Stone Exteriors: Asset or Nightmare?

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Traditional vinyl siding, long the go-to material for home builders, is increasingly being snubbed in favor of trendier manufactured stone products that may or may not contain any actual stone. The appeal of faux stone to builders and home owners is easy to understand: Fabricated stone or stone veneer exteriors are lighter weight and less expensive than natural stone and are offered in a wide array of colors and styles. Manufacturers have reported double-digit sales increases in recent years. But home inspectors are sounding off about the need for caution: Reports of water damage due to poor installation techniques have become widespread.

Home inspector Scott Patterson with Trace Inspections in Nashville, Tenn., says that in nine out of 10 homes he inspects with stone veneer siding, the product has been applied incorrectly. And home owners are reporting that water seepage behind the siding is leading to rotting walls and mold problems. Sometimes the problems don’t become evident for years after installation.

These damage reports related to manufactured stone sound eerily similar to those from the 1990s when synthetic stucco (also known as exterior insulation finish systems or EIFS) generated a lot of public attention. Like artificial stone, synthetic stucco was initially touted as a more affordable, versatile alternative to the genuine product. EIFS were also more crack-resistant than traditional stucco. Years later, home owners discovered water penetrating small openings around windows and doors, leading to costly repairs. Home owners filed lawsuits against manufacturers, and class action settlements resulted in affected home owners receiving generous payouts.

3 Ways to Protect Home Exteriors

Most siding materials require little to no upkeep. Brick, engineered wood, stone (both natural and manufactured), and fiber cement are thought to last for the life of a home, according to a report released by the National Association of Home Builders and Bank of America, “Study of Life Expectancy of Home Components.” But Frank Lesh, executive director of the American Society of Home Inspectors, offers some pointers you can share with home owners to help them protect their siding from damage, including:

  • Keep foliage away. Make sure no plants are growing on the siding. “Plants can trap moisture and allow insects and animals to infiltrate,” Lesh says. “You want the siding to be exposed to the elements.”
  • Watch where water may be getting in. Check areas around windows and doors to see if water is getting in. Moisture can linger and eventually cause rotting or fungal growth. Make sure those areas have been properly caulked or tuckpointed to prevent seepage.
  • Keep the gutters cleaned. Many home owners think they only need to check for clogged gutters in autumn when leaves are falling. A neighbor’s stray tennis ball, a bird’s nest, or even squirrels stocking up for winter can quickly become a serious problem. If water gets backed up in your gutter, it could damage your siding too, Lesh notes. Have gutters checked at least twice a year. Or better yet, clean them four times a year to prevent back-ups.

To avoid a case of history repeating itself, the American Society of Home Inspectors has urged members to become familiar with manufactured stone siding and to inspect it vigilantly for budding problems given its porous nature compared to actual stone. ASHI has offered seminars about how to spot problems resulting from improper installation. Home inspectors nationwide are also posting articles on their websites warning home owners to have their manufactured stone inspected.

That said, not all homes with these exteriors are doomed, says Frank Lesh, executive director at ASHI. Home owners typically experience no problems when faux stone is installed correctly and appreciate it as an affordable, lightweight alternative to natural stone exteriors. The artificial product, running about $3 to $8 per square foot before installation, is one-third to one-half the cost of genuine stone, though still about double the cost of vinyl siding. “It’s a durable, long-lasting product, but there are still things to watch out for,” says Lesh. “It has to be installed the correct way, and among subcontractors—of even some big builders—unfortunately this isn’t always the case.”

Consumers purchasing a home featuring manufactured stone veneer might consider hiring a home inspector with specialized training. Real estate pros can direct clients to ASHI’s homeinspector.org website and recommend that they search for inspectors who list an expertise in these materials in their profiles.

So how do home owners know if they have a problem? There may be visible signs; Patterson recalls one recent incident where home owners noticed the trim boards inside their home were starting to separate and found a slight discoloration on a section of their hardwood flooring. Patterson discovered the exterior’s artificial stone was not installed with sealants or the needed backer rods around a huge window frame, which led to water pouring into the walls and eventually damaging the interior wall.

Another test for potential problems is to simply tap on the stone to see if anything feels loose. “If there’s water behind it, the glue starts to come off and you may get some movement,” Lesh says. Also, look for water damage around the siding. However, inspectors warn that the problems are often hidden behind the stonework and difficult to detect until the damage has become extensive.

That’s where specialized equipment can come in handy. Patterson uses a moisture meter and an infrared camera if he suspects a problem. He also looks to make sure the artificial stone comes up to the window or door frame, with only about a half-inch buffer between the two. That space should be filled with a foam rod and a flexible sealant that seals the entire area on top. He also checks to make sure the artificial stone isn’t buried underground. There should be about six inches between the ground and the base of the stone to prevent water from seeping in.

