Dear Michael: We are in escrow on our first home. We are not sure if the seller will be out by the close of escrow. What are our options if the seller is not out when we close escrow?
Answer: You will have to keep very close attention to the seller’s moving progress. You have a final walkthrough, which in your case should be scheduled at least 5 days prior to the close of escrow. If during your walkthrough it becomes apparent that the seller has not packed their personal items or does not have any boxes ready to be shipped out, you will need to start planning your options. You can hold off the close of escrow. This will be an enormous inconvenience to you but will motivate the seller to move out quickly. If you have Realtors involved you are in a better place! Your Realtor and the sellers Realtor must stay on top of the situation every day after you have removed all of your contingencies. Communication and overseeing is imperative. If you close escrow and the seller is still occupying the property you become a landlord. You may end up having to pursue legal matters for compensation. This situation must be avoided. I recommend seeking legal advice if you close escrow and seller is still in possession.
Dear Michael: We are buying a 4-unit apartment building and would like to know the rate of inflation we should factor as a return on our investment?
Answer: The most accurate way to calculate the property appreciation is to use a 4 percent rate of inflation. In other words: if you purchased an investment property today for $1 million, in 10 years it should be worth $1,400,000. The rate of inflation fluctuates depending on economic factors. Historically this rate has been in line with equity appreciation. Keep in mind that your rental income from each unit should also be a source of income. Make sure you complete a “spread sheet” which will allow you to compute your monthly overhead. Buying an investment property is one of the safest investments you will ever make! When buying an investment property it is best to always keep it for the long term.
Dear Michael: I want to rent out my home as we are relocating to the Bay area. How do I know how much I can get for it? We rather not hire a real estate agent and do this ourselves.
Answer: Check comparable properties within your immediate area. Take note of the size and special features your home has to offer. You will need to search Internet sites for rental advertisements. Offer to rent your home for a price that matches local comps to attract demand. Remember: every month that your rental sits vacant is money out of your pocket. Be diligent but also cautious to whom you rent. There is nothing worst then a “deadbeat” tenant. No perfect strategy exists for setting rents. Rates vary according to location and local economics. Think long term and keep up with rent increases as long as the economy is healthy.
Michael Kayem is a Realtor with Re/max estate properties serving Culver City and the Westside since 2001. You can contact Michael with your questions at (310) 390- 3337 or e-mail them to him at: homes@agentmichael.com