By . House. Published at Sunday, February 17th, 2019 - 04:25:35 AM.
The Macro-Dynamics of the US and the Canadian Housing Markets: An Analytical Comparison Introduction: This article examines three key fundamental questions: (1)-Would the US housing market face any reversal given what is happening in the US and global economy? (2)-As predicted by some pundits, would the Canadian economy undergo any serious correction? (3)-What are the key macroeconomic factors which impact the Canadian and the US housing markets? And using this framework what predictions can we make both for short and long term trends of real estate markets? The US Housing Market: Its Evolution from Crisis (2007-2008) to Present: The US housing bubble was created by Steroids Banking using Securitization process and taking advantage of low interest rates and massive inflow of investment money from abroad. The housing prices in most regions almost doubled 2001 to 2006; and subprime lending escalated astronomically. The private Mortgage banks were applying their creativity and greed in designing highly risky esoteric mortgage products using the Securitization process. What is Securitization? Put simply this is packaging of mortgages (including subprime) into structured products (Mortgage backed securities, Collateralized debt obligations). The manufacturing mortgage bank then removes these esoteric products from its balance sheets to minimize any risks and sells these products to institutional investors using SIV (Structured investment vehicles). The buyers of these products erroneously assumed that the underlying mortgages of these securities were safe collateral given upward trending housing market. However, when subprime mortgages defaulted and housing market began to sink, these structured products built around defaulting mortgages fell sharply in value, thereby freezing the entire global credit system. Added to this turmoil was dilution of commercial paper because of potential default of big lending institutions. The global financial system was under siege. Ironically, the Credit default swaps, which mean to insure against default of these mortgages collapsed under their own weight, thereby reinforcing the Credit crisis. The US Treasury and the Fed intervened and injected trillions of dollars to save the collapsing US Housing and Banking system. This crisis is a classic example of Moral Hazard issue. Who was responsible for over-leveraging the system beyond its buoyancy point? Technically the Mortgage banks had packaged the mortgages and passed on the risks to the institutional investors. The institutional investors made the wrong assumption that the US housing market will move North forever. The Fed and other institutions did not have a proper regulatory-monitoring structure as envisioned in the BASEL guidelines to avert such over-leveraging. Nobody knew who will be responsible if the edifice collapses. Worst of all, the institutional investors assumed wrongly that the Credit default swaps (CDS) instruments would work miracles; and bail out defaulting mortgages. This is known as Moral hazard problem. Ultimately everybody was looking forward to the Fed and the Treasury to bail out the global financial system from reaching the doomsday. The US Housing Market in the aftermath of Crisis: The Mortgage Delinquency Rate (MDR) is a key metric that speaks of the real fallout of the US housing crisis (2007-2008). It measures the percentage change in delinquency of residential loans. In June 2007, the MDR was 2.17% and reached its highest level in March 2011 at 11.36%. It recovered back to 2008 levels at 10.4% recently. MDR is a key lagging indicator that reflects economic difficulties. Another key metric reflecting the state of housing health in the US is the S&P/Case Shiller Home Price Index. This is an index reflecting change in housing prices of 20 (and 10) key US metropolitan areas. The home prices in April 2012 for 20-city composite have reached the level existing in the start of 2003. In April 2012, the home prices have declined about 34-35% from its peak level in 2006. The main reason for a stagnant US housing market as evidenced from the MDR data is a fragile labor market. Slow job growth rate is due to weak consumer spending, which is the 70% component of real GDP and key driver of job creation in the US. Consumer spending is directly related to job growth rate, the saving rate and the consumer confidence. In an uncertain environment, spending falls and both the US dollar and saving rate increases. Although savings are recycled by the intermediaries as investments for businesses, this does not necessarily translate onto investment spending and GDP growth. Companies in a high risk environment aim to trim their balance sheets by paying off their debts, a process called as deleveraging. They do not want to burden their balance sheets by borrowing from banks. This deleveraging process slows down the level of investment in the economy thereby indirectly moderating the job growth rate. Deleveraging also runs counterproductive to low interest rates and impedes growth in jobs and therefore fast recovery of real estate prices. Why the Canadian housing market is not poised for a serious correction? The Canadian Mortgage system is more robust and conservative than the one prevailing in the US. First of all, the Canadian subprime market is only 5% of total outstanding mortgages whereas during its peak years 2004-2006, the US subprime market captured 25% of total outstanding US mortgages. The Canadian mortgage system executes better risk management tools including limited exposure to securitization and tight lending practices backed by insurance mortgage. The recent changes in the Mortgage lending have further tightened the belts to avoid any risks to healthy housing in Canada. The supply and demand conditions in Canada are monitored by all players actively. There is a great degree of transparency and authenticity in the housing data and practices. Supply dovetails both current and future demand leaving little room