Chicagoans Linda and Debra Basili thought about becoming landlords years ago. But even two professional women’s combined salaries were no match for the Windy City‘s high housing prices.

Then the biggest real estate crash since the Great Depression hit, driving down Chicago home prices by a third in five years. The 54-year-old twins took the leap.

Last year, they bought not one but two condominiums near downtown. They found renters within weeks, and the rent more than covers their costs

Builders get more optimistic

“Tell Donald Trump to look out,” says Linda Basili, a State Farm insurance manager.

Mom and pop investors like the Basilis are snapping up homes and condominiums to rent out all over the country. They’re capitalizing on a confluence of events: depressed home prices, rising rents and strong rental demand. A typical plan? Buy cheap. Collect rents to cover costs. Cash out — one day — when home prices recover.

“An unprecedented number of investors are looking into this,” says John Burns, CEO of John Burns Real Estate Consulting.

Investor purchases are strengthening demand in a still-weak market for home sales. Through the first nine months of last year, investors bought more than 26% of single-family homes and condominiums sold in 167 U.S. markets, indicate data tracked by Burns.

That’s up from 21% in 2007.

Even the U.S. government wants to capitalize on a strong rental market. It recently started a pilot program for investors to buy and rent out foreclosed homes owned by government-backed mortgage giants Freddie Mac, Fannie Mae and the Federal Housing Administration. Together they own more than a quarter-million single-family homes.

In a recent paper, the Federal Reserve noted that “small investors” are buying foreclosed homes and converting them to rentals. It also said that larger investors were struggling to do so, in part because of tight financing and their inability to buy enough properties in the same area to make it worthwhile.

“Right now it’s just that perfect storm for mom and pop investors,” says David Hicks, co-president of HomeVesters of America, known as the “We Buy Ugly Houses” company.

A multiyear investment

As with any real estate buy, good timing is key.

Jason Huerkamp, 35, a Coldwell Banker real estate agent in Minneapolis, got especially lucky.

He and his wife, Brooke, cashed out some stocks in 2006 to buy rentals in their former college town of Mankato, Minn. Nothing panned out, and home prices started what’s turned into a five-year fall.

“That was dumb luck,” Huerkamp says.

In 2009, the couple bought their first rental. “That was probably premature,” he says, as home prices dropped further still.

Since then, the couple have bought four rental homes, plus a duplex. They paid $310,000 for the properties and spent $90,000 to fix them up.

Now, they take in about $7,100 a month in rent and clear about $2,700 after expenses, including financing costs.

While home-loan financing has tightened since the go-go days, the couple secured loans for all the rentals. They did have to put 20% down. Their interest rates are also higher than for owner-occupied homes. At today’s rates, that might mean a 5% rate vs. a 4% rate.

Assuming home prices rise in three to five years, Huerkamp says the couple hope to sell the homes at a profit and buy small apartment buildings.

“By the time we’re 60, we hope to have 60 doors (rental units) and make that our retirement lifestyle,” he says.

That buy-and-hold mentality is now common among investors buying homes, says Zillow economist Stan Humphries. Unlike “flippers,” who quickly bought and sold homes for a profit when prices were soaring, the buy-and-hold investors intend to keep properties for years, Humphries says.

Rental markets vary by city. An 8% annual return is now about the norm, with some markets higher and some lower, Burns says. That means that someone who buys a $100,000 property — and pays cash for it — makes $8,000 a year after expenses, including maintenance and taxes.

Given today’s tight financing, Burns says, many rental properties are purchased with cash. Many banks will also lend to investors, assuming they have good credit, for three rentals in addition to a primary home, Hicks says.

The soft costs

The Basilis’ experience as landlords has also been positive, so far.

They rented both units quickly, one to a friend of a friend. The young professional renters pay on time. Except for a busted microwave and broken refrigerator, the units have been largely hassle-free.

That isn’t everyone’s experience, and a “fair number of people aren’t cut out to be landlords,” says Eric Tyson, co-author of Real Estate Investing for Dummies.

