James W. Bobo II

Florence Alabama homes for sale are a great investment especially when you look at what this area has to offer. The shoals area has a combined population of 147,137 and growing. Industry continues to visit and decide to stay. Florence Alabama continues to offer the latest in dining trends which includes Olive Garden, Buffalo Wild Wings, Five Guys Burgers and Fries and many, many more.

Florence Alabama currently has a Publix grocery store under construction in the new development on Cox Creek Parkway. This new development includes a new Hibbett Sporting Goods store, Books-A-Million and Joe Muggs. Rumors are that there will be a new Panera Bread in the new Florence Alabama development.

New blue collar industries include Navistar which is establishing it’s roots in Cherokee Alabama and North Alabama Lighting has indicated that it’s current facility will include expansions and new job openings as well. New jobs spell new money. Who said the Florence Alabama area has seen the depression? Just drive thru the city of Florence Alabama and see for yourself.

According to our latest Florence Alabama housing market statistics, our market is up 18.54% compared to last years sales volume. Housing inventories have dropped and the median and average sales prices is up. Sales in the $300,000 range and up area also beginning to show a change for the better.

News just broke today that the the local Veterans Park in Florence Alabama could get a multi-court indoor/outdoor tennis facility. Estimated costs of the new facilities could cost $10 million, $2 million of which has already been set aside for the infrastructure by the city of Florence Alabama. Local government is proposing a 2 cent per gallon fuel tax to help fund the multi-court indoor/outdoor tennis facility.

Florence Alabama city officials believe that these tennis courts could have a $2 million a year economic impact. So why not invest in Florence Alabama homes for sale?

As we all hear in the news today, some markets are doing better than others and some are still not doing very well. In the Shoals area home market, which consists of Florence, Killen, Muscle Shoals, Sheffield and Tuscumbia Alabama, things are moving along right nice. This year compared to last year has seen an 18.54% increase in dollar volume sales. Median and average home prices are rising and our inventory is starting to decline.

Of course, with spring approaching, all markets will pick up along with housing inventories. Some sellers I've spoken with have chosen to wait till spring to place their Florence AL home on the market. I always ask, Why? Some seem to believe that it's a great time with flowers in bloom and the grass turning green, people are more motivated to buy at that time. Makes sense to me but why not go ahead and beat the crowd to that buyer?

According to statistics in the Florence AL housing market, our market can get flooded with inventory. More inventory means more for a buyer to choose from. And sometimes that means picking another property over yours. If I'm selling, I want my Florence AL home on the market when their isn't as much competition!

Buyers in the winter months tend to me a little more serious over buyers in great weather. Who wants to go look at homes in cold, dreary rainy weather? Not me. Not unless I HAVE to be somewhere. Plus, when I don’t have as much to choose from, I can make my decision much quicker.

So why wait? Well, waiting doesn't make much sense to me. If you have something to sell, better sell now rather than later, right?

If you’re wondering what your Florence Alabama home is worth then visit our website. Anyone one of the highlighted links will link you back to our site.

Florence Alabama short sales are not uncommon. In todays real estate market it’s also not uncommon to hear the terms Foreclosure and REO. Foreclosures and REO’s tend to have a reputation with all types of buyers that they can be bought for much less than what they’re asking. Even though foreclosures are priced below market value from the start, they typically sit on the market much longer and have a much lower sale to list price compared to a conventional real estate listing.

There are alternatives to Florence AL foreclosure and REO’s though. It’s called a short sale. Basically, a Florence Alabama short sale is the sale of real estate where the proceeds from the sale fall short of the balance of debt owed against the property and the seller cannot afford to repay the loan in full. The bank or lien holder agrees to release their interest in the property and accept less than the amount owed. Not all short sale agreements release their borrower from the unpaid balance. Properties that are sold short of their balance usually have a shorter days on market, sell much closer to market value and don’t carry the plague a foreclosure does.

Although Florence AL short sales are a much better arrangement for all parties involved banks can still take up to 4 to 9 months to reach a decision. To help with this process three senators have introduced legislation to speed up the short sale process. Senators Lisa Murkowski (R-Alaska), Scott Brown (R-Massachusetts) and Sherrod Brown (D-Ohio) have proposed a bill called the Prompt Notification of Short Sale Act. This bill will require a written response from lenders no later than 75 days after their receipt of a request from a buyer.

It would require the lender to specify their acceptance, rejection, counter offer, need for extension and an estimation of when their decision will be reached. It limits the lenders extension to no more than 21 days.

Florence Alabama short sales do not bring down home values liked foreclosed homes do. Lenders like JPMorgan Chase and Bank of America are even offering some of their borrowers short sale incentives, some paying up to $35,000. Florence AL Short sales are not only a great way for the borrower to get out from underneath a debt heavy home but it allows the lender to save more money compared to the expense of carrying it on their books.

You may ask how do short sales effect my credit score? According to Fair Isaac you can loose 140 to 160 points off your FICO score for a short sale or foreclosure. Although short sales do effect your credit, the road to credit recovery is much shorter. Lenders will consider you for a home two years after a short sale versus up to seven years after a foreclosure.

Follow our link for a list of Florence Alabama short sales.

Florence, AL Real Estate | Good Investment?

While at a closing last week I was speaking to a couple who was purchasing some Florence, AL real estate to build their home on. Our conversation moved towards accumulating and investing money. They were of the mind of investing their money into CD’s and interest bearing accounts which is a very safe and smart thing to do. But, as of this writing these types of investments pay very poorly with inflation almost exceeding your moneys growth. Upon learning their investment ideals and understanding I suggested that they look into investing into some Florence, AL real estate.

