Those working in the real estate industry should have a clear understanding of how great real estate is to invest in and they should be investors themselves.  I've been in this industry for many years as a loan officer, property manager, investor and landlord.

 One thing that always surprises me is how many people in the industry don't invest in real estate and don't understand it.  As someone that is excited about real estate I often get in conversations with people about rentals and long term real estate investments.  I've been asked so many crazy questions even from people in the industry.  For example:

• How much more should I charge for rent than my mortgage payment?

(Ans. Rent is dictated by the market not your bills.)

• Aren't you worried about the value of the home going down?

(Ans. No, my ability to pay the mortgage is not influenced by the value of the home.  Plus, real estate is best as a long term investment so I don't care about a couple bad years.)

• The stock market has a higher rate of appreciation.  Why wouldn't I put money there instead?

(Ans. This is my favorite.  I even read a news article that was answering the same question and they also wrongly concluded stocks are better.  Anyone that thinks this really misses the biggest advantage of real estate, leverage.  For example, If I have $10K.  I can buy a $100K house or $10K of stocks.  Right from the start I have a bigger asset with real estate and that $100K house will appreciate faster at 10% than the $10K of stocks will at 15%.  Plus, if you want to take money out of the house you can borrow against it and you don't loose the asset.  Try taking money out of your stocks without loosing the asset.  You can't because the asset is the money.)

• Isn't it risky?

(Ans. I'm never sure how to answer this.  Is there risk?  Yes.  In my opinion there's not much risk because I understand it.  Plus, what is the alternative?  Do nothing?  If you always avoid risk you're not ever going to do anything.

• Aren't you worried that a tenant will destroy the place?

(Ans. Not too much, I do have to be prepared for such a thing and proper screening does reduce that risk.  Plus, how much damage can one person do?  Even if they did a lot and the bill was $5-10K.  I make more appreciation than that in one year.  So as long as I'm able to afford it then it is still a great investment.

 I don't understand people that have been in this industry for several years and they only have one house or they are renting.  Sure sometimes there are financial/credit reasons but many times there is not.  Shouldn't a real estate professional be personally involved in real estate?  If I needed a realtor I'd want to make sure they have been through the purchase process themselves.  If I wanted to buy investment properties I'd want a realtor that has their own investment properties and would know what I need.

 Real Estate is not complicated.  To be successful with real estate you don't have to find the perfect deal.  You don't need to order books and tapes from infomercials and you don't need a complicated spreadsheet to determine if a property is a good investment.  If you want to be a successful real estate investor you only need to understand this one big secret: remember what homes used to cost?  Now they cost more.  That's it.  People will always be saying that and in the long run it will always be true.  Other than that, get some good professionals on your side to take care of the details.

 People always look back and say things like, "I should have bought back then", "I wish I had just done it", "that property is worth so much more now", "imagine if we'd bought a couple houses back then."  But they didn't buy because they wanted a better deal or they were unsure of the real estate market or they wanted to save up more money, etc.  Here is a valuable tip:  When it comes to real estate waiting to buy is never a good financial move because then appreciation is working against you instead of for you.

 So to anyone involved in the real estate industry that is not already personally involved, I say join in and buy, buy, buy.  You will learn more, be a better advisor and you'll be much more successful and wealthy.

Jeff Stinson

Property Manager

www.stonebridgerealestate.net

I hear mortgage brokers say, "I'll sign up when they start doing more for me.  They should be more like the NAR is for their people."  To anyone that thinks this way I say:

If everyone took your view on it NAMB would not exists at all.  NAR is able to step in and do bigger and better things because Real Estate Agents get involved and sign up.  NAMB has been using their recourses fighting all the stupid bills that legislators have been trying to pass that would have already put brokers out of business.  You think it's bad now?  It would be much worse if NAMB wasn't doing their job.  You would know that if you participated and got involved.  If you want something to change then get involved.  Don't just sit around complaining that someone else needs to take care of you.  NAMB has high hopes and wants to do more.  It is made up of hundreds of volunteers and thousands of members that are actually willing to do something to protect their industry.  NAMB wants to do more but they need more support and people like you are the reason they can't.

If you want NAMB to have more money to do more for you, than you need to help support them.  NAMB is way over budget because it is very expensive to fight all the bad laws that are being proposed.  If you won't contribute financial with a membership fee (which pays for itself in free meals and trainings) then at least take the time to write your congressman and local representatives or are you waiting for someone else to do that for you too?  Actually, if you had signed up with NAMB they do write those letters for you.  When there is a critical issue you get an email with a letter already written out and they tell you where to send it.

