Property Partners: Why Investing in Real Estate with a Friend May Be a Good Move

Buying a home together isn’t always a sweetheart deal; it can also be a great business opportunity between friends.

More and more people who are looking to become real estate investors, prior to saying their vows, are finding ways to avoid investing in property solo.

Ever the businessman, Chris Pendarvis jumped at the opportunity to purchase a town house in Sacramento a couple of years ago with a former business partner. Although they kept the property for a relatively short time, Pendarvis believes he got a bang for his buck.

“It was a good deal, and we ended up turning it around aft er about a year,” he says. “We used the money we made to capitalize the back end of a coff ee house. So it was a nice way to help us build the business and at the same time provide a tax shelter.”

According to the 2006 National Association of Realtors’ Profile of Home Buyers and Sellers, 7% of homebuyers are unmarried couples.

Elizabeth Weintraub, a Sacramento real estate agent, admits she wouldn’t follow a similar route. “If I were single, I’d never buy a home with a friend,” she says. “I’d live in a smaller home, or in a worse part of town, before going into partnership on a home.”

But Pendarvis believes he was the perfect candidate and that he would do it again with just about anyone. “You might not play the market or do real estate development, but home ownership is important,” he says.

Unlike Weintraub, Lois A. Vitt, PhD, founding director of the Institute for Socio-Financial Studies in Virginia and author of 10 Secrets to Successful Home Buying and Selling, calls investing in a residence with someone other than a spouse or significant other “good business”—as long as the friend or business associate shares the same investment motives. “[Partners] need to have compatible goals and expectations so they can together analyze trends in the general economy, run the numbers under diff erent scenarios, and know the local housing sales, mortgage and rental markets,” Vitt says. “That doesn’t mean they can’t split up these tasks, but they have to be able to work together to achieve a single set of investment goals.”

At the same time, Vitt says there are drawbacks and issues some people should consider. “What happens if their individual circumstances change and one partner wants to sell and the other does not? What happens if the market tanks and one partner wants to ride it out but the other wants to cut his or her losses?” she says. “Partners—including spouses and significant others—should discuss these potential circumstances thoroughly and know that they can work together in any housing market for their mutual benefit.”

When Jim Goodykoontz learned the owner of the fourplex in Sacramento, where Goodykoontz resided in a unit, wanted to sell the property several years ago, he thought it was a golden opportunity to invest in real estate. But because of the high down payment required, he needed a partner in order to make a transaction happen. So, in stepped his brother, with whom he knew he could work eff ectively.

And it certainly has proven to be a mutually beneficial deal for the brothers. “[The building has] appreciated quite a bit in value,” Goodykoontz says. “And we’ve been making a profit from the beginning. The rents pay the mortgage and then some.”

Although she would not buy property with a friend, Weintraub does acknowledge the difficulty of purchasing a home independently “With the affordability index being so low, three out of four people can’t aff ord to buy at today’s prices,” she says. “Plus, it typically takes two incomes to qualify [for a loan], especially since lenders are tightening their requirements for qualification. Builders are designing homes with two master suites to accommodate unrelated individuals buying together as tenants in common.”

Part of the cost of being a homeowner is taking on a major responsibility. And while investing in real estate with a partner does not lower these risks, it provides someone to share in the job—not necessarily what everyone is looking for

By Chuck Green - Friday, June 1, 2007

Most Resilient U.S. Real Estate Markets

When it comes to real estate, the questions on everyone's lips are: How low is low, and when's the perfect time to buy back in?

That moment has passed in Seattle and Charlotte -- both metros hit bottom in the first quarter of 2006 and have since posted price gains of 12.3% and 6.3%, respectively, according to National Association of Realtors (NAR)data.

Ripe for investment? Philadelphia and New Orleans. Based on housing inventory and local economic conditions, both should hit price troughs by year's end and bounce back with moderate gains around 4% in 2008.

In markets expected to recover more slowly, such as Boston and Denver, low buyer confidence coupled with a surplus of housing stock has lengthened the slump. NAR chief economist Lawrence Yun points out that buyers are looking for clear signs of a market bottom and are content to wait on the sidelines until then.

