What you can expect from the rental market in 2012-2013

Becoming a Landlord
What you can expect from the rental market in 2012-2013

With a new wave of foreclosures imminent, housing affordability at its highest level ever, and rental rates at an all-time high, one could argue that there has never been a better time to become a property investor. No matter where you are, opportunities exist all across the nation.

A recent report published by HomeVestors of America named the best 100 U.S. markets for investing in rental properties for the third quarter of 2012. It shows California taking the lead as home to 12 markets among the top 100. Florida represents itself nicely with nine markets making the list, while Texas is home to seven, and North Carolina boasts a surprising five top markets.¹

“From Honolulu, Hawaii to Providence, Rhode Island, a total of 39 states and the District of Columbia are represented among the 100 hottest rental markets”. ¹

Another study compiled data from consumers searching Homes.com and ForRent.com and discovered more than 31 million searches for rentals in the second quarter of this year, an increase of 20% from the beginning of 2012. The majority of these searches are for Southern cities seeing a drastic rise in employment and an economy improving at a faster rate than the rest of the country. ²

“The data shows Southern housing markets leading the way in rental searches, with seven of the top ten cities located in the South. Houston and San Antonio top the list. Rounding off the top five are Atlanta, Orlando and Chicago.  Although Phoenix came up seventh on the list, the city saw more than a 55 percent increase in home searches.” ²

The rental squeeze

In spite of affordable prices coupled with record-low interest rates, tighter lending restrictions and comparatively high unemployment rates have left otherwise potential homeowners unable to enter the market. In some markets, families who have been displaced due to foreclosures or short-sales are having a difficult time finding comparable rentals. Many displaced families don’t want an apartment - they want a house.  During the past two years the nation has seen a substantial exodus of families transitioning from homeownership to renting.

The nationwide homeownership rate continues to drop, a persistent trend which began in 2007, and falling to its lowest level since 1996. The need for shelter and mortgage delinquency rates point to a continued reduction in homeownership as displaced owners look to enter the rental market.

According to the Zillow Rent Index, 69.2 percent of metro areas showed increases in year-over-year rent values, compared to home price gains in only 7.3 percent of those same areas.  In January, 73,767 distressed homeowners received permanent loan modifications while banks foreclosed on 78,734 homes, according to the national non-profit organization Hope Now. ³

The rental market is flourishing, and rents are on the rise.

As competition for limited rental space surges, rising rent is becoming the norm across the country.

Nationwide, median rents rose an average 3 percent from January 2011 to January 2012, but home values continued to fall, declining 4.6 percent during that period, according to Zillow’s January Real Estate Market Reports.  Zillow found rents rising as much as home prices fell, including in Chicago where rents were up 9.1 percent, year-over-year, while home values fell 10.4 percent. In Minneapolis-St. Paul, MN metro, rents rose 11 percent and home values fell 8.1 percent. ⁴

Philadelphia, Baltimore, Washington, D.C., Portland, St. Louis, Miami, Denver and San Francisco all saw year-over-year rent increases coupled with declining home values. ⁴

Is now a good time to become landlord?

Signs point to yes. With houses becoming more affordable, many current landlords and those looking to enter the investment market are looking to cash in and buy properties while they are still at an all-time low. 

“The flourishing rental market is the silver lining to the nation’s housing downturn. The inaugural ZRI [Zillow Rent Index] shows us a healthy and growing rental market across the majority of the country, even as home values continue to fall,” said Zillow’s chief economist Dr. Stan Humphries. ⁴

The slowly recovering U.S. housing market together with high inflation, despite having an adverse effect on the economy, have lead to advantageous conditions for rental real estate investing, and a more promising market for current landlords.

In fact, the rental market is so strong that even large corporations are finding ways to invest. In January of this year, GI Partners announced a $250 million investment in Waypoint Real Estate Group, an Oakland based company that buys foreclosed homes at a discount and then rents them to tenants.  Although Waypoint currently operates in San Francisco and Southern California, the company plans on expanding to other markets, which may include Phoenix, Atlanta, Chicago, Las Vegas, and markets across Florida. ⁵

“Single-family rental investment represents the fastest growing real-estate asset class,” said Waypoint founder Colin Wiel. ⁵

Taking the plunge and protecting your investment

Even in a surging rental market, it’s important to remember that prospective renters are still susceptible to the economic conditions that lead to the increased demand for rentals.

