Matthew Whitaker -
Monday, December 30, 2013
Section 8 property management is a big part of the Birmingham real estate market. For that reason – and to better serve our residents – we stay up to date with the latest developments that impact our tenants and owners. Last week, Matthew Whitaker, the team leader of gkhouses.com, property manager Bryan Miles, and office manager Donnie Honaker attended the Birmingham Section 8 Landlord Meeting to discuss vital topics that involve Section 8 property management and future trends. At this meeting, we covered a variety of key issues, including:
The impact of the Alabama Uniform Residential Landlord and Tenant Act
Housing quality standards for all Section 8 properties
2013 Housing Assistance Program Payment Standards
Management and staff structure changes for Birmingham Section 8 management for 2014
Terminations of Assistance and Housing Assistance Program contracts
The first topic is perhaps the foundation of Section 8 property management. Signed into law in 2006, the act covers residential landlord/tenant relationships in Section 8 properties and governs several elements of the rental experience, ranging from how much security deposits can be to who is responsible for making all necessary repairs and renovations to properties and how to keep them in “good and safe working order”. How tenants can handle issues they believe are in violation of this act and other agreements is a big part of the tenant/landlord relationship. Unfortunately, residents are not always aware of their options. At gkhouses.com, we believe a well-informed tenant is a happy one, so it’s important for us to be well-informed as well and ensure education is available. Anyone who has any questions about the Section 8 program or how we manage these and other properties under our responsibility should contact gkhouses.com or call 205.940.636
Matthew Whitaker -
Friday, December 27, 2013
The latest figures from the Greater Alabama MLS suggest that Birmingham real estate is continuing to improve – putting the area’s market in a great position moving into 2014. According to the figures, year-to-date residential sales moved up 9.8% from November 2012, with a total number of 10,970 units. The number for this month did drop compared to November 2012’s totals, though, by 2.1%. Still, the real news for this stat is that 9.8% more homes have been sold over the past year. Also, the number of homes sold last month is well above both the three-year average and five-year average for November. More homes being sold ultimately indicates a stronger real estate market overall, which will undoubtedly give real estate investors more options to purchase affordable real estate for flipping or for rental income. Median Sales Prices Also Increase To further establish this progress, median sales prices went up as well both monthly (by 2.9% from October) and year-over-year (9.9% from November 2012). For November, the median price stood at $166,042. Existing single-family homes were priced at a median value of $155,000; for condos, that figure was $139,000; for new construction, it was $246,420. Notably, the median value of condos almost doubled from this point last year to now. Days On Market Decrease A telling figure of a real estate market’s liquidity is the days on market (DOM) figure. November’s Dom registered at 83, 17.8% lower than it was last year. In October, that number was two days lower at 81, but monthly fluctuation is largely expected. On balance, days on market have gone down over the past five years by 17.2%. The figure is a good bit lower than the national median DOM figure, which stands currently at 94. That figure is also down annually by 11.32%. Conclusions As a whole, the Birmingham real estate market is improving and becoming more liquid. More homes are selling faster and for more money. We expect these trends to continue through the beginning of 2014, and anticipate a year similar to 2013 in terms of overall performance. As long as home affordability remains high, prospects look strong.
Matthew Whitaker -
Monday, December 23, 2013
The rental market across the United States has been strong over the past seven years. As home prices plummeted, foreclosures rose, and mortgages became harder to obtain, demand for rental properties rose dramatically. Even today, after the market has cooled a bit, vacancy rates remain down and rental rates – and income – remain high. And while some predict a steady demise of the rental market as the housing market heats back up, there are several indicators that the nation’s rental market will stay strong for the foreseeable future. Younger Homeowners Are Buying Fewer Homes The American Dream, for decades, was to buy a home. Now, though, younger homeowners – burned by the worst housing collapse in American history – are understandably leery of taking on a mortgage. Homeownership as a whole fell by 1.7% from 2009 to 2012. Also, the number of new homebuyers aged 29-34 dropped by 50% from 2009 to 2011. Younger generations are important because they are the only way to replenish demand for homebuying that is passing away steadily as older generations age. If they do not purchase as many homes, demand lags – and rental demand increases. Student Loan Debt Is a Major Obstacle One big reason why young people aren’t willing to buy homes is because they can’t – thanks to stifling student loan debt. For people aged 25 to 34, unemployment is over 9% and the average debt load is $25,000. That can keep many from taking on yet another debt obligation, which means they have no choice but to rent after they graduate. Even those without major student debt might have other forms of debt as a result of the recession that keeps them from wanting to take on even more. As a result, younger Americans are fueling a rising demand for rental rates that coincides with a growing apprehension about buying real estate for personal use only a few years removed from the housing bubble’s demolition of 2007. For investors who are positioned to take advantage of what should remain a strong rental market, the next few years could be more profitable than anticipated.
