cleanly estimate these sensitivities empirically.”      

What’s More Important to SW Florida Renters than Interest Rates? Thankfully, that study was accompanied by a summary. The upshot for us is that the current hard-to-predict mortgage interest rate ups and downs may not be as important a WTP influence (at least where the SW Florida home renter population is concerned) as we might assume. What are always keys for swaying potential buyers are objective pricing, proper presentation, and energetic marketing. I can help with all of those—so call me! 

SW Florida Rent-to-Own Agreements Defuse Common Landmines

SW Florida Rent-to-Own Agreements Defuse Common Landmines. The term “rent-to-own” sounds like a contradiction for good reason. It’s often called upon to reconcile a buyer-seller situation that does not fit a standard mold. A SW Florida rent-to-own agreement can allow potential buyers to move into an SW Florida house before their finances are up to snuff (or at least that’s the call most lenders would make). It’s can be a useful contradiction for both parties, because the would-be buyer can get the immediate benefit of living in their choice of home knowing that some portion of the rent paid has the potential of building residential equity, while the seller will either eventually have successfully sold the property or have benefitted from some cash flow should the sale fail to materialize.

If this rent-to-own scenario sounds like a win-win, that’s because it is…that is, unless it isn’t. The reason that rent-to-own is not more popular with SW Florida home buyers and sellers is because of some frequently encountered landmines—but a well thought-out arrangement can tackle most of the major ones. When both parties (and their legal counsel) anticipate the most likely future circumstances, among them will be:

• Purchase price. This will be an amount that is agreeable to both parties…one that ideally will also seem fair at the future time when the deed changes hands.
• Option consideration. To compensate the current owner for the loss of ability to sell the property to anyone else during the term of the rent-to-own agreement, a non-refundable amount (usually somewhere between 2%-7%) can be negotiated. If a portion of this consideration can be applied toward the ultimate purchase, it may increase the incentive for the rent-to-own tenant/buyer to complete the sale.
• It’s “rent-to-own” because a monthly rental is negotiated—usually at a higher-than-market rate with a portion of the excess to be applied toward the purchase price.
• The length of the agreement—the amount of time the renter/buyer has to complete the purchase—is a key provision. A common reason that a rent-to-own agreement is desired at all is because the buyer needs time to qualify for a traditional home loan, so negotiating a sufficient length of time to accomplish that can be critical.
• Ongoing maintenance. Spelling out precisely which party is responsible for which classifications of maintenance will prevent a common problem from cropping up. Especially in a situation where the tenant will not be completing the sale, the landlord will be keen to protect the property’s integrity.
• And taxes, homeowners’ association fees, insurance—any and all details that need to be addressed so that both parties are aware of their responsibilities. Failure to anticipate any one of them can end in a dispute…and that benefits no one!

A SW Florida rent-to-own agreement can be a terrific way to realize a sale that would otherwise not be possible. The key is to anticipate not just the hoped-for, smooth-sailing outcome, but all of the obstacles that might crop up along the way. Rent-to-own is just one of the possibilities that an experienced real estate professional will help you to consider.

SW Florida Rent-to-Own Agreements Defuse Common Landmines. Be sure to give me a call when your sights are set on buying or selling a SW Florida home!   

Homing in On SW Florida Rental Investment Opportunities

Homing in On SW Florida Rental Investment Opportunities. It’s a good thing that the human body is constructed the way it is, which is to make it difficult to do any real damage by kicking yourself. Particularly after many of us recall quite clearly how incredibly low SW Florida prices dived during the last decade’s real estate meltdown. When you see the bounce back the intervening years have brought, if you are at all investment-minded, you want to at least smack your forehead…
The good news isn’t just that the rebound looks to be progressing still, but that in the realm of SW Florida rental investments, the wished-for growth in underlying value of any investment property may be only half the goal. There is also the ongoing cash-generation to consider.
If you were to set out to search for a property to become one of the SW Florida rental investment income producers, one place to start out is to think about a two-part qualifying question:
Part 1: will you be actively managing the rental investment property? Realistically, do you have the time and inclination to do so? As a true investment rather than a sideline avocation, the answer to that question should take into account what your time is worth elsewhere. Whether you are a fully engaged professional or a massively overstressed soccer mom (or, heaven forbid, both!), the cost of hiring a professional management firm might be the better choice. Zillow notes a starting point for estimating management services at around 6%-8% of the rent number (which may or may not include services like re-leasing services).
The answer to that Part 1 consideration will give you a firm basis for estimating the answer to Part 2: What is the price range of the properties you should consider. Managing the rental yourself will increase the bottom line, but that’s only one of your rental’s operating expenses. The complete operating budget will include maintenance (generally ballpark at 1% per year of the property’s value), insurance, taxes, and any HOA and gardening fees.
The next step is to investigate what the income stream is likely to be. The local classifieds will show what comparable SW Florida rentals are going for. There are also a number of online information sources like Rentometer, craigslist, Zillow and Trulia that should supply a good approximation of today’s market. Once you find where those rates stand, you’ll be able to pencil out the cash-generating potential of candidate property.
Homing in On SW Florida Rental Investment Opportunities. At every step of the way—from first looks at the many promising SW Florida rental investment properties, to introductions to the kind of reliable local tradespeople who make a landlord’s life easier—I offer my clients fully engaged service and advice. Give me a call!

