How Homeowners Associations Can Affect Your Real Estate Investments

Homeowners Associations and How They Can Affect Real Estate Investments

by Mission Hills Prudential

I had a question from a student not too long ago asking what was the best form of real estate to purchase for rental income, ie, SFR (single family home), Condominium, Townhouse, Duplex and on and on, you get the idea. They can all be good rental opportunities, depending on your strategy and if the property is purchased correctly. One of the things that can make a Condominium or Townhouse less desirable, however, is the HOA (Homeowners Associations) and the rules they create – CC&Rs (covenants, conditions and restrictions). Let's take a closer look at how this can affect your investment.

A Homeowners Association (HOA) is usually a not-for-profit organization established by a community board which governs by a set of rules established by that HOA. It determines the rules and the money that is spent on the shared property.

A Homeowners Association's primary job is to: Establish that set of rules called the CC&R's. The CC&Rs establishes monthly dues for all homeowners, and can restrict the rights of the owner and how they use their own property or the jointly owned property. For example, a HOA may have rules on who can occupy the property on a permanent basis, what colors can be used on the exterior of the unit, what time the common areas can be used and so on. Homeowners Associations are established to, hopefully, protect the rights of all in the community.

Another big issue that affects the investor is the fairness of the HOA to prohibit or restrict an owner from renting out their property. Should this be an issue of law? Well, there are many states where these issues are currently being argued on both the legislative level and in the courts.

There is no argument that a HOA has the right, when it is formed, to adopt rules restricting the ability of its member to rent out their units. In fact, there are retail buyers that will look for complexes that have restricted rental rules. These owners want to be assured that they are living with other owners. Investors would look for the opposite. But the issue arising is that associations are changing the rules after they were formed, and they are adversely affecting investors.

Here is a scenario of facts very similar to the Sierra Dawn Estates Homeowners' Association vs. Isabella Harrison, et al case. Say you purchased a unit in a Townhouse development as your residence. The CC&Rs had no rule regarding the ability of an owner to rent out his property or properties. Over the years, you acquire a few more units for the purpose of renting them. You might even purchase some in an LLC with family members to use as rentals.

Then members of the association become concerned that the number of rental units is too high and some of the renters are becoming a problem. An election is held and the proposed rules are adopted. According to these new rules, no more than a certain number of units in the development may be rented at any one time. No owner is allowed to own more than two rental units. Leases are subject to approval of the HOA. No lease may be longer than one year. Existing leases are honored, but, at the termination of the lease, if the owner has more than the allowed number of rentals, then they cannot continue to re-rent that unit.

The issue here is that the right to lease one's property is a fundamental property right. In a brief filed by CAR (California Association of Realtors), they stated, "This fundamental right should not lightly be taken away from those who acquire real estate with those rights intact... Any attempt by the Homeowners Association to take away the fundamental right to lease one's property without adequately accommodating existing owners' investment should be considered unreasonable..."

The CC&Rs and the HOA were established to create a pleasant living situation for all residents. Its main job is to provide things like gardening, outside repairs, pool upkeep, other maintenance issues, collection of membership dues and managing common areas. HOA should not be totalitarian in their control.

To avoid these kinds of issues as an owner/investor, at a minimum, you should attend all association meetings and, even better, run for a position on the board. Also, make sure that your tenant knows what the HOA rules are and that they are responsible if rules are broken and you are assessed a fine. Make sure in the lease that the fine can be then assessed to your tenant.

Condominiums and Townhouses can be very good rentals that attract good tenants, but you must be aware of these things.

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Administration Officials Reject Idea of National Foreclosure Moratorium

Administration Officials Reject Idea of National Foreclosure Moratorium

by Mission Hills Prudential

Evidence of several major servicers mishandling foreclosure paperwork and in some instances, breaking the law in their rush to work through the still-growing backlog of cases has cast a cloud of doubt over the entire industry and servicing procedures across the board.

Consumer advocacy groups and a number of state attorneys general have demanded a nationwide moratorium on foreclosures. But a senior White House official has indicated that the Obama administration will not support an all-out foreclosure freeze.

David Axelrod, one of President Obama’s top advisors, appeared on CBS’ Face the Nation this weekend, and the foreclosure paperwork debacle was Bob Schieffer’s topic of choice.

Axelrod acknowledged that the allegations of faulty foreclosure documentation are a “serious problem” and “thrown a lot of uncertainty into the housing market.”