Here’s some of my quick and simple suggestions to Florence, AL real estate investing. These are a few things I’ve learned while acquiring real estate over the past 11 years.

Florence, AL Real Estate | Multifamily Property Strategy

Invest in something that pays a return either now or over the life your Florence, AL real estate. I suggest multifamily property. Why? Because everyone needs a place to live. Plus, your tenant pay your mortgage and pays into your future retirement.

For example. Say you find a $55,000 home near the University of North Alabama, which is prime Florence, AL real estate for those attending college. You can expect to put down about 5% to buy the home. Here’s how it works:

Purchase Price: $ 55,000

Down Payment: $ 2,750

Financed: $ 52,250

Monthly Payment: $ 407

Including Property Tax and Insurance: $ 457

Market Rent: $ 575

In Your Pocket: $ 118

Yearly Gross Income: $ 1,416

This particular scenario allows for a positive cash flow. Having a positive cash flow allows for you to either make:

1. Extra payments to your loan

2. Money for repairs and maintenance

3. Extra spending money

Florence, AL Real Estate | Tenant Builds Equity + Property Appreciation

REMEMBER! This allows the tenant to PAY YOUR MORTGAGE while you BUILD EQUITY in your Florence, AL real estate. ALSO, while the tenant is building the equity in your property, you’re able to recognize appreciation in the properties value.

Let say that in five years your Florence, AL real estate value has appreciated to $60,500. How much equity do you have in the property?

Property Value: $ 60,500

Loan balance: $ 39,000

Equity: $ 21,500

You would have made $21,500 for an investment of only $2,750. Thats a very reasonable return on your Florence, AL real estate investment. Much better than a CD or interest bearing account. PLUS, you get to depreciate the value of the home over a period of time set by the IRS. Here’s how depreciation works in very simplistic terms:

Purchase Price: $55,000

Yearly Depreciation Amount: $ 2,000

Say you net $1,416 at years end, not including your principal payments, this is what your net would look like to the IRS.

Gross Income: $ 1,416

Depreciation: $ 2,000

Net Income: $ - 584 NEGATIVE

Florence, AL Real Estate | When A Loss Can Be A Gain

You may think, why would I want to loose money on my Florence, AL real estate investment? This is only a loss on paper and not in your pocket book.

The IRS looks at and treats a properties depreciation as an expense. Which means this yearly depreciation amount of $2,000 will be written off at the end of the year which means less tax dollars out of your pocket. These dollars can be used to improve your piece of Florence, AL real estate or even begin looking for another property.

This particular scenario does not take into mind the recapture of a properties depreciation upon its sale or raising your rents over the life of the property. That’s a completely different conversation.

This information is based on my opinion and experience only. There are multiple situations and scenarios that can come into play while investing in Florence, AL real estate. Thats why I suggest you consult with a professional who’s done this type of investing before, specifically one who makes his or her living doing it, and even more so, if their expertise in in Florence, AL real estate.

A few months back I remember meeting with a couple that wanted to sell their apartment complex in Florence, AL. During our meeting we discussed many things that related to their property. While discussing price I asked how they had arrived at their asking price. They said that the previous real estate agent had looked at the tax records and based the asking price on the assessed value (tax record). Not a very accurate appraisal of the properties value. Based on my experience with local assessed values, they can over and under estimate a properties value by as much as 26%. Sometimes I’ll see one close to the market value but not very often. You just never know value until you look at the what the markets doing.

When looking at multifamily properties to purchase for myself or another I start with capitalization rates otherwise know as “Cap Rates”. I like the Income approach rather than the comparable method or cost method because its a direct reflection of what an investor receives for his or her investment into a property. Isn’t that why we invest?

So you ask, how do we get this cap rate and what is it?

To get a current cap rate for a property comparable to what you’re looking at, talk to a couple of commercial brokers in your city. Ask them what cap rate multifamily properties that are similar in age and condition to yours are selling for.

Once you’ve got a comparable cap rate use this formula to establish a value based on return.

Property Value = NOI (Net Operating Income) / Cap Rate

Now you may ask, whats a properties NOI? Here it is:

NOI = EGI (Effective Gross Income) - Operating Expenses

Whats EGI? It’s whats left after you’ve subtracted a dollar amount for vacancies. It’s really simple. Take a properties GPI (Gross Potential Income) and assign a vacancy rate for it. Right now, in Florence AL, it around 5%. Say the properties GPI is $300,000 then subtract the dollar amount for vacancy which would be $15,000 and you’ve got your EGI.

EGI (Effective Gross Income) = GPI (Gross Potential Income) - Vacancy

For this example we’ll say the properties expenses are operating at 20% of the GPI. That would put expenses at $60,000.

Now take your GPI and subtract your Vacancy

$300,000 (GPI) - $15,000 (Vacancy) = $285,000 (EGI)

Now subtract your EGI from you Expenses

$285,000 (EGI) - $60,000 (Expenses) = $225,000 (NOI)

Operating Expenses can be defined as those that happen in your daily operations. This would not include replacing a roof, carpet or toilet. These would be considered Capital Expenditures which would be depreciated over a longer period of time.

Now you can find your properties value. For this example we’ll use a cap rate of 8.5%.

$225,000 (NOI) / .085 (8.5% Cap Rate) = $2,647,059 (Property Value)

I hope this gives you a better idea and understanding of one way investors and real estate agents assign value to commercial property.

Need a professionals help buying or selling your apartment complex in the Florence AL area? Give us a call at one of the numbers listed below. Be sure and follow us on Facebook, Twitter and YouTube!