B.R. home sales up 16% in November

Strong November home sales in the eight-parish region tracked by the Greater Baton Rouge Association of Realtors have already placed year-to-date 2012 home sales ahead of total sales in 2011, with another month of sales still to report this year. GBRAR reports 566 homes were sold in November in East Baton Rouge, Ascension, Livingston, West Baton Rouge, East Feliciana, West Feliciana, Iberville and Point Coupee parishes. That’s 80 more home sales than were tallied in the region in November 2011, or an increase of about 16%. The average sale price in November, at $206,249, was also considerably higher than that of the same month last year, when the average home sold for $173,096. Through November, 7,064 homes have been sold in the Capital Region this year, which is roughly 15% more than the 6,122 sold through the same 11-month period last year—and exceeds the 6,604 homes sold in all of 2011. The 11-month total this year is also already ahead of annual sales totals in 2010 (6,386) and 2009 (6,899). And unless December sales this year are far below the 482 recorded last December, 2012 should end up being a stronger year than 2008, when 7,284 homes were sold and the area began seeing impacts from the national recession. Total months inventory—or the number of months it would take to sell all homes on the market at the current sales pace—was also down sharply in November compared to last year. Although the months inventory rose to 7.3 in November from 6.5 in October, it is still well below the 10 months inventory recorded in November 2011.

Read more from Business Report here: http://businessreport.com/daily-report/12172012/Baton_Rouge_home_sales_up_16_percent_in_November#ixzz2FKaZsNNe

Real Estate Investing: Single Family Home vs. Condo

From Fox Business:

If you’re considering getting into the landlord game, you might wonder  whether it’s best to buy a single family home or a condominium.

Many people say to stay away from condominiums because of all the issues with  homeowners associations, and they have a point. However, single family homes  have many issues, too, so don’t make up your mind so quickly.

Here are several things to consider in this “Rumble in the Investment  Property Jungle.”

Round 1: Investment returns

When you’re buying an investment property, the first thing you should do is  pencil out your real estate deal to see if it has fair cash-on-cash investment  returns. As a general rule, you’ll find that single family homes typically have  lower cash-on-cash returns than condominium properties. So a fair deal on a  single family home might be a cash-on-cash return of 3 to 5 percent, while a  condominium might have 4 to 7% returns. The condominium will probably take this  round, but every property is different, so you need to pencil out your specific  deal to understand the returns.

Round 2: Tenant turnover

Every time your tenants leave, you’ll need to re-rent the property. And it’s  a lot of work! You have to advertise, take calls and emails, show the property,  draft a lease, do a credit check, move the old tenant out, move the new tenant  in, etc. And even if your old tenant left the place in perfect shape, you still  need to fix minor issues, probably paint and maybe have the carpets cleaned.

Smart landlords know that you make the most money by keeping your tenants as  long as possible. Apartment/condo units typically turn over every other year,  while single family homes typically have much longer tenancies of three to five  years. Clear winner on this round: single family homes.

Round 3: HOA vs. non-HOA

The biggest complaint about condominiums is dealing with HOAs and HOA fees.  And while there are many HOAs that are in terrible financial, legal and  operational shape, there are also many that are well-managed and in very good  shape. HOAs can have strict rules, and if you or your tenant breaks them, you  have to deal with the fallout. But those rules also keep harmony in the  neighborhood and stops tenants from parking inoperable vehicles, appliances,  etc., in their yards as might happen with a single family neighborhood. No clear  winner here.

Round 4: Ongoing maintenance and repairs

As a single family residence owner, you would need to schedule and handle all  the exterior issues — roofing, painting, landscaping — which is going to take up  a lot of your time and energy. These are all tasks the HOA would handle in a  condo community. Overall, it’s much less work owning a property in an HOA — and  that’s why owners pay HOA fees. It’s a condo “KO” on this issue!

Round 5:  Value increase

Many people believe that single family homes go up in value more than condos,  but there really isn’t any conclusive proof of that. Most real estate, in a  general vicinity, is going to appreciate about the same 2 to 3% per year over  the long term. So you should exclude this one as a consideration. For building  wealth, forget the appreciation and instead go for the better cash flow as noted  above in Round 1.

Summary

So those are some of the items to consider. Either one can be a great  investment, or a terrible investment, depending on what you purchase, how much  due diligence you do before your purchase and how well you manage the property.  Do a lot more research and talk to property owners, and then you can figure out  how you will win the heavy weight championship of real estate investing!

