daxsllc.com http://daxsllc.com daxsllc Wed, 15 Feb 2012 19:20:24 +0000 en hourly 1 http://wordpress.org/?v=3.1 Enticing Renters to Cross the Bridge to Queens http://daxsllc.com/enticing-renters-to-cross-the-bridge-to-queens/ http://daxsllc.com/enticing-renters-to-cross-the-bridge-to-queens/#comments Wed, 18 Jan 2012 00:17:40 +0000 admin http://daxsllc.com/mls/?p=303
By C. J. HUGHES

ON a recent afternoon the view across Court Square, in eastern Long Island City, Queens, took in an auto body shop and parking lots, and aging factories beyond. The Citicorp Building and other office towers cast shadows across streets. Places to shop were nonexistent.

That view is about to change. The Rockrose Development Corporation has started construction on a 42-story rental tower with 709 apartments that is expected to be among the largest residential developments in the area — and one of the tallest buildings in the borough — when completed in 2013.

The apartments in the tower, which will be called Linc LIC, at 43-10 Crescent Street, will range from 450-square-foot studios to 1,400-square-foot three-bedrooms. They will have parquet floors and “Rockrose standard” flecked granite counters, and in many cases, washers and dryers, said Justin Elghanayan, a principal of Rockrose, which is led by his father, Henry.

The rents will be about 25 percent below those for comparable apartments in Manhattan, brokers say. They average $1,750 a month, for studios, and $4,150 a month for three-bedrooms, or about $38 per square foot.

Those rents are in line with those at the smattering of new rentals in the area. At Packard Square and Packard Square North, for instance, a pair of projects developed by Ciampa Management, studios are $1,700 to $2,000 a month, said Danielle T. Culver, the Citi Habitats agent who leases them. And they have leased quickly; the 90 units at Packard Square North, which opened in June, were filled by November, she said.

“A lot of people from Manhattan used to be afraid to cross the bridge,” Ms. Culver said, referring to the Queensboro Bridge, which runs a few blocks north of Court Square, “but now this is becoming its own little area.”

To ensure that renters keep crossing, Rockrose is stocking its $275 million building with amenities. Among them will be two sizable outdoor spaces: an 8,000-square-foot courtyard, with lawns, on the third floor; and another with grills, bars and tables, on the 31st.

As an added enticement, that auto body shop, which sits on Rockrose land, will be leased to a restaurant, to enliven sidewalks that now are hushed at night.

“I think it’s about to pop,” Justin Elghanayan said of the Court Square area, as he gave a tour of the work site. Indeed, a bustling after-work social scene will be critical to attracting the younger renters whom Rockrose covets, said Mr. Elghanayan, who for similar reasons staged a sort of multiweekend pool party on a lot near his new building last summer. Called the Palms, the party featured three Dumpsters filled with water to splash around in, alongside beach chairs, and beer. “That’s the kind of energy neighborhoods need,” he said.

The revels won’t last forever, though. The second and third buildings in Rockrose’s complex, which is to have a total of 1,700 units, for $750 million, will rise on the Palms lot, though no groundbreaking date has been set.

Details are even vaguer about the fourth building, which is to go up next to the shop-turned-restaurant; it could contain condominiums, or even offices, Mr. Elghanayan said.

Although residents may be a new sight, Court Square has been steadily adding office workers since the Citicorp Building went up in 1989.

Court Square Place, which opened in 2006, is now home to the United Nations’ large credit union. And next fall, the City University of New York School of Law will move from Flushing, its home since 1983, to Two Court Square, a high-rise built in 2007.

The Court Square project is the first for Rockrose since its unusual restructuring.

For decades, Rockrose was controlled by three brothers, Henry, Tom and Fred Elghanayan. But in 2009, they split the firm into two separate companies, divvying up its buildings in the process.

One company, called TF Cornerstone, is run by Tom and Fred. Among its holdings are two apartment buildings in a different part of Long Island City, called the Queens West development. On Center Boulevard along the East River, it was created from once-polluted industrial lots. TF Cornerstone is currently building on four other sites on Center Boulevard, one of which, No. 45-45, is to have 806 units, rivaling Rockrose’s new tower.

The other spin-off company, which retained the Rockrose name, went to Henry Elghanayan; it controls 47-05 Center Boulevard, among many other buildings.

Part of the reason for the family split, cited at the time, was that Henry sought a clear path of succession for Justin, 33. And in some ways that move seems to have paid off: the Crescent Street apartment is Justin’s first development project. “I’m really, really enjoying it,” he said.

