Boise Meridian Eagle Idaho Real Estate - Homes Sales and Boise Investment Properties

Michael Hon, CEO, The Iron Eagle Realty Team Assoc. Broker, Silvercreek RG The Iron Eagle Realty Team is a Full Service Real Estate Company. Our mission is to assist our clients in the successful acquisition and sale of their personal homes and/or investment properties in the Boise Idaho Real Estate Market. We have successfully helped our clients with short sales, investment properties and foreclosed / bank owned properties in the Boise Idaho Real Estate Market.

Monday, March 10, 2014

What is the Cap Rate and NOI on Rental Properties and are they Important?

Found this great blog on Linked by Mark Ferguson posted on March 4, 2014. If you are looking for a Boise investment property such as a fourplex, duplex or commercial investments, please visit us at www.ironeaglere.com.

If you have been around Boise investment properties you have probably heard the term cap rate and NOI. The cap rate on an investment property is a measure of what the returns will be assuming you pay cash for a property. I don’t use cap rate on my investment properties, because it doesn’t factor financing costs. I prefer to use the cash on cash return on my properties, but the cap rate can still give you a basic idea of a property’s returns.

NOI is the net operating income on a rental property and does not factor in debt service. The NOI can be another indicator of rental property returns, but can also be easily manipulated.

How do you figure the cap rate on a property?

The cap rate is a very simple formula; net operating income divided by the price of a property. For example if you buy a home for $100,000 and the net income is $10,000 a year, the cap rate is 10%. ($10,000/$100,000=10%)

What is the net operating income? (NOI)

The net operating income is how much money a rental property produces after expenses. This is another simple calculation and can be figured using our cash flow calculator. The NOI does not include debt service, which our calculator includes, but you can enter the mortgage payments as zero to determine the NOI. For example if the rents are $10,000 a year on a rental property and the yearly expenses are $3,000, then the NOI is $7,000.

What expenses are included in the NOI?

You will find different investors include different expenses to determine the NOI. Some investors may include vacancies and property management and others may not. Some investors may not even include any maintenance in their NOI projections to make their properties appear more profitable. If you are basing a purchase decision on the cap rate then you need to make sure all the expenses are accounted for. If the total rent for a property is $10,000 a year and the NOI is $10,000, then there are obviously expenses being left out of the equation.

How can the cap rate vary greatly on the same property?

The NOI greatly affects the cap rate. If the NOI does not include all expenses on a property, then the cap rate is going to be artificially inflated. I don’t like using the cap rate as an indicator of returns, because it does not factor into account debt service and the cap rate can be easily manipulated.

Why Cash flow is more important than the NOI

I think the cash flow on a rental property is much more important than the cap rate. The cash flow tells you exactly how much money you are going to make including expenses and debt service. Our cash flow calculator even helps you determine what the maintenance and vacancies may be on a property per month.

Why the cash on cash return is better than the cap rate

The cash on cash return tells you what returns you are getting on your cash invested into a property. The cash on cash return takes into account the amount of money invested based on leverage. The cap rate completely ignores leverage, which will make a huge difference in the actual returns an investor sees. Our cash on cash calculator can help you calculate the actual returns on a rental property including the debt service.

What can the cap rate tell you about different markets?

The cap rate gives a very basic idea of the return rate on rental properties. If you are looking to invest in long-distance properties, the cap rate can give you an idea of the returns in that area. Average cap rates in the country can range from 5% to 15%. There are many other factors to consider when determine where to buy, but cap rate can give you an idea on returns.

How can cap rates help you decide on single family versus multifamily

The cap rates can also give you an idea of the different returns on single family homes versus multifamily homes in an area. In Colorado the cap rate for a multifamily property tends to be around 5%. For a single family home you can see cap rates at around 8% in my area. I buy my properties below market value and see cap rates at 10% or higher on the purchase of my single family rentals. In other markets those percentages may be reversed on single family and multifamily homes.

