Moves to the ‘Burbs? Conflicting Trends Shed Little Light

Kevin Shirley, Associate Broker (DC), GRI, ASP, e-PRO

Real estate trackers stay informed via the most recent listing and sales numbers, which is the most reliable information of all. It’s helpful for planning purposes—even though what has happened in the past is only a suggestion of how real estate in {Your Region} will perform in coming months. To get another indicator of future activity, we can watch the broader national trends, along with the analyses and predictions of the top real estate experts. But it’s not always clear which trend is emerging or which expert is right.

Case in point concerns younger families abandoning more urban areas to take up residence in the suburbs. Everyone acknowledges this group has been slow to settle into their first single-family homes, but now there is a trend that has them selling their expensive condominium in downtown core areas, then using the proceeds for down payments on a house in the suburbs.

Real estate commentators who see this trend can bring convincing logic to their argument. Condominiums in most major downtown city cores have become increasingly expensive. For the lucky owners, it means they have gained significant real estate equity. However, especially for those with growing families, the downside is that they can’t afford to grow into a larger condo in their current neighborhood. Their best option is to sell the condo and move to the suburbs, where their money will get them more real estate. Of course, the COVID-19 pandemic has contributed to this continuing trend.

Urban Studies Professor Joel Kotkin confirms that the first group of millennials, now entering their 30s, “are beginning, like preceding generations, to move to the suburbs.” It’s a trend that sounds reasonable enough … but not to everyone.

Others disagree, convincingly. In fact, it’s more than a disagreement: they propound the opposite — a movement is toward city cores. The 36th edition of the incredibly respectable Urban Land Institute/PricewaterhouseCoopers Emerging Trends in Real Estate report says, right there in Chapter 3, that “vibrant urban centers are almost a universal trend” in all 75 markets surveyed. That’s quite a few markets (compiled by 1,400 contributors). Lest anyone be unclear about the emerging trend itself, those quotes come from the section called “Continuing Urbanization Trend.”

To be fair, both perceived trends are subject to qualifications and footnotes that, it’s fair to say, muddle the picture. Under the Urban Land Institute/PwC’s Continuing Urbanization Trend heading, for instance, lies the statement, “Interviewees…cited activity in the traditional downtown area and also in suburban nodes.” In other words, perhaps the Urbanization Trend could also be sort of suburban, sort of. Hoping to spot a trend, real estate watchers could conclude that young families are moving to and fro …

In any case, you don’t have to fall into the Millennial, Gen X, GenY, Boomer, or even the Greatest Gen category to follow one distinctly local trend: if you will be looking for a new home — or have one to list — giving me a call is the thing to do!

Real Estate Investors Expect These 5 Truisms

Kevin Shirley, Associate Broker (DC), GRI, e-PRO, ASP

If you go looking for insights from successful real estate investors, depending on which areas they concentrate on, you could come up with various takes. Despite the distinct differences that separate the commercial and residential investment spheres, there are some time-worn truisms about the real-life experience that would have most investors nodding their heads —

• Expect to work at it. The myth of buying real estate, watching it appreciate, then just cashing in is a two-dimensional expectation. A typical real estate investment has to be discovered, investigated, negotiated, cared for, cared for some more — and sometimes sold — for it to ring up the profits that make real estate investing so lucrative. The best investors relish doing all of it.
• Expect to interact with a wide range of people. Math skills are essential, but people skills are up there, too. Just about anyone can do the arithmetic that produces accurate cash flow projections, but being able to network with real estate professionals and lenders — and manage close working relationships with tradespeople — are also vital for sustained success.
• Anticipate changing conditions. Economic conditions are always in flux, so market conditions are still on the move. Last decade’s real estate investment strategies don’t guarantee success today — and certainly not tomorrow. Anticipating and planning for changing conditions is work that can pay real dividends.
• Expect losses. Any investment — including real estate investments —involves some degree of risk. Serious real estate investors are those who profit the most from multiple investments over time. Necessarily, they expect that some projects won’t pan out as expected. Not expecting that to be true would be a rookie mistake.
• A fast nickel is better than a slow dime. This fifth one is ancient: It sounds like something Ben Franklin could have penned. Strangely enough, this truism can be misinterpreted. One commentator thinks it means, “Owning real estate is easy; getting paid is tricky.” I think its core meaning is that knowing just when to sell is a superb real estate investment skill.

You could say that prioritizing when to sell is what distinguishes real estate investors from most of the rest of us — real estate consumers who are contented homeowners. In my profession, I get to facilitate winning transactions for investors and real estate civilians alike. I hope you’ll give me a call for all your own real estate dealings!

The Top 7 Qualities All Good Tenants Share

To find a good tenant, it helps to know what a good tenant actually is. Here are seven qualities all good tenants have.

Finding a good tenant isn’t easy. Even someone who looks good on paper may not be the best tenant. If you keep these seven qualities in mind while showing the property and during the application process, you’ll have a good idea of what type of tenant the person you are dealing with will make.

