I took a brief tour of a Richmond, CA investment property. The property had 6 units that need a little bit of updating. Each unit has a covered parking space. There is a small onsite laundry room.
Here’s a short video of the outside of the property:
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CNNMoney.com is reporting that rents are rising as home prices fall. According the article the cities with some of the largest price increases in the past 12 months were:
As well, they reported that the vacancy rate for apartments was just 4.9%. Even cities in the Midwest saw significant price increases.
In a recent article, I shared about a potential wave of foreclosures that is yet to come. Should these foreclosed properties hit the market, pricing on homes should continue lower.
As well, those souls that have lost their homes to foreclosure or via short-sale may be forced to rent for a period of time. This increased demand for rental properties, would put continuing upward pressure on rents.
These forces lead me to believe that it is a good time to own residential rental real estate.
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Reuters is reporting that another wave of foreclosures is about to hit the U.S. housing market. (HT: Zerohedge via BloodhoundBlog) The robo-signing settlement paved the way for lenders to resume foreclosure on many of their delinquent loans.
The Reuters’ article reports:
Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo’s rose 68 percent and Bank of America’s, including BAC Home Loans Servicing, jumped nearly seven-fold — 251 starts versus 37 in the same period in 2011. Bank of America said it does not comment on data provided by other sources. Wells Fargo and Deutsche Bank did not comment.
Market pricing is a function of supply and demand. If a large supply of housing hits the market, pricing will will have to fall to a level that demand picks up.
I wrote just yesterday about the lack of current inventory on the market. It will be interesting to see how this plays out in Contra Costa County.
If you are interested in real estate investing, please feel free to visit our website or our blog to get more information about investing. You can call me at (925) 385-8798 to discuss current investments or future plans for investing.
The Contra Costa Association of Realtors® (CCAR) publishes monthly market stats. The February numbers were quite shocking to me. Below is a graphic that illustrates the inventory of homes for sale.
Notice that the number of homes for sale under $300,000 has fallen by 52.6% from last February. Across the entire market the inventory is down 40% from February of 2011.
Now look at a graphic illustrating the months supply of inventory. This metric analyzes the number of active listings divided by the number of homes sold in that month.
In February of 2011, the market would have needed 5 months to clear the inventory of homes under $300,000. This February it would have only taken 1.7 months to clear the market of the inventory of homes under $300,000. This is a 67.2% decrease year-over-year. The entire months supply has decreased by 48% across all markets.
The market is very brisk at the current time. Properties under $300,000 are getting multiple offers. If you are looking to buy, you should be ready with a pre-approval and a competitive offer. If you are an investor, consider making an all cash offer. Many properties are going for at or above market price depending on the area and condition of the property.
The Wall St. Journal is reporting that investment property sales were up last year. Particularly the sales of single family homes increased last year according to the National Association of Realtors.
One of the reasons I believe this to be the case is that interest rates have remained low. The ability for investors to finance a significant portion of their purchase with low fixed rate financing for 30 years is an incredible opportunity. This type of financing is available for 2-unit, 3-unit, and 4-unit properties as well.
I believe, another reason for the increased demand for investment property is that investors can buy some, not all, properties for below replacement cost. This means that when new homes are built, they will necessarily be more expensive than the investor’s property in order for the contractor to make a profit or break even.
For more information about real estate investment please head over to the Maclennan Investment Group, Inc. website.
If you are interested in buying an investment property in the San Francisco Bay Area, please call me at (925) 385-8798.
The California Association of Realtors® posted the following warning about “Successful Rent” courtesy of the Apartment Owners Association to landlords about a scam being perpetrated on rental property owners and property managers:
Beware of “Successful Rent”
The Apartment Owners Association is warning of a company called Successful Rent run by a lady named Sunny who is scamming rental property owners.
Sunny calls owners who have vacancies and claims she has prospective tenants from out of the country looking for homes. She then sends someone over who fills out the rental application and gives the owner or manager a fake cashier’s check to hold the apartment. She also says that she will run the credit report for the owner for free.
On the day of move-in, she calls the owner and says the tenant found another place and they would like their money back. The owner then writes a check for the deposit amount and a week or two later, gets a letter from their bank saying the original cashier’s check was fraudulent.
For more information about real estate investment call Peter @ (925) 385-8798 or visit http://www.maclennaninvestments.com.