Read more:  http://www.foxbusiness.com/personal-finance/2012/11/26/real-estate-investing-single-family-home-vs-condo/#ixzz2DMUn4CT6

Real Estate Recap: October 3, 2012

From the Baton Rouge Business Report:

Hungry for more: While Galatoire’s new restaurant in the Acadian Village Shopping Center on Perkins Road is on target to open before the end of the year as planned, owner John Georges is looking seriously at expanding the venerable New Orleans institution into the Houston market. Georges tells Daily Report he has identified two potential sites in Houston’s posh River Oaks neighborhood and that he could open what would be Galatoire’s first out-of-state restaurant as soon as next year. Read the full story here.

Industrial giants: LED is working with five industrial prospects that are looking to build projects in Louisiana that are bigger than the Nucor Steel project in St. James Parish, which could be worth as much as $3.4 billion when all is said and done, according to LED Secretary Stephen Moret. Of the five, Moret says, “one, maybe two” could be built in the Capital Region. Those projects could be part of a sustained industrial building boom that might lead to 40,000 new industrial construction jobs in three to five years, he says. Daily Report has the full story here.

On the bright side of the road: Fremin Construction has preliminary plans for luxury townhomes at 3757 Brightside Lane that will be modeled on the company’s recent development, Chatsworth Court Condominiums, on South Kenilworth Parkway. The new development is planned for a vacant 2.5-acre tract of land on the south side of Brightside Lane, between the Riverbend subdivision and River Road, but closer to the levee than the adjacent neighborhood. Get more details in the full story here.

Tiger denizen: The 287-unit Tiger Manor apartment complex at State and July streets, not far from LSU’s North Gates, has been purchased by a group of investors led by Covington-based Stirling Properties. A sales price was not disclosed. The purchase brings the number of Baton Rouge apartment complexes owned by Stirling Communities I LLC to two, consisting of 367 apartments total. The firm also owns three Lafayette apartment complexes. Stirling Properties will serve as asset manager of Tiger Manor, while Des Moines, Iowa-based BH Management will serve as the primary property manager on-site.

BR port finalizes land deal

From The Adovcate:

The Port of Greater Baton Rouge got the final signature Thursday from a family selling the port a 135-acre piece of property on the Gulf Intracoastal Waterway.

The port agreed to pay $3.1 million for the land, which bundled with previously purchased parcels will be used for future development, ending a long-running dispute over how much the parcel purchased Thursday was worth.

The purchase price of $23,000 per acre for the so-called Mahaffey property roughly split the difference between the $14,000-per-acre port appraisal for the property and the $30,000-per-acre price of the Mahaffey family’s appraisal.

In a letter to the port commission, Executive Director Jay Hardman said both appraisals were fair but used different criteria in valuing the land.

Previous reports on the dispute noted that the higher value was taking into account the surrounding land, which had been accumulated by the port during the last decade.

The port’s contention was that the Mahaffey tract needed to be valued according to what any other purchaser would pay for a piece of landlocked property.

The deal gives the port about 400 acres of developable land between its Inland Rivers Marine Terminal and the Gulf Intracoastal Waterway.

The total amount for all parcels together comes to about $6.4 million, or just under $16,000 per acre.

Hardman noted that’s a fair price for that much land, noting in the letter that its lease rates for undeveloped land is between $4,500 and $6,500 per acre.

In other business, the port’s board of commissioners approved $2.1 million in work to rehabilitate the rail spur at the marine terminal, $1 million of which would come from the U.S. Economic Development Administration.

The board also approved 4 percent raises for the 26 port employees, five of them unclassified.

Hardman, who was included in the raises, said staff hadn’t gotten a raise since 2009, though some got raises in 2010.

Real Estate Recap: July 31, 2012

From the Baton Rouge Business Report, Real Estate Weekly:

By the numbers: The percentage of Baton Rouge homes in foreclosure fell to 2.36% in May, according to a report from CoreLogic, down from 2.39% from the month previous and 2.47% in May 2011. The local mortgage delinquency rate—that is, the percentage of home loans three months past due or more—also fell in May to 5.39%. That’s down from 5.54% in April, and 5.59% a year ago. Daily Report has the full story here.

Game on: Pinnacle Entertainment plans to officially open the doors of its $368 million L’Auberge Casino & Hotel in Baton Rouge at 7 p.m. on Wednesday, Aug. 29. Pinnacle says the grand opening will “feature memorable entertainment, dining experiences and an unveiling ceremony capped off with a stunning fireworks display.” Details on entertainment specifics were not released but are expected as the opening date nears.

No finer place for sure: U.S.-based IT services firm Ameritas Technologies plans to open an “information technology center” in the Chase Tower South downtown. Ameritas says it will begin hiring in September, plans to open by October, and hopes to have 300 employees by 2016, with the jobs paying an average of $63,000 annually, plus benefits. The company was lured to Baton Rouge with an incentives package, the full details of which you can get from Daily Report here.

This week’s poll question: If you built a new house, would you include energy-efficient and maintenance-free amenities?

