Area Real Estate News & Market Trends

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

Feb. 21, 2024

Why Putting Your Vacation Rental Into An LLC Might Be a Smart Move & How To Actually Do It.

Limited Liability: A Shield Against Unforeseen Incidents. The primary advantage of placing your Red River or Angel Fire vacation rental into an LLC lies in the protection it offers. As the name suggests, a Limited Liability Company limits your exposure to legal and financial risks. Should any unfortunate incidents occur on the property, the liability would be confined to the assets and the insurance policy held by the LLC, safeguarding the owner's personal assets. This structure provides a solid layer of security for property owners against potential lawsuits or claims.

Simplified Accounting and Tax Benefits Another compelling reason to consider an LLC for your vacation rental is the ease of managing finances. By housing your property under an LLC, all related expenses and incomes are consolidated within the entity's bank account. This separation simplifies the accounting process, making it easier to prepare profit and loss statements and determine tax liabilities specifically for the property. However, it's crucial to maintain a clear boundary between personal expenses and those of the LLC to preserve these protections.

The Importance of an Operating Agreement An operating agreement is a critical component of forming an LLC. The operating agreement details how the LLC will operate and who the owners are. While templates are available online, it's advisable to have a customized agreement drafted by an attorney. This ensures that the document accurately reflects the specific needs and structure of your LLC, whether it consists of a single member or multiple partners. 

Setting Up an LLC  Establishing an LLC is a straightforward process in New Mexico. Property owners can file for an LLC through the Secretary of State's website, either independently or with the assistance of your real estate broker or attorney. The cost is $50 and there are no annual fees or reporting. For those residing outside NM who wish to have a NM LLC, it will be necessary to appoint a resident agent. This resident agent can be a NM resident or a NM corporation. Once the LLC is completed, you simply deed the property to the LLC and file the new deed with then county clerk. This is normally done with a simple quit claim deed.

In Conclusion, converting your vacation home into an LLC offers many benefits, from limiting personal liability to streamlining financial management. While the process is relatively simple, consulting with a legal professional can ensure that your LLC is set up correctly and tailored to your specific needs. As real estate and legal advisors always emphasize, taking the time to properly establish your LLC can provide peace of mind and financial protection for years to come.

 

Questions? contact me anytime

Rob Swan, Qualifying Broker

Swan Realty 575-613-4243

Red River, Angel Fire

 

rob@swanrealtyinc.com

 

Jan. 25, 2024

Can Deed Restrictions or HOA Covenants Prevent You From Using Your Home As A Short Term Vacation Rental in New Mexico?

 

Many homeowners that do not reside in their homes full time have benefited from renting them out on a “short term” or vacation basis. However, some homeowners have discovered either prior to purchasing the home or after the fact, that they have deed restrictions or HOA restrictions preventing short term rentals.

Over the years I have had many homeowners or prospective buyers ask me if these deed or HOA restrictions are enforceable in New Mexico. 

I am not an attorney, so to answer this question I refer clients to two previous cases decided by the NM Supreme Court and then to an attorney to see if these cases may or may not apply to their unique situations.

The first case is Mason Family Trust v Devaney which dealt with deed restrictions, in this case Mr Devaney was renting his cabin in Ruidoso on a short term basis to vacationers much to the displeasure of the Mason Family Trust who claimed his doing so violated deed restrictions which required properties in the subdivision to be used only for dwelling purposes and precluded properties from being used for business or commercial purposes.

The court, however, found that under the specific circumstances of this case, Devaney’s short-term rental of his cabin did not violate these deed restrictions. The court's decision was based on a strict and reasonable interpretation of the deed restrictions, concluding that short-term rental for dwelling purposes did not constitute a use for business or commercial purposes. This decision was influenced by the principle of resolving issues of enforcement of a restriction in favor of the free enjoyment of the property and against limitations​.

In the second case, Estates At Desert Ridge Trails v Vazquez. Mr Vazquez was renting out his home on a short term basis in a Albuquerque subdivision that had restrictive covenants in place preventing such use. The HOA argued that the short-term rental of a home by Mr. Vazquez was inconsistent with the single-family residential purposes limitation, comparing it to more of a business such as a hotel.

