Lots going on globally, nationally, locally, etc.

Well, we're quite aware here of how long it's been since our last post... Perhaps this is due, at least in part, to what's been on our plate lately. It's pretty substantial.

On the local level, what we've seen of the Augusta/CSRA real estate market is, in some respects, a microcosm of the national real estate market - new construction as well as existing home sales are both on a long but steady (and encouraging) road to recovery, but banks are still making it ridiculously difficult for the average man to contribute to this recovery. The "For Sale" signs are still out there, especially the ones that are in front of homes that refuse to adjust their prices to market demands. But seeing less congestion of these signs where only a few months back it seemed there were as many as there are mailboxes is a sure sign that we're headed back toward a stabilization of home prices. In short, it seems that the faith in real estate as the best investment a person can make - even if it's the one that that person lives in - is being restored, but the lending institutions have yet to buy into that same faith.

Auben Homes, as a company, is still churning out rentals and homes for sale. A steady demand of both adds some credence to the old adage that "people will always need a place to live." Check out some of our newest available homes for sale, or if you're in the market for a rental, check here.

Perhaps the most exciting news to hit the national front is that of the extension of the first-time homebuyer federal tax credit. We had believed this to be coming for months now. However, like Area 51, George H.W. Bush's "No New Taxes" and stating that Bin Laden is hiding in Iraq, our venerable government doesn't always say what it means. Seeing it in writing was especially exciting.

Here are the specifics:

• Homes purchased under the "first-time homebuyer" qualification (again, if you haven't purchased a home ever, or, for at least three years) from January 1, 2009 all the way to April 30, 2010, you're still down for the $8,000 tax credit.
• The rule of "10 percent of total home price up to $80,000 still applies.
• The big difference is, if you buy the house after November 6 of this year (which has already passed), the income limitations are expanded to include those earning less that $125,000 single or $225,000 jointly, an allowance of an extra $50,000 for single taxpayers, or $75,000 for married couples.
• Also, if you have a house under contract by April 30, 2010, you have until the end of June 2010 to buy a house and still qualify.
• On top of all of this, we also have the "Worker, Homeownership and Business Assistance Act" (that's a long title) which has established a tax credit of $6,500 to those who are buying a house as their principle residence, within the same time period and by the same percentage-of-home-price-up-to-$65,000 measure as above. It applies to any homebuyer that purchases a home, whether it's his/her first or fifteenth or hundredth, as long as it's their principle residence. In other words, if you're buying a third house in Aspen, you don't qualify. Nor do you need to qualify.

This is huge. Not only does it mean that a very large percentage of individuals that would've missed the deadline on their first home purchase tax credit now have an extra six months to find that perfect home and still get the credit, but the income requirements have gone more lenient and it doesn't have to be your first home.

I see this as a open admittance that the government realizes how important to our nation's infrastructure homeownership is. Having people who own a physical stake in the country does wonders for that country - for more reasons than I can count, but consider this reason:

People who own are less likely than renters to pick up and move to another if the economy of that area slows. They tough it out; there's no exodus. People who own homes take better care of their communities. It's a fact. Government knows this, and it knows that the homebuyer tax credits it has enacted are going to be the blocks upon which our country's economy is soon rebuilt.

--Auben Homes

Seven steps to improving your credit score, and why you should

These days, just about any purchase you make depends on your credit score, and this doesn't mean just houses, boats or cars. Even how much you'll pay over time on a living room set down at Ashley Furniture depends on how good (or bad) your FICO score is. Picture it as a grade score of how trustworthy society deems you to be, based on your previous actions as a consumer. Or picture the three credit rating agencies that compose this score (that is, Experian, Equifax and Transunion) as the three mystical gatekeepers that stand between you and every major material posession you desire in life. Either analogy works.

What follows is a guest post by Jim Wang, editor and contributor to Barganeering.