Conclusion

The cap rate and NOI can be used to help determine the returns on rental properties, but there are also many other factors to consider like the cash flow and cash on cash returns. I personally do not pay attention to cap rate or NOI, because it does not giving me a clear picture of my returns.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! Click Here to Pre-Qualify for a Loan Online!
IERT logo

Regards, Michael Hon, REALTOR®CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Friday, February 14, 2014

Millionaires See Real Estate as Top Investment for 2014

Found this great article on Bloomberg Personal Finance

Millionaires See Real Estate as Top Investment for 2014
By Margaret Collins and David M. Levitt Feb 6, 2014 2:45 PM MT

U.S. millionaires see real estate as the top alternative-asset class to own this year, according to Morgan Stanley. (MS)

About 77 percent of investors with at least $1 million in assets own real estate, according to a survey released today by the New York-based investment bank’s wealth-management unit. Direct ownership of residential and commercial properties was the No. 1 alternative-investment pick for 2014, with a third of millionaires surveyed saying they plan to buy this year. Twenty-three percent said they expect to invest in real estate investment trusts, the second-most popular choice.

Wealthy investors are turning to a rebounding real estate market as fixed-income yields remain historically low and equities surge. U.S. commercial-property values rose 8 percent in the 12 months ended Jan. 31, and have jumped 71 percent since hitting their post-recession bottom in 2009, research firm Green Street Advisors Inc. reported today. The S&P/Case-Shiller index of home prices in 20 cities is up 24 percent from its 2012 low.

“After a year where the Standard & Poor’s Index rose 30 percent, some millionaires are moving money out of traditional, long-only strategies to find outperformance, and turning toward alternatives such as real estate and private equity,” said Gary Kaminsky, a vice chairman at Morgan Stanley Wealth Management in New York. “Sophisticated, high-net-worth investors are much more concerned about losses.”

The One57 residential building stands while under construction in New York.
Collectibles ranked as the third-most-popular alternative-investment choice this year, with 20 percent of millionaires saying they planned to buy, followed by private equity at 19 percent and precious metals at 16 percent.

Interest Rates

Wealthy investors see stocks getting expensive and interest rates staying stable or even declining over the next couple of years, Kaminsky said in an interview at a conference for Tiger 21 investors last week in Scottsdale, Arizona. That’s why they are looking more closely at alternatives including real estate for returns and income, he said.

Tiger 21 members, who have at least $10 million in investable assets, increased their average allocation to real estate last year to 21 percent as of the fourth quarter from 19 percent in the first three months of 2013, according to a separate study released by the New York-based group last month.

Will Ade, a Tiger 21 member, said real estate is a particularly attractive investment as stocks show vulnerability in 2014. The S&P 500 has fallen more than 4 percent this year, while developing-country stocks have tumbled on concern that the outlook for economies is worsening.

‘Lame’ Bull

“We had a great bull run last year,” Ade, a 60-year-old geologist, said in an interview today. “I don’t know if the bull is dead, but it certainly is lame right now.”

This year may be the tail-end of attractive investments in property before interest rates rise, said Ade, who has made his money finding oil companies and private investors to fund the drilling of wells. He said he is trying to purchase residential real estate in Miami right now.

“The really good real estate deals are getting harder and harder to find,” Ade said. “Once interest rates start to go up, whether it’s farmland or single-family dwellings there’s going to be huge downward pressure on real estate.”

Foreign Buyers

The Manhattan high-rise condominium buildings One57 and 432 Park Ave., where units have gone under contract for more than $90 million, are evidence of the faith that the very wealthy have in real estate, said Mitchell Roschelle, real estate advisory leader at PricewaterhouseCoopers LLP. Such properties have also attracted international buyers.

Wealthy foreigners have bought high-end U.S. properties for their safety and because they’re denominated in dollars, the world’s reserve currency, he said. This helps domestic millionaires maintain the value of their property investments.

“It creates competition, which drives the price up for everybody,” he said. “The sellers have multiple channels to sell into. That gives you more liquidity.”

Self-storage properties are among commercial real estate investments wealthy individuals are buying, Kaminsky of Morgan Stanley said. Retail shopping centers are seen as less attractive as more consumers shop online through companies such as Amazon.com Inc., he said.

Chilean Fund

Morgan Stanley Wealth Management surveyed 1,004 U.S. investors ages 25 to 75, with least $100,000 in assets, during the fourth quarter of last year. A third of them had more than $1 million.

