Month: October 2013

Why Aren’t the Big Homebuyers Coming to Birmingham Alabama?


Matthew Whitaker - Thursday, October 31, 2013

Perhaps you’ve heard of the huge private equity groups that are snatching up homes across America hundreds at a time. Being in the industry, I’ve heard stories from managers in Atlanta that are taking in 100 new properties in a single day. One management group has doubled in size in the last 18 months and other management groups have gone from zero to hundreds of homes.

However, in Birmingham, we have not seen these companies buying. What is that?

Birmingham simply is too small of a market to feed the beast. Birmingham’s metro area is about 1.2 million people. Compared to Atlanta that is about 1/5 the size. There simply are not enough homes for these huge groups with hundreds of millions of dollars to invest here.

Birmingham’s inventory is too old. I recently had a discussion with an Atlanta manager who described these groups model as, “They don’t want a house that was built before 1980.” While Birmingham obviously has some houses that meet this model, the majority of the inventory was built prior to 1980, and thus doesn’t meet their requirements.

Birmingham doesn’t have the “sex appeal.” Compared to traditionally hot markets like Las Vegas, Los Angeles, Dallas, and Atlanta, Birmingham doesn’t have the same kind of national appeal.

What does this mean for you as an investor in Birmingham?

Because huge real estate companies are making broad, sweeping decisions on a macro level, we, as local investors, have the opportunity to look at deals from a micro perspective and actually beat the returns of the huge, sophisticated groups.

In places like Atlanta and Las Vegas, these companies have run off the small investor who has a hope of owning 10 to 12 rentals, because they have bid up the prices on houses so high. In Birmingham, however, that opportunity is still very much a possibility.

Plus, with fewer big buyers, there is naturally less competition.

For these reasons and more, Birmingham is a great opportunity for the small-scale investor.

Location Matters in Real Estate – Especially for Birmingham Property Management


Matthew Whitaker - Monday, October 28, 2013

Virtually anyone today knows that in real estate, location is king.

A home may be perfect, but if it is too far away from work, entertainment, school, and other high-priority amenities, it’s useless to its owners. Or, a home may be located in a perfect location – but may not be the best type of home for that location.

That makes sense for people buying homes to live in, but what about real estate investors who need Birmingham property management services to handle their portfolio of assets? What role does location play in that arena?

More than you think!

A Metro Area Is a Mosaic of Communities

Picking the right homes to add to your investment portfolio is a matter of knowing enough about the surrounding area to know what constitutes a good investment for the right place.

For example, the Birmingham metro area is divided broadly into two basic areas: Birmingham proper and the Over the Mountain communities of Homewood, Vestavia, and Mountain Brook. Even within the Birmingham proper, there are several distinct neighborhoods, like Red Mountain, Southside, Crestline, East Birmingham, North Birmingham, Woodlawn, Titusville, and approximately 16 others.

Each area of the metro has its own qualities, characteristics, amenities, and traits that matter more than the homes themselves.

Understanding the local dynamic for each is a big part of making a wise investment.

Choose Wisely: Know Your Neighborhood

It helps to have a thorough understanding of each community before you make a decision to purchase a home for rental income and need property management.

It also helps to have Birmingham property managers who understand the communities in which you already have properties you need effectively managed.

If you are looking for property managers who take location to heart with an intimate knowledge of the Birmingham community, contact gkhouses.com and call 205.940.6363.

Three Tips for Buying Renters Insurance in Birmingham, AL


Matthew Whitaker - Friday, October 25, 2013

If you rent, you should protect yourself and your belongings by taking out insurance. Like a homeowner purchases homeowners insurance, you should have renters insurance – and should know a few things before you choose a policy and purchase it.

Tip #1: Inventory Your Belongings

Every tenant should have a list of what he or she owns and how much he or she realistically thinks it’s worth. This list will help you determine how much insurance you’ll need to purchase, which will affect how much you pay on a monthly basis.

This list has other uses, though. It will also help you determine what is called replacement cost coverage, which gives you compensation for what the item would cost if you purchased it today. It helps you to avoid worrying about figuring out how much your items have depreciated; instead, you get a lump sum payout.

