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Excalibur Home Management Blog

New Social Networking Site for Real Estate Professionals

Mike Nelson - Sunday, July 29, 2012

 

 

I learned about a new social networking site today and I thought I would share....http://realtyjoin.com/ According to the site, RealtyJoin is a social networking site for the real estate industry in the US and Canada. RealtyJoin helps real estate investors, service providers, and other professionals find relevant opportunities and connect with the people they need. RealtyJoin is designed to help investors and vendors find more business opportunities, share information, and make more money. 

 

This site is a great resource for information and connecting with other real estate professionals and investors.  Take a look for yourself today!  http://realtyjoin.com.

Atlanta is Prime "Real Estate" for Investors

Mike Nelson - Tuesday, July 17, 2012

Metro Atlanta is becoming an investors destination for good return on investment and should continue to be through the next few years.  Speculators estimate that there are currently around 25,000-30,000 forclosures with about 80,000-100,000 properties over 90 days delinquent. This means that there is a large number of properties to be purchased at the foreclosure auctions and through REO sales.  This is an excellent time to purchase investment property in Atlanta.

Atlanta is Still Seeing Dramatic Home Sales Price Drops

Mike Nelson - Monday, April 23, 2012
 
Getty Images

According to Standard & Poor’s/Case-Shiller home-price index, Atlanta is one of many cities that are still experiencing drops in home sales prices.  This is good for investors that are still looking to buy in the Atlanta market.  Here are a couple of articles that are discussing the trend in Atlanta:


http://finance.yahoo.com/news/us-home-prices-drop-6th-130235133.html


http://blogs.smartmoney.com/advice/2012/04/19/cities-with-the-least-realistic-home-sellers/2/


Blog Post by John Durham, Marketing Director with Excalibur Home Management, an Atlanta Property Management Company.

Spring is TERMITE season!

Mike Nelson - Monday, April 2, 2012
 
© How Stuff Works

Here in the Southeast, termites are a homeowner’s worst nightmare.    Termite “swarming season” is upon us.  This usually occurs the first few warm days between March – May.  The flying termites are actually male and female reproductive termites that are mating and creating new colonies.  Once mated, the queens quickly move into the ground and begin laying eggs.  Thus a new colony is formed.  If you are seeing swarms around or in your home then that is a pretty good sign you have a termite infestation. 


There are 3 basic ways to treat termites: baiting system, liquid treatment with nonrepellents, and liquid treatment with repellents.  The baiting system is installed around your home and monitored quarterly.  Average cost of the baiting system ranges from $250-$700 depending on the size of the home and cost for the quarterly inspection ranges from $65-$125.  Typically, a liquid treatment can cost anywhere between $4-$10 per exterior linear foot of the home.  Treatments should come with a 5-7 year guarantee with annual inspections (cost is usually around $100-$150).  A termite treatment usually comes with one of two types of guarantees, a retreatment only or retreatment/repair guarantee. 


Of course, just because you don’t have active termites in your home doesn’t mean you shouldn’t be worried.  Termites can strike at anytime, especially here in Georgia, so the best offense against termites is a good defense.  Have your home inspected for termites annually to prevent infestations and major damage. 


Here is a video that explains a little more about termites: 

YouTube Video



Excalibur, an Atlanta property management company, is the leader in the leasing, property management and sales of single family rental homes in Metro Atlanta area.

EPA Slashes Freon Production by 50 percent

Mike Nelson - Wednesday, February 22, 2012
 


 The EPA has slashed production of R-22 refrigerant by 50%, doubling the cost to HVAC contractors. The benefits of replacing equipment that utilizes this refrigerant are becoming more and more prominent. If your property has a Freon leak, it will be much more cost effective to replace the system than to repair it.  If you are a client of Excalibur’s, contact your property manager for more information about HVAC preventative maintenance service. For more information on the R-22 phase-out, click here.



Blog from Cool Change newsletter, 02/2012
Posted by John Durham, Marketing Director for Excalibur Home Management


When Will It Get Back To Normal?

Mike Nelson - Thursday, January 19, 2012
 

Blog Post written by Mike Nelson, President of Excalibur Home Management, LLC


According to research performed by Zelman & Assoc. the U.S. is experiencing annual growth in the number of households being created of 1.5 million per year.  In a “normal” market we would need to increase the number of homes (apartments, houses, etc.) available at the same rate.  Obviously we are not in a “normal” market.  Today we have over 1.5 million vacant units.  We are only building about 300,000 new units per year.  And we still have several hundred thousand units that still need to go through the foreclosure pipeline (it’s difficult to estimate a precise number).  At this pace we should be able to fully absorb these vacant, and soon to be foreclosed, units around 2015. 


All of this assumes we don’t experience any other significant economic “hits” like a collapse of the European economy, significant natural disasters, or a significant increase in inflation.  In short, it will be a while before we get back to normal. 


