Renters and Landlords

Should You Rent Your House or Sell It?

March 2, 2023 by khproperties Leave a Comment

If you’re a homeowner ready to make a move, you may be thinking about using your current house as a short term rental property instead of selling it. A short-term rental (STR) is typically offered as an alternative to a hotel, and they’re an investment that’s gained popularity in recent years. According to a Harris Poll survey, 28% of homeowners have considered using a rental service to temporarily rent out their home for additional income.

Owning a short term rental can be a tempting idea, but you may find the reality of being responsible for one difficult to take on. Here are some of the challenges you could face if you rent out your house instead of selling it.

A Short-Term Rental Comes with Responsibilities

Successfully owning and renting a house takes work. Think through your ability to make that commitment, especially if you plan to use a platform that advertises your rental listing. Most of them have specific requirements hosts have to meet, and it takes a lot of work. A recent article from Bankrate explains:

“Managing a rental property can be time-consuming and challenging. Are you handy and able to make some repairs yourself? If not, do you have a network of affordable contractors you can reach out to in a pinch? Consider whether you want to take on the added responsibility of being a landlord, which means screening tenants and fielding issues, among other responsibilities, or paying for a third party to take care of things instead.”

Not only is there the upfront time and cost of owning a short term rental, but there are also risks that could come up for you down the road. Investopedia warns:

“Risks of hosting include renting your place to rude guests, theft or damaged property, complaints from neighbors, and potential regulatory violations depending on your location.”

There’s a lot to consider before taking the leap and converting your house into a short term rental. If you aren’t ready for the work it takes, it could be wiser to sell instead.

Your House May Not Be Ideal for Your Rental Goals

Not every house ends up being a profitable short term rental either. One of the biggest factors is where your home is located. The less likely your neighborhood is to be a travel destination, the fewer requests you should expect from potential renters – and that impacts your bottom line. An article from the National Association of Realtors (NAR) advises:

“When it comes to the viability of profitable STRs . . . consider factors like location, amenities, and whether the property is appealing. Most people seek STRs in locations where they vacation, so proximity to attractions is important. Likewise, the property should cater to a variety of travelers.”

It’s smart to do your homework and learn how much rentals in your area go for, how much business they get throughout the year, and how this compares to your goals.

Avoid The Rental Trap This Year

February 13, 2023 by khproperties Leave a Comment

If you’re a renter, you likely face an important decision every year: renew your current lease, start a new one, or buy a home. This year is no different. But before you dive too deeply into your options, it helps to understand the true costs of renting moving forward.

In the past year, both current renters and new renters have seen their rent go up based on information from realtor.com:

“Three out of four renters (74.2%) who have moved in the past 12 months reported seeing their rent increase. The strain from recent rent hikes isn’t exclusive to renters who have recently moved. Nearly two-thirds of renters (63.2%) who have lived in their current rental between 12 and 24 months, and likely renewed their lease, have also reported increases in their rent.”

And if you look back at historical data, that shouldn’t come as surprise. That’s because, according to the Census, rents have been rising fairly consistently since 1988 (see graph below):

So, if you’re considering renting as an option in 2023, it’s worth weighing whether this trend is likely to continue. The 2023 Housing Forecast from realtor.com expects rents will keep climbing (see graph below):

That forecast projects rents will increase by 6.3% in the year ahead (shown in green). When compared to the blue bars in the graph, it’s clear that the 2023 projection doesn’t call for an increase as drastic as the ones renters have seen over the past two years, but it’s still above the historical average for rent hikes between 2013-2019.

That means, if you’re planning to rent again this year and you’ve not yet renewed your lease, you may pay more when you do.

Homeownership Provides an Alternative to Rising Rents

These rising costs may make you reconsider what other alternatives you have. If you’re looking for more stability, it could be time to prioritize homeownership. One of the many benefits of owning your own home is it provides a stable monthly cost that you can lock in for the duration of your loan. As Freddie Mac says:

“Monthly rent payments may increase over time, but a fixed-rate mortgage will ensure that you’re paying the same amount each month. With a fixed-rate mortgage, your interest rate is locked in for the life of loan. Steady payments allow you to budget wisely and make plans for the future.”