]]> http://daxsllc.com/enticing-renters-to-cross-the-bridge-to-queens/feed/ 0 Much More Than Just ‘Maintenance’ http://daxsllc.com/much-more-than-just-%e2%80%98maintenance%e2%80%99/ http://daxsllc.com/much-more-than-just-%e2%80%98maintenance%e2%80%99/#comments Wed, 18 Jan 2012 00:16:07 +0000 admin http://daxsllc.com/mls/?p=301 January 12, 2012

Much More Than Just ‘Maintenance’

By JIM RENDON

IN New York, the cost of a co-op or condo can seem an impossible hurdle. But alongside the asking price is another figure that can induce sticker shock: the monthly maintenance fee — or, as it’s called in condos, the common charge.

The fee can range from a few hundred dollars a month, for a small condo, to many thousands for an exclusive co-op. And as millions of owners have discovered, it almost never goes down and rarely stays flat. Often, the increases happen yearly.

Potential buyers should be concerned about the fee, not only because it is real money paid out of pocket every month, but because it has a direct impact on property value.

“The market rewards low maintenance and punishes high maintenance,” said Roberta Axelrod, the director of residential sales and rentals for the real estate firm Time Equities, who sits on 10 co-op boards. Apartments with low monthly charges tend to sell for more, and those with higher fees for less. That is not to say that buildings are doing away with amenities. In fact, new condo projects tend to be full of perks like exercise rooms, screening rooms, children’s play areas and even indoor pools. Yet all of these things add expense.

The monthly charges in both co-ops and condos cover operating costs — things like staff salaries, management fees, heat, water and sewer charges, even flowers in the lobby. But that is where the similarities end.

Condos usually have lower maintenance fees than co-ops. That is because they have different ownership structures. Co-op owners do not own real property. They own shares in a corporation: the co-op. Apartments thought to be more desirable — larger ones, or those on high floors with better views — have more shares than smaller ones, or those on low floors that face a brick wall. Since individual owners do not own property, the real estate tax bill for the building goes to the corporation, which in turn collects those taxes based on the number of a member’s shares, as part of the maintenance fee.

In addition, co-ops often have an underlying mortgage on the entire building (which is separate from the mortgage that buyers have on an apartment). So the co-op maintenance fee often includes monthly payments on the underlying mortgage as well.

(Real estate tax payments as well as interest payments on the underlying mortgage can be deducted from an owner’s income tax.)

Condos are different. When someone buys a condo he is buying real property, just as in a house purchase. The buyer gets a deed and a separate bill for taxes directly from the city.

Fees for upkeep have increased sharply over the last decade, according to the Council of New York Cooperatives and Condominiums, which publishes an annual report of co-op and condo charges based on data gathered from members. The council found that the median maintenance fees for co-ops on the West Side of Manhattan rose by 59 percent between 2000 and 2009 (the most recent year for which it has statistics). Citywide, condo common charges increased by 38 percent over that same period.

As taxes are folded into co-op fees rather than separately paid, one of the main reasons for the fees’ rise is real estate tax increases, said Mary Ann Rothman, the council’s executive director. The city has increased both the rate at which buildings are taxed and its assessment of property values. The median real estate tax paid by West Side co-ops rose by 116 percent between 2000 and 2009. Taxes make up a larger proportion of payments, too. In 2000, real estate taxes accounted for only 23 percent of the maintenance paid by East Side co-op owners, according to the report. By 2009, taxes accounted for nearly a third of the maintenance fee.

A number of co-ops are facing an unusual increase. Those that do not own the ground on which the building stands rent it through something called a ground lease. The first generation of these leases on co-op buildings, signed in the 1980s, is just now coming up for renewal, said Steven Sladkus, a partner in the law firm Wolf Haldenstein Adler Freeman & Herz. As these leases get renewed, Mr. Sladkus said, “there will be a terrible jump up in cost.”

And buildings facing increases are hard pressed to offset them with savings. “The vast majority of these costs are fixed,” Ms. Axelrod said.

There are few places to cut corners: buildings must pay taxes (if they are co-ops), the salaries of doormen and other employees, insurance and management fees, and for water and sewer. Some co-ops have hired water consultants to check for leaks and to determine whether the switch should be made to a meter from the city’s cost-estimate system. Some buildings have converted to less expensive natural gas from heating oil. Others are metering each apartment’s utility use separately.

