NorthEast Georgia's Premier Real Estate Resource from The Classic City to Lake Hartwell

Act Now to Take Advantage of the National Tax Rebate and Avoid Paying Rent Throughout Your College Student's Education

According to the Office of Student Financial Aid at the University of Georgia, average room and board expenses in Athens total $615 per bedroom / per month – 12 full months per year.   Meaning, rental houses in Athens easily pay for themselves while continuing to hold or increase their value throughout the entire period of ownership.  This is why I have always recommended putting investment money in rental houses in Athens, Georgia.

The intelligence of these investments applies particularly to parents of college students because of the vast savings afforded by purchasing rather than renting in a college town (an area where I have more than a little bit of experience)!

My parents helped me to purchase my first Athens rental property while I was in college at UGA.  The rent paid by my roommates covered the mortgage payment, escrow payment, and my portion of the utilities throughout my entire time in college.  Once out of college, I moved out, and used the additional rent to supplement my income while I settled into my career.  Then, I sold the property for a $35,000 profit over purchase price and used that money to pay for the down payment on my first home with my husband (and new car!).  

By being smart investors, my parents made a one time cash investment of $7,000 and avoided paying rent or utilities for my entire time in Athens – an average savings of $7,300 per year.  Eventually, they also received their cash investment back, AND their intelligent investment provided me a nest egg to promote a strong start to my future without having to get into debt over my head or ask them for financial assistance. 

In addition to the obvious savings my parents enjoyed, and the nice start in life afforded to me by their investment, home ownership allows your young adult to build crucial positive credit while helping them learn responsibilities of home ownership. 

If you have a son or daughter in college, I highly recommend looking into purchasing a property in the area.  And, do it NOW to make another $9,800 that is only available for purchases by December 1st.  Even if you lend the downpayment money to your college student - as long as they are first time home buyers living in the house, they should qualify for both the National $8,000 tax rebate and the Georgia State $1,800 tax rebate offers.  But, they have to CLOSE before December 1^st to qualify.

With that benefit, plus the rent, your savings should total ~ $40,000 over a 4 year college career.  This doesn’t even take into account the savings for students who are currently on out of state tuition – add another $80,000 in savings for that.  Plus equity gained and profit after the sell . . . for any family with the means, this investment simply makes good sense!

The market is perfect for Buyers right now, thus the property should produce a very nice profit in the future if they wait for a good market to sell. 

In review:  assisting your college age son or daughter with purchasing before December 1^st rather than renting or living in the dorms saves an immediate $9,800; another $7,300 per year throughout their college careers, and then saves your young adult incalculable amounts in interest rates, fees, PMI, etc. by having a nice nest egg for their future.  All the while, teaching them crucial lessons for adulthood.  This is what I call a win-win-win-win situation!

Contact Julie Haley TODAY to make the most intelligent investment you can make in your child’s future.  Julie@JulieHaley.com

One More Time - Let's Revisit the Tax Rebates Available before It's Too Late!

The good news is, the real estate market seems to be rebounding nicely.  If you've read my post regarding the 28 properties which went under contract or sold in Hart County during the last 2 weeks of September, this is not news to you!

While not the only factor, I feel the national first time home buyers tax rebate is at least partially responsible for this rebound.  Unfortunately, this offer only applies to properties which close before December 1st. 

If you think you still have plenty of time to find the right property and close before December 1st, think again!  Mortgage lenders are trying to mend their evil ways, resulting in slower processing, knit-picking underwriters, and more intensive due diligence inspections.  The average first home purchase closing takes 4 weeks.  If the property you choose is a foreclosure or short sale, it could take twice as long. 

With the tax rebate currently applying only to properties which close by December 1st, home buyers hoping to take advantage of this offer need to be under contract THIS WEEK to assure receiving the benefits.

This is why I want to make issues of the tax rebate offer my theme for the next week . . .

I won't go over the basics of the program again.  To find out those basics, see my earlier blog under the archives for "April 2009" or under the category "Buyer's Tips".  However, I will add that I have since read articles which indicate the tax rebate can be used in instances where the lender borrows money from a family member to purchase!  Naturally, you still need to check with your personal tax advisors, but the information has come from reliable sources.

This is important for newlyweds and particularly college students to research.  I've written articles in the past describing the many positive aspects for parents of college students to purchase a house rather than spending money on rent.  I am going to pull that one out of the archives, dust it off, and repost it over the coming days.  If you include the GA State tax and the National tax rebate, your college student can make enough in rebates by buying a house to pay for a full year of college tuition AND books, with more left over!  Now - more than ever before - it is crucial for parents of college age sons and daughters to discuss the possibilities of purchasing over renting!

As this is my theme for the next two weeks, you will find articles going in depth on even more of these subjects every day.  In the meantime, contact me at julie@juliehaley.com for further discussions.  Don't wait; the clock is ticking fast . . .