If you’re planning to make a move this year, locking in your monthly housing costs for the duration of your loan can be a major benefit. You’ll avoid wondering if you’ll need to adjust your budget to account for annual increases like you would if you left your housing payment up to your landlord and their renewal cycle.

Homeowners also enjoy the added benefit of home equity, which has grown substantially. In fact, the latest Homeowner Equity Insight report from CoreLogic shows the average homeowner gained $34,300 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. Wr mortgage on a house, you grow your wealth through the forced savings that is your home equity.

If you’re thinking of renting this year, it’s important to keep in mind the true costs you’ll face. Let’s chat to see how you can begin your journey to homeownership today.

New Apartments on Blanco Road and Wilderness Oak

October 11, 2018 by khproperties Leave a Comment

It wasn’t that long ago that driving by the corner of Blanco Road and Wilderness Oak, we began to notice crews marking trees and flagging utilities. Soon construction began on a set of new apartments taking up the entire block. As the apartments come together, we thought we’d share what we’ve learned so far about the new Los Robles Apartments since it’s just down the road from our offices (at 21232 Gathering Oak, #107 – stop by when you’re ready to lease and we’ll gladly help you what you’re looking for).

Los Robles Apartments will offer a variety of one and two bedroom units in several three story configurations at their site on the corner on Blanco Road and Wilderness Oak. A planned 312 apartments on 13 acres, they are self-described as luxury apartments with square footages ranging from 668 to 1,195. Looks like all of the apartments will have balconies, with second and third floor units having optional secondary balconies off of bedrooms. Initial pricing for one bedrooms starts at $1,080 and $1,505 for two bedroom units.

Amenities are said to include a resort style pool and fitness center, both typical in apartments these days, but there is also mention of a natural preserve Biergarten. This of course intrigues us and we look forward to seeing how this part of the amenities comes together.

Interior spaces look to focus on modern design elements – granite counters, wood-look flooring, stainless steel appliances, under mount sinks, tile backsplashes, and under cabinet lighting. Los Robles is still under construction, so for now, there are only renderings and design mockups to view on their website, but we are eager to see the finished product.

The apartments don’t come without some controversy of course. Built on a large wooded area, the space was stripped clean of most of the trees before construction began and local residents have voiced concerns over traffic in the area. As anyone coming down Wilderness Oak to Blanco Road (or southbound on Blanco Road from neighborhoods like Timberwood Park) can tell you, it can be quite congested in the morning and there have been way too many accidents on Blanco Road as people try to turn on to it from auxiliary roads like Gathering Oak (which has no traffic lights). A new traffic light is set to go in to help alleviate some of the concerns, but many residents don’t feel it’s enough.

If you’d like to learn more or need assistance finding an apartment, contact one of our agents and they can help you find the apartment that meets your needs and fits your budget.

Los Robles Apartments

20838 Blanco Road
San Antonio TX 78258
www.losroblesliving.com

image courtesy of condosccsca

Need Help Finding a New Apartment? Apartment Locating Services

November 19, 2016 by khproperties 3 Comments

If you’re in need of an apartment, the agents at Kimberly Howell Properties can help. Searching for an apartment is somewhat different than looking for rental homes. This seems to create a fallacy that local real estate agents can’t help you find them. That couldn’t be further from the truth. The agents at Kimberly Howell Properties can assist you with apartment locating services as well…and the best thing is, their services are free to you! Many renters think they have to pay an up front fee to an apartment locator, but that is not common practice here in San Antonio (we know some areas of the country work this way, but that’s not how we do business around here), and much like house rentals and sales, the owner pays the fees to have us help find tenants.

