Friday, 29 January 2016
There are now more renters in the U.S. than ever before in history, and the situation is still developing. Not only are more people wanting to rent instead of buy homes, there is a shortage of inventory. When demand is high and supply isn't keeping up, rents rise, and they're doing that aggressively right now.
There is plenty of media attention being paid to this situation, as well as many articles about the cost of renting versus buying a home. It seems that the ratio is not good, but people aren't clamoring to buy. This is in spite of continued low mortgage interest rates. It's partly a legacy of disappointment with housing as a wealth component after the market crash. Also there are far fewer first time buyers in the market. High student debt and an anemic job market isn't helping.
It would seem that this is still a great market for rental property investors, but maybe not for everyone. The higher prices for single family homes is making it more challenging to get them into the rental market at prices people can afford. The percentage of income on average going to rent is rising and at levels that are causing economic hardship for renters.
I believe there is still a great opportunity, if you respond to the market with affordable rents on homes people want. That "homes people want" part is crucial. Due diligence into your market's demographics is absolutely necessary. Baby Boomers are generally downsizing, so you'll be seeking to purchase smaller homes in markets where they are locating. In college towns, larger homes that will work for roommate rentals would be your target.
Once you've figured out the style and size of homes you want, then it's time to see how you can provide a rental that meets their desires, but at a more affordable rent than the competition. Your vacancy and credit loss numbers will be sweet if you can provide rental properties that are affordable and meet your tenants' criteria.
It's a more challenging situation, especially if you're buying ready-to-rent homes. If you are doing fix & flip, you have some leverage in the rehab project. Going cheap isn't necessarily the best approach. Using vinyl countertops may help you to set the rents where you want them, but they may not attract the best tenants. But, maybe something in between that and top grade marble is best. Maybe some tile that isn't too labor intensive can do the trick.
The point is to really nail down your costs before buying decisions, get the best deal on the property possible, then bring it to market with the fit and finishes that renters rate as important to them. But, do it at a value price to comparable sized units in your market area.
Friday, 22 January 2016
What comes to mind when you see this image? No, not a glass of wine. When I see this image, I notice what isn't there. There isn't a bright white blown-out set of windows. Instead, there is a pleasing outdoor view exposed properly. There are not a lot of dark areas inside, much darker that the mellow shadows on the floor and walls. Instead, the shadows and highlights are more as my eyes would see them. There just isn't a stark contrast because of the bright outdoors merging with the interior.
The fact is that real estate photography requires a lot of interior shooting. Surveys every year conducted by real estate associations and others tell us that people are using the Internet to shop for homes to buy or rent. They, at least 90%+ of them, tell surveyors that photos are the first thing they check out and they're very important to them. If they like the pictures, they'll check out the descriptive text and property information. If they don't, they move on to another property.
Many real estate agents unfortunately would rather close the curtains and turn on interior lighting than have those blown-out bright windows like big white boxes. Others have embraced HDR, High Dynamic Range, photography. Real estate investment is about numbers, and the number here is 3. HDR photography uses three to five, usually three, photos at different exposure settings to merge and create a single image with all of the bright and dark areas adjusted for a result like the one in the photo above.
I can't show you what this photo would look like if it was done as a single shot, but it definitely would have had the bright outdoors mostly very whitish to get the interior right. To get the outdoors right, the interior would be very dark, with harsh contrast between light and dark areas.
Most of today's digital cameras have a feature called "exposure bracketing." You set the camera to take your three photos with one underexposed, one properly exposed, and one overexposed. You should use a tripod, as you're going to push the shutter button once and all three exposures will be created in rapid order. There will be:
• The underexposed photo with the outdoors looking OK, but the indoors dark.
• The properly exposed photo will be something in between, too bright out and too dark in most likely.
• The overexposed photo with the interior looking good but the windows blown out.
Now you just need software to do the HDR process for you. There is free software out there, such as Picturenaut. There are many good software packages under $50 too. The software merges the three photos to create the perfect blend of exposures that are more like what your eyes do for you. Some of the newer digital cameras even have in-camera HDR, and the processing is done for you automatically.
If you are going to market homes for sale or rental, you should look into HDR to get the attention of your Internet property viewers.