Tips for buying a house

From CNN Money

The top 10 things you need to know when buying a home.

1. Don’t buy if you can’t stay put.

If you can’t commit to remaining in one place for at least a few years, then  owning is probably not for you, at least not yet. With the transaction costs of  buying and selling a home, you may end up losing money if you sell any sooner -  even in a rising market. When prices are falling, it’s an even worse  proposition.

2. Start by shoring up your credit.

Since you most likely will need to get a mortgage to buy a house, you must  make sure your credit history is as clean as possible. A few months before you  start house hunting, get copies of your credit report. Make sure the facts are  correct, and fix any problems you discover.

3. Aim for a home you can really afford.

The rule of thumb is that you can buy housing that runs about  two-and-one-half times your annual salary. But you’ll do better to use one of  many calculators available online to get a better handle on how your income,  debts, and expenses affect what you can afford.

4. If you can’t put down the usual 20 percent, you may still qualify for a  loan.

There are a variety of public and private lenders who, if you qualify, offer  low-interest mortgages that require a down payment as small as 3 percent of the  purchase price.

5. Buy in a district with good schools.

In most areas, this advice applies even if you don’t have school-age  children. Reason: When it comes time to sell, you’ll learn that strong school  districts are a top priority for many home buyers, thus helping to boost  property values.

6. Get professional help.

Even though the Internet gives buyers unprecedented access to home listings,  most new buyers (and many more experienced ones) are better off using a  professional agent. Look for an exclusive buyer agent, if possible, who will  have your interests at heart and can help you with strategies during the bidding  process.

7. Choose carefully between points and rate.

When picking a mortgage, you usually have the option of paying additional  points — a portion of the interest that you pay at closing — in exchange for a  lower interest rate. If you stay in the house for a long time — say three to  five years or more — it’s usually a better deal to take the points. The lower  interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.

Getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.

Your opening bid should be based on the sales trend of similar homes in the  neighborhood. So before making it, consider sales of similar homes in the last  three months. If homes have recently sold at 5 percent less than the asking  price, you should make a bid that’s about eight to 10 percent lower than what  the seller is asking.

10. Hire a home inspector.

Sure, your lender will require a home appraisal anyway. But that’s just the  bank’s way of determining whether the house is worth the price you’ve agreed to  pay. Separately, you should hire your own home inspector, preferably an engineer  with experience in doing home surveys in the area where you are buying. His or  her job will be to point out potential problems that could require costly  repairs down the road.

How to Determine How Much Home Can You Afford

From Fox Business:

Interest rates are low and home prices have plummeted from their 2008 highs,  making it an ideal market for homebuyers. But before even starting the hunt,  every buyer needs to determine exactly what they can afford and how much they  will need for a down payment.

While a down payment is sure to be in the thousands, 90% of new mortgages are  government-backed FHA loans, according to Bob Walters, chief economist at  Quicken Loans, that only require 3.5%-9% upfront, compared to the standard 20%.  Veteran Home loans or VA loans sometimes finance the entire home purchase and  don’t require a down payment.

“Most clients that apply for an FHA loan put down the lowest available down  payment of 3.5% to 5%. This is the major advantage of an FHA loan,” say Noah  Brown, a mortgage loan originator at American Mortgage Group. Keep in mind that  if you don’t put down 20%, you’ll likely have to pay for private mortgage  insurance on top of your mortgage payment until you have enough equity in the  home.

Calculating How Much Home You Can Afford

When you get pre-approved for a loan, the lender will tell you the maximum  you can borrow based on your debt to income. Most banks set the debt to income  ratio at 45% to 50%, which means you’re debt can’t exceed 50% of your income.  Once your debt to income ratio is determined, the bank will tell you how much of  a home you can afford.

Experts warn buyers that just because they are approved to borrow a certain  amount, it could be more practical to borrow less to have more flexibility with  other lifestyle spending. If you like to eat out every night, enjoy weekly  shopping trips or have an expensive lifestyle buying the maximum house you can  afford could leave you strapped for cash. “Some clients may not feel comfortable  with a debt-to-income ratio of 50% and thus look for a lesser value home, with  the knowledge of what they can afford / qualify for,” says Brown.

Once you know what you can afford, next you need to figure out the down  payment amount and how to come up with it. According to Brown, you should never  use the majority of your assets to for your down payment—putting 20% down  instead of 25% will leave some emergency funds in the bank.

Collecting funds for the down payment also varies by financial situation.  According to Walters of  Quicken Loans, the majority of people use money  from their savings account or from the sale of a previous home as the down  payment.

