Boise Real Estate is full of opportunity right now, and many people are asking me, “Can I rent out my current home and buy another?”  Seems like a good strategy, and, it is.  But, before you go shopping for that new home, you need to know the ins and outs of how to turn your primary home into a rental and qualify for another.

Step One–Talk to a Lender or Mortgage Broker

Before you get all ethered up on the smell of the opportunities in new construction or use up a bunch of gas checking out open houses, you need to see what it takes to qualify for that second home.

I’ve asked Tim Baldwin at Source Mortgage to provide me with some of the basic qualification guidelines for converting your primary home into a rental–Of course, this is just a simple outline, but, here’s what he came up with:

Basic requirements for turning Primary Resident in to an Investment Property

• DTI – is up to 50% Approve Eligible

• Can’t smell of buy and bail (words from the lender)

• 620 minimum credit score

• In order to count the rental income of the converted property, the borrower must have documented equity of at least 30% (appraisal value minus outstanding liens) in the existing home based on a full appraisal.

Ok, lets break this down a bit. 

DTI, or Debt to Income Ratio is  your total income (wages/salary, investment income, rental income, etc.)   divide by your total debt (credit cards, car payments, secured loans, etc.).  If your monthly debt, not bills (gas, utilities, phone bill, etc.) totals $1000/month and your total income is $3000/month, then your debt to income ratio (DTI) is 30%.  According to the basic requirements of converting your primary residence to an investment property this scenario would allow for a total debt of about $1500.

Buy and Bail–It means what it says.  Historically, many homeowners who were upside down on their mortgage saw opportunities to move up for less money.  They got the new loan and stopped paying on the other other.  Smarmy, really.

Rental Income–Pretty straight forward.  It’s the income you get from the home that’s been turned into the rental.  In many cases, you can’t use 100% of the rental income toward your DTI, but only 50-75% to figure for a vacancy factor.

Do You Qualify?

Every situation is unique and I can’t say for certain if you can qualify so you need to call Tim right away if you’re interested.  In just a few moments, he can see if you’re a candidate for converting your primary home into a rental. Right now, the rental market is doing well;  homes are renting quickly and are bringing in top dollar.  If the housing market takes off again, you’re very well positioned to sell if you’d like.  On the other hand, if prices and values drop, it will force more people into the rental market and again, you’re covered.

Where’s the Risk?

Like any kind of investment, there is some inherent risk; market fluctuations (addressed above), job loss, accident or injury affecting income.  But, with rentals, your biggest risk is going to be non-payment from a tenant and damages from a tenant, and those are a possibility.

Mitigating the risk.  Hiring a property manager is the best way to protect yourself from risks of being a landlord.  Of course, not all property management companies are created equal, so do your homework, or hire me; my company currently manages residential homes throughout Boise/Meridian/Eagle/Star.

What’s holding you back?

If you’re ready to upgrade, downsize, upsize, move to a different part of town or whatever reason you can come up with for moving, this is a pretty amazing time:

• Interest rates are still low
• Rental Rates are high
• Rental Vacancy Rates are low
• Real Estate inventory is on the decrease (down 44% from this time last year)

Just take a look at my home search page and see what’s out there–you’ll be amazed at the opportunities.  It doesn’t cost you anything to consider it, or check out the opportunity!  It may not be right for some, but it is right for others–which category do you fit into?  Don’t wait, give me a call or email

It’s been nearly a year since I went into full time, on-site new construction sales and the blog has had to suffer from it.  I’ve recently however changed builders and positions and have a bit more time to dedicate to sharing news and updates with you about the Boise Real Estate Market.

New Construction

Over two years ago I decided to take the leap into residential new construction training at NAHB and since have had the outstanding opportunity to work in some of Boise and Meridian’s most distinctive communities.  I haven’t abandoned my existing home/resale business and still enjoy working with buyers and sellers outside of new construction.  Let’s face it, new construction isn’t for everyone–I haven’t figured out why just yet, but there are still plenty of people who like the skull-splitting experience of a short sale.  Honestly, they still freak me out, but I’ll do em if I have to.

Red Feather Community

I’m currently working with Berkeley Building Company on-site in the ever successful Red Feather community.  It’s a great location, excellent community that is still thriving even after the real estate crash.  It’s clear that community wide there is pride of ownership and a real commitment to a clean, safe and happy subdivision.

As I’m writing this, the Julius M. Kleiner Memorial Park is under construction directly adjacent to Phase 6 & 7 of Red Feather.  In fact, there will be direct pedestrian access into the park from our community!  What a bonus

Also worth of noting is the Community Pool and Clubhouse that every Red Feather owner has access to as well as the Fiber Optic feed to each house.

Berkeley Building Company

Working with Joe Atella has got to be one of the best real estate experiences that I’ve  been a part of in my 7+ years in the business.  He’s committed to doing the right thing every time and has a real passion for his work.  His homes are practical, dynamic and exciting.  He brings a real creative mind and approach to the design process (well of course, he’s an Architect), yet allows room for the clientele to add their own personal touch as needed.

As far as amenities goes, he’s got it nailed.  When you walk into the model, it’s all included.  There is no bait and switch or funky “base pricing” programs that many production builders in the area are known for.  He keeps it real, he keeps it practical and of course he’s the bridge between quality and affordability.  You can check it his website for more details and information about his company.  He’s a real class act!

Market Update

It’s been a while since I’ve crunched numbers market wide, but here’s the water cooler dish.  Inventory is shoring up, but buyers aren’t.  There are fewer homes on the market than we’ve seen in many years and it’s probably not going to get better (for buyers that is).  There’s over 1000 fewer homes on the market right now than the same time last year.