“David Hicks, HomeVestor’s co-president, says while there are good investment opportunities in every one of the top 100 markets, investors would be wise to take into account other dynamics for the ideal timing to enter the market. He cites job growth as a key indicator of a market prime for investment.” ¹

Choose wisely. Remember that the current market is to the advantage of landlords, giving you the option to select your tenants from a large pool of prospects. It’s also crucial to perform credit checks on applicants.

Hiring an attorney to draft a proper rental agreement, in conjunction with property and rent default insurance, can help you toward making your investment equal a positive cash flow. A new rent default insurance called Aon Rent Protect, offered by worldwide insurance broker Aon plc (www.aonrentprotect.com), offers rent recovery in the event of tenant non-payment if confronted with a tenant who becomes unemployed or stops paying rent for other reasons. The insurance also offers up to $1,000 for certain legal expenses in the event of an eviction. A number of statewide REALTOR® Associations, including the Colorado and California Associations, have backed the Aon Rent Protect product. “Aon Rent Protect is a cash flow safety net for a residential landlord,” said Robert Baily, Chairman of REBS, a subsidiary of the California Association of REALTORS®.

Take the plunge

Home prices are down, and interest rates are at historic lows. With the top 100 rental markets spanning the nation, now is a great time to get your feet wet in real estate investment. To make the proposition even more tempting, rent prices are up in a market that gives landlords the option to be selective when choosing a tenant.

If you need a more selfless motive to enter the market as a landlord, consider that experts believe that property investment may aid in the recovery of the housing market in the country’s urban areas. As investors snap up foreclosures, strong markets are showing a gradual return to pre-recession levels.

¹ Bean, Brian and Hardin, Tim. California Top Market for Rental Homes. The Press-Enterprise, March 23, 2012.
² Rentals: The Future of Real Estate in California? First Tuesday Journal Online, February 12, 2012.
³ Lazo, Alejandro. Southern California Rental Market Getting More Expensive. The Los Angeles Times, April 12, 2012.
⁴ Perkins, Broderick. Two-Study Mashup Reveals Rental Market Boom Towns. Realty Times, March 22, 2012.
⁵ Timiraos, Nick. A Market Builds for Single-Family Rentals. The Wall Street Journal, January 11, 2012.

All descriptions, summaries or highlights of coverage are for general informational purposes only. Please consult your policy for actual governing terms and conditions.

This article is provided for general informational purposes only and is not intended to provide individualized business or legal advice.  The information contained in this article was compiled from sources that Affinity considers to be reliable; however, Affinity does not warrant the accuracy or completeness of any information herein.  You should discuss your individual circumstances thoroughly with your legal and other advisors before taking any action with regard to the subject matter of this article.    

Dec 3rd - Free Landlord Workshop

Last chance to register. Don't miss out.

You and your guest are invited to Landlord/Business workshop.

We are thrilled to open the registration process for our December 3rd workshop. This seminar will be held in the Community Room in Manchester NH and it is free.

WHEN

Monday December 3th
7:00pm-9:00pm

WHERE
Community Room
50 Queen City Ave.
Manchester, NH 03103

MORE INFO

Call 603-232-9195

Doors open at 6:40 so you can meet other people with your same interest. 

This event will be covering:

• Developing your business plan.
• Having and getting a management philosophy to being profitable.
• Learning how to manage time so you can have a balanced life.
  

Early Bird Registration Open  

Please forward this invitation to someone you know that is interested in learning more about being a Landlord or business owner.

Looking forward to seeing you there!

Thanks
Rick Blais

New Hampshire Contractors Fined

For immediate release:

Manchester, November 21, 2012.

For more information, contact:

Kate Kirkwood.

Kate@KKirkwood.com

603-781-4304

New Hampshire contractors fined

The EPA/HUD lead safety rule (renovate, repair and paint) has been in effect since April of 2010.  However, we have just recently seen significant enforcement resulting in FINES in New Hampshire and surrounding States.

Recently two NH contractors have been fined:  Exterior Images of Derry,  and  Kindred Painting, LLC of Dover

  

Hundreds of children are lead poisoned every year in New Hampshire, and currently there are approximately 10,000 lead poisoned children in our schools. The damage from this disease can be permanent, and includes brain disorders, learning disabilities, and decreased IQ.