The court, however, did not agree with the HOA interpretation. It found that the use of the property for short-term rentals did not, by itself, constitute an impermissible business or commercial activity under the "single-family residential purposes" restrictive covenant. The court held that just because Mr Vazquez was receiving an economic benefit does not automatically equate to a business or commercial activity under the restrictive covenant. 

In these two cases, the homeowners prevailed and were not prevented from renting their homes on a short term or vacation rental basis. It is impossible to tell how the court may rule in future cases, but In reading through these cases in their entirety it can be summarized that the court was unwilling to differentiate residential use based strictly upon the time of occupancy. 

Please note that this article is not to be construed as legal advice and the above cases are specific and may not apply in every situation or your situation. If you have specific questions about short term rental permissibility, you are highly encouraged to seek out a qualified real estate attorney. 

 

Real Estate Questions? Feel free to contact me anytime. 

Rob Swan

Qualifying Broker, Swan Realty

575-613-4243

 

Jan. 10, 2024

Valle Escondido Real Estate, A hidden New Mexico Gem

If you are considering buying a home in Valle Escondido, located between Taos and Angel Fire you’d be hard pressed to run out of things to do with an abundance of options right in the community. Valle Escondido features a nine-hole golf course, with roughly 40 acres of well-kept greens throughout. There is a Clubhouse with a deli/restaurant and bar, as well as a heated swimming pool. Two well-stocked trout ponds lying in the scenic areas of the neighborhood offer great picnics, dog walks and great sunsets. As well as easy access to countless miles of forest roads to get you hiking, four wheeling, hunting, backcountry skiing, horseback riding, mountain biking, and much more!

 

The community frequently has events going on including live music, golf tournaments, holiday celebrations, and much more! The area is relaxing and serene, with some of the best sunrises and sunsets in New Mexico. The landscape in Valle Escondido is expansive and wild. On a regular basis you will see an abundance of wildlife from deer to elk frequenting the view out your window or off the porch. This hidden gem, Valle Escondido, is sure to enchant anyone who visits.

 

Valle Escondido is also proud to be recognized as a FireWise Community! FireWise communities are recognized by the National Fire Protection Association by their efforts to become more resistant to wildfire, structural and environmental damage.

 

The Homeowner’s Association fees are currently $1,700 annually and include access to all that's listed above plus road maintenance, snow removal, community dumpsters, chipper days, and community water that's voted best quality in New Mexico. Valle Escondido does not have a community sewer system so all the homes have their own septic systems. 

 

Valle Escondido was established in 1962 as a resort community and has continued to grow slowly ever since. Currently there are several homes and lots for sale in Valle Escondido. The average price of a home sold in Valle Escondido is $424,000 which is slightly lower than the surrounding resorts.  

 If you'd like to learn more about Valle Escondido, feel free to contact me 

 

Lindsey Januskiewiecz

Associate Broker, Swan Realty

lindsey@swanrealtyinc.com

575-613-4243

 

Valle Escondido welcome sign

Nov. 25, 2023

Dealing With Negative Findings in Inspections for The Buyer and Seller

 

Don’t Lose The House Over A Loose Toilet Seat!

During the home buying/selling process there will most likely be an inspection conducted. The buyer generally has the right to inspect the home in any way they would like. They can do it themselves or hire an inspector. This inspection will inevitably come up with findings, even in a brand new house. How these findings are dealt with is important. 

A home inspector is hired to find issues and I can guarantee you, he will find them, that’s their job. In general, the older the home, the more issues will be found. Inspectors are usually pretty good at indicating which findings pose a safety hazard and those that do not. 

Once the findings have been delivered to the buyer, now what? The buyer at this point has some options, do nothing and accept the house as is or ask for a credit at closing to remedy any defects. But now the question is, what do you want remedied and how much should you ask for.