Many co-ops are also taking advantage of low interest rates to refinance underlying mortgages. “In the last three years every building that could refinance their underlying mortgage has,” said James O’Connor, the president of Douglas Elliman Property Management. Even though most of these mortgages include prepayment penalties, rates are so low that it is often worth the cost. Mr. O’Connor says that more than half of the 260 co-ops that his firm manages have refinanced.

Some buildings are also trying to generate income by imposing or increasing fees for using the bike room, for moving in or out, or for renting a unit.

Developers and boards often walk a fine line between keeping monthly fees low and keeping up with the Joneses with amenities and renovations. “The more bells and whistles the building has, the more expensive it is to run, the more that eats away at a prospective buyer’s ability to afford the apartment,” said Scott Walsh, the director of market research at TF Cornerstone, which develops and manages condo and rental buildings.

One of the company’s buildings in Long Island City navigates that line by sharing amenities with a much larger rental building across the street. For a fee that is added to monthly common charges, owners can use the pool, the lounge, the billiards room and the large fitness center at the neighboring building for much less than it would cost them to have these amenities in their own building.

Potential buyers should take note of how a building spends its money, said Eva Talel, a partner at the law firm Stroock & Stroock & Lavan who directs the firm’s co-op and condo practice. There is no point in moving into a building if you disagree with how the maintenance fees are being spent. Some buyers want fresh flowers in the lobby every day; others, needless to say, do not.

If owners have a similar approach to spending, she said, “there will be fewer battles over the appearance of the lobby, or whether or not to build a rooftop garden. And that helps the building run more smoothly.”

]]> http://daxsllc.com/much-more-than-just-%e2%80%98maintenance%e2%80%99/feed/ 0 Queens Neighborhood Gets a Little TLC http://daxsllc.com/queens-neighborhood-gets-a-little-tlc/ http://daxsllc.com/queens-neighborhood-gets-a-little-tlc/#comments Wed, 18 Jan 2012 00:13:35 +0000 admin http://daxsllc.com/mls/?p=297 Queens Neighborhood Gets a Little TLC
By ANTHONIA AKITUNDE

SOMETIME this fall ground will be broken in Astoria, Queens, on Hoyt Plaza, a rental building with 34 units, from studios to three-bedroom penthouses, with amenities that include an expansive lobby, a gym, a laundry room, a pool, terraces and a rooftop garden.

That might not seem unusual in many neighborhoods in New York, but Hoyt Plaza is a departure for Astoria, a neighborhood mostly known for its Greek cuisine and as the home of Steinway & Sons.

Architectural renderings of Hoyt Plaza suggest a scale heretofore unseen in the neighborhood. The glass and brick building will be 11 stories high, benefiting from recent rezoning that allows new developments to rise above the previous maximum of six stories. Hoyt Plaza, which is expected to open in two years, is being developed by Giannola Realty, which has also built two other rentals, Hoyt South and Bridge Side. The buildings are within five minutes’ walk of each other in the westernmost reaches of Astoria, near the foot of the Robert F. Kennedy Bridge.

Joseph Giannola, the company’s vice president and co-founder, said monthly rent at Hoyt Plaza would be slightly more than at the original buildings. Bridge Side has 27 units (studios rent for $1,500 and two-bedrooms are $2,200) and Hoyt South has 19 (studios are $1,800, one-bedrooms $2,200 and two-bedroom penthouses $3,200 to $3,500).

Before going into real estate, Mr. Giannola, who has lived in Astoria for almost 50 years, worked as a hairdresser at 42nd and Lexington. Most of his clients didn’t live in Manhattan, he said, and they came to him because they were unhappy with the services in their own boroughs.

“I said to myself, ‘Why can’t I do this type of work in my neighborhood?’ ” Mr. Giannola said. In 1970 he opened Joseph’s Hair Place, which still operates a few doors down from his rentals.

The hair salon and the rental buildings are just part of a puzzle that Mr. Giannola is assembling in Astoria. The area is known for its wealth of dining options, but around the Giannola buildings, restaurants and places to commune are few and far between. So Mr. Giannola and his brothers Anthony and Vito have opened two storefront restaurants within the last year: Twirlz, a frozen yogurt shop, and Basil Brick Oven Pizza, featuring pizza made with fresh ingredients and baked in a wood-fired oven.

“That’s why we not only try to provide nice apartments,” Mr. Giannola said, “we tried to build something unique for our tenants.”

Brokers say the Giannolas’ presence has improved the area, cosmetically and socially.

“They wanted to bring up the community,” said Luca Di Ciero, the president of NY Space Finders. “People appreciate it.”