Price-to-Rent Ratio isn’t the Bottom Line for SW Florida. Naples, Ft. Myers.

Price-to-Rent Ratio isn’t the Bottom Line for SW Florida. Last week, SW Florida residents who keep their eyes on real estate trends got some fresh information about one factor that seeks to put numbers to the relative benefits of buying versus renting. When real estate values head south, buying may seem to be a particularly risky proposition…even though later it’s clear that the value proposition was actually improving. The trade-offs are hard to quantify. Even now, if SW Florida listings reflect prices on the rise, renters who failed to lasso the most extreme bargains may assume they’ve missed the boat.
Putting numbers to the problem is a complicated, pencil-snapping exercise. In addition to current dollars spent, it involves speculating on future market values. But SW Florida readers who checked into CoreLogic’s Insights blog found some new data toward the end of last week, presented in an interesting way. It arrived in an article that looked at one particular aspect of today’s national real estate landscape “seven years after the last housing bubble.”
What CoreLogic’s market trend analyst Shu Chen did was to calculate the ratio of median home listing prices versus home rental prices, and chart it over the past decade. To come up with the numbers, national median home prices in key markets were divided by median annual rent figures. The beginning 2005 ratio was set at (indexed to) 100: the starting point for this “Price-to-Rent” ratio. The idea would be that when the ratio shows less than 100, it’s a good time to buy; when it goes over 100, the relative advantage has faded. It’s all relative, of course…and it doesn’t work out to be much more than a footnote to history—but you have to check the graph carefully to come to that conclusion.
Tracking the ratio’s movement over the past ten years, the graph shows a more or less steady Price-to-Rent ratio from 2005 until sometime in 2007. English translation: until the onset of the housing crisis, the financial incentives to continue renting versus buying remained pretty much unchanged. But then we see a bumpy but pronounced drop from 2007 until 2012. Aha! The housing crisis/mortgage meltdown! This would verify that listing prices were falling even as rent levels were rising. This would mark a point where purchasing became more advantageous—even though the risk level at the time seemed daunting.
Then, beginning in 2012, the graph does an about-face. It shows a steady rise as the Price-to-Rent ratio returned to previous heights. Right at the end, as we near today’s data, there is a minor drop: but it’s only slightly below the peak—which you’d think should coincide with the least advantage to buying versus renting.
That this conclusion is the opposite of ’ SW Florida s current situation is because the Price-to-Rent ratio isn’t the only game in town. The spoiler on the US Price-to Rent Ratio graph is a second line (a faint orange one that all but disappears next to the in-your-face deep purple of the Price-to-Rent line). The orange one is the mortgage interest rate curve. It mimics Price-to-Rent’s ups and downs almost exactly…until it doesn’t. At some point in 2012, the mortgage interest rate flat-lines near the bottom, then stays there, hugging the depths even as Price-to-Rent’s purple line heads skyward.
Price-to-Rent Ratio isn’t the Bottom Line for SW Florida. In other words, the relative advantage to buying versus renting, which should have all but disappeared as SW Florida home prices climbed, did no such thing. Today’s historically low mortgage interest rates continued to make buying a fantastic opportunity. If you’re one of those who’d like to check into those current opportunities in SW Florida, I’ll stay close to the phone!

Owners of SW Florida Rental Properties Benefit from U.S. Trends. Naples, Ft. Myers.