So let's think about this, all houses have issues. Asking to have everything fixed is unreasonable and will probably alienate the seller. We recently had a small house under contract and there were a few defects uncovered that posed safety risks and a whole bunch of  small issues that would not be uncommon to find in an older home. The buyer decided to ask for everything on the inspection report to be fixed and in doing so made a request for $19,000 to be credited to him. As expected, the seller refused the request and was so annoyed by the buyer asking for so much that he did not even counter the request and started considering previous offers. The buyer panicked and dropped all requests for repairs and the deal was eventually completed with the buyer receiving no compensation for the defects. 

The lesson here is that a negotiation is a two way street, as long as all parties act in good faith and make reasonable requests of one another, the deal usually rolls along smoothly and makes it to closing without any issues. Once a party acts unreasonable in the mind of the other party, is where problems start to arise and distrust starts to set in. Once this happens the likelihood of one party becoming upset and leaving the deal is greatly increased. Had the buyer only requested compensation for the most significant defects he would have stood a very good chance of receiving his request, but in this case, he ended up with nothing. 

In the case of inspection reports, both parties should look at the report for what it is, it’s just a report and it will be full of findings, some may be significant, most of them will not be a big deal. Focus on what matters and let everything else go. Do you really want to lose the deal over a loose toilet seat? 

 

Real Estate Questions?

Rob Swan

Qualifying Broker, Swan Realty

575-613-4243

Nov. 25, 2023

How Continued Economic Development Affects Real Estate Values

Why We Should Never Close The Door Behind Us. 

A resort community’s permanent  population is generally a mix of working people and those who are retired. The working population always wants more economic activity as it is their only way of making a living and on the other hand, retirees many times want less economic activity and less tourists as increased tourism ads to the congestion and sometimes unwanted side effects. 

For the most part, all of the infrastructure we have in both Red River and Angel Fire was funded by tourism based economic activity. All of the current infrastructure and businesses you see were funded almost 100 percent from tourism dollars. Without the dollars the tourism industry provides, both of these communities would have very little to offer. Red River has been building for over 100 years and Angel Fire for over 50 years, so everything you see and enjoy in these communities took a long time and a lot of money to come to fruition. 

With that said, unfettered tourism for the sake of generating income should never be the goal. The goal should always be to use economic activity to improve the lives and well being of the community members to include both the working population and retirees. Achieving this balance can take patience and a willingness to compromise on both sides. 

All of this matters to real estate due to the fact that without our thriving towns the real estate values would be considerably less. For example, a home in the forest outside of a thriving resort community generally has about half the value of those within proximity of a resort destination, so it’s not a little difference, it is a major difference. 

Everyone does not directly benefit from everything, but everyone does benefit indirectly as all of this economic activity continues to build additional infrastructure boosting property values, keeping our businesses open, maintaining our water, sewer and parks and subsequently improving the quality of all of our lives. 

 

Real Estate questions or concerns? 

Rob Swan, Qualifying Broker, Swan Realty

rob@swanrealtyinc.com

575-613-4243

 

Nov. 25, 2023

How To Make Real Money With Your Vacation Rental

With over 1,400 vacation rentals in Angel Fire and 600 in Red River, the vacation rental market has slowly become very saturated. 

The advent of online booking platforms has given rise to the vacation rental boom and everyone wants a piece of it. Many homes are performing well but many more are not. All of the high performing properties have these things in common:

1) Great location

2) High quality property

3) Exceptional management

If you already own a property, you can't change the location but you can improve the quality and the management if you feel your property is underperforming. In our area a 60% and above occupancy rate is considered good, if you are below 50% some intervention may be in order. 

Improving quality is going to cost money and on average the cost for a smaller house will be around $25 to $30 per sf for a complete remodel, flooring, paint, appliances etc.., so for an 1,100 sf house you should expect to pay around $27,000 for the remodel. However with proper management this upgrade will pay for itself in about 3 years and have a lifespan of around 15 years. When potential renters are searching for a vacation home, photos and or video is all they have available to them in order to make their decision, so to get their attention, the house needs to be in excellent condition with modern amenities and appearance. 

