08 Aug, 2019
Ah, summer is here. The temperatures are soaring, the rain is pounding, and the sun is blazing. It’s important that you take the time to maintain your home this summer and to prepare it for the extreme heat that you could be facing. Check out our ultimate checklist of summer home maintenance tips to help you give your home some TLC. Indoor summer home maintenance: 1. Do a test of your smoke detectors and your carbon monoxide detectors. Replace the batteries if needed. 2. Get your cooling system ready. Consider getting your air-conditioning system serviced. Proper air conditioner maintenance can help your AC last longer and prevent air conditioner fires . This one is especially important for summer home maintenance since you don’t want to be stuck without air conditioning when the temperature starts climbing. 3. Dust the ceiling fan bla des and check that the fan is balanced and working properly. Attach a dryer sheet to a paint roller so you can reach easily and dust away. 5. Clean or replace your showerheads. 6. Clean bathroom drains. 7. Reverse the direction of your ceiling fans. If your fans spin counterclockwise, they’ll push the air straight down to your home will stay nice and cool. To do this, turn off the fan, wait for it to stop, and find the direction switch and check that your fans are spinning counterclockwise. 8. Clean the baseboards of your home. Use a damp cloth and wipe away all the dust and grime. 9. Check your attic and basement. In your attic, look for signs of dampness, mildew, leaks, holes in the roof, and pests. In the basement, check for leaks, pests, mold, and mildew. 10. Clean the vents of your bathroom fans. 11. Clean the dryer vent and exhaust duct. Clean out all of the dust and lint trapped in the vent and exhaust duct. Call in a professional to clean and service your washer and dryer if needed. Clothes dryers can be a fire hazard if they’re not cleaned and maintained. 12. Change the filter in the air conditioner.
07 Jan, 2019
If you’re a first-time homebuyer, you may be aware that it’s possible to deduct mortgage interest. But what about the tax impact of buying a house? What are the tax ramifications of the actual transaction? Warm-weather months can be a great time to buy a home. But before you take the plunge for the first time, here are some things you should know about taxes and buying a home. Sales tax? That’s a ‘no’ While the federal government doesn’t have a sales tax, most states do. In fact, Alaska, Delaware, Montana, New Hampshire and Oregon are currently the only states that don’t collect a statewide sales tax. States that do have a statewide sales tax generally tax a range of purchases, and what’s taxed varies from state to state. For example, California taxes retail sales of merchandise in the state, but not tickets to movie theaters or sporting events. While North Carolina’s sales tax doesapply to movie tickets (among other items), it excludes the purchase of lottery tickets. Additionally, counties and cities may charge their own sales taxes. With so many types of purchases subject to sales tax, it may be surprising to learn that when you’re buying a house, some states don’t apply their sales tax to home purchases. However, states can have idiosyncrasies in their tax law. For example, California may charge sales and use tax if you buy a mobile home. So make sure to check your state and local sales taxes to get a better idea of the taxes you may be responsible for. And, depending on the state in which you buy, you may face another kind of purchase-related tax — real estate transfer taxes. Real estate transfer taxes States, counties and municipalities can choose to levy taxes when a piece of real property — like your new home — changes hands, or when recording a mortgage. These taxes are often known as documentary or “stamp” taxes. Many states that charge these taxes base the tax amount on a percentage of the purchase price of the property. Each state and its taxing body have different rules for how their real estate transfer taxes work. Here’s an example of how state and local real estate transfer taxes can affect the ultimate cost of buying a house. Colorado charges a transfer tax of .01%, which means you’ll owe the state a penny per $100 of the purchase price. What’s more, if your new home is in Telluride, Colorado, the town will tack on an extra 3% real estate transfer tax for any home purchase of more than $500. It’s up to the buyer to pay the town’s tax. So if you buy a $500,000 home there, you’ll owe a transfer tax of $5,000 to the state and another $15,000 to the town. What part of your house payment can you deduct?Even states that don’t have sales tax can have real estate transfer taxes. In Delaware, where there’s no state sales tax, real estate transactions can be subject to a transfer tax of 3% of the property value. However, if you’re buying in a county or municipality that has its own real estate transfer tax, the state tax drops to 2.5%. And Delaware state law says the tax will be divided between buyers and sellers equally. So in Delaware, your $500,000 home could come with transfer taxes of $15,000 (if you buy in a city without its own transfer tax) or up to $20,000 in state and local taxes . In either case, you’d split the tax with the seller, so your share as the buyer could range from $7,500 to $10,000, respectively. A lot depends on where you buy On its website, the National Conference of State Legislators provides a list of real estate transfer taxes that shows how widely such costs can vary from state to state. For example, the list shows that 12 states — Alaska, Idaho, Indiana, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Texas, Utah and Wyoming — do not currently have real estate transfer taxes. Others charge a single, simple transfer tax — for example, a $2 flat fee in Arizona and a 0.1% mortgage registration tax in Kansas. And others have more complex transfer tax rules. For example, Hawaii’s state conveyance tax increases as the property value increases, with the tax rate starting at 0.1% for properties valued at less than $600,000. New Jersey has multiple fees on top of the state and county fees, including additional fees for properties over a certain dollar amount. Who’s gonna pay for all this? Who’s responsible for transfer taxes when you buy a home? That depends. Some taxing jurisdictions may specify whether the buyer or seller must pay transfer tax, or if both parties in the transaction must share it. Or you may be able to negotiate with the seller to pay transfer taxes as part of the sales contract for your new home. If you end up paying transfer taxes as a buyer, you can’t deduct them from your federal income taxes the way you might deduct property taxes. However, you can include them in your cost basis, which is basically the value of a home for tax purposes. Down the road, if you sell your home, your cost basis will be a factor in