'Air-ing' Concerns on Summer Rentals

This week, we answer a listener email:

Mike, I enjoy listening to The Closing Table as we have WOMR on the radio at work all day. I was asking co-workers a question about my summer rental and they suggested I email you. So here it is: I rent out my small west end studio to weekly renters to help with the mortgage. Should I provide an air conditioner? Signed, West End Studio Gal. 

Thanks for listening and for your question. This is a common dilemma that many landlords ask themselves when renting their property out on a weekly basis. When offering your condominium or home for rent, especially to a vacationer, keep in mind that you should have most of the amenities a hotel, guesthouse or rental property has.

On Cape Cod, it is rare that we need air conditioning, however it can get pretty stuffy in late July and August. Air conditioning can make the difference if a renter comes back. 

You may want to provide a small window air conditioning unit that can be installed if the heat and humidity get unbearable. Your strategy may be to keep your air conditioner locked in a closet. In the event of a heat wave, have a cleaner or manager install it for you if you are not in town. A renter will appreciate the effort and could potentially re-book for next year. Retention and repeat business after all, should be your goal. 

Keeping the air conditioner in the closet also protects you. Renters are prone to running air conditioners when the weather is cool, when they are out or with the windows and doors open. This of course will leave you feeling chilled with a high electric bill.

Sight-seekers Extend Their Stays

In conversations I’ve had throughout the years with various individuals who decide to move here, the natural beauty of Cape Cod always comes up as one of the reasons.

This past week, we’ve been treated to a spectacular show of Right Whales feeding off Race Point and at times Herring Cove Beach. If you live here or hear this broadcast and have not witnessed this magical happening, try and see this before it ends. A whale watch from the beach is rare.

With that being said, the wonders experienced on the outer cape are breathtaking. From our sunsets and world’s most beautiful beaches to the manic culture of summer and isolation of winter, there is nowhere like the outer cape.

Why do I bring this up? Well, it seems that folks are buying on the outer cape now for the absolute love of the area, not for a quick buck to be made on a flip. This is good news for us year round residents as it means more concern and care from homeowners who vacation here.

Since 2005 the median real estate price for a single family home in Provincetown dropped 12.6% to $594,500. In Truro, a drop of 8.7% to $582,500 and Wellfleet a 10.7% drop to $500,000.

This means that a second homebuyer who missed out on opportunities before the radical appreciation of the early 2000’s can come back and make that dream of owning a vacation home on Cape Cod come true.

To List, or Not to List ... Your Property

This week we start a three part series pertaining to listing your home, buying property and open houses.

Today we’ll discuss the reasons to list your property and whether or not you may want to wait.

Most consumers by now are aware that selling your home in today’s market is taking longer and you will not yield the strong profit you desire. If you purchased your property within the last few years and you don’t have to sell, then you shouldn’t. If you have a strong equity base but no reason to sell, then don’t. You can maximize the profit on your house when the real estate market comes back.

Here’s why you should sell. If you are in financial distress and need to liquidate a real estate asset, banks are working with consumers to sell property through short sales. This allows you to market your property in line with today’s prices in order to stay competitive.

Another reason to sell is if you want to buy a larger property. Now is the time. Selling your existing home at a slight loss or for a lower yield is worth the gain you’ll receive on the new property when the market rebounds. The potential loss that you incur due to selling at a lower price will all be forgotten when you are in a new home and the appreciation starts.

If the property is an investment home, the loss could be a potential tax benefit. Check with your accountant.

Check back next week when we explore what is motivating buyers to act in this market.

First Quarter Recap

Here's a recap of the real estate activity for the first calendar quarter 2008.

Let’s start in Eastham
33 properties sold between January and March
24 single family homes, 1 lot of land and 8 condominiums
The average sales price in Eastham right now is $521,000 and property is on the market for an average 149 days.

Moving up to Wellfleet
13 properties sold between January and March
8 single family homes, 1 lot of land, 2 businesses and 2 condominiums
The average sales price in Wellfleet right now is $519,000 and property is on the market for an average of 321 days.

In Truro
8 properties sold this past quarter
4 single family homes, 1 lot of land and 3 condominiums
The average sales price in Truro right now is $527,000 and property is on the market for an average of 232 days.

