Successful Tenant Screening

Markets are on a roller coaster with some areas and asset types doing better than others. First, a notable comment by our Federal Reserve Board.

Bernanke: No upset from Mortgage Woes: Federal Reserve Chairman Ben Bernanke said Thursday that he did not believe the growing number of mortgage defaults would seriously harm the economy. “We believe the effect of the troubles in the sub prime sector on the broader housing market will be limited and we do not expect significant spillovers from the sub prime market to the rest of the economy or to the financial system,” Bernanke said. NOTE: The reason this is so noteworthy is that housing is such a major part of the economy, that if mortgages were to really get into trouble it threatens the banking system. Try getting a loan for anything if the banks pull back due to large quantities of debt. Good to hear that its not that bad. Of course, the truth is more likely, the trend has yet to play itself out, but we all hope its not too bad and we arnt forced into a recession.
To give you an idea of how hard it is to generalize heres two more:

New Home Sales Soared 16% As Prices Declined in April
By Jeff Bater
New-home sales soared in April, an unexpected surge marking the biggest climb in 14 years, according to a report that showed declining inventories and signaled hope for the long-suffering housing sector.Separately, demand for expensive goods rose mildly in April, according to a government report Thursday that also showed capital spending by businesses grew again.
Sales of single-family homes increased for the first time in four months, rising by 16% to a seasonally adjusted annual rate of 981,000, the Commerce Department said Thursday. March new-home sales decreased 1.4% to an annual rate to 844,000, a figure revised down from an earlier estimated 858,000. Sales fell 3.8% in February and 13% in January. Year-to-year, new-home sales were 11% lower than the level in April 2006. NOTE: Sellers Market?

Existing-Home Sales Fell in April As Sub prime Lending Drops Off
By Jeff Bater
Existing-home sales retreated in April, dropping to the lowest pace in nearly four years in another negative sign for the slumping housing sector.
Home resales fell to a 5.99 million annual rate, a 2.6% decrease from March's revised 6.15 million annual pace, the National Association of Realtors said Friday. March's rate was originally estimated at 6.12 million.
The median price for a home previously owned was $220,900 in April, down 0.8% from $222,600 in April 2006. The median price in March this year was $217,400.
NAR senior economist Lawrence Yun said he has anticipated slower demand because many subprime-loan products have dried up. NOTE: Buyers Market?

Many of us that have bought now realize we are landlords and many of us bought knowing we would be landlords. Its not so very bad to own and manage. But you must realize that the quality of our new career depends on who we have as tenants. One bad tenant can really ruin an experience. So, its most important to screen out the bad ones before you sign on for what could be a multi-year relationship.

Secrets to Successful Tenant Screening

One of the most important decisions you can make is who you allow into your life as a tenant. This can be a very long term relationship and in many parts of the country, frankly, the tenant has the upper hand.

We know of one tenant that has been in the samew unit for almost 25 years and has been to the local rent board dozens of times and small claims court almost as many times. He has made a business out of knowing the law and applying it successfully. The landlord is now so afraid of him that he complyies wilh almost all of his wishes. The file must weigh 10 pounds.

Do not rush into these decisions, it is much better to wait for the right person than to be pushed to a decision because you have to cover expenses until its rented.

Most of our decisions are based on how we feel. its very important to have a basic set of rules you always apply equally. This will keep you out of trouble.

Always check the application

1. Time/Date Stamp: It may be helpful to screen your applicants on a first-come, first-served basis, then when you reach qualified applicants who meet your screening criteria you may offer the unit to the first applicant that qualifies. It's a good idea to date and time stamp the applications; then you know the exact order in which you received them.
1. Attach all written commentary to the application.
2. Keep the commentary objective and rules based. Create your owdn scoring system or use the system provided by many professional credit reporting agencies.
3. Never write on the application itself. A Fair Housing law suit may look at notes or underlines and highlights as code that you use to somehow discriminate.
4. No personal commentary at all (keep that in your head).
5. Be sure to have a proper signiture on the application that allows you to llook into fcredit and call prior landlords. Never look into an applicants personals without a completed and signed application. You must have permission to screen.

Fair Housing

What is it?
Membership in one of seven protected classes: race, color, religion, sex, national origin, disability, and familial status are the protected classes that Fair Housing issues protect.

Federal law prohibits housing discrimination based on race, color, national origin, religion, sex, familial status and physical/mental disability.States have added a host of other law. Be syre to know the law in your area. There are professionals who study fair housing and state law and look to catch you in a mistake and sue. Its a living for some.