The next variable is management. Poor management will automatically result in poor performance. I have seen homeowners and property management companies both do phenomenal jobs at management with outstanding results, however, I have also seen pathetic results from both of the aforementioned management scenarios. Property management is a complicated business with a tremendous amount of moving parts including maintenance, housekeeping, marketing, advertising, customer relations, and more, all of which need to be perfectly choreographed in order to succeed. There is no getting around the fact that property management is not an easy job, it takes a lot of time and dedication.

Once you have quality and management under control you need to think about pricing. This is an area that many managers don't pay enough attention to. Every night that your house is vacant is money that can never be recovered, so getting it booked is paramount. The online booking platforms such as VRBO use algorithms to sort and show properties to potential customers, these algorithms take into account many variables including pricing. Believe it or not, sometimes adjusting your price slightly upward can actually move your property higher in the suggested list. Adjusting pricing is a mixture of art and science, a good property manager with the assistance of pricing software can make a huge difference in occupancy rates. What you absolutely do not want to do is to set the price and walk away. Pricing adjustments need to be done on a monthly if not weekly basis. 

Additional tips on getting your property rented. The most searched term for amenities is "pet friendly" with 40% of potential renters looking for a home that will welcome their furry family member, followed by "internet" then "hot tub/pool". if you don't currently offer any of these options, you may want to consider it.

 

Questions about the vacation rental business?

Rob Swan

Qualifying Broker, Swan Realty

 

575-613-4243

 

Oct. 23, 2023

“Wiggle Room” in Pricing, A Self Fulfilling Prophecy

“Wiggle Room” in Pricing, A Self Fulfilling Prophecy. Don’t Alienate Potential Buyers.

 

Many sellers want to add “wiggle room” to the listing price in order to have room to negotiate. Negotiating is a cultural behavior, some cultures expect to negotiate while others do not. Americans do have a tendency to negotiate but we tend to negotiate within limits. 

The more “wiggle room” you add to your asking price, the more you will end up negotiating along with alienating a percentage of potential buyers. 

Let's start by looking at this from a buyer's perspective. If a buyer is on a real estate website and is looking for a home but does not want to spend more than  $500,000, the buyer will put that amount into the search criteria and only homes listed at $500,000 or less will appear. The buyer may add a little extra in order to find a home just above his target price in hopes of negotiating back down to what he actually wants to pay. However, on average he won’t search much above his target amount.

Now let's look at this from a seller's perspective. The seller's home is worth around $500,000 but the seller insists it be listed for $550,000 because he wants room to negotiate. 

As you can see in this example, the seller has alienated the potential buyer by listing his house quite a bit above fair market value. Now multiply this by the amount of potential buyers in your market and you can see that the seller has effectively limited his pool of potential buyers.

Now let's assume that the seller listed his house at $510,000 much closer to fair market value. In this case, a buyer looking for a $500,000 home may actually see and consider this particular listing. A win for both parties. 

I have heard many times over the years from sellers with overpriced listings “somebody might just come along and pay it”. Yes, maybe but not likely. The more likely scenario is that the seller's property will just sit on the market and the listing will become “stale”. The seller will eventually fire his broker after six months, hire another broker who will convince him to drop the price and the property will end up selling for what it was worth all along. 

As a seller, keep in mind that real estate brokerages are in the business of selling property, not advertising property. You may find a broker willing to list and advertise your property for well above market value, but I can assure you that broker is not doing you any favors as these scenarios usually end up with disappointment on both sides. 

So here is what you should do, find an experienced and knowledgeable broker and listen to them. They should be able to advise you on a listing price and this advice will be backed up with actual market data. This methodical approach is much more likely to get you to your end goal a whole lot faster and with less frustration then overpricing your Angel Fire or Red River home right out of the gate.

 

Real Estate questions or concerns?

Contact me at any time. 