Landlords not only have to be tough enough to evict people — even families in the dead of winter as Huerkamp had to do — but to take midnight calls about broken plumbing, confront late-paying tenants and live with a heightened risk of legal hassles.

They also have to be able to “crunch the numbers,” Tyson says.

Paying too much or underestimating the cost to make a place rentable can sink even cautious investors.

Then there’s the risk of deadbeat tenants.

Shelley West, 49, a physical therapist in Tampa, just bought a $100,000 townhouse to turn into a rental. She and her husband, Tom, plan to rent it to a friend.

She still thinks the rental market is a good business despite her experience renting out another home in 2008. In that home, the first tenant “was nice but couldn’t pay after five months,” West says. The second tenant stopped paying, too, and even demanded money back when West moved to evict him.

The Wests gave the tenant some money so that he wouldn’t delay leaving, she says.

The whole experience cost the Wests about $7,500.

Jason and Tammy Bezdicek experienced the emotional toll of becoming landlords.

Last year, they bought a $140,000 home in St. Paul that had been flipped after going through foreclosure.

The health care manager and pharmacist paid a “premium,” to get a home that had been largely fixed up, Jason Bezdicek says.

His plan was to rent it out without it taking over his life. He looked at more than 30 homes. He put each into a spreadsheet to calculate rents, taxes, assessments, insurance, utilities, repair, cash needed and the “time value of money” to calculate the years it would take to break even on the investment. They also put 20% down and financed the purchase.

“This home was the best,” says Bezdicek, 34.

But then water leaked into the basement, requiring drainage improvements to the front yard. The couple put central air conditioning into the house and found that it needed a new furnace, too. That cost several thousand dollars. Someone had stuffed food, garbage and toys in air ducts that needed to be cleaned.

Bezdicek hired a company to screen applicants for credit scores and employment histories. But he showed the property himself.

More than 20 applicants traipsed through.

“They all loved it, took an application and then we didn’t see them again,” Bezdicek says. “It kind of stressed me a little bit.”

The time he poured into the house caused some conflict at home, especially since the couple had a new baby .

While Bezdicek says he had been keen to think of another rental purchase in the future, his wife “isn’t sold on doing it again,” he says.

Barring any disasters, he estimates it’ll take them six years to recoup their initial investment, not including any home price appreciation that may occur.

“We bought at the right time,” he says.

Risks exist in rental market

Buying a house cheaply and getting someone else to cover the costs sounds like a no-brainer financial move.

But there are some big risks, given the potential for hidden costs and struggling tenants, Burns says. Because there are so many foreclosures in some cities, there’s more danger now that someone might buy a rental only to see the neighborhood deteriorate around it, Burns says.

There’s also the risk that too many people will turn rentals into cash-flow machines and then attempt to cash out at the same time if home prices rise, says Hessam Nadji, managing director of real estate investment services firm Marcus & Millichap.

“They could flood the market,” he says.

Real estate is also cyclical. Demand is strong now for single-family rentals because so many people are losing single-family homes to foreclosure, says Ronald Johnsey, president of apartment market researcher Axiometrics. But as foreclosure rates drop, home prices are likely to rise. That could inspire home buying and lessen single-family rental demand, Johnsey says.

For now, though, many economists expect home prices to continue to fall and then flatten for some time. That will continue to lure real estate investors, real estate experts say.

“For this year and next, the market will be hot,” Humphries says.

Here is why I love the Sea Biscuit:

• They open at 7:30. I believe this is the earliest any non-chain or fast food restaurant opens in Charleston on Sunday.
• The drive from Daniel Island to IOP on Sunday morning, being greeted by the Atlantic, is sure to feed the soul.
• They play Frank Sinatra and Dean Martin.
• They have crab cakes as a side dish.
• Their omelettes are exactly the size of my bicep (I measured last time). We split one every Sunday. On the menu it says that they use 3 eggs when they clearly use at least 10
• All we need is a $20 bill .
• The place has tons of character.
• I love the waitresses.
• The only people who beat us here are these two ladies I call “the sisters” who sit at the same exact table every Sunday. I wonder if they go every morning? Anyway, I love them.
• You get your food within 10 minutes of ordering.
• I’m full till mid-afternoon

Sea Biscuit, thank you for being your authentic self!

