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Two NM Counties On Affordable Mortgage List

Nationally, the cost of residential real estate is trending up and the number of days on the market is trending down.

The median list price of a home in the country is $275,000, up nearly $25,000 from June 2016, according to realtor.comValuePenguin.com looked at some of the nation’s counties for their affordable mortgage list

Taos County and Los Alamos County were featured on a least affordable mortgages study by ValuePenguin.

Taos is a popular vacation spot for wealthy travelers as the Taos Ski Valley is one of the town’s highlights. International luxury real estate firm Engel & Völkers came to Taos in JuneMartin Molz, associate broker for Engel & Völkers’s Taos location, said a large portion of the residential real estate market comes from second housing.

“I think we’re on the front end of a progressive real estate market,” Molz said in an interview in June. “The bigger picture is that Taos is a very desirable place not just for people from the United States, but for international buyers, and that with all that’s going on here, that some of those international buyers would consider Taos as a place to invest.”

Housing availability and affordability can be a big factor for businesses and their employees when weighing where to locate.

According to a previous analysis by American City Business Journals, Los Alamos was the third-most affluent place in New Mexico, behind White Rock and Sandia Heights, which ranked as the most affluent place in the Land of Enchantment. A big draw for wealthy New Mexicans buying real estate in the Sandia Heights area, according to CBRE Senior Vice President David Eagle, is access to the outdoors, particularly mountains and trails.

ValuePenguins’s methodology took the reported median value of owner-occupied homes and determined each county’s monthly mortgage payment. By using the reported data and assuming a 4 percent interest rate over 30 years, ValuePenguin calculated a ratio ratio for monthly mortgage to median household incomes.

Albuquerque and Rio Rancho Rental Investments

A plan for finding the best Albuquerque and Rio Rancho Single-family investment property

The following are a few things to consider when planning on investing in a rental home in the Albuquerque Metro Area.   People have been building wealth by investing in real estate since the beginning of civilization. In Albuquerque and Rio Rancho metro areas approximately ten percent of the single-family homes are an investment property.  Just as every market is different every single-family home is different.  This discussion is intended for the investor who wants to hold their property as a rental for at least five to seven years and not for someone who is looking to “flip” a property for a quick profit. The following are some of the things I have learned over many years of investing for myself and managing thousands of single-family rental properties for Single-Family Home Investors.   These are simply my suggestions.  Be sure to check with your financial and real estate professionals when developing your own plans and benchmarks.

Strategies for finding the right long-term single-family home investment

1. Create a plan. Include in your plan, both the local and the micro local market in which you want your investment. (All real estate is local but market rents are micro local.).

2. Be sure to factor in the vacancy time as well as the cost of getting the property in condition. Inspections are crucial to include in your plan. From the inspection you will be able to assess better the condition of the property.

3. Deferred maintenance is a double-edge sword. Limit your fix up items to carpet, paint, yard work and minor carpentry, or as I call it lipstick and eye makeup. Larger projects often cost twice as much as estimated and take longer than expected.  The loss of monthly income generation plus the remodel cost can be hard to make up in rent increases.

4. If you pay cash, remember to factor in the cost of insurance and property taxes when figuring out the net present value of the initial investment and revenue streams.  Consider using a self-directed ROTH IRA.

5.  Be conservative with  vacancy cost and maintenance cost in your calculations.  For my own calculations I use a three year block of time.  I estimate an average of 18 months leased with four weeks of vacancy and  approximately two and a half months rent as routine maintenance cost.  This does not count any capital improvements.  If you anticipate having to make a capital outlay within five years factor that cost as well.

6.  The investment return % can be calculated using many of the revenue stream present value calculators available on the internet.  I escalate my rent by 2% each year and use a 2% inflation factor from the initial purchase for sales price at the end.  I wantshoot for a 6+% net present value over seven years as my minimum benchmark.

7. There is always a risk that something unexpected can go wrong with the rental process.  People, money and many Federal, State and local regulations are involved.  You can minimize that risk when you hire a local professional property manager with great experience and enough staff.  Murphy’s law of rentals says: if you do not have an expert on your team you will need one.  My corollary to this is: if your property manager does not have enough qualified staff the person you need will be sick or out of town when you really need them.   If you want to do your own maintenance at lease hire a professional for the lease up.  It you have a quick temper, do not do your own maintenance.

 

What’s in your wallet.

man's walletNew Mexico Lawmakers are forced to face the Driver’s Licence REAL ID issue.  Finally!

Published: Journal staff and wire reports Wednesday, January 20th, 2016

SANTA FE — The U.S. Department of Defense says it will no longer accept New Mexico driver’s licenses at its installations nationwide.

Defense Department officials announced Wednesday that driver’s licenses from New Mexico — along with those from Minnesota, Illinois, Missouri and Washington state — can’t be used as proof of identity to enter its bases.

The move comes after the U.S. Department of Homeland Security declined to give New Mexico an extension on complying with tougher rules under the federal REAL ID Act. Those rules require proof of legal U.S. residency in order for state driver’s licenses and IDs to be valid for some federal purposes.

