Get ready for spring at the Champlain Valley Expo Center and Fairgrounds. We’ll be there, along with 400 other exhibitors from around the Champlain Valley. Meet Bob from the Home Team, chat with a Home Performance with ENERGY STAR contractor, and more.

This is a great home show, I just wish it were closer to the Bennington VT real estate market.  Would you like to see a Home Show in Bennington?  If you would, let me know, and maybe we can get enough interest.

• Clutter could indicate a lack of maintenance on the property, such as plumbing leaks, roof or electrical problems. Damage from these problems could result in an insurance claim.

• There is an increased chance of rat or insect infestation, causing health and public safety hazards.

Call Troy Richardson for a property evaluation and learn how to get top dollar for your Bennington, Vermont home!

But how do you know how much rent to charge?

• Is your home in a good area? The phrase, “location, location, location” works for rentals, too. Typically, the closer a property is to the core of a town or city, the higher the rent.

• Check out rents in the same area. However, take amenities into consideration, as well as the condition of the home.

• Consider adding a bonus. Owners can lure in tenants with the offer of free rent, additional services such as garbage pickup or mowing service.

• Including utilities in the rent is a great way to draw college students or seniors. Updated appliances, balconies, decks, fireplaces, or other “lifestyle upgrades’ can play into the amount of rent you can charge.

The easiest way to answer all these questions, is to bring in the professionals, and allow Troy and his team to value your property, offer you advice on how to make it more attractive, and let RE/MAX Maple Leaf Realty market your rental property.

Bennington VT, Investment

Many real estate investors miss out on tax benefits that could be keeping money in their pocket.

A program called T-ReX-Global can help investors track transactions and find tax write-offs, and offers a printable rental property tax form. Here are a few tax tips for investors:

• Document mileage to/from rental property.

• Keep track of repairs, upgrades, or damage to your property.

• Go to TRexGlobal.com for more information.

• Call Troy Richardson for your real estate needs!
Bennington VT, Investment

Last month in this column we looked at how the financial crisis on Wall Street and a slowing economy have been affecting the office and industrial sectors of commercial real estate. This month we examine the impacts on retail and multi-family properties.

Retail Sector
Over the last few years, healthy job growth and a steadily, albeit slower, expanding economy spurred demand for office and industrial space. Consumer spending was strong, fueled by credit availability. Consumer spending accounts for 70 percent of economic activity and has been the main driver of economic growth over the past few years. But as employment turned negative at the beginning of this year, and as credit availability dried up due to the financial crisis that emerged, consumer spending has slowed considerably. In addition, rising prices for most consumer goods, due primarily to increased fuel costs, have also curtailed consumer spending. These factors have rippled through the retail sector of the commercial real estate market.

Consumer spending decreased 3.1 percent in the third quarter of this year, and is expected to continue on a downward path in the fourth quarter as well This deceleration is in marked contrast to the 3 to 4 percent real growth in consumer spending during the past 5 years. Consumers have trimmed their spending on all fronts, except necessities. As a result, the retail sector is clearly feeling the pressure. Demand for retail space is dropping, with many companies closing retail outlets across the country.

However, the pace of completions coupled with declining demand, is causing decreases in net absorption. The national vacancy rate is moving up and is projected to reach 10.1 percent by the fourth quarter of 2008. Some of the hardest hit cities are in the Midwest. Topping the list is Detroit, MI with a vacancy rate of 17.7 percent for the third quarter of 2008. Columbus, OH recorded the second highest vacancy rate, at 16.2 percent, followed by Fort Worth, TX (14.2%), Indianapolis, IN (14.1%), and Kansas City, MO (13.6%).

On a positive note, most Southern California markets are posting improvements in vacancy rates. For the third quarter of 2008, Los Angeles posted a vacancy rate of 5.0 percent, while San Diego’s vacancy rate was 6.6 percent. Orange County remains on the list of markets with the lowest vacancy rates in the country, at 3.9 percent.