So next time you need to find a new place to live, contact one of our agents, and let them know what your needs are. They’ll help you identify areas of interest and apartment complexes within your budget, take you on a tour of some properties, and help you navigate the apartment office’s paperwork and needs in order to get you settled in. Long gone are the days where you had to spend hours on the internet researching, then a few more calling each apartment complex to find out their requirements, and then a weekend or two driving around town only to find disappointment. Let our agents do the heavy lifting and get you moved in with a lot less stress and worry.

image courtesy of Bernard Spragg

How to Spot Hot Markets for Real Estate Investing

July 8, 2016 by khproperties 2 Comments

If you’re thinking about getting into real estate investing, particularly buying homes for rental income, it’s no secret that you’ll want to find the hidden gems before everyone else. Buying in a neighborhood before it gets hot, at a low price, and being able to ride the wave of popularity as the property values grow can be a great investment strategy long term and help you build your real estate empire. But getting in early isn’t always easy. The whims of taste and cool can change overnight and buying in an area that everyone thought might be up and coming may not pan out.

There are some things to look for and with a little knowledge, research, and intuition, you may just find yourself sitting on the next hot property.

Real Estate Investing 101

The concept is simple. Buy homes at low prices that bring in rental amounts that exceed your mortgage payments and expense on the home. Your first step is to run the numbers. Need help with that? This post from BiggerPockets makes it so simple, you can calculate all the numbers you’ll need for rental property on a napkin. Like any investment, you want to see what’s coming in and what’s going out – the comparison of the two is where you earn (or lose) money on the deal. Some investments pay off long term, some pay off the day you purchase them. The goal is to be on the positive side as quickly as possible.

An important thing to remember is that these homes you’re buying are investments. As investments, you’ll want to protect them long term. Take care of them and they will take care of you. The biggest mistake we see new investors make is not taking real estate investing as a serious long term endeavor. If the house needs repairs, don’t ignore them. Those problems build up the longer you put them off and they can get much more costly the longer you wait. Regular maintenance of systems in the home will help you avoid costly malfunctions. Treat your properties well and they will treat you well too.

Spotting Hot Markets for Real Estate Investing

The first step is playing the simple numbers game – look for areas with low sales prices and higher rents. Be sure to check rental prices over time – are they rising or are they falling? Are there a lot of rentals available in the area? How long do the rentals stay on the market? Look at individual properties – do they stay rented or is there a lot of turnover (and beware too much short term turnover, such as every few months)? The more you look at the activity in the neighborhood, the better. Your real estate agent can help show you the comps for the area, both rentals and sales.

Watch out for other investors who were looking to spot trends for real estate investing and may have misjudged the market. Look for homes that were bought and sold within short time periods. Were they improved and flipped or is someone cutting their losses because the area didn’t pan out? There may be bargains there, but buying a property you can’t rent down the road isn’t going to be to your advantage.

Listen. There is always chatter out there about what’s hot and what’s not. Look to where your target renter spends their time and listen to them. They’ll tell you where the trends are going. Social media can be a great tool for this kind of research. Read the business papers and see where developers are putting their money. You don’t want to wait until the last second though, so be ready to move quickly if you think you’ve spotted an uptick in interest. Of course, your intuition comes in handy here too. See something that just seems too good to be true or only one person seems to be gravitating towards? Remember, not all investors get it right and sometimes even the biggest projects fail.

When analyzing the sales data in a given area, look for days on market. Is there a sudden downward trend? When the average days on market starts to fall, it may indicate that investors are starting to snatch up properties because there’s something going on. Be careful however, as it may just signal a normal spike in activity. This is where long term trends can really help you get a better picture. Comparing the long term and short term trends can help you see whether this is normal or there’s actually something going on. Remember, when days on market trend downward, prices tend to move upward. Shorter days on market typically precede price hikes, so be sure and time your entry carefully, you never want to be on the growth side of prices.

Look to the commercial market. Corporations spends millions each year on market research. They don’t randomly choose their next location, so if you see development happening, you can be sure they see value in the area. Learn where the businesses are going in before they start building. Know your target renter’s likes and dislikes as well. Stores like high-end grocers and coffee shops are popular these days, so look for Trader Joe’s, Whole Foods, and mom and pop artisan coffee shops. The more you know about the local commercial trends, the better you can spot activity before everyone else does.