The Effect of the Tax Rebate on the Property Ladder, You, Me, and Even Retirees in Florida

Most have heard Congress recently passed legislation allowing qualified first time home buyers to receive a tax rebate of up to $8000.  Google it and research the benefits if you haven't done so.  Unlike the 2008 version, this rebate doesn't have to be repaid!  It is an excellent attempt to propel the real estate business, and I believe it will have a great impact if the lenders will use their bail out money to join in the common cause.  Even though the tax rebate only applies to first time buyers, sellers of all types of properties should see benefits as a result of the property ladder . . .

What I've been terming "The Property Ladder" works like this: 

• Once a first time home buyer is preapproved for a loan, they choose a Realtor and buy a starter home listed for sale - the first wrung of the ladder.
• The seller of the starter home is then able to buy a bigger house perfect for their growing family - the next wrung up the ladder. 
• This allows the Seller of the bigger house to finally move to the house of their long-term dreams - the next wrung up the ladder. 
• The seller of the dream house is now a happy retiree able to buy a condo in Florida, a lake home in Hartwell, and a couple of rental investment homes in Athens, because the rental income pays their annual tax bills on all of the properties.

When the banks began pulling back on funding and tightening regulations, more first time home buyer candidates had to remain renters.  Thus all of the houses on the market took longer to sale: from starter homes to family homes to dream homes, and so on, and so on. 

Obviously, moving the starter homes is an opportunity for everyone hoping to sell; Family homes, Florida vacation homes, Hartwell Lake homes, townhomes, mansions, and even double wides.

Because qualified applicants can file for the rebate with their 2008 tax return, or lower their withholding over the course of 2009 by the amount of their rebate, the tax rebate should help first time home buyers with the expenses of first time home ownership.  I should also add that most foreclosures can be purchased at large bargains, but often need work.  This requires cash many starter home purchasers don't have after going through the process of putting a downpayment on a house.  This rebate allows them a means to pay for those repairs and begin filling some of the empty shells left after foreclosures.

Oh - and parents of college students - I think this is a great opportunity to experience the benefits of the rebate while helping your college student grow their credit:  Gift them the funds and assist them with Buying the house they currently rent (I even know of a lender who can offer 100% financing!).  Have their roommates continue to pay rent, and your college student will have an income stream while also receiving a tax rebate that will assist in their education expenses for the year - and gain equity throughout their college career.   BTW: A good property management company (All Hart Realty, for instance!), can manage it for him or her, collect rents from their roommates, pay the mortgage, make repairs, and simply cut a check to your son or daughter every month for you.

Encourage everyone you know who can benefit from the tax rebate to buy!  Contact me anytime, and I'll work with you to help determine your elligibility.

Getting Into Real Estate Investing

The recent collapse of U.S. home sales ripped a magnnificent bloom off the rose of real-estate investing - yet buying rental properties remains one of the best ways for middle-income Americans to build wealth.

While the rich have a phalanx of investment advisors to help enrich them further every day, middle-class Americans struggle just to set aside enough money in their 401(k)s to secure their retirement. Real estate offers people of modest means an opportunity to build wealth in an investment they understand as homeowners and renters themselves.

Studies show residential real-estate investing returns an average 10 percent a year equal to the historic return for stocks. While it requires active management of the asset on the investors part vs. more passive stock investing, it can be a rewarding part-time evdeavor for those with a long-term horizon.

Leveraged investing

The beauty of real-estate investing is the ability to leverage other peoples money namely, a mortgage lender and renters to make money yourself.

Take, for example, a $200,000 home bought with 10 percent down and $8,000 in closing costs. If that property appreciates just 4 percent a year over 20 years, its owner turned a $28,000 investment into a $238,000 gain.

That scenario assumes the rental income covers annual mortgage, insurance, property-tax and maintenance costs, which it may not fully in the early years. But it also doesn't factor in the likely surplus annual income in future years when rising rents more than cover fixed-mortgage costs.

Tangible assets

Unlike stocks, whose value is a matter of perception and psychology, real-estate is a tangible asset and not just a paper stock certificate (which shareholders don't even get in hand anymore.)

The steadily rising cost of constructing new homes protects and ultimately enhances the value of existing properties. That underlying strength is even greater in metro areas with a limited supply of developable land within easy commuting distance to the center city, or well-located properties in desirable coastal and resort communties.

Direct control

Unlike the crapshoot inherent in the stock market, real-estate investors have direct control over their investments. They set the rents, chose tenants and decide what improvements to make and when.

Rather than staking their fortunes with corpporate executives who can fail to grow their companies for any number of competive reasons, real-estate investors manage their own assets based on local market conditions.

Limited risks

Real estate values can and do fall as homeowners discovered in Texas in the 1980s, southern California in the early 1990s and various regional markets throughout the U.S. more recently.

Still, long-term investors seeking to build wealth for their retirement years face little downside risk with real estate. America's rising population, shrinking household sizes and unfortunately high divorce rate are expected to fuel increasing demand for places to live for decades to come.

Diversification

Real-estate values generally don't rise and fall in tandem with stocks and sometimes are countercycical, moving in the opposite direction. It is what's called in the investment world a non-correlated asset.

Diversifying investment holdings into rental properties provides a solid counterbalance to stack-laden 401(k) and IRA accounts. A modestly priced three-bedroom rental home won't ever produce the explosive returns of a sensational stock like Google, but itowner can sleep easier knowing his or her future isn't wholly dependent on the whims of the stock market.

