The IDEAL Investment

Rental homes can be the IDEAL investment in today's market because they offer a much higher rate of return than alternatives without the volatility of ups and downs in the stock market.

IDEAL serves as an acronym to identify the advantages of rental properties:

• Income from the monthly rent contributes to paying the expenses and a return on the investment
• Depreciation is a non-cash deduction that contributes a tax shelter
• Equity grows monthly as the mortgage amortizes due to some of each payment being applied to the principal
• Appreciation is achieved as the value of the property goes up
• Leverage can increase the return on investment by using borrowed funds to control a larger asset

The combination of these characteristics working together makes rental real estate a very good investment for today's economy and years to come. Increased rents, high rental demand, good values and low non-owner-occupied mortgage rates contribute to positive cash flows and very favorable rates of return.

Contact me for more information about actual opportunities in our local market.

Great Investment

If you invest in a savings account, you'll make less than 1% and will have to pay income tax on the earnings. On the other hand, contribute something extra to your house payment on a regular basis and you'll essentially, earn at the mortgage interest rate which is certain to be more than you're earning in the bank.

Making additional principal contributions on your mortgage will save interest, retire debt and build equity. An extra $100 a month in the example shown will save thousands in interest and short the term of the mortgage as well.

Reducing your cost of housing is another way to improve the investment in your home. Becoming debt-free is a worthy goal that is achieved with discipline and good decisions. Suggestions like this are part of my commitment to help people be better homeowners when they buy, sell and all the years in between.

Risk Determines Rate

Regardless of what a lender quotes on mortgage rates, the actual rate paid by a borrower is based on a number of variables. Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved.

• Loan amounts - conventional loans for more than the conforming limits set by Fannie Mae are considered jumbo loans and generally have a higher interest rate.
• FICO score - the lowest interest rate is reserved for the highest credit scores; the lower the score, the higher the rate borrower will pay.
• Occupancy - borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.
• Loan purpose - purchase transactions generally have the lowest interest rate while refinancing a home is generally higher.
• Debt-to-Income ratio - a borrower's monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower's ability to repay the mortgage.
• Loan-to-Value ratio - the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.

Any combination of these factors could limit a borrower's ability to secure a mortgage at the rate initially quoted. Being pre-approved by a trusted mortgage professional is the best way to know what rate you can expect to pay. Please call for a recommendation.

In search of an honest man

Similar to Diogenes’ search for an honest man, homeowners want someone to do quality repairs at a fair price.  The task appears reasonably easy but if you’ve ever tried to locate someone to fix something, you know just how difficult it is.

Finding a list of companies from a phone book doesn’t mean they’ll be reasonable and reliable, it just means they have a phone and are willing to pay for an ad.  Searching on the Internet may direct you to a website that appears to be a local company but really is a marketing company who will sell the lead to a repairman or company who will pay a referral fee.

There are consumer organizations like Angie’s list who rate repairmen and contractors but they usually require an annual membership fee to be able to access the information.  There are also services like Renovation Experts or Service Magic that are registries for contractors but they may not be the most competitively priced.  

Your best recommendations are going to come from friends, family and neighbors you trust who have actually used the repairmen before and would use them again.  The problem here is that you might have to make multiple calls before you can find a friend who can recommend the type contractor you need.

Repairs are a normal part of selling homes and we certainly come in contact with lots of contractors.  This experience leads us to understand who is reputable and reasonable as well as who to avoid.  As part of our commitment to helping you be a better homeowner from the time you buy your home until you sell it, we’re more than happy to make a recommendation of good repairmen or other professionals you might need.  Give us a call…we want to help.

Economic Impact Study Says Tyler’s New Housing Market Stays Steady

Economic Impact Study Says Tyler’s New Housing Market Stays Steady


“These results show that home building is more than paying its own way and should put to rest the notion that existing home owners are subsidizing new home construction here in the Tyler area,” said Elliot Eisenberg, the senior economist for the National Association of Home Builders.

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By DANNY MOGLEAssistant Managing Editor

The home construction industry is a major contributor to the local economy and pumps money into it long after a house is built.
That was one of the findings of an economic impact study presented Wednesday by Elliot Eisenberg, the senior economist for the National Association of Home Builders. He discussed the findings during a news conference and a luncheon at Rose Garden Center recognizing government officials.