BigSur Partners, a Miami-based wealth-management firm, has been helping some of its wealthy clients, who usually have at least $50 million, work with institutional investors such as a Chilean pension fund to invest in commercial real estate, said Chief Executive Officer Ignacio Pakciarz. Deals include an office building in Princeton, New Jersey, he said.

“We don’t feel there’s a lot of value in emerging-market bonds, high-yield bonds and highly rated fixed income,” Pakciarz said.

Owning the real estate is attractive because of the expected appreciation of property value and stream of rental income, as well as better control and supervision over the investments, he said. The firm has also bought office properties in Pittsburgh and Boston, multifamily residences in Texas and some industrial buildings for clients, and is looking for more opportunities this year in real estate purchases or lending, he said.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Monday, February 03, 2014

5 Ways to Pick the Perfect Time to Sell

I found this article on Trulia by Tara-Nicholle Nelson on January 29th, 2014 about when you should think about putting your Boise, Eagle, Meridian or Star home on the real estate market.

Smart sellers spend a whole lot of time and energy strategizing about how to sell their homes for top dollar. They factor in buyer demand, the competition, the job market, the mortgage market and their agent’s track record. And that doesn’t even account for all the time spent understand recent home sales in the area as an indicator of how local buyers will react to this listing.

Many a smart seller will also try to time their listing just right, too. And most often this looks like waiting until they feel buyers are sufficiently ready, willing, and able to pay a good price for the property. One timing consideration that sometimes gets short shrift is this: the calendar.

There’s a season for everything, as you might have heard. And recent Trulia data revealed some powerful geographically-specific seasonal trends in search activity for homes, adding proof to what agents have long known – the calendar portends various shifts in buyer activity, which sellers need to note. If you’re gearing up to list your home for sale, you should definitely take advantage of this interactive tool we’ve created to help you understand how these shifts play out in your area, and connect with your agent to discuss whether and how you might want to factor that into your home sale action plan.

But there are also a number of calendar-based factors you should just be thoughtful about as you put your plan for selling together. Here are a handful of calendars that should be – and stay – on every home seller’s radar screen:

1. The Academic Calendar. Families with school-aged children often find it less disruptive to house hunt in the late Spring/early Summer with the aim of moving in before school starts. Of course, we all know what they say about the best laid plans, so by no means should you let this stop you from listing your home at another time of year. Just know that demand for homes with convenient proximity to strong schools can uptick during the summer school break and around other times of year when kids are not in school.

2. The Tax Calendar. I cannot count the number of relatively unmotivated, looky-loo type buyers I’ve worked with over the years who got sudden, intense motivation from a massive, looming tax bill. For instance, many new professionals will seek to close escrow on homes between the time they graduate and the end of that same year, in an effort to deduct their closing costs and mortgage interest from their newly large incomes and avoid a big tax bill the following April. Similarly, just after tax time in April, a flood of newly motivated buyers come into the market, advised by their CPAs that the mortgage interest deduction is their best bet for not having to write as big a check to the IRS next year.

Fortunately for sellers, more buyers and more motivation means more demand and – all other things being equal – can translate into a faster sale at a higher price than at other times of the year.

3. The Weather Calendar. Many sellers who live in cold-weather climates are aware that wintry weather conditions can dramatically cut down on the numbers of buyers who are out viewing properties. This is why buyer searches for homes on Trulia peak earliest, in January, in warm-weather states like Hawaii and Florida – and not until after the Spring thaws in the Midwest, the South, the northeast and most of the West.

But what’s not as obvious is that the combination of what’s happening on the weather calendar and the specific features of your home can interact to impact your home’s prospects for sale – and its ultimate sale price. Behavioral economics researchers have found that homes with swimming pools sell for more in the summertime than they do in the winter. “When it is sweltering outside, a swimming pool just looks attractive. There’s an emotional connection because it reminds us of fun times we have in the summer,” said Jaren Pope, one of the study’s authors and an assistant professor of economics at Brigham Young University.