for creation of bubbles. Remember bubbles happen when there is a huge undiscovered lag between supply and demand. For example, there is an anticipated constraint of commercial real estate supply in the wake of surging demand both in Toronto area and Western Canada. A large number of Canadians are currently disillusioned by lower and volatile investment returns in the core financial assets, stocks and bonds. The ongoing volatility in the Capital markets is expected to last in the next few years, given some long lasting problems like risks of Sovereign debt crisis in Europe & the US. This situation has mobilized a great number of people to invest in real estate as most viable alternative investment in the wake of record low interest rates. This process might continue for some years as the core financial assets (stocks, bonds and mutual funds) may not pick up momentum soon. The concept of a bubble is not quite relevant in the context of the Canadian housing market. This is explained in terms of a typical sales cycle witnessed in Toronto and other places in Canada. The sales cycle woven around tighter demand-supply conditions mitigates the probability of bubbles. For example, in Toronto, condos are sold or flipped by investors, who generally do not live in those condos. When interest rates would inch up in future, these investors will find it difficult to keep highly expensive condos. They will sell these condos putting downward pressure on prices of the condominium market. Intuitively, the falling prices will give opportunity to new immigrants and other investors to purchase condos, as they could not previously afford it. This process is further strengthened by different ethnic groups who support their new immigrant friends and families toward the purchase of their first homes in Canada. Overall these processes would push prices upwards again. To conclude, given these tight supply-demand conditions, the chances of any serious correction are quite minimal in Toronto. What are the Macroeconomic factors which impact the prices of Real Estate? Interest Rates and Inflation: Interest rate is the price of money. It is determined by supply and demand of loanable funds. However the countrys Central bank can greatly influence the rate by tightening credit conditions or making those relaxed by pumping money into the system. This is typically done through Monetary Policy and open Market operations. Lower rates make it cheaper for potential buyers to borrow money and make purchases. It also helps current homeowners to refinance their homes and save money. All this will lead to stronger demand for mortgages and housing. Increasing rates will have the opposite effect and dampen the level of sales activity in the Mortgage market. Carry forward trades, borrowing at lower rates in one region and investing it in other, also indirectly impact real estate. For example, foreign institutional investors can borrow money overseas at cheaper rates and invest in Canadian real estate market. More important, real interest rates equal nominal rates minus inflation. Rising level of inflation will lower the real interest rates and declining levels will inflate real rates. Inflation typically feeds into asset prices including real estate. Tightening of money supply is done to control inflation, and this process leads to rising interest rates. Easing of money supply is done to trigger growth and this is accompanied with declining interest rates. However greater supply of money and rising oil prices (supply side) feed into inflation and ultimately inflates asset prices. Economic Growth, Consumer spending and Employment level: Economic growth is measured by growth in the real GDP. Slowdown in economic growth-both global and regional-raises fears of deflation or declining prices, which does not bode well with overall economic affluence. Deflation can be compared to freezing of an economy. Japan experienced sustained recession due to deflation for a long period. Fear of deflation due to declining growth can have negative impact on the real estate market. Labor Market dynamics and in particular the level of unemployment has a critical relationship to the health of the housing sector. Rising unemployment during recession is often accompanied with low housing demand and mortgage delinquencies. For example, when Enron crisis erupted, there was general softening in the regional housing market. Another example is the current state of the US housing market. Economists say that the slow pace of housing recovery is attributed to a stagnant US labor market, which is stuck up at over 8% of unemployment rate. Consumer spending plays a key role in the US while the export sector plays an important role in China. As well in Canada, consumer spending has correlation to the GDP growth. In case of the US, Consumer spending constitutes 70% of GDP and is therefore most important driver of GDP growth rate. Higher consumption level, driven by consumer confidence levels, leads to greater economic (job creation) activity and ultimately translates into greater demand for housing. Surging consumer debt, as it is happening in Canada, is also not healthy for a sustainable consumption and GDP growth. Over-leveraged consumers do not have the capacity to absorb shocks like layoffs or increase in interest rates & inflation. Institutional Capacity of Economy to absorb External shocks: The housing crisis of 2007-2008 contaminated the global financial system. The Fed and G-7 countries had to undertake unprecedented bail out measures to save the global financial system from getting derailed. Fortunately, the Canadian housing market was resilient enough to absorb the shocks and did not sink. This happened because of a relatively conservative mortgage system prevailing in Canada. Regulatory measures also impact the resilience of the housing market. For example, tax credits in the US had triggered growth of the housing sector in the aftermath of crisis. Canada has applied its regulations to keep the housing sector strong and healthy. Demographics and