figuring out your gain or loss on the sale. Your gain or loss in turn may affect how much (if any) tax you’ll owe on the money you receive from the sale. Now for the good news … Transfer taxes can be a painful part of an already-daunting process, but buying a home can deliver tax benefits as well. Here are some deductions and credits you may qualify for as a homeowner. Mortgage interest deduction If you’ll be taking out a new mortgage to buy a house this year, you might be able to take a mortgage interest deduction on your 2018 federal income tax return provided … You itemize your deductions Your mortgage is for your principal residence or one other qualified residence You paid or accrued the interest during 2018 You used the loan proceeds to buy the home that secured the mortgage Your total mortgage debt (including home equity) was $1 million or less – or $500,000 or less if you were married but filing separate returns If you’re buying your home in 2018 (or later), the maximum amount of mortgage debt for which you can claim an interest deduction is $750,000 if you’re married filing jointly or $375,000 if you’re married filing separately. That means if you’re married filing jointly and your mortgage is for $1 million, you won’t be able to claim a mortgage interest deduction for $250,000 of your principal. State and local property tax deduction Every year, you’ll pay any property taxes on your home to your state and local governments. Whether you pay your property taxes directly or do so through an escrow account with your lender. Beginning with the 2018 tax year, you may be able to deduct up to $10,000 ($5,000 if you’re married filing separately) of your property taxes, plus state and local income taxes combined. Or, you could choose to use sales tax instead of income tax. This is known as the SALT deduction. For example, if you paid $5,000 in property tax and $7,0000 in state and income tax, you can only take a $10,000 deduction toward that total $12,000 cost. Can you defray the loss of SALT deduction? You’ll need to itemize your deductions on Schedule A to take this deduction, and you’ll have to decide which taxes you want to deduct – property and income taxes or property and sales taxes. If you live in a state with high property taxes, your property tax bill could account for all your allowed SALT deduction, leaving you no room to deduct income or sales tax. Or if your property taxes are lower, there may be money left in the deduction limit to deduct some state income or sales taxes as well. Deducting points Buying a house can involve paying “points” — charges you pay to obtain a mortgage. Your lender may also refer to points as loan-origination fees, maximum loan charges, a loan discount or discount points. You may be able to deduct the full amount of points you paid in the same year you paid them if … The mortgage is secured by your main home (your main home is generally defined as where you live most of the time) Paying points is common in the area where the loan was made and you didn’t pay more than the going rate for points in that area You report income the year you receive it and deduct expenses in the year you pay them (known as the cash method of accounting) The points didn’t replace other fees that normally appear separately on a settlement statement, like appraisal fees, title company fees, attorney fees and property taxes The cash you paid at or before closing on your house for costs like a down payment or earnest money, plus any points the seller paid, were at least equal to the points charged (you can’t have borrowed this money) You used the loan to buy or build your main home The lender computed your points as a percentage of your mortgage principal Your settlement statement clearly shows the points charged for the mortgage If you don’t meet all these criteria, you’ll have to deduct your points over the life of the mortgage as prepaid interest. Mortgage interest credit If you’re a homebuyer making a lower annual income, you may be able to qualify for the mortgage interest credit. Before you get a mortgage, contact the state or local government for your area to find out if you can qualify for a Mortgage Credit Certificate. The IRS requires you to have an MCC to be eligible for the credit. If you qualify for an MCC and are eligible for the credit, it’s a dollar-for-dollar reduction in the amount of tax you owe. Your credit will be based on the certificate credit rate on your MCC (10%–50%), and you’ll need to calculate the actual credit amount on Form 8396. Credit Karma Tax® supports this form, and you can e-file it when you file your federal 1040 using the free tax-preparation service. You can still take a mortgage interest deduction if you also qualify for a mortgage interest credit. However, if you itemize your deductions you’ll have to reduce your home mortgage interest deduction by the amount of the mortgage interest credit you claim, even if that amount is partially carried forward. Each state or agency can have different rules for MCCs, so it’s important to find out exactly what the qualifications are for your area. State and local tax breaks Property taxes can be a huge cost of homeownership. States, counties and municipalities may offer tax breaks that can help defray this cost. Eligibility can be based on factors such as income, whether you’re a veteran or a disabled veteran, where you live in the state, or whether you’re retired or disabled. For example, Washington state offers deferral programs for qualifying applicants to help with their property taxes. Homeowners with household disposable income of $57,000 or less may be able to qualify to defer some property tax payment, although they’ll owe interest on the deferred amount. In Georgia, homeowners may be able to get a standard homestead exemption of $2,000 off their county and school taxes ($4,000 if they’re 65 and older), as long as they actually live in their home and it’s their legal residence, subject to some exceptions. Contact your state’s taxing authority or department of revenue to find out about any state or local tax breaks that might be available to you. Bottom line Depending on the state where you’re buying a house, real estate transfer fees can be complicated and costly. You could find yourself wishing your home purchase was subject to something as simple to understand as a basic sales tax. However, tax implications shouldn’t necessarily be the driving factor in any financial decision, including where you live. Fortunately, qualifying for federal-level tax breaks like the mortgage interest deduction can help reduce your tax burden. If you’ll be buying a home this year, be sure to keep all important purchase-related documents organized in one place. Having your home purchase information on hand when it’s time to file your 2018 income taxes in 2019 can help ensure you make the most of every home-related credit or deduction you’re eligible for.