With business booming, Mr. Giannola says he plans to expand the dining areas in both restaurants. There is also talk of opening a yoga studio.

Mr. Di Ciero said the Giannolas’ rentals raised the bar for other developers in Astoria. “They weren’t just cookie-cutter-shaped layouts,” he said. “They were one of the first to mount the cable outlet in the wall so you could have a flat screen. They put a gym in. A lot of buildings I know have the room to do that, but they didn’t go the extra mile.”

Mr. Giannola said that his tenants were willing to pay “that extra dollar” (his rents were about 10 percent over the market average) for higher-quality construction and finishes. “I looked at so many places and said, ‘No, no, no,’ ” said John Gaspar, a production manager who has lived in Hoyt South for eight months and plans to move into Hoyt Plaza when it opens. “Places I looked at in Manhattan comparable to this are $4,000 a month. I pay $1,900 and I can see the Chrysler Building.”

After it opened seven years ago, Bridge Side was fully rented in six weeks; Hoyt South, which opened in January 2010, filled up just as quickly. Mr. Di Ciero said he expected a similar response to Hoyt Plaza.

The presence of such developments hints at a growing interest in Astoria. Near La Guardia Airport and 20 minutes from Midtown by car or public transportation, the neighborhood is becoming more of a destination, said Steffan Olausson Partridge, a real estate broker who has placed clients in Hoyt South.

Mr. Giannola, who said the only time he had been away from Astoria was the two-year period he spent serving in Vietnam, expressed the hope that more people would come to know the pleasures of his neighborhood.

“Why would you want to go live in the city?” he said.

]]> http://daxsllc.com/queens-neighborhood-gets-a-little-tlc/feed/ 0 New Ways to Use Less Energy at Home http://daxsllc.com/new-ways-to-use-less-energy-at-home/ http://daxsllc.com/new-ways-to-use-less-energy-at-home/#comments Fri, 30 Sep 2011 13:23:12 +0000 admin http://daxsllc.com/mls/?p=268
  • SEPTEMBER 12, 2011

New Ways to Use Less Energy at Home

Concrete countertops? Blown fiberglass insulation? The payback may be quicker than you think.

By JIM CARLTON

For new-home buyers, green is the color of money.

The share of homes being built in the U.S. with environmentally friendly features jumped to 16% of single-family starts last year from 2% in 2006, says McGraw-Hill Construction, a market-research firm in New York. Fueling the trend, industry officials say, is a desire to save energy at a time of high fuel costs. Indeed, in a recent survey, 93% of builders named increased energy efficiency as an important green practice—far more than cited any other benefit.

“People understand energy efficiency because it’s easy to measure,” says Michele Russo, director of green content at McGraw-Hill, a unit of McGraw-Hill Cos. “They get that bill all the time.”

Green homes generally cost anywhere from 2% to 10% more than a typical home, depending on the features included, though the difference is shrinking. About 4%, or $14,000, of the cost of a $398,000 home purchased last year by Keith and Rebecca Sorensen was for green features, including a solar water heater and added insulation, says Michael Chandler, who built the three-bedroom residence in Chapel Hill, N.C. But the couple says their energy bill has been cut by two-thirds from their previous home. The roughly $200 a month in savings means the Sorensens’ green premium will be paid off in about six years.

“We’re kind of tree-huggers, if you want to call us that, but I hate spending a lot of money hurting the environment,” says Mr. Sorensen, 38, an accountant.

Many of the latest practices in green building revolve around ways to make homes use less energy. Here’s a look at some recent innovations.

Blown Fiberglass Insulation

Blowing fiberglass between walls, rather than installing matted sheets, is a relatively new technique for addressing one of the best ways to improve the efficiency of a home: making sure it’s properly insulated.

[GREENCOST] Johns ManvilleBlown fiberglass insulation is more effective than traditional batts 

“After all, it doesn’t make any sense to outfit a home with all of these great new, highly efficient technologies and then have it in a home that leaks like a sieve,” says Michelle Desiderio, director of the green buildings program at the NAHB Research Center, part of the National Association of Home Builders, in Upper Marlboro, Md.

The old standard in walls was fiberglass sheets, or “batts,” but they often didn’t keep rooms sealed very tightly. That led to a slew of competing products in recent years, such as cellulose, or recycled paper, and polyurethane spray foam, which provide more insulation because they are blown in to fill all the nooks and crannies between walls, Ms. Desiderio says.