Some Basics:

1. Avoid using words or phrases that show a preference or discourage anyone because of his or her protected class.
2.Always describe the property itself and not the targeted audience
3. Be careful with your language.
4. Do not make assumptions about the need of a group of people. It is best to objectively describe the property and allow the prospective applicant to determine their needs
5. In a sentence its about differential treatment

Its Your Property


How to Use the Internet to Shop Your New Home

Before we offer some insights into the internet as a tool for search and shop a home, we cruised the internet and found some interesting news that may help in yoour consideration your next home.

Mortgage Rate Daily: Rates Remain Relatively Stable. Again Applications were down, decreasing 0.8 percent on a seasonally adjusted basis and 0.6 percent on an unadjusted basis from the previous week. The application volume was up 13.8 percent from the same week in 2006.
Refinancing as a share of all mortgage activity was up to 42.1 percent from 41.8 percent a week earlier while the share of ARMs fell yet again from 18 percent to 17.4 percent.

Associated Press: Wildfire Hotspots Spook Insurance Cos. Spooked by devastating wildfire seasons, the nation's top insurers are inspecting homes in high-risk areas throughout the West and threatening to cancel coverage if owners don't clear brush or take other precautions.

The inspections have angered homeowners and watchdog groups that accuse the companies of trying to cut risk at the expense of customers, even while industry profits soar.
The requirements can range from clearing brush to cutting down trees or even installing a fireproof roof.

Real Estate Journal: Product Taps Home Equity Without Taking Out Loan.
By James R. Hagerty
A small San Francisco investment company, backed by a subsidiary of insurer American International Group Inc., is rolling out a product that lets homeowners tap into their home equity without moving or taking out a loan.

The company, REX & Co., offers to pay homeowners cash now in exchange for a right to part of the proceeds when the home eventually is sold.

The owner of a home valued at $750,000 might obtain $100,000 in cash by giving REX a 50% share of the change in the home's value. If the home sold for $850,000, REX would receive $150,000 -- the original $100,000 invested plus half of the increase in value. If the home sold for $650,000, REX's share would be $50,000, half of what it had invested

Washington Post: The services of a buyer's broker don't come free, even though buyers aren't asked to take pen to checkbook to pay for them. The good news is there are a growing number of local real estate agents offering to work with buyers for less in the form of rebates.
"Maybe the agent is new or inexperienced and needs the business," Odio-Páez says on his Web site. "Maybe the firm is virtual and can't open homes up for you, so you'll have to do it yourself. But when you focus on getting a rebate, you will always be giving something else up." He also warns: "Not negotiating the best deal could also cost you much more than you'll save by getting a rebate."

How to Use the Internet to Shop and Search Your New Home

According to NAR, which has a vested interest in following this new trend very carefully, 9 of 10 home buyers still use a real estate agent in the traditional way. However NAR, goes on to note that in 1995 only 2% of buyers used the net to search for a home but by 2005 that figure jumped to 77% and has most certainly increased since then. This is not necessarily bad news for the broker/agent. It actually provides a lot of information now including photos, maps demographics and all kinds of helpful information to a buyer.There is so much choice now for a new home buyer to search easily that it has been a boon to the industry as well as the consumer.

However, when the internet delivers information freely to the consumer, that was previously in the hands of the professional, the edge that the professional has is diminished and the commissions soon begin to drop. The 6% standard commission, we believe, is being challenged and that all buyers and sellers can now get a better deal. That commission has always been negotiable and the timing has never been better for the consumer to get a better deal.

For example discount realtor's such as Zip Realty will offer services for 4%. That is quite a savings and there are new business models challenging even the discount brokers. Redfin is an internet web site that is offering to rebate back to the buyer 2/3's of the commission. Normally, the 6% commission is split between the buyer and seller's agents. Redfin will keep just 1% of that commission for transacting the house and they will even find you a loan.

If the old adage holds true that you get what you pay for, are they really the good deal they appear to be? We don't think there is one answer for all people here, some people will be very happy with the service and others will not have a good experience. Either way, its clear that the internet is providing new choices for the consumer.

How to Shop Online

1. MLS. Its the old standard and trustworthy.
2. A new model for home buyers in search
3. 4. freddie mac has a listing og homes for sale 5. offers listing for sale without the use of a broker agent. This is a great way to save the commission, but please, only for the very knowledgeable.
6. HUD has a listing of HUD homes for sale
7. craigslist is a community bulletin board that lists homes for sale
8. All banks have a stable of foreclosed homes for sale, often a a great discount. Use a professional here, unless you understand the risks.
9. is another site with foreclosed homes for sale
10. All the broker houses such as Caldwell Banker, Provident etc. all will provide good search tools to help you find your new home
11. Any individual agent associate web site will offer a listing of homes represented
12. is another interesting new tool for home buyers and sellers

There is so much now on the internet, just sit back and take the tour.