Migration: These play an important role in shaping the long term prospects of the real estate market. In Canada and the US, the aging population of baby boomers will create more demand for residential and vacation homes in the next decade. International migration to Canada is also an important determinant of housing market in Canada. Technology, Oil-Commodities boom and Exports: The Canadian economic and housing activity is also impacted by three external forces: Chinese Investors, Oil-commodities prices and economic activity in the US. The Western Canada is impacted by the level of Chinese and foreign investments, mainly in the Mining and Oil sector. The Eastern region, mainly Ontario and Quebec, is impacted by the level of exports to the US and therefore indirectly on the state of the US economy. Stronger Canadian dollar does not augur well for exporters. Overall, the Canadian economy and dollar are strengthened by rising demand for Oil and commodities. National Level of debt: In the US, the national level of debt is reaching about $14 trillion and will continue to grow in the years to come. National debt piles up due to persistent fiscal deficits in the economy. In the US, there is a challenge of twin deficits-both fiscal deficit and external imbalances. The twin deficits not only lead to faster growth of national debt but trigger anticipation of higher interest rates and inflation. This happens through the following mechanism: Higher debt in the US is monetized by either selling bonds to China (or other surplus countries) or by printing money from thin air. In either case it leads to greater risks and consequently higher interest rates, fast depreciating currencies and therefore more inflation. Some economists say that if debt is not contained by the US policy-makers, we may enter an era of hyperinflation where all asset prices (including real estate) will become very costly. Applying Macroeconomic Framework to analyze current & future trends: (I)-Current Global Economic Outlook: The global economic growth is expected to moderate in 2012 (and perhaps 2013). Concomitantly, the global real estate market is cooling down a bit. The moderation in growth is spread unequally across different geographical regions. In the US, which been the central point of housing crisis, there is some improvement in key housing indicators. Given sustained low rates, minimal probability of deflation (freezing of economy) and complete preparations by European Central Bank to cope with Eurozone debt crisis-there is less likelihood of any major reversal to the US economic fundamentals and therefore the housing market. The key emerging Global housing trends are captured in the following summary: (A)-The battered US housing market is relatively stable, with less increase in foreclosures and mortgage delinquencies. The US market is currently an ideal buyers market. However, there will be a substantial lag time before we can witness a complete turnaround in the US housing market. (B)-The vibrant Canadian housing market is generally perceived to be ready for some correction in 2012 and 2013. Chart V shows key housing trends in Canada. (C)-The European housing market is (and will in future) undergoing a degree of correction. This stems from recent fiscal crisis in Europe as well as fragility of the German economy exposed recently. The housing market in the emerging global economies is also cooling down a bit. (II)-Some Predictions using the Macroeconomic Framework: The short term perspective of the Canadian housing market might witness come corrections in 2012 and 2013, but as argued in this paper this will be minimal. Also, as argued further, the commercial real estate market will stay steady and strong in 2012 and 2013 in Canada. Given the complex interplay of global economic forces and what is happening in the Eurozone and the US in terms of debt crisis, it is rather difficult to make any certain long term predictions. However, growing complexity warrants a more holistic inter-market analysis to predict about the real estate trends. The seven key global economic trends of the next decade can help us understand the future real estate prospects as well. These seven trends are as follows: (1)-The bubble of Sovereign debt crisis in the US and Europe will last for sometimes, at least next decade. Governments in this part of the world are running unsustainable massive debts, which will ultimately put an upward pressure on inflation and interest rates. (2)-The clear outcome of (1) above will be depreciating value of currencies. (3)-Another consequence of (1) above will be fragile and volatile bonds and stock markets. (4)-Commodities, gold and some alternative investments will become attractive as they will be perceived to store real value. Currencies, stocks and bonds will depreciate fast. (5)-Inflation will be triggered by massive monetization of debt (printing currency from thin air). This situation may be exacerbated if China pulls out trillion of dollars of US bond purchases it made in the last decade; and if oil prices continue to move north. (6)-Demographic trends entail growth of baby boomers in North America and Europe leading to migration to North America. (7)-The US dollar will not evaporate because of spectacular performance of the US companies and technological advancement in North America. Given these seven key economic trends of the next decade, the housing market will stay vibrant and steady in Canada and the US. Baby boomers, foreign investors and immigrants will continue to play a critical role in strengthening the housing demand in North America. Hyperinflation, as worst case scenario, might pull down demand of assets because it would stoke prices of those assets including real estate. At this stage, however, it cannot be predicted whether the European and the US governments will take concrete measures to contain their debts and put in place sustainable debt management policies. Future events will unravel the political commitment of these governments. At this stage, one thing is certain: the current debt monetization policy of these governments is not sustainable in the long run.