Connect with the city. Attend planning sessions, committee meetings, public hearings – the more you know about what’s happening in your city the better. Pay special attention to any meetings that involve the public being able to speak. Listen to their concerns and thoughts and get the insight on what’s happening in their local communities. Serve their needs and give them what they want and you’ll find yourself in a much stronger position. Listening is probably the investor’s greatest skill – the people will tell you what they want and need.

Finally, your mom was right when she taught you not to put all of your eggs in one basket. While you may want to purchase more than one property in a trending neighborhood, real estate investing is a long term strategy and trends do come and go. While downtown areas are experiencing a surge all over the country, there was a period where they were abandoned for the suburbs and suffered greatly for it. Spread your investments around so that you have a cushion of safety in case one area doesn’t pan out or finds itself suddenly on the “not hot” list. Like the stock market, some good planning will help you weather any storms that may come in the local areas housing market.

image courtesy of 401(K) 2013

Landlords: Don’t Download a Lease From the Internet

June 22, 2016 by khproperties Leave a Comment

If you’re a landlord or an investor buying rental properties for the first time, it’s easy to google and download a lease from the internet to use for your properties. A quick search for “texas lease download” while writing this post brought back 1.4 million hits. Leases are everywhere on the internet and we’ve seen them used many times. Trouble is, those leases often lack some of the most basic protections provided by the Residential Lease put out by the Texas Association of Realtors. The TAR lease as it is known by most agents has been tested and tweaked over the years to provide a solid foundation for your rental properties. We’ve run into quite a few situations where leases were hastily downloaded by an investor looking to save a few dollars, but when push came to shove in a court of law, they realized that the lease they had was pretty much worthless and that attempt to save a few dollars up front wound up costing them much, much more in the long run.

Obviously, whenever we write a post like this, we are aware of the self-serving nature of such – use us or face incredible difficulty…of course we’re going to say that, right? We take our jobs and our industry quite seriously and we recognize that there are plenty of people out there that go it alone without the help of an agent. We care for those people just as much as we do our clients, even though we know we can’t always convince them and they will still go it alone. We understand this, but because of the nature of our business and the things we see on a daily basis, we feel we must try to help as many as we can, so that they don’t get caught up and find themselves stuck in a sticky situation just because they didn’t know it could happen.

Don’t Download a Lease From the Internet

“Don’t download a lease” – sounds pretty ominous, doesn’t it? There are some good leases out there available on investment sites, but they are few and far between. Here in Texas, the TAR Residential Lease is written with landlords in mind and compared to some other states, it is definitely more favorable to landlords. It gives them a lot of protections and also outlines a lot of “what if” scenarios that most landlords wouldn’t even think of if they wrote one themselves. They are tested over time and rewritten by the Texas Association of Realtors legal team to adapt to new laws and as reactions to any lawsuits that have cropped up over the years.

The dangers when you download a lease from the internet come in many shapes and forms. We’ve seen everything from leases that attempted to rewrite the Texas Property Code (which you can’t do) to forgetting to cover some of the most basic circumstances you may encounter as a landlord. Most of the downloaded leases we’ve read are well intentioned, they just lack some of the finer points and it is those finer points that lose court cases. As we often teach our agents, when a lawsuit happens, it’s often less about proving you did the thing you’re being sued for, but rather building a profile of you as being negligent and unknowing of the laws that affect real estate. By proving you could have done it because of that negligence and ignorance of the law, a lawyer is able to sow the seeds of doubt in your abilities and therefore sway a jury to believe you did in fact do the thing you’re being sued for. Watch any court drama on TV and you’ll see exactly what we mean.

We’ve also seen more than a few “handshake deals” try to pass as leases. Texas law is clear – if it is not in writing it is unenforceable. Get it in writing, make sure all parties sign and date it and make sure you give copies to the tenants. Also, be sure you keep the copies stored somewhere you can find them later if you need them. Saying “I forgot where I put it” isn’t a very legal argument.

