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!

20 Steps to Get the Best Deal on a Home in 2007

When it comes to real estate, timing is everything. And if you're buying this year, your timing is perfect.For most homes in most areas, it's a buyer's market. That means you'll see plenty of houses on the market with prices that have slowed, stabilized or, in some places, even declined. And motivated buyers will likely be more amenable to making concessions."For someone who's been sitting on the sidelines, it's a great time to buy," says Eric Tyson, co-author of "Home Buying for Dummies."The biggest problem many buyers may encounter: too many choices. But that's not a bad problem to have, says Colby Sambrotto, chief operating officer of ForSaleByOwner.com "See everything in your price range so you can make an informed decision," he says.Spring and summer tend to be the prime home-buying season. And in many markets, buyers will have a lot of options. Want to make sure you get the best home for you? Here are 20 steps to help you get the best deal on a home this year:

1. Know your score. Pull your credit report and purchase your credit scores. "It's especially critical this year because the government has started cracking down on mortgage lenders offering nonstandard financing," says Chicago-area attorney Diana Brodman Summers, author of "How to Buy Your First Home." A small change in your credit rating can make a big difference in the amount you pay for your home over the life of a loan, or even whether you'll be offered a loan at all.Do this early because if you find mistakes that lowered your score, you'll need time to correct the record before you apply for financing. And, if you find that your scores are correct, but lower than you expected, you can change your habits, pay down some balances and rack up a few more months of good marks on the record before you obtain financing.

2. Get preapproved for a mortgage. Preapproved, not prequalified. Prequalified simply means you're good for the loan -- if your income, debts, credit and other factors are exactly as you stated and can be documented. In other words, it's more like wishful thinking. Preapproved means these things have already been checked and verified. This is always a good idea in any market, especially now. Along with a lot of housing choices, there are many more selections on the mortgage menu in recent years too, says Tyson. Sorting out the mortgage first will let you concentrate solely on the loan terms, without the added pressure to choose something quickly or risk losing your "dream house." Since you're likely to have more options in terms of properties, this step will also help you narrow the field to only those homes you can truly afford.

3. Determine your dollar limit. Decide how much you want to pay, not just how much you can pay. The maximum for which you qualify isn't automatically the amount you want to spend, says Summers. You may want to buy less house to allow for a future where one of you might want to stay home with the kids or make a career change. "Everyone would like to see you move into a bigger house -- they would get a bigger fee," says Summers. "But that's no good if you're miserable." And if you get overextended and life throws you a curve, like a job loss or family illness, "you have to have a fudge factor," she says.

4. Make a list, check it twice. Another way to narrow your search in a market with many choices is to really zero in on the individual features of your future home. Which items do you really need? Which do you merely want? Which don't matter? And what would be a deal-breaker? "You've got to make sure that what you're looking for is really what you want," says Patricia Fitzgerald, broker/owner of Coastal Properties in Jupiter, Fla. If you're buying the home with a spouse, make up your own separate lists first, then try to integrate them. That way, you approach sellers and agents as a united front -- and you're more likely to get what you want.

5. Do your homework. If there are communities you like, do the in-depth research now. Buyers, especially in a market with a lot of choices, "get caught up in finding the 'perfect house,' and don't do their research," says Tyson. Instead, "you want to be able to take advantage of the fact that we've got a lot of choices."Study the quality and cost of living. If you're semi-local, shop in the community for a week or so. Buy groceries, gas and all the little necessities in the same places you'd patronize if you already lived there. Sample the way of life by checking out things you use, like libraries, health clubs, bookstores, restaurants and movie theaters.Test the commute. It's one thing to drive an area on Sunday morning and look at homes. It's another to roll out of the driveway at 7 a.m. Monday morning and fight commuter traffic. So drive it during rush hour. And if you want to use public transportation, check out those options, too.Scope out the schools. If you have kids, or are planning a family, research the neighborhood schools. What do they look like, and what kind of reputation and scores do they enjoy?Read the newspaper. Almost every community has a local paper. Subscribe -- via mail or online, and keep up with the local happenings. From water quality to zoning, you're likely to get the inside information you really don't get anywhere else.

6. Hire a buyer's agent. A good real estate agent can help you focus your search and avoid the pricing pitfalls. Ideally, you want "someone patient, someone focused on the neighborhood you're interested in," says Tyson. Talk to several agents. "Have they taken advanced classes or received a designation?" says Fitzgerald. "Is it somebody that you feel comfortable with, somebody who's going to listen to your needs? Is what you're looking for what they're showing you?" Don't fall victim to the trap that you can save money by not using an agent. The seller, after all is paying that agent in most cases, and even if there's only half a commission involved, don't you think the seller wants to save that same amount you have your eye on?

7. Don't trash the house. It's become almost routine to point out all the things you don't like about a house to shake the seller's confidence and try and bring down the price. This can be a crucial mistake. First, it makes them angry. Second, once you've insulted their house (and them), it's going to be tougher to get them to negotiate a good price. If you're at the stage where you're making an offer, but there are details you really can't live with, be tactful and kind, says Ron Phipps, broker with Phipps Realty in Warwick, R.I. Instead of declaring that their 1950s kitchen is horrible, say "I understand the kitchen is original." Then follow with something along the lines of "obviously, competing houses have been updated and that would be a priority for me," says Phipps.

8. Study comparables. Do this before making a first offer. When you look at the comps (which should be within six months and ideally within three months), what's the relationship between the list price and the sales price? That's going to give you a good idea of just how much room you have to bargain. And just how much your first offer cuts from the asking price can vary with the town, neighborhood and price range. "In some areas of the state, people wouldn't be distraught," at an offer than came in 15 percent to 20 percent below the asking price, says Phipps. "In my area, the sellers would be offended and you wouldn't get a counter offer." And that's why it can pay to have a professional on your side. Especially in today's market, "you need a buyer's agent to explain the nuances of the market," he says.