Some Financing Resources

Veterans Administration home loan program,
Affordable housing at Freddie Mac,
Your Property Path
CICA programs for affordable housing, Housing Assistance Council


How to Hire an Insurance Agent, Find a Good Home Insurance Policy and Save Money

This week we wanted to explore some ideas on how owners and managers of property could keep fixed costs down, looking into operations is a good way to put more money back into your property. But first, lets look at some important developments this week.

Freddie Mac Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.15 percent with an average 0.5 point for the week ending May 10, 2007, down slightly from last week when it averaged 6.16 percent. Last year at this time, the 30-year FRM averaged 6.58 percent.

The 15-year FRM this week averaged 5.87 percent with an average 0.5 point, unchanged from last week when it averaged 5.87 percent. A year ago, the 15-year FRM averaged 6.17 percent.

MSNBC Gloomy outlook from top U.S. homebuilders. “Twenty months into this housing downturn, we continue to face difficult conditions in most of our markets,” Toll’s chief executive officer, Robert Toll, said in a statement."
Subprime mortgages had helped drive the housing market from 2005 through last year. As the housing market reached a crescendo, home loans became more accessible for people with poor credit.

As defaults rose, lenders started pulling back on the easy money. A survey of bank loan officers by the Federal Reserve showed that the net percentage of banks tightening standards for mortgage loans jumped to 16.4 percent in the firblog nest quarter from 1.9 percent at the end of 2006.
According to Celia Chen, director of housing economics at Moody’s, the housing correction is expected to last until the end of 2008, with prices falling by 3.6 percent this year and 2.9 percent next year. The market peaked in mid-2005.

NPR New Census figures show that the percentage of vacant homes has risen to its highest level in four decades. Marketplace 's Steve Tripoli talks with Madeleine Brand about how this could affect housing prices. NOTE: It takes quite a while for a property to go from default to sale. Much of the oversupply that will enter the market is in front of us. The mitigating factor is that neither the banks want to handle property nor does the Fed want to create a housing crash. This would threaten the banking system, cause loan parameters to tighten and slow the economy. We have two blog articles on foreclosures and the help available, scroll down to get names and numbers of some of the programs available

Bloomberg TV The oversupply of vacant homes is beginning to affect the rental market. it rose to 61% and this is according to Real Estate companies. the increase is due to record amount of homeowners who can't sell condominiums and houses. nationwide, 2.8% for houses for sale were unoccupied. the highest since back in 1956.

Housing Tracker This is a blog that tracks Both home asking prices and inventory are tracked for about 55 city real estate markets. We note that of the 55 cities tracked inventory has increased in 35 cities. The highest inventory increase wer Atlant folloed by Cincinnati and then San Jose. Only Atlanta experienced a price drop. Keep in mind these are list prices, the sales priceis not reflected in these numbers. But clearly, it shows that markets are uneven and that there are uptrends within the major slowing or down trends. We think this is good news and points to the diversity of markets, always a good thing.

How to Hire an Home Insurance Agent, a Good Home Insurance Company and Save Money Too!

Home insurance is a fixed cost and better property looks to lower your bills. Here's how you can judge a good company and compare prices and find a good agent to represent you. All the while saving money! Your Property Path has done some research into how to choose a good insurance company and a good agent.

How to Find a Good Agent

Be sure you have choices There are two kinds of agents. A captive agent will only represent one company. All his solutions to your problem will be solved by recommendations from his company. Since No company has a product line that is the best in every area you use an agent or agency that can represent a variety of companies. You are likely to find better price and product with more choice

Your Property Path has developed a simple procedure that will help you find the best product mix at a good price.

Interview a few agents and ask some basic questions.

1. How long have you been in this business
2. Can you represent many companies
3. How do you get paid
4. Has your license ever been suspended

The Your Property Path Procedure

1. Insurance premiums can vary greatly. Use the Shop Rates quote button on to get Insurance Agents to compete for your business. When agents compete for your business you win! Then follow this process to assure you are getting a good price with a strong home insurance company that you can trust.

2. Use the response list of insurance company's from your competitive quotes at to begin to find your best price and strongest company available.

3. Verify agent or Brokers license. The License Registry is an affiliate of the National Association of Insurance Commissioners (NAIC). All complaints, suspensions arbitrations and other issues are here. Be sure to get your agents Insurance license number, it is often on business cards or letterhead

a. National Insurance Producer Registry (NIPR)

b. National Association of Insurance Commissioners in Your State. Go to the state web map to find information about your agent.

4. Check for Consumer Complaints. Your Insurance Company is as good as its ability and its willingness to pay. Don't find out about how your Insurance Company does business after you need it to perform. Check for Insurance Company Complaints

a. National Association of Insurance Commissioners and research the number and type of consumer complaints outstanding against a company.

b. Check your local Better Business Bureau They have an area where you can check out an organization. Too many complaints and you should go elsewhere, even if you like the agent.