Leasing your rental to a new tenant sometimes feels like a gamble, but it doesn’t have to be. You can reduce your risk of future tenant issues by knowing the qualities all good tenants have and looking for those in applicants as you show the property and review the application.

Just keep in mind that to avoid violating the Fair Housing Act — a costly mistake you never want to make — you will have to apply your application criteria equally to all applicants. Also, make sure that the determining factors when you make your decision are measurable, such as the income-to-rent ratio and credit score.

A good tenant is responsible.

Not only does a good tenant pay the rent and other bills on time, but he mows the grass, pulls the weeds, changes the filters, and takes care of the day-to-day maintenance issues that are his responsibility. He also alerts you to potential problems that require your attention, such as termite tubes in the laundry room.

Punctuality is your first indication of whether a potential tenant is responsible. Check his credit report, too. If he doesn’t pay his bills on time, his credit score will reflect it. Also, watch for judgments for uncollected rent and damages. A responsible tenant will pay his rent on time and in full, and of course, he won’t damage the property.

A good tenant is respectful.

If your tenant doesn’t respect you, you’re in for trouble. He will likely try to take advantage of you by paying late or asking for concession after concession. You can tell whether he’ll respect you after he’s your tenant by the way he treats you before he’s your tenant. Trust your instincts on this.

Respect isn’t just limited to how he treats you. If the tenant isn’t respectful, he may abuse the property by doing things like slamming doors or letting his children color on the walls. Or, he may simply neglect the property because he doesn’t respect you enough to care.

A disrespectful tenant may also become a neighborhood nuisance because he doesn’t respect others enough to play his music at a reasonable decibel or keep the landscaping well-maintained.

A good tenant can pay.

This is a no-brainer. If a tenant cannot afford the rent, you shouldn’t be surprised when he doesn’t pay the rent. A good rule of thumb is that the rent should not exceed 30 percent of the applicant’s income. In fact, you may want to make that one of the written criteria for qualifying to rent the property.

But, just because the rent rate is less than a certain percentage of the applicant’s total income doesn’t guarantee that he will be able to pay. He may be overextended in other ways or live beyond his means. Again, a credit check is a good indicator of how the applicant manages money. Theoretically, the better he manages his finances, the better his credit score will be.

A good tenant is creditworthy.

Saying a tenant is creditworthy is another way to say he has a good credit score. The tenant’s credit score reflects whether he pays his bills on time, how much debt he has, and his type of debt. A detailed report may also indicate whether he has had judgments against him for uncollected rent or damages.

Running credit and background checks is an essential part of the application process along with verifying the applicant’s employment, verifying his rental history, and calling on his references. If you manage your own property, you can use online services such as Tenant Verification Service or TenaCheck, to check an applicant’s credit score. (A property manager will obtain the tenant’s credit score and verify his application if you use one to manage your properties.)

A good tenant is honest.

There are so many ways a dishonest tenant can trip you up. He can obviously lie about mailing the rent, having his hours cut, or not knowing why his check bounced, but he can also lie about what happened to the dishwasher or the information on his application.

During the application process, the only reliable way to catch a dishonest tenant is to verify his application’s information. Start by requesting a copy of his drivers’ license (most tenant screening services require one along with a completed application before running a credit check). Do his name and information match what is on the application?

Next, call his employer. You’d be surprised at how many applicants don’t earn as much money as they say they do on the application. Follow that phone call with one to his current landlord, even if it’s his aunt. Has he really lived there for one year or just since he was evicted from the last rental? Finally, call any references, if listed, to get their impression of him.

A good tenant is clean.

You want someone who will take good care of your property, not someone who will leave food remnants build up in the microwave or let trash pile up on the patio. Potentially, the bigger the mess the tenant makes while he is in your property, the bigger the mess you will have to deal with when he moves out. Also, filth can attract bugs and other pests and lead to an infestation.

If you have to be careful judging the applicant on his appearance, the appearance of his car, or the appearance of his current residence if you have the opportunity to meet him there. Refusing to rent to him solely on appearances can be a violation of the Fair Housing Act. Instead, cite a measurable indicator, such as his credit score, or the fact that he lied on his rental application.

However, if he meets all of your criteria, let him know your expectations for maintaining your property and include a “cleaning” clause in the lease. The “cleaning” clause will allow you to evict based on a violation of the lease if the property isn’t kept clean.

A good tenant is drama-free.

Some tenants thrive on drama. These are the tenants that call with excuse after excuse about why the rent is late: they lost their job, their wife left, their dog died. Their life is one problem after another, and you’re invited to the party.

It’s not as tricky to spot these tenants as you would think. They will tell you about their hard knock life (in fact, good luck getting them to shut up about it). Fortunately, these tenants often have histories of late payments and evictions, so you shouldn’t have any trouble finding a reason to not rent to them. A good tenant doesn’t make excuses and doesn’t bother you unnecessarily with his life details.