Immediate returns

Self-anointed real estate gurus trumpet the fortunes to be made in buying and flipping distressed and foreclosed properties, a fast-buck strategy that's especially difficult to pull off in weak housing markets where properties languish for sale for months on end.

Still, smart shoppers can reap immediate paper gains on many properties. At any given time and especially in today's markets with mounting supplies of unsold homes individual home sellers forced to sell quickly due to job relocations, divorce or unemployment may accept below market prices to facilitate a sale.

Improvment potential

Just as with the purchase of a first home, it's wise when shopping for rental properties to buy the least expensive home in the nicest possible neighborhood.

The benefit of the owner is threefold: The better the neighborhood, the less likely the number of rental properties available within it. Improvements made to modest homes in nicer areas will yeild higher rents. And an owner could simply maintain the property during the rental period and improve it just prior to sale to bring it up to the neighborhood standard and command a much higher asking price.

The benefit of inflation

As Americans have seen in the last year, rising mortgage rates hurt home sales and property values. Yet rising rates can have a postitive impact on owners of investment properties.

The fewer number of people buying homes, the greater the number of renters, which heightens demand for rental properties. Since real-estate investments tends to slow as mortgage rates rise, that also means a tighter supply of rental homes in the near term.

Interest rates hikes are the Federal Reserve Bank means to curtail inflation by making borrowing money more expensive. Inflation benefits real-estate investors who can raise rents accordingly. So while long-term appreciation suffers from mortgage-rate spikes, the immediate rental income picture improves.

Tax-deferred gains

Real-estate investing provides the same type of tax-deffered advantage of 401(k)s and IRAs. Owners aren't taxed on the appreciation in a homes value until the time of sale, and even then, they can forestall paying taxes by rolling their gain into another property.

Add to that another major tax advantage: The ability under new tax law for owners of rental properties to move into the home for a total of two years in any five year period and pay no tax on up to $500,000 in capital gains. That opportunity argues for buying rental properties you can comfortably inhabit yourself for a spell.

Of course, real-estate investing is not without its downsides, which should all be heavily weighed:

Illiquid investment

Unlike stock, which could be sold with the push of a computer keystroke, selling a home can take months and entails considerable costs. If you're not prepared to tie up your money for years to come, best that you don't.

The difficulty in quickly selling a property, however, can work in investors favor by discouraging them from running scared in a market downturn and dumping properties. The relaative liquidity of stock investing is actually one od it's greatest drawbacks, since countless investors sell in a panic, often at a loss, when an individual stock or the overall market drops.

Cash-flow constraits

The ideal situation is to buy properties whose income covers monthly carrying costs i.e. mortgage and insurance payments, property taxes and maintenance costs. The run up in the U.S. home values in recent years has made that scenario difficult to attain in many regional markets.

New investors today may find temselves in a negative cash-flow situation, meaning the rent doesn't cover their costs. Investors must be prepared financially to cover any such shortfall or risk losing the property if yhey can't foot the bill, a crushing problem now facing many recent investors saddled with properties they expected to flip for a fast profit.

Sporadic income and unforeseen costs

However good the cash flow numbers may look going in, rental-property owners risk being squeezed on several unforeseeable fronts.

The first is tenants who fail to pay their rent in a timely manner or not at all, leaving it to the owner to cover their mortgage payments out-of-pocket until they collect the back rent or evict a deadbeat. Next is a tenant turnover, which can leave a property unrented for several months a year, during which time the owner must also cover the tenant. Lastly, there are major repairs that must be done--such as a new roof, furnance, or septic system that can cost well into the thousands of dollars that must be ponied up on the spot.

Landlording

Finally, there is the angst of trying to do right by tenants who don't reciprocate in kind. Some may destroy the home you're improving for them without any intentions of raising rent.And all catch on fast to when you're playing them.

Tenant selection is a skill rental-property owners need to master since it has an immeasurable influence on success. If you're suspicious by nature and have a short fuse, this is no business for you. If you can learn to recognize great tenants who'll carry your mortgage for years and care for your property as if it were their own, you may be wise to never raise their rent and reap tremendous long-term benefits.

The Fastest Way to Profit From The Coming Apartment Boom

Unless you have been living in a lead cave OR have not been seeing or reading anything that I have been doing over the last few months you have heard me talking about the coming Apartment Boom...Frankly the apartment boom is starting right now.

One of the things that Ican tell already is the demand for apartments. I am looking over the reports for this month as I type this newsletter and I am seeing our occupancy climbing substantially. Not only that but I am also seeing our rents go up as well. By the way, this is a profitable formula.

When you come around to this kind of success in the apartment property world it is not unlike the most basic economic model. Supply and demand.

There is growing demand and not enough in terms of supply. That is the way it is here in the Heartland of America anyway. I have already told my top clients in their own newsletter that this will be a very, very good year. 2008 will be profitable for many of them.

My Question to you is what are you doing about this? Where are you putting your investments? Specifically, I would be thinking IRA kinds of investment here too AND NOT just relegating this to 'regular' investing.