Do you want to see NAMB doing public announcements and commercials to educate people on what is really going on?  Then do your part.  They have had a tough couple years and have done amazing things for our industry.  But there is no way you'd know that if you aren't a member.  All you know is what you think you know, which is a lot less than you think.

After saying all of this I want to point out that I am only a member of NAMB.  But I pay my fees and go to the meetings and I know what is going on.  How many of you do?

Weirdly, tenants have to be trained to follow the rules or they will walk all over you.  Anyone that can't respect the rules is not someone that you want to keep as a tenant.

It is important for Landlords to follow and enforce every part of the lease.  Landlords must not give one time waving of a late fee or payment plans for late rent. If someone is late you can not agree to getting paid later without compromising the lease agreement.  I learned this the hard way.  For example: If someone says, "I can't get you rent until the end of the week" you don't say "okay".  You need to say, "I understand your difficulties, but it is in your best interest to get caught up as fast as possible."  Otherwise, you have agreed to new terms that are outside of the lease agreement and you've put the whole agreement in jeopardy.  Plus, this way they feel the pressure to get caught up.  I also suggest posting a 3 day notice the very 1^st day they are late.  I print mine on pink or red paper to make them more intimidating.

It all sounds harsh but it keeps life much easier for me and I have plenty of tenants that like working with my company and stay for a long time.  They understand right from the beginning what is expected of them and what they can expect from me.  In saying all of this I'm not all mean.  I do my part too, I take care of the property, I'm quick to resolve a problem and maintenance issues and I'm fair when it comes time to return a security deposit.  The tenant is still the customer and needs to be treated like you appreciate their business but at the same time real estate is too expensive to put up with any of their games.

Jeff Stinson

Property Manager

www.stonebridgerealestate.net

Proper screening avoids a lot of problems.  I tell plenty of people that their application is denied.  It saves me a lot of problems later and protects my properties and the owners from expensive repairs.  It sounds harsh but I can't care about everyone's problems.  If they have to explain their situation to me I most likely will not rent to them.  I'm not willing to make other peoples problems my problem by taking them on as a tenant.

A good way of finding out if a tenant will be a problem is by letting them talk.  A lot of renters don't realize landlords are essentially looking at a renter as a business partner.  They think landlords are in the business of providing housing.  That is not the case.  Landlords are in the business of making money from cash flow and appreciation.  This can be most effectively done with a good business partner or in other words a good tenant.  Potential tenants will call me all the time and before they even see the place or fill out an application they start telling me all their problems and explain to me why nobody wants to rent to them.  After letting them talk I usually know I no longer need to waist time with them and I kindly explain that it doesn't sound like they will fit my guidelines and I wish them good luck.

I'm also amazed how many times I get a partially filled out application.  When I tell the person they need to finish filling it out and resubmit it some people get mad, others never reapply and some even resubmit another incomplete application.  My application isn't that long either.  It is one legal page long and only asks for essential information yet they must think I don't really want the information, or that I don't need it or they don't want to tell me.  Either way it must be filled out right or the answer is no.  Weirdly, tenants and prospective tenants have to be trained to follow the rules.  Anyone that can't respect the rules is not someone that I want as a tenant anyway.

One BIG red flag is if they are not able to pay the security deposit in full.  If they need to pay it over time the answer is ALWAYS no.  If their finances are that tight then they will have a hard time paying rent on a month that the car breaks down or something else happens.  When I tell people,"no I will not let you pay the deposit over time" many times they respond, "that's ok I can figure it out myself."  I always get a laugh from that response.  I think if you can then why were you asking?  If you don't make their problems your problem they can usually figure it out themselves and if they can't you don't want to work with them.

I find it is important to never give in to an applicant. It lets them know you won't be a push-over landlord and some people are looking for a landlord that is a push-over.

Some may say I'm too "tough" on applicants and tenants.  I say I'm only expecting people to act like an adult in the grown up world.  I expect people to fill out a complete and accurate application and then I expect them to live up to the lease, just as they would expect me to live up to what I agree to on the lease.  At the same time an applicant is a potential customer and needs to be treated with respect and they need to feel like (until I know differently) that their business is important to me.  Being "tough" doesn't make it hard to fill a vacancy either.  I can usually get a place filled in a few weeks or less.