What Do Houses In Vilas Do Atlantico Have To Offer? If you are looking for a luxurious house in Bahia then you must definitely take a look at the real estate options in Vilas do Atlantico. Located in the municipality of Lauro de Freitas, just 12 km from the Salvador international airport and 20 km from the city, Vilas do Atlantico offers an optimum combination of quiet nature and urban conveniences. Being a locality inhabited by affluent people, houses in Vilas do Atlantico are high end real estate options offering premium facilities. Great Location Being near the cities with many international companies, many foreigners and high level executives prefer to stay in Vilas do Atlantico. While it is a convenient place to commute from, it has an excellent beach and is also close to other beaches of the Bahia north coast. Tourist towns like Praia do Forte are also only a short drive away. If you live in Vilas do Atlantico, you will find all everyday conveniences like supermarkets, hospitals, schools, banks, restaurants and malls near you. The public transport is also well developed in this coastal town. Vilas do Atlantico Offers Premium Houses Houses in Vilas do Atlantico will be attractive to all types of buyers. It makes great sense to buy a house here for your own use if you are looking for a house in the coastal area of Bahia. It can also be a great place to invest for renting out due to the number of tourist and business visitors the place receives. The area is likely to see significant capital appreciation as well and therefore it is a good place for long term real estate investment. At Vilas do Atlantico you will find great looking houses built on fairly large plots. Most houses have at least two bedrooms, one suite and come with basic furniture and swimming pool. Depending upon the price and location, you can also expect air-conditioning, premium fittings, party areas, multiple car parks, well designed gardens and play areas. Many houses have quarters for employees and domestic help. Some also come with an office. While the price of houses in Vilas do Atlantico could range from $285,000 to $795,000, the average house will cost you around $475,000. Let us take a closer look at what can be expected at different price levels. Houses Below $300,000 Even the most economical houses in Vilas do Atlantico offer you some choice. You could choose between smaller houses nearer to the beach with all suites and air-conditioning or go for a larger house slightly in town. At this range you may not get a pool, but you can expect a plot of around 600 sq. meters and a built up space of 140 to 350 sq. meters. Houses will typically be 4 bedroom with multiple suites and most houses will have facilities like garden, parking and basic fittings. Some may offer sauna or jacuzzi and some may be fully furnished. Between $300,000 To $400,000 In this range most houses will have a swimming pool. Below $ 360,000 you can expect in town houses with 4 bedrooms, at least one suite, basic fittings like cabinets or wardrobes, maids room and security equipment. Built up area is usually around 200 to 300 sq. meters on a plot of about 600 sq. meters. From $360,000 to $400,000, you will get multi floor houses closer to the beach either standalone or part of a condo. Typical houses have 4 to 5 bedrooms with 2 suites and other things like pool, multiple car parking, bar, barbecue, garden and security features. Built up area will be around 400 sq. meters on 500 sq. meter plots. Some houses will offer fancy features like terrace garden, waterfall or landscaping. Most houses will come with basic fittings. The $400,000 To $500,000 Range Below $450,000 you will get houses in good locations in town with large built area of around 420 sq. meters on larger plots of around 700 sq. meters. In addition to previously mentioned facilities you will get play areas or playgrounds, fancy swimming pool, kennel and living quarters for employees. Between $450,000 to $500,000 you can expect better locations, larger and better gardens, bigger plots up to 1500 sq. meters. You can also get houses on the seaside if you opt for smaller plots up to 900 sq. meters. You can also opt for houses in well planned condos with premium modern construction and private garden. The plots in these cases are likely to be about 500 sq meters. The $500,000 To $700,000 Range You will get very lovely houses in good locations either in town, near the beach or with a sea view. You can expect 380 to 600 sq. meters built area on plots of up to 1200 sq meters. Typical houses have 4 to 5 bedrooms with at least 2 suites. Facilities such as covered car parking, jacuzzi, sauna, living space for employees, office, security systems and nice party areas with bar and barbecue can be expected. Above $700,000 In this budget you will get large, very well designed houses in nice localities a short walk from the beach. You can expect about 750 sq. meters construction on plots in excess of 2500 sq. meters with at least 4 bedrooms and multiple suites. All other facilities mentioned in cheaper options will be available but will be of much better quality. For example, you can expect huge professionally designed gardens, large party areas with dining facilities and separate washrooms for ladies and gents. If you prefer a beach front home, then relatively smaller but luxurious beach front homes with direct beach access are available. Typical houses of this type will offer about 400 sq. meters of construction on about 500 sq. meter plots. You can expect 3 to 4 suites, full air-conditioning, fancy pool, premium furniture, premium flooring, office facility, garden, party area and employee accommodation. Houses in Vilas do Atlantico offer you a wide choice. What fits your needs depends upon your preferences on location and facilities. For any budget there are several choices. One thing that you can be certain of getting is a large multi-floor house set in a spacious well developed plot. Combine these specifications with dual advantages of being close to peaceful nature while having all urban conveniences and you are already looking at some great options. If you are looking for a house for living, renting out or just for investment in Bahia, houses in Vilas do Atlantico will provide plenty of excellent options.
