Raleigh-Durham Real Estate Blog

Welcome to the 2^nd decade of the new millennium! I hope you enjoyed your holidays and are ready to make 2010 a great year. Market trends are looking positive, with an upswing in property sales prices over the last 2 quarters in some areas. Also included in this week’s blog:

• Introducing Paradigm Properties: A new vision for real estate
• More competition leaves landlords with difficult decisions to make
• Triangle MLS Market Trends Report (Durham, Wake, Johnston & Orange counties)

We hope you enjoyed the holidays and we look forward to working with you in 2010. Happy investing and Happy New Year!

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Introducing Paradigm Properties: A new vision for real estate

A few of you have noticed the company name change in my email footer from Realty Executives to Paradigm Properties. Since the cat is out of the bag, I’ll spill the beans…After 5 wonderful years with Realty Executives, the time has come to branch out. I am excited to announce that I am now Broker-Owner of Paradigm Properties. Our tagline: “A new vision for real estate”. Many of you know that my style of brokerage differs from most brokers and that I enjoy, above all else, helping my clients learn the ins and outs of property ownership and real estate investing. Paradigm Properties will build on this reputation with a webinar series on home-buying and investing, a continued focus on investment property brokerage and a learning series on a broad range of non-traditional real estate techniques that will support our client’s endeavors (we’ll tell you about these later). The past few months have been extremely busy given all of the activities surrounding the launch of our firm. We are excited for what is to come and we look forward to working with you again in the new year. Be on the lookout for our client survey and for info on our company launch celebration in early 2010. We look forward to reconnecting with all of you there. In the meantime, you can reach me, as always, at tiffany@tiffanyelder.com or at the Highgate office location.

More competition leaves landlords with difficult decisions to make

A recent conversation with one of my favorite property managers prompted this next note. She shared with me the dilemma in which many of her landlord clients are finding themselves; this being the decision to not only forego cashflow on their rentals, but to have to put money toward the debt coverage on their property in order to avoid vacancy. The cause for this? Simple supply and demand. There are too many rentals on the market and not enough tenants.

Where did all the unexpected rentals come from? Quite a few of them are from unexpected sources, foreclosures and builders. Foreclosures seem to be tapering off in the Triangle, but there is still quite a bit of inventory sitting on the market. Vacant new construction and condo projects are sitting on the market as well. In recent months, I’ve seen both banks and developers renting out their vacant properties to help with carrying costs on these properties. What does this mean for landlords? COMPETITION. Potential tenants now have many more options, and with so many properties available for rent, lease prices are being forced down in some areas.

What this means for existing landlords: If a ready, willing and able tenant puts forth an offer to rent that is a bit shy of your asking price, you may want to consider biting the bullet in the short term as it may take longer to get your unit rented out, and there is the possibility that you might not get your price. Take a small hit in the short term to win in the long term. Not too many things are worse than having to cover full carrying costs out of pocket for months at a time. In addition, the current market of low prices and low interest rates provides an opportunity for you to purchase another rental with sufficient positive cashflow to balance out your negative cashflow and bring your overall portfolio back into the black.

What this means for investors looking to buy rental property: Run your numbers based on conservative rental income projections and look for properties in areas that tend not to suffer from higher vacancy rates in difficult markets. These include neighborhoods near universities and solid employment centers. It’s fine to expect the best, but prepare for the worst. It’s still a great time to buy given that prices and mortgage rates are still very low. Many of my colleagues who have been in the business for decades mention that both prices and mortgage rates have not been low at the same time before. So definitely take advantage of the market because we probably won’t see this again for a long time. Be reasonable in your expectations, however, as the national media has painted a more desperate picture of the overall real estate market than we are facing here in the Triangle. As those of you who have been forced to sit with me in the office already know, one of my favorite sayings is: “A game is more likely won with a series of base hits, not by waiting for the homeruns alone.” A steady stream of smart “base hit” investments will propel you forward in 2010 and beyond. Waiting around for the “homeruns” may lead you to miss out on a lot of opportunities (and cashflow) in the meantime.

Triangle MLS Market Trends Report

The following market reports summarizing activity through November 2009 are available online at the Triangle MLS website. Following these reports is a great way to stay on top of real estate trends in our area.

Entire Triangle: http://www.durhamrealtors.org/pdf/mreports-1109/entire-triangle-region.pdf

Durham County: http://www.durhamrealtors.org/pdf/mreports-1109/durham-county.pdf

Johnston County: http://www.durhamrealtors.org/pdf/mreports-1109/johnston-county.pdf

Orange County: http://www.durhamrealtors.org/pdf/mreports-1109/orange-county.pdf

Wake County: http://www.durhamrealtors.org/pdf/mreports-1109/wake-county.pdf

Happy investing, and here’s to a wonderful 2010!