It also helps in the event of theft. Take pictures of your more valuable assets to go with your inventory.

Tip #2: Check for Discounts

To lower your premium, you can take advantage of several possible discounts.

For example, if you install security alarms (if allowed by your lease), that will typically lower your premium. You can also benefit from discounts given to universities, trade associations, credit unions, and groups like the AARP, military veterans, and law enforcement personnel.

You can also get discounts if you install dead bolt locks from many insurers.

Tip #3: Shop Around – Create a List of Several Insurers

Before you start shopping, make sure you are shopping from a big pool instead of just picking the first insurer you find, as many tenants do.

Create a list of every insurer you can find in the surrounding area and find out how much your policy would cost from the top five or six options. This will help you weed out the overly-expensive options and select the ones that have what you need at a reasonable cost.

Above all, don’t be afraid to ask your landlord about suggestions for renters insurance, in addition to other key issues.

If you want to rent a house in Birmingham, AL and be a part of a thriving community, contact gkhouses.com and call 205.940.6363.

The IRS Throws Rental Property Owners a Bone


Matthew Whitaker - Monday, October 21, 2013

Owners of rental properties have had a hard time translating the guidance sent out by the IRS regarding deductions for property repairs, improvements and renovations for business properties.

Now, though, the IRS has issued that guidance – and owners of residential rental properties might notice a nice surprise.

As reported by inmannews.com, the IRS approved guidance that contained what is called a “safe harbor for small taxpayers”. Found in IRS Reg. 1.263(a)-3h, a qualifying taxpayer can choose to not apply the new regulations to a building if the amount the owner paid during the year for qualified expenses is smaller than $10,000 or 2% of the building’s cost.

In other words, an investor can instead elect to deduct approved expenses (such as maintenance, repairs, improvements and upgrades) instead of depreciating them over the timeframe created by the new regulations.

All cases are different, and yours may be different, but the safe harbor could be beneficial for your rental properties – especially if this past year saw a good deal of expansion and growth. Furthermore, if you converted houses to rental properties lately, you might be able to benefit.

As mentioned in the article, there are some buildings that do not apply – namely, residential rentals with an original cost or unadjusted basis of over $1 million. Additionally, there is a revenue limit. A qualifying taxpayer has to have average annual gross receipts of less than $10 million over the past three tax years.

We encourage all property owners to consult with their accountants and tax attorneys to determine if the safe harbor is advantageous. It’s not every day that the IRS announces a boon for property owners, so be sure to take advantage if you can.

For reliable property management in Birmingham, AL to professionally manage your holdings and care for your tenants, call gkhouses.com at 205.940.6363.

Avoid This Real Estate Scam: Your Home as a Fake Rental


Matthew Whitaker - Thursday, October 17, 2013

As property management professionals, we are appalled at attempts to defraud people of their hard-earned money.property management

Unfortunately, in real estate, there are many opportunities for unscrupulous individuals to take advantage of people who are simply trying to rent or buy a home the right, ethical way.

The latest real estate scam is something everyone involved in real estate should be aware of: a scheme that takes a home you put up for sale and uses it to get money from people who think it is for rent.

How the Scam Works

Let’s say a home goes up for sale, by the Smiths. The Smiths have their Realtor, Jim, put their home listing online and in print in all of the usual places.

The shady villain, Bob, takes the listing information and creates ads that say the Smiths’ home is actually for rent – and then solicits rental payments and security deposits from these unassuming tenants. Often, they seal the deal by making the would-be tenants an offer that is too good to refuse, usually a below-market rental rate.

So when Frank and Jill decide to rent this home, they send in the usual paperwork – and are even asked for their Social Security numbers and other private information – along with a check that could be worth several thousand dollars.

Of course, Bob keeps the money and Frank and Jill never get to rent the Smiths’ home – which was never for rent in the first place. Meanwhile, the Smiths are not aware of the scam until Frank and Jill come calling to move in.

