Dean Graziosi

The 1.2 million member National Association of Realtors released their June pending sales report on August 4th, 2009.  For the fifth consecutive month, pending sales increased significantly and were substantially higher than year over year sales.  In fact, June 2009 sales were 6.7% higher than in June 2008.  June pending sales rose 3.6% over May sales.  The last time there were five consecutive monthly gains was in July 2003.

The bottom line is that residential real estate is selling.  The current market features low mortgage rates, depressed pricing and the availability of the $8000 tax credit for first homebuyers.

For the past several months, the FHA has been reviewing their appraisal policies.  A recent ruling requiring participation of local appraisers has helped to quell some unrest among investors.

The NAR maintains a Housing Affordability Index.  The index tracks important criteria and is a reflection of the overall buying climate.  The June affordability index stood at 159.2.  While down a bit from recent months, the index is 36.6 points more favorable than a year ago.  The slight rise in the interest rate from record lows still makes it a desirable marketplace.

The affordability index is so favorable that a median-income family earning $60,000 per year can now afford a home costing $289,000, well above the average selling price in June.

The Pending Home Sales Index is a leading indicator representing about 20% of transactions for existing home sales.  The index is based upon activity from the year 2001.  June 2009 is 59.2% ahead of the 2001 pending sales.

Many of these pending transactions are investment sales, short sales or foreclosure sales.  These areas are providing strong buying opportunities for investors.  Today’s real estate market is loaded with opportunity.  Experienced investors are getting pre-qualified and playing that chip to strengthen their position.  If there was ever a buyer’s market, this is it.

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Where will you be in five years with your rental properties?  Will you be enjoying a lifestyle that suits your personality and interests?  Or will you wake up each morning dreading an argument with a complaining tenant, or having to knock on a door and ask for rent that’s a week late?

We’re not talking here about whether you should be a landlord or not.  It’s more a planning issue, so that you can select properties and invest appropriately in order to accomplish your investment goals in a way that suits your personality and abilities.  An objective assessment of your attitudes and capabilities at the beginning of the real estate investment process is important.

·         Do you like working with people?

·         When complaints are made, can you handle anger or volatility?

·         Have you been stable in other long term endeavors?

·         Can you enforce rules and stand up for your rights?

·         Do you get along better with certain people types or income strata?

·         Can you handle surprises or uncertainty?

It isn’t necessary that you have all these qualities or abilities.  It is necessary that you understand where you excel and where you may need help.  Whether it is you, your spouse, or an employed manager, there are activities that simply cannot be avoided in managing rental properties.

·         Interviewing and selecting of tenants – including turning them down if they aren’t up to your requirements

·         Enforcing your rental and behavior rules

·         Collecting rents when they aren’t on time

·         Fielding complaints from tenants – whether they are valid or not

·         Responding to emergency repair issues – perhaps late at night

·         Doing all of this and more over a period of years

Many of us just seem to gravitate to a certain income strata.  You may do well with higher income tenants renting in more exclusive areas.  Or, on the flip side, you may get highly annoyed by a rich college student making demands on your time.  It could be that blue collar workers with families are just your cup of tea.  It doesn’t really matter.  What does matter is that, if you do lean in one direction or the other, you recognize that fact and invest in areas and properties that will bring you the tenants you’ll enjoy serving.

If some or all of the more people-interactive tasks are not your thing, it doesn’t mean you can’t own rental properties.  You may just need to make purchases that will return on your investment, even if you must hire help on a part or full time basis.  Or you may be able to let your spouse handle some of the tasks.

Learn what you like and do well, and find other solutions for the other requirements. 

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Here are three simple, easy, and inexpensive ways to add green to your real estate – both in terms of attractive outdoor plants and those perennial greenbacks you can take to the bank.

#1

Lay the Groundwork

The first step to creating beautiful flowerbeds around your property – whether it is a home, an office building, or a cluster of condos – is to define or outline the beds. Curves add interest and are visually more natural and organic than straight lines, so keep that in mind as you plan your landscape. Once you have your idea envisioned, use a flat-ended shovel to cut into the turf and mark the outline of the flowerbed. You don’t have to dig a ditch, just cut into the earth to make a slight trench about an inch or two wide and 4-6 inches deep.

Once that is done use flexible rubber border material found at any home improvement store to create a boundary between the lawn and your flowerbed. If you need to add topsoil to the bed to ensure healthy plants, do that next. Then use a good quality weed block fabric to cover the area. This can also be found in rolls that look kind of like wrapping paper at home improvement stores. Staking it down controls the weeds so that you don’t have to spend your free weekends on your knees pulling weeds out from around your plants. But it also allows enough water to reach your plants so that they can grow up strong and healthy despite the fabric.

#2

Add Colorful Flowers and a Cheerful Border

With the help of someone working at a nursery – unless you happen to have a green thumb – select plants and flowers that not only look good but also are appropriate for the location, climate, and amount of attention you can reasonably afford to give them over the long haul.

Cut little X’s into your weed blocking fabric – which now covers the flowerbed dirt like a wall to wall carpet – and dig out holes just large enough to plant your flowers. Pat them into the ground with some dirt or potting soil, give them some water, and pat yourself on the back for a great job that is almost done.

#3

Mulch is Magical

Finally, use a thin layer of dirt to hide the weed block fabric. On top of that disguise the fabric completely with a liberal amount of mulch Hardwood mulch generally holds its color the best, while also helping to retain moisture during warm months and provide warmth to your plants in winter. The visual benefit of mulch is stunning if it is applied carefully and neatly. The contrast in color between the rich dark mulch and your colorful palette of flowers gives the flowerbed a thoroughly professional appearance and can dress up even the drabbest of landscapes. 

Home improvement stores also sell inexpensive fencing that is about two feet tall. Some is wooden, some plastic, and some metal. If you want to really dress up your flowerbeds, add some around the edges.

Using the exact same methods outlined above – on a budget of about $5-$10 per square foot or less – you should be able to jazz up flowerbeds, the sides of your walkways, and other prominent features of your yard.

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