So, if you’re selling a home with ski slope access in the summer, you might want to paint the picture of a cozy, fun-filled winter by staging the place with ski gear and other items that help prospective buyers visualize how much fun they’ll have when winter comes. And vice versa -if you’re selling a pool house in the winter, consider making sure it is steamy and heated, if it has those features. Stage it with lounges, towels, lights – anything that showcases the pool to offset cold-weather buyer’s psychological tendency to discount the appeal of a pool in the winter.

4. The Holiday Calendar. During the holidays, many buyers simply prefer to spend their downtime celebrating with family and friends vs. house hunting, especially in locales where the winters are wet or cold. Our listing search data backs this up: nationwide, December is the slowest month of the year for home searches, and November is the second-slowest.

Does this mean the holidays are a bad time to have your house on the market? Not necessarily: some homes just show beautifully when all lit up and tastefully dressed up for the holidays. And the truth is that there is a hardy contingent of buyers motivated to close by year’s end for tax purposes, every year in every market. While buyers might be fewer in number, those who will brave rain, sleet and snow and forego holiday parties to house hunt can be some of the most motivated buyers of all.

5. The Gregorian Calendar (the regular old January through December calendar, that is). A survey just released by Fidelity Investments revealed that 54% of Americans said they typically consider setting New Year’s Resolutions related to their personal finances. This year, 26 percent of respondents said they are in a better financial situation today than last year (only 19 percent said so in 2012) and 28 percent say they are less in debt (vs. 25 percent in 2012).

Home buying tends to be a popular resolution among those with money on their minds at this time of year – and also among people looking forward to career promotions, developing their love and family relationships or relocating to a new home town. Make sure your home is well-represented on sites like Trulia at the beginning of the year (i.e., now!), when these life and financial change visionaries start searching the web for their next nest.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Tuesday, January 14, 2014

3 things to know about interest rates in 2014

Found a great article on Interest Rates for 2014 on housingwire.com. This definitely pertains to investment properties in Boise ID.

3 things to know about interest rates in 2014
Whether they rise or not, things are going to change

By Trey Garrison January 10, 2014 5:07PM

Interest rates will go up. Or they will stay the same. One of those two things will definitely happen in 2014, economists say, and some lenders and investors may have trouble adjusting to the change.

"We think rates are generally headed up. We have a growing economy both here and aboard,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association (MBA). "We’re going to get some differing data like today’s jobs report which was off, but the next jobs report may see employment up. We are anticipating the job market is going to grow in 2014 and the recovery will continue."

Further, he said, a longer-term factor will be that a growing federal deficit will put upward pressure on rates. And third, the Federal Reserve has already made it clear that if U-3 unemployment goes below 6.5%, it will let rates rise.

"We expect that in the third quarter the Fed will stop buying MBS and Treasurys, and start raising interest rates," Frantantoni said.

MBA is projecting interest rates on the 10-year Treasury yield to go from 3% in the first quarter of 2014 to 3.3% by fourth quarter of 2014, averaging 3.2% for the year, and then creeping up to 3.5% by the last two quarters 2015, averaging 3.4% for 2015.

MBA projects that 30-year fixed mortgage rates will go from 4.7% in the first quarter 2014 to 5.1% by the end of the year, and continuing a slow rise to 5.3% by the end of 2015.

Conversely, economists at international macro-economic research firm Capital Economics say they don’t expect interest rates to rise and that the Fed will keep a tight, tight leash on rates through 2014.

"The world economy has entered 2014 with a lot more momentum than it had a year ago. Business and consumer confidence have improved and unemployment is falling rapidly in several countries. However, while this should eventually prompt central bankers to raise interest rates, we do not expect significant hikes this year," the firm states in its Global Central Bank Watch report. "Instead, the Fed and Bank of England are likely to leave rates unchanged even after unemployment falls below their current thresholds, while both the ECB and the Bank of Japan look set to announce additional policy stimulus."

"The acceleration in growth over the past twelve months or so has been particularly strong in advanced economies In principle, this should pave the way for policy- makers to raise official rates from their current exceptionally low levels, particularly given that some central banks – notably the Fed and Bank of England – have explicitly linked future hikes to progress in reducing unemployment," the Capital Economics report states. "In practice, though, the four major central banks in advanced economies are likely to continue to tread very carefully in withdrawing stimulus, let alone actually tightening policy."