If damage is found, recommend that your clients consider hiring a structural engineer to complete a more invasive moisture testing procedure to learn the extent of the damage to the walls behind the stonework. Many of the same contractors who fixed EIFS in the 1990s and early 2000s are working on repairing stone veneers too. Home owners may find that builders can help resolve an installation issue as well.

Repairing the damage is no small job. The cost of replacing improperly installed manufactured stone runs from about $30 to $38 per square foot of wall. And that doesn’t include repairing any damaged landscape or the replacement of the product itself.

Meanwhile, home owners’ interest in manufactured stone veneer remains strong. The vast selection of colors and textures are a draw, and when it’s installed correctly, home owners find it worth every penny. Indeed, Remodeling magazine’s 2016 Cost vs. Value Report highlighted manufactured stone veneer as having the second highest ROI out of 27 home projects, with nearly 93 percent of the cost recouped at resale. (Only attic insulation, with an ROI of nearly 117 percent, came in higher.) But don’t leave any stone unturned when doing research about the benefits and pitfalls of this emerging product category.

Cerdit to Melissa Dittmann Tracey
Contributing Editor

Melissa Dittmann Tracey is a contributing editor for REALTOR® magazine.

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Top 8 Most Effective Leasing Incentives for Renters

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Understanding the Mind of a Renter

There are four factors that all renters consider before signing or renewing a lease; Location, Price, Condition, and You. That’s right, I said you!

Since you can’t change the location but still obviously want to command a higher price, you have to provide incentives that improve the condition, convenience, or the level of customer service.

If the location and property condition are not ideal, and you’re not willing to do anything about it, you’ll then have to provide financial incentives to spark interest. Realistically, most people would live almost anywhere, and in less-than-favorable conditions, if the rent were low enough.

Types of Incentives

…No one should get a prize for doing what is expected of them in the lease.

Whether you are trying to convince an applicant to sign a lease, or encourage a great renter to renew, incentives act as the carrot at the end of the proverbial stick.

With that said, I believe that no one should get a prize for doing the bare minimum or fulfilling what is expected of them in the lease.

1. Early Payment Discount

I believe that a landlord should never discount the rent if a renter pays it on-time – which usually means the absolutely last possible day. However, a small discount might be in order if the renter pays rent 10, or even 15 days early.

2. Rent Decrease

Rent decreases are a great way to convince excellent renters to sign another long-term lease. For this to be profitable, you really need to run the numbers. A $50 discount for 12 months would cost $600/year. Considering vacancy and upkeep, you must ask yourself “will keeping these renters for another year save me $600?”

3. Property Upgrades

Benefiting both the landlord and renter, anything that is a permanent change to the dwelling would be considered an upgrade. Renters who view the property as their “home”, will often ask for an upgrade.

If an appliance is near the end of its life, I’ll usually entertain the request – especially if it gets the renter to renew. Other simple upgrades can include painting, new carpet, additional parking, or even a bathroom/kitchen remodel.

4. Flexible Lease Terms

Sometimes, the ability to break a lease with 30 day notice, or the approval to have pets, is valuable to a renter. Again, you have to weigh the risk vs. reward, but sometimes it’s worth it.

Further, allowing other flexible terms, such as the ability to sublet, will entice a new renter or keep a current one. Student renters often travel home for the summer and want the ability to sublet their room.

5. Online Rent Payments

For many people, their rent payment is the only check they write all month. They would jump at the opportunity to pay their rent online, and finally ditch their checkbook. This added convenience can make a huge difference when marketing to new renters and instantly makes your property more appealing.

Every time I tell a potential applicant that they can pay their rent online, they get really excited. It’s obvious that they are tired of writing rent checks. It’s no secret that I use Cozy to self-manage all my properties, and my tenants love it. I haven’t had a single late payment since switching to online rent collection with Cozy.

6. First Month Free

Larger apartment complexes have the additional cash flow to cushion a free month worth of rent. However, often times, the 11 other months are increased by 1/11th the price to make up for it. Without realizing it, this incentive allows a renter to spread the first month’s payment over the term or the lease, but gives the impression that they are getting something for free. For better or worse, this incentive appeals to renters with little or no cash liquidity.

7. Zero or Partial Security Deposit

Waiving the deposit requirement is popular with large apartment complexes as a means to reduce vacancies, but it’s not feasible for an independent landlord. A landlord needs the deposit as security against unpaid rent and physical damages to the unit. Without it, the landlord has no leverage or protection.