1. Review Your Credit Report

The easiest way to improve your score is to ensure your credit score is accurately calculated. Each year you can request your credit report for free via AnnualCreditReport.com, a website setup by the government to help you get your reports. By reviewing your report, you can get anything incorrect, positive or negative, removed from your report. Since your report and score affect more than your ability to get loans, it’s always important to keep it correct.

2. Dispute “Errors & Inaccuracies”

This is a secret tactic of many “credit card repair” services – they dispute everything negative on your account. The credit report industry works on voluntary reporting by creditors. Credit card companies don’t always report every late payment because it’s simply too much work for very little return. They usually only report it if it’s 30 or 60 days late.

What this also means is that sometimes they won’t respond whenever the bureau requests more information. If you dispute an error, the bureau has to go to the creditor to have them confirm the information. Sometimes they confirm it, sometimes they don’t. Sometimes they no longer exist. If they can’t confirm it, it must be removed from your report.

3. Focus on Making Timely Payments

35% of your credit score depends on your payment history, the largest factor of the five listed by Fair Isaac. Creditors don’t care if you have debt as long as you’re making timely payments! That’s why it’s so important to ensure that you make your payments early or on-time.

So many times we miss making an on-time payment for stupid reasons. We forget to put the check in the mail. We forget to hit confirm on the billpay screen. We forget because we’re on vacation. Set up a system so that you will never miss a payment because you forgot. I setup electronic billing so I am sent an email each month reminding me to check my statement. I also set a reminder in my phone to remind me when my bill is usually do, since the date itself drifts between a few days. Finally, once a month, when I do a financial check in, I poke my head into each of my accounts when I review the transactions for errors.

4. Pay Down Debt

The second largest factor for your credit score is how much you owe (30% of your score). The more you owe, the lower your score will be. You would do the same thing if you set up a credit score right? Someone who owes $10,000 in debt is riskier than someone who owes only $100, all else being equal. So a great way to increase your credit score is to pay down as much debt as you can.

Credit utilization is often mentioned in any discussion of debt because that’s the metric most understood. Credit utilization is simply the percentage of your credit limit you are currently using. If you have $1,000 in debt but a total credit limit of $10,000, then you’re utilizing 10% of your debt. The lower this number is the better.

5. Stop Opening Credit Card Accounts

Want a free t-shirt? How about a frisbee? Or a blender? You’re dinging your credit score each time you apply for a new credit card. Lenders see it as a big red flag is someone is applying for a lot of credit cards, they think the applicant must really need all of this money otherwise they wouldn’t be applying for the cards!

In addition to credit cards, remember that any request for a loan will fall in this category. The application will result in a “hard inquiry,” which is an inquiry made by a creditor looking to make a decision. On the other side is a “soft inquiry,” which is an inquiry made by a creditor looking for information. If you request your own score, that’s a soft inquiry. When Citi requests it after you apply for a card, it’s a hard inquiry.

6. Don’t Close Credit Card Accounts

If you don’t use a card, stick it in your desk drawer. Don’t cancel it. A lot of times we feel tempted to cancel and cut up a credit card we don’t use because we don’t want to forget we have it. We don’t want it stolen or we simply want to be rid of it because we paid down the debt. Resist the temptation because when you close the credit card, you are hurt by the credit utilization number. Since the credit limit it taken from your total, the percentage of your total credit immediately goes up. It’s a bit of a moral hazard but that’s how the system works.

7. Don’t Pay For Credit Score Monitoring

A lot of people use services like MyFICO or other similar services that offer free FICO credit scores to monitor their credit score. I think it’s a mistake, if you are in debt, to continue to pay for the services after the free credit score. You should be taking that money and paying down your debt. Looking at your score won’t improve it, paying down debt will.

If you want to monitor your score, it’s best to use a free service like Credit Karma. They give you your TransUnion credit score, which isn’t technically your FICO score, but it’s still a credit score and you don’t have to pay.