Matthew Whitaker -
Friday, December 20, 2013
Real estate investors who have been following legislation in Congress were probably worried by a few proposals floating around that called for serious changes to the tax code and other regulations. Now, it appears that these proposals are on a temporary hiatus before being introduced – at least, throughout 2013. One such proposal is actually a massive tax reform bill proposed by Dave Camp, a Republican representative from Michigan who wants to slash tax rates to 25% maximum for individuals and corporations in exchange for eliminating mortgage interest deductions, property tax deductions, and similar write-offs. That bill was just shelved for mid-2014 at the earliest, though. Another proposal – this one having more of a direct impact on real estate investors – has yet to be taken off the table. Senator Max Baucus, a Democrat from Montana, is proposing to do away with Section 1031 tax-deferred exchanges. This normally allows investors to defer property taxes if they exchange “like-kind” real estate properties within certain properties. Baucus also wants to almost double the depreciation period for real estate assets, which would mean investors couldn’t write off nearly as much in depreciation expenses each year as they can now. Any incentive to discourage homeownership and real estate investment would have a negative impact on the market as a whole. Prices have risen slowly but steadily over the past six years since the crash; it would be a shame to see Congress cause a disturbance that disrupts that pattern and upsets a still-recovering market. Ironically, one area that could benefit would be the rental market. If the proposals described above go through, homeownership could become prohibitively expensive again for homeowners. If this happens, the rental market would do what it started to do in 2008 – turn red-hot again. It’s always wise to stay aware of what is going on in Congress. Ultimately, we think small-scale real estate investors are actually well-positioned to benefit themselves regardless of if the bill passes or not. The potential for growth and profit in the rental market – as well as optimistic expectations for real estate through 2014 – mean that savvy investors can flourish no matter what Congress does.
Matthew Whitaker -
Friday, December 13, 2013
Affordability is one of the key factors behind how successful a real estate market is and will be. According to recent reports, homes in Alabama remain affordable – and that trend should continue into 2014. State Affordability Index Declines but Remains High The latest reading from the Alabama Statewide Housing Affordability Index (produced by the Alabama Center for Real Estate) declined from last quarter but still remains strong. The reading – 206.8 – declined 8.8% from the second quarter of 2013, and is also down by 14% compared to where we were at this point in 2012, but still remains high and well above the median rating of 100. In essence, a family with a median income of $53,600 has roughly 2.3 times the income they would need to purchase a home with a median price of $135,761. For people looking to buy homes – whether to use them as primary residences or turn them into income-producing rental properties – that is good news that bodes well for Alabama residents. It’s particularly strong given the national index is only 162.8. That means homes in Alabama are 27% more affordable than many other places in the country. What This Means for Investors The index calculates affordability for homeowners looking for primary residences, but the implications can be extrapolated for investors looking to make a purchase. Increased affordability ultimately means higher profit margins for investors who are looking to purchase homes in Alabama and turn them into rentals. There’s another dimension to it, however. Affordability is calculated in part based on household income. If household income increases, families and individuals have more income to spend on renting – which thus supports higher monthly rent rates and therefore more revenue potential. For more information on how affordability in Alabama provides potential boons for investors, contact gkhouses.com or call 205.940.6363.
Matthew Whitaker -
Wednesday, December 11, 2013
The Jefferson County bankruptcy debacle has been a huge black eye for the area and the state as a whole for the past few years, ever since it was announced in 2011 that the county would enter into the second-largest municipal bankruptcy in U.S. history. Now, two years and $4 billion later, the saga is drawing to a close. Will the end of the Jefferson County bankruptcy case signal a fresh new start for investment? Our guess is yes – and that means solid potential for our area’s economy. How Leaving Bankruptcy Will Impact Real Estate What makes the bankruptcy case so important for local real estate is due to how closely tied the entire case was to real estate from the beginning. After all, one of the main issues that resulted in billions in debt came with a program designed to overhaul and expand the county’s sewer system. Due to mismanagement and corruption – both on the state level and with the banks who underwrote the debt used to pay for the program – costs ballooned and the county was saddled with billions in fees, interest charges, and principal payments. This ultimately led to the first of several planned sewer rate increases for homeowners throughout Jefferson County that rankled many. What this means, though, is that Jefferson County will undoubtedly be more attractive to outside investment, particularly developers, corporations, and other institutions that will start looking harder at Jefferson County as a possible destination for their projects. More projects and expansion equals more jobs. More jobs mean more people in need of housing – either because they’re relocating or because they want to upgrade from their current home. More demand for housing will eventually boost home prices and rental rates. Birmingham real estate is already on an upward trend for 2014. Now that the stigma of bankruptcy is leaving the county, future economic development could be on its way – to the benefit of us all.
