August 29, 2011

HARRY’S WEEKLY UPDATE
A CURRENT LOOK AT THE COLORADO SPRINGS RESIDENTIAL real estate MARKET


CSCC AND CSREDC UNIFY TO BRING MORE JOBS TO COLORADO SPRINGS

The Boards of Directors of the Greater Colorado Springs Chamber of Colorado Springs (CSCC) and the Colorado Springs Regional Economic Development Corporation (CSREDC) have decided to unify the two organizations to maximize their efforts to attract new jobs to the area.

In announcing the new, unified organization, Bill Hodgkins, Chair of the Board for CSCC said, “Both organizations are currently strong, but they will be even stronger together’.

Doug Quimby, Chair of the Board for CSREDC, stated, “We need integrated strategy for economic development, and a strong force to ensure it is successful. We now have the means and opportunity to do so”.

Quimby also stated, “Small business is the backbone of our economy. We support the Chamber’s key initiatives of fighting for small business, supporting our military and focusing on our defense economy. We believe this new organization can only reinforce these critical initiatives”

Editor’s note: We applaud this decision to focus the efforts of both of these organizations in attracting new jobs to our area. The Pikes Peak Area has everything a business could want to help them succeed and all we need is a vehicle for getting that message out to the rest of the country. This new organization should help us spread the word. …Want more proof of our great business environment, see the following item.


KIPLINGER’S PERSONAL FINANCE RATES COLORADO SPRINGS AMONG THE BEST

The September 2011 isssue of Kiplinger’s Personal Finance magazine rates Colorado Springs as the fourth best city in the nation for value.

Kiplinger’s states that “This burgeoning Western town is filled with transplants drawn by spectacular outdoor beauty, 300 days of sunshine a year, a relatively low cost of living and a vibrant business community that finds little conflict between economy and ecology”.

The article also points out that our city is home to more than a dozen colleges and actively woos companies with tax incentives and a highly educated workforce.

The city offers 150 parks and 260 miles of trails and the Pike National Forest, which borders the city, offers camping, fly-fishing, camping, biking, horseback riding and scenery that extends as far as the eye can see.

Rents and real estate are reasonable, too. The median home sells for less than $199,000 and monthly rent on a two-bedroom apartment is less than $800.

Editor’s note: Another indication of the health of our local economy is the fact that Colorado Springs foreclosure filings are down 32.6% from January 2010.

 

LAST WEEK’S ARTICLE ON INVESTMENT PROPERTY STIRRED UP A LOT OF INTEREST

We received a lot of feedback relating to the article in last week’s eNewsletter regarding investment property. Realtors and prospective Buyers from around the US contacted us to learn more about the opportunities that are now present in the market. We thought the response merited some further comments about this unique opportunity.

Just to review the window of opportunity that now presents itself to all prospective Buyers:


• Prices are ridiculously low …probably lower than you will ever see again
• Mortgage Rates are historically low… probably lower than you will ever see again
• The inventory of available homes is very high. It is a Buyers’ market and you have your ‘pick of the litter’ for both new and   resale homes, thanks to foreclosures and short sales.
• The high volume of ‘New Renters’ (thanks to foreclosures) has resulted in record low vacancy rates for rentals. Your investment property is almost guaranteed to rent.


And, to cite a couple of reasons to buy now


• Lenders are starting to tighten lending requirements and loans will soon become more difficult to obtain
• As of October 1, 2011, FHA maximum loan amounts will drop from $325,000 to $272,800 for most communities in the US, including Colorado Springs.


The Wall Street Journal, Wed. Aug 17, 2011 stated, “Investors can cover their monthly costs and make an 8% -12% profit pretty easily. We haven’t seen that in 20 years”.