Wholesaling real estate - why buying now makes sense

Wholesaling real estate - it's a term that's been bounced around a lot lately in real estate professional circles. It's a practice that's been hot in bigger markets for decades, and is now catching on in smaller cities, like Augusta.

Perhaps you've heard of the term but are a little shaky on what it means exactly. Let's clarify: Buying or selling real estate in the wholesale market parallels wholesaling in other markets, like groceries. If you buy wholesale, you might forego some of the finish-end amenities of a product in order to cut out a middleman and make a huge saving on the purchase. In the grocery world, a store like Sam's Club or Costco would wholesale products to you - you'd buy in bulk and shop in a barebones warehouse instead of a dressed-up supermarket, and thus, you'd save a ton.

In real estate, wholesaling is similar to this process; however, the wholesale vendors are not as prevalent as city block-occupying warehouse conglomerates. They are out there, though. The properties they market may have some due maintenance. And if you can establish a working relationship with a wholesaler, the benefits are quite bountiful, whether you look to purchase investment properties (now is the best time ever) or live in the home as your primary residence (now is also the best time ever).

So how might one find a wholesaler? Well, Auben Homes is always acquiring new properties with the intent of wholesaling them. In addition, wholesaling is exactly what the people behind all those "I Buy Houses Cash" signs are all about. They find motivated sellers through those signs, get the property under contract, and sell the contract to an interested buyer. Everyone wins. The seller finds a solution, the wholesaler earns an amount for his or her time spent finding the property and getting it under contract at an attractive purchase price, and the buyer - again, whether they are looking for a residence or an investment - finds a sweet deal from the wholesaler.

If all this sounds confusing, it's really not, if you can visualize the process in other terms. Imagine an empty grain silo. This silo represents the amount of money the house will be worth on the retail market. Let's imagine for illustrative purposes that the house will be worth $100,000 on the retail market. (Remember that we are dealing in the wholesale market, though. We're below the radar of the general populous. It's kind of cool like that.)

If a wholesaler gets the property under contract for $50,000, that grain silo is half full. There is also room for another $50,000 before the silo fills up. If he or she sells that contract (it's called assignment) to the end buyer for $60,000, then the wholesaler has made is profit and the property still has $40,000 worth of breathing room that can be spent on any necessary repairs, or it could be sold outright if no repairs are needed. See how it starts to come together? The seller has gotten $50,000 to solve any of their problems, the wholesaler has made $10,000, and there's still room for the buyer to play around with this property before the "silo" is full. Equity is a very cool thing.

Be sure to visit the Auben Homes website for a complete listing of our investment properties.

--Auben Homes

August 7 week in review and more...

Yet another week comes to a close here at Auben Homes, as we reflect on all of the little "adventures" we undertook - or, in some cases, the ones that undertook us - over the last five days.

Early in the week we put the brass tacks into 3913 Creekwood, a contemporary home in the Clairmont subdivision. A 3/2 with high-end frise carpet, tile and hardwoods underfoot everywhere in the home (not to mention tile countertops in the kitchen, wood paneling on the ceiling of the dining room, an absurdly large backyard with a massive deck and a sick great room with a fireplace) it's the kind of house you really cringe at putting on the market. Because soon it will be gone, and out of our lives forever. And we all wanted to move into it.

We spent a large portion of the week servicing our rental homes - putting carpet in this one, taking care of a leaky faucet (on the double) in that one.

Then, it was on to 808 Lake. This is the kind they don't make anymore, but should. It's a solid little bungalow just on the fringe of downtown North Augusta. I love that area. You can see half the state of Georgia from just about any standpoint, and there's always a breeze. Yet, there you are, walking distance from an ice cream parlor (The Pink Dipper) and a great wine shop (Wine World), not to mention North Augusta's Greenway, a 10-mile foot and bike trail that winds through some of the most serenely beautiful riverfront land anywhere.