Matthew Whitaker -
Monday, December 9, 2013
Some people think the hardest part about running a successful real estate venture is finding and buying the right property. While that’s important, the hardest part about turning a profit and generating steady revenue comes after the buy – when you have to manage the property and take care of a million details that come at you all at once. For this reason, hiring professional property management in Birmingham, AL is strongly recommended. Here are three crucial reasons why turning to the pros is always a wise idea. Collecting Rent from Tenants The lifeblood of a rental property venture is monthly rent. Collecting rent can be laborious, difficult, and awkward – not to mention, at times, frustrating. Multiply this by the number of tenants you serve and you can see how going about the business of collecting and depositing rent payments each and every month by yourself can get out of hand. Staying in Compliance Managing a property also requires an in-depth knowledge of regulations at the local, state, and federal levels, not to mention additional housing codes and other regulations that can impact anything from how the property looks to how disabled individuals can access it. What makes this even more difficult for a non-property manager is the fact that these regulations change on a regular basis – requiring even more of your time. Taking Daily Care of Tenants and Buildings Finally, perhaps one of the most valuable services a professional property manager offers is something more valuable than gold: time. Instead of spending your time each day taking care of tenants, overseeing maintenance on properties, dealing with vendors, and showing vacant properties to prospective tenants, you can have a manager handle all of the above and then some. The real estate market in Birmingham has a wealth of potential for investors who want to maximize their investment. Take advantage of this opportunity by leveraging property managers to execute critical services and save your time and effort. Contact gkhouses.com today or call 205.940.6363.
Matthew Whitaker -
Friday, December 6, 2013
Good news for the Birmingham real estate market is still rolling in through the year-end. Not only were total home sales up 12% year-to-year in October, but there were positive numbers across the board. Several key metrics have showed improvements over last year, including the 7.6% increase in median sales price, up $11,350 from last October’s $150,000 mark. Additionally, there was a 10% decrease in the number of days a property stayed on the market. Positive year-to-year improvements isn’t the best part — the improvements look even better when compared to the five-year averages for several metrics. Current property owners look to benefit from this success directly through increased property values, and a higher demand in the marketplace. Homeowners aren’t alone in their bright future, though, as investors could cash in on the success of the market as well. Making a Move in Birmingham Real Estate The demand for Birmingham is high, and the prices are increasing. The new year is also expected to ring in some improvements, so what better holiday gift to yourself than the rental property that you’ve always wanted? The rise in median price could also bring gains in return on investment for those looking to flip single-family residential properties or turn homes in premium locations into revenue-generating rental properties. Birmingham is definitely improving, whether we’re talking about the revitalization of downtown, or the improving nature of the residential real estate market. With several growing residential communities and suburbs, and a residential market virtually free of major corporate investors, the competitive environment is just right in Birmingham. For more information on how you can invest in a residential property to produce income through rental, or simply how you can move your family closer to the home you’ve always wanted, contact us today at gkhouses.com or call 205.940.6363.
Matthew Whitaker -
Thursday, December 5, 2013
It may be the American dream to own your own home but, when home values can barely keep up with inflation, the dream is out of reach for many families. This would explain why roughly one-third of households in America rent and don’t buy their homes, according to the national Multi-Housing Council. As an owner or manager of a rental property, you know there’s no perfect tenant—but attracting families to your property often leads to long-term renters. Many times families want to find a place to settle into, if not for the long haul, at least for a number of years while the kids are in school. If your rentals do fine attracting the single crowd, employ these simple strategies to improve your property’s appeal to families. Invest in Some Construction Many times a family’s deciding factor between properties is space. Not just square footage, but accommodating everyone with a little space to call his or her own. Building an additional bedroom or expanding an existing one can make your rentals more attractive to families. Bathrooms are often an issue with families as well. Add a second or third bathroom to increase a rental’s appeal to families. Supply Neighborhood Info What the surrounding area has to offer can make a particular rental more attractive to a family. Always have information on hand that demonstrates how renting from you will benefit a family. Get informative printouts from local schools and the area school district. Design your own hand-outs that list nearby points of interest, such as how to find the local public library, number and location of community parks, shopping and dining facilities close by and greenway areas for jogging and biking. All are enjoyable features that help attract families. Provide Amenities They’ll Value Even if the local community doesn’t have a lot to offer beyond close proximity to schools, you can provide amenities that encourage families to choose your property. Swimming pools, game rooms and play areas appeal to families. One or more of these features are typically on-site for multiple-family dwellings, and they enhance single-family properties, too. Install high-quality playground equipment such as a heavy-duty swing set, slides and a merry-go-round in the back or side yard of a single-family home (make sure to secure them with concrete footings). Convert extra space in the garage or basement into a cable- and Internet-ready game room. You don’t have to equip this room entirely, but it’s easy to find foosball and pool tables at reasonable prices online and in secondhand shops. Landlord Beware Just because it’s a family who wants to rent from you doesn’t mean that there won’t be problems. First impressions can be deceiving, so even though you want to attract families to rent your properties, you should still perform background and credit checks as usual. It’s also helpful to obtain rent collection information from a landlord’s association to help ensure you don’t come up against renters who tend to pay all their bills but skip out on rent.