How to Turn Your House Into a Vacation Rental : Turning your house into a vacation rental can seem overwhelming at first... but it really doesnt have to be. This is a process that you can really enjoy and have fun with! I have set up houses as vacation rentals dozens and dozens of times, for my clients properties, as well as my own houses. I understand what is involved and required from every aspect, from assuring the property is in compliance with governmental agency rules and regulations, to making sure it has all the essentials that most guests require. In my commitment to assuring that my clients are continually successful with their vacation rental houses, I often find myself in the role of vacation rental counselor, mostly pertaining to governmental agency and code compliance, quality assurance, and ongoing property maintenance required to meet the current industry standard. So, with that in mind, its important to begin with the basics when you decide to offer your house as a vacation accommodation to travelers. In this article I will provide you with the 5 most important steps to follow to assure your vacation rental success. As you read through this, I advise you to consider the fact that your house is in a unique town or city, that this article is a general guide, and that it is critical for you to become aware of your local community sentiment, and rules and regulations about short-term rentals. Always remember, your house is a private property, it is are not a hotel, and preparing your house and managing it as a vacation rental accommodation for tourists must be carefully and thoughtfully done. 1 - LAWS, ORDINANCES, RULES, AND REGULATIONS The very first thing you need to do is to educate yourself about your local city, county, and state laws, ordinances, and rules and regulations pertaining to offering your house as a vacation rental in your unique community neighborhood. Please dont just assume that because its your property, you can do whatever you want with it. And, please dont put a lot of effort and expense in setting up your house as a rental for tourists until you rule out the possibility that there are laws preventing you from doing so. Many local and state government agencies have clear regulations stating that setting up your house to rent as a vacation rental turns it into a business, and it will probably be subject to some level of city, county, and / or state licensing. Many governing agencies also require that to legally rent your house as a short-term rental, you must collect local and state tax from tourists who rent your property. A quick search in the vacation rental news reveals, that as short-term rentals become more and more popular, many communities have licensing restrictions and very specific rules and regulations regarding renting houses short term to tourists. Call your local town or city governmental offices and get to the appropriate licensing department that can answer your specific questions. Find out what specific licenses and / tax numbers you need to legally rent your house, and get them. I highly recommend that you seek the assistance of an established licensed local rental agency that can properly assist you understanding and complying with licensing and tax requirements required in your community. 2 - YOUR NEIGHBORHOOD AND YOUR NEIGHBORS Now that youve determined that it is legal for you to rent your house as a vacation rental, and youve obtained the proper licenses and tax numbers, its time to think about the neighborhood where your rental house is located. This might seem silly, and many people gloss over this important step, but believe me you can save massive headaches and fights with neighbors by dealing with this issue pro-actively. Nearly every news article you read on communities that are resisting or trying to restrict vacation rentals point to the same neighbor issues: noisy tourists staging loud parties, tourists taking parking spaces from local residents, and tourists being careless with their garbage. In all the years Ive been in the vacation rental business Ive seen several neighbor-to- neighbor squabbles that have involved code enforcement, the police, and even expensive law suits. Most of these issues could have been avoided with plain common sense and consideration. Find out who your neighbors are, and do your best to communicate with them and determine if they will resist you renting your house to tourists. Once you begin renting your house to vacationers, you need to commit to being selective about who you rent your house to. It is important to talk with them and determine if they will be a good fit for your neighborhood. Ask them directly what they plan to do while they are renting your house for their vacation. For example, if you discover a potential guest is planning to rent your house to accommodate a wedding party or a birthday party, think about the impact on your neighbors and if they will be okay with this. Some properties I manage are in neighborhoods that will only tolerate very quiet couples, others are set up to accept larger groups and the neighbors are clear on this and understand the rules. Know your neighborhood, and set up your own House Rules that your tourist tenants must agree to comply with. The biggest complaint that most neighbors have who live next to vacation houses is noise. Some neighbors are more noise sensitive than others, and you need to know if your neighbor is going to call the police every time a group of vacationers sit around the swimming pool and listen to music. Give neighbors who live next to your rental your phone number, and ask them to call you directly if there is a noise problem. And when there is a problem, call the guests and ask them to quiet down. Since you are renting your house to tourists, it is your responsibility to make sure the guests you bring into your rental house are respectful of the local neighborhood. 