One big concern outside the housing and mortgage universe is that if interest rates rise too high, it could essentially bankrupt the U.S. treasury. The Fed is now printing 29 cents for every dollar the U.S. government spends, and servicing the national $17.3 trillion debt is costly even with low interest rates.

A study last fall by the bipartisan Committee for a Responsible Federal Budget said total interest payments on the federal debt in 2013 were approximately $255 billion. That’s based on the Treasury paying 0.01% on three-month bills and 2.98% on 10-year notes, as opposed to the historical average of 3.3% and 5.2 % respectively.

Frantantoni said typically the Fed has made it clear to the Treasury that it will focus on price stability rather than financing the debt, although he acknowledges there is a concern that interest payments on outstanding federal debt could be an issue. Economic growth concurrent with rising interest rates would serve to ameliorate these concerns through increased tax revenues and stronger job growth.

"We’ve had a couple of unusual years, and a lot of folks in the Fed would like to get back to the role of just minding monetary policy,” he said.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Friday, September 20, 2013

Boise Idaho Fourplex Market Update - Prices, Interest Rates, Cap Rates, Etc.

Boise Idaho Fourplex Market Update

Since Jan. of 2013, interest rates for buying fourplexes have increased about 1% from the low 4's to the low 5's. So the spread between interest and cap rate are now becoming too narrow for an acceptable cash flow. So, either rates need to come down (don't know if that will happen) or cap rates need to go up, which means prices need to come down. However, to maintain current pricing, rents to need to go up as well which is happening but not fast enough to compensate for interest rate increase.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Tuesday, August 06, 2013

Just Listed - Fully Leased Fourplex in Boise, Like New 6%+ cap rate

Asking $379,000; priced at a 6% plus cap rate.

We just listed this Boise Idaho Investment Property; Fully leased, like new fourplex in Central Boise. Built in 2005, close to St. Alphonsus Regional Medical Center, Boise Towne Square Mall and freeway access. Consistently rented in a well maintained fourplex development. Buyer's choice of property management. This will not last! BTVAI

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Tuesday, July 30, 2013

Prices and Rates and Rents, OH MY!!!

Boise Idaho Investment Real Estate Update

A lot has happened to the fourplex market in the last several months in Boise Idaho. Prices have definitely gone up, investment mortgage rates have also gone up and rents are as strong as they've been in a long time.

So why have prices going up?

1031 exchanges and cash buyers are the main drivers of the increase in demand for fourplex investments in Boise Idaho. Cash investors are pulling money out of the stock market and bank accounts. In addition sellers are reluctant to sell because of increasing prices thus leading to smaller inventory numbers. Therefore the increasing demand and the shrinkage in the inventory have led to increasing prices. The logic might be, “Should I leave my money in a bank account and make nothing or negative or should I put my money into a real estate investment that will get me a 5 to 6% cap rate?”

Interest rates are up

Interest rates have gone up as we all knew that they would. Click here for a link to an article that explains it better than I can. The mortgage rates for investment properties have gone up over 5% to approximately 5.125%; that’s a 1% jump from rates in Feb of this year. That will put a downward pressure on cash flow before taxes for potential investors. Investors will likely have to live with lower cap rates which at this time are still much better than leaving your money in a bank account or putting your money in to the stock market casino royale.

Rents are up!

According to the Southwest Idaho chapter of NARPM rents have increased significantly year over year over the last 24 months. So why are rents increasing in Southwest Idaho? There seems to be a steady and strong influx of people moving in from California, Oregon, Washington and other cities and states around the northwest as well as from the east. In general people are finding that the quality of life in Boise Idaho is very desirable. Rental vacancy rates in Ada County are as low as 3%. Therefore rents are increasing steadily which is serving to counteract the downward pressure from increasing mortgage rates on cash flow before taxes.