The big companies wil come in and pay more for the properties because in most cases they require less of a return and there is pressure on them to get money into the market. Again, this is experience talking...It really comes down to simple American capitalism.

Buy low now, tend the properties so they will produce more cash flow in the next 3-4 years and then sell the properties to the folks that are lathered up. Sounds a bit simplistic I know, but, this is how the process works. The interesting part of all this is profiting off of other peoples problems.

Whether you like it or not a lot of money is made when one persons problem becomes another persons opportunity. That is exactly what is going on here. People need a roof over thier head and many of them will not want NOR be able to buy a home in the coming years. This is a problem obviously for the mortgage and real estae industryin general. BUT, for us investors this is opportunity...

I Discovered Successful Apartment Investment Strategies Could Be Easliy Duplicated

But, here's the crudical point-Successful Investors Simply Do the Opposite Of What 99 percent Of All Other Investors Do! And then it dawned on me, everyone was putting his or her efforts into the typical investments we all hear about. Most investors ignored apartment properties or commercial investment properties here in Iowa or the Midwest.

Most investors concentrated on the wrong investment. In fact, after working with successful apartment investors, I've discovered three easy steps to learning and (more importantly) using these and commercial investment property investment secrets:

1. How to easily locate that "instant profit" apartment property.

2. The secret to profitably managing your apartments and commercial investment property (without all the tenant headaches and managment hassles).

3. How to sell a huge profit and legally avoid any capital gains taxes. If you didn't know, investment apartments allow you to defer capital gains legally. You don't have to pay Uncle Sam a dime when you sell, IF you know what you're doing.

What you'll discover as an apartment property investor will contradict many things you've been told, taught or schooled regarding investments in real estate.

Using the Wisdom of the Ages to Put Today's Market in Perspective

Lately, in our real estate firm, all visitors have had only two questions: When is the real estate market going to "straighten out" and when is the lake going to get back to full pool?

As All Hart Realty celebrates our twentieth year of selling property on Lake Hartwell, we are experiencing regular cycles typical for this area:  The local real estate market naturally adjusting from a seller's to a buyer's market, and the lake shrinking and swelling with the rain levels.  We see these two natural cycles are being not so different, leading us to marvel at John Steinbeck's's wisdom when he wrote:

     "There would be five or six wet and wonderful years . . . and then the dry years would come . . . and it never failed that during the dry years the people forgot about the rich years, and during the wet years they lost all memory of the dry years.  it was always that way."

Rarely are words spoken which so accurately span decades and prove how little has changed with the turn of the century.  Those words were as true when Steinbeck wrote them in 1952 as they are today.  We like to incorporate the wisdom of such thinkers with our knowledge gained during the past two decades to assist Sellers and Buyers through these natural market adjustments.

For Sellers in today's market, patience is a virtue.  we understand the past five or six wonderful boom years for sellers have created lofty expectations, but the following is a fact of this market adjustment: you have a great deal of competition.  The market is inundated with motivated sellers and spec houses.  Your property must be accurately priced and maintained in pristine condition to have the best chance of showing better than your competition.  The All Hart Realty team can help you with current and accurate pricing, provide recommendations for the most cost effective improvements, and construct an aggressive professional marketing plan to offer you the best opportunity to move your home as quickly as the environment will allow.

For Buyers and Investors in today's market, there are many wonderful purchasing opportunities available.  Interest rates are excellent, lenders are offering a bevy of loan programs - including 100% financing, and competition among sellers is fierce.  NOW is the time to buy - before the market begins to cycle back to sellers.  Quite simply - Make An Offer!  We also stress the wisdom of being prepared to hold onto a property for up to five years.  While the natural adjustment has diminished the opportunity for "quick flips", there are true deals available now, and the rental market in both residential and commercial arenas is strong enough to allow for the proper maturation of your investment, or end-user purchase.  If you don't like the hassles of Property Management, allow All Hart's professional property management team to manage your rental and send you a monthly check.

Our decades of experience in the Lake Hartwell area have provided a unique perspective for weathering the recent fluctuations in our market, and we enjoy sharing this knowledge with our clients and customers to help you take full advantage of the opportunities associated with these cyclical adjustments.  While there are very few guarantees in real estate - as in weather - we know land is the only thing we cannot make more of; thus it is a commodity in demand.  Visit All Hart Realty on the square in downtown Hartwell anytime.  Let us share our real estate knowledge with you . . . while we talk about the weather!

Getting Into Real Estate Investing

The recent collapes of U.S. home sales ripped a magnificent bloom off the rose of real-estate investing--yet buying rental properties remains one of the best ways for middle-income Americans to build wealth.

While the rich have a phalanx of investments advisors to help enrich them further everyday, middle-class Americans struggle to just set aside enough money in their 401(k)s to ensure their retirement. Real estate offers people of modest means an opportunity to build wealth in an investment they understand as homeowners and renters themselves.

Studies show residential real-estate investing returns an average 10 percent a year ? equal to the historic return for stocks. While it requires active management of the asset on the investor?s part vs. more passive stock investing, it can be awarding part-time endeavor with a long-term horizon.