Alternatively, spreading the deposit payments over the first three months will lighten the financial blow to the renter who often cannot afford to pay for first month’s rent and the deposit at the same time. However, it might not be wise to rent to someone who can’t pay the deposit in full.

8. Anything They Want (within reason)

Last but not least, perhaps it’s best to let the renter request the incentive. You just never know what they are thinking. For example, if they don’t have transportation, perhaps you could let them borrow your bike for the year. Or, maybe providing a partially furnished unit, or an early move-in date, would convince them to sign a lease.

At the end of the day, every landlord needs to market creatively to attract the best possible renters, and to keep the ones who care for the property and pay rent on time.

Many times, it’s the incentives that provide the extra push needed to seal the deal.

Credit to Lucas Hall

Lucas is the Chief Landlordologist at Cozy. He has been a successful landlord for over 10 years, with dozens of happy tenants and a profitable income property portfolio.

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5 Tips for Handling a Deposition

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Given the complexity of real estate transactions, there’s always a chance that something could go wrong—and that you will have to answer questions under oath about a deal you were involved with. The deposition could stem from an error you made or something you neglected to do, or the attorney might just want to interview you because of your involvement with the transaction. In any event, knowing how to handle yourself is critical.

Here are five tips to help you deal with a deposition.

Don’t say more than you have to.

Attorneys like it when someone says more than they need to during a deposition, because the extra information might prove useful if a case goes to trial, notes Robert A. Sayas, an attorney with Sayas, Schmuki, Rondini & Plum S.C. in Wauwatosa, Wisc. That’s why it’s better to speak as concisely as possible if you have to answer questions during a legal proceeding—and to not provide information unless you’re asked for it directly, he says. If “yes” or “no” will do, that’s all you have to say, Sayas says. “Answer the question asked of you. No more. No less.”

Ask for clarification.

Always be sure you understand what you’re being asked before answering when you’re speaking during a deposition, says Marc W. Brown, an attorney with Goldberg Segalla in Buffalo, N.Y. “It’s OK to say you don’t understand a question and ask for it to be rephrased,” Brown says. “You never know when your testimony could come up and be used against you.”

Don’t guess or speculate.

The last thing you want to do during a deposition is say something that is inaccurate or false, Brown says, so if you aren’t sure of the answer to a question or don’t remember a particular detail, say so. “If you answer, it looks like you understand,” he says. “and if it turns out that [something you say] is not 100 percent correct, the other side will amplify it to the tenth degree before a jury.”

Keep your feelings to yourself.

If it looks like you’re prone to letting your emotions get the better of you, the attorney questioning you could take note and attempt to rattle you during a trial, says Sayas. “Angry witnesses can be less credible to a jury and are less effective because they have a hard time staying on point,” so it’s essential to keep your cool during a deposition, he says.

Don’t bring documents you’d rather not share.

It may seem reasonable to have documents at hand during a deposition, but keep in mind that the other side could ask to see that material—and you might be compelled to comply with their request, says Brown. You could also be forced to turn over documents you say you used to refresh your memory, even if you don’t have them with you, he adds. Your best course of action is to only bring along or discuss documents that you wouldn’t mind sharing, Brown advises

Credit to Sam Silverstein
 As a writer-producer for the National Association of REALTORS® based in Washington, Sam Silverstein develops articles and videos for NAR’s members and others interested in its activities, statistics and research.
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A Continuing Shortfall of Homes

We can only get to an ideal market with an uptick in new construction.

Unfinished New Construction Framing

The first half of the year looked strong, with home sales and prices rising moderately on top of the gains experienced in 2015. Though prices will continue to rise, sales in the second half face more challenges. That’s because too few homes are available to keep up with demand. Total inventory on a year-over-year basis fell 6 percent in July, the 16th consecutive monthly decline. The supply level hit 4.7 months. In contrast, when home prices were falling several years ago, the supply hovered between 10 and 12 months.

The most recent housing crisis was the result of a collapse in demand, which led to depressed home prices and rising foreclosures. The next housing “crisis” will be due to a collapse in supply.

As employment strengthens, more households would like to buy, but there aren’t enough homes for sale. Home prices are rising at a higher rate than incomes are growing. While income has ticked up a percentage point or two, home prices have been growing by 5 or 6 percent a year. That in turn is creating an affordability crisis. Somewhat paradoxically, the home ownership rate—at 63.5 percent of households—is at a 50-year low even though mortgage rates, at about 3.5 percent, are also at their lowest level over the same time period.