It's easy to see why. Most of the country's real estate markets are feeling the effects of overproduction. A strong market hovers near a 1.5% vacancy rate, but the national average currently stands at 2.8% and in cities such as Miami, Atlanta and Denver, figures hang around 3.5%. In addition, every nugget of good news (a May Commerce Department report said that new-home sales are at a 14-year high) comes with bad news (median price growth is at a 10-year low).

So which other metro area markets stand the best chance of recovery, and when will that upturn occur?

Behind The Numbers
Market corrections follow three basic recovery patterns. A V-shaped recovery where a market experiences a sharp, fast decline but comes out strong once it hits bottom; a U-shaped recovery, where prices decline gradually and recover slowly; and an L-shaped curve, a hard, fast fall with paltry price bounceback following the market trough.

The differences between a V-shaped market and a U-shaped one has to do with barriers to growth. High vacancy rates and high investor share can hurt a market, but if the local economy remains strong and housing stock affordable it's only a matter of how long it takes to absorb the excess inventory.

Tampa is a perfect candidate for a V-shaped recovery, according to research from Moody's Economy.com, an economic analysis, forecasting and credit risk firm. The local economy remains strong, and subprime lending is relatively low. Tampa's problem? A high investor share that lead to high vacancy rates. When the market turned sour in 2005, more than 25% of Tampa homes were owned as investment properties. Investors are quicker to flee during a downturn, thus creating a glut of available housing stock. In Tampa's case, vacancy rates now stand at 3.5%.

"As investors exit, the market revives," says Mark Zandi, chief economist at West Chester-PA based research firm Moody's Economy.com, as fewer speculative buyers results in a more stable market. "Tampa's a pretty affordable market and first-time buyers can come in once prices fall."

In the market for a seven-figure home? How much domain your dollar will net depends on where you look. Based on Moody's Economy projections, Tampa should burn off its excess inventory and hit a price trough in the first quarter of 2008, at which point prices are expected to increase by 10.6% the following year.
These projections take into account housing affordability, vacancy rates, the strength of the local economy and job market, investor share in 2005 and the share of subprime mortgages. Data comes from Moody's, the Bureau of Labor Statistics and the Federal Reserve's Home Mortgage Disclosure Act.

Predicting the bottom of any asset market, especially real estate, is a difficult thing. While these projections are based on sound data and advanced modeling by Moody's, no one can predict futures markets with absolute certainty.

Other Bounce Backs
Like Tampa, Phoenix is similarly afflicted by high investor share (26.1%) and it has a vacancy rate over 3%. Good affordability rates and a surging job market suggest that once Phoenix bottoms out, price growth will be strong. Moody's projection model has Phoenix reaching its price trough in the fourth quarter of 2008 and then growing by 7.7% the following year.

Slower recovery rates are expected in markets such as Minneapolis and Boston, where a slumping local economy, slow job growth and negative migration numbers hamper long term prospects. Along with other U-shaped markets like Sacramento that have double-digit subprime lending share, Zandi says it's going to be harder for these markets to get going again.

That doesn't necessarily mean V-shaped markets are in the clear. The labor markets in cities such as Las Vegas, Phoenix and San Diego, whose future economic success will be critical to recovery, are heavily in housing-related industries, according to Moody's. So long as those economies can weather their respective corrections, they should be all right.

"These markets are going to experience more substantial declines in the coming year," says Zandi. "Gauging the bottom is a very intrepid affair and the job market is very important to recovery."

By Matt Woolsey, Forbes.com
June 11, 2007

Welcome to the *NEW* City of Johns Creek, Georgia!

As of June 1, 2007, Johns Creek residents in zip codes 30022, 30097 and 30005 could begin using Johns Creek, GA, as their official mailing address! For those of you unfamiliar with this North Atlanta community, the city was created during 2006's election period in a heated vote (see timeline below).

We are proud to be Realtors in the new City of Johns Creek! Here are some interesting...

...Johns Creek Facts

The City of Johns Creek is located in the northeast corner of Fulton County; bounded on the south by the Chattahoochee River, on the east by Gwinnett County and the Chattahoochee, on the north by Forsyth County and on the west by the cities of Alpharetta and Roswell.

Johns Creek has an approximate population of 65,000.

Johns Creek is the 10th largest city in the state of Georgia, Marietta being the 11th largest.