That’s why this could be a great opportunity for you.  If you have some cash, this is a great time to buy a home or invest in a rental house.  You are familiar with the expression “buy low, sell high”?  Well, this is LOW.  Don’t miss out.  Give us a call so we can help you find a great deal!  Call Excalibur at             678-825-0425      .


Blog Posted by John Durham, Marketing Director with Excalibur Home Management.

Record Number of Homes in Foreclosure (From Inman News)

Mike Nelson - Thursday, January 5, 2012
 

The foreclosure pipeline has never been more crammed, with lenders attempting to push 2.2 million homes through the process as of the end of October, according to a monthly report issued by Lender Processing Services Inc.


Foreclosure starts jumped 5.7 percent from September to October, to 232,865, LPS said. But the report also showed significant improvement in the long-term outlook for foreclosures.


The number of borrowers who were behind on their loans by at least 90 days but who were not yet in foreclosure at the end of October dropped by nearly 19 percent from January, to 1.76 million. That’s a 42.5 percent drop from a peak of 3.06 million in January 2010.


Compared to January, the number of homeowners behind by just one payment also dropped 7.4 percent, to 1.66 million, and 60-day delinquencies were down 11.8 percent, to 665,804.


Delinquencies of all types (30-day, 60-day and 90 days or more) were down 13.6 percent from January to October, to 4.08 million, while the number of homes in foreclosure increased by less than 1 percent.


The number of homes that were either in the foreclosure process or delinquent by 90 days or more fell 9.2 percent, to 3.97 million in October.


One reason the foreclosure pipeline is so full is that it’s taking so long for lenders to begin foreclosure proceedings on seriously delinquent loans, and also to move homes through the process after an initial foreclosure notice is filed.


Homeowners who were behind on their payments by 90 days or more were 388 days delinquent, on average, in October, compared to an average 344 days in January 2011 and 257 days in January 2010.


Homeowners in foreclosure in October hadn’t paid their mortgage for 631 days, on average, compared to 523 days in January 2011 and 410 days in January 2010.


In judicial foreclosure states where courts handle foreclosure proceedings, the “robo-signing” scandal has slowed both initial foreclosure filings and the foreclosure process itself.


LPS said foreclosure sale rates in nonjudicial states have been proceeding at four to five times that of judicial.


The top 10 states with the largest year-over-year decline in noncurrent loans percentages were all nonjudicial foreclosure states, as lenders in those states have been more able to move seriously delinquent loans into foreclosure.


Meanwhile, foreclosure starts actually declined in October in nonjudicial foreclosure states, suggesting lenders have largely worked their way through backlogs.

Winterizing Your Investment Property

Mike Nelson - Friday, December 30, 2011
It is time to start preparing for freezing temperatures and Excalibur recommends having your property professionally winterized if it is vacant and not yet on the market.  Here is a list of items that should be addressed:


- Drain all water supply lines and water heater


- Put antifreeze (usually a RV type antifreeze) in drains and toilets


- Inspect roof and gutters to make sure they are in good repair and clean


If at all possible, the heat should be left on set at no less than 55 degrees.  While this will no doubt have a small cost associated with it; it is nothing compared to the cost of a repair due to damage resulting from frozen pipes, etc…  It is also a good idea to insulate any exposed pipes including water lines and hose bibs, as well as, the hot water heater.


For properties that are vacant and on the market for rent it is best to have the heat on and water on.  It will market better to prospective buyers and tenants if they are focused on the property as opposed to how cold it is inside.  It will also be necessary to have the water on to clean the property and inevitably someone will need to use the bathroom from time to time during showings.  In these situations, the heat will be on at a minimum (55 degrees) to protect against freezing pipes and to keep the property in showable condition.  Please contact your property manager for more information about having your property winterized today.  Don’t wait until it is too late.


Blog Post by John Durham, Marketing Director with Excalibur Home Management
Excalibur is an Atlanta Property Management company

Foreclosures are UP in August

Mike Nelson - Sunday, September 18, 2011
 


Foreclosures are up in August according to several online forecasters.  According to ForeclosureRadar.com, “Foreclosure starts jumped significantly, reversing what had been a declining trend over the past several months. Investors bought more properties on the courthouse steps in August than in July everywhere except in Washington.” They go on to state that the primary factor may be Bank of America, “This appears to have been primarily driven by Bank of America and related entities, where we saw an overall 116 percent increase from July to August.” 


According to the Atlanta Business Chronicle, “RealtyTrac reported Thursday Georgia posted the fifth-highest state total with 11,743 properties with foreclosure filings in August — an increase of 2 percent from July, but down 28 percent from August 2010. Irvine, Calif.-based RealtyTrac defines a foreclosure as default notices, scheduled auctions and bank repossessions.”