Leveraged investing

The beauty of real-estate investing is the ability to leverage othe peoples money, namely, a mortgage lender and renters to make money for yourself.

Take, for example, a $200,000 home bought with 10 percent down and $8,000 in closing costs. If that property appreciates just 4 percent a year over 20 years, its owner turns a $28,000 investment into a $238,000 gain.

That scenario assumes the rental income covers annual mortgage, insurance, property-tax and maintenance costs, which it may not fully in the early years. But it also doesn't factor in the likely surplus annual income in future years when rising rents more than covers fixed-mortgage costs.

Tangible asset

Unlike stocks, whose value is a matter of perception and psychology, real estate is a tangible asset and not just a paper stock certificate (which shareholders don't even get in hand anymore!). 

The steadily rising cost of constructing new homes protects and ultimately enhances the value of existing properties.That underlying strength is even greater in metro areas with a limited supply of developable land within easy commuting distance to the center city, or well located properties in desirable coastal and resort communities.

Direct control

Unlike the crapshoot inherent in the stock market, real-estate investors have direct control over their investments. They set the rents, choose tenants and decide what improvements to make and when.

Rather than staking their fortunes with coporate executives who can fail to grow their companies for any number of competitive reasons, real-estate investors manage their own assets based on local market conditions.

Limited risk

Real estate values can do and fall as homeowners discovered in Texas in the 1980s, southern California in the early 1990s and various regional markets throughout the U.S. more recently.

Still, long-term investors seeking to build wealth for their retirement years face little downside risk with real estate. Americas rising population, shrinking household sizes and unfortunately high divorce rate are expected to fuel increasing demands for places to live for decades to come.

Diversification

Real-estate values generally don't rise and fall in tandem with stocks and sometimes are countercyclical, moving in the opposite directions. It's whats called in the investment world a non-correlated asset.

Diversifying investment holdings into rental properties provides a solid counterbalance to stock-laden 401(k) and IRA accounts. A modestly priced, three-bedroom rental home won't ever produce the explosive returns of a sensational stock like Google, but its owner can sleep easier knowing his or her future wealth isn't wholly dependent on the whims of the stock market.

Immediate returns

Self-anointed real estate gurus trumpet the fortunes to be made in buying and flipping distressed and foreclosed properties, a fasted-buck stragey that's especially difficult to pull off in a weak housing market where properties languish for sale for months on end.

Still, smart shoppers can reap immediate paper gains on may properties. At even given time and especially in todays market with mounting supplies of unsold homes individual home sellers forced to sell quickly due to job relocation, divorce, or unemployment may accept below-market prices to facilitate a sale.

Improvement potential

Just as with the purchase of a first home, it's wise when shopping for rental properties to buy the least expensive home in the nicest possible neighborhood. The benefit for the owner is threefold: The better the neighborhood, the less likely the number of rental properties available within it .Improvements made to modest homes in nicer areas will yield higher rents. And an owner could simply maintain the property during the rental period and improve it to sale to bring it up to the neighborhood standard and command a higher asking price.

The benefit of infaltion

As Americans has seen in the last year, rising mortgage rates hurt home sales and property values. Yet rising rates can have a positive impact on owners of investment properties.

The fewer the number of people buying homes, the greater the number of renters, which heightens the demands for rental properties. Since real-estate investment tends to slow as mortgage rates rise, that also means a tighter supply of rental homes in the near term. 

Interest rate hikes are the Federal Reserve Bank means to curtail inflation by making borrowing money more expensive. Inflation benefit real-estate investors who can raise rents accordingly. So while long-term appreciation suffers from mortgage-rate spikes, the immediate rental income picture improves.

Tax-deffered gains

Real-estate investing provides the same type of tax-deferred advantage of 401(k)s and IRAs. Owners aren't taxed on the appreciation in a homes value until the time of the sale and even then, they can forestall paying taxes by rolling their gains into another property.

Add to that another major tax advantage: The ability under present tax law for owners of rental properties to move into the home for a total of two years in any five year period and pay no tax on up to $500,000 in capital gains. That opportunity argues for buying rental properties you can comfortably inhabit yoursely for a spell.

Of course, real-estate investing is not without its downsides, which should all be heavily weighed:

Illiquid investments

Unlike stocks, which can be sold with the push of a computer keystroke, selling a home can take months and entails consirderable costs. If you are not prepared to tie up your money for years to come, best that you don't.

The difficulity in quickly selling a property, however can work in investors favor by discouraging them from running scared in a market downturn and dumping properties. The relative liquidity of stock investing is actually one of its greatest drawbacks, since countless investors sell in a panic, often at a loss, when an individual stock or overall market drops.

Cash-flow constraints

The idea situation is to buy properties whose rental income covers the monthly carrying cost, i.e. mortgage and  insurance payments, property taxes and maintenance costs. The run up in U.S. home values in recent years has made that scenario difficult to attain in many regional markets.

New investors today may find themselves in a negative cash-flow situation, meaning the rent doesn't cover their costs. Investors must be prepared financially to cover any such shortfall or risk losing the property if they can't foot the bill. A crushing problem now facing many recent investors saddled with properties they expected to flip for a fast profit.