The fiberglass industry has fought back with new products that have insulation values rivaling cellulose and spray foam, without the potentially harmful chemicals they may contain. (Officials of those latter two industries say that toxicity is an issue only when the materials are being installed, and that workers are instructed to wear appropriate safety equipment to avoid exposure.) One technique has been to design a system of blowing fiberglass into wall cavities, such as the JM Spider Custom Insulation System from Denver-based Johns-Manville Corp.

Builders who have switched back to fiberglass say that while the blowing technique costs as much as 40% more than using the batts, it’s up to 50% cheaper than using spray foam. Cellulose costs about the same as blown-in fiberglass, but unlike the Spider fiberglass it can hold moisture, says Stephen Crouch, a residential market manager for Johns-Manville.

Green-building experts say the higher insulation costs will eventually be offset by the home’s overall energy savings, which can vary widely depending on what other green features are included.

Mr. Crouch says Johns-Manville’s Spider sales have continued to increase during the housing slowdown.

Cellulose and spray foam have both continued to gain share in the home insulation market, say officials of the two industries. And cellulose has “superior” moisture-handling capabilities, says Daniel Lea, executive director of the Cellulose Insulation Manufacturers Association, in Dayton, Ohio. Mr. Lea adds that cellulose is the “greenest of green” insulation, in part because it has such a high content of recycled materials including newspapers.

Spray foam, meanwhile, has added benefits such as being able to reinforce the structural integrity of a house, says Kurt Riesenberg, executive director of the Spray Polyurethane Foam Alliance in Fairfax, Va.

Heat Pump Water Heaters

Heat pump water heaters have hit the residential market over the past two years as a way to slash bills on electric water heating. Made by companies including General Electric Co. and Rheem Manufacturing Co., the water heaters suck heat out of the air such as in a garage or basement, like a refrigerator running in reverse, and use it to help heat water in a house.

[GREENCOST]

The savings can be significant: In the case of the Rheem HP-50 heat pump water heater, Rheem officials say the average annual operating cost of the device is between $225 and $280, or about half that of standard electric water heaters.

But the heaters aren’t cheap. They cost up to $1,500 for a 50-gallon model, or three times as much as a comparable conventional electric water heater and five times as much as natural-gas-powered units (though natural gas isn’t available everywhere). To pay back the higher investment would take three to four years, based on the annual savings.

Another issue with the heat pump units is that homeowners could inadvertently end up paying more to heat the home if one is installed in the wrong place. “If you put it in the garage, that’s OK, but if you put one in your basement, that will pull heat out of the basement—forcing you to put more heat back in,” says Joe Wiehgen, a senior research engineer at the NAHB Research Center. He suggested that wouldn’t be as much of an issue in more temperate climes.

Electronic Monitoring

Several companies have come out with home monitoring systems over the past year that let homeowners track their energy use so they can turn off electricity where it isn’t needed.

In February, France’s Schneider Electric SA introduced the Wiser Energy Management System, which lets homeowners see a computerized display of their power consumption so they can make adjustments, such as shutting down power to unused appliances. Costing about $600 with installation, the Wiser system can take $60, or 20%, off a $300-a-month power bill, meaning a payback period of as little as a year, says Jeff Drees, president of Schneider’s U.S. division.

Similarly, Newton, Mass.-based Powerhouse Dynamics Inc. last year introduced the eMonitor, which costs about the same and advertises a comparable payback period. At the Sorensen residence in North Carolina, the builder, Mr. Chandler, says he included an eMonitor system in the home and has agreed to monitor power use for the family.

“It shows you in a graphical format where there are spikes and stuff,” says Mr. Sorensen, who shares the home with his wife and their three children.

Concrete Countertops

At least one green building technology costs less right out of the gate: concrete countertops.

Inspired by “Concrete Countertops: Design, Forms and Finishes for the New Kitchen and Bath,” a book by designer Fu-Tung Cheng of Berkeley, Calif., builders around the U.S. have taken to making countertops by mixing their own concrete on a home site. The technique is considered both greener and cheaper because the concrete doesn’t have to be shipped like the more prevalent granite counters, says Mr. Chandler, who began building them last year.

According to online calculators, it costs around $1,100 to make 50 square feet of concrete countertop, compared with $2,000 for granite.

But the do-it-yourself approach has its drawbacks. “The challenge is getting the right training for your crew,” Mr. Chandler says. “You have to know how to reinforce steel in the right way. It’s not intuitive.”

Mr. Carlton is a staff reporter in The Wall Street Journal’s San Francisco bureau. He can be reached at jim.carlton@wsj.com.

