Contact Carla Barnes for a free rental market analysis at 678.548.9466
Contact Carla Barnes for a free rental market analysis at 678.548.9466
EOTM Real Estate Group specializes in providing our clients with a proactive management style which maximizes your bottom line.
And because we’re local professionals – experienced and knowledgeable – we will maximize your investment while putting dollars back in your pocket.
EOTM Real Estate Group was created for the express purpose of providing turn-key management services to our investor clients of single-family, multi-family, retail, and commercial rental properties. From marketing to on-site staff management, collections, and monthly P & L reporting, our goal always is twofold: to maximize our client’s return on investment, and to preserve and/or enhance the quality of their asset.
We take pride in the fact that our size allows us to deliver hands-on site management at all levels; from our leasing agents and region managers to our managing partner.
Call us today and we’ll tell you how we will put more dollars on your bottom line through expense control, volume purchasing and receivables management.
We look forward to hearing from you.
or Contact Carla Barnes today and get a FREE confidential rental analysis of your most prized investment.
Is the U.S. housing market truly at a turning point, as real estate investors seem to increasingly believe? Or is this actually a false dawn, meaning that there are problems ahead for those who turned bullish too soon?
New home sales jumped almost 10% in July, while the Case-Shiller home price index rose for the second successive month. Yet luxury home builder Toll Brothers lost $493 million in the quarter ending July 31, considerably worse than analysts had expected.
Housing stocks are certainly acting as if a recovery must be on the way. Pulte Homes Inc. has more than doubled from its low. Toll Brothers Inc. is up around 70% from its bottom. D.R. Horton Enterprises is up almost four times from its bottom. Lennar Corp. is up about 4.5 times from its low. Finally, Hovnanian Enterprises Inc. is up almost tenfold from its low after a flirtation with bankruptcy. Yet all of these companies are still racking up quarterly losses, according to their most recent earnings reports.
In terms of house prices, it would seem unlikely that a bear market bottom has been reached. Yes, the average house price is now back down around its long-term average of about 3.2 times average earnings, or only a little above it. But history suggests that markets don’t bottom at their average valuation: In fact, after such a huge excess to the upside, they overshoot on the downside.
The Case-Shiller 20-cities index is still 42% above its January 2000 level, having outpaced inflation during the last 9.5 years. Yet January 2000 was not the bottom of a housing depression — far from it, in fact. That was actually close to the top of the dot-com bubble, when valuations of all assets were at all-time highs. So an average price over the whole country that — even now — remains 42% above the average price recorded at the very top of a huge economic boom does not seem like a market bottom to me.
You also have to remember that the U.S. federal government is hugely subsidizing the market. Interest rates are artificially low, and the U.S. Federal Reserve has bought more than $1 trillion worth of housing debt. Fannie Mae and Freddie Mac have been rescued by the government, and provided with more than $100 billion of taxpayer capital. And Ginnie Mae (the Government National Mortgage Association), directly a government agency, has provided almost $1 trillion of mortgages that require a 3% down payment.
And that’s not all…
The government is spending additional billions helping homeowners avoid foreclosure. First-time buyers are given a tax credit of $8,000 towards the down payment on their house — this credit currently runs out on December 1. So the current overall market bottom is propped up artificially. Even if the proposed tax-credit extension is approved, at some point, those props will be removed.
In individual cities, the picture is somewhat brighter. Phoenix and Las Vegas prices are less than 10% above their 2000 levels, having been halved from their respective peaks. In those markets, house prices may truly be reaching a bottom, although the overhang of foreclosures after such a huge drop may make recovery slow. At the other extreme, Detroit housing is 30% cheaper than in 2000, a testimony to the awful economic environment there, with the bankruptcies of General Motors Corp. and Chrysler Group LLC.
Again, with the government bailouts of both companies, there may be something of a recovery in those local housing markets.
Probably the best prospects, however, are in Denver and Dallas, where prices are about 20% above their 2000 level, roughly in line with the increase in consumer prices during that same period. However, the local economies are strongly based on natural resources, particularly oil, whose price is triple its 2000 level. With prices in Dallas and Denver down only about 10% from their 2000 peaks, a true recovery in those cities may be near.
At the opposite extreme are the metropolitan “Big Three” of Los Angeles, New York and Washington, where prices are 61%, 71% and 74% above their 2000 levels, respectively.
Washington will be fine, of course: The Obama administration’s spending-and-legislation plans have attracted yet another huge influx of bureaucrats, lobbyists and lawyers, all of which will boost the housing market to new highs. With New York you have to worry about all the financial-services jobs being lost as a result of the worst financial crisis since the Great Depression.
