“Personality can open doors, but only character can keep them open.”    --Elmer G. Letterman

 OWNERS NEWSLETTER – JANUARY 2008 

INSURANCE RATE HIKES – Some of us will be paying more for our insurance coverage as a result of pending rate increases or increases that are already in effect. State Farm Ins. Co. and Farmers Ins. Co. have both filed for rate increases with the Texas Department of Insurance. Allstate has already raised its rates by 5.9%. State Farm, the state’s largest insurer of homes and autos, has filed for a 3.6% rate increase in Texas homeowners’ insurance policies. Farmers Ins. Co. has filed for a statewide increase of 2.5%.  

INSURANCE PREMIUMS – A new state law that took effect on January 1, 2008, states that if you’ve filed only one insurance claim in the past three years, you will not receive a surcharge penalty when you renew the policy. Surcharges are allowed if you’ve filed two or more claims. 

TROOP GAINS – When the Base Realignment and Closure Plan was passed into law, Ft. Hood was slated to lose approximately 8,000 troops by 2011, which would have effectively reduced the post’s troop level to roughly 42,000 soldiers. However, the Army has announced that it plans to increase its number of active-duty soldiers by 65,000, which is good news for Ft. Hood and the surrounding area. By 2011, the base will see a troop gain in excess of 3,000 soldiers and be at near maximum capacity, which is 50,000 soldiers. Additionally, it has been announced that Ft. Hood will be receiving $160 million for construction projects under a new military construction and Veterans Affairs appropriation bill.  

IMPORTANT 1099 INFORMATION – Please verify your name and social security number as being correct on your 1099 form. Incorrect information reported to the IRS will result in backup withholding being taken from your rental proceeds. If your rental income for 2007 was less than $600.00, you will not receive a 1099 form.  

MORTGAGE COMPANY DATA – At some point between December and March, your mortgage company will furnish you with a copy of your escrow accounting showing your expenditures for taxes, insurance, and interest for the year 2007. This information is provided for your tax filing. When filing your taxes, you should also include any personal expenditures you had such as costs associated with travel to visit your property in 2007. 

ADMIN FEE – Please note that there has been an annual admin fee charged to your account this month for each unit managed. This fee helps cover our increased costs in January for 1099 tax forms, purchasing software to print the 1099s, extra paper work, postage, and handling associated with the year-end accounting. The fee is $30.00 for the first unit managed and $5.00 for each additional unit. 

ACCOUNT STATEMENTS – Included in this envelope, you will find the following items: 

1. January Statement. Your January statement has been printed on white paper this month and shows income and expenses for January 2008 only.

2. December 9^th – 31^st Statement. This statement has been printed on purple paper and will only be included if you incurred an expense or had income between December 8, 2007 and December 31, 2007.

3. Year-end statement. Your year-end statement has been printed on yellow paper with your total income and total expenses shown. The first block of this statement is a summary of total income and expenditures you had in 2007. Multi-family property owners and multiple property owners – the second block has the transactions for each individual unit summarized.

4. 1099 form. This form has been attached to the last page of your year-end statement (yellow statement). It will show income only. Please contact us if there is an error.

5. For your most recent account balance, refer to the January ledger (white statement).

DECEMBER TRAFFIC – The return of 1^st Cavalry soldiers and their families kept us busy right up until the close of business before Christmas. We rented thirty-five single-family properties and twenty apartments. We ended the month with an overall occupancy rate of 96%. Of the thirty-five families that vacated last month, eighteen left due to military orders. We successfully renewed the leases of thirty of our existing renters.

RENTAL MARKET OUTLOOK – Timing is everything in our market with thousands of soldiers coming and going to and from Iraq each year. The returning 1^st Cavalry Troops have certainly given our rental market a nice boost albeit temporary. We will be seeing the 4^th Infantry Division head back to Iraq very shortly, which will have some impact on area vacancy rates. Overall, I expect the rental market in the coming months to remain relatively steady for single-family properties. Crime, overbuilding, and deployments continue to negatively impact multi-family properties making many of them difficult to fill let alone achieve a decent market rent.

The slowing of existing home sales and tougher lender requirements for prospective buyers is having a gradual positive impact on the rental market. We are already seeing fewer renters vacate at the end of their leases to purchase homes in spite of still relatively low interest rates.  

David Gerke

CO-Owner/Broker