Rob Swan, Swan Realty

 

rob@swanrealtyinc.com

 

June 16, 2023

Whisper Creek Homes - Explainer Video

Whisper Creek Homes offer a "Modern-Rustic" panelized building system designed to offer incredible quality with a much shorter build time. This video will explain how all of this happens and how you can obtain one for yourself. 

Swan Realty - 575-770-2958

May 23, 2023

Importance Of Turning Our Locals Into Homeowners. Homeowners Have a Net Worth 40x That Of A Renter

 

The importance of being a homeowner cannot be overstated, beside the obvious tax benefits, according to a recent study done by the Federal Reserve, the average net worth of a homeowner is $225,000 compared to a renter at $6,300, that is 40x more net worth for a homeowner vs a renter. This is an astonishing statistic and underscores the importance of home ownership and the path to prosperity. 

A misconception that many of our locals who work in the service sector have is that home ownership is out of reach for them. This misconception is far from the truth and prevents them from having a home of their own and subsequently increasing their net worth. 

Buying a home is a process and that process needs to start somewhere. I know in our brokerage we do everything within our power to get locals into homes. We know that without our locals we would not have the beautiful vibrant towns that we all enjoy, so helping locals achieve stability through home ownership is a priority. 

So where do you start the process? The first step is to start getting your team together by building a relationship with an experienced real estate broker. This is the person who knows the housing market intimately and will find you the right house, this is their job, that’s what they do all day every day. Your broker is the one that is also going to get you with a lender to round out your home buying team. 

The lender is a big part of the equation, your lender is the one that is going to help you get those ducks lined out and make that new home a reality. Very few first time buyers have everything in order, but don’t worry, a good lender will help you get it all sorted out. The lender is going to look at your individual situation, probably request additional documents then make recommendations on what needs to be done so when the right house comes along you are ready to pull the trigger. Getting qualified for a loan can be frustrating at times, however, the end result far outweighs any frustrations you may experience along the way. So if you are thinking about buying, let's get your home buying team together and get you on the road to prosperity. 

 

Questions, contact me anytime. 

Rob Swan

Swan Realty

575-613-4243

 

rob@swanrealtyinc.com

 

May 23, 2023

90% of homes in Red River and Angel Fire are owned by non-residents. Why?

 

According to county records approximately 90% of homes in Red River and Angel Fire are owned by non-residents (owners whose tax bill is mailed to an outside zip code). So what drives people to buy homes in resort areas when they could just simply rent a house when they want a vacation and avoid all the hassles of home ownership? Many people have incomes that exceed their needs and with that comes an unlimited amount of places to invest that same money. So why do they invest in resort properties? Individual motivations can vary widely and in many cases tend to overlap, here are some of the biggest reasons. 

Many buyers just want a second home in order to escape the daily routine of home life at their primary residence and spend some time relaxing and indulging in pastimes that they may not normally have available. 

Rental income. The short term rental market has become a hot commodity over the past decade. Income from renting out your property in a resort area can be lucrative. These funds can not only put cash in the pocket of the owner but can also go a long way in paying for the home. 

Retirement destination. Our towns offer a nice climate, activities, social functions and many other amenities that appeal to retirees. These homes also offer a desirable location for multi generational family gatherings. What grandparent doesn’t want the grandkids around?

Real estate appreciation. Due to supply and demand, real estate tends to appreciate at a higher  rate in resort areas than it does in other areas. There are only so many nice places to go and they always come with a finite amount of available properties. 

Lifestyle choice. If you are reading this, then most likely you have experienced what our resorts have to offer and the fact that we have a nice lifestyle is no secret. The accessibility to outdoor recreation, laid back atmosphere and natural beauty is unmatched. 

Irrespective of the reasons behind their home purchases, these non-residents generate a substantial level of economic activity that contribute greatly to the development of additional infrastructure, thereby enhancing the overall quality of our towns. So to the non-resident and resident homeowners, thank you for being here, it takes all of us to make this work. 

 

Real Estate Questions? Feel free to contact me. 

 

Rob Swan

Qualifying Broker, Swan Realty

rob@swanrealtyinc.com

575-613-4243