So what's the moral of the story? The moral is that overall rates, which are still ridiculously low rates, are increasing; inventory is short so therefore if you are looking to buy AND a good rental property comes on the market in Boise, be ready to jump. It remains a very good time to buy as well as potentially sell. So if you're interested in doing either that is buying or selling your fourplex or other investment properties in Boise Idaho please give us a call at 208-939-9033 or send us an email.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Tuesday, July 23, 2013

10122 W Aguila Court Star, ID - Presented by The Iron Eagle Realty Team ...

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor

Click Here to Search 24/7 for The Best Real Estate Deals in Boise!
Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan!
Click Here to Pre-Qualify for a Loan Online!
IERT logo

Regards, Michael Hon, REALTOR®
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Tuesday, July 02, 2013

Pending Home Sales Hit 6-Year High As Rising Mortgage Rates Propel Home Buyers

Here is a great article on rising mortgage rates that I found on Forbes.com by Morgan Brennan, Forbes Staff; we knew this was coming and it will definitely affect the Boise Idaho Real Estate market.

Looks like those rising mortgage interest rates are beginning to affect home buying. Pending sales of previously owned homes surged to six-year highs, according to the National Association of Realtors, as more buyers jump into the market looking to lock in on home prices and mortgage rates that have begun upward marches expected to continue.

Pending home sales, which represent the number of contracts signed but not yet closed, ratcheted up 6.7% in May from a month earlier and 12.1% higher than a year ago. May’s index reading of 112.3 marks the first time contract activity has grown at this rate since December 2006, when it hit 112.8.

Pending sales are a forward-looking indicator for the housing market since signed contracts offer an early outlook on the number of existing home sales coming within the next one to two months, the typical time frame it takes a deal to close. Economists have been eager to see May’s numbers to better gauge how changing market conditions could be beginning to affect buyer behavior and more so, the housing recovery as a whole.

The biggest issue currently facing housing is mortgage rate increases. This week the 30-year fixed mortgage jumped to 4.46% rate – the largest weekly increase in 26 years, according to Freddie Mac, from 3.93%. That’s up more than 100 basis points – meaning more than a full percentage point – from the 3.35% rate logged mere weeks ago in early May. While still very low by historic standards, that 4.46% rate, compared to a week earlier, translates into an extra $31 in monthly payments for every $100,000 taken out in financing; compared to early May, it’s an extra $63 and change for every $100,000 taken out.

The dramatic jump, fueled by investor activity tied to the anticipated winding down of the Federal Reserve’s $85 billion-per-month bond buying program, makes borrowing costs more expensive and chips away at the high level of home affordability that has been fueling the housing recovery.

Real estate experts have wondered in recent weeks whether rising rates could spur an uptick, short-term at least, in sales, as on-the-fence prospective buyers jump into the market to lock in on rates before they climb further. The bump in May’s pending homes numbers might be reflecting the start of this. “Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” explained Lawrence Yun, chief economist of the National Association of Realtors. “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”

As inventory levels have dwindled over the past year, the growing ranks of buyers have helped propel dramatic price increases in many of the country’s largest markets. On Thursday, the Realtors association upgraded its price forecast for 2013: Yun now expects the national median existing home price to rise more than 10% this year. If realized, it represents the largest yearly increase since 2005, the height of the housing bubble.

Home sales have been climbing for the better part of two years. The number of pending sales has grown year-over-year consecutively for the past 25 months, according to NAR. In May, sales of existing homes – meaning closed contracts for previously owned homes– totaled an annual rate of 5.18 million. It was the first time home sales broke above the five million mark in three and a half years, after the First Time Home Buyer tax credits temporarily boosted housing activity. NAR expects sales to increase as much as 9% throughout 2013, which would translate into slightly more than five million homes sold (a number last seen in 2007).

But for all of the Realtors’ robust projections, as rates rise – and economists believe they will continue to do so, albeit unevenly – that increased cost of borrowing could still cut into the blossoming housing recovery. Though higher rates aren’t likely to derail the rebound, they could slow it, weighing on the hefty double-digit rate of appreciation underway as buyers qualify for lower principal amounts moving forward and sluggish economic growth keeps income levels relatively stagnant.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Tuesday, June 04, 2013

How do interest rates affect the pricing of fourplex investment properties in Boise Idaho?