Negative economic impacts in New Hampshire associated with lost future income, special education costs, and juvenile justice service costs linked to childhood lead poisoning have been estimated at between $141.1 and $345.7 million dollars annually

  

Lead poisoning is a serious problem in NH, and particularly in Manchester, where an estimated 14,000 homes still contain lead paint. As a "universal screening community” All children in the city of Manchester should be tested for lead at ages one and two. The same is true in any community, where a child  lives in a home that was built before 1978, and there has been renovation, or there is a chipping, peeling paint. Approximately 1/3 of children who are lead poisoned in New Hampshire, live in a home  that was renovated within the past six months.

New England housing stock is the oldest in the nation; over 138,000 homes and apartments in New Hampshire communities were built before 1950 and thus may contain lead paint hazards.

Anyone who disturbs lead paint in a home, or child occupied facility built before 1978, must take an eight hour training course, and be able to show proof of that certification. The regulation is written so that you must assume the paint in a pre-78 building is lead paint unless you can prove it is not.

The course teaches you how to test the paint to determine whether or not it is lead, to notify the property owner and tenants of the existence of the lead paint, to work safely around the toxic paint, and to clean up the lead paint chips and dust when the job is completed.

Contractors who do not follow the rules risk fines up to $37,500 per violation.  Recently two NH contractors have been fined:  Exterior Images of Derry,  and  Kindred Painting, LLC of Dover

For more information about Lead Paint Safety Certification, getting your child tested, or other lead paint or healthy homes concerns, contact:

Ben Kirkwood, ben@kkirkwood.com, 603-716-2901 or visit www.lead-edu.info

November 2012 Landlord News

Free Lead Paint Safety Classes in December

NOTE: Self-employed and Small Businesses with less than 5 employees only

Dates: December 7th and December 15th

Where: Rochester NH

Certain restrictions apply, so you must call to register. The participants can get the full EPA/HUD required 5 year training with certification in just one 8-hour class and will leave there with their certification in hand.

Contact Ben Kirkwood at 603-716-2901 or 603-203-6430 (cell)

251 Pine St.

Manchester, NH 03103

K.Kirkwood Consulting, LLC

ben@kkirkwood.com

New England Health and Housing Lead-Edu

www.lead-edu.info

____________________________________________________________________

EPA Fines 16 Firms Nationwide for Violations of the Lead Renovation, Repair and Painting Rule

WASHINGTON – The U.S. Environmental Protection Agency (EPA) today announced 16 enforcement actions for violations of the lead-based paint Renovation, Repair and Painting Rule (RRP). A priority for EPA’s enforcement program is to protect children, and others, from exposure to lead dust that can cause lead poisoning by ensuring that renovators follow the RRP and other lead rules. Lead exposure can cause a range of adverse health effects, from behavioral disorders and learning disabilities to seizures and death, putting young children at the greatest risk because their nervous systems are still developing.  Story continues here

------------------------------------------------------------------------------------------------

October 31. 2012 5:45PM

Landlord guilty of faking de-leaded properties

By Gary V. Murray TELEGRAM & GAZETTE STAFF
gmurray@telegram.com

WORCESTER �  A Leicester landlord was placed on probation yesterday after pleading guilty to charges of falsely representing that his property was in compliance with lead paint laws.

Jaroslaw Pianka, 42, of 5 Dolge Court, Charlton, pleaded guilty Thursday in Worcester Superior Court to two counts each of uttering a false document and single counts of larceny and reckless endangerment of a child. The charges related to properties Mr. Pianka owns on Dale Court in Leicester and allegations that he submitted fraudulent certificates of compliance and falsely represented to tenants that his properties were fully de-leaded.

Prosecutors from the office of state Attorney General Martha Coakley charged that Michael and Heather Bennett and their three children, two of them under age 6, rented one of the properties in February 2007, after being told by Mr. Pianka that it had been de-leaded. The family later conducted a home lead test, which revealed the presence of lead.

An inspection prompted by a complaint to the local Board of Health revealed several areas of the property that contained lead and Mr. Pianka was ordered to take remedial action.

In April 2009, Mr. Pianka gave the family and the health board a copy of a letter of full de-leading compliance, according to prosecutors. He also gave the family a copy of the Massachusetts Tenant Lead Law Notification and Certification Form, which the law requires landlords to provide to tenants before renting them properties built before 1978, prosecutors said.