If you don’t have adequate savings for the payment, you can tap your 401(k)  or IRA, although experts warn you could be hit with significant penalties for  withdrawing early. Most lenders allow a portion of the down payment to come from  a gift as long as it’s a gift with no strings attached. “Lenders want to make  sure it’s a gift and not a loan,” says Walters. “They don’t want an over  leveraged client.”

You can not charge your down payment or otherwise borrow money through an  unsecured loan because they will increase your debt-to-income ratio.

There are non-profit companies that offer eligible buyers assistance in  buying a home. For instance AmeriDream, a non-profit focused on helping people  find affordable housing, helps people with low and moderate incomes buy homes by  offering down-payment assistance. Buyers who are approved for an FHA loan, but  don’t have the money for the down payment can apply for the AmeriDream down  payment assistance.

The Nehemiah Program, which is a down payment assistance program that offers  help to buyers who qualify for an FHA loan. With this program there are no  limits on income or assets.  For a list of down payment assistance programs click  here.

Read more: http://www.foxbusiness.com/personal-finance/2012/07/11/how-to-determine-how-much-home-can-afford/#ixzz20KO10ggQ

Mortgage rates sink to new record low

From CNN Money:

Mortgage rates have fallen to a new record low, according to Freddie Mac, and the stagnant economy is to blame.

The 30-year fixed-rate mortgage dropped to an average of 3.67% in the week ended June 7, Freddie Mac said Thursday.

This is the sixth consecutive week of declines. The 30-year rate is down from 3.75% in the prior week, and well below from the year-ago rate of 4.49%.

“Interest rates have been on a one-way elevator trip to the cellar,” said Mike Larson, housing market analyst for Weiss Research. “We have never seen rates this cheap.”

Freddie Mac, one of the nation’s largest backers of mortgage securities along with Fannie Mae, also said the average rate for 15-year mortgage — which is popular for refinancing — dropped to 2.94%. That’s compared to 2.97% in the prior week, and the year-ago average rate of 3.68%.

Rates have continued to slump in tandem with the U.S. economy. Freddie Mac attributed the rock-bottom rates to two recent economic reports: the anemic payroll growth of 69,000 jobs in May, which pushed the unemployment rate up to 8.2%, and the weaker-than-expected gross domestic product growth of a 1.9% annual rate in the first quarter.

Despite the low rates, Larson doesn’t see any reason to believe that the housing market will pick up, given the state of the economy.

“Housing in some markets has stabilized, but it’s not booming, by any stretch of the imagination,” he said. “People aren’t knocking down doors to buy houses.”

The low mortgage rates are happening as home prices hit new post-bubble lows, according to the S&P/Case-Shiller home price index of 20 major markets. Home prices have not been this low since mid-2002.

Baton Rouge home sales soar 25% in May

From the Baton Rouge Business Report:

In a continuation of a trend seen every month this year, home sales in the eight-parish region tracked by the Greater Baton Rouge Association of Realtors were once again significantly better in May compared to the same month last year. The 729 home sales recorded in May by GBRAR as of this morning represent a 24.6% increase over the 585 sold in May 2011. While the sales increase may have been expected in light of similar monthly gains seen so far in 2012, an increase in the average sales price in May will likely come as a pleasant surprise to area realtors. At $197,683, the average home sale in May this year was just shy of 1% better than the $195,885 average sales price in May 2011—and 5% better than the average sales price in April. The monthly average home sale price has consistently been about 5% lower this year compared to 2011. Through May, year-to-date home sales in the Capital Region stand at 2,949. That’s 19.9% better than the 2,458 sold through May of last year, 1% better than the 2,918 sold in 2010, and 12.8% better than the 2,614 sold in 2009. A total of 3,309 sales were recorded through May in 2008, which is about 12.2% more than this year. East Baton Rouge Parish led the May sales increase, with 424 sales—95 more than in May 2011, or a 28.8% increase.

Real Estate Recap: June 12, 2012

From the Baton Rouge Business Report:

Highland District: More than two years after plans were unveiled for The Long Farm—a TND being developed by Russell Mosely on the property that belonged to his grandfather, U.S. Sen. Russell Long—construction is under way on the first filing of the development, a neighborhood that will be known as the Highland District. Construction on the 65 homes could begin this fall. For the complete story of The Long Farm, click  here.

Another year: The Research Park Corp.’s board of directors voted unanimously last week to fund the local Regional Innovation Organization at $250,000 for another year. The RIO is supposed to improve the climate for entrepreneurs by improving access to early stage capital and other resources. For the full story, click here.

Consumer magnet: The New Orleans Costco could begin construction by year’s end in the Carrollton area. New Orleans officials say their city’s new store will bring out-of-parish shoppers to the city. To read more about the store’s potential late-summer 2013 opening, click here.

This week’s poll question: Have you shopped at Bass Pro Shops and Cabela’s, and if so, which do you prefer?