3 - FURNISHING YOUR HOUSE AS A VACATION RENTAL Furnishing your house can be daunting if youve never done it before. Below is a very detailed list of basic home furnishing items you will need to provide. This includes suggestions for bed configurations, kitchen essentials, soft goods, and household items. Your guests will be looking for the basic comforts most of us look for in our daily living. Enjoy setting up your house for tourists - and strive to strike a balance between nice and economy. If you are striving to attract a higher end clientele add some nice touches and things that you would appreciate if you were a guest in your own house. You dont need to purchase all new items, but please doesnt use junk or your house will start to look like an unappealing garage sale. Add some interesting art work, wall mirrors, artificial plants, and some nice nick-nacks - just take care not to overdo it or it can start to look cluttered. Some personal pictures (a shot with your friends or family members) are nice to place on shelves... it reminds guests that they are in some ones house, and not a hotel. Suggested Bed Size Lay Out Your vacation rental property needs to be practical and user friendly as well as beautiful to look at. I have found the following general layout to meet the demands of most guests. As a general rule, avoid putting too many extra beds in a bedroom, you do not want to give the message of the more the merrier. If your property has an office or den, it is a nice feature to add a desk or set up an office. Try to make the nicest bedroom the master bedroom. The nicest bedroom is usually determined by the view and features - such as en-suite bathroom, private deck, French doors that lead to the swimming pool or porch, or it can just be the largest bedroom if the property offers no other unique features. If your property has more than one bedroom with an en-suite bathroom and/or view than you are lucky to have a property that can be marketed with more than one master bedroom or suite... and that is a fantastic feature. That way, couples traveling together dont have to flip for the best bedroom! About bed sizes: The layout below is suggested after nearly 2 decades of being in this business and listening to what guests require. Today, it seems like most people sleep in king size beds at home, and many couples who stay in vacation rentals insist on a king bed. For some couples, not having a king bed option can be a deal breaker since they are convinced they wont be able to sleep in a smaller bed with their partner. So that being said, here are the basic suggested guidelines... • Two Bedroom House Bedroom 1: Master bedroom - Prefer King bed. If room is too small use a Queen. Bedroom 2:- 2nd bedroom - Queen or 2 twins. (I find that 2 twins are a better option as they can be pushed together to make a King.) • Three Bedroom House Bedroom 1: Master bedroom - Prefer King bed. If the room is too small use a Queen. Bedroom 2: 2nd bedroom - Queen or King or 2 twins. Bedroom 3: 3rd bedroom - 2 Twins or Trundle bed • Four Bedroom House Bedroom 1: Master bedroom - Prefer King bed, but if the room is too small use a Queen. Bedroom 2: 2nd bedroom - Queen or King Bedroom 3: 3rd bedroom - Queen or King or 2 twins. Bedroom 4: 4th bedroom - 2 Twins or Trundle bed Guideline for Cookware and Kitchen Items Equip your vacation rental kitchen with basic cookware and kitchen items. Buy a good set of good cookware, as much quality as you can afford. It does not pay in the long run to get the cheapest as it will not last, but not necessary to buy the very best either. Sometimes you can find a nice stainless steel set in a box. Do not get the cheap aluminum stuff. • Stove Top Pans: Provide a basic set of 2, 4, 8, and 10 quarts. • Skillets: 7 and 10 inch • Oven Pans: Glass baking dishes: 9X13 and 8X8, roasting pan with lid (holiday dinners),cookie sheet, muffin tin, 1 pie pan, 2 cake pans, 1 pizza pan. • Mixing Bowls: 2 large: 8 - 10 quarts; 2 medium: 2 - 4 quarts; and 2 small: 1 - 2 quarts. These can be stainless or glass. These can also be used as serving bowls. • Knives: Paring, large vegetable, butcher, bread, and a sharpener. • Cook Prep Items: Colander, spatulas (1 medium size, l large size), mixing spoons (1 large, 1 medium), wire whisk, can opener (a good manual one is best), plastic cutting boards (1 large and 1 small), measuring spoons, rolling pin, ladle, funnel, and tongs. • Small Kitchen Appliances: Toaster, coffee pot (electric drip - Mr. Coffee Style), blender (good quality that will spin frozen drinks) • Other Kitchen Items: 2 to 4 pot holders and trivets, placements for complete table setting, 6 dish towels, teapot (for steeping tea; not essential but nice), bread basket, aluminum foil, and plastic wrap. • BBQ Grill: Inexpensive gas grills are best. Plan on replacing them about every couple of years. • Flatware and Serving Ware: Dinner plates, soup / cereal bowls, small plates (Service for 8 - 10 works best for property that sleeps up to 8), glasses (service for 8-10), flatware (service for 10 plus meat fork), 6 to 8 Serving spoons, 2 slotted spoons, coffee mugs or coffee cups and sauces (service for 10), 2 to 3 serving bowls and platters for hors doeuvres, or maybe a turkey or roast. Bright colorful serving bowls are nice and also help to add a pop of color to the kitchen. • Cleaning Supplies (keep in property for guests): Hand dish soap, dishwasher soap, degreaser, window cleaner, cleaning cloths, large 2 to 3 gallon plastic bucket, mop, 2 brooms (1 for inside and 1 or outside),1 dust pan Guideline for Soft Goods Equip your vacation rental house with nice quality bedding, towels, and window coverings. Do not buy the cheapest soft goods. They wont last and you will likely receive complaints. Guests expect good quality towels and linens and will write bad reviews for poor quality items. You can save money by