Raleigh-Durham Real Estate Blog

Topics in this market update:

1. Real Estate Stimulus Update

2. Landlord Registration/Raleigh PROP Ordinance Affects landlords (***VERY IMPORTANT TO KNOW!!!***)

3. Property Focus

Real Estate Stimulus Update (visit www.realtor.org for details)

By now you have probably heard bits and pieces about the portion of the Stimulus Package pertaining to real estate. A number of proposed items were omitted from the final bill, and the following list highlights a few items of note:

1. The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

2. The bill reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. The FHA loan limit for a single-family home in Durham, NC is $334,650. For Raleigh, the limit is $271,050.

3. Commercial real estate is impacted primarily through those provisions of the bill focused on green building and energy efficiency as well as business tax incentives. H.R. 1 provides significant funds for state energy programs, which could be used to support commercial property owners' investment in energy efficiency upgrades.

4. The bill provides an additional $500 million to existing USDA Rural Housing programs. The RHS provides both a guaranteed loan program and a direct housing loan program for those meeting the program’s eligibility criteria.

5. Through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for purchases of new furnaces, windows and insulation. Previous 10% caps have been lifted to 30% on most items. Visit http://www.energystar.gov/ for more details.

Landlord Registration and the Raleigh PROP Ordinance (visit www.treia.com for details)

2 important items are currently in effect for owners of rental property in Raleigh:

1. The new Landlord Registration requirement is for all non-owner-occupied properties. The city wants to be sure to have accurate contact information for all tenant-occupied properties as the tax records are not always accurate when an owner moves. If you are an out-of-state owner, the city asks that you designate an in—state contact person for their files. Registration is not optional and late registration carries a hefty fine ($50 per day up to $2000). The registration window is March1-April 30 of each year. (Yes, that means registration is now open). Visit the following link for more details: http://tinyurl.com/RaleighLandlordRegistration

2. The Probationary Rental occupancy Permit (PROP). The quick-and-dirty summary: Essentially 3 strikes and you’re out. If you own a rental property in the city limits and it suffers certain violations (even those caused by your tenants, and without your knowledge), your property gets a strike. If your property get 3 strikes, it is put on “Probation’ and you have fines, etc… in order to allow its continued use as a rental. The key to the PROP is that STRIKES DO NOT CANCEL OUT UPON A CHANGE IN OWNERSHIP. This means that an investor might purchase a property with 2 strikes and find him/herself on the PROP list upon just 1 additional violation (potentially from something as simple as a mattress or other trash left in the wrong location on the grounds of the property). It is therefore critical that all potential buyers check with the city inspections department on the status of violations/strikes against a property before purchase. Visit http://tinyurl.com/treiapropsummary or the City of Raleigh website for an in-depth PROP summary.

Property Focus (Strong Cashflow and/or Equity Positions)

Many of you have asked for updates on solid cashflow opportunities in Raleigh-Durham. From time to time we will close out the Real Estate Market Updates with a highlight on properties that are very strong in their cashflow and/or equity positions. Feel free to contact our office if any of these deals interest you.

STRONG CASHFLOW IN RALEIGH!

Great 4-unit rental for sale in Raleigh with large 1100+ sq ft units. Priced at only $195000. Appraised in September 2008 for $215,000. Immediate cash flow potential. Rents total in excess of $1800/month. Fully occupied. One of the best-priced 4-unit buildings in Raleigh. Less than 5-minute drive to downtown Raleigh. A great way to get into this growing market. Partial seller-financing available, along with potential for long-term financing at only 10% down. Motivated seller will pay $3000 in closing costs for the buyer.