As an example, let’s take a look at what we discussed with one of our clients just last week, as we helped him build his retirement portfolio with an investor property. The following figures are based on realistic estimates in our local; market.
Purchase price $200,000
Down Payment $50,000
Loan Amount $150,000

Using today’s investment interest rate of only 4.5% for non-owner occupied property, on a 30-year fixed loan (and assuming a tax bracket of 33%), here’s how the numbers work out:

Monthly payment P&I $760
Estimated taxes $120
Estimated Insurance $ 80
Total Monthly Payment $960

Typical one-year tax deduction
Interest deduction $6,700
Estimated property tax $1,440
Total deduction $8,140

Annual Income-tax savings $2,686

Net cost of the property
Monthly payment $ 960
Less tax savings $(224)
Net cost $736

The monthly rental net income (after estimating repairs and vacancies) would be $1,054


On a monthly basis, that works out to:
Income $1,054
Loan cost $ (736)
Income before depreciation $ 318
Depreciation per month $ (390)
Actual loss per month ($72)

Bottom line: This investment property would actually cost you only $72 a month.

Further, the estimated annual depreciation would be $4,675.

Now, let’s look at the long-term numbers. If you held this property for 10 years, assuming typical inflation and appreciation, you could expect an average annual growth of 3% per year. Thus, the market value would go from $200,000 to $260,000.

At the end of the ten years, your balance on the loan would be at $120,134 and your equity would be $139,866 from your original investment of $50,000. That’s 27.97% growth per year as your rate of return.

Finally, in the event that there is absolutely no growth for ten years, (and not even the most pessimistic economists are predicting that), your rate of return would still be approximately 16%. In a zero-growth economy, that would be fantastic !!

The icing on the cake is that these figures don’t even take into account your annual tax benefits/deductions. …That alone puts an additional $8,140 per year in your pocket.

And you thought Stocks were the way to go


If you would like us to go into more personal detail about these numbers, please call us at (719) 598-3200, or, 800 677 MOVE (6683). We would be happy to hear from you.

And, please remember, I would be honored to serve as your Broker for all of your residential real estate needs. I want to help you, my reader, make the most prudent and accurate Real Estate business decision.


Also if you know of anyone who desires to buy or sell local real estate, or, who is moving in or out of the Pikes Peak region, remember that, with over 39 years of providing relocation and Real Estate services to clients throughout the country, I am uniquely qualified to assist them with the relocation process, including buying and/or selling their homes on both ends of their move. Please allow me to implement my negotiating skills on your behalf.

Just click on the icon at the top of this email to listen to my podcast for this month …

 

LATEST SALES AND LISTING STATISTICS


Click here to see the latest Sales and Listing statistics for the Pikes Peak region

 

JOKE OF THE WEEK


10 Office Rules:

10. Never walk without a document -- People with documents look like hardworking employees headed to important meetings. People with nothing in their hands look like they're headed for the cafeteria. Above all, make sure you carry loads of stuff home with you at night, thus generating the false impression that you work longer hours than you really do.


9. Use computers to look busy -- Any time you use a computer, it looks like "work" to the casual observer. When you get caught by your boss -- and you will get caught -- your best defense is to claim you're teaching yourself to use new software, thus saving valuable training dollars.


8. Messy desk -- only top management can get away with a clean desk. For the rest of us, it looks like we're not working hard enough. Build huge piles of documents around your workspace. Pile them high and wide. If you know somebody is coming to your cubicle, bury the document you'll need halfway down in an existing stack and rummage for it when he/she arrives.


7. Voice mail -- Never answer your phone if you have voice mail. People don't call you just because they want to give you something for nothing -- they call because they want YOU to do work for THEM. If somebody leaves a message for you and it sounds like impending work, respond during lunch hour when you know they're not there


6. Look impatient and annoyed -- According to George Costanza, one should also always try to look impatient and annoyed to give off the impression that you're always busy.


5. Leave the office late -- Always leave the office late, especially when the boss is still around. Make sure you walk past the boss' room on your way out. Send important e-mails at unearthly hours (i.e. 9:35pm, 7:05am, etc.) and during public holidays.


4. Creative sighing for effect -- Sigh loudly when there are many people around, giving the impression that you are under extreme pressure.


3. Stacking strategy -- It is not enough to pile lots of documents on the table. Put lots of books on the floor, etc. (thick computer manuals are the best).


2. Build vocabulary -- Read up on some computer magazines and pick out all the jargon and new products. Use the phrases freely when in conversation with bosses. Remember, they don't have to understand what you say, but you sure sound impressive.


1. MOST IMPORTANT -- DON'T forward this to your boss by mistake!