Officials from the Massachusetts Department of Public Health's Child Lead Poisoning Prevention program later determined the documentation to be fraudulent, according to the attorney general's office.

Prosecutors also alleged that a letter of full de-leading compliance for a second property Mr. Pianka owned on Dale Court in Leicester contained the name and license number of an inspector who did not exist.

Assistant Attorney General Andrew A. Rainer recommended to Judge Richard T. Tucker yesterday that Mr. Pianka be sentenced to 18 months in the House of Correction with 59 days to be served and the balance of the sentence suspended for three years with probation.

The prosecutor further recommended that Mr. Pianka be ordered to pay $9,825 in restitution to the Bennetts, to perform 50 hours of community service entailing "actual physical work" to clean up the environment, and to have all of his properties inspected for lead paint and, if necessary, de-leaded.

Mr. Pianka's lawyer, Michael G. Cashman, urged the judge to spare his client from a jail sentence and place him on probation.

Judge Tucker placed Mr. Pianka on probation for three years. As conditions of probation, Mr. Pianka was ordered to provide a list of real properties he owns and their usages to the Department of Public Health and the Probation Department, to report any changes in ownership or usage to both agencies and to follow the health department's instructions concerning inspections and any de-leading.

The judge also ordered Mr. Pianka to perform a total of 300 hours of community service in the area of environmental concerns

This story out of Philadelphia: Lead paint rule baffles landlord

October 21, 2012|By Al Heavens, Inquirer Columnist

Click here for article

Make no mistake about it, David Dietz enjoys being a landlord.

He tries to be a good one, often showing up within minutes of a call from a tenant at any of six units in Northeast Philadelphia or the two in Atlantic City when a toilet clogs or a sink drips, changing a room color from his standard neutral or white to potato-chip yellow or Medici blue.

These days, however, Dietz finds himself a bit, well, confused, as he puts it. The reason for his confusion, apparently shared by many small landlords in Philadelphia, is city Ordinance 1000-11A, effective two months from Sunday.

This ordinance requires that all rental property owners who start new leases after Dec. 21 to families with children under age 6 certify that these properties have been tested for lead paint.

If evidence of lead-paint contamination is found in housing built before manufacture of this paint was banned in 1978, it must be remediated. Properties built after 1978 do not require testing.

Dietz understands the concerns the law is attempting to address. Data from the Centers for Disease Control and Prevention show 6 percent of all children ages 1 to 2 years and 11 percent of African American children ages 1 to 5 years have blood-lead levels in the toxic range.

Lead is a potent poison that can affect individuals at any age, according to the American Academy of Child and Adolescent Psychology.

Children are especially vulnerable because their rapidly developing nervous systems are particularly sensitive to the effects of lead, the academy said.

Elevated lead levels are found in about 1,000 Philadelphia children a year, or 3 percent of those tested, city health officials said during hearings on the bill.

Understood, yes, but with 60 days to go, "No one has explained how the law works," Dietz said.

Landlords such as Dietz fear they will be liable if the "dust-wipe test" to determine the presence of lead dust on surface areas of the apartment isn't done properly and the lead test on a tenant's child - routine in annual physicals for children up to age 6 - shows elevated levels in their blood.

An elevated blood-lead level in a child is defined as 10 or more micrograms of lead in a deciliter of blood.

The city said this July 17:

To be valid, the certificate must be based on an inspection conducted by a lead-risk assessor or certified lead-dust sampling technician no more than 24 months before the lease is signed.

Free Business and Landlord Workshop - Oct 15th

You're Invited to attend a Free Business & Landlord Workshop

Hosted By Rick Blais

When:  Monday, October 15th 2012 from 7:00 - 9:00 pm
Where: Community Room, 50 Queen City Ave Manchester NH

REGISTER NOWClick to Register

Come and Learn About:

• New Tax Law changes coming your way in 2013
• What to do before December 31,2012
• Would Real Estate help me to Retire
• Making smarter business decisions to increase my profitability

A CPA and Attorney will be on hand to help prepare you for the 2013 tax changes. To reduce your taxes in 2013 you need to start today.

Don't get caught behind the 8-ball.  We will also have a discussion session to help with your own concerns. 