Avoid the Scam With These Guidelines

To keep yourself clear of these unethical practices, RealtyTimes offered a few terrific pieces of advice:

If a price seems too good to be true, it probably is; compare the going rate for similar properties to the quoted rate;

Avoid wiring money to strangers without being sure of their identity;

Be suspicious of anyone who asks for a deposit before showing the property;

Make sure your representative (agent, Realtor, or property manager) is aware of these types of frauds and scams.

If you want property management in Birmingham, AL you can trust – and can keep you and your investment safe from fraud – contact gkhouses.com and call 205.940.6363.

Watch Out For a New – and Illegal – Property Management Problem


Matthew Whitaker - Friday, October 4, 2013

Foreclosure abuses have been in the news so often over the past few years that Americans have almost become jaded at the lengths banks and other organizations will go to when potential foreclosure properties are concerned.

This latest deceptive practice, unveiled earlier this month, is something a little more shocking.

According to a lawsuit filed in Illinois by the state’s attorney general, Lisa Madigan, some property management companies are being contracted by banks to find out if properties they are managing are vacant or abandoned.

While there is nothing inherently wrong with that – banks need to know if the properties they are underwriting actually have homeowners still in them – some companies are taking it too far. The industry’s leader, a company called Safeguard, is accused of doing pretty underhanded things to homeowners who are very much in their homes, such as:

“breaking into homes despite evidence of occupancy, damaging and removing personal property, changing locks, cutting off utilities, and bullying occupants into leaving their homes when they have the legal right to stay”.

Other states are reporting other, similar practices that are not only unethical and abusive, but are illegal to boot.

Banks are in charge of overseeing any contractors they hire to deal with homeowners, including property management companies, but in this instance, they allegedly haven’t done a very good job. The fault lies with the way the system is set up. These property management companies make more of a profit off vacant homes because they require less work, and banks make money off selling vacant homes.

Furthermore, some of these practices were allegedly conducted while the homeowners were in the middle of loan modification negotiations with the bank, which is also against the law and in violation of loan modification protections from the federal government.

Finding a property management company that is responsible and ethical – not just for property owners, but for tenants – is so crucial in today’s real estate market. There are a lot of opportunities for success, but also a lot of opportunities for situations like the above to happen.

Looking for a property management company in Birmingham that does it the right way? Contact gkhouses.com and call 205.940.6363.

Want a ‘Hidden Gem’ Real Estate Market? Try Shelby County


Matthew Whitaker - Thursday, October 3, 2013

There are many factors that go into a prime real estate market that is ideal for investors and homebuyers alike. Some of these factors are simple to understand, like location; others involve more complicated measures.

All are designed to point the way to real estate markets that are perfect for investment, especially ‘hidden gem’ markets that have a wealth of potential.

According to RealtyTrac, we have one of these hidden gem markets in our own backyard: Shelby County, Alabama.designed to point the way to real estate markets that are perfect for investment, especially ‘hidden gem’ markets that have a wealth of potential.

Real Estate in Shelby County Offers Opportunity

RealtyTrac produced a report that found the top 25 hidden gem markets in the U.S. – markets that are not on everyone’s radar for single-family homes.

It looked at a few factors, such as gross yield, median rent value, median market value, investor sales percentage, and unemployment.

Investor sales percentage refers to the percentage of investors who are institutional investors, such as banks, corporations, and funds. A lower percentage is more advantageous for average real estate investors.

According to the report, Shelby County real estate had a median market value of $157,000, an unemployment rate of 4.5% (much lower than the national average of 7.3%), and an investor percentage of 1.9%. The median rental price was $1,194 per month.

Most impressive was the gross yield of 9.1%, which is an impressive return even for this market.

Investors can use this information to find prime locations for purchasing homes and renting them to families who are in search for many of the same factors – affordable rates in places with low unemployment and hence more job opportunities.

Rising home prices and increased real estate investment in the greater Birmingham area is another piece of the puzzle that is producing an enticing picture for investors.

If you are an investor attracted to favorable real estate market conditions in the Birmingham area and need an expert property management company to maximize your return, contact gkhouses.com and call us today at 205.940.6363.