But he quickly added, “I’m not sure about a national moratorium because there are, in fact, valid foreclosures that probably should go forward and where the documentation and paperwork is proper.”

“We are working closely with these institutions to make sure that they expedite the process of going back and reconstructing these and throwing out those that don’t work,” Axelrod said, noting that the administration’s hope is that the process will “move rapidly and get unwound very, very quickly.”

In an email to the Washington Post, David Stevens, commissioner of the Federal Housing Administration (FHA), echoed Axelrod’s stance.

“We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile

housing market,” Stevens wrote to the Post. “While we understand the eagerness to make sure that no American is foreclosed upon in error, we must be careful not to over-reach and apply a remedy that will make the underlying problem of foreclosures worse.”

So far, five companies have announced voluntary foreclosure suspensions because of potential deficiencies in the legal paperwork.

GMAC Mortgage was the first to halt foreclosures in 23 judicial states.

JPMorgan Chase and Bank of America suit two weeks later. On Friday, BofA announced that it is expanding its moratorium to include all 50 states.

PNC Financial and Goldman Sachs’ Litton Loan Servicing have also called for a stop to foreclosures in certain states.

The servicers contend that any errors made are procedural and have stated that they expect only minor and temporary delays in foreclosure timelines due to the suspensions, but others say the latest developments are sure to disrupt the already tenuous balance of the housing correction.

Mark Zandi, chief economist for Moody’s Analytics, told the Associated Press that the foreclosure paperwork scandal could prolong housing’s slump for at least several more years. A mere month ago, before the documentation mistakes came to light, Zandi was predicting that an upturn would be well under way by this time next year.

The Mortgage Bankers Association (MBA), along with several other industry trade groups, sent a letter to members of Congress on Friday expressing concern over the additional damage a blanket national moratorium would bring.

The letter stated, “It is important to note…that these are document process reviews; in almost all cases there are no factual disputes about whether the mortgage is delinquent, the amount of the arrears or whether foreclosure is proper. In the overwhelming majority of cases, we believe the facts presented to the courts in foreclosure proceedings about the debt amounts and delinquencies have been accurate.”

According to MBA’s letter, “A foreclosure moratorium would not change the ultimate outcome for borrowers impacted by this situation,” but only cause further harm to communities at risk, the unstable housing market, and the fragile economy.”

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Foreclosures in California Real Estate Investments

Foreclosures in California Real Estate investments

by Mission Hills Prudential

Tips on Buying Foreclosures in California

With foreclosures in California flooding the market, buying one can be a risky venture, for the main reason you are not as protected as conventional homeowners are.

If you’re interested in buying foreclosures in California, here are some tips to consider:

Focus on the quality. Low price can lure you into a quick deal. Be certain that you invest within the budget. However, it is important that you concentrate on the quality of the home fairly than on its cost alone.  With many foreclosures in California with shockingly low prices, you should be able to tell apart which of these properties are both a quality and affordable buy.

See the house for yourself.  If you’re an investor from Vermont and buying foreclosures in California, you should hire someone to inspect for any indication of pitfalls that may possibly give you difficulty later on such as unseen major structural defects, near hazardous elements, zoning problems, eviction issues and many more.

Find the best price. You may not know, but you can still talk about the prices of foreclosures in California. By doing your research and comparing prices, you can reach a reasonable figure to discuss with the owner or lender of the property. This means that you can still further extend your savings by negotiating a lower price apart from the already low prices that these properties are selling for. The best price does not always have to be in the form of the sale price of the property, but may be in lowered interest rates, compensation for repair costs and other things that will take some of the costs of his shoulders.
Make sure the title is clean. Part of your job as smart buyer is to ensure that the title of the property is clean. It is necessary that you try every measure to be certain that the property doesn’t bear some liens, encumbrances and other debts attaché to the title. Otherwise, your savings will be meaningless.

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What Not To Feed Your Dog

What not to feed the dog

Updated: Sept. 20, 2010

Choosing the right food is essential to the health of your dog. (©iStockphoto.com/Grant Shimmin)

From The Dog Daily More>>

 

House calls: Veterinary care at your doorstep

What not to feed the dog

Pet-friendly hotels open their doors to vacationers with dogs

How dog food is made and tested

How dogs react to human infants

Summer fun for dogs

Famous fathers and their dogs

Prebiotics support your dog’s inner strength

Dog park etiquette

How to prevent dog bites

By Brad Kloza

When shopping for dog food, pet food stores offer a wide variety of choices.