 

Makeover Your Investment Property Kitchen for $500

There is nothing like looking at a design magazine or reading an inspiring article to get you excited about renovating your kitchen, but your options might feel limited on a tight budget. With so many resources available and enough elbow grease, you would be surprised how easily you can transform your kitchen.  Here are some simple ways to update your investment property kitchen without breaking the bank:

Paint

It goes without saying that paint can truly transform a room. Thankfully it is also a very cost-effective way to update an otherwise ugly space. The avocado green walls may have suited your grandma, but it’s contributing nothing but retro vibes to your kitchen right now. Aim to choose warm neutral tones as these colors give a welcoming impression and are more appealing to potential buyers.

Deep Clean

Nothing sends people running faster than a filthy kitchen. This might seem like an obvious step, but a sparkly clean space is one of the most inexpensive ways you can maintain the value of your investment property. Once your kitchen has gone through a deep clean, it will peel back layers of grime that accumulate through the years, revealing some things you may have never noticed before. If the grout was once stained but cleaned up nicely, you might be able to skip replacing it. A clean start will help you determine the areas that genuinely need updating and other areas you can save.

Update Accessories

One extremely minimal way to update your kitchen is simply to change out a few prominent kitchen accessories. This includes a new:

• spoon rest
• hand towels
• fruit bowl
• wine rack
• colorful floor mat
• decorative shelving
• pretty utensil container

Another way to freshen up the kitchen on a dime is to display fresh fruit like lemons or oranges in large apothecary jars or place a vase full of fresh flowers on your kitchen counter. Sometimes a pop of color can add so much warmth. Lisa Canning, a Toronto-based interior stylist, adds, ” Swapping kitchen accessories in and out, such as dishtowels and counter-worthy accessories, is another simple and effective way to change the color and feel of a kitchen with minimal cost.”

Get Creative

Anyone on a shoestring budget knows you have to think outside of the box when it comes to decorating. An excellent way to save while updating is to re-purpose old items. Laura Gaskill of Houzz suggests, ” Work in rustic elements. Farmhouse accents instantly add warmth and character to a bland kitchen. Replace the kitchen or pantry door with a sliding barn door, hang copper pots from a ceiling rack or bring in a timeworn antique wooden stool.” Try visiting your local thrift store to see if you can find some statement pieces with rustic appeal. Glass mason jars also add a creative solution to storing grains, cereal, and spices, while still looking pretty on display.

Add a Chalkboard

Chalkboard walls bring a fresh, functional addition to your kitchen. Since the kitchen is the home hub, having a feature that’s easy to add and remove is an excellent budget-friendly investment. Chalkboards are great for displaying your menu, sharing note-worthy quotes, and entertaining children. There are several approaches you could take:

• feature one cupboard as a ‘grocery list’ zone
• use your chalkboard as an accent wall
• frame it beside your dining table
• paint a few inside your pantry
• distinguish a space like your herb station or coffee bar

With enough creativity, the possibilities are endless and easy to paint over if you grow tired of it.

Revamp the Hardware

Changing the drawer pulls on your kitchen cabinets can give them an instantly modern new look. While focusing on cost-effective ways to update the kitchen, you should consider spray painting the old pulls. Beautyandbedlam.com shares some real-life design advice, “Why, oh why, did it take me so long to spray paint my kitchen cabinet knobs (or “pulls” for the decorators out there)? It took all of thirty minutes and makes such a remarkable difference. Seriously, if you have those infamous 80’s and 90’s ‘in your face, gold brass knobs’ take a minute and update them. You’ll add a fresh, perfect punch to your kitchen, bathroom, and bedroom…wherever you have outdated hardware (and trust me, my whole house is full of it).

Install a Back-splash

A lovely back-splash can give your kitchen a quick, updated look. Don’t think just because you have a small budget to work with that your options are minimal. Here are some out-of-the-box ideas for finding a fresh back-splash:

• pegboard
• vintage postcards or maps
• salvaged wood
• home-made mosaic

Add a Kitchen Island

You might not be able to go out and add the kitchen island of your dreams, but there are plenty of alternative use items that function as beautiful islands. Consider converting an old table, vanity, or desk into a statement piece for your kitchen. Check out your local thrift store and see what funky pieces you can find. Add a fresh coat of paint, install some new hardware, and your once-bare kitchen will dazzle. You can add cup hooks or shelving to one end for extra storage and a few barstools around the edge to provide additional seating. Kitchen Designer Nadia Hursky shares, “Have a large open-plan space with a kitchen island if possible. Buyers often want to multitask in the kitchen. They want to cook and have their kids do their homework and socialize in it.”

Factor in the Splurge

Chances are, there is one thing about your outdated kitchen that significantly bothers you the most. This is an area worth spending on; however, there are ways to cut corners and get the most bang for your buck. Narrow down the major problem areas of your kitchen and work your budget backward, considering what update will yield the best investment down the road.