In an article which appeared this month in the Los Angeles Daily News, staff writer Gregory J. Wilcox shared his opinion that the San Fernando Valley housing market will certainly improve as summer approaches: “With all of the March housing reports out now, the theme is set for the summer buying season. Prices will rise, a critical shortage of inventory will continue to constrain sales and foreclosure activity will keep falling.”

Among the positive signs in the San Fernando Valley, Wilcox points out:

• At the end of last month, Realtors had just 1,015 properties listed for sale in the Valley, the second-lowest total on record and barely above the record low of 995 listings last December. It’s a 1.5 month supply at the current sales pace.

• The median resale house price rose 13.6 percent from a year ago to $430,000. That is the highest median since $435,000 in July 2008, the association said. The median price increased $8,000 from February.

• Home sales were basically flat, 498 in March versus 502 a year ago. But they jumped 30.7 percent from 381 in February, typical for this time of year.

• Of the homes sold last month, 9.9 percent, or 69 properties, were foreclosures.

• March’s median price was 26.8 percent above the Great Recession low of $339,000 in December of 2011. But it was 34.4 percent under the $655,000 record in June of 20017.

• The condominium market took a different track last month. During March sales increased 20.1 percent to 197 units from 164 a year earlier and 20.9 percent from 163 in February.

• The condo median price rose 22.2 percent to $281,000 from $230,000 a year earlier and it increased 8.1 percent from $260,000 in February.

Another positive sign, noted by Jim Link, CEO of the Van Nuys-based Southland Regional Association of Realtors, (which tracks the San Fernando and Santa Clarita valleys is this: “Another encouraging sign is that the number of homeowners ‘underwater,’ or owing more on their mortgage than the property is worth, is declining.

“The latest stats I’ve seen is we’re down to about 20 to 22 percent of homeowners in our area (who) are still underwater,” Link said. “Now, that’s a big improvement over the 60-some percent of 18 months ago.”Good news for the Greater LA Basin is generally a positive sign for outlying areas such as the Southern California High Desert—as market conditions in the city tend to trickle down to more rural locations.

Mesa Property Management realtor Beau Cooper explains: “When the housing market in LA improves, we start to see a similar recovery in the towns we service such as Hesperia, Adelanto, Apple Valley, Victorville, Barstow, Phelan, Oak Hills and Spring Valley Lake.”

Cooper and his associates at Mesa Property Management maintain that, currently, there are still great deals to be found in the High Desert, where inventory remains high and prices are reasonable. “While you can’t usually find houses for sale under $100,000 in LA County, investors can still find affordable investment properties in the High Desert. But move now, because this will not always be the case.”

No matter the market conditions, to wisely invest in rental properties, you should hire a professional property management firm that can help you seamlessly navigate home-buying, rehabilitation, renovation and rental. Whatever property management company you choose, verify personnel are experienced in locating ideal tenants who pay on time, take care of your investment and leave your property in great condition.

The right property manager will also be able to find you additional properties, handle new purchases, direct rehab, manage repairs, keep you well informed and handle all communications with your tenants. At Mesa Property Management, we do all of this and more…taking the pain out of property management.

DeBord’s assertion is based, at least in part, on input from Cal State Fullerton economists’ 2013 mid-year economic forecast. Typically, economists expect housing to lead the economy out of recessions. But that hasn’t been the case with what pundits call The Great Recession, because the housing bubble grew so large. When it popped, the entire economic market collapsed.
He also noted that:

• California and Los Angeles have been recovering faster than the nation as a whole.

• Orange County has been “a true standout performer.”

• After bottoming out in 2008, Orange County housing prices stabilized in mid-2012

• Housing is driving the OC’s robust pace of improvement, with housing growth data more closely resembling a typical recession bounce-back.

• Since the bounce-back, prices have risen steadily (now up 30 percent from their lows.)

• The outlook is for annual price appreciation in Orange County is approximately 7-10 percent.

Although nationally and locally, job growth has failed to keep pace with rising real estate numbers, the housing recovery has started to shift the employment picture. To wit, unemployment in Orange County was 6.5 percent, which is significantly lower than the national rate of 7.6 and the California rate of 9.6 percent. Based on this, economists think the unemployment rate could eventually return to pre-recession levels, although doing so could take a good three to five years.

In Forbes, Wall Street Writer Robert Lenzner is optimistic about the numbers: “One hopeful sign is the gradual increase in prices for residential homes throughout the United States. This trend has restored some semblance of household wealth for homeowners from low income and middle income sectors of the population.”