And the house itself sits snugly in the Hammond Hill area, where apparently the city had a stern law that no houses could be built unless they adhered to a quality code. Some are six bedroom palaces, some are bed and breakfast-style mansions, and interspersed are lots of smaller cottages with great yards. I could go on all day. The house itself is an all-hardwood (though we're putting in lots of tile in the kitchen and bath) 3/1 with tons of potential, which we plan to maximize over the next week as we put the finishing touches. Check our website in a week to catch the snapshots of the finished product.

Beyond that, we've got lots of great rentals, wholesale deals and retail houses coming up. Check back often, we get new houses everyday, almost. Have a great weekend, all.

--Auben Homes

Seven actions you can take to ensure you'll get your rental deposit back

Moving into a new place costs money. Usually, it's a lot of little drops in the bucket that add up to a tidal wave when you balance your checkbook at the end of that month. Moving fees. Utility set-up fees. The money you spend on beer in order to coerce friends into helping you move furniture up three flights of stairs.

Perhaps one of the scariest and most underestimated expenses when you start a new lease is the prospect of having to fork up a first and last month's rent somewhere in that first-of-many checks you write to your new, beloved landlord. But it doesn't have to be so scary. In fact, that deposit money you pay isn't even an expense, if you want to get technical about it. It's an amount of money your landlord requires to protect his or her asset - the place you're moving into. Protection from what? Essentially from you being a knucklehead and punching holes in the drywall, breaking a window or otherwise having a party that goes wrong and ends up as footage shot from a helicopter on the CNN morning news.

Let's face it: No one is deliberately a bad tenant. No one signs a lease thinking of all the destruction they can wreak on an apartment or house. But things happen. Messes and damage occur, and that deposit is a necessary instrument. But with that acceptance in mind, you can get that money back when the lease is up. And if you're like me, you'll look upon a returned deposit not only as found money, but a monetary confirmation that you respected someone else's property in a courteous manner. A check for being a good person.

Here are seven key steps to take to ensure that you'll get refunded your full deposit:

1. Read your lease/ask the landlord questions before you sign. Don't simply flip to the back page of the lease and sign without thoroughly reading through it. If some language is murky or suspicious, ask the landlord or property manager questions. There is no stupid question here. We aren't all lawyers. The bottom line to this point is to make sure there are no clauses that can unfairly bite you when it is time to move out. Take it a step further: If you can ask some of the landlord's previous or current tenants about his reputation on this, all the better. If you can't get clarification on some language in the lease contract, send it to a friend who's a lawyer. Also, have a friend who's a lawyer.

2. Do the walkthrough and document everything. And I mean everything. It's easy to get caught up in the hustle and bustle of moving into a property and not doing what is essentially a renter's due diligence first. Don't move a stick of furniture into that place before you've done a walkthrough and had the landlord or his/her agent sign off on everything you've noted. And there is no such thing as too specific. Rips in carpet, scuffs on linoleum, leaky faucets or toilets, holes in walls - anything that you could foresee being held responsible for later that was already that way before you got there - you have to write all this stuff down. Take it a step further: Got a video camera, or the means to borrow one? Landlords sometimes can be a little too scrupulous (not Auben Homes, but others) and a videotaped walkthrough will take all of the wind out of their less-than-honest sails.

3. Always pay rent on time. Even strict landlords have a several-day grace period after the day your rent check is due (which is usually on the first of every month, just to keep it simple). This one pretty much goes without saying - if you don't pay your rent and end up getting evicted or, at the very least, pay later than allowed, you're costing the property owner money. And things that cost the property owner money will eat into your ability to get your deposit back when you move out. Take it a step further: Pretend that the grace period doesn't even exist, so you won't allow yourself to be even a day late. Pay a few days early or even months at a time if you can. Trust me, it leaves you with a pretty good feeling inside.