From a nationwide standpoint, the most likely path for the housing market is for a modest recovery, with some later slippage as subsidies are removed. Housing is likely destined to once again become a highly regional market, as it always was prior to the 2001-2006 market boom, with the cycles in each market being very different.
What do you think local housing markets will do over the next 12 months?
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We have been investing in single family rental homes for over 10 years. During this time, we have built the necessary relationships with bankers, REO agents, Brokers, Insurance agents, contractors, title co.s., etc. After building a sizable portfolio of homes for ourselves (we put our money where our mouth is), we are now making this product available to outside investors.
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Carla Barnes of EOTM Properties explains how homeowners can turn their unsold properties into rental income. The nation’s painful housing bust has put sellers in a serious lurch. To get their properties sold, many sellers will have to make sharp reductions to their asking prices — a necessary evil that can rob the investment of its return. But Carla Barnes has a different idea. In her new infomercial, Can’t Sell Your Home, Rent it!
Carla describes how homeowners can ride out the turbulent market by converting their homes into rental properties. Barnes outlined the benefits of renting, explained how homeowners can determine if it’s right for them, and even offered advice on how to avoid lousy tenants.
Watch the infomercial live now >>>
What are the benefits of renting out your home if you can’t sell it?
There are many benefits, including the ability to ride out the market and potentially not lose money on a home. It generally isn’t in a homeowner’s best interest to sell at the bottom of a market—unless they have an unusual financial circumstance, such as immediate retirement or illness. Secondly, renting offers the ability to take a tax deduction if there is any rental loss. Moreover, renters have the ability to move back into the home. In other words, if you’re not sure that you will like Texas and want to move there, you can always move back to your Georgia home if you don’t like it.
When would it make the most sense for a homeowner who is unable to sell his home to rent it out?
If you are in the military, renting is a great option. Military personnel often have to move rapidly for deployment, but they cannot sell the home with 10 months’ inventory on the books for any reasonable price. Secondly, if you need to move quickly to take a job but don’t want to sell your home in a down market, renting is a great alternative. If your home isn’t worth what you owe, you might be able to modify the loan to change the principle balance and rent it out to ride out the market.
Feel free to contact Carla Barnes of EOTM Properties today for a free rental analysis of your most prized investment @ 678-548-9466
and visit and bookmark our website today >> www.eotmrealestategroup.com
How do you know if you are getting a good return on your real estate investment? Calculating the ROI on your investment property is critical to knowing how your investment is performing, or when comparing one investment to another.
In order to successfully decide whether a property is worth buying, an investor must run the numbers to calculate two types of returns: Cash-on-cash return on investment, and total return on investment.
Cash on Cash Return on Investment
The cash on cash return on investment is the before-tax cash flow (BTCF) divided by your initial cash investment. The formula looks like this:
Cash on Cash Return on Investment = BTCF / Initial Cash Investment
Your before-tax cash flow is calculated by subtracting your annual mortgage payment from your net operating income (NOI). The net operating income is simply the total income from the property minus the total expenses.
Let’s take a look at an example using a $150,000 income property purchased with a 20% down payment of $30,000. Let’s assume your mortgage of $120,000 is fixed for 30 years at a 7 percent interest rate.
Let’s assume your BTCF is $3,000 per year ($250 per month):
Cash on Cash ROI = $3,000 / $30,000 = 10.0%
Through the “magic” of leverage using financing to purchase your property, you have created a cash on cash ROI of 10%. This would be quite attractive to most investors in today’s market.
The cash on cash ROI is a good measure of a property’s first year financial performance. However, it does not include the additional benefits achieved through real estate such as the amortization of the mortgage and any future appreciation. The total return on investment addresses that.
Total Return on Investment
The total return on investment (TROI) provides a better and more complete measure of a property’s financial performance. That is because it factors in amortization and appreciation gained over time.
Total ROI = (BTCF + Net Sales Proceeds – Initial Cash Investment) / Initial Cash Investment
In order to calculate the total return on investment, one must project the BTCF for each year of expected ownership as well as the net sales proceeds from the sale of the property.
Let’s take our example above and assume that we plan to sell it in five years with an average annual appreciation rate of 4% per year. After five years our $150,000 property would be worth $182,498, and our mortgage balance would be $111,665. Let’s also assume that our selling expenses total 5% of the sales price, or $9,125.
Using the figures above, our net sales proceeds from the sale of the property in year five would be $61,708 ($182,498 – $111,665 – $9,125). Additionally, our before tax cash flow after five years would total $15,000 assuming no annual increase in rents or cash flow. Now our formula looks like this:
Total Return on Investment = ($15,000 + $61,708 – $30,000) / $30,000 = 156%
Note that some investors calculate their TROI using their after-tax cash flow (ATCF) instead of the BTCF. This can provide a deeper “bottom line” measure of the return on investment; however, it does not provide a good measure to compare one investment to another since tax liabilities will vary between individual investors. Calculating the TROI using ATCF is best suited for investor specific use.