28 Nov, 2018
1. Condition Of The House There’s nothing wrong with buying a fixer-upper, but you need to be realistic about the time and money it’ll take to make an ugly duckling shine again. After receiving a thorough inspection by a qualified professional, ask yourself how many of the repairs you can do on your own, and how many would require outside contractors. Get estimates for any major jobs that you would have to pay someone else to do. You’ll want to make sure that you fix all serious issues before anyone moves in, as an unsafe house can lead to grave consequences if tenants become hurt or sick. Calculate how long the repairs should take. If the house needs to be vacant for months while renovations take place, it may not be worth it. After all, there’s nothing more discouraging to landlords than an empty house that isn’t bringing in any income. 2. The 1% Rule Every investor has their own goals when it comes to returns, but most will agree that the income from an investment property needs to abide by the 1% rule. 3. Property Taxes You should always consider property taxes when buying an investment property. High taxes will eat into your profits, while low taxes will allow you to keep a larger amount of your rental income each month. As a general rule, expect to find higher property taxes in metropolitan areas, and lower taxes in more rural places. Some locations charge investors at a higher rate than owner-occupants, so it’s worth calling your local tax assessor to determine whether this is the case. Be sure to remember that even if you find the perfect house in the perfect neighborhood, high property taxes could make it a poor investment choice. 4. Insurance Costs Just like property taxes, insurance costs can eat into your profits, so be sure to do your due diligence. The first step is to decide what kind of coverage you want for the investment property. Do you want to pay a smaller premium each month but be faced with a higher deductible when you make a claim? Do you want to provide coverage for tenants’ personal property? Secondly, you should determine whether the area you’re interested in has higher insurance premiums due to its vulnerability to floods, sinkholes, tornadoes, hurricanes, earthquakes or other natural disasters. If this is the case, the house may not be worth it. Once you’re ready to proceed, start comparing insurance rates. Many companies offer an online calculator, but calling a customer service number can often allow you to create a more customized policy based on your needs. 5. Neighborhood The location of a house is just as important as the house itself. You need to choose an area wisely, making sure it’s a place where tenants will want to live. The most important factor to consider is safety, making sure the neighborhood’s crime rates are not too high. Curb appeal is also a major factor, as tenants will be more eager to live on a street with well-manicured lawns and nicely painted homes. If you’re hoping to rent to families, you’ll also want to have a look at the local school district. Parents are more likely to choose areas that have well-ranked schools. Buying a home near a university can be an excellent way to enter a strong rental market, although many investors are wary of renting to partying college students. 6. Property Management Being a landlord can be a headache at times, so you should consider whether you’re willing to deal with 3 a.m. phone calls when there’s a plumbing disaster. Many investors choose to hire a property management company to take care of everything for them. Most companies charge around 10% of the monthly rent, as well as a fee for procuring tenants. Some also charge to supervise maintenance repairs from outside vendors. Some landlords believe the management fee is well worth it, while others choose to save money and deal with problems on their own. This decision is purely a personal one, but one you should carefully consider. 7. Unexpected Costs While the primary objective of purchasing an income property is to make money, you should prepare for unexpected expenses. Calculate the amount of money it would take to replace major parts of the house, including the roof, HVAC system and water heater. Throw in a sizable amount of extra cash as a cushion. Always keep that amount of money available, whether on a credit card or in a savings account.
13 Sep, 2018
Turning the key in a lock that no landlord has access to, reading in a hammock in your own backyard and painting your dining room bright red – what could be more exciting than making the leap from renter to first-time homeowner? Getting swept up in all the excitement is a wonderful feeling, but some first-time homeowners lose their heads and make mistakes that can jeopardize everything they’ve worked so hard to earn. Don’t be one of those people; take a few moments to ponder these seven practical concerns that will help ensure that your first home becomes the place of luxury and financial freedom you’ve anticipated. Don’t Overspend on Furniture and Remodeling You’ve just handed over a large portion of your life savings for a down payment, closing costs and moving expenses. Money is tight for most first-time homeowners. Not only are their savings depleted, their monthly expenses are often higher as well, thanks to the new expenses that come with home ownership, such as water and trash bills, and extra insurance. Everyone wants to personalize a new home and upgrade what may have been temporary apartment furniture for something nicer, but don’t go on a massive spending spree to improve everything all at once. Just as important as getting your first home is staying in it, and as nice as solid maple kitchen cabinets might be, they aren’t worth jeopardizing your new status as a homeowner. Give yourself time to adjust to the expenses of home ownership and rebuild your savings – the cabinets will still be waiting for you when you can more comfortably afford them. (For further reading, see To Rent Or Buy? The Financial Issues.) Don’t Ignore Important Maintenance Items One of the new expenses that accompanies home ownership is making repairs. There’s no landlord to call if your roof is leaking or your toilet is clogged (on the plus side, there’s also no rent increase notice taped to your door on a random Friday afternoon when you were looking forward to a nice weekend full of naps). While you should exercise restraint in purchasing the nonessentials, you shouldn’t neglect any problem that puts you in danger or could get worse over time, turning a relatively small problem into a much larger and costlier one. Hire Qualified Contractors Don’t try to save money by making improvements and repairs yourself that you aren’t qualified