He told news media that despite major problems in home-lending markets and a downturn in new home sales and prices in some places, the Tyler new housing market remains steady.
"If (what is happening in) Eastern Texas was (representative of) the housing market nationally, there would not be a problem," Eisenberg said.
Areas in which loose lending practices were common and new housing prices had spiked are now "suffering," he said.
"You've got it about right," he said of the balance of factors that affect the local home construction industry.
Eisenberg said he used a model developed by the NAHB to gauge the economic impact during the construction phase and ongoing occupancy phase as well as a ripple effect caused as money spent by those within the industry circulates through the community.
The results are based on figures from 2007 showing that 883 new homes were built in the Smith County at an average price of $208,408.
Over the next 25 years, those 883 homes, through the jobs they create or help support and the taxes and economic spending produced by those who occupy them, will generate $127.7 million in revenue compared to $117.5 million in costs associated with the building of the homes and government services required to support the residents, according to the report.
"These results show that home building is more than paying its own way and should put to rest the notion that existing home owners are subsidizing new home construction here in the Tyler area," Eisenberg, said in a prepared written statement.
"This is an excellent result and tells me that local residents should be thanking the building industry for footing the bill for a lot of city services," his written statement said.
The report found that in regard to the 883 homes built in 2007:
During the first-year construction phase they generated 1,525 jobs (1,082 jobs in construction alone), $3.2 million in taxes and $74.8 million of local income.
They set into motion a ripple effect -- wages and profits local residents earned during the construction period that were then spent on other local goods and services -- that resulted in 689 jobs, $2.7 million in taxes and $32.5 million in income, also in the first year.
They will have a calculated ongoing annual effect -- which includes local jobs, income and taxes generated as a result of the home being occupied -- of creating 547 jobs, $5 million in local taxes and $24 million in local income per year.
The luncheon was presented by Tyler Economic Development Council, Tyler Area Builders Association, Fair Management and Genecov Group and sponsored by numerous area builders and affiliated businesses.
Copies of the study are available by contacting the Tyler Area Builders Association at 903-561-3964.

City of Tyler Debt Free

Article published Feb 21, 2008Tyler Set To Be Free Of DebtBy CINDY MALLETTEStaff

WriterAt 2 p.m. Thursday, the city of Tyler will be debt free.
City leaders will gather at Tyler Pounds Regional Airport to symbolically sign the last check for general obligation debt payment. The ceremony begins at 2 p.m. near the ticket counters.Since 1995, the city has been able to fund major municipal projects through a half-cent sales tax voters approved in the spring of that year. The sales tax money has allowed the city to pay for projects with cash, so the city didn't have to issue bonds and go into debt."That's unheard of in Texas," said Mayor Joey Seeber. "We've been able to pay for multi-million dollar projects with cash."Some of those major capital improvement projects included the Glass Recreation Center, Tyler Pounds Regional Airport and Faulkner Park. The tax also paid for more than 40 street and traffic projects totaling $39.8 million.Each year, the tax generates about $11 million. That money pays for capital improvements in public safety, parks, streets/traffic, drain-age, airport and general projects. A half-cent sales tax board meets once a month to review, prioritize and fund projects within those categories.The original goals of the half-cent sales tax were to lower property taxes by 15 percent and pay off the city's general obligation debt."Thirteen years ago, when we had the election, a lot of people didn't believe that a local government could reduce property taxes," Seeber said. "We've proven we can fulfill the promises we made."Since 1995, property taxes in Tyler have dropped 60 percent, falling from 52 cents per $100 valuation to just 20 cents, saving $134 million in property taxes in 13 years. Susan Guthrie, city of Tyler spokeswoman, said Tyler has the lowest tax rate of Texas communities similar in size. Cities such as Abilene, Denton and Beaumont - all with populations around 100,000 - have tax rates exceeding 62 cents."Our citizens have over $100 million in their pockets that they would not have had if we hadn't implemented the half-cent sales tax," Seeber said.On Thursday, the mayor, City Council and State Sen. Kevin Eltife - who was Tyler's mayor when voters originally passed the half-cent sales tax - will fulfill the second part of the original goal by paying off the last of the city's general obligation debt."I am very proud to be participating in this moment in Tyler's history," Seeber said. "It's really exciting for the city and for the residents."

Merry Christmas!

Merry Christmas from www.HomesInTyler.com and www.LivingInTyler.com . RE/MAX Tyler is here to serve your Real Estate needs. Call me any time 903-570-2383