purchasing from discount warehouse and home furnishing stores. • Towels: For a 2 bedroom rental - 12 bath towels, 12 hand towels, and 8 wash clothes; for a 3 bedroom rental - 14 bath towels, 14 hand towels, 14 wash clothes; for a 4 bedroom rental - 16 bath towels, 16 hand towels, 16 wash clothes • Sheets and Pillow cases: 2 sets for each bed. Get at least 400 count sheets • Bedding Protectors: Mattress covers for each mattress zip pillow protectors for each bed pillow (these go on the pillow before the pillow case). • Bed spreads or comforters: We take our cue from high end hotel rooms. At this writing (2011) travelers like duvet covers (over comforters) and / or mattalesse coverlets in the contemporary market. Bed covers MUST be washable. • Decorative and Comfort Items: Throw pillows, 2 or 3 blanket throws, throw rugs, door mats • Beach / Pool Towels - 2 per bedroom • Window coverings - Nice curtains and / or blinds Entertainment and Internet Service: Flat Screen TVs: People expect TVs in the bedrooms as well as the main living room / great room. I recommend a large TV (minimum 36 inch) in the living room, and smaller ones in the bedrooms (15 - 24 inch are fine). Small flat screen TVs need to be mounted on the wall or bureaus for security reasons. Cable TV or Satellite: Dont offer pay per view features. Its too hard to keep track of those charges. Internet (DSL): WiFi router is an expected feature. Almost all tourists travel with laptops... and they get upset if they dont have internet access. Most renters do request WiFi. Stereo and C/D player: Most guests travel with iPods in todays market, but most still expect some kind of music player. This should not be an expensive unit. It can be a large boom box type with detachable speakers and should be large enough that people do not try to take it outside. 4 - Maintenance and Housekeeping Your vacation rental must be well maintained and kept immaculately clean. Keep in mind, that while your house is not a hotel, you are offering it as a vacation accommodation to travelers, and guests will expect maintenance and cleanliness standards set by nice hotels. This is not a place to cut corners, and if you do, your house will soon appear on a travel log such as Trip Advisor, Flip Key, or rental review sites with negative comments. Bad reviews about poor cleaning and maintenance, even if they are exaggerated by unscrupulous guests, can quickly stigmatize your house and discourage future guests from renting it. You simply must commit to bearing the cost to keeping your house to quality standard. Most vacation rental agencies collect a departure cleaning fee in advance from the guests to clean it when they leave. Guests expect and deserve to arrive to a clean and tidy property. Set a cleaning rate that will cover your costs to clean the house thoroughly each and every time guests depart. Make sure you plan enough time to clean the house, and better yet hire a good professional housekeeper. Make sure carpets and furniture are cleaned as needed. During periods when your house is not rented, be sure you give it a deep clean. Replace towels and linens with new ones as necessary, and never make a bed or make up a bathroom with tired or stained linens or towels. If your house has porches or decks and outdoor furniture, they must be kept scrubbed and free from mildew and look fresh for every guest who checks in. Same with windows, yards, landscaping, swimming pools, and Jacuzzi tubs - they must be maintained to quality standard or you will get complaints. This goes for household maintenance issues as well. You will need to hone your handy-man skills and make sure all the light bulbs work, a/c filters are changed, the internet is working, TV remotes work, the toilets are flushing properly, and the pool and Jacuzzi heaters are working right. You will also need to be on call to go over to the property and provide minor repairs. Unless you live in the same town as your rental, and you are absolutely committed to maintaining it, hire professionals to do this for you. If you are not willing or able to do this, or cannot quickly respond to any maintenance needs, I strongly recommend that you hire a professional rental agency that is staffed up to provide these kind of services. It will save you a lot of head ache and could save the reputation of your rental house. 5 - Managing Your Property - Advertising, Reservations, Rental Contracts, Bookkeeping The final basic step to turning your house into a successful vacation home is to start advertising it and taking reservations. Today, there are several mega-vacation rental advertising websites to choose from that have huge data bases of available rental properties. Most of these are set up so you can you can post your own ad copy and download your own property photos. Expect to pay over $500. to get positioned on-line so that prospective renters can find your property. You can also use social media such as Facebook and Twitter to promote the availability of your property. If you decide to manage your property yourself, you must be completely committed to every aspect of the administrative process. This means answering email and phone inquiries in a timely manner, maintaining an availability calendar, talking with potential guests to determine if they are appropriate renters for your house, writing and sending rental contracts to guests, collecting rental fees, collecting and paying required bed and / or sales tax, collecting and refunding security deposits (or determining costs where there is damage), paying housekeepers and maintenance people, paying utilities, keeping licenses current, and generally staying on top of the bookkeeping. There are several home-based reservation management software packages available to help you stay organized, but they will only work if you are diligent about keeping the information updated.
