Investment Property – Time to Sell?

rent sign

flickr/Mark Moz

Interest in area rentals remains strong, but there has been a noticeable slight decline in area rents so far this year Even in high demand urban areas, rents have dipped slightly.  With thousands of new apartments recently completed, or nearing completion, and hundreds more under construction, rental supply may have begun to outpace demand.

If you own an investment property, you’ll likely find more competition the next time you negotiate a lease renewal. Hundreds of new apartments are available offering modern finishes, new appliances, high tech features and a long list of community amenities and services. Tenants may not be as quick to accept a rent increase or even a lease renewal when, for the same or less money, or attractive lease-signing incentives, they can move into newer digs.

If you’ve owned your investment property for 5+ years, this could be an excellent time to sell and maximize your return on investment and diversify your portfolio. The inventory of available homes for sale is at historic lows and buyer demand is off the charts. Properties are selling quickly, often with multiple offers. Your total return on investment could provide more long term income security than the monthly rental income. Even if a property needs cosmetic updates to rent or sell, that minor investment will result in a major return when you sell.

Need local market information? I live and work in downtown Bellevue – there isn’t much I don’t know and love about the city. A Realtor® for over two decades, I combine my knowledge of the city and extensive condominium experience to advise and guide clients through the process of buying or selling a home.

 

 

 

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Condo Pet and Rental Restrictions

dog and cat

Flickr/ by meknlts

Its easy to get excited about the perfect condo when searching for a home, but condos have many moving parts. One of the most important, and often overlooked issues, are the HOA rules and regulations, particularly as they relate to pets and non-owner occupied units.

Some communities restrict all pets, others allow only cats, and some have weight or breed restrictions for dogs. The Puget Sound region is rated as one of the top in dog ownership in the country  –  don’t fall in love with a condo only to discover your family pet isn’t welcome. Pet restrictions can (and do) have an impact on resale  –  buyers may eliminate communities that won’t permit them to bring four legged family members.

Rental restrictions need to be disclosed and understood up front as well. If purchasing a condo as an investment, or if you hope to rent down the road, research and understand community rental restrictions or limitations on use. Sellers should disclose rental or use restrictions at the time a property is listed for sale to avoid buyer misunderstandings, delays in closing or a failed transaction.

Condos have many moving parts. Work with an industry expert who knows the local market and is familiar with the rules and regulations that apply to ownership in specific communities. A condo expert can help you find the right condo and community for your lifestyle and investment goals and guide you through the issues specific to condominiums and HOAs.

Affordable Housing in Bellevue

The high demand for housing in Bellevue has created a robust real estate market, driving sale prices for houses and condos and residential rents up in recent years. It was great news when the King County Housing Authority announced last week it had reached an agreement with local builder Intracorp to purchase the Highland Village apartment community and preserve the apartments as an affordable place to live in Bellevue.

Intracorp, the developer who purchased the Highland Village property, had submitted plans to redevelop the property’s 76 affordable apartments into 87 townhomes selling between $650,000 and $900,000. The KCHA agreement with Intracorp to purchase the property will preserve the Highland Village apartments as affordable housing, allowing existing families to continue to live in the community. (Intracorp will sell the property to KCHA  for below appraised value.) After the acquisition of the property KCHA will renovate the property over the next two years, keeping rents at or near their current affordable levels.

Finding and preserving opportunities for affordable housing is a goal of city, county and state governments. Preserving Highland Village will allow these families to maintain their homes where there is access to quality schools, employment and public transit.

Debunking Reasons Not to Buy a Home

money

courtesy flickr  401kcalculator.org

With the lack of available inventory, rising prices and more stringent mortgage guidelines, many buyers have chosen to abandon their search for a home and continue renting. It is a challenging market, but with incredibly low interest rates, and a bit of patience and planning, it may make financial sense to start paying your own mortgage rather than your landlord’s. A recent realtor.com article, “Top 6 Reasons to Not Buy a       Home – Debunked” listed the most common reasons people don’t buy a home and the reality checks showing why that goal might be within reach.

#1  I don’t have enough for a down payment  – In reality, few buyers purchase a home with 20% down. There are great FHA and conventional loan programs available for first time buyers with 3% to 5% down payments. Grants are another option for subsidizing a down payment. These typically require taking a home ownership course. Just remember, if you put less down, you’ll need private mortgage insurance (PMI).

#2  I can’t afford a mortgage payment  –  Monthly rents in the Seattle/Bellevue areas can approach or exceed a typical mortgage payment. There are rent vs. buy calculators available online to help you determine if renting or buying makes more sense, especially if you plan to stay in a home for several years.