to make. This may seem to contradict the first point slightly, but it really doesn’t. Your home is both the place where you live and an investment, and it deserves the same level of care and attention you would give to anything else you value highly. There’s nothing wrong with painting the walls yourself, but if there’s no wiring for an electric opener in your garage, don’t cut a hole in the wall and start playing with copper. Hiring professionals to do work you don’t know how to do is the best way to keep your home in top condition and avoid injuring – or even killing – yourself. Get Help with Your Tax Return Even if you hate the thought of spending money on an accountant when you normally do your returns yourself, and even if you’re already feeling broke from buying that house, hiring an accountant to make sure you complete your return correctly and maximize your refund is a good idea. Home ownership significantly changes most people’s tax situations and the deductions they are eligible to claim. Just getting your taxes professionally done for one year can give you a template to use in future years if you want to continue doing your taxes yourself. Keep Receipts for Home Improvements When you sell your home, you can use these costs to increase your home’s basis, which can help you to maximize your tax-free earnings on the sale of your home. In 2008, you could have earned up to $250,000 tax free from the sale of your home if it was your primary residence and you had lived there for at least two of five years before you sold it. This assumes that you owned the home alone – if you owned it jointly with a spouse, you could each have gotten the $250,000 exemption. Let’s say you purchased your home for $150,000 and were able to sell it for $450,000. You’ve also made $20,000 in home improvements over the years you’ve lived in the home. If you haven’t saved your receipts, your basis in the home, or the amount you originally paid for your investment, is $150,000. You take your $250,000 exemption on the proceeds and are left with $50,000 of taxable income on the sale of your home. However, if you saved all $20,000 of your receipts, your basis would be $170,000 and you would only pay taxes on $30,000. That’s a huge savings: in this case, it would be $5,000 if your marginal tax rate is 25%. Don’t Confuse a Repair with an Improvement Unfortunately, not all home expenses are treated equally for the purpose of determining your home’s basis. The IRS considers repairs to be part and parcel of home ownership -something that preserves the home’s original value, but does not enhance its value. This may not always seem true. For example, if you bought a foreclosure and had to fix a lot of broken stuff, the home is obviously worth more after you fix those items, but the IRS doesn’t care – you did get a discount on the purchase price because of those unmade repairs, after all. It’s only improvements, like replacing the roof or adding central air conditioning, which will help decrease your future tax bill when you sell your home. For gray areas (like remodeling your bathroom because you had to bust open the wall to repair some old, failed plumbing), consult IRS Publication 530 and/or your accountant. And on a non-tax-related note, don’t trick yourself into thinking it’s OK to spend money on something because it’s a necessary “repair” when in truth it’s really a fun improvement. That isn’t good for your finances. Get Properly Insured Your mortgage lender requires you not only to purchase homeowners insurance, but also to purchase enough to fully replace the property in the event of a total loss. But that’s not the only insurance coverage you need as a homeowner. If you share your home with anyone who relies on your income to help pay the mortgage, whether it’s a girlfriend or a child, you’ll need life insurance with that person named as a beneficiary so he or she won’t lose the house if you die unexpectedly. Similarly, you’ll want to have disability-income insurance to replace your income if you become so disabled that you can’t work. Also, once you own a home, you have more to lose in the event of a lawsuit, so you’ll want to make sure you have excellent car insurance coverage. If you are self-employed as a sole proprietor, you may want to consider forming a corporation for greater legal protection of your assets. You may also want to purchase an umbrella policy that picks up where your other policies leave off. If you are found at fault in a car accident with a judgment of $1 million against you and your car insurance only covers the first $250,000, an umbrella policy can pick up the rest of the slack. These policies are usually issued in the millions. Bottom Line With the great freedom of owning your own home comes great responsibilities. You must manage your finances well enough to keep the home and maintain the home’s condition well enough to protect your investment and keep your family safe. Don’t let the excitement of being a new homeowner lead you to bad decisions or oversights that jeopardize your financial or physical security.
24 Jul, 2018
There are always a number of tasks for homeowners to complete to properly maintain their home. Here’s a summer maintenance checklist from BlackRock to you. Air Conditioning Tune-Up During the hot summer heat, it’s important to stay cool. To prevent unwanted problems, a regular inspection is a smart idea. This will save money in the future. Also, if your AC is running efficiently, your energy bills will be much lower. Experts advice changing out air filters once a month when using your unit everyday. Check Your Roof Roof inspections are simple to perform, but safest is done by a professional. The best time to do so is before and after a rainy season. This will often prevent water damage and leaks. Gutter Cleaning Prevent clogged gutters and pesky leaks by cleaning your gutters. This particular chore she be performed every season, but during the summer and fall is most crucial. Window Inspection If you don’t want your energy bills to skyrocket during the summer, check your window to make sure the hot air isn’t entering. Routinely check the sealants by ensuring both the inside and the outside are completely sealed. If you find any open areas, caulking is a quick fix. Exterior Pressure Wash During the summer, it’s likely you’re spending some free time outside. Keep your home looking fresh and spotless with a quick power wash! This process will help remove concrete stains, dirt and mildew. You’ll be surprised what a difference this makes! Hawaii real estate, property management honolulu, property management hawaii, property management oahu, property manger oahu and honolulu. Property Manager in Hawaii.