9. Stay current. Keep up with the market while you're shopping. In the areas you like, watch the for-sale signs go up and come down. How long are homes staying on the market? Look at the listing for the asking prices. Comb the local paper to see what they actually bring when they're sold. What's the relationship between sales price, value and asking price? The trends you see can really help when it's time for you to make those offers.

10. Determine the real value of the property. Buyers sometimes focus on how large an offer it will take to "get" the home, and lose site of what it's actually worth. But before you make an offer, sit down and determine, based on tax records, which can often be found online, comparables and the other data, just how much is the property actually worth? Then analyze the relationship between the actual value of similar houses and their selling prices. Often there's a pattern, and that can help you too, says Phipps. In addition, knowing the home's real value serves as a good touchstone to keep you grounded during negotiations.

11. Research the sellers. Are they motivated? Do they have to move by a certain date? While your offer should be determined by how much the house is worth, "There's nothing wrong with doing some intelligence on the seller and using that to your advantage," says Phipps. Your best source: the agent or the sellers themselves. If the listing agent or the sellers are at home when you view the property try to engage them in small talk. Ask them where they're going and why. "It's amazing how many sellers and agents volunteer a lot," says Phipps. A buyer's agent can also help in that area too, says Tyson." Your agent should do as much inquiring as possible on the sellers and their situation," says Tyson. While you do have to get a handle on why they're selling, "If you lowball someone, they're not going to think you're serious," he says.

12. Look at the real numbers. Was it for sale by owner? Have the sellers used other agents? And how long has it really been on the market? The current listing may show that the home has only been on the market two weeks. But it may not show that it's been on the market before -- and recently. Some agents will pull a property off the MLS, and then put it back on the market to reset the clock, says Phipps. A buyer's agent can look at the listing records and determine just how long, in total, these owners have been trying to sell that home. And that can make a big difference in the offer you make.

13. Leave room for a second offer. Many sellers will assume that if you knock $20,000 off the price the first time around, you're looking for a counteroffer that will reduce the asking price by $10,000, says Phipps. But it's a fine line to walk. Offer too little and they won't believe you're a serious buyer; too high and you leave little room to negotiate.

14. Have a backup plan. Don't set your mind on one house and say it's that or nothing. "It helps you remain more objective," says Phipps. And you won't get carried away and pay more for a house than the house is really worth. And if you are seriously considering other homes -- and could be just as happy with other choices, have your agent convey that point, says Phipps. Doing the negotiating yourself? Be respectful and honest. Alert the seller to that fact without threatening them with it. Something along the lines of "we're looking at two other houses, we know the numbers there are workable and we can get either at a good price." But don't say it if it isn't true.

15. Put all extras in your first offer. Negotiations are more elastic in the beginning, when the buyer and seller are most likely to want to reach an agreement, says Phipps. It's a lot easier to include that entire list of concessions or repairs in the beginning than to drop it in at the very end. And that list should include a warranty deed and title insurance, he says.

16. Don't let them play mind games. "If you make a good offer, within the realm of reasonable, and the seller rejects it outright, move on," says Phipps. Some sellers don't really want to sell. Others like to play games. And that just slows your search for a home. "In this market, it makes sense to take advantage of the breadth of inventory and deal with a seller who wants to sell," he says.

17. Surrender where you can. You're going to be dealing with the seller throughout the process, so on points where it really doesn't matter, giving ground can be smart, says Phipps.

18. Call your insurance agent. How will the neighborhoods you're shopping affect your home and auto premiums? Your agent will be happy to tell you. And it's even more important since some areas are seeing large increases in premiums in the wake of natural disasters. "It's free knowledge," says Summers. And like the price of groceries in your new community, "it all goes into the cost of living and you never think of it until you move there."

19. Call the power company. Look at your current power bill to see just how much juice you're using each month. Now call the would-be supplier in the neighborhood you're considering. How much would it charge for the same power? "It may require a little math," says Summers. But it can save you from sticker shock after the move.

20. Educate yourself. "Education is more valuable now," says Tyson. "People have trepidation and fear because they realize that real estate doesn't go up every year." But with low rates and decent prices on housing, he says, "it's a good opportunity to get into the market."

Dana Dratch is a freelance writer based in Atlanta. March 8th, 2007

Vacation Home Sales Hit Record High in 2006

A record number of vacation-home purchases was offset by a sharp drop in investment-home sales, bringing down the overall number of second-home purchases in 2006, according to the National Association of Realtors. Vacation-home sales were up 4.7% to a record 1.07 million homes in 2006, compared to 1.02 million in 2005. Investment-home sales dropped 28.9% to 1.65 million homes in 2006, down from 2.32 million in 2005.

According to the NAR, The typical vacation-home buyer in 2006 was someone 44 years old with an income of $102,200. The report stated that 79% of vacation-home buyers wanted the property as a vacation or family retreat, 34% wanted to use the property to diversify their investments, 28% planned to use it as a primary residence in the future, 25% were motivated by tax benefits, 22% intended for a family member or friend to use the property, 21% said they bought because they had extra money to spend, and 18% plan on renting the property to others.

The most popular location for the homes was in rural areas; 29% of the homes were purchased in the country. But 24% were located in resorts, 22% in a suburb and 10% in an urban area or central city. Sixty-seven percent of the homes were detached single-family houses, 21% were condos and 8% were townhouses or row houses.

Investment-home buyers were younger and earned less than vacation-home buyers.

If you are interested in purchasing an investment home or a vacation home, please contact The Gebhardt Group today! With our international network of Realtors, we can help you find your dream property...anywhere in the world! Email us today at info@GebhardtGroup.com.