Find Sea Biscuit on the web!

We currently have 4 condominiums available for rent on Daniel Island:

• 200 River Landing Drive F302 – 3BR/2BA $2,100/month available 2/18
• 125 Pier View Street #304 – 2BR/2BA $1,700/month available 3/15
• 1225 Blakeway Street #905 – 3BR/2BA $1,700/month available 6/1
• 1225 Blakeway Street $1401 – 2BR/2BA $1,550/month available 3/10

They are all in great condition. The Pier View and Blakeway properties have always been owner-occupied and have never been rentals. Get them while you can!

By Stacy Jennings

Whoa! I just looked in MLS and there is only 1 home for sale on Daniel Island under $439K and that’s 131 Brady Street for $289K. That’s unbelievable to me. Not having any homes for sale on DI in the $300’s is just crazy! I certainly anticipate more listings coming to market this spring that will fill in this gap, but I think it’s a great sign for market recovery on the Island. The low hanging fruit has been picked. This is exactly what needs to happen to push values back up.

Another positive sign comes from Daniel’s Landing. The lowest priced listing there is $125K. Last year at this time, there were several opportunities to purchase REO’s (bank-owned properties) or short sales under $100K. In fact, 9 one bedrooms in Daniel’s Landing closed last year. They all sold between $78,500 and $100,450. Now – there’s nothing in that price point.
People frequently ask me about the market and what I am seeing with prices etc. Well it depends, really. It’s neighborhood specific, AND price point specific. What I can tell you is right now, the cheap stuff on Daniel Island is gone. There are a couple of $99K condos at 254 Seven Farms Drive, but that property has the lowest value of any condo community on Daniel Island so I don’t necessarily think those are great buys unless you could negotiate them down 10%-15%.

Where there is still doom and gloom on the Island is the $1M+ price point. There is currently 30 months/2.5 years of inventory for properties priced $1M-$2M on Daniel Island and 27 months of inventory for those mega-mansions priced at $2M+. I think it will be years before we see recovery here.
Today, all of my buyers with fat-wallets are telling me they want to “simplify” and “downsize.” I think it takes a unique buyer that will feel the need to indulge themselves in this economy. And the Owners of those properties won’t “dump” their homes, because they don’t have to. They feel they can afford to hold on until the market recovers. It’ll be interesting to see what happens in 2012 for these million dollar properties. For their sake, I hope to report signs of recovery this time next year.

It’s February – time to do something sweet for your honey and eat copious amounts of chocolate!

Things are super busy at HJP! Normally this time of year is generally slow in real estate, but the rental market is BOOMING so we have picked up several new properties to manage and have been successful placing well qualified tenants in these lovely homes quickly. If you, or someone you know has a property for sale, and they are ready to stop the bleeding, please have them call us to explore their options. We have a shortage of available rentals in Charleston right now and HJP makes the property management process painless and fun.

We’ve also had successful short sale closings in January and the biggest trend we’ve noticed – the investor buyer is back in action and hungry for opportunities. Hayden has been helping several investors, many first-timers, take advantage of lender owned properties. They are getting some amazing deals!

Thanks again, as always, for supporting our small, local business!

Cheers!

Hayden’s Hungry in Flavor Country

On a recent Saturday night, Stacy and I had an opportunity to check out The Grocery on Cannon.  There is a lot of buzz about the place, and it’s super new, so we felt it’d be perfect for an HCH review. Now note that if it’s just the two of us and we don’t have others to consider, we eat early, like senior citizen/early bird special style, so we got an amazing parking space directly across the street from the front door, and entered to find we pretty much had the place to ourselves with the exception of a couple in their 70′s sitting at the bar. The space is a brand spanking new, clean, and industrial feeling. We hopped on a couple of barstools – another H+S tip – sitting at the bar allows us to catch the vibe of restaurants, bartenders are traditionally more forthcoming with suggestions, and you get to talk to your neighbors which keeps Stacy fully entertained. It’s also fun to watch cocktails being made.