Sporadic income and unforeseen costs

However good the cash-flow numbers may look going in, rental-property owners risk being squeezed on several unforeseeable fronts.

The first is tenants who fail to pay their rent in timely manner or not at all leaving it to the owner to cover their mortgage payments out-of-pocket until they collect the back rent  or evict a deadbeat. Neaxt, is tenant turnover, which can leave a property unrented for several months a year, during which time the ownet must also cover the nut. Lastly, there are major repairs that must be done--such as a new roof, furnace or septic systemthat can cost well into the thousands of dollars that must be ponied up on the spot.

Landlording

Finally, there's the angst of trying to do right by tenants who don't reciprocate in kind. Some may destroy the home you're improving for them without any intention of raising the rent. All catch on fast to when you're paying them.

Tenant selection is a skill rental-property owners need to master since it has as immeasurable influence on success. If you're suspicious by nature and have a short fuse, this is no business for you. If you can learn to recognize great tenants who'll carry your mortgae for years and care for your property as if it were their own, you my be wise to never raise their rent and reap tremendous long-term benefit.

Report Reveals 8 Signs of a Real Estate Recovery

Encouraging signs that a meaningful recovery in the overall U.S. housing market could begin later this year are found in HouseHunter's fourth quarter, 2007, "Current Market Reports" survey of member-agents and in year-end statistical data compiled by the National Association of Realtors (NAR).

Just consider: Monthly inventory totals of unsold homes are down slighlty for the first time in more than a year; buyer-seller ratios are stabilizing; an increasing number of member-agents reported that their sellers received 95% of more of their asking prices; monthly home sales are up slightly; and nearly two-thirds of U.S. metro areas reported median home prices increases in the third quarter.

Conversely, HouseHun's lastest random survey also found that average home price appreication has decreased and that the average amount of time required to sell ahouse has increased to more than 90 days in many areas.  Daily doses of negative news in the media continues, and unresolved mortgage liquidity problems are also keeping many potential buyers on the sidelines.

Many real estate observers agree that the key to once again achieving a more balanced market between buyers and sellers is a rebound in consumer confidence, which fell 20 points in recent months.

"What's badly needed now is a more postiive attitude amoung both Realtors and their customers at the local level because that's where the recovery will begin in earnest," said Michael Bearden, president and CEO of HouseHunt, Inc., a customer-oriented Internet firm that provides free information and services to homeowners, home buyers and home sellers in 47 states through nearly 2,000 member-agent and it's primary Web site, HouseHunt.com.

"Our survey and NAR data suggests that many potential buyers are waiting on the sidelines to see if they can gauge the bottom of the market," Bearden continued.  "No one wants to buy on their way down.  However, consumers who take a long view of real estate home values should recognize that the selection is great right now, and if they can find a home they would really like to live in, price appreciation will occur over time.  No market bottom is required unless you are an investor looking for a quick resale."

Lawrence Yun, NAR chief economist, experts existing home ssales to hold fairly steady, then rise later in the year and continue to improve later this year.  "On one hand, we have a pent-up demand from the four million jobs added to our economy over the past two years of sale decline, "he said last week in a news release.  "On the other, consumers continue to wait for additional signs of market stabilization.  As a result, the exact timing and strength of a home sales recovery is a bit uncertain.  A meaningful recovery is existing home sales occur as early as this spring, or it may be further delayed toward late 2008."

Yun noted earlier: "Mortgage interest rates are near historic lows and the most shows decelerating price declines along with modest reduction in the number of homes on the market.  Our inventory is still high and futher in prices may be required in some asrs to induce buyers back into the market."

Preliminary NAR figures for November show that there is a 10.3 month national supply of unsold existing homes across America.  This is down from a 10.7 month supply in October and from 10.4 in September with a 6.6 month supply of insold homes.

Here's a sample of HouseHunt member-agent quarterly survey reports:

Tim Rogers of Keller Williams Advantage Realty in State College, PA, exclusive HouseHunt member-agent for State College, said that first-time buyer activity in the $125,000 to $175,000 price window continues to be strong.  He reports more buyers than sellers with a limited supply of unsold homes.  Average time on the market is 90-120- days.

John Toay of Prudential Burroughs & Chapin Realty in Myrtle Beach, SC, exclusive HouseHunt member-agent for Murrells Inlet, SC, reported average time on the market of 60-90 days and prices down 10-15% from a year ago.  Most activity is from repeat buyers from out-of-state looking to retire there.  Average home price is $225,000.

Mike Sherrill of Better Properties Estate in Lakewood, WA, exclusive HouseHunt member-agent for Quantico, VA said buyers currently enjoy an advantage: "There has not been a better time to purchase a home in this decade.  Foreclosures in Prince William County are up substantially, there ia an ample inventory to choose from, prices are down, interest rates are low, offers are negotiable, the ecomony is good and we are adding 50,000 new jobs a year."  Averaage home price is $300,000.

Fourth quarter, 2007, national HouseHunt survey showed:

Average Buyer-Seller-Ratio-Fifty-nine percent of members-agents in the U.S. reported more sellers than buyers; 27% said more buyers, and 14% said it was about even.