#3  I don’t have a good enough credit history  –  You don’t need a 750+ credit score to qualify for a mortgage. Review your credit reports to be sure they’re correct, dispute any errors (this can take 60-90 days) and over the next 2-4 months make an effort to pay down credit cards and clean up your credit picture. If you don’t qualify for a mortgage now, that picture could change for the positive in less than six months.

#4  I don’t have any credit history  –  You can build credit history without a credit card. If you rent, provide verification that your rent payments have been on time (bank statements, a statement from your landlord); do the same for utility bills.

#5  I haven’t been at my job long enough  –  While work history is important, even if you’ve recently changed jobs you can still qualify for a mortgage, especially if your new job is in the same field and income range. If you’ve changed careers, a letter from your place of employment could help in confirming your job stability and growth potential.

#6  I can’t find a home I like in my price range  –  This could be the biggest obstacle facing buyers, especially first time buyers. Be realistic  –  don’t try to buy your last home first. You should find a condo or house that feels like “home”, but this will likely be the first home of two, three or more over the next several decades. You can move up to eventually buy your last or dream home.

Housing – What Can We Expect in 2016

January calendar

Image courtesy of Flickr by Jeff Djevdet

2015 definitely saw the continuation of price recovery for houses and condominiums in Seattle and on the Eastside. If you were in the market, either buying or selling a home last year, you were aware of the historically low levels of available inventory and escalating prices in most neighborhoods. With so few homes to choose from and so many buyers in the market, multiple offers were common, time on the market declined and prices rose in most communities. So what’s in store for 2016?

The Seattle/Bellevue area still ranks high nationally as a very desirable place to live and work. With a positive employment climate, more people are relocating to the area than are leaving which will continue to add to the housing crunch for buyers and renters. Interest rates are expected to rise this year but fixed rate mortgages aren’t expected to exceed 5% – still very attractive and affordable for buyers. Area housing prices are predicted to continue to increase, good news for sellers,  but at a more modest level than last year. Depending on which forecast you read, area housing prices will increase in the range of 4.5% to 6% this year.

Home values will continue to rise but at a more typical and sustainable pace than the last few years. Its likely demand will still exceed supply but with more households returning to positions of positive equity, more homeowners may finally have the ability to make plans to move up, downsize or relocate, improving inventory levels.

Is this year the perfect time to sell or buy a home? Demand for housing is high and we’re in a very strong sellers market  –  interest rates are low which benefits buyers and investors. Rents are skyrocketing; if you’ve been thinking about buying this would be an excellent time to purchase your first home and begin to build equity for yourself rather than your landlord. This could also be the time to maximize your equity position and buy a larger home, an investment property, downsize or think about a second or vacation home. How long will low interest rates last and property values continue to increase? That’s the sixty-four thousand dollar question. Major changes to the market aren’t anticipated, so its a safe bet that getting into a home now will result in increasing equity and a solid investment.

Older Condo Rentals May Need to Upgrade to Compete

for rent signThis fall two new apartment communities (Alley 11 and Main Street Flats) opened adding 500+ new rental units to the downtown Bellevue marketplace. Early next year the second tower at SOMA and two communities under construction at Main Street & Bellevue Way will be ready for occupancy adding nearly 1,000 rental units. With more apartment communities in design review or under construction, several hundred more rental units will be added downtown in the next 2-3 years.

Demand for rentals is high in downtown Bellevue. If you’ve advertised a condo for rent in recent months its likely multiple renters were ready to sign on the dotted line. New communities command lofty rents, and while its tempting to cash in on that trend, bear in mind that those newer communities also offer high end finishes and luxury amenities and services. Renters are willing to pay top dollar for high tech, upscale finishes and fixtures, stainless appliances and granite, security, garage parking, concierge service, fitness and business centers, dog walking/grooming areas, electric car charging stations and well appointed resident lounges and view terraces for gathering and entertaining. Condo owners who previously found it easy to secure tenants and demand top rental dollars may find its difficult to rent an older condo with tired oak cabinets, laminate counters, dated appliances or fixtures and a common hallway laundry room. Improvements may be required to compete with newer, sexier apartments.

On the other hand, it’s definitely a challenge to find quality, affordable rentals in and near downtown. While not all renters demand rooftop terraces or 24/7 concierge service, what they won’t accept is a unit in poor condition that isn’t clean, well maintained, somewhat updated, safe and secure. While these are two different markets, each has its own market demand. Major upgrades will compete with new construction and provide a significantly higher rental return, but are expensive. Minor improvements may result in a modest bump in rental income but equally high demand for a quality. affordable option.