Chris Warren Realty, our in house property management company, specializes in leasing and managing property in Cedar Park, Leander, Round Rock, Pflugerville and Central/NW Austin areas. Surprisingly, we have a 100% occupancy rate despite the attractive $8,000 tax credits available to first time buyers who enter into a contract to purchase a home by April 30^th. Today, I did a lease search and found surprising results. Leasing Inventory is near record lows.

I queried active single family resident properties in Cedar Park/Leander and Round Rock areas. The majority of the properties we manage are in these areas. We manage over 100 properties just in Cedar Park/Leander. This makes sense since our office is located in Cedar Park, and we have multiple leasing agents living in area. As of today (2/25/10), there were only 57 active homes available for lease in Cedar Park and Leander. Round Rock also only had 57 active homes for lease. This is very unusual. We have seen inventory

For the first time, I sued a tenant in small claims court for not paying last month's rent and was awarded triple damages. Tenant failed to give proper written notice, breached lease by vacating early, and did not pay last month's rent. We had previously filed an eviction lawsuit and received an eviction judgment for rents in arrears. We filed a second small claims lawsuit for damages, reletting fee, lost rents, and triple damages for not paying last month's rent.

When filing an eviction lawsuit, a judge will only award a judgment for past due rents. Late fees, reletting fees, future rents, and damages will not be considered in eviction court. A landlord must file a small claims lawsuit to pursue rents from breach of contract, damages, and late fees.

Texas is a very friendly landlord state and has property codes to protect landlord. Under no circumstances are tenants allowed to pay the last month's rent using security deposit. Texas property code § 92.108 states:

Getting a property ready for lease does not require as much work as getting a home ready for sale. Prospective tenants are not as concerned about curb appeal, condition of yard, or extensive upgrades. However, tenants are looking for homes in good subdivisions that are priced competitively and show nicely.

Tenants are looking for a home with clean walls and carpet. These are probably the most important features. Like home buyers, tenants have choices in looking for homes. However, most will submit an application once they see a home that meets their needs and is priced competitively. Tenants usually don't preview additional properties once they find one in good condition, because there are fewer homes for lease than for sale. Homes with clean walls and carpet will lease quickly and sometimes receive multiple applications.

Adding a swimming pool can increase the value of your home and make home for saleable. However, like most upgrades, sellers most likely won't capture  the entire cost of adding a swimming pool.

In my experience, there are usually three profiles of buyers looking at homes with swimming pools. Some buyers specifically want a home with a swimming pool and make this an important factor in their home search. Other buyers will not consider a home with a pool due to cost of maintenance and or fear of liability if they have small children. The most common buyer may not be looking for a home with a pool in a home search but end up choosing a home because it has a swimming pool. So, the swimming pool can be a feature that sells the home. In this scenario, a buyer chooses the home with a pool because it stood out from other properties.

Higher priced homes have a better chance in recovering the cost of adding a swimming pool. In fact, if many homes in a subdivision have a swimming pool, it can be a real advantage for the seller. Homes in these neighborhoods without a pool may actually be at a disadvantage when competing with other listings that have swimming pools.

It can be challenging working with tenants and collecting rent. Many times an unexpected car repair or medical bill will come up. Or, a tenant may lose his or her job and lose income for a month. This can make is extra difficult for tenants to get caught up in paying rent. Most tenants will have a hard time paying the next month's rent plus a month in arrears. In these situations, we have considered a lease modification for qualified tenants.

The screening process is a very important in considering a prospective tenant application. We do pull credit reports for all applicants. However, a credit report is just one metric we use when screening a tenant application. We obtain recent paystubs, pull a criminal background check, and verify rental history. A low fico score does not tell me if a tenant will take care of a property or lose his or her job in the future. So, what is the most desirable or profitable tenant?

The most profitable tenants have good jobs, work hard to provide for their families, take care of the property, and stay in the property a long time. One of the advantages of a single family residence property versus a multi-family unit is many tenants stay in a home much longer. Because it is cheaper to rent than purchase in most situations, tenants can live in an expensive neighborhood that they otherwise could not afford. Renting in a nicer neighborhood provides a high quality of life for their family. Hence, many tenants will stay in a home for years.

Sometimes sound financial strategies can be counter-productive to borrowers in qualifying for a mortgage. I often have future home buyers ask me if they should payoff credit cards before purchasing a home. In many cases, this can actually disqualify the borrower(s) from qualifying for a mortgage.

Lenders qualify borrowers based on gross income and monthly debt obligations. Lenders consider two debt ratios. A house ratio is calculated by taking the actual mortgage payment and dividing by gross income. Total debt ratio adds other minimum debt payments to the mortgage payment and divides by gross income. As a general guideline, a mortgage payment should not exceed 28% of gross income, and total monthly debts including mortgage payment should not exceed 36% of gross income.

Last December, I predicted higher unemployment levels, lower sales activity, a further deterioration of the economy, and slightly lower rents for 2009. Well, we finished 2009 with similar results.

Austin's unemployment increased from 5 percent to 7 percent the past 12 months. Two years ago, Austin's unemployment rate was 3.5 percent. Our unemployment rate has doubled the past two years. Consumer confidence has remained low, and we are seeing many clients and tenants lose jobs.

The $8,000 first time buyer's tax credit has been extended. If you have not owned a home as your principal residence the past three years, you will qualify for the $8,000 tax credit. The tax credit is equal to 10% of the sales price with a maximum credit of $8,000. This credit applies to a sales transaction occurring before April 20, 2010. There are income cap limitations. Single taxpayers whose income is below $125,000 and married couples whose income is below $225,000 will qualify for the full tax credit.

A  move-up / repeat buyer tax credit of $6,500 was also passed into law. Eligible buyers must have owned and lived in their previous home for five consecutive years out of the last eight years. The tax credit is equal to 10% of the sales price with a maximum credit of $6,500. The credit applies to all homes priced under $800,000, and the home must be purchased by April 30, 2010. Income requirements are the same as the first time buyer's tax credit ($125,000 for single taxpayers and $225,000 for married couples).

There is no better time to purchase a home. Austin real estate prices are at reasonable levels. It is still a buyer's market, and mortgage rates are below 5% for 30 year mortgages and low 4% for 15 year mortgages. These tax credits will expire, and interest rates will not be this low forever! If you have any questions or need information about purchasing a home or qualifying for a mortgage or need to refinance your existing mortgage, please call us at 512-257-9836.

The IRS allows generous tax deductions for business owners and landlords. Unlike an employee, a business owner generates revenue and pays income taxes AFTER deducting business expenses. Business owners pay income taxes on net income, while employees have income taxes deducted from gross income. Employees receive remaining funds after taxes are deducted. Landlords are similar to businesses. They collect rent and pay income taxes after expenses. One of the best deductions for investors is depreciation expense. Depreciation is a very powerful tool for lowering taxes and building wealth.

Depreciation expense is a very unique deduction for investors and landlords. Real estate is the only type of asset that can be depreciated, but is an APPRECIATING asset. Most businesses depreciate capital equipment over the life of the asset. For example, a company truck may be depreciated over five years. If the vehicle costs $50,000, the business expenses $10,000 deduction yearly for five years. After five years, the truck is fully expensed and has a remaining salvage value. The value is substantially less than what the owner paid for the asset. However, real estate in most situations is an appreciating long term asset.