Despite the good news, Matthew DeBord qualifies the information: “The OC is not completely out of the woods because there is a shortage of houses to buy at all price points, and especially under $500,000. And that is serving to push prices higher—a common story now throughout California.”

If you are an investor who is interested in buying rental property in Southern California, you might be better served to set your sights east of the OC in the High Desert. In cities such as Barstow, Mentone, Hesperia, Victorville and Adelanto, home prices remain low and inventory is relatively high. In fact, in a story which ran last summer in the High Desert Daily Press, staff writer Tomoya Shimura offered readers assurances that, in Victorville, “Contrary to the gloomy news you hear or read about the housing market, local real estate agents say demand for homes has shot up.”

Steve Shwetz of Mesa Property Management concurs: “As property managers in Southern California’s High Desert, we are still able to find ample inventory of great homes available at affordable prices. And that’s great news for investors who want to buy great properties at a low price point, where the demand for rental housing is high.”

No matter the market conditions, to wisely invest in rental properties, you should hire a professional property management firm that can help you seamlessly navigate home-buying, rehabilitation, renovation and rental. Whatever property management company you choose, verify personnel are experienced in locating ideal tenants who pay on time, take care of your investment and leave your property in great condition. The right property manager will also be able to find you additional properties, handle new purchases, direct rehab, manage repairs, keep you well informed and handle all communications with your tenants. At Mesa Property Management, we do all of this and more…taking the pain out of property management.

Whether you are new to the property investment market or a seasoned pro, at some point, you will inevitably face the question of whether you should cover pest control in your tenant-occupied unit. As the warm spring weather brings with it tiny tenants seeking residence indoors, we thought it timely to devote some blog space to the topic.

Before your rental home is leased, the gray area is eliminated. After all; you won’t be able to rent property that is teaming with flies, ants, roaches or mice, not to mention your house won’t meet building codes unless you clear the decks of rodents of every size. More complicated is the question of who should handle hiring and paying an exterminator if pests become a problem after your tenants move in. Left unresolved, this pesky problem could potentially cause a rift in the landlord-tenant relationship.

Opinions vary about who bears the responsibility for hiring and paying exterminators for rental units. And regulations vary from state to state. So check on applicable legislation where your property is located. In California, where Mesa Property Management is located:

“California law requires landlords to keep their properties in livable condition. Unless a tenant’s own behavior leads to a pest infestation, the landlord is responsible for paying the exterminator. If a landlord refuses to do so, tenants have several options for addressing the situation, including deducting the cost of an exterminator from the rent or simply terminating the lease and moving out.”

Wherever you live and lease property, here are a few guidelines we think might help:

·       The most important question to answer about pest control is who is responsible. While subtleties exist according to region, in general, the tenant is obligated to keep the living space clean while the landlord is responsible for maintaining the rental property so that it remains fit for human habitation and meets building code standards. Both parties, the landlord and the tenant, are responsible for preventing pest infestations.

·       If a pest problem occurs, the party that didn’t fulfill their duty to keep pests out is generally considered the responsible one. For example, if roaches or rodents show up because of uncovered food items or rotting garbage, this represents negligence on the part of the tenant.

·       When weighing options, property owners should consider the implications of failing to act once pests become an issue, regardless of who is to blame for the infestation. In other words, your ultimate goal should be to protect your investment. If you think your current tenants may be ruining your property, you might consider pursuing eviction instead of refusing to act in a way that will ultimately harm your property.

·       California law recognizes an “implied warranty of habitability” for tenants. So if the property or units become naturally infested with bugs, rodents or bees, etc to the point of (making) the home being inhabitable, the property manager must take action to eliminate pests.

·       In many states, property owners have a responsibility to provide notice to tenants when they contract with a pest exterminator. A new pest control service requires the landlord to provide notice before the first treatment and the use of pesticides. If the pest control company changes pesticides, another notice must be given to the tenant to inform of the new pesticides. 

No matter the market conditions, to wisely invest in rental properties, you should hire a professional property management company that can help you seamlessly navigate home-buying, rehabilitation, renovation and rental. Whatever property management firm you choose, verify personnel are experienced in locating ideal tenants who pay on time, take care of your investment and leave your property in great condition. The right property manager will also be able to find you additional properties, handle new purchases, direct rehab, manage repairs, keep you well informed and handle all communications with your tenants. At Mesa Property Management, we do all of this and more…taking the pain out of property management.

“At this stage,” Duncan writes, “I believe that an investment in rental property offers better prospects than either stocks or gold. The Dow Jones Industrial Average has risen 80% since its crisis trough in February 2009. Gold has more than doubled since then.