"There are foods on the market which are very easy and tasty for your dog but don't provide the highest nutrition," says Dr. Katy Nelson, a Virginia-based veterinarian who has consulted on the nutritional makeup of dog food products. "Even though your pet may be excited about what's in their bowl, it won't necessarily glow afterwards, just like people who regret those visits to fast food restaurants." 

Avoid "Fast" Dog Food

How can we tell the difference? Like with fast food for people, very inexpensive dog food may indicate a less nutritious meal.

"Generally, the higher-priced premium brands have higher-quality ingredients, as well as specialized nutrients," says Dr. Amy Dicke, a veterinarian who also consults on the nutritional aspects of pet food. As a general rule, it's wise to feed your pet the best food you can afford.

"From foods which use human-quality sources, to foods which use the scraps off of the slaughterhouse floor, you truly do get what you pay for most of the time," says Nelson.

After price, look at the list of ingredients. Just like we screen our food labels for unsaturated fats or high fructose corn syrup, there are things to look out for on dog food ingredients lists.

Because ingredients are listed in order of quantity, "always look at the first three ingredients on your pet food's bag," says Nelson. "If there is corn or something with the word ‘gluten' in those first few ingredients, step away and keep looking." Gluten, a vegetable protein, is a cheap alternative to protein from animal sources. But animal protein is more nutritious for your pet.

Spotting Good Dog Food

Although it's not a panacea, there is a seal of approval you can look for. The Association of American Feed Control Officials (AAFCO) provides pet food guidelines and regulates the naming of ingredients.

"AAFCO's nutritional adequacy statement identifies the food is nutritionally complete and balanced and contains all of the required nutrients," says Dicke.

Beyond that, there's still variation. But Nelson recommends at least avoiding foods without AAFCO approval.

Special-needs Dog Food

Many foods are tailored to special circumstances, like a dog's health or age. Dicke says these claims are also regulated by AAFCO. Choosing the right one for your dog just involves matching your dog to the goal of the product, which typically falls into the following three categories:

1) Age: Growing puppies (0 to 24 months), healthy adults and senior dogs (5 years giant breeds and 7 years and older for other breeds) all have different nutritional profiles.

2) Body/activity: According to Dicke, "Pets that are overweight or underweight need different nutrition than those who are at optimal weight. Pets who get lots of exercise also have different nutritional requirements." These food labels include weight control, performance or maintenance.

3) Health history: Your dog may have a condition requiring a therapeutic, or prescription, formula. For instance, dogs with sensitive stomachs can benefit from foods containing prebiotics. These nondigestible food ingredients stimulate the growth and activity of beneficial bacteria that help the digestive system. Other blends are specialized for heart health, dental health, bone/joint health and more.

Ask Your Doctor

In the end, however, Nelson says the most important thing is to discuss your dog's food options with your veterinarian. In fact, she says the biggest mistake people make when choosing food is seeking advice from the sales associate at the pet store rather than their veterinarian.

"Your veterinarian can help you find the food that's best because they know the particular issues that your pet deals with," she says. "Your veterinarian has the best interests of your pet in mind."

Brad Kloza is a freelance writer whose work has appeared in The New York Times Magazine and Discover.

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Dog park etiquette - San Diego, California Talk Radio Station - 760 KFMB AM - 760kfmb

Dog park etiquette

© iStockphoto.com/Ana Abejon

From The Dog Daily More>>

 

House calls: Veterinary care at your doorstep

What not to feed the dog

Pet-friendly hotels open their doors to vacationers with dogs

How dog food is made and tested

How dogs react to human infants

Summer fun for dogs

Famous fathers and their dogs

Prebiotics support your dog’s inner strength

Dog park etiquette

How to prevent dog bites

By Brad Kloza

 

Just like the gym or the workplace, a dog park is a social place with its own set of proper etiquette guidelines. But what that means in a dog park isn't always obvious. With the help of Charlotte Reed (author of The Miss Fido Manners Complete Book of Dog Etiquette) and Cheryl Smith (a certified dog behavior consultant and author of Visiting the Dog Park: Having Fun, Staying Safe), we set the record straight on some important aspects of dog park decorum.

Q: I'm very protective of my small dog. I want her to have fun at the park, but I don't want her to get hurt. Can I keep her on the leash so that I'm always close and can pull her out of rough situations?

A: Sorry, but no. A dog park is specifically for off-leash play. "A leash can create different reactions in the leashed dog, who feels constrained and unable to react as he or she may wish," says Smith. "Leashes can create barrier frustration," she says. This is a common dog behavior issue, where dogs may lash out because they don't feel in control. If you're still concerned about your pet, you might consider trying to establish an event for small dogs only at your local dog park.