Jeff Stinson

Property Manager

www.stonebridgerealestate.net

I've learned a few things about meth testing and there are some things people need to be careful of.  I'm a property manager in Utah and I've talked extensively with my attorney about Meth.  One major pit fall people get stuck in all the time is if you have a need to get a place inspected make sure you tell the inspecting company that you don't expect them to find anything wrong and if they do you will not be hiring them to clean it up.  You will only pay them for the inspection.  Inspectors have been known to report their "negative findings" to the state immediately.  That way the state is on your back to get it cleaned up and the inspector is standing there ready to clean it up for a very hefty fee.  You will also find that they will be more honest in their reports if they know they will not be hired for the job of cleaning it up. - Some have a very hard time being honest if they think they will get clean up work out of it.

The other problem is there is no science involved to determine what is and is not safe levels of Meth.  Each state is different and nobody even knows at what point Meth contamination is dangerous.  In Utah, as in most states the rules are so ridiculous that if someone had sat on a couch where meth had been smoked, then they got up and came over to your house and sat on your couch you would probably fail a meth test and your place would need to be decontaminated, it is ridiculous.  I think at those levels we have all been exposed to Meth and when we are talking about thousands of dollars to decontaminate a place the states needs to be sure it is necessary before requiring it of someone.

For more property management issues visit my website www.stonebridgerealestate.net and feel free to contact me.

Jeff Stinson

Property Manager

Currently in the Media, there has been a lot of information coming at me, as well as everyone else, about "evil subprime loans", mortgage fraud, foreclosures, and depreciating home values all causing a housing crisis that will destroy all life as we know it.  With all this negative information we are left wondering: Is it really that bad?  Has the impending bubble finally burst?  Who will save us?

I'd like to reassure as many people as I can that it is not as bad as it sounds and I'll show you why.  Having said this, I do recognize the economy and housing market have slumped from where we were a couple years ago and that some people and families are being hurt by these changes in a very serious way.  I understand this personally, being involved in many aspects of real estate.  My family and I have felt these hardships and have had to reevaluate our own needs vs. wants.  But, the outlook is NOT grim.  Real Estate is still and always will be one of the best ways to build long term wealth. 

Let me illustrate by pointing out some misrepresentations that I have seen.  A local newspaper states "Utah foreclosures up 52%" as its title.  Well that sounds bad and not an uncommon thing to see and hear about many different areas of the country.  The same article also mentions Utah had one household in 1288 being the subject of a notice of default or a foreclosure.  That's right, only 1 out of 1288 houses.  That is the same as 0.078% of all the houses in Utah and not all of those were foreclosed on because that number even includes those that only received a notice.  Now if that number is increased 52% that would put the total "foreclosed or notice of foreclosure" houses in Utah at 0.12%.  Imagine if the same headline read "Utah foreclosures up to 0.12%."  Due to the small and seemingly insignificant number I don't think many people would care to read the article. 

This same newspaper published another article only 35 days later that predicts Utah will have 1 in 25 houses in foreclosure.  This is an insane prediction that is based on nothing and even if it were true that is still only 4% of the homes in Utah.  Now, let's take a closer look at the information coming from the two articles published by this newspaper.  To go from .12% to 4% would require the rate of foreclosures to increase by more the 3000%.  I think if they published an article that was titled "We predict Utah will see a 3000% increase in the number of foreclosures" people would dismiss them as crazy.  This article states its source of information is from "The Pew Charitable Trusts."  After digging into the "Pew" I found they got their information from "The Center for Responsible Lending."   Their website is filled with many exaggerated calamities, simplistic answers as to who we can point a finger at and equally simplistic solutions for what the government should do to fix everything. 

Now let's look at some information published from a reliable source.  The Utah Department of Real Estate published in their March 2008 newsletter "...in Utah the number of foreclo­sures actually decreased."  (I sent a complete copy of this article out to many of you earlier.  If you'd like another copy of it let me know).  This article is filled with a lot of accurate and positive information about Utah's economy and housing market and it actually reports there are great things on the horizon. 

If the information is not accurate why does the media report it?  Reporters would want you to believe that they are most concerned about keeping you, the public, informed.  Some of them have even disillusioned themselves into thinking that they really are that benevolent, but it is not true.  The truth is that if their headlines do not sell they are out of a job and they are motivated, like the rest of us, to stay employed and make a living.  So when they are trying to get the front page spot light they will write in such away that sensationalizes the truth or even worse, get their information from whoever has the most eye catching data rather than go to a reliable source.  I don't blame the media as a whole.  It is a competitive industry and "you have to play ball to stay in the game".  So, it is important that we realize what the media is motivated by when we listen to, read and see what they have to tell us. 