As you walk into the Grocery the first thing you see behind the hostess stand is a bright kitchen with a large wood fired oven that puts out a warm, inviting aroma to the room.  Above the window to the kitchen is a wall of what appears to be the current restaurant decoration trend in Charleston – festooning your window with  Le Creuset cookware (Dear McIntosh, Imitation is the sincerest form of flattery. Love, the Grocery),  as well as a display of large jars of house pickled veggies.    The wide dining room has booths with views out of the large windows to Cannon Street. The booths seem to provide nice privacy in an otherwise exposed space.

I started with a green tomato dirty martini to begin this new culinary adventure.  This bev has a house cured green tomato pickle juice, Ketel One, and is garnished with a green tomato pickle and jalapeno skewer. This cocktail was light and refreshing, a little sweet. It is not salty at all – so no next day sausage fingers. This was an adventurous twist on a classic cocktail.

Perfect lil' plate o' pickles

Now onto the food.  The menu is divided by portion size, starting with “snacks”, then “bites”, then full portion dinners,  and even has several options meant to be shared by the table, a concept that I embrace.  I started with the corn meal battered fried oysters. Five perfectly fried oysters were served in their shell on top of a base of thick and creamy deviled egg sauce. House made bread and butter pickles and pickled onions also decorated the plate.  Yum.  Next up was the pork course.  Many restaurants in Charleston now are serving pork in ways that stretch boundaries while remaining approachable.  I chose a new menu item (their menu changes frequently and is guided by what is fresh, local, and available), the pork trotter.  This is basically pork crab cake. Braised pork is formed into a patty, breaded, pan fried served with a portion of pig ear and red pea salad.  Pig ear tastes like bacon – that’s all you need to know. This dish was another winner.  We love pickles , after all, we named our dog after them, so we asked for a pickle platter and they were happy to accommodate.  This needs to be a menu item.  The plate featured pickled green tomatoes, okra, radishes,  and traditional bread and butter pickles. All were just delightful in their simplicity.

Whole roasted fish

For the main event we chose what appealed most to Stacy and what I’m not sure you can actually get in another restaurant here in Charleston unless fried – a whole fish, scored, and roasted in the wood fired oven.  The dish was beautifully presented but fell short in a couple of ways. First, the fish wasn’t entirely cooked through in one section. Second, it could’ve used more seasoning, the light flaky flesh was pretty bland even when you incorporated the salsa verde it is served with.  The menu also offers some wonderful side dishes for sharing at the table. We ordered some roasted onions that were served with feta and almonds. The dish was unique, fresh, and delicious.

Usually I review restaurants I have been to several times. I don’t believe it is really fair to judge a restaurant after one visit though I wanted to share this experience. You can’t be good at everything all the time, so we need to go back and try some other entrees. Every dish was special and true to the identity the Grocery has created for itself which is fresh, local, and southern. This certainly is “the trend” right now, but all of these places can have similar concepts with unique menus. That’s what truly differentiates them from each other. I look forward to heading back soon.

 

Stacy Sips @ Hall’s

There are reasons I love Hall’s Chophouse, and reasons I don’t.
When this place first opened a few years back, I think I was there every week with friends and clients who wanted to try it. The first thing I noticed was that each time I went, I met the whole family: two sons, Mom, and Dad. They’d come around to introduce themselves and make small talk, and then 15 minutes later another one would do the same thing. This was their business model – to make you feel at home, like family. But I’ll stay home if I want to feel like I’m at home, and I didn’t like them interrupting my meals with friends to re-introduce themselves.

We went to meet friends for drinks and snacks probably once a month after that. It was obvious to me that people really liked the place. The food and drinks were excellent, however this is when I started to sour. “Tommy Hall, Tommy Hall, Tommy Hall, Billy Hall, Billy Hall, Billy Hall” these dudes were on repeat introducing themselves around. I just got irritated cause “BILLY HALL I HAVE MET YOU FIFTY FOUR THOUSAND HUNDRED MILLION TIMES!” Gah! I wonder how many times Billy Hall has said his own name. If I had a penny for each time, I’d be a multimillionaire fo’ sho’.