As we have been hearing for the last twelve months, interest rates are going up. Dennise Sandquist, my favorite loan officer at Guild Mortgage just quoted me 4.625% 30 year fixed with points on a fourplex loan for a buyer with less than 4 total loans. That's 3/8's of a point higher than we were earlier this year. What does that mean for price, cap rates, buyers and sellers.

As we know, an interest rate is the rate at which interest is paid by borrowers for the use of money that they borrow from a lender. The higher the interest rate, the higher the debt service and the lower the cash flow before taxes on investment real estate in Boise.

If cash flow is to be maintained on an investment property in Boise Idaho, the price needs to decrease. Unless the buyer is willing to live with a lower cash flow. As interest rates go up, so will interest rates paid by banks on deposits. Therefore the differential in returns on real estate investments and just leaving your money in the bank will decrease.

So what does this all mean? If interest rates go up and buyer still demand the same or higher returns on the their cash investments, then prices will need to decrease. However, if buyers remain in a mad scramble to put their money into real estate investments in Boise Idaho and elsewhere, then they will need to live with lower returns.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Friday, May 17, 2013

Just Listed - Impeccably Maintained Home in West Boise

The Iron Eagle Realty Team just listed this impeccably maintained home in West Boise! 11921 W Goldenrod Dr. in the Binghamshire Subdivison. Click here for detailed property information. Low Maintenance and Private backyard with Mature Landscaping and Covered Redwood Deck. Living Room with vaulted ceiling and wood burning fireplace. Kitchen has tile floors, breakfast bar, and Stainless Steel Appliances. Wood stove and built-ins in Dining Room. Cozy Family Room with ledgestone fireplace. Master Suite has a walk-in shower and soaking tub. Quiet and Mature West Boise Neighborhood with Community Pool. BTVA

To view this property or any other real estate in Boise Idaho area, please call us at 2089399033.

PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor

Click Here to Search 24/7 for The Best Real Estate Deals in Boise!
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Regards, Michael Hon, REALTOR®
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Friday, May 03, 2013

How do property taxes affect my Investment Property in Boise Idaho?

Property taxes vary form state to state. In Idaho, property taxes are based on assessed property values and levy rates. Property assessed values change from year to year; property values are re-assessed every Jan. 1st.

There are two pieces of the puzzle in regards to property taxes in the Boise Idaho Real Estate market. Each county has a tax assessor and treasury dept. The tax assessor determines the property value; this is done on a yearly basis on Jan 1st. The treasurer determines the levy rate based on the county budget. We have two major counties that encompass most of the Boise valley, Ada and Canyon. Ada is comprised of Boise, Meridian Eagle, Kuna and Star. The bulk of the population in our area lives in Ada County. Taxes in Ada County can vary from slightly less than 1% to 1.9% of assessed values. Assessed values in general are lower than current fair market values. If you want more info on assessed values, visit the Ada County Assessor Website. Taxes in Canyon County can vary from 2% to 2.5% of assessed values in investment properties.

It is important to know the history of assessed values and to project them forward to get an understanding of how this will affect future cash flow. Please call us at 208 939 9033 for any additional information.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Wednesday, April 24, 2013

Boise Idaho Investment Property - Fourplex within a Mile of Downtown Boise and Boise State University

Activity level has jumped again in the fourplex market in Boise so I thought you might like some information about a fourplex The Iron Eagle Realty Team just listed that is JUST ONE MILE (WALKING DISTANCE) of downtown Boise and Boise State University.

This is a fully leased fourplex (built in 1994) just south of Downtown Boise. You can literally walk to downtown as well as the BSU campus within minutes. All the units are 2 bedroom with 2 baths; clean as a whistle and perfect for roomates. The owner has NEVER had an issue renting these.

In fact, all of the utilities can be paid by the tenants and the rents are slightly under market. With an increase in rents and utilities paid by the tenants, this property produces an almost a 10% cash on cash return with a 6.8% cap rate. Not only that, this block is sandwiched by city blocks that have already been re-developed with new apartments and condos. This is an excellent income producing property and a long term hold for re-development opportunities.

If you are interest in a proforma, please click on the link below or call me at 208 939 9033.