Given the increase in vacancy rates and the number of store closings, average retail rent is expected to have remained virtually flat in the third quarter of 2008, at 0.1 percent. For the year, rent growth will likely show only a moderate 1.2 percent increase, compared with the 3.2 percent gain for 2007.

It is unlikely that the fourth quarter, which encompasses the traditional holiday shopping season, will provide much relief. While gas prices have been declining, the economic slowdown prompted by the financial crisis is leading to continued job losses and deterioration in consumer confidence. Furthermore, retailers are responding to expected lower sales by trimming orders and inventories.

The Multi-family Sector
While the residential market is still dealing with delinquent mortgages and foreclosures, the multi-family sector is feeling some positive side-effects. A good number of potential first-time home buyers are waiting out the current economic and housing conditions, and choosing to rent. In addition, in markets with significant foreclosures, displaced homeowners are renting units in multi-family buildings. As a result, the multi-family market is likely to be the least impacted of the commercial property types.

Nationally, the vacancy rate was 5.4 percent for the third quarter of 2008, unchanged from the previous quarter. There are several markets, however, where the availability is significantly lower, making for a “landlord’s market.” Newark, NJ and Pittsburgh, PA both share the lowest vacancy rate for the third quarter, at 2.2 percent. Other markets with low vacancy rates are Minneapolis, MN and Philadelphia, PA, each at 2.8 percent. San Diego, CA rounds out the list, with a vacancy rate of 3.0 percent for the quarter. Markets where vacancy rates are higher than the national average include Jacksonville, FL at 8.5 percent, Phoenix, AZ at 8.1 percent, as well as Houston and Fort Worth, TX at 7.7 percent and 7.2 percent, respectively.

The number of multifamily completions remains relatively high, despite a slight drop in the third quarter of 2008. A major factor in completions continues to be the conversion of condominium projects into multi-family rental units. This is a particularly notable trend in markets that experienced increases in condominium construction over the past five years, such as Washington D.C and Miami. The pace of completions is matched, however, by positive net absorption. In turn, rent growth in the multi-family sector continues on a moderate, but steady pace. For the third quarter of 2008, rents are up 1.1 percent.

In the short run, the multi-family sector is slated to remain stable. By the end of 2008, the vacancy rate is expected to be 5.5 percent, only slightly higher than the 5.4 percent during 2007.

Conclusion… and for more information
The credit crisis has hit the commercial real estate market harder than the residential sector. The lack of liquidity in capital markets is causing companies to cancel or postpone many commercial real estate transactions. Commercial market fundamentals, which have held up fairly well for the first part of the year, are showing signs of decline. Demand for space, particularly in the retail sector is down and vacancy rates are trending upward. The recent bankruptcy of Circuit City highlights the difficulty of retailers to operate in the current economic recession. The continued job losses are likely to also impact retail sales, especially during the crucial holiday shopping season.

Consumer spending will continue to tighten for the foreseeable future, with further dampening of the retail market. The outlook for the apartment rental market is a bit brighter; it should stay fairly positive, with a moderate level of growth.

For more information about commercial real estate sectors, visit www.realtor.org/research.

Bennington VT, Investment, Real Estate

Remember the ancient curse, “May you live in interesting times”?  While many are indeed cursing the current real estate climate, others see opportunities.  In a “soft” market, the short-term options dwindle, but seasoned investors in for the long haul are positioned to take advantage.

In the words of billionaire J. Paul Getty, “Buy when everyone else is selling and hold until everyone else is buying.”  Just like the stock market, more money is often made in a down cycle than in an up market.

Slower times encourage sellers to be more open to negotiation.  Combine acceptance of lower prices with currently low interest rates, and you’ve got the perfect recipe for bargains.  Real estate is continually cycling, and it’s guaranteed that prices will rise again.  The time to get in is now, before that begins to happen.

A “buy and hold” strategy works in this market, while your property appreciates.  While you wait, consider leasing it.  The property can pay for itself with rent collected, and an investor that can pay off a small mortgage is in an excellent position indeed.