Home prices are just now beginning to move off their lows. Over time, the odds are much greater that home prices will move higher from here rather than lower.” Duncan says the real attraction of investing in rental property is not just the possibility that the property will appreciate in value but in the cash flow it will provide. “The more cash flow you have, the more financially secure you will be. Over time, if your rental property appreciates in value, then all the better!”

Many factors influence whether or not any particular property would make a good investment. Details such as location, sales price and profit expectations are important considerations for first-time buyers who are interested in acquiring rental properties. The key to successful investment is learning about the real estate market in general as well as details about particular properties of interest. So if you’re considering buying income property, consider not just the purchase price but also the projected additional costs such as maintenance and repairs relative to wear and tear:

• Take a realistic look at your finances to determine how much you can afford to invest.
• If you might require a loan to purchase rental property, consider interest rates and shop around for a loan with good terms.
• Determine where you want to invest. To select the right location, check out area amenities, crime rates and the average cost of homes.
• Check out websites that offer detailed information and photographs of available listings.
• Document the location and sales price of income properties in your price range.
• Hire experts in real estate, finance and property management. Protect your investments by surrounding yourself with competent professionals.
• Tour properties at different times of the day so you will be aware of everything that could potentially detract from the value of the home.
• Once you’ve settled on a geographic area, research rental rates of comparable homes.
• Tour the inside and outside of potential properties. And don’t forget to open closets and cabinets to see if anything lurks behind closed doors.
• Assess the condition of floors, appliances, walls and other features that are prone to wear and tear.
• Find a licensed home inspector to examine potential investment properties.
• Consider expected costs of necessary upgrades and repairs.
• Make an offer on properties that fit your budget and real estate goals.
• Try not to get emotionally involved. To think like an investor, you should be prepared to walk away instead of over-paying.

No matter how much investment experience you have, to wisely invest in rental properties, you should hire a professional property management company that can help you seamlessly navigate home-buying, rehabilitation, renovation and rental. Whatever property management firm you choose, verify personnel are experienced in locating ideal tenants who pay on time, take care of your investment and leave your property in great condition. The right property manager will also be able to find you additional properties, handle new purchases, direct rehab, manage repairs, keep you well informed and handle all communications with your tenants. At Mesa Property Management, we do all of this and more…taking the pain out of property management.

We wholeheartedly agree with a recent article which appeared in the Economy section of the Wall Street Journal. Author Nick Timiraos noted that “U.S. housing recoveries almost always have been ignited by rising demand from families and individuals looking for a place to live. (But) this recovery is different. Investors—including some big Wall Street players—are leading the way…Their role is noteworthy given that flippers and speculators were blamed for helping to inflate the housing bubble of the past decade.”

To illustrate the story, Timiraos points to a property investor named Jeff Pintar who says he wishes he had bought more properties than he did…12 foreclosed homes in 5 Southern California counties in a single day…because “things have turned around faster than anyone anticipated.” In Orange County, for example, Pintar says nearly every home listed for less than $400,000 is being pursued by institutional investor capital.

Today’s home-buying scenarios largely include investors who intend to buy homes in order to rent them out. As available homes enter the housing market, they are setting off a chain reaction which has served to stabilize prices and is changing market psychology. Fear of buying homes when prices are dropping has been replaced by the fear of missing out on cheap ones. The trend is reminiscent of the fervor buyers felt in the early 2000’s while searching for primary residences.

Timiraos’ article goes on to say, “The rush of investors into the housing market follows a long push by federal policy makers to foster the American dream of homeownership that unraveled for some people in the housing crash.”

As the picture unfolds, we’re seeing an increase in the desire for nice, affordable rental homes by those who were displaced when the housing bubble burst. Economist Christopher Thornberg explains the emerging picture: “We’re clearly at the beginning of a rental boom. We all saw there had to be a shift towards renting single-family units that owners could no longer afford. Investors played a critical role in that transformation.”

If you’ve been considering entering the rental housing market, don’t delay. Now is the time to purchase properties at rock-bottom prices, while inventory remains relatively high and interest rates are reasonable. If you’re willing to put money into modest repairs, you will be in a great position to start building an impressive and profitable rental property portfolio.

Although some investors gave the industry a bad rap during the housing bust in California during the late 1980s and early 1990s, gone are the days when entire neighborhoods full of neglected rentals became shabby communities. Sophisticated real estate professionals now favor providing upgrades to lure quality tenants and offering timely repairs to convince tenants to stay for the long haul.

With investors scooping up available homes, untidy houses with overgrown grass are a thing of the past. Steve Shwetz of Mesa Property Management concurs with Pintar’s conclusion that it’s worthwhile to use money judicially for rental upgrades, but that it’s almost always best to avoid homes with pools.