Owners of SW Florida Rental Properties Benefit from U.S. Trends. The outlook for owners of SW Florida rental properties has been buoyant for some time, but last month a widely publicized report added to the long-range outlook. The study presented multiple scenarios in which demand is likely to outpace the supply of rental properties in the U.S., creating a market bound to reward their owners. Not such good news for tenants, though—or, as The Wall Street Journal summarized, “Renting is unlikely to get easier anytime soon.”
The report, which was issued by Harvard University’s Joint Center for Housing Studies and the affordable-housing organization Enterprise Community Partners, focused on the growing number of U.S. households for whom rent payments present a ‘growing burden’ in terms of the percentage of income they comprise.
According to the study, nationwide, rents have continued to grow faster than incomes over the last 15 years, hindering affordability. Added to that, many federal housing subsidies have been cut in recent years. One result is that the number of households who pay more than half their income to rent is estimated at 11.8 million—three million more than in 2000.
“Renters Will Continue to Struggle for the Next Decade, Harvard Study Says” was the headline that topped Laura Kusisto’s WSJ article summarizing the report. Although the study found that some factors contributing to the rise were due to temporary economic conditions that are unlikely to continue, other demographic factors will persist. Growth in groups of those in their mid-20s to mid-30s and in the Hispanic population (both groups “tend to be disproportionately renters”) have added to demand for rental housing. At the same time, the private sector has had difficulty producing profitable housing “that is affordable to lower- and moderate-income families.”
The trend might slow and even reverse should incomes begin to outpace rents—but the overall effect might have marginal results. One expert is quoted as saying that even a full decade of solid income growth would likely produce little change in the number of severely burdened households.
One nay-saying group to challenge that outlook is the Mortgage Bankers Association, which in August concluded that Americans will form “at least” 10 million new owner household in the next decade. Such growth would be expected to ease pressure on rental stocks, lightening demand enough to slow rental price escalation.
Owners of SW Florida Rental Properties Benefit from U.S. Trends. Whichever group is right, it’s evident that the owners of SW Florida rental properties currently stand to benefit from some of the economic currents that continue to garner headlines. That’s the kind of incentive that interests the investment-minded—and if that sounds like you, why not give me a call to review some of the rental properties in SW Florida currently listed for sale?

A SW Florida Rental Investment: Stiff Competition for Investor Capital. Naples, Ft. Myers, Bonita Springs.

A SW Florida Rental Investment: Stiff Competition for Investor Capital. When you buy a property as a SW Florida rental investment, you join the world of investors who recognize the value of an investment that’s as solid as the ground we walk on—one with the additional advantage of providing a steady cash dividend. With those dual advantages, you’d wonder how other investments can offer much competition, were it not for one major consideration: your time.
That’s the part that not everyone fancies. A SW Florida rental investment is one that simply requires more active management attention than many others. You don’t have to check on your bond portfolio regularly, but when you have a house or condo rental, it’s a good idea to do so. You don’t have to monitor your stock investments to be sure you’re in compliance with the latest local, state, and local fair housing rulings, but for an SW Florida rental investment, it’s prudent. Your IRA holdings don’t require your attendance at seminars on risk management, but hands-on landlords sometimes show up at them.
No wonder everyone isn’t automatically drawn to rental real estate investments.
The truth is, SW Florida investors with sufficient free investment capital are also likely to be people whose time is at a premium. They’d like their investment to make life easier, not more complicated. Who can blame them?
As a strong proponent of the advantages of SW Florida rental investments, I’m happy to point out that there are two major solutions to those built-in drawbacks.
The easy solution is what folks who are close to retirement age sometimes discover about themselves: they like being landlords! If their time is actually not in critically short supply, retirees (or in today’s more common circumstance, semi-retirees) who have mastered a career or two of management challenges often find the hands-on administration of their rental investments to be a relatively low-intensity assignment. No sweat, since they have enough free time to do their due diligence were needed. Piece of cake!
The other solution is what busy people in leadership roles have learned to use in other spheres: delegation. And the lucky fact is, there is a whole industry staffed and ready to accept the assignment. They are our SW Florida professional property managers—eminently qualified and experienced in handling the management burdens their clients send them. Their fee can cover any part or all of the landlord’s duties, from composing tenant advertisements to collecting the rents…from monitoring Fair Housing compliance and supervising maintenance emergencies to preparing rigorous financial documentation.
A SW Florida Rental Investment: Stiff Competition for Investor Capital. This month’s market features some terrific SW Florida rental investment property offerings at prices that make them worth exploring. Give me a call for more details!