Then I told some HJP homeys to pick where they wanted to go to dinner to celebrate their closing (shout out to CJ and EJ)  and they picked Hall’s. Now, I will say, when you go out to eat with boys at a steakhouse, they seem to have this manliness challenge to see who can order the largest steak. So I don’t recall what they ordered (tomahawk ribeye???), but I know it was the biggest, most expensive cut on the menu. Kinda looked like dinosaur to me, with a large protruding bone. I was waiting for them to start beating their chests and growling, but that never happened. I’m sure that both of them thought it was worth the cash and felt like 100 times manlier then when Billy Hall first shook their hands that night. Man mission accomplished. The bill was so expensive though – to the point that it made me feel guilty to eat there.

After that, I think I managed to avoid Hall’s for a good year. I admit, I get pleasure out of boycotting places. Note: I am currently boycotting Wasabi on Daniel Island until they’ll offer half price sushi like every other sushi restaurant in town.

My most recent visit to Hall’s was in the Fall. I gave in and went back with my girlfriend HJP homey Angie. She had never been, so I said what the hell – this will be entertaining. I think we rolled in around 7:30 on a Wednesday evening. Billy Hall was out in front of the restaurant like he usually is, recruiting innocent tourists to drop a couple Benjamins in his establishment. He opened the door, invited us in, and we began an amazing night. My girlfriend looks likes Barbie, so when we sat down, there was clamoring coming from a table of about a dozen older gentlemen that had been playing golf (drinking) all day. We sat at a community table since there were no available seats at the bar, and the head scotch-drinker, let’s call him “el presidente” since he seemed to be running the place,  came over and told us he’d buy us whatever we wanted. He was on a business trip from Atlanta and was feeling generous. Bam! There are few places on King Street, where Angie and I would have been the youngest chicks at the bar – but we sure were here! Awesome! I started ordering drinks from the specialty cocktail menu and they were delish and boozetastic. Their cocktail menu offers classics with flair.

A few minutes later a couple of guys came and sat across from us at our table. They were also from Atlanta, in town for a conference.  I asked them where else they liked to eat in town and they looked at me like I had four heads. Yes, that’s right, these guys come to Charleston several times a year for three or four nights and they go to Hall’s EVERY SINGLE NIGHT for dinner. Come again, sir? Wow – you must be fascinating to be married to. Hall’s feeds both the bellies and the souls of their loyal customers, by making them all feel special. It really is genius. No one else in Charleston does it like they do.

When you go to the bar at Hall’s, and you should, you’ll see many of the same Charlestonians, several are there most nights. They are wealthy, have had success, and they want to go eat delicious, indulgent food at a place where the Owners and employees make them feel special. It’s their upscale Cheers. Hey – I get it.

Hall’s is not my #1 because I’m a girl, I don’t care about a giant piece of steak, or whether or not the bartender knows me. I know a ton of people that call Hall’s their favorite restaurant in town. But, for me, I’m only going to sip a delicious martini and enjoy the show.

P.S. Billy – you are my favorite Hall brother. See you on King Street soon. xoxo Stacy

 

The Last Call

“Be who you are and say what you feel, because those who mind don’t matter, and those who matter don’t mind.”

-Dr. Seuss

Welcome home to 268 Marsh Ibis Trail – $3400 monthly

Showcases Mount Pleasant community living at its finest with this spacious 5 bedroom 3.5 bath home centrally located across from Belle Hall Shopping Center and easy driving distance to Downtown, Daniel Island and more.

This custom built home has never been a rental and has nice upgrades.

Ugragded kitchen and bathrooms. Outdoor living space includes wraparound porch and screened-in porch.

4 bedrooms plus attached FROG which could be used as fifth bedroom, playroom, or home office.