Johns Creek officially became a city on Dec. 1, 2006, when governance of the new city tranferred from Fulton County to Johns Creek's elected officials and city government.

Johns Creek's transition from six unincorporated northeast Fulton communities - Newtown, Warsaw, Ocee, Shakerag, Autrey Mill and Johns Creek - to cityhood was initiated through the state legislative process, as follows:

March 31, 2005 - pre-bills introduced by State Rep. Jan Jones (Dist. 46) to incorporate both northwest and northeast unincorporated Fulton County.

Feb. 13, 2006 - House Bill 1321 introduced by State Rep. Mark Burkhalter (Dist. 50) to incorporate unincorporated northeast Fulton County into the City of Johns Creek.

March 2, 2006 - House Bill 1321 approved by the Georgia Assembly.

March 29, 2006 - Governor Sonny Perdue signed House Bill 1321 into law.

July 18, 2006 - Voters of unincorporated northeast Fulton County approved incorporation.

Nov. 7, 2006 - Citizens of Johns Creek elected Mayor Mike Bodker and City Council members Randall Johnson, Karen Richardson, Liz Hausmann and Bev Miller as the city's first officials.

Nov. 14, 2006 - Inauguration; first City Council meeting.

Dec. 1, 2006 - The City of Johns Creek assumed governance from Fulton County.

Dec. 5, 2006 - Run off elections for Post 2 and Post 4 brought Dan McCabe and Ivan Figueroa, respectively, onto the first Johns Creek City Council.

For more information about the new City of Johns Creek, click here.

You can also visit: http://www.ilovejohnscreek.com/!

If you have any questions about the new City of Johns Creek or the North Metro Atlanta area, please give us a call or send us an email! We'd love to help you!

Got Mold?

There's no way to sugarcoat it: Mold is an unwelcome guest in any home. And like your unpredictable cousin Harry, it can show up without warning, even in the cleanest abodes. Mold is a type of fungus that grows from tiny spores that float in the air. It can grow almost anywhere there is moisture and a temperature of between 40 and 100 degrees Fahrenheit.

The most common type of mold, called mildew, is easy to spot. It's the black stuff you see in the grout lines in your shower, on damp walls and outdoors on the surface of deck boards and painted siding, especially in damp and shady areas. To test for mildew, dab a few drops of household bleach on the blackened area. If it lightens after one to two minutes, you have mildew. If the area remains dark, it's probably just dirt.

Besides being unsightly, mold can cause health problems, including hay fever-type symptoms such as sneezing, runny nose, red eyes and skin rash. More seriously, mold can cause asthma attacks in people with asthma who are allergic to mold.

To get rid of minor mold and mildew infestations, disinfect the area with a mild bleach and water solution, then seal with several coats of a primer/sealer and repaint with washable paint. Improving the ventilation in damp areas of your home, such as the bathroom, will tend to minimize mold problems. For more extensive mold infestations, contact a professional who can help you determine the best way to deal with it.

If you have concerns about mold in your home and would like a referral to a trustworthy service provider, please contact us today! We'd love to help!

Five Quick Tips to Enhance Curb Appeal

In a buyer's market, it's important for sellers to do what they can to get their home to stand out.

Here are some quick tips you can use to generate some excitement for your home in today's market.

1. Use paint: A new coat of paint can go a long way to making your home look up to date. Neutral colors work best because they appeal to the most number of people.

2. Mow the Lawn: Take the time to mow the lawn and clean the yard. Rake leaves and grass and put away any tools that may be lying around. Don't turn buyers off with a messy yard. If they like what they see on the outside, you'll improve your chances of getting them to take a look inside.

3. Plant Flowers: Seasonal or perennials can bring a splash of color to your home and brighten things up from the street. Flowers throughout the house will please the senses and make it feel like a home.

4. Spruce Up Your Walkway: Dressing up your walkway with bricks or paving stones will lead people to your front door. Inexpensive solar lighting can enhance your entry even more!

5. Window Treatments: Keep your home from looking plain or boring with some decorative shutters. Windows are so important to the overall appeal of your home. Take some time to add plant boxes underneath and you'll see an immediate improvement that doesn't cost a lot of money!

By following these tips, you will be able to capture the hearts and minds of today's buyers, as well as improve your chances for a quick sale at top dollar!