Q: My dog gets really thirsty after running around in the park. Should I bring his water bowl for drink breaks?

A: Only if you bring him outside the park for the break. It's too hard to keep the other dogs away from your bowl, and both Reed and Smith point out that a communal water bowl is also a communal germ pool. Nasty bugs like giardia can spread through water.

Q: What about treats? Since I dole those out by hand, they're something I can control.

A: It's not a good idea to give your dog food in front of other dogs. Not only might you get mobbed and knocked over by jealous, hungry dogs, but other owners could also become agitated. This tip additionally applies to food you might bring for yourself. "The smell and sight of it will rile up the dogs," says Reed.

Q: Aside from being a great place to exercise my dog, isn't the dog park also a perfect place to find love?

A: Perhaps, but keep the former purpose at the forefront. Reed once witnessed a flirty woman become so enamored with a male dog owner that she didn't notice her terrier escape the dog park and run away. The dog was smart enough to run home, but as Reed points out, "You should love the ones you're with and not lose them by looking for love at the dog park."

Q: My dog is always well behaved and can fend for herself. Is it OK for me to leave her in the park for 20 minutes while I run to the store?

A: Absolutely not. You are responsible for your dog's actions, so you need to be there. "Believe it or not, people do this," says Smith. "But the park is not to baby-sit your unattended dog while you go off and run some errands."

Q: I appreciate that my dog gets to play, but I also like to use the dog park as a way to relax. It's not as if my dog is a 2-year-old child, so is it OK to bring a book to read?

A: No! Your dog is like a 2-year-old child, and you need to pay attention. Do this for the sake of his or her safety, and for the sake of the other dogs. And speaking of 2-year-olds, you might notice that dogs poop whenever and wherever they want, and it's your responsibility to pick it up. "Piles of poop are the prime reason dog parks are shut down or never open in the first place," says Smith. Most people are happy to clean up after their dogs, so a poop-filled dog park is likely the result of people who don't pay attention.

Copyright (c) 2010 Studio One Networks. All rights reserved.

Brad Kloza is a freelance writer whose work has appeared in The New York Times Magazine and Discover.

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Where Can I Get Real Estate Investor Training?

Real Estate Investor Training

by Shane Pliskin

Hello to You!

      Below you will read the EHow.com article regarding  How to Become a Real Estate Investor.  We at Prudential California Realty, Mission Hills can guide you through this process.  We are highly skilled and continuously work to understand new concepts introduced into Real Estate today.  The market today offers you, in some cases, the ability to not only realize break-even opportunities but immediate positive cash flow at the close of escrow.  It is truly an amazing time for investors. 

Real estate investment requires you to understand real estate rules, laws and regulations for the area where you're investing, as well as the trends in the local real estate market that can positively or negatively affect your return on investment when you sell the piece of real estate. Having this knowledge and understanding before investing in real estate helps you to maximize the return on your investment by making buying and selling decisions that leverage your investment funds.

Training Choices

1.    There are a plethora of choices for real estate training, from colleges and institutes to online courses, books, e-books, CDs and DVDs. You can tap into real estate investor coaches, mentors, training videos, seminars and workshops, as well as television infomercial programs and courses. For example, McGraw-Hill, one of the biggest publishers of educational textbooks, offers a 36-hour real estate investor course (see Resources). The University of Phoenix, which is an accredited college, offers a real estate investment class, which provides information on ways to analyze real estate investments, including financing techniques, real estate tax considerations and the criteria to consider when assessing real estate in today's economic environment.

Research Your Training Options

2.    While a flashy television commercial or a well-written website landing page may boast a real estate investor training program is "the best," don't take the company's word for it. Research any real estate investing program before sending any money. Search the company website for real estate organizations and associations that the company is a member of that you might be interested in. Contact the organizations the company is a member of, verify membership and ask for references. Find out what the organization requires for membership---some organizations conduct background checks on members, checking for a business license and that the company is in good standing in the state they operate in by contacting the state attorney general's office.

The real estate division of the state you intend on investing in is another viable source for real estate investment education information: This is the department that issues licenses to real estate professionals for the state. A money-back guarantee is something else you can look for from a training program to ensure credibility.

National REIA

3.    Increase your knowledge on investing in real estate while also growing your network by joining the National Real Estate Investors Association (National REIA), a nonprofit trade association serving the real estate investment industry. The National REIA keeps investors up to date on legislation, funding and education related to the real estate investing industry. Joining the organization requires a membership fee.