21 Dec, 2017
High demand and low interest rates continue to drive housing sales this month. While home prices for starter-to-midrange homes are pushing upward toward pre-recession peaks, especially in secondary markets, they’re stabilizing in higher-priced areas. Prognosticators see the robust markets of Seattle, Portland and Denver as this year’s top performers, with 10 percent to 11 percent price growth. If mortgage rates rise modestly as expected in 2017, sales elsewhere may normalize with smaller price appreciation, especially as housing starts rise to fill the inventory breach, but recently, rates have been on the decline. Here are 10 tips to adapt to the latest market conditions. 1. First-time homebuyers: Get that starter home now And we mean now! More than half of the home sales (52 percent) in 2017 are expected to be to first-time buyers , and mostly to the millennial set (19 to 34 years old), many moving from urban rentals, research by the National Association of Realtors shows. That means competition — and bidding wars — could become fierce through the rest of the year for such “starters” in desirable areas. While there’ll be less inventory this winter, there’ll also be less competition per unit and a higher percent of motivated sellers. 2. Sellers: Hire the right agent Oftentimes, the best investment a seller can make is time spent researching agents. A bad hire can cost sellers tens of thousands of dollars and months of worried waiting. First, look at an agent’s online marketing material and listings. Is there good photography or video? Does it “pop”? Are descriptions accurate and complimentary without seeming exaggerated? Then, look at profiles of the agents on LinkedIn, Facebook and other social media; and be sure to read web reviews. What kind of vibe is an agent sending out? Narrow your search to three agents and interview each, ideally in person. Ask for sales-activity reports, existing listings and time-on-the-market averages, plus the requisite local comps. A seasoned listing agent also will know the best times for open houses and how to initiate a price war if the market allows. Never consent to a listing contract of longer than 90 days in a seller’s market. You can always extend later. 3. Buyers: There’s more loan money out there Those who couldn’t get mortgages during the downturn because they didn’t have 20 percent to put down can find affordable financing again. Borrowers with FICO scores as low as 690 are now getting conforming mortgage loans (those under $417,000). One telling sign: About two-thirds of mortgage refinancers were getting approved in the fourth quarter of 2016 compared to just one-half of those at the end of 2014. However, borrowers without a 20 percent down payment will still pay private mortgage insurance, or PMI, until they hit the 20 percent to 25 percent equity mark. The best rates go to those with 800-plus credit scores, though 750-plussers are getting virtually the same terms. Unfortunately, those seductive interest-only loans are also on the menu again. Avoid them. They’re affordable at first since you’re not paying principal, but then years later, well … see the Great Recession of 2008. 4. Sellers: It may be a seller’s market but … Home sellers can do several simple things to enhance appearance, increase buyer interest and boost their home’s profile: Renew selectively: Instead of wholesale renovations from which sellers recoup maybe 60 percent on investment, do light makeovers everywhere, with an eye on the kitchen and bathrooms. They’re far more cost-effective. Clean, clean and clean some more: It’s hard for buyers to picture themselves living in a dirty house. Scrub floors, baths, kitchens, windows and walls, and be sure to clean, vacuum and deodorize rugs. This is simple but effective. Depersonalize, declutter: Show the space, not the contents. Box up family photos, kids’ school papers and excess art, and store bulky and worn furniture. Organize your closets to make them look half empty. Illuminate: Think bright and cheery. Open drapes and add brighter light bulbs in dark areas. Repaint where needed but use neutral colors. 5. Renters: It might be time to buy In many cases, rents are rising faster than home values, yet mortgage rates remain low. That, and the fact that renters now account for 37 percent of households (the highest level in 50 years), seem to indicate an imminent coming-out party for renters-turned-buyers, especially if they plan to stay put for five to 10 years after buying. 6. If you’re a buyer, don’t believe the house is yours Don’t bank on a done deal or other verbal promises from listing agents until you sign a contract. In heated markets across the country, sales agents are giving buyers false hope and using their offers to bid up the price for preferred buyers who they think can pay more and close faster. Have other homes in mind. Strategies such as preapproval (versus prequalification), proof of funding, closing flexibility and the always-risky practice of waiving inspection and repair contingencies can help sway buyers. For added clout, tell sellers you’re willing to “escalate,” or exceed all offers to a certain limit. Some agents even advise buyers to write so-called “love letters” to sellers, telling them how much the home will mean to their families. 7. Sellers: The grass is always greener … … in yards with a “sold” sign. Major presale upgrades typically aren’t needed, but a little greening outdoors is a must. Surveys show that strong curb appeal can increase prices by 10 percent or more. Greener grass, whether derived from new sod or fertilizer and water, is a must. New shrubs, plantings and flowers also project a welcoming feel. Sellers typically enjoy a 100 percent return on the money they put into curb appeal. Another form of green, sustainable landscaping has become a value-add for buyers. Native plants, native grasses and perennials that require less water and attention fill that bill. Do some local research or ask your local home-and-garden pro for simple “greening” tips. 8. Sellers and buyers: Know the state of your market A balanced housing market is defined as one with an average inventory of 6.5 months, according to Texas A&M University Real Estate Center research. When inventory remains below equilibrium, sellers enjoy more control over prices and terms, and the area becomes a seller’s market. When inventory lingers well above stasis, you have a buyer’s market where sellers must get more serious about price reductions, credits and throw-ins. Of course, these averages don’t necessarily reflect demand in certain desirable and undesirable submarkets. Go to Realtor.org for such market home sales data by state or to a local agent, business journal and daily newspaper you can read online. In 2016, the U.S. housing inventory average was under five months. 