Regional exceptions were reported in Flordia (71% more sellers), Chicago Metro ( 71% more sellers) and the Midwest ( 70% more sellers).  A year ago the national ratios were: 52% more sellers, 28% more buyers and 20% said it was about even.

Average time on the Market - Sixty one percent of memeber-agents said it now takes an average of 90 days or more to sell a home in the U.S.  Another 30% said it takes at least 60 days.  Regional exceptions are: Flordia (95% said 90 days or more); Chicago Metro (90% said 90 days or more); the South (84% said more than 90 days); and the Midwest (76% said more than 90 days). A year ago, 84% percent of member-agents in the U.S. said it was taking more than 60 days, on average, from listing to sale.

Average Sales vs. Asking price - Member-agents reported that 54% of sellers are getting 95% or more of their asking prices, on averge, across the country. Regional exceptions include: Flordia (only 19% getting 95% or more); Texas and the Midwest, where 70% are getting 95% or more, on average.  A year ago, 65% of member-agents in the U.S. reported their customers getting 95% or more.

Average annual Price Appreciation - Thirty -four percent of member-agents reported positive price appreciation, on average, in the U.S. in the past 12 months.  Fifteen percent reported no changed and 51% reported negative appreciation.  This compared with 53% positive appreciation and 47% negative appreciation a year ago.  Biggest appreciation reported in any region in the fourth quarter of this year was Flordia (85%), Chicago Metro (71%), and California (70%).

Multiple Offers - Member-agents reported that only 23% of their clients are receiving multiple offers from buyers.  Regional exceptions include Chicago Metro (9%), Flordia(10%). and California(17%). A year ago the U.S. average was 24%.

Buyer Activity - Repeat and move-up buyers represent 61% odf sales activity in the U.S.  Regional exceptions include Texas (87%), the Midwest (32%0, and the West (75%), the Northest(47%), and Chicago Metro (28%).

Unsold Inventory - Sixty three percent of member-agents reported that inventories of unsold homes in the U.S. are up over a year ago. California (76%), was the highest and Texas (41%) was the lowest.

Free Fall: A Rapid and Uncontrolled Decline By John Adams

I recently heard a news report on MSNBC that home values were in a "free fall."  Not being exactly sure what a free fall is, I looked it up.

A "rapid, uncontrolled decline" was the meaning I settled on, and because I heard it on the network news, I believed it must be true.  After all, if you see it on the news, it must be true, right?

If, in fact, home values were in a free fall, that would be very bad for those of us who own real estate, especially those who have invested a lot in their own homes.  And since the average American family has a large part of their net worth tied up in their house, a "free fall" in home values could spell trouble for many reading this column.

Thus I was pleasantly surprised when the most widely trusted home price index for the United States was released last week.  It showed that, in fact, home prices are not in free fall. Instead, it showed  that Georgia home values for the fourth quarter of 2007 were, in fact, higher than they ever been.

The Office of Federal Housing Enterprise Oversight (OFHEO) is the agency charged with supervising Fannie Mae, both government chartered "market-makers" for home loans. In that capacity, they have access to remarkably widespread data regarding homes sales and refinancings from all over the United States.  Their website is ofheo.gov and this data is from the Home Price Index.

Here are the facts:

* OFHEO's all-transactions House Price Index (HPI), which includes data from home sales and appraisals for refinancing national HPI rose 0.1 percent over the latest quarter and 0.8 percent for the year of 2007.  The "all-transactions" index is the broadest measure of home values available anywhere.

I realize that a national average home price increase of less than one percent is statistically no increase at all, and not much to celebrate.  But after reports of my home's value being in a free fall, an increase of 0.8 percent nationally begins to sound pretty good.  Remember that this number includes California, Flordia and all the states where recent unsustainable price run-ups are being paid back today.

* The states with the greatest rates of appreciation between the fourth quarter of 2006 and the fourth quarter of 2007 were: Utah (9.3%), Wyoming (8.3%), North Dakota (7.9%), Montana (6.9), and Alaska (6.0).  None of these states has participated in the speculative frenzy that set up our current slowdown.

* The states with the lowest rates of appreciation for the same period were: California (-6.6%), Neveda (-5.9%), Flordia (-4.7%), Michigan (-4.3%), and Rhode Island (-2.6%).  The first three are suffering from their own popularity, Michigan is in a general "rust belt" decline, and Rhode Island is approximately the size of Fulton, Dekalb and Gwinnett counties added together, so it's hard to say what's really happening there (and who cares?).

* Georgia's price appreciation for 2007 ranked 24th on the list of states, and indicated that the typical home here increased in value by  2.55 percent during the year.  It also showed a small increase of 0.76 percent in the fourth quarter alone.

* The southeastern block of states surrounding Georgia fared even better, with the notable exception of Flordia.  All other surrounding states were in postive territory, showing price gains of between 3 and 5 percent for 2007.

* The Atlanta metro area ended the year with a small, but important increase as well.  The all-tranaction index showed the average home in our metro area was up 1.67 percent for the year, with a 0.67 percent increase in the difficult fourth quarter.