Timiraos’ article stresses that “investors are concentrating on markets that have cheap housing and where job growth—and rental demand—is revving up.” The High Desert is just such a place—with great value on the purchase price relative to the rents you can expect.  For example, the WSJ article gives an example of a $375,000 property in Lake Forest that needs attention. With $25,000 in rehab and repairs, this home would translate to a Capitalization Rate of 5. The High Desert typically sees Cap Rates 50-60% above those figures!

No matter the market conditions, to wisely invest, you should hire a professional property management company that can help you seamlessly navigate home-buying, rehabilitation, renovation and rental. Whatever property management firm you choose, verify personnel are experienced in locating ideal tenants who pay on time, take care of your investment and leave your property in great condition. The right property manager will also be able to find you additional properties, handle new purchases, direct rehab, manage repairs, keep you well informed and handle all communications with your tenants. At Mesa Property Management, we do all of this and more…taking the pain out of property management.

According to the Wall Street Journal, “The U.S. housing sector looks willing and able to be an important contributor to growth this year.” To wit, the U.S. Dept of Commerce (DOC) reports that housing-starts rose 0.8% to 917,000 in February, with single-family homes alone rising to their highest level since June 2008. Building permits increased to 946,000, which is also the best reading in almost five years.

Also positive are indicators that the number of housing starts isn’t the only home-related increase. So is the size of new homes. In fact, the DOC released data that shows the median size of a new home last year was 2,309 square feet, which surpassed the previous high of 2,259 in 2006. U.S. Census Bureau records show that the size of homes has slowly but steadily increased over the past 38 years, except during 2009 and 2010, when the weak economy led homeowners to build smaller houses.

The return to growth is welcome news for several industries, as bigger homes typically require more materials and labor input than houses with lower square footage. What’s more, the trend to buy smaller structures usually accompanies a general sense of economic caution relative to the purchase of home goods and decorator items. So the combination of more houses and bigger home size should positively impact economic activity in 2013.

Economists concur. A writer with IHS Global Insight points out that three factors support the current positive housing outlook:

• Interest rates are rock-bottom low.
• Inventories of new and existing homes are lean.
• The economy is starting to create jobs.

These 3 indicators may serve as further proof U.S. housing may be on the mend:

1. The Affordability Index is increasing
   Released by the National Association of Realtors, this measures whether a typical family could qualify for a mortgage loan on a typical home. According to the NAR, “Housing affordability is up for the month of January in the U.S. as rising incomes and lower mortgage rates coupled with easing home prices from December to January to boost affordability. Affordability is at its 3rd-highest level since the record set last February 2012.”
2. The Housing Market Index is improving
   The National Association of Home Builders (NAHB) produces this index, which is weighted and adjusted seasonally. It is calculated from ratings for present single-family sales and single-family sales in the next six months. Both these ratings are determined on a scale of good, fair and poor.
3. Existing Homes Sales/Months Supply Existing are Rising
   Considered “the premier measurement of the residential real estate market,” this figure is released by the NAR, which provides statistics on sales and prices of existing single-family homes, including condos and co-ops, for the nation and the four regions.

No matter the market conditions, to wisely invest, you should hire a professional property management company that can help you seamlessly navigate home-buying, rehabilitation, renovation and rental. Whatever property management firm you choose, verify personnel are experienced in locating ideal tenants who pay on time, take care of your investment and leave your property in great condition. The right property manager will also be able to find you additional properties, handle new purchases, direct rehab, manage repairs, keep you well informed and handle all communications with your tenants. At Mesa Property Management, we do all of this and more…taking the pain out of property management.

Even so, investor optimism about the economy pushed Asian stock markets higher Friday after Wall Street logged more gains and the U.S. job market showed further signs of strengthening. In Europe, the Stoxx 600 Europe index rose slightly to sit around the 298.90 level. Zacks.com reported similar evidences of worldwide consumer confidence, “Benchmarks added on gains yesterday riding on upbeat investor sentiment following a bunch of encouraging economic numbers.”

Richard Leong of Yahoo News concurs, “There is mounting evidence of an improving U.S. economy.” Leong attributed the uptick in attitudes to job growth: “As the U.S. jobs picture brightens despite tax increases and government spending cuts, some analysts remain upbeat about the longer-term prospects for stocks.”

Even more optimistic is pundit Erik Folgate of MoneyCrashers.com: “We really are in a time of huge economic growth, and it doesn’t seem like there is that much room to worry. The growth is a steady growth, and it’s not based on unproven profits like the dot com boom promised.”