This is the main reason that Excalibur has been asking our new clients and just started asking our existing clients for a copy of their mortgage statement.  We are trying to avoid putting tenants or keeping tenants in properties that may be under foreclosure.  As you can imagine that can be quite burdensome to find out as a tenant that you may be losing your home and it is out of your control.  The earlier we can prepare the tenants regarding this situation, the better.  Another reason is some owners have been accused of fraud for renting a property to a tenant when the owner knew the loan was in arrears.  We want the owner to avoid the risk of facing a criminal complaint from a new tenant.


Excalibur’s management agreement does require all owners to inform us within 15 days as soon as the mortgage payments are not current.  Please provide the mortgage statement to our office when requested.  We thank you in advance for your cooperation.  Please let your property manager or our office know if you have any questions. 


Blog post by John Durham, Marketing/Communications Director
Excalibur Home Management, an Atlanta property management company

The Dangers of Foreclosure: “Out of the Frying Pan and Into The Fire”

Mike Nelson - Tuesday, August 23, 2011
 

During the past two years several of our clients have lost property to foreclosure.  Often they don’t notify us or consult with us about their circumstances.  They just decide one day that they are no longer willing to carry a property with a negative cash flow so they stop making payments.  But there may be significant tax consequences for the client that loses the property thru foreclosure or a short sale.  The investor may still owe Capital Gains Tax, tax on Cancellation of Debt (COD), and/or tax on the recapture of depreciation deductions taken on the property.


 What is Cancellation of Debt? (From IRS.gov)


If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.


Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.


Here are a few quick examples to illustrate the problem:


Scenario 1 – An investor buys a rental house in 2005 for $160,000 and gets a $152,000 mortgage (we saw several deals like this in our market back then).  Now the investor is experiencing a negative cash flow of about -$300 per month.  So the investor stops making payments on the property.  The lender forecloses and the property is bid in at the courthouse steps by the lender for the mortgage balance of $150,000.  Since it “sold” for the amount of the mortgage, there is no cancellation of debt.  The investor depreciated the property over 5 years for a total of $27,000.  Now the investor will owe the tax (25% Federal) on recapturing those depreciation deductions which would be approximately $6,750. 


Scenario 2 – An investor buys a rental house in 2005 for $160,000 and gets a $152,000 mortgage.  Now the investor is experiencing a negative cash flow of about -$300 per month.  So the investor stops making payments on the property.  The lender forecloses but since the property is now worth much less today it is sold on the courthouse steps for $130,000.  The investor’s outstanding loan balance at the time of sale is %150,000.  So the investor has a $20,000 cancellation of debt which could be taxed as ordinary income.  The investor depreciated the property over 5 years for a total of $27,000.  Now the investor will owe the tax (25% Federal) on recapturing those depreciation deductions.  The investor’s total tax obligation may be as much as $11,700 for just Federal tax.


Scenario 3 – An investor buys a rental house 10 years ago for $160,000.  Over time the house appreciates in value and 3 years ago the investor does a “cash out refinance”.  Based on the new higher value the investor gets a new loan for $200,000 and uses the additional proceeds to send a child to college.  Now decreasing rents or other financial problems have made it uncomfortable for the investor to keep the house with a negative cash flow.  So the investor stops making payments and the lender forecloses and the property is “sold” on the courthouse steps for $200,000.  The investor has no cancellation of debt but there is a capital gain.  The investor bought the house for $160,000 and sold it for $200,000 so there is a gain of $40,000.  The Federal capital gains tax rate for 2010 is 15% (it is expected to go up in 2011 plus we have the new 2.9% Medicare tax on capital gains from our most recent health care legislation).  So the Federal capital gains tax will be $6,000 in 2010.  The investor also depreciated the property over 10 years with total deductions of $49,000.  So the tax on recapturing those depreciation deductions will be approximately $12,250 for a total tax obligation of $18,250.


Then there are other ramifications due to the negative impact the foreclosure has on the investor’s credit.  This could lead to higher interest rates from lenders or being denied some types of financing.  All to get away from a -$300 per month negative cash flow.  Based on the above examples, it may well be cheaper to “tough it out” for the next 2 – 3 years then sell the property as the market gets a little stronger.  Do the math first – not once it is too late.


Several caveats:  Some investors may choose to take advantage of their rights under the American Recovery and Reinvestment Act of 2009 to delay the recognition of some of these taxes until 2014.  The tax obligation is still there but payment is postponed.  Other clients that started out as frustrated sellers may be able to classify the house as their personal residence (they lived there at least 2 of the past 5 years) and take advantage of some protections under the Mortgage Debt Relief Act of 2007.  The investor may have a lot of accumulated losses which might offset some of these capital gains.  Each person’s situation will be unique.  It may be best to consult with an accounting professional.


Mike Nelson, GRI, RMP, MPM is the managing broker of Excalibur Home Management, LLC  which currently represent over 1200 rental houses in the Metro Atlanta area.
Blog posted by John Durham, Marketing & Communications Director with Excalibur Home Management, LLC.

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Excalibur Homes
2855 Marconi Dr, Suite 310
Alpharetta GA 30005
678-825-0500 Fax:(678) 825-1401