9. Sellers: House going on sale in the spring? Do some prep work now. First, grab your camera or smartphone and do an exterior autumn photo shoot, with the leaves changing colors. It’s a much better way to showcase your home than to wait until late winter when everything is still dead and brown and mucky. Also take some landscape shots after the first snow, ideally on a sunny day, to show how cozy your place looks in winter. Take a preliminary inventory, too. Look through your attic, closets, basement and garage to see what stored items you’ll want to keep, give away or sell in the spring. This will help you determine whether you’ll need a storage unit when your home is on the market and if there are any problem areas that need repairs or attention. It’s also a good time to start discussing financing options with a local lender and interview prospective listing agents who also might provide additional preparation tips. 10. Buyers: Relocating near a waterfront? You’d best consider weather and insurance realities. Major hurricanes and floods of the past dozen years have pushed the National Flood Insurance Program into a $23 billion hole, forcing flood-insurance rates to spiral. FEMA flood-map changes are aggressively expanding flood zones, especially along the East Coast and Gulf Coast, forcing hundreds of thousands of homeowners to buy flood insurance for the first time and others to pay thousands more annually. Parts of Florida saw 20 percent increases in 2016 and will likely see similar hikes through the end of 2017. Insurers also are imposing coverage caps so there’s no guarantee you’ll be made whole post-catastrophe. Some home sellers and their agents are conveniently not disclosing these realities, so buyers will have to ask pointed questions and do their own research. Go to FEMA.gov for more info.
15 Jul, 2017
TUTORIAL: How To Buy Your First Home Don’t be one of those people; take a few moments to ponder these seven practical concerns that will help ensure that your first home becomes the place of luxury and financial freedom you’ve anticipated. 1. Don’t Overspend on Furniture and Remodeling You’ve just handed over a large portion of your life savings for a down payment , closing costs and moving expenses . Money is tight for most first-time homeowners – not only are their savings depleted, their monthly expenses are often higher as well, thanks to the new expenses that come with home ownership, such as water and trash bills, and extra insurance. Everyone wants to personalize a new home and upgrade what may have been temporary apartment furniture for something nicer, but don’t go on a massive spending spree to improve everything all at once. Just as important as getting your first home is staying in it, and as nice as solid maple kitchen cabinets might be, they aren’t worth jeopardizing your new status as a homeowner. Give yourself time to adjust to the expenses of home ownership and rebuild your savings – the cabinets will still be waiting for you when you can more comfortably afford them. (For further reading, see To Rent Or Buy? The Financial Issues. ) 2. Don’t Ignore Important Maintenance Items One of the new expenses that accompanies home ownership is making repairs. There is no landlord to call if your roof is leaking or your toilet is clogged (on the plus side, there is also no rent increase notice taped to your door on a random Friday afternoon when you were looking forward to a nice weekend). While you should exercise restraint in purchasing the nonessentials, you shouldn’t neglect any problem that puts you in danger or could get worse over time, turning a relatively small problem into a much larger and costlier one. (For tips on how to spot problems with a potential home before you buy it, see Do You Need A Home Inspector? ) 3. Hire Qualified Contractors Don’t try to save money by making improvements and repairs yourself that you aren’t qualified to make. This may seem to contradict the first point slightly, but it really doesn’t. Your home is both the place where you live and an investment, and it deserves the same level of care and attention you would give to anything else you value highly. There’s nothing wrong with painting the walls yourself, but if there’s no wiring for an electric opener in your garage, don’t cut a hole in the wall and start playing with copper. Hiring professionals to do work you don’t know how to do is the best way to keep your home in top condition and avoid injuring – or even killing – yourself. (For tips on finding qualified workers, read The Better Business Bureau’s Tool Belt For Saving Cash . For home improvement projects most homeowners can tackle themselves, read Do-It-Yourself Projects To Boost Home Value .) 4. Get Help with Your Tax Return Even if you hate the thought of spending money on an accountant when you normally do your returns yourself, and even if you’re already feeling broke from buying that house, hiring an accountant to make sure you complete your return correctly and maximize your refund is a good idea. Home ownership significantly changes most people’s tax situations and the deductions they are eligible to claim. Just getting your taxes professionally done for one year can give you a template to use in future years if you want to continue doing your taxes yourself. (For more insight, see Crunch Numbers To Find The Ideal Accountant and Give Your Taxes Some Credit. ) 5. Keep Receipts for Home Improvements When you sell your home, you can use these costs to increase your home’s basis, which can help you to maximize your tax-free earnings on the sale of your home. In 2008, you could have earned up to $250,000 tax free from the sale of your home if it was your primary residence and you had lived there for at least two of five years before you sold it. This assumes that you owned the home alone – if you owned it jointly with a spouse, you could each have gotten the $250,000 exemption. (To learn more about how having a spouse can affect your tax return, read The Tax Benefits Of Having A Spouse and Happily Married ? File Separately!) Let’s say you purchased your home for $150,000 and were able to sell it for $450,000. You’ve also made $20,000 in home improvements over the years you’ve lived in the home. If you haven’t saved your receipts, your basis in the home, or the amount you originally paid for your investment, is $150,000. You take your $250,000 exemption on the proceeds and are left with $50,000 of taxable income on the sale of your home. However, if you saved all $20,000 of your receipts, your basis would be $170,000 and you would only pay taxes on $30,000. That’s a huge savings: in this case, it would be $5,000 if your marginal tax rate is 25%. (For more insight, see Is it true that you can sell your home and not pay capital gains tax? ) 6. Don’t Confuse a Repair with an Improvement Unfortunately, not all home expenses are treated equally for the purpose of determining your home’s basis . The IRS considers repairs to be part and parcel of home ownership -something that preserves the home’s original value, but does not enhance its value. This may not always seem true. For example, if you bought a foreclosure and had to fix a lot of broken stuff, the home is obviously worth more after you fix those items, but the IRS doesn’t care – you did get a discount on the purchase price because of those unmade repairs, after all. It’s only improvements, like replacing the roof or