Looking ahead, new-home sales will rise in the second half of the year as builders boost construction. We expect between 700,000 and 800,000 single-family starts in the year ahead. That’s a marked improvement from just a few years ago, when housing starts were a fraction of the historical norm. Still, we need about 1.5 million starts annually because of the country’s expanding population. In the meantime, affordability issues will likely hurt existing-home sales. That’s even more likely to be the case if interest rates start edging up. Only when supply reaches closer to six months—our definition of a balanced market—will we see the best of all worlds: rising new-home sales, rising existing-home sales, rising home prices, and a rising home ownership rate.

Credit to Lawrence Yun
Chief Economist and Senior Vice President of Research at the National Association of REALTORS®
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Don’t Stress Out Over Messy Tenants

Business people with stress and worries in office

What’s the best way to handle messy tenants – or should you?

Think back to the last time you rented a car. Before returning it, did you deodorize the floor mats, Windex the windows, give it a fresh paint job, and refill all the fluids?

No! And you probably complained about having to top off the gas tank.

Rental car companies don’t bat an eyelash when customers return vehicles in poor shape. They just clean them up, buff out the scratches, rent them out again, and get back to making money.

You, as a landlord, should have this very same mentality. It’s simply unrealistic to expect tenants to polish the countertops after every meal, wax the floors like Cinderella every night, and take immaculate care of every blade of grass in the yard.

I used to lose sleep over sloppy tenants.

I used to lose sleep over this. It would break my heart to see my properties in less-than-ideal condition, and I’d stress out about all the repairs and cleaning I’d need to do after the tenants moved out.

But eventually, I realized that cleaning up after sloppy tenants is just a fact of life for landlords. You can certainly withhold part or all of the deposit for damages, but in the grand scheme of things, if you’re playing your cards right, whatever money it costs is nothing compared with the amount you’re making off rent, appreciation, and tax savings. My life changed when I took my mind off tenant damage and instead focused on getting rich.

My life changed when I took my mind off tenant damage and instead focused on getting rich.

1. Focus on Big-picture Finances

If you find your blood boiling every time you inspect a recently vacated property, change your thinking.

Remember that, ultimately, your tenants are making you rich. For the entire time they rent from you, they’re paying your mortgage, covering your taxes, paying down your principal, and providing you with positive cash flow as your house appreciates. In return, they get a roof over their heads — one you can’t expect them to obsessively clean and maintain.

More often than not, tenants will take decent care of your property; at least, good enough for them to enjoy living in it. But don’t be shocked if, after they move out, your carpet is a little dirty, the walls could use a coat of paint, and the yard needs to be edged. Compared with how much cash your tenants gave you in rent as your home appreciated, fixing that stuff is a small drop in the bucket. At net, you’re still way ahead.

Worst-case scenario, if anything’s horribly expensive, you can always withhold your tenants’ deposits and make them pay for the necessary repairs.

2. Remove the Emotional Attachment

You might be renting out the home you grew up in, but this means nothing to your tenants. They are focused on making their own memories there.

I recommend staying away from the area as much as possible. Don’t drive by the house to reminisce about old times. You’re only going to feel bad when you see the landscaping isn’t how you want it and perhaps how tacky the lawn flamingos in the front yard are.

If you’re friends with the neighbors, do not listen to their gossip. Anything they tell you won’t be helpful. If the tenants are too quiet, they must be creepy and up to no good. If they’re too loud, they must be throwing parties.

3. Take Matters Out of Your Hands

I began my landlording career as a big proponent of the DIY approach. I was constantly running around like a madman from property to property, attempting to save money and address maintenance requests myself.

This didn’t last long, though. The final straw was when it took me three trips to Home Depot and about $500 to install a simple shelf in one of my homes — when I could have paid my contractor $100 to do it correctly on the first try. From that day on, I knew that adding “handyman” to my résumé wasn’t worth the fuss, and I started hiring pros.

Whether it’s repairs throughout the year or a deep cleanse after tenants move out, hire someone else to do the dirty work. Go out to dinner with your family instead.

Since learning to love sloppy tenants, my life as a landlord has become infinitely less stressful. Spills on the carpet and nicks on the walls aren’t the end of the world; they’re a part of life.

Take a deep breath, change your mentality, and be grateful that your sloppy tenants make you tens of thousands in appreciation, mortgage pay down, tax savings, and rental income each year.

Credit to the Guest Author – Mike Kalis

An entrepreneur at heart, CEO Mike Kalis leads the team at Marketplace Homes, a Detroit-based brokerage that specializes in new construction sales and property management. Marketplace has sold more than $1.5 billion in new construction homes, gained a controlling interest in more than 2,000 single-family properties, and been a four-time Inc. 5000 list awardee.

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