Folgate has a point. After all; the last time stocks closed at highs for 10 days in a row was in 1996. So what, if anything, does all of this mean for real estate investors?

• A bullish trend in the stock market often begins before the general economy shows clear signs of recovery.
• People who have money in their pockets and healthy stock portfolios feel better about injecting money into the economy.
• When it comes to selling properties, confident consumers are less inclined to hang onto assets to maximize profits.  So this leads to better deals.

If you’ve been waiting for signs of economic improvement to enter the property investment game, now is the perfect time to act…before financial pundits start recommending real estate investment diversification en masse. Here are five great reasons that you should consider investing in real estate:

1. Cash Flow The most obvious benefit to investing in real estate is income generation from rental income less expenses.
2. Appreciation One of the perks of property investment is the increase in the value of the property over time, let alone when improvements are made.
3. Tax Incentives Depreciation, business expense deductions, and investing tax-free with self-directed IRAs are just a few of the ways investors benefit from buying property. We are not tax experts. So please consult with your accountant to find out what types of discounts and/or credits you may qualify for if you choose to buy income property.
4. Leverage Investing in real estate provides benefits that cannot be attained any other way. Admittedly, real estate is a high-cost investment. But it requires far less out-of-pocket expense than most other investment opportunities. For example, when you purchase stocks, you have to ante up $200,000-plus in order to buy $200,000 worth of stock. On the other hand, when you purchase real estate, a $200,000 investment may require only 20% of the total property value (in this case, $40,000). Of course the details depend on your credit history, etc.
5. Inflation Resistance Inflation resistance is part and parcel for real estate, since the monthly mortgage payment is fixed. So while prices for goods and services rise, monthly mortgage payments do not. You can actually benefit from inflation as a property investor because you will have the freedom to raise rents, which will improve your bottom line.

To wisely invest in this current economic climate, hire a professional property management company that can help you seamlessly navigate home-buying, rehabilitation, renovation and rental. Whatever property management firm you choose, verify personnel are experienced in locating ideal tenants who pay on time, take care of your investment and leave your property in great condition. The right property manager will also be able to find you additional properties, handle new purchases, direct rehab, manage repairs, keep you well informed and handle all communications with your tenants. At Mesa Property Management, we do all of this and more…taking the pain out of property management.

Because speculators are willing to sacrifice the promise of long-term profits when they begin to lose confidence in their investments, it’s common for residential and commercial properties to change hands many times over—without ever being developed. When, on the other hand, buyers hang onto their land and start purchasing fixtures and appliances to stock the structures they plan to build, this signals the fact that real hope for housing is on the horizon.

So it’s good news for property investors that:

• Whirlpool Corp. reported its financial results for the fourth quarter of 2012 in January. The company reported GAAP net earnings of $122 million, or $1.52 per share for the quarter on revenue of $4.8 billion.
  

  Jeff M. Fettig, Chairman and CEO of Whirlpool Corporation, said, “The company’s actions have clearly produced the expected improvement in operating margins, resulting in strong earnings per share and underlying cash flow.” Fettig also noted that the initiatives taken by the company, combined with improving trends in U.S. housing and growth opportunities in emerging markets create positive momentum going into 2013.

• iRobot Corp. last month reported fourth quarter revenue of $100.7 million. The company’s revenue for the full year 2012 was $436.2 million.

Colin Angle, Chairman and CEO of iRobot Corporation, said, “(Our) home robot business had a phenomenal year with revenue increasing 28% over 2011.”

In addition to Whirlpool and iRobot, the best household appliance stock projections for 2013, according to The Street include:

• Helen of Troy Ltd
• P&F Industries
• NACCO Industries
• SODAS

CNN Money writer Lisa Gibbs @Money recently reported additional stock improvements which she says reflect well on housing investment:

• Homebuilders (returning 77% through early December)

• The lumber industry (74%)

• Home-improvement stores (55%) were the top-performing industries in 2012

• The Dow Jones U.S. Home Construction ETF traded in December at a lofty 27 times projected earnings, which is nearly double the figure for the S&P 500.

The smartest way to invest in this current economic climate is to work with a professional property management company that can help you seamlessly navigate home-buying, rehabilitation, renovation and rental. Whatever property management firm you choose, verify personnel are experienced in locating ideal tenants who pay on time, take care of your investment and leave your property in great condition. The right property manager will also be able to find you additional properties, handle new purchases, direct rehab, manage repairs, keep you well informed and handle all communications with your tenants. At Mesa Property Management, we do all of this and more…taking the pain out of property management.