With all the recent news about real estate I've come to realize how much the media is wrong.  I'm involved in many aspects of the real estate industry and I understand how a lot of it works.  I'm constantly amazed how little research actually goes into some of the information that is put in front of us in the form of "news".  It seams like certain headlines start to sell and the rest of the media jump on board as they dash to find any "data" that can support the headline that they want. 

I believe the best thing you can do to protect yourself from misinformation is to understand the motivation behind the voice.  Do a little research yourself and talk to a professional involved in the industry being reported on.  People in the industry will know more about the subject than the person that knows how to sell the headlines. 

Remember; millionaires are made from down turns in the market.  When markets are down it is the best time to get involved.  In the real estate industry interest rates are still at historical lows, sellers are motivated, renters are plentiful, and rents are up.  You need accurate information from a Real Estate Professional.  I can help you take advantage of this unique time to get involved in real estate. 

Give me a call and we can discuss your personal situation.  www.stonebridgerealestate.net 

Sources: Deseret News "Utah Foreclosures up 52%" 3/13/2008; Deseret News "Foreclosure future grim for Utahns" 04/17/2008; www.pewtrusts.org; www.responsiblelending.org; "Utah Division of Real Estate News" March 2008.

With all the news going on about real estate lately, I have been asked, multiple times, if I am concerned about my real estate investments.  My answer is always no.  Utah is a great place to invest in real estate.  Currently Utah is the envy of the rest of the country.  The former Director of The Division of Real Estate for the State of Utah published a great article that gives a lot of valuable information to those of us that love and invest in real estate.

Reading or watching the news is rarely what one would call a positive or uplifting experience. Re­cent headlines are no exception. In fact, you might think the world is falling apart if you focused on the terms used to describe the real estate industry and housing market - words like crisis, deteriorating and collapse. While it is certainly true that many parts of the country are experiencing serious and in some cases even severe market adjustments, those doom and gloom headlines don't necessarily apply to our state.

So, while you may have read in recent news articles that "foreclosures are skyrocketing" you might be interest­ed to learn the fact that in Utah the number of foreclo­sures actually decreased. Yes, DECREASED. Maybe it doesn't make for the kind of eye-catching headlines that reporters are looking for, but it is a fact nevertheless.

Here are some more facts you may be interested to learn (and may even surprise you when contrasted to recent headlines). According to economic data re­cently released for 2007, Utah experienced population growth of 3.2%, which equates to over 85,000 new in­dividuals in our state. A telling sign for our economy is that over half of that 85,000 moved to Utah from out-of-state (anyone know of a good agent that could help find these people a home, or an appraiser, or mortgage broker?). The high number of move-ins is no wonder given that our state added almost 50,000 new jobs last year. Even though our economy has slowed somewhat recently, job growth for the end of December was still a healthy 3.6% (which is four times the national aver­age). Pay growth in Utah for 2007 surpassed the na­tional average at 5.5% and we had an extremely low unemployment rate of 2.7%. Given these numbers it is no surprise that Utah continually receives awards and accolades for our strong economy, including re­cently being named by the Beacon Hill Institute as "the most economically competitive state in the nation."

Besides the strong overall economic numbers, our state continues to post solid real estate numbers. Foreclosures are down and a recent quarterly re­port from the Mortgage Bankers Association showed Utah with the lowest foreclosure rate in the country for subprime ARMs. Like all things in the free mar­ket, real estate and housing rely on a healthy bal­ance of supply and demand. With some of the lowest rates in recent history and real estate on the market, supply is not a problem. Based on economic esti­mates that Utah will add another 85,000 people to our state this year, we can expect continued demand.

That said, it would be ridiculous to ignore the fact that real estate markets have tightened somewhat, even here in Utah. However, the economic indicators in Utah remain strong and the best way to overcome some of the ‘psychological' factors contributing to the slowdown of sales in Utah is to continue to grow our economy, so that people feel assured that this is still a great time to buy a home and invest in real estate.

It's a great time to invest in real estate.  Contact my office about all your Property Management, Real Estate and Mortgage needs.  I'd be happy to discuss any questions you may have or strategies you may be thinking of to get started in real estate or to improve and grow your current portfolio.

Sources: "Utah Division of Real Estate News" March 2008.