]]> http://daxsllc.com/new-ways-to-use-less-energy-at-home/feed/ 0 Home Prices Are Down, but Rentals Are Rising http://daxsllc.com/home-prices-are-down-but-rentals-are-rising/ http://daxsllc.com/home-prices-are-down-but-rentals-are-rising/#comments Fri, 30 Sep 2011 13:22:51 +0000 admin http://daxsllc.com/mls/?p=266 Home Prices Are Down, but Rentals Are Rising
By MOTOKO RICH

The housing market is gasping for air, and home prices are down to 2003 levels, according to the S&P/Case-Shiller Home Price Indices.

But that does not mean all housing is cheap. Rents are actually rising, according to the latest inflation data from the Labor Department. Last year, rents were essentially flat, but they have been rising steadily since the end of 2010. In August, rents paid for primary residences were up 0.4 percent compared with July, and 2 percent above a year earlier.

Bureau of Labor Statistics and IHS Global InsightIndex of rents paid for primary residences using 1982-1984 as a base.

The reason is simply a matter of increasing demand for rental properties. In a better economy, the people who are now renting might be looking to buy a house. Many people do not have the financial capacity to get a mortgage. Interest rates are at historic lows, but lenders are making prospective borrowers go through ever more hoops to qualify for loans. People who are insecure about their jobs do not want to commit to mortgages, and those who are scraping by on unemployment insurance or savings certainly cannot buy a house.

“A lot of people are really changing their attitudes toward housing,” said Chris G. Christopher Jr.,
senior principal economist at HIS Global Insight. “So there is more renting going on.” With prices down, he said, housing “doesn’t seem like a very good investment.”

]]> http://daxsllc.com/home-prices-are-down-but-rentals-are-rising/feed/ 0 Six Mistakes Housing Investors Make http://daxsllc.com/six-mistakes-housing-investors-make/ http://daxsllc.com/six-mistakes-housing-investors-make/#comments Fri, 30 Sep 2011 13:22:32 +0000 admin http://daxsllc.com/mls/?p=264 Six Mistakes Housing Investors Make

Traditional investments are delivering low returns, and home prices are at bargain levels. Is it time to consider buying some rental housing?


 

GETCO

Illustration by Scott Pollack

Investing in real estate right now can be surprisingly profitable, if everything goes well. Rents are climbing in many areas, and more properties may be coming on the market. Last month, the Obama administration asked for proposals on how to convert at least some of Fannie Mae’s and Freddie Mac’s bulging inventories of foreclosed homes into affordable rentals.

Investors used to aim for rents that were 1% of the purchase price, or $1,000 a month for a $100,000 home—an annual gross return of 12%—says Michael McCreary. His firm, McCreary Realty, manages about 300 properties in the Atlanta area. Today, he says, some of his investors are getting as much as 2% of the purchase price.

In general, though, average returns after expenses are far less, more like 5% to 6% of the property value, says Ingo Winzer, president of Local Market Monitor, a real-estate forecasting firm. But that still is well above what many other investments yield.

Before you start scouring for deals, keep in mind that owning rental properties is time-consuming, expensive and fraught with challenges, and many investors lose money. You will want to avoid falling into one of these common traps.

• Mistake 1: Confusing a cheap deal for a good deal.

It is true that you can buy some homes for ridiculously low prices—but that doesn’t mean you can rent them out. Homes in deserted subdivisions aren’t any more appealing to renters than they are to buyers. The same is true for less-attractive properties or those in less-desirable school districts.

Investors from the San Francisco area often look at the Sacramento market assuming they can get Bay Area-like rents, and end up overpaying, says Robert A. Machado of HomePointe Property Management. He uses several resources, including the website FinestExpert.com, to estimate rents. Other experts suggest canvassing apartments nearby to see not just their rates, but whether they are offering special deals, like a couple of months of free rent.

• Mistake 2: Overlooking key costs.

Knowing the potential rent isn’t enough. Before you buy a property, you should also factor in closing costs of 3% to 6%, the costs to fix up the place and maintain it, and your holding costs. Then add the profit you expect to make (and more closing costs, if you intend to turn around and sell it). Only then can you figure out what you can afford to pay.

• Mistake 3: Forgetting that time is money.

In real estate, “time is your biggest enemy,” says David Hicks, co-president of HomeVestors of America, a franchiser whose motto is “We Buy Ugly Houses.” You lose money when your property is empty, whether you are painting it or between tenants. You also lose if you buy in the fall and can’t replace the roof until spring. You may be better off accepting a lower rent than waiting for a higher-paying tenant.