4. Don't live like you're a 6th Century viking. No offense to vikings if any still exist outside of the guys who like to crash Renaissance fairs, but it's a good idea to keep a mindfulness of what deliberate damage to your rental home can do. Swinging from a chandelier, holding hot dog eating contests, reenacting scenes from Fight Club - all bad ideas. Keeping a damage-free lifestyle can not only do wonders for the odds of getting a deposit refund, but it's also just good practice. This is what a bad tenant can do to a place. Take it a step further: If you know how to fix a leaky sink or can handle problems as they arise without calling in repair requests, that's a plus. Just beware of making minor issues into major ones by not correctly repairing things. And by all means don't rewire the place if you aren't an electrician.

5. Get your landlord's definition of "normal wear and tear." Landlords are notorious dictionary writers. That is, they love to have their own proprietary definitions of some words or terms. "Normal wear and tear" may be the most commonly redefined term in the property-owning lexicon. Some landlords define this term as worn carpet and nail holes in the wall where your family pictures hung. I once had a landlord that replaced carpet every time someone moved out, even if they'd only been there one month and walked through the apartment on stilts. Find out early on what they'll do to the place once you leave, and you'll know in which areas you need to tread lightly and in which you can rest assured that you won't tarnish the refund of your deposit. Take it a step further: Get to know the handyman or property manager that your landlord uses regularly. He'll let you know exactly what the landlord does after every tenant moves out. (He's the one doing the work!)

6. Don't ride the midnight express. That's not a literal train. It's the name commonly given to the inexpicable force that drives a tenant to pack up and move in the middle of the night. Oddly enough (or perhaps not) the midnight express only runs at the end of every month, or when rents are coming due or have gone overdue. But if you are prone to this type of behavior, first of all, congratulations on being able to still sign a lease with any landlord who runs any kind of decent background check. More importantly, however, don't even expect that you'll ever see your deposit again. And for that matter, expect a skip trace service to find you wherever you turn up, where you'll be turned over to a collection agency for any past due rents. Take it a step further: If you're in a multi-unit complex and you hear someone else suspiciously moving out in the middle of the night, call it in to your landlord immediately. Otherwise it could be weeks before they find out, and your landlord will trust that you're on his/her side and wouldn't do the same thing in a few months.

7. Take an active role in the final walkthrough. This is the walkthrough that landlords or their agents and tenants who are moving out once the furniture and all belongings are gone, and the landlord can see their property as it will be turned back over to them. This is the time when you want to either do some hardcore cleaning or pay to have it done, repair or have repaired any damages you caused (if any), and essentially leave the place in better condition than it was when you moved in. That way your former landlord will have no cause to hang on to your deposit, especially since they will be distracted by how happy they are that all they have to do now is sign a lease with the next tenant that will move into the place and begin collecting rent again. Take it a step further: Bake your landlord cookies. Just kidding. Unless we are your landlord. We like chocolate chip.

July 10 week in review and more

Our first full week in July 2009 was one of the busiest in recent memory. In addition to my first full week back from a recent injury (that first week back is always a tough one) we have purchased several properties. The office is abuzz with excitement about the possibilities that these homes can offer the community.

First is 3913 Creekwood Dr., a beautiful three-bedroom, two-bath, two-story, modern-design house in the Clairmont subdivision in Martinez. When complete in approximately a week, this home will be complete with a beautifully landscaped lawn, brand new hardwood, tile and carpeted floors, new paint, and new roof. That's not to mention the unbelievable rear deck and fenced backyard with a property line adjacent to a nearby creek. As close as this home is to West Augusta, Fort Gordon, downtown Augusta and I-20 (but without traffic noise), I'm hard-pressed to think of anyone who it wouldn't be a perfect fit for. Pictures will follow at our official website as the project nears completion.

Next is 2412 Apricot, a lovely 3/1, brick ranch-style home in the National Hills subdivision off Washington Rd. For as long as I can remember (and that's saying something) this neighborhood has been rock-solid in terms of steady appreciation, neighborhood security and pride of homeownership. On top of that, these are the '50s brick ranches. These are from the era when they knew how to build a house. This project will likely be completed by mid-August - it requires just a little more TLC. When complete, however, it will have new everything - roof, exterior paint, interior paint, electrical, plumbing, flooring and landscaping. I'm very excited to see the progress as it unfolds. Also look for it on the website when it nears completion.