By projecting a property’s future cash flows and appreciation, you can calculate the potential gains on your initial cash invested (down payment). Assuming the property is not declining in value, the TROI should increase in each successive year.
However, total return on investment can be a little shortsighted when used in isolation. This is because total return on investment does not measure of the property’s financial performance as it relates to its equity. For this we must calculate the property’s return on equity (ROE). Similar to the TROI, the return on equity calculation replaces the initial cash invested with the properties equity in a given year.
Please feel free to submit all mortgage and real estate related questions directly to me via email @ firstname.lastname@example.org.
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Buying Real Estate With All Cash
In an up and down market there are those investors that will dig up opportunities regardless of the state of the economy. These types of individuals are known as the “Warren Buffets” of Real Estate. They understand that in the current climate banks are holding on to their cash with a wait and see attitude. Savvy investors are finding that buying with “All-cash” works as a viable strategy for acquiring residential and commercial bank owned properties. The investors with a wait and see attitude for institutional lending and financing are missing a great opportunity to buy while everything is on sale. Rock bottom prices in the residential and commercial markets in part have been driven down by the scarce availability of credit. Stop waiting and start taking advantage of the Investors Buyers Market in Atlanta. Contact Carla Barnes of EOTM to get started!
Because of the current economic climate, property managers are popping up all over the nation. Some just got their license, some have been listing and selling for a living, and most don’t have a clue what they are getting into. If you are considering hiring a property manager you need to understand the issues. What you don’t know can hurt you! Here are some things to think about before you make the decision, “Who can I trust to manage my rental property?”
First, there are thousands of good realtors in this country that make great listing (buyer’s) agents but are currently starving and looking for ways to supplement their incomes. As properties sit on the market longer and longer customers are asking their listing agents, “Can you rent it?” Realtors who are accustomed to saying “no” to that question are starting to say “yes” and enter a world they are neither trained for nor familiar with. These well-intentioned agents have the license to manage rentals but their skills are not developed in this unique field and it will take them a while to figure things out. Property management is very different than what they are use to and it can cost you plenty of your own hard-earned money to be part of their learning curve.
Next, Property managers must be licensed by the real estate regulatory agency of their state. There are lots of well-intended entrepreneurs running property management businesses out of their homes without a license. This has become a cottage industry, much like the listing and selling business, and it takes almost no capital to get into the management business. They manage properties for others for a fee but are not licensed to do so. This means they are not under the scrutiny and control of the regulatory system created by the states to protect the public from dishonest managers. They typically are not holding other’s money in a trust account registered with the agency and you have no one to report them to when they mismanage the property, the money, or you. If they steal from you there is no place for you to go for help, as there is no regulatory authority with jurisdiction over the unlicensed manager. You are on your own with unlicensed managers so be on your guard.
Lastly, they should manage rentals as a primary business, not as a sideline to another business. Many real estate agents hold themselves out as property managers when their real business is listing and selling. Lots of real estate agents manage a few rentals as a sideline to their brokerage business and these businesses naturally compete for their attention. There are plenty of mom and pop property management businesses in every town and the owner of a rental property needs to consider the shortcomings of these sideline operations. Property management needs the total focus and attention of a manager because it’s demanding and more complicated than it looks. If they are listing and selling homes for a living, and managing a few houses on the side, make sure they have plenty of extra staff doing the managing. The big dollars they get selling houses will distract them from the “nickel dime” business of managing rentals. There is a natural conflict of interest between these businesses and you don’t want them competing for your attention as a landlord. You do not want them having to decide, “do I show a house for sale today, or show a house for rent?” The sale option will always win out because the potential reward is much greater. Find somebody who is focusing on the management business for a living. “I do both” is the wrong answer.
EOTM Real Estate Group is a full service for all real estate needs for Owner’s, Residents and Investors, with services ranging from financial advice, consultations on all aspects of real estate including tax liens, foreclosures, to tenant placement, screening to real estate rental services, management, and sales & marketing training.
With over 10 years experience in Real Estate, Mortgages, Property Management and Marketing, EOTM Properties has positioned themselves as leading providers in Property Management, Real Estate & Mortgages.
We encourage you to visit our site to learn more about the company, our partners and how we are structured to help you achieve the highest investment on your most prized investment.
With the implementation of the new H.O.M.E. Initiative program we predict being able to help thousands of Georgia Families that have been directly affected by the mortgage crisis.
Contact us today for more information on our company and this new initiative.