LEXpert on Location: Palomar Shopping Center

by John Rice

Thought I’d start shooting short videos of the features around the neighborhoods I’ve blogged about.

Today I was at Palomar Shopping Center.

If you live in Firebrook, Dogwood Trace, Dogwood Hills, Palomar, Beaumont, Harrods Hill, Harrods View, Rabbit Run or Plantation, you will find this is an easy place to get in and out. Plus it has a ton of stores, restaurants, banks, a gas station, gym, day care and so on.

I guess what I have always liked about it is that it is just the right size. Clean, pleasant, easy to get around in. Just nice. It is one of those places that is the suburbanish version of everything people like about their urban neighborhoods. You know, you see people on HGTV that don’t want to move away from their location because they love the bakery or coffee shop around the corner. There are probably people who live in this area that are like “I just love meeting friends at Panera, working out at LA Fitness, eating on the patio at Harry’s in the summer. I don’t want to leave this location!!” I think if you lived out there, it would feel like your shopping center and not just another strip mall.

When I was younger, I delivered newspapers to part of Rabbit Run and Palomar. I remember parking in the middle of this shopping center at 4:30 in the morning folding papers. On rainy days, I’d pull under the drive through canopy at Central Bank. Back then, a lot of people would park cars that were for sale in the parking lot. I remember eyeing a Lexus SC400 for several weeks before it disappeared. Other than the LFA, that was the coolest car Lexus ever made. I guess craigslist has put an end to selling cars that way. Just means more parking spots for us now.

Check out the video. I hope it helps you see what businesses are around this location.

Take care!

The LEXpert

School district & resale value

by John Rice

I get asked a lot about how a less than stellar school district effects the value of a house. This is one of those deals where what I am about to say is contrary to what people think. Ready? It doesn’t effect the value at all. Really.

The reason is because the current value is likely already less than the same house in a similar neighborhood with a better performing school district.

It takes a change in school district to really make a difference in value. If you had a better school and got redistricted to a worse performing district, then you might see a decrease in value (or increase in value if you get a new better school.) Make sense?

Obviously a neighborhood full of condos is kind of exempt from this because few people in our market with school aged kids opt for a condo.

There are some exceptions in Lexington. The Waterford and Pinnacle neighborhoods are right beside each other. Both have the same middle and high school. Pinnacle goes to Veteran’s Park Elementary, which is one of the best performing schools in town. Waterford goes to Southern Elementary, which is not one of the best performing schools in town. Guess which neighborhood has a higher value for essentially the same sized house of similar quality? Waterford. Personally, I think it is because Waterford is just a little older and has a bit more character. Funny thing is that Waterford use to be in Veteran’s Park Elementary district. It did take a hit in value for a while there after the change, but it is such a nice neighborhood that it came back. Think about this too: You take a giant neighborhood of kids that had contributed to the excellent test scores while at Veteran’s Park and move all of them to another school. What do you think happened to the test scores of the new school?

Lexington has many neighborhoods that sell well despite not being in top scoring school districts. If you want to be in a better performing school district, great. If you home school, private school or don’t have kids, then don’t sweat it. There are more elements that determine property value than just schools.

Low Inventory? Reality or Perception?

by John Rice

I keep hearing agents say we have low inventory. This is kind of funny, but I even had an agent accuse me of not knowing we were in a shortage of listings. LOL!

That got me thinking……are we really experiencing low inventory?

I did some research. Since we are only half way through March, I compared January and February from 2011,2012, 2013 and 2014. 2011 new listings in Fayette Co were 1184. 2012 saw 1144, 2013 saw 1184 and 2014 had 945. So, we are down a little this year probably due to weather, but sales are down too since buyers haven’t wanted to go out much. A shortage means an imbalance. If supply AND demand go down equally, then that isn’t a shortage.

But I don’t think that is really what people mean when they say “Low Inventory.” When I go to look for houses for my buyers, I always have plenty to show them. The problem is there is nothing that really stands out. There are a bunch of ho-hum, run of the mill houses for sale, and everybody wants something better. That is why an updated house will sell so quickly right now. I just got multiple offers on a house the first day on the market. There are 13 other active listings in the same price range in the same neighborhood with an average of 111 days on market. Mine was move in ready, the others must not be?

Which leads me to something else I have been thinking about lately. Since the economy had been so bad for so many years, many homeowners didn’t have the funds to do much to their houses. I think that is why we are seeing so many of the ho-hum listings that just are hard to fall in love with.

I think it will take a few years until we start seeing more updated houses come on the market. Until then, here is what to do depending on who you are:

Sellers-I’ve blogged about cheap ways to make your house appealing to buyers. There are often minor changes that can be done that have a lot of impact. If you already have a really nice house, plan on selling it before the next weekend passes.

Buyer-If there is a house you saw online and really liked, drop everything and go see it immediately. Chances are every other buyer in your price range likes it just as much. Don’t need that totally updated move in ready house that looks like The Property Brothers just got done with it? Then you don’t have to be in such a hurry.