adding central air conditioning, which will help decrease your future tax bill when you sell your home. For gray areas (like remodeling your bathroom because you had to bust open the wall to repair some old, failed plumbing), consult IRS Publication 530 and/or your accountant. And on a non-tax-related note, don’t trick yourself into thinking it’s OK to spend money on something because it’s a necessary “repair” when in truth it’s really a fun improvement. That isn’t good for your finances. (To find out which improvements can add the most value to your home, read Add Value To Real Estate Investments. ) 7. Get Properly Insured Your mortgage lender requires you not only to purchase homeowners insurance , but also to purchase enough to fully replace the property in the event of a total loss. But that’s not the only insurance coverage you need as a homeowner. If you share your home with anyone who relies on your income to help pay the mortgage, whether it’s a girlfriend or a child, you’ll need life insurance with that person named as a beneficiary so he or she won’t lose the house if you die unexpectedly. Similarly, you’ll want to have disability-income insurance to replace your income if you become so disabled that you can’t work. (For ideas on how to save money on your home insurance, read Insurance Tips For Homeowners .) Also, once you own a home, you have more to lose in the event of a lawsuit, so you’ll want to make sure you have excellent car insurance coverage. If you are self-employed as a sole proprietor , you may want to consider forming a corporation for greater legal protection of your assets. You may also want to purchase an umbrella policy that picks up where your other policies leave off. If you are found at fault in a car accident with a judgment of $1 million against you and your car insurance only covers the first $250,000, an umbrella policy can pick up the rest of the slack. These policies are usually issued in the millions. (For more on car insurance, see Shopping For Car Insurance .) Bottom Line With the great freedom of owning your own home comes great responsibilities. You must manage your finances well enough to keep the home and maintain the home’s condition well enough to protect your investment and keep your family safe. Don’t let the excitement of being a new homeowner lead you to bad decisions or oversights that jeopardize your financial or physical security.
14 Jun, 2017
We all have many old and unused items lying around in our homes or garages waiting to be thrown away. I don’t know if you’ve noticed, but there’s a great feeling of liberation that comes after shedding old stuff. However, before you start cleaning your home, we want to show you 20 incredibly creative Do It Yourself projects that may change your mind. You’ll learn that a lot of useless items can be transformed into wonderful creations. You can turn an old glove into a cute chipmunk toy, toilet paper rolls into a beautiful floral wall art, plastic bottle into a broom and many more. We’ve been working on this list for a long time, but I’m sure there are many more awesome DIY ideas that we’ve missed. So if you know one or have done a cool DIY project yourself, feel free to share it in the comments! 1. Pop Tabs Bag
29 May, 2017
If you want to hire a property manager for your rental, the questions you ask during the interview are incredibly important. These questions will help you determine their actual skills and knowledge and whether they are the right fit for you and your rental property. The four areas you should focus on include their experience, their educational background, their knowledge of legal issues and their actual results as a property manager. Interview Questions About Property Managers Experience: These types of questions will give you information about the property managers background. You will learn if their experience is the right fit for your needs as an investor. How long have you been a property manager/management company? What types of properties have you managed? Have you had experience dealing with *insert the type of property you own*?- If you own a 10 unit building and the manager has only had experience with single families, they may be too inexperienced for your specific needs. How many properties are you currently managing?- You don’t want your property to get lost in the shuffle. Do you have the time and resources to successfully add my property(ies) to your workload? Interview Questions About Education: Questions about college degrees and higher education learning are important, but your focus here is to learn about their education as a property manager. You want to know if they have acquired the knowledge and training necessary to obtain the proper certification. Do you have your real estate broker’s or property management license?– Most states require property managers to have a license so they can show apartments. Do you have any type of certification?- Trade organizations such as IREM, NAA, NARPM and CAI offer education and training courses and provide certification after completion. Interview Questions About Knowledge of Landlord-Tenant Law: A property manager with an extensive knowledge of landlord tenant law is non-negotiable. Since they are representing you, any missteps could result in lawsuits against you and your property. Do you understand the city, state and federal laws for property managementand dealing with tenants? Do you have knowledge of the federal fair housing laws? Do you know the steps to properly evict a tenant? What are the safety codes for my type of property(ies)?- How many smoke detectors are needed? Do they have to be hard wired? Do you need window guards on second floor windows? Do you know the rules for collecting and storing security deposits? What to include in a pet policy and the list of dangerous dog breeds? How to terminate a lease? Interview Questions About Filling Vacancies/Retaining Tenants: These questions will give you an idea if they are any good at their job. If the property manager has a high tenant turnover rate or a tough time filling vacancies, they are probably not the right person for the job. How long does it take you to fill a vacancy?- If it takes them longer than a month, what are you paying them for? Are they available to show apartments seven days a week? At what times? Where do they advertise to find tenants? What is the average length of tenancy?- If they get tenants to sign long leases and actually stay for the duration of the lease, this will cut down on costs to fill vacancies — including advertising costs, apartment turnover costs, and lost rent. How many tenants have you evicted over the past year?- This can help you determine if they are properly screening tenants. What is their process for screening tenants? How do you set the right rent for the property?– How many comparable properties do they look at? How often do they adjust the rent? How do you collect rent each month?- Do they allow tenants to use direct deposit? Do they only accept money orders or certified checks? Is there a set day each month? Is there a grace period ? Do they enforce late fees?