5. Check the Company's Financial Ratings. Your Insurance Companies ability to pay is everything. Shop wisely and you will be better protected if disaster strikes.

When you use the comparison shopping tool at You can get four to six competitive bids from agents working for different companies in a matter of minutes at no cost to you. Comparison shop the offers and let agents really compete for your business. Shop for good rates and strong financial s and then check the company's business practices.

How to Find a Good Insurance Company

The financial score. All insurance policy's are a promise to pay based on the assets of the insurance company. Thats why a good financial rating is so important.

AAA: This is the highest rating given and the company's ability to pay is very strong.
AA: Standard and Poors tells us the difference between AAA and AA is slight
A: The company is subject to economic swings, perhaps it carries high debt or has made some riskier insurance bets. The company ability to meet obligations is still strong
BBB: This rating is reserved for "adequate". The company is more likely to run into difficulty during hard times.

Its easy to see that the financial ratings of a companies ability to pay under some circumstances could translate into a longer time before you see a check or really narrow definitions applied to problems you have. Stay with the higher ratings.
Compare similar coverage using a AAA company (likely the most expensive) against AA and single A company.

Its Your Property


Foreclosure Fears……..Help is on the Way

Part Two

This week we wanted to take a closer look into the results of the sub prime collapse and how it will affect so many of us. We read that 2 million homes have now foreclosed and we wanted to offer some better understanding of foreclosure. We crawled the web to find some high quality credible stuff on the help now jelling over the pain of 2 million foreclosures and rising.
But first lets take a short look at he current markets

MarketWatch: Mortgage applications up as yields fall. The Mortgage Bankers Association (via MarketWatch) said that mortgage applications were up about 3% and almost 20% over last year, indicating healthy activity and helping balance the view that the sky is falling. Obviously a lot of folks still want real estate. It is interesting to note that at the same time yields fell making homes just a little easier to carry.

National Multi Housing Council: Investment Returns on Apartments. Demographic trends suggest that demand for apartment living should continue to moderately. In 1990 the value per square foot of a multi family property was $57.07 and by 2003 it had grown to $97.02. When home sales are flat to down rents tend to be strong and apartment units are priced as a multiple of rent rates or cash flow…..strong markets for apartments. There is an interesting article at about the new amenities available and how an owner might increase rent rates and fill vacancies faster and present a modern face.

NAHB: New Home Sales Tick Up in March in Uncertain Climate. “The increase in home sales for March was quite disappointing, considering the weather-related weakness recorded earlier this year,” said David Seiders, chief economist for the National Association of Home Builders (NAHB).

The sudden tightening of mortgage conditions has had a profound impact on the housing market, and it is hard to know how far the credit pendulum will swing,” Seiders said. “NAHB’s forecast still shows improvements in home sales and housing production by the second half of this year, although these forecasts are subject to an unusually wide range of risk.”

"Since the housing boom went bust last year, sales and prices have gotten hammered by a glut of homes on the market. While home inventories shrank 1.6 percent last month from February and are now down about 3 percent from the record highs hit last July, they're still up 17 percent from a year ago."

Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property immovable property due to the owner's failure to comply with an agreement between the lender and borrower called a "mortgage or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property.

What is it: Basically, the owner cannot pay the bank or lender and a series of options come into play.

1. The lender can sell to another and avoid the foreclosure proceedings, since it can affect credit.

2. The owner can call one of the home counseling agencies and see what kind of deal can be made to keep the owner in the house and help buy time. (see Your Property Blog of April 21 2007)

3. The lender can buy back the property, often for the value of the mortgage and sell it in the open market

4. If a buyer does not step up and the lender does not want it then it goes to auction and is for sale to the public, generally at a discount.

Help is on the Way…

NACA: issues a press release indicating they will offer a billion dollars to rescue victims of predatory lending. There is more information on the NACA site that may be helpful

Fannie Mae: has produced a foreclosure workout guide they insist you should read before you do anything. NOTE: They can be reached by calling 916.408.0494 for immediate assistance.

The Your Property Path web site has a good deal of informative articles on mortgages and the April 21 blog that is part one of this series that may be helpful.

What if You Own Now…

The Real Estate weekly on the MarketWatch web site considers the impact of a foreclosed home in your neighborhood and what it does to the value surrounding homes. If you are in an area that is experiencing foreclosures near your property there are some steps you can take to protect your home values. It can be found located here

The Your Property April blog pointed some interesting articles for those owners who find themselves new landlords because they cant sell at their price. Consider renting and managing your property. Begin by talking to your local apartment association since the laws can be difficult. It may even make sense for you to consider hiring a property manager. We have a discussion on how to hire a property manager at that will go a long way towards helping you figure out if that is the right thing for you. As always, good luck!

Its Your Property