268 Marsh Ibis Trail Features:

• 2-Car Garage
• Air Conditioning
• Crown Molding
• Dishwasher
• Hardwood Floor
• 2600 square feet of living space
• Playground/Park
• Community Dock
• Outdoor Kitchen and Community Center
• Boat Ramp
• 9′ plus ceilings
• Walk in Closets
• 5 Bedroom 3.5 Bath
• Fireplace
• Family Room
• Separate Dining Room

From Hwy 526 take the Long Point Rd exit. Turn left by the Waffle House, go to Belle Hall Pkwy, turn left onto Seacoast Pkwy to the end. Right into Grassy Creek on Shoals Dr, left onto River Oaks Dr, right onto Marsh Ibis Trail. Last house on the right.  This property is listed for rent by Hayden Jennings Properties.  For more information or to preview this property Contact Stacy at 843-276-2998 or Hayden at 843.814.8061. 

It’s 2012 and real estate investors are back and hungry for opportunities to buy at the bottom. We’ve had several calls this week from buyers looking to purchase investment properties in Charleston, SC for under $150K. Interestingly, most of them are first time investors.

Last week, we ratified an awesome deal for Hayden Jennings Properties buyers in the Concord, a condominium community just a few miles from downtown Charleston. These investors had extra cash that they did not want to throw into the stock market or let sit in the bank. They had never purchased a property before as an investment, so they were a bit apprehensive about becoming landlords, but they know Hayden Jennings Properties will do a great job managing the property for them.

Hayden found them a 2 bedroom 1 bath lender owned condo listed at $64,900.00 There were multiple offers, so the bank said bring us your highest and best, and Hayden was able to provide the proper advice to make our HJP Buyers offer the most attractive one,  and the bank accepted it. The condo is generally in good condition, they’ll just need to steam clean carpets and paint, and Hayden Jennings Properties will find them a great tenant for around $950 per month.

These HJP buyers are so excited about the deal they got. Their timeline for this investment is 30+ years, so it was a no-brainer. The unit was originally purchased in 2005 at the height of the market for $161,900. What a deal, right?

Helping buyers purchase investment properties in Charleston, SC is Hayden’s forte. He has been an investor himself for over 20 years, and has the keen ability to evaluate and advise properties for investment. Please contact him if you are curious about purchasing an investment property in Charleston, SC yourself.

GROUP TRANSPORTATION – Charleston Green Taxi can now provide service for small group transportation (under 75 people).

Think of us as Limo service at a taxi price all while reducing your carbon footprint.

Wanna know what cab drivers do when your not in the car? That’s right we rock out.

Charleston Green Taxi – Clouds in My Head

Welcome home to 152 Etiwan Park Street – $2400 monthly

Showcases island living at its best with this charming 3 bedroom 2.5 bath Daniel Island home across from Etiwan Park and Bishop England High School.

Great open floor plan with french doors leading to the office. All hardwoods downstairs except for office. This home has a full front porch and outdoor patio. Beautiful yard with back alley entrance to 2 car garage.

152 Etiwan Park Features:

• 3 Bedroom, 2.5 Bath
• 2 Car Garage
• 2100 square feet
• Air Conditioning
• Bike/Walking Trails
• Boat Ramp/Dock
• Den/Family Room
• Dishwasher
• Disposal
• Hardwood Floors
• Microwave
• Office/Library
• Patio/Deck
• Playground/Park
• Pool

Listed by Hayden Jennings Properties, to preview this property or for more information please call Stacy at 843-276-2998 or Hayden at 843-814-8061.

210 Creek Back Street – Daniel Island, SC 29492 $849,000 – MLS #1030665md

Unique opportunity to own one of the largest (.67 acres) deepwater homesites on Daniel Island with unbelievable views.

Nestled in The Reach on a private cul-de-sac with only four homesites, this property is truly distinctive.

There is a private shared dock with four boat slips one deeded to this property.

This is the prefect chance to build the home of your dreams on land that is sure to impress.

This property includes Daniel Island Club social membership privileges, plus the opportunity to upgrade to a transferable, non-recallable golf membership.

For more information or to preview this property, please contact Stacy at 843.276.2998