How would you like to be one of these sellers?

by John Rice

BEWARE – of a buyer – (Name withheld) who claims to be a doctor for VA relocating from Texas. Plans to purchase three homes. She has made offers with three different Realtors on three different properties – all new construction. All cold checks. (Name withheld), her husband (Name withheld) and another lady (Name withheld). (An unnamed local association of realtors) staff informed she has been house shopping since last Thursday.

Just got the message you just read. I didn’t print the names of the scammers nor the source of the message as the only change.

How would you like to be the seller of one of the properties? I mean, it got to the point where there was a check written that bounced. That was probably the earnest money deposit check, which gets deposited after a contract has been signed.

How does this happen? I’d tell you but I would probably have a bazillion emails from realtors calling me out for criticizing our industry……..like the actions above aren’t the real crime.

I guess my point in this is that I want to prevent sellers from having this happen to them. I want to prevent MY sellers from having this happen.

How do I try to keep this from happening?

I need a preapproval letter from the buyer’s agent before my seller signs a contract. If it is a loan officer I do not know or a company I haven’t worked with, I call to see if the buyer has really been preapproved and if their credit has been pulled. Often, loan officers will send a preapproval based solely on the info the buyer tells them.

If the buyer contacts me about one of my listings and wants to buy it, same thing. They need a preapproval letter from a lender I can talk to before I (as the listing agent) would accept it.

If it is a cash deal, I offer to come help count the money first.

All of this is really common sense. You just check things out before taking any action.

It is all about NOT letting my clients waste time with somebody who is a dreamer or who wants to play games.

Want rental property? Here’s the LEXpert’s story

by John Rice

I had a dude email me this week. Says he found my blog and asked if I do much with investment property. Then it dawned on me that I have never blogged about it.

The biggest client I have worked with on investment property is……..me! Want to hear my story?

I use to live in Gainesway. I bought that house for about 80% of it’s potential. I fixed it all up, doing most of the work myself. We decided to move. I really hated to sell the place since the market had tanked (this was 2007) and I had done so many long term improvements. I didn’t like the idea of giving somebody else the benefit of all I had done.

I was having lunch with my kids one day at their school and a mother I knew suggested I rent it. To be honest, it scared the heck out of me……..but I also liked the idea.

So, we bought our next house in Andover Hills and I “Finished” all the work I needed to do on the old house. I got it looking good and put it on the market. Having lived there, it was really hard to think about somebody else living there. I finally found somebody that looked good and we signed a lease. They have been there for 6 years.

I really didn’t have any plan to keep going, but I did. I found another small ranch house in Century Hills that had a remodeled kitchen and bath, plus a 4 year old heat pump. The house was just dirty. It needed paint and carpet. So, I bought it, did paint, carpet, new lighting and a new range. It rented quickly.

Then we decided to move again. After keeping my old house the last time, my default was to keep the Andover one after we moved out. This one rented quickly too. There aren’t many 2500 square feet houses for rent. While they cost a fortune for the turnover, they are easy to rent and I’ll have a huge asset for retirement.

I got this wild idea that I needed one that was more about cash flow than creating an asset for the future. I bought a shotgun house on the edge of downtown for $18k. There were lots of positive things about this street. I could see it turning around in time. All was well until the tenant had a home invasion. I think she was selling drugs. She came with the house. I would have never picked her. I sold it 4 months after buying it. It just wasn’t the property for me. Every investor has a different model, and this was not a good fit for me. Some people like the super low end rentals, some like multi-family properties. Everybody has their own niche.

I then got word of a property in Ashbrooke from a prospective tenant who looked at my little ranch. His family was selling it. It was pretty rough. I got that one for a pretty low price and spent 6 leisurely months fixing it up. It got an all new kitchen, hardwood, a lot of work in the bathrooms, new roof, windows, hot water heater and HVAC. For all practical purposes, it was effectively a brand new house. Other than maybe carpet and paint, I shouldn’t have to spend a lot on it for the next 15 years.

Because this gets addictive, I just bought two more small ranches. I think I might be done for a while though!

Here is how I roll:

1. If a house won’t cash flow on a 15 year loan, I don’t consider it. Neither should you.

2. I only pay wholesale (unless it is my primary residence). I like to be able to make all the improvements needed to keep it in good shape for the next 10-15 years and still get some free equity.

3. I like to make my houses a step above what other houses look like. People always want the best house they can find. By doing this, I have always been able to pick the best tenant.

4. I try to make long term decisions. I’ll do hardwood if I can because you can refinish it forever. I do wood cabinets rather than melamine film because I can paint them or repair any minor damage. Most landlords just go cheap and have to keep spending the same money over and over again.

5. I like single family homes. You can sell a house for retail whereas you can only sell something like a duplex to an investor, and they don’t pay anything over wholesale.

6. I only rent to the best applicant. I would rather have a house sit vacant than stick a bad applicant in it. It’s that whole long term verses short term thinking.

7. I always remember my tenants are people too. It is my house but their home. They get a good house and deserve a prompt response when anything needs fixed. Not only is that just the right thing to do, it is good business. Happy tenants stay longer. Long term tenants save you money. Everybody wins.

I’ve enjoyed getting to this point. I am always happy to help anybody wanting to do the same!!