Other Georgia cities showed increases for the year as well: Warren Robbins led the way with an increase in value as of 6.52 percent for 2007, while Augusta, Hinesville and Brunswick all topped 5 percent.  Nearby Athens and Rome exceeded a 3 percent increase.  Not one reported Georgia city experienced any decrease in the Home Price Index for 2007. 

Some of you may remember that the widely publicized S&P/Case-Schiller Index of home prices came out earlier this year, and it showed home prices in Georgia declining, although only slightly.  I chose not to dwell on those numbers, and I want you to know why.

The Case-Schiller National Index uses only resale data from county tax records in only 37 states, while the OFHEO index uses Fannie Mae and Freddie Mac appraisal data from sales in all 50 states.  In addition to having complete national coverage, the OFHEO index expands its data by including refinancings, giving it a much broader base of information from which to draw conclusions.

OFHEO's quarterly Home Price Index is based on more than 34 million repeat transaction pairs over 32 years.  You can download the complete report at their website which is located at ofheo.gov by clicking on "Home Price Index."

I guess this means I am stillin denial about the broad based "free fall" in housing values across the nation and here in Georgia.  And while some broadcasters may not want to admit it, the facts indicate that most Americans are not experiencing a decline in their home's value.

Quick Skim

The slowdown in the real estate has sent some investors fleeing from the market. But those bailing out may be missing opportunities, say the authors of Making Hard Cash in a Soft Real Estate Market (Wiley, 2007). There are still big bucks to be made- even in a down cycle. In fact, authors Wendy Patton and Justin Ryan argue that "more money has always been made in a down market than in an up market." They highlight how investors can snag the best buys, master market-timing and risk management, and prepare finances-all to better help you become a savvy investor in any type of market.

From the Book: 5 Investor Tips in a Slower Market

Slower markets can offer rich opportunitites for investors: real estate sellers are more open to negotiate and lower home prices- and combined with low interest rates-can help you get properties at bargain levels. Yet, some buyers are reluctant.

"The market may not look perfect," the authors write. "This is why prices haven't taken off yet"- and why you want to get in before they do! The book offers the following tips:

1. Timing is everything. Enter the market cycle early. "When it's quiet, when the media isn't saying 'record levels of appreciations,' that's when you want to jump in,"  the authors write. As billionaire oilman J. Paul Getty once said: "Buy when everyone else is selling and hold until everyone else is buying."
2. Get finacially ready. Before you buy, consider holding costs, tax implications, and cash flow potential. Many things can go wrong when buying investment properties-such as a vacant rental or a property that won't sell. Have cash reserves (get a partner if you don't have any) and you'll be prepared to ride out any market cycle. Identify your risk level and what you want: For example, an investor who wants to turn a quick profit with low holding  costs would want to sell their new-home property before construction is complete. On the other hand, an investor looking for a bigger return with less capital gains tax would want to hold the property until after construction is complete and keep it as a rental property for at least one year.
3. Buy and hold. In a distressed market, this can be smart move. A buy-and-hold strategy ccan help give the property an opportunity to appreciate over time. Buy at right price, through. Compare the home's price to what homes are selling for over a reasonable time period in that community and what you expect is the lowest price the market will reach. Get in at that price. Consider lease option investments so you can rent the property to cover payments, having the property practically pay for itself each month. Also, continue pay down the mortgage and eventually you may even have the home paid off- and ideal position for an investor!
4. Find best deal. In a slow market, you can get great deals-and some extras. Builders overbuilt during the housing boom, resulting in high inventories of unsold properties. Now, many builders report slashing prices, offering free upgrades, absorbing all  financing points for their buyers, and paying closing costs or fees. Extras aside, other good investment properties include homes five years old or less and properties in the $200,000-range, which can particularly be desirable to a large pool of buyers. Also, look for a property in an emerging market. Some indicators: sales of existing homes and new construction permits are starting to trend upward, supply is steadily dropping, mortgage loan defaults are high but starting to fall, days-on-market move below 90, and low interest rates.
5. Have an exit strategy. Have a selling strategy in place before you buy so you're not just randomly banking on the property appreciating and then doing a quick sale. Come in with a solid selling plan. For new construction period, sell when construction is complete, lease and then sell, or a lease option. Reduce the taxable impact of selling your real estate investments by talking to your tax adviser about a 1031 exchange or self-directed IRA. "Know how you will get out before you get in!" the authors advise.

Sneak Peek

"When markets go soft, things get interesting. Even though an abundance of opportunity exists in a soft market, many people still won't take action. Why is this? Because by nature, people follow a 'herd' mentality. Most people believe that for something to be the 'right' thing to do, many people need to be doing it. Actually, this is not true at all....An experienced insider's secret-that many folks don't want to you to know - is this...When the markets go soft the playing field is being 'reset.' Short-term opportuinty gets created for the seasoned investors who know how things really work."

About the Authors

Wendy Patton, also the author of Investing in Real Estate With Lease Options and Subject-To-Deals (Wiley), is a broker with several real estate offices nationwide. She, along with her coauthor Justin Ryan, also are real estate trainers, on such topics as lease options and pre construction investing. Ryan is also a real estate practitioner in Michigan.