Tenants have rights too. Trying to remove those rights by writing clauses into a lease that negate those will always end poorly. Remember, when you’re facing a jury, you are seen as the big, bad slumlord and the tenant is the good guy. Everyone has a story about a landlord that they thought was mean and evil and it is those memories that the lawyers will play to in a lawsuit. It’s an uphill battle to start. If you’ve tried to remove those basic rights from a tenant, you’re going to lose.

The trouble when you download a lease is also knowing if you received one that is updated or not. The internet is one giant archive and if you download something written in 1999, it’s not going to hold up well to the law as it stands in 2016. Laws change over time and using something that is out of date or doesn’t cover newer laws can most certainly land you in hot water. We’ve even seen cases where a landlord downloaded a TAR Residential Lease (which clearly state they can only be used by members of the Texas Association of Realtors – your use of them can invalidate them if you are not a member), but they downloaded an older form. Staying up to date on these forms is part of what we do for our clients, so you need to make sure you do too.

Whatever you do, make sure you that if you do download a lease or write one up yourself, you actually get it signed. We’ve seen more than one case where an investor said they had a lease, but the tenant never actually signed it. No signature? You don’t have a lease.

What Happens With a Bad Lease

The obvious issue with having a bad lease (or one that is completely invalid) is lawsuits. You’re never going to win a lawsuit based on a poorly written lease that contains illegal or invalid language, isn’t signed, or lacks the particular protection you need in that lawsuit. Lawsuits are much more costly than the price of having a lawyer draw up a lease or involving a real estate agent to manage the property.

Another big issue we see with these kinds of leases is when the owner decides they want to sell. Investors will often sell their properties at some point for a whole host of reasons – that lease survives the sale and you must provide copies of it to the buyer. The new buyer is tied to the terms you set forth in the lease, so you may be binding them to something that is illegal or unenforceable. If the buyer does their due diligence, they may back out the deal and you will lose the sale. Even if they do buy it, you may be creating a situation where you may get brought back into the mix during a lawsuit as you were the one who initially set up the lease and created the issues the new owner is now facing. Being sued over a property you no longer own is not an ideal situation and a good use of your investment dollars.

How Can You Get a Quality Lease in Place?

As real estate agents, you know our first recommendation will be to contact a real estate agent that specializes in leasing in property management. These Realtors work with leases, landlords, and tenants on a daily basis and keep abreast of the laws and forms to help protect you as an owner. Much like not every agent is a commercial real estate agent, not every agent specializes in this field, so it is important to choose one that has experience in this highly specialized area of real estate.

The other way to get a strong lease written up is to talk to a lawyer and have them draft up a form for your use. Many of the leases available on the internet will say they were drawn up by a lawyer, but you should always be sure that it is drawn up with your situation and properties in mind and (we see this mistake made a lot) it is drawn up by a lawyer from the state you will be leasing in. A Pennsylvania lease differs greatly from a Texas lease, because the laws in both states are vastly different. If you do have a lawyer write your leases, make sure you have them reviewed and updated frequently so that as laws change, you stay protected.

The internet can be an incredible source of information, but it can also have its downside. If you download a lease from the internet, you may be exposing yourself to legal action that you’re not aware of or creating a completely unenforceable lease. We recommend all owners read and familiarize themselves with the Texas Property Code, particularly Chapter 92, which deal with residential tenancies. Being a landlord is not quite as simple as collecting a rent check every month, but when done properly, it can be an excellent source of income and long term wealth building. If you’re unsure of what you’re doing, it can be costly and because it is a highly litigious field of real estate, being proactive in putting together your leases should be top priority.

Disclaimer: As always, we need to remind you that we are not attorneys and as such cannot give legal advice. If you’re unsure of what implications your lease has, please contact a lawyer. We’d be more than happy to recommend a few to you.

image courtesy of Sørn