Some U.S. Air Force bases previously had said New Mexico licenses still would be accepted, but this new announcement makes it clear all U.S. military bases must stop accepting that form of identification.

Sandia Labs, a Department of Energy installation, as well as DOD sites White Sands Missile Range and Fort Bliss also said this month it would stop accepting New Mexico IDs.

New Mexico lawmakers are set to begin debate Thursday on a REAL ID fix.

2016 Rental Market Predictions

My predictions for Rentals in the Albuquerque Metro Area Housing Market in 2016

crystal ball

The Metro Area was slow to decline from the housing bubble burst of 2008 and as is our usual trend we have been equally slow to recover.   The Metro Area finally saw the turn around in the housing market during the second quarter of last year. This affordability will create economic growth and housing demand. According to a January 5th article by Sal Christ, ABF’s business reporter, the average price of $175,000 with a 5% down made it 33 percent more affordable to buy than to rent the Metro Area last year.   According to a recent survey in the Wall Street Journal the greater Metro Area ranks as one of the 20 most affordable cities of more than a million residents in the country.

I see rents continuing to be strong in the Metro Area. We will not see average rents going up as fast as in the past few years or vacancy rates as low but overall we will remain in a Landlord Market. The Post Millennials (or generation Z) are becoming adults everyday now and are more apt to move into their own place sooner than the millennials.   Interest rates have started to go up and the constraints on financing a new home are much tighter than before 2008. They remember the effects of the housing bust. I predict they they will continue to rent for several years before taking the plunge into a mortgage commitment.   This will keep the Metro Area rental market strong until 2018. After 2018 I believe the demographic will change.   Without a crystal ball I have prudently decided another year to make predictions for 2008.

My next post will address my predictions for the Metro Real Estate sales market.

Experts In Their Field: Residential Property Management

With residential property management, there is simply no substitute for experience.

Experts in Their Field: Residential Property Management

 

Blair Hart has over 30 years of experience as a landlord and entrepreneur. (more…)

Five Guiding Principles for the Successful Landlord

 

Whether owner/manager or a professional property manager of a residential rental there are some aspects of good management that apply to every situation. In addition to these five principles, to be successful the landlord must also consider how the rental home is unique, its neighborhood and the sociological and economic factors of the community. See our next post for an additional five principles for a successful professional landlord.

1.Keep your property in top shape.

You should have some funds set aside for replacement and repair. If the home needs paint, paint it before showing for rent. If the air conditioner breaks fix it, etc. A well maintained home attracts the best residents.

2. Be respectful no matter what.

Some people are difficult and high maintenance. Keeping your cool and maintaining respect under fire is essential to the successful landlord. Landlord/Resident relations are full of landmines: late rents, negotiations over requests, maintenance issues. Remember a disrespected resident often does not respect your property. There are many techniques you can employ when dealing with difficult people.  Some excellent resources for these techniques are Books on dealing with difficult people, YouTube videos, and The National Association for Community Mediation.

3. Keep your word on maintenance requests.

When you tell your resident it will be fixed on Friday, fix it on Friday. This involves work on the part of the landlord to identify a person, or multiple people who can deliver on fixing the problem right the first time and being organized and talented enough to stay on a schedule

4. Screen your residents well. 

Your rental income is needed and it can be tempting to “take a chance” on a prospective resident.  Remind yourself what happens if they move in and become a problem. By the time they are out you can eat up several months rent out of pocket. Review your procedures and background checks, etc. The worse potential renters are some of the best con artist. You are not the first landlord they duped. 

5. Run it like a business

Good business principles can minimize headaches. Document everything. Use a move-in and a move-out report with pictures to accompany your reports.  Have a handbook for the residents with your house rules, your policy on security deposits and other useful information such as utility phone numbers, etc. Include this information as part of your lease signing. Let them know up front that you enforce the provisions. Knowing what to expect, up front and understanding what they need to do to get 100% of their security deposit returned, is a breath of fresh air to residents.

 

 

How to Analyze the Market to Avoid Major Investing Mistakes

It’s easy to get caught up in the minutiae and forget to look at the big picture. Learn how macro analysis can be key to making wise investing decisions.

Home price increases show some strength

 

After five years of trailing the national trend in home prices, the Albuquerque metro area’s single-family housing market finally outperformed the nation as whole in January by posting a year-over-year increase of 6.1 percent in home prices, according to CoreLogic’s Home Price Index.

January’s 6.1 percent increase surpassed the average increase nationwide of 5.7 percent and represents the metro’s strongest gain in average home price for any month since June 2007, when it registered 7.1 percent, according to data from the Irvine, Calif.-based provider of real estate data and services.

“That’s very good news for everybody,” said Paul Wilson, president of the Greater Albuquerque Association of Realtors. “We’ve been lagging everywhere else for from a year to 18 months. What they’ve done in the past, we’re doing now.”

The national single-family housing market has experienced 35 consecutive months of year-over-year increases in home price, compared to just 12 months in Albuquerque.