QUESTIONS or to register by phone?  
Call: 603-641-2527

September 2012 - Landlord News

2013 Tax Changes - Should You Be Worried?

Here's a look at the laws that could wage a multipronged attack on your wallet and what you can do to prepare.

Over the last few years, Americans have observed a series of tense Capitol Hill confrontations over what to do about expiring tax code provisions. While each was significant, their scale is dwarfed by what looms at the end of this year: Without action by Congress, Americans face a half-trillion-dollar tax hike in 2013, according to the Tax Foundation — a scenario so ominous that pundits have nicknamed it "taxmageddon."

While the outcome is anyone's guess, it's important to know what hangs in the balance and what it could mean for your bottom line.

What's at Stake	What Will Happen Jan. 1 Without Federal Action
Income Tax Brackets	Rates would rise for all Americans, with the lowest bracket rising from 10% to 15% and the highest from 35% to 39.6%.
Dividends	Would be taxed at the same rate as ordinary income — instead of today's 15% maximum rate.
Capital Gains	Maximum rate would rise to 20% from the current 15%.
Personal Exemptions and Itemized Deductions	Would be reduced for high-income taxpayers.
Alternative Minimum Tax	Without extension of temporary exemptions, more taxpayers will be snared by this parallel tax system.
Payroll Taxes	Individuals' share of Social Security taxes would return from the temporary 4.2% to the normal 6.2%; the self-employment tax rate would rise from 10.4% to 12.4%.
Estate Taxes	Maximum estate tax rate would rise to 55% from the current 35%; estates valued at more than $1 million would face the tax (versus the current $5 million).
Education Savings	The annual contribution limit for Coverdell Education Savings Accounts would fall from $2,000 to $500 and qualified withdrawals would no longer be permitted for K-12 expenses.
Child Tax Credit	Falls from $1,000 to $500.
Married Couples Filing Joint Returns	The expiration of features meant to address a so-called "marriage penalty" would reduce standard deductions and push many couples into higher tax brackets.
Adoption Credits Joint Returns	Maximum credit would fall from $13,360 to $6,000 and would only be available for special needs children.
Other Popular Tax Breaks Joint Returns	Deductions for state and local sales taxes, higher education and teachers' classroom supplies all would vanish.

An Uncertain Outcome

Adding to the pressure, members of Congress will grapple with these broad-reaching tax expirations while facing national elections and a related showdown over what they should do when the nation again reaches its debt ceiling. That is the amount of debt the federal government is authorized to have.

Don't expect a clear outcome anytime soon. "Frankly, it's unlikely that it will be resolved before the November 6 election," says Dan Brouillette, USAA senior vice president for government and industry relations.

A bipartisan group of senators has begun working in hope of having a package ready shortly after the election, Brouillette says. "However, their final product could depend on the election results."

As with many recent tax issues, the nation may get a short-term extension that preserves our current tax rules for a few months or a year or two. On the other hand, the resolution could come in the form of sweeping tax reform that stretches to other tax provisions that aren't set to expire.

Personal Tax Moves: Watch and Wait

Given all the uncertainty, what should USAA members do? J.J. Montanaro, a CERTIFIED FINANCIAL PLANNER™ professional at USAA, offers three pointers:

• Don't make big bets. "Since the outcome is unpredictable, I wouldn't make any big financial decisions based on an assumption that the tax debate will end one way or another," Montanaro says.
• Tighten your budget. "If your taxes do increase, you'll be better prepared. If they don't, you'll have a windfall to dedicate to other goals," he says.
• Stay alert. "Once the outcome is known, you may find it will be to your advantage to make some financial moves this year — under the current tax law," Montanaro says. For example, if you face higher capital-gains rates in 2013, it may be better to sell some of your investments sooner rather than later.

If recent experience is any guide, Congress may not act until late December. That means you may have limited time for those late-year decisions. Until then, keep monitoring for timely updates.

___________________________________________________________________________________________

NH Healthy Homes Conference - The Second Annual NH Healthy Homes Conference

Monday, October 15, 2012
Concord Courtyard by Mariott
Grappone Conference Center
Concord NH from 8:am - 4pmTo register online: Click here

_______________________________________________________________________________

Nashua - Section 8 can be a valuable, but uncertain choice for Bronstein Residents