• Mistake 4: Assuming you will sit back and watch the rent roll in.

“When you become a landlord, you become a rent collector,” says Mark Kreditor of Get There First Realty, which manages 1,600 rentals in the Dallas-Fort Worth area.

Just like homeowners who can’t pay the mortgage, tenants lose their jobs and stop paying the rent. Evicting them can take several weeks, and some steal appliances or other property. Mr. Kreditor says that once or twice a month, a tenant removes a home’s copper tubing on the way out the door to sell the copper for its meltdown value.

You will need to screen prospective tenants carefully—or pay someone to do it for you.

• Mistake 5: Underestimating repair costs.

As with all homes, you will be making lots of repairs. You may find wood rot or mold when you remove that cracked bathtub. Carpet in rental homes typically must be replaced every five years, and you may have to repaint after every tenant. Tony A. Drost, president of the National Association of Residential Property Managers, or Narpm, suggests setting aside six months of expenses so that you will have funds if a major repair is needed.

• Mistake 6: Assuming that owning a rental is the same as owning a home.

You might put up with flaws in a home that a renter wouldn’t tolerate. In addition, many states and communities have strict (and complex) laws for landlords, even if you own only one property. A property manager can handle most of the headaches, but you should expect to pay one up to a month of rent for finding and screening tenants—and up to 10% of the monthly rent for management fees.

You can find property managers through the websites of trade groups Narpm and the Institute of Real Estate Management. In addition, many communities have local Real Estate Investor Associations, which can provide support.

Write to Karen Blumenthal at karen.blumenthal@wsj.com

]]> http://daxsllc.com/six-mistakes-housing-investors-make/feed/ 0 The Buddy System, or the Buyer’s Broker http://daxsllc.com/the-buddy-system-or-the-buyer%e2%80%99s-broker/ http://daxsllc.com/the-buddy-system-or-the-buyer%e2%80%99s-broker/#comments Fri, 30 Sep 2011 13:22:02 +0000 admin http://daxsllc.com/mls/?p=262 The Buddy System, or the Buyer’s Broker
By SUSAN STELLIN

IN this do-it-yourself era of online real estate listings, it is easy to find out what is on the market, visit open houses and even research sales data to come up with a reasonable price to offer for a home.

So why should a buyer bother using an agent?

In a nutshell: to protect his or her interests in an expensive, often complex purchase that can become even more complicated by the labyrinthine co-op approval process in New York City.

A buyer who relies on the seller’s agent to handle both sides of the deal may not hear about problems with the apartment or the building, or have a real advocate during contract negotiations.

“When you work with a buyer’s agent, their fiduciary responsibility is to you as a buyer,” said Walter Molony, a spokesman for the National Association of Realtors. The organization has helped establish state laws that require clearer disclosure to consumers about which party in the transaction an agent represents.

In New York, real estate agents must have clients sign a disclosure form that explains the difference between a seller’s agent, who provides undivided loyalty to the seller, and a buyer’s agent, who represents the buyer’s interests. A dual agent can represent the buyer and the seller, but both parties must consent to the arrangement and acknowledge that they are giving up the benefits of exclusive representation.

“Obviously if you’re representing a buyer and a seller in a transaction,” said Neil B. Garfinkel, the residential counsel to the Real Estate Board of New York, “you can’t have undivided loyalty.”

A dual agent can maintain each party’s confidence, Mr. Garfinkel said — for instance, by not disclosing to the seller that the buyer just received a big bonus check, or by not telling the buyer that the sellers are divorcing and want a quick sale. But things get murky when it comes to negotiating a price or discussing a home’s flaws.

“Perhaps it’s a defect in the property or potential financial issues in the building,” said Gea Elika, the founder of Elika Associates, a real estate agency that works exclusively with buyers. “Or maybe the resale potential is terrible. Buying a home is an emotional thing, so buyers may not see what’s wrong.”

When the market was booming, it was sometimes difficult for buyers to find a broker to show them properties unless they had millions of dollars to spend. That is because properties were selling so fast that agents preferred working with sellers rather than buyers who might take months to make up their minds. But agents say that with listings taking longer to sell, there is generally more willingness to work with buyers.

Noah Rosenblatt, the founder of the real estate data site Urban Digs, is among the agents who focus exclusively on the buy side of the deal.

“The buyer clients who come to me tell me that they’re not interested in someone to show them what’s on the market,” Mr. Rosenblatt said. “Once they find a property they like, my services really kick in at that point.”