Not only do the stats show it, but buyers and agents are creating a buzz.

New construction is also doing well, especially as the “used” inventory dries up we’re seeing a higher demand for new homes.  Soon though, we’ll be running into a Class A lot shortage and it will take most lookers by surprise.  Mark my words.  The window of affordability and quality in new construction is closing and county wide, I’ve seen price increases consistently.

That’s it for now, if you have any questions, please ask, if you have any comments, please share and if you have a Facebook Account, please follow and share this post!  Till next time!

This is a guest post by Daniel Beer. Daniel is a San Diego real estate agent who primarily focuses on Santaluz homes for sale. He has used auctions in the past with great success.

Today’s market requires us to have a very deep tool belt when it comes to selling homes. An action should be one of those tools and there are situations in which it can be the right strategy to get your home sold.

Homes that are good candidates for auctions are those without any relevant comps. If you have a home that is outside the scope of what your neighborhood commonly offers – whether due to price, size, or style – an auction may be exactly what you need in order to properly valuate the home. An example would be if you were selling a custom 6,000 square foot home, in a neighborhood where the biggest home to have sold in the last year was 4,000 square feet. It would be very challenging to put a firm price on that home, which makes it ripe for an auction.

Homes that have to be sold by a particular date are also great candidates. An auction is the only way to ensure that any home will be sold by a deadline without having to severely under price the property.

It is all about the psychology that comes into play with a home auction. Traditionally when a home is marketed each passing day makes the home listing old and stale. Auctions achieve the opposite because with each passing day the sale date draws closer. People’s competitive nature kicks in and they often try and purchase the property before the auction in order to thwart the competition. The home owner, of course, is free to accept an offer prior to auction date.

In general, an auction makes people’s competitive nature come out because they sense that there is a deal. If on a Sunday there are five or six homes holding an open house but only one of the signs says “Auction” which do you think people are going to be interested to see first? In other words, the auction process not only makes people feel like they are in competition with one another but it also drives more traffic to the home because everyone is after a deal. Of course, the level of competition helps drive the price up and the deal doesn’t turn out to be as sweet as they may have imagined.

Auctions can be reserve auctions or absolute. With a reserve auction there is an undisclosed reserve price that the seller and auction company agree to. If the buyer’s bids at auction do not meet this price there is no obligation for the seller to part with the home. However, the seller can still choose to let it go if they wish. In an absolute price auction there is no reserve. Wherever the bidding ends up is the price the home is sold for. Some sellers are intimidated by this, but the fact is that absolute auctions normally produce a higher price because a far greater amount of buyers show up to bid, driving the price up.

Something to consider for today’s market.

Click Image for Larger View

Boise, ID-Boise Real Estate has seen an overall decrease median price  this year–good news for affordability and stability.  Year to date, the median home price in Ada County is down 7% or to $155,000; Just about where we were in 2004 before the big median value run up.

Boise Home are Sales Up

For the same time frame however, our sales are up overall by 7% to 5,367 homes sold.  It’s gonna be a close one to beat 2009 numbers, but we’ll see once those stats show up.

What’s this mean to you?

Buyers:

• Affordability
• Selection could be limited depending upon location
• If you see the one you want, don’t wait, someone will buy it if you don’t.  That’s a guarantee!

Sellers:

• Less* competition in the market
• Pricing stable but remains competitive
• Get your price down to your lowest threshold and hold firm, you’ll get an offer… if not 2 (or more)

Stay tuned for a 2010 end of year report and a look back into a decade of Boise Real Estate home values.

You are entitled to your opinion.  But you are not entitled to your own facts.

– Senator Daniel Patrick Moynihan

Boise Real Estate Statistics

Say what you want about the state of the  Boise Real Estate Market–but, the numbers don’t lie.  Key price ranges have been steadily losing supply and that’s good news for the fragile recovery of our local markets. The fewer homes available for sale limits choices and helps balance the market.

Boise Real Estate Inventory on the Decrease

In November, Intermountain MLS reports that the two most active price ranges ($120k-$160k and $160k-$200k) are seeing the affordability opportunities disappear.  This doesn’t mean that housing is getting less affordable, what it means to you is that you’ll simply have less to choose from and in some cases might be competing for the good Boise Real Estate.

YTD, the $120k-$160k price range has seen a 45% decrease in inventory–currently standing at 709 units down from 1079 at the beginning of the year.

In addition, the $160k-$200k price range has seen the same 45% decrease in inventory from 706 units down to 452.

The important thing to remember is that while markets are local, there are also local factors that can further affect the stability of a market; jobs, interest rates, foreclosures etc.

What this means if you’re buying a home in Boise

Simply put, if this trend continues, you’ll have less to choose from.  On one hand, this may make searching for homes easier, it will also make the playing field more competitive–a good priced home in the right condition could attract many lookers.

If you’re in the market to buy real estate, now’s the time to get educated by someone who understands the local numbers and opportunities.  Now more than ever consumers have access to real time listing information and market news, but also, now more than ever, consumers are more confused about what that news actually means.

What this means if you have a home for sale in Boise

If you’re selling or thinking of selling within this price range, it’s good new especially for you.  If you’re home has the 5 Rights, you’re likely to garner a higher asking price to sales price ratio and will probably be on the market for less time overall.  Don’t get greedy though, we aren’t out of the woods yet–be competitive and go get a great deal on a discounted upgrade home.  By the way, you can start that search here.

If you’d like the entire copy of the November MLS charts and graphs, you can download them here.

Bottom line–decrease in inventory good–increase in inventory bad.