How To Sell Your House By Yourself: A Short Guide Selling your house is something youll have to do maybe just a few times in your life. And unless you know a local real estate agent who will sell your house for free or a hugely discounted commission... it can be a real pain in the rear and an expensive process for you as well. So... you landed on this page about How to sell your house by yourself because of a few reasons Im guessing... • You have no or very little equity in your house so you cant afford to pay a real estate agents commissions • You have equity but want to try to save money selling the house yourself before you resort to hiring an agent • Youre in foreclosure (or heading that way) and just need to sell fast without incurring thousands in agent commissions • You cant wait the months and months it sometimes takes to sell a house in your area, so you want to try to sell it more quickly Whatever one you land in... there are ways to sell your house yourself in your local real estate market. Since 2013, the housing sector has been experiencing a major recovery. Selling your house at this time will definitely be profitable if you do it right. In most cases, it is about using smart marketing strategies and being realistic about your expectations on what you want to achieve with this sale. This article will provide some guidelines to help you sell your house yourself. How To Sell Your House By Yourself - Lets Dive In Know The Real Estate Market Well The first and most important step is doing a market research on your neighborhood. This step involves visiting various home marketing sites (Zillow, Eppraisal, Redfin, etc), calling a real estate agent or two to see what your home is worth, or reading about the various market pricing techniques. Proper homework on these issues will allow you to come up with a right price for your house and also helps you to avoid making certain selling mistakes. If you dont want to hassle with trying to come up with a home value yourself... contact a local cash home buyer. Theyll be able to give you an honest fair valuation of what your house is worth in its current condition. And most cash homebuyers can make you a fair all-cash offer on your house within 24 hours, to give you that option of selling quickly (most cash homebuyers can close within 14 days). Assess the market This step is almost similar to conducting market research, only that in this case, you are bound to your neighborhood and similar houses. Are there lots of houses for sale in your neighborhood? If so, what is the average that they are listing for? Are there lots of foreclosures in your neighborhood? That may drag your house price down. Assess the house As a seller, your house should be in top condition or shape in order to sell at a good price. Identify certain unique characteristics about it and emphasize them during the marketing. For example, a house with garage parking may be more attractive to buyers compared with one with driveway parking. Also, does your house require repairs? Does it need to be repainted inside or out? How is the condition of the roof? Is the landscaping in good shape? Is the house outdated at all? (you know, those popcorn ceilings. All of these things can make the house more attractive or less attractive depending on the buyer... which changes the price theyre willing to pay. After all of this... come up with an asking price for your home that is fair... isnt so high itll take you 12 months to sell the house... but is attractive so you get a frenzy of buyers who are ready to buy it quickly. Use Photos or Videos Buyers are obsessed with media. Taking walk-through videos of the house and using the videos to advertise will enable you to reach a wider market. In fact, these videos are considered more transparent than taking photos. However, this should not stop you from using the latter option since it is more affordable compared to the video. So take some great pictures. Take a picture of every room in the house that helps show it off. Take a picture of the house from the outside in a few different angles... people want to see the house before they ever show up to see it. So having great pictures of your house online could be the difference between getting the right buyer quickly... and waiting months and months to sell. Get Your House Listed On The Local MLS And Market It You can find no or low fee real estate brokers these days who will charge you a few hundred bucks to put your house on the local MLS. This gets your house in front of all of the real estate agents quickly (so be prepared to pay those buyers agents a 2-3% buyers broker fee if you plan to have their support in helping you find a buyer. Place ads in the local newspaper, signs on the roads, and hold an open house. All Of This Sound Like A Lot Of Work To Sell Your House Yourself? It can be. And in the end, many homeowners think theyre saving money and time by marketing the house themselves... when in the end it costs them more money to go that route. When you sell your own house here are some things you need to consider... • If youre not a good marketer or arent ready to spend a bunch of time marketing your house right... selling it yourself may not be your best bet • If you dont do a good job preparing the house and the marketing materials... and working with buyers to really build the value of your house in their minds... you may actually sell the house for 3-8% less than you may get for the same house an experienced person marketed the house for you • Too many sellers never think about holding costs or opportunity costs... every month that your house doesnt sell means another mortgage payment, tax payment, insurance, utilities, etc. If your mortgage payment is $1,500/mo... and $1,300 of that is interest... if it takes you 7 months to sell your house... that cost you an extra $9,100 (not to mention taxes and insurance you paid during that time). So, if you were able to sell that house more quickly... would it make sense for you to provide a buyer a discounted price today so you can close quickly and move on? Something to think about. A local cash home buying company can give you a fast offer for a fair price.
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