Showing a SW Florida Property – Occupied or Not, it’s a Balancing Act! Naples, Marco Island

Showing a SW Florida Property – Occupied or Not, it’s a Balancing Act! In a perfect world, before you set about selling your SW Florida property you would have emptied it of all evidence of human habitation, called in the best staging pros on the planet, and set off to vacation in a Caribbean island spa-hotel so you could sift through the dozens of offers in comfort.
“Let’s see,” you would soon be musing to no one in particular, sipping your first mimosa of the afternoon as you thumbed through the sheaf of faxes from your SW Florida agent; “should I accept this all-cash offer for 150% of comparable value—or hold out for this one for 200% of comp that came in with only 50% earnest money…?”
It is here where we might best depart from this reverie to point out that in this less than perfect world—the one that we actually live in—the more probable situation is one where your SW Florida property is fully occupied, either by your own family or a tenant.
How do you make the most of that mimosa less situation? If you and your family are the occupants, your SW Florida property fits the most common profile, so the standard to-do’s apply: you will want to clear the clutter and store any non-essential furnishings; de-personalize as much as practical; deep clean; and work with your agent to make showings as routine as possible.
But what if you have a tenant? It’s going to be a true balancing act that affects four parties: seller, listing agent, tenant, and buyer. Of these, the one with the least to gain is the tenant, who is paying for the privilege of tenancy while being asked to keep the property clean and showable on the others’ schedules.
Let’s face it: this could be a minefield. Almost any tenant’s interests lie elsewhere. In fact, they may very well like your SW Florida property so much they would just as soon discourage prospective buyers—and there are subtle (and less-subtle) ways to go about that!
One solution that is sometimes offered involves this creative procedure:
Compensate the tenant for their cooperation by offering a significant bounty (say, 20% of the monthly rent) to be placed in an escrow account. It’s a meaningful award for the tenant’s full cooperation—one that will grow with the payment of each month’s rent. It will be turned over upon the completion of the sale. This ingenious plan has the effect of reversing the natural order of things. Since the amount in escrow grows with each passing month, rather than becoming increasingly annoyed with each ensuing showing, the tenant is increasingly incentivized to make the property ever more appealing. There’s cash on the line! In fact, as the escrow account builds, who’s to say the tenant won’t start doing some arithmetic…and start considering becoming the buyer himself…???
In any case, the best results for selling your SW Florida property happen when there is rock-solid communication between the listing agent and owner—and when a tenant is involved, that’s another party who should be included as well. It’s the best way to insure that everyone can go about their business with a minimum of disruption and inconvenience.
Showing a SW Florida Property – Occupied or Not, it’s a Balancing Act! If you are sizing up the coming fall market, whether your SW Florida property is occupied by a tenant or your own tribe, I hope you will give me a call to discuss how I can get the results you’re after!

SW Florida Rental Home Question: Buy Now or Wait? Naples, Ft. Myers, Cape Coral

SW Florida Rental Home Question: Buy Now or Wait? For an increasing number of SW Florida residents, what used to be a slam dunk assumption—that owning your home is preferable to opting for a SW Florida rental home—is no longer so self-evident. The powerful reasons for owning are still there: ownership still means that you are building equity over time; it still means you are free from a landlord’s control; and it still means you have the psychological benefits of being the possessor of the place where you live, and the standing in the community that accrues to the permanence that implies.
Those are powerful inducements to forego a rental home in favor of ownership, for sure—yet according to the numbers, the number of Americans who own their homes has been declining since the advent of the housing crisis (at the moment, fewer than 2/3 of households now own their homes).
You might assume that the reasons for the increase in popularity for rental homes are simply financial, and to some extent, that’s the case. The economy, while improving, is doing so painfully slowly, wages are not rising as has been the norm in prior recoveries, and mortgage loans, while still at attractively low-interest rates, can still be difficult for some SW Florida borrowers to obtain.
Yet those dollars-and-cents arguments don’t paint the whole picture. Some of the reason why rental homes in SW Florida are being chosen are due to changes in American lifestyles. Forbes contributor Beth Braverman offered some insights in last week’s article entitled “When Renting is More Expensive, But It’s Still the Right Move.”
Her first reason is not a new one: rental homes offer more flexibility. What is new is how Americans—particularly the group we call Millennials—increasingly value that freedom. Some of that has to do with the difficult labor market—and the premium breadwinners are placing on being able to ‘go where the work is.’
Next reason had to do with the relative illiquidity of the asset value a home represents. This looks like the first cousin to Reason #1: for someone who needs to move for professional reasons, being able to just pick up and move from a SW Florida rental home can de-complicate the situation. For those who are reasonably sure they will be in town for long enough to offset the costs of acquiring and selling a home, the financial benefits may outweigh this one.
Last reason given was, “You’re not financially ready”—which is certainly the most longstanding one of all. Even if a current rental home occupant qualifies for one of the new programs (some can make the down payment as minute as 3%), it’s still possible that the ‘all in’ costs will strain resources. You have to agree with Braverman that in those circumstances, it’s probably best to build up savings, even if it means remaining in a rental home for an extra year or two.
SW Florida Rental Home Question: Buy Now or Wait? All in all, any increase in the popularity of SW Florida rental homes is good news for area investors who are (or soon will be) landlords. It’s also a great reason to give me a call this summer!