What to Look for in a Training Program

4.    Every real estate investor training program is different, but make sure to look for a program that teaches you a broad range of courses, from how to understand appreciation, taxes, leverage, depreciation and cash flow to how to make home enhancements to increase property values. The best training involves a combination of classroom and hands-on training.

Common Sense

5.    Beware of real estate investor training scams. Don't fall for get-rich-quick schemes, training that makes promises it clearly cannot keep (e.g., claiming you can make millions of dollars in just a few months), or programs that have bad reputations. While there aren't any rating systems for real estate investing courses and programs, you can use information from a particular company's website, such as testimonials and affiliations with associations.

Review a course, ebook, book or other real estate investing source's website and search for testimonials of others who have taken the course or utilized the program's information. Testimonials typically list a person's name and company name, where applicable. Follow up on these testimonials by contacting the person.

You can also contact the Better Business Bureau (BBB) to find out if the company is registered with the BBB and if any complaints have been lodged against the company. Real estate investing forums are also a good place to figure out if a company is legitimate or a scam. You can post a question asking for anyone who has utilized the real estate investing course or information to provide you with feedback, or search real estate investing forums for information on the course or information source you're considering.

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10 Mistakes Made By Real Estate Investors

Top 10 Mistakes Made by Real Estate Investors

by Mission Hills Prudential

Avoid Top 10 Mistakes Made By Real Estate Investors

Real estate investment is perhaps one of the most lucrative forms of investment today. But it is also equally risk bound especially when one is not well versed with the trends and nuances of the real estate market. So if you are contemplating on investing in real estate, it is best to avoid costly mistakes in real estate investment especially when you invest your hard earned money into it. Knowing the most common mistakes made by real estate investors helps one steer away from making such mistakes in the future and ensures good return on investment.

Here are the top ten mistakes made by real estate investors, according to bankrate.com. Bankrate has put together the top ten mistakes after speaking to established, full-time real estate investors and other professionals involved in real estate investment such as bankers. Read on to know them and avoid them.

1. Not planning up ahead. Lack of a proper plan is the biggest mistake made by novice investors. Finding a house after forming a proper investment strategy is the right way instead of looking for a house to fit the plan. Many make the mistake of buying a house because it seems to be a good deal and then trying to see how they can fit it into their plan. Instead of buying a house and thinking one can plan in due course, investors should rather concentrate on the numbers and try to make offers on multiple properties. This will ensure a good property that not only matches their investment model but also works out well with the numbers they had planned for.

2. To believe you can make money quickly. The second major mistake that real estate investors make is to think it is very easy to get rich in real estate. This is only a myth and the reality is that investing in real estate is a long term project.

3. Doing it single-handedly. For becoming a successful real estate investor one needs to build a team of professionals who would assist the investor in his deals. This would ideally include a real estate agent, an appraiser, a home inspector, a closing attorney and a lender.

4. Making excess payment. One another reason that investors in real estate goof up in their investment is by paying too much for the properties they buy. Paying too much and locking up all the funds in the erred property deal will leave you with no money to redeem yourself.

5. Leaving out the groundwork. Not doing your homework could be a costly mistake if you were a real estate investor. Every field of business needs sufficient amount of homework to be done, and real estate investment is no exception. Learn the fundamentals and then venture into investing in properties.

6. Throwing caution to the winds. Investors have to exercise a certain degree of caution and take earnest efforts while making a deal. New investors often fail in this regard and sign a deal without doing adequate research on the property.

7. Miscalculating money flow. Investors whose strategy is to buy, hold and rent out properties need to ensure sufficient cash flow for maintenance. Property managers could be expensive and the owner has to incur more expenses such as mortgage, taxes, insurance, advertising costs etc. Investors have to allocate their budget such that all these expenses are taken care of, or end up having their asset turn into a liability.

8. Lowering the volume. A larger volume of deals or transactions helps in increasing the profits by reducing the impacts of marginal deals.

9. Getting trapped in your own deal. Having more number of options at hand for the property you buy is a wise strategy. This helps one to be prepared for fluctuations in the real estate market. Plans to rent out the house could go awry when the rental market slumps. Having alternative plans helps you cut down losses and tackle unexpected situations.

10. Making incorrect estimates. People who plan to rehab their house need to check if they will still reap the benefits at double the time that they had estimated. This ensures they do not miscalculate and lose money on the deal.

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