And finally in Provincetown,
37 properties sold between January and March 2008.
4 single family homes, 1 multi family home, 31 condominiums and 1 hotel (The Brass Key)
The average sales price in Provincetown right now is $577,000 and property is on the market for an average of 190 days.

For more information and additional statistics on this wrap up of real estate activity in the first quarter 2008, please email me at mike.dubour@verizon.net.

Almost Prime Time

The stars are aligned and conditions are prime to buy real estate. It is beyond textbook perfect...almost. 

Here's what I mean. Listed prices for condominiums and single family homes are the lowest they have been in years. This is based on most sellers now pricing their homes realistically per the market performance. Low listed prices combined with the fact that interest rates for 30 year fixed mortgages may decrease to 5.5% this week, makes it very clear that something magical is occurring for those who want to buy real estate.

Rarely, have both the listing prices and mortgage rates been simultaneously low.
Historically, even in the early nineties this phenomenon did not occur. The market was only sluggish for two years before the extreme escalation in values started.

If the market starts to rebound one year from now, it will most likely take another three years to see the same levels of appreciation as we did before the recent correction.
Consumers would serve themselves well to pay attention to the signs. Low mortgage rates, low listing prices, multiple foreclosures and short sales. This is indeed the time to make that leap.

But here's the double edged sword. Keep in mind that obtaining a mortgage in today's market is not as easy as it once was and can be downright impossible. The recent mortgage meltdown has put stricter qualifications on potential homebuyers. Although there is tremendous opportunity out there reflected in low listing prices and foreclosures, not everyone can take advantage. Lenders are no longer giving away money. And if you plan on buying a foreclosed property keep in mind that you have to be pre qualified and bring a deposit of up to $5,000 the day of the auction.

So although it is a good time to buy, you have to have clean credit, strong income and a good eye for opportunity. 

Buying a B&B

This week a listener emailed the following question:

Q: My partner and I have had a long time dream of owning a Bed and Breakfast, and we are thinking more seriously about starting to look in Provincetown. Can you tell me about the process and how much we will have to put down as a deposit?

A: There are over 85 Guest Houses in Provincetown. There are 12 on the market offered for sale, priced from $699K to $3,000,000. Most often, Guest House properties are sold completely furnished and equipped.

It is important to speak with a commercial lender at the beginning of your search so that you can determine the price range in which you should be looking. Here are some questions to ask yourselves: Will one of you continue to work at your present job while the other runs the inn? Do you own other properties? Do you have an outside source of income? The lender will ask these types of questions and use all of your income to pre-qualify you for a loan. Generally speaking, you will be expected to put down at least 20-30% of the purchase price. This number will vary, depending upon your personal financial strength and credit history while also taking into account the income of the property you are considering.

Once you have identified a property and a lender, you will work with your real estate agent and your attorney to negotiate all of the details of the sale. The lender will order a commercial appraisal of the property and in some instances, an environmental inspection. The appraisal is a critical part of the process, as the appraiser will use the income to value the property. The lender may also ask you for a business plan.

The present climate is very favorable for commercial loans – interest rates are low and there are some great loan products for you. In addition, there is money available through the Small Business Association (SBA). 

Once you own your inn, the fun part starts! You will meet people from all over the world and become a part of their special memories of Provincetown. 

The Market is Active!

Market Snapshot
Activity since January 1, 2008

For those of you who are wondering how the market is doing this year, here is a year-to-date account of what’s happening in the three towns on the Outer Cape!

Provincetown:
There are currently 317 properties for sale, including Single Family, Multi Family, Land, Commercial, Condominiums and Hotel/Motels.
33 properties are under agreement, and there have been 29 sales ( 24 condos, 3 single families, 1 hotel, and 1 Multi)

Truro:
There are currently 196 properties for sale, including Single Family, Multi Family, Land, Commercial, Condominiums and Hotel/Motels.
19 properties are under agreement, and there have been 7 sales (3 condos, 3 single families, 1 Piece of Land)

Wellfleet:
There are currently 131 properties for sale, including Single Family, Multi Family, Land, Commercial, and Condominiums.
12 properties are under agreement, and there have been 8 sales (6 single families, 2 Commercial Sales