Learn from your real estate agent and tax advisor how a “1031 Exchange” can greatly reduce your tax liability when it does come time to sell your investment.  Now is the time to get in, but be sure to know how you’ll get out, too!

Bennington VT, Buying, Selling

The study, which is sponsored by the Ewing Marion Kauffman Foundation, found that some areas encouraged far more entrepreneurial activity than others.

The 10 states with the highest entrepreneurial activity rates were:

1. Idaho
2. District of Columbia
3. Arizona
4. Tennessee
5. Louisiana
6. Wyoming
7. Vermont
8. Montana
9. Georgia
10. California

The 10 states with the lowest entrepreneurial activity rates were:

1. West Virginia
2. Alabama
3. Delaware
4. Pennsylvania
5. Ohio
6. Connecticut
7. Rhode Island
8. Hawaii
9. Washington
10. Virginia

Among the 15 largest metropolitan areas in the United States, the highest entrepreneurial activity rates were in Phoenix, Riverside-San Bernardino, Atlanta, Los Angeles, and Miami. Philadelphia posted the lowest rate of entrepreneurial activity.

Source: Ewing Marion Kauffman Foundation (04/24/08)

Reprinted from REALTOR® Magazine Online April 24, 2008 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2008. All rights reserved.

Bennington VT, Investment

Energy use and savings. Funded by the U.S. Green Building Council (USGBC) and the EPA, the New Buildings Institute study found that buildings certified by the USGBC LEED system are performing 25 to 30 percent better on average than non-LEED certified buildings in terms of energy use. NBI’s study showed a direct correlation between increasing levels of LEED certification and increased energy savings.
Higher rent, occupancy rates. Meanwhile, a new CoStar Group study calculated that LEED buildings command rent premiums of $11.24 per square foot over non-LEED certified buildings and have 3.8 percent higher occupancy rates. The report further confirms that Energy Star buildings represent a $2.38-per-square-foot premium over comparable non-Energy Star buildings and have a 3.6 percent higher occupancy.

Source: Interior Design, Nicholas Tamarin (04/08)

Reprinted from REALTOR® Magazine Online April 15, 2008 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2008. All rights reserved.

Bennington VT, Buying, Selling, Investment

 

First, understand that there are four basic types of insurance, some required, some not. Title insurance protects you in the event that title to the property is found to be in question. You definitely want to purchase title insurance as part of the closing transaction.

Homeowner’s insurance provides coverage in cases of theft, damage and liability. Your lender will require this policy, so this is another absolute necessity.

Flood insurance may or may not be required, depending on the location of your new home. The federal government provides this policy to cover replacement value of the home and its contents. Consult with a local real estate agent to determine necessity and restrictions.

Finally, a newer and very popular form of “insurance” is the home warranty, often provided by the seller as “peace of mind” for the buyer. These are often one-year policies that cover repairs to systems and appliances, and more details on this are coming up in my next column. In the meantime, consult with a real estate agent if you have any questions or concerns about any of the insurance policies addressed here.

Bennington VT, Investment, Safety

Now imagine if you had a legal problem involving that kind of money – would you prepare and present your own case to the judge without an attorney? Not surprisingly, managing legal issues is just one of the top reasons that most sellers seek the representation of a qualified real estate professional.

On the paperwork side, there are offers to purchase, sales agreements, inspection reports, title investigations, and more, all leading up to the final closing. On the personal side, there is the experience and skill required to successfully negotiate between parties, as well as to anticipate and resolve the myriad issues that can arise from listing to offer to sale.

Considering the size of your investment, why would you put any of your stake at risk by forgoing the assistance and advice of an experienced professional? Maximize your returns with a minimum of hassle and cost. You wouldn’t go to court without an attorney, and you wouldn’t operate without a surgeon. It’s easy to see that some things are just too important to handle without an expert.

Bennington VT, Investment