Those services include providing a market analysis, evaluating comparable sales, coming up with an offer based on the value of features like outdoor space, and handling the back-and-forth of negotiations and contract terms. The role of a buyer’s agent may also involve preparing a co-op board package and navigating speed bumps that can derail deals, like delayed seller responses to a bid.

“I would not allow my client’s offer to be used as leverage by a seller who might be entertaining two or three other deals on the side,” Mr. Rosenblatt said. “I would put a deadline on the offer.”

A common uncertainty is at what point a buyer should start thinking about bringing an agent into the picture. Many savvy shoppers are happy to visit open houses on their own, and many even acknowledge, when signing visitor’s logs, that they are not working with an agent. But brokers recommend finding a buyer’s agent before making an offer or scheduling an appointment for a second viewing.

Engaging a buyer’s agent later in the process opens up the potential for a dispute over whether the new hire is entitled to a portion of the selling agent’s commission. Also, by this point in the proceedings, a buyer may have chatted too much with the selling agent, revealing information that could influence the outcome of the deal.

“You may have already lost your negotiating power because you’ve already told them what you’ll spend,” said Kimberly Kahl, the executive director of the National Association of Exclusive Buyer Agents.

Although the seller typically pays the agents’ commission, that fee comes from the purchase price of the home — in other words, out of the buyer’s pocket — so buyers who think they have no financial obligation to an agent are deluding themselves.

“You’re paying for it,” Ms. Kahl said. “You might as well hire someone to represent you.”

Some buyers worry that if they work with a buyer’s agent, their offer may be less attractive to the seller, whose fee to his own agent could be smaller than the full 6 percent if that agent represented the buyer too. In many cases, the listing agreement stipulates a 6 percent commission if the deal is split between brokers and a 5 percent commission if the listing agent represents both buyer and seller.

But with financing tight and qualified buyers scarce, Mr. Rosenblatt said, for the seller to be swayed on this issue, he would have to receive two very similar offers, with similar terms and financing conditions, and both buyers would have to have similar appeal to a co-op board.

“How often does that really happen?” Mr. Rosenblatt asked. “It happens, but the stars do not align that perfectly often enough that it’s something buyers should be paranoid over.”

]]> http://daxsllc.com/the-buddy-system-or-the-buyer%e2%80%99s-broker/feed/ 0 Mortgage Rates Sink; 30-Year Reaches 4.12% http://daxsllc.com/mortgage-rates-sink-30-year-reaches-4-12/ http://daxsllc.com/mortgage-rates-sink-30-year-reaches-4-12/#comments Fri, 30 Sep 2011 13:21:25 +0000 admin http://daxsllc.com/mls/?p=259 Mortgage Rates Sink; 30-Year Reaches 4.12%

By AMY HOAK

Mortgage rates hit record lows this week, reflecting continued market and U.S. employment concerns, Freddie Mac’s chief economist said Thursday.

Rates on 30-year fixed-rate mortgages averaged 4.12% for the week ending Sept. 8, down from 4.22% last week and 4.35% a year ago. The mortgage’s previous low was set the week ended Aug. 18, when the rate averaged 4.15%.


 

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Concerns about euro-zone sovereign debt and a weak U.S. payrolls report for August put downward pressure on yields on Treasury bonds, enabling fixed mortgage rates to hit new lows, according to Frank Nothaft, vice president and chief economist of Freddie Mac. Fixed mortgage rates are closely related to yields on 10-year Treasury notes.

“On net, the economy added no new jobs last month and was the weakest reading since September 2010,” Mr. Nothaft said. “Meanwhile, the unemployment rate remained at 9.1%, marking its 31st consecutive month of being above 8%, the longest such stretch in 70 years.”

Mortgage rates haven’t been above 6% since November 2008, according to Bankrate.com. When the 30-year fixed-rate mortgage was 6.33%, a $200,000 mortgage would have had a monthly payment of $1,241.86. A mortgage rate of 4.35% on the same size loan would mean a monthly payment of $995.62, according to the news release.

Fifteen-year fixed-rate mortgages averaged 3.33%, down from 3.39% last week and 3.83% a year ago, according to Freddie Mac.


 

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Associated Press Mortgage rates haven’t been above 6% since 2008. Above, a new home in Springfield, Ill.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 2.96%, unchanged from last week. The ARM averaged 3.56% a year ago. And rates on 1-year Treasury-indexed ARMs averaged 2.84%, down from 2.89% last week and 3.46% a year ago.

To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 0.7 point, while the 15-year fixed-rate mortgage and both ARMs required payment of an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

 

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