In terms of rentals, we have the Harrisburg market covered. It looks like the area is making positive changes and the community is really starting to band together down there. It's about time. Several of our rentals - 219 Eve St., 413 Greens Ln., and 1845 Warren St. - lie directly in the path of progress, so it's news to our ears. On that note, both Eve and Greens have recently come available, so if you're looking to relocate closer to downtown, now couldn't be a better time. Aside from the community stabilizing itself, the upcoming Salvation Army Kroc Center is going to make the area even more desirable.

--Auben Homes

How a lease option (aka rent-to-own) works

If you've driven your car over one mile in the last month or so, you've undoubtedly seen the signs in front of houses and other properties, roughly the size of the standard real estate sale sign, but instead of "for sale" they state "rent-to-own" or "lease option."

While rent-to-own immediately makes me think of furniture stores that specialize in this method of sale, they conjure many random thoughts for those not familiar with this process. The least of which is likely "for sale," given that the signs use terms like "lease" and "rent," two terms that aren't often associated with a property that is for sale.

However, in terms of property, that is EXACTLY what terms like rent-to-own and lease option are meant to denote. Quite simply, lease options exist as a way to more creatively get buyers into homes, especially when banks aren't ready to lend to a certain buyer because of barriers like credit score and traditional down payment terms. So, if you've ever been denied home ownership because of a bank's requirements, this may be the option for you.

Let's explore the process. It's actually quite simple when you break it down.

1. Binding Fee. Much like a home sale, which generally requires a down payment, a lease option requires a binding fee, a very similar security instrument. However, this down payment is negotiable with the seller, but at least 5% of the purchase price of the house is generally expected. Some sellers have set down payment prices or percentages. You make this binding fee when you are signing the lease option agreement. This binding fee gets you in the house, but it will also go toward the purchase price when you buy. One caveat here to note here is that while a binding fee secures your future option to purchase a property, it is non-refundable should a buyer opt out of the eventual purchase. Also key in that option agreement (which very much resembles a standard purchase and sale contract) is going to be the amount of time between the day you move in and the day you buy the house outright, and the purchase price of the house. We'll get into that more in a second.

2. Monthly lease payments. You'll make these in the same manner you would if you were renting the property. Monthly payments between the move-in date and the purchase date do not typically help toward the purchase price the way that a down payment does. However, this period is what sets a lease option apart from a standard sale or a standard lease. What you are doing in this time period until you buy the home is getting all your financials in order, the ones that kept a bank or other lending institution from lending you the money to buy the property in the first place. If your credit is too low, you're working on paying down the amounts that are weighting your credit score down, or working with a credit counselor.

3. Purchase the property. Now, after however many months you specified in your lease option contract (or sooner if you can) you've built up a solid enough financial record or found a lender who will lend you the purchase price. It's vital to the success of this plan that, in the time between signing the agreement and purchasing the home, that you are working with a reputable mortgage broker and credit repair consultant to clean up your personal finances and make yourself a more attractive home loan recipient. That purchase price should have been agreed upon in writing way back when you put down that down payment money, and you set a specific amount of time in the lease option contract as well. And don't forget - your original down payment now counts to pay down your purchase price. For example, if you paid $3,000 down on the day you signed the lease option agreement, and the agreed upon purchase price was $78,000, that $3,000 goes against the $78,000 to make your new purchase price $75,000.

And that's really all there is to it. So if you are looking for alternate entries to home ownership, start looking into lease options. It's kind of like layaway: you lock in a price, pay it down a little, then pay it off when you can. For a look at the lease option properties we currently have, check out the Auben Homes lease option homes.

--Auben Homes