PS: Click here to go to our Facebook Page, Boise Investment Real Estate and Like Us!

Like NEW FULLY LEASED Fourplex - Asking $315,000

Walking Distance from DOWNTOWN Boise ID

and Boise State University

2 Bedroom and 2 Bath Units

3856 SF, Built in 1994

If you are interested in this property please...

Click here to download listing info, map and proforma

CLICK HERE FOR GOOGLE MAP

Or Call 208 939 9033 for more info

Tuesday, April 09, 2013

Investor frenzy over housing has peaked

Here's an interesting article from CNNMoney.com about investors pulling back from the real estate market.

By Nin-Hai Tseng, Writer April 5, 2013: 5:00 AM ET

Signs that the big money has retreated from the foreclosure boom may be good for the housing market overall.

FORTUNE – When the U.S. housing market crashed in 2007, millions lost their homes to foreclosure. With their finances in shambles, they picked up the pieces by renting rather than buying. Big institutional investors quickly caught on, snapping up foreclosed properties on the cheap and renting them out.

All this has helped drive the recovery we're seeing today: Investors effectively absorbed the excess inventory of homes for sale, which in turn has helped push home prices higher. Prices for rentals have also risen rapidly, as families who either lost their homes or put off buying found rentals to live in.

While this has gone on for some time, the investor frenzy might have peaked. Rents for single-family homes have essentially flattened -- rising just 0.1% in March from a year earlier, according to a report released Thursday by real estate listing website Trulia. What's more, in some cities where investors had the biggest appetite for properties on the cheap, rents have fallen: Take Los Angeles, where rents fell 1.9%; rents in Orange County slipped down 0.7%; Las Vegas saw a 1.9% drop. And in two other key investor markets -- Atlanta and Phoenix -- single-family home rents remained flat, rising less than 1%.

Meanwhile, rents for apartments have continued to rise, climbing 2.9% in March from a year earlier.

MORE: Why higher mortgage rates will help the housing market

The change suggests good news. It hints that the broader housing market is normalizing, as the role of big investors in the recovery wanes. They bought so many properties that the supply of single-family homes for rent has met demand. Nationally, there were nearly 4 million more homes for rent in 2012 since the housing market last peaked in 2005. With rents softening, investors may start selling off their properties, adding to the tight supply of homes for sale, says Jed Kolko, Trulia's economist.

Of course, there's risk that this could dampen momentum of the recovery. Some have argued that once big investors stopped buying, home sales and subsequently home prices could start flattening then falling again.

There's more to it, however. While institutional investors have played a big role in reversing the housing market, their part isn't as big as some might think. Investors fall under two categories: There's the big corporate kind. And then there's the individual investor: High earners who buy multiple homes.

As The Wall Street Journal highlighted recently, small investors accounted for a good chunk of home sales in areas where the Blackstones (BX) of the world also drove sales. In Phoenix, small investors who bought more than five homes accounted for 26% of home sales at the end of 2012; Atlanta, 24% and Las Vegas, 22%.

It might not make financial sense for institutional investors to keep buying if the payoff continues to soften, but it could be different for small investors. They may very well still be willing to buy, analysts say.

"If all the big funds went out of business today, we'd still be talking about investors," says a housing analyst quoted in the Journal.

And as for renters in search of single-family homes, they might enjoy cheaper rent.

Wednesday, April 03, 2013

Like New Duplex Close to Boise State University - Justed Listed

We just listed this Like New Immaculate Duplex in Southeast Boise Idaho. This property is minutes away from Boise State University, Boise Downtown and Boise Greenbelt. Please click here for more information about this and other Investment Properties in the Boise Idaho Real Estate Market.

Just Listed - Like NEW Duplex in SE Boise close to Boise State University- Asking $220,000

We just listed this like new duplex in southeast Boise Idaho!

Great Property and Great Location!!! Duplex located in highly desirable SE Boise. Never a problem renting it. Both units are immaculate. Low maintenance siding and backyard. Two car garage for each unit. Close to downtown, Boise State University, Boise Greenbelt, shopping, entertainment, etc. Click here for listing information. BTVA

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.