25 May, 2017
It takes a talented and unique skill set to be a professional property manager. Not everyone is cut out for it, but this article will help you tell the amateurs from the pros. Property management is a complicated, fast-paced business, but generally speaking, there are some of the traits I see in successful property managers Pleasant, but firm Communicative, but not aggressive Detailed oriented, but not in the weeds Organized, but not obsessive Calm, but not seemingly apathetic Truthful, but does not overshare Is always learning, but is not arrogant and lastly, is passionate about real estate investing Obviously, there’s more to being a successful manager, but I’m going to stop there. You see, most of the managers I’ve met only possess half of these traits (at best), and as such, it causes the business to struggle. I’m not saying that they need to be perfect (I’m sure not!), but there needs to be a pursuit for something bigger and something greater. Managers who push themselves professionally towards these traits are the ones that will be able to keep your rental property occupied, meticulously maintained, and your tenants happy. A good property manager is worth his or her weight in gold. So, how exactly do you find a quality property manager? Simply put … just like any other job opening – you interview them of course! Top 20 Questions to Ask a Property Manager Recently, the folks at Active Renter put together an in-depth guide to interviewing a property manager before you hire them. While I think 74 questions is a bit much (okay, way too much), the premise is solid. With their permission, I’ve picked my top 20 questions to ask a property manager – which would still take 30 minutes or more to ask. In my opinion, these are the most important questions to ask a property manager that you are thinking about hiring. 1) What are the various services that you offer to your clients? You want to make sure that you find a property management company that can market, lease, manage, and sell your property. It is also important to make sure that this company can provide top-notch maintenance, conduct inspections, and administer in-depth background checks. 2) How many rental units do you manage? This will help you understand their size. Too few rental units and they are either inexperienced or have lost clients due to poor service. Too many rental units and you will get lost in the shuffle. Look for a property manager with 200 to 600 rental units. That’s when you’ve found your Goldilocks level of “just right.” 3) What experience does your company owner have in managing rentals? Some company owners have never even managed a property. If the company owner has never managed a rental, what is the chance that he or she runs a company that can effectively help you with your investment property? 4) How do you determine rent amount? A property manager should be able to complete a comparable market analysis of all the other available listings near your property. They should use properties that just went off the market and properties that are currently on the market to determine the highest possible rent. They should also have the expertise and experience needed to factor in the unique aspects of your rental property, like a pool or a new kitchen. 5) Are you currently an active real estate investor in your market? The company’s leadership should be investing in the real estate market themselves. Period. If they don’t invest in your market then they lack the understanding they need to help you excel. 6) Under what conditions can I cancel my management contract? Never get locked into a contract you can’t escape. Some companies will try to hold you captive with a contract and others will keep your business with great service. If a company is offering you an inescapable contract, it’s time to look elsewhere. 7) What are the management fees and/or pricing options when the property is being rented? This question will help you understand your average monthly fee, if any. Some companies will offer a flat rate and others will offer a rate based on the rent amount. Others will offer 3 levels of pricing, which includes a lease only plan, standard plan, and a premium plan. Again, you’re best off looking for a percentage of collected rents. This motivates your property manager to fill vacancies because they don’t get paid if you don’t have a tenant. It also motivates them to fight for higher rent amounts because this helps their bottom line too. Flat rate companies will get the same pay no matter what, so why would they be motivated to get you a higher rent? 8) Are their fees when the property has no tenants? This is a very important question to ask for two reasons. One, many companies will offer a “flat rate,” which sounds great until your property is empty…and they still continue to charge you. If a company is taking money with the property empty, how motivated do you think they are to fill the vacancy? 9) What miscellaneous fees could I be charged for the management of my property? Again, some companies will try to get you to sign because they offer a low rate. As the saying goes, if it is too good to be true, it probably is. Once you’ve signed, a company that seemed inexpensive will now charge you lots of extra fees. Remember, a property management company has to make money, so if they aren’t making money from the low monthly fee they will find another way to do it. 10) Do I have to sell my property with you if I want to list it? Some property managers will ask you to sign a contract that forces you to sell the property with them. Don’t fall for this. A quality brokerage would never require this- but rather they would be available if you wanted to use their brokerage services. 11) Do you offer direct deposit for your owners? Unless you’re living in Back to the Future and you’ve traveled to the 1800’s, your property manager should be able to deposit your check in your account. This saves you time and effort, which is the whole reason you hired them. 12) How do you collect rent from tenants? Asking tenants to bring checks to an office is a lot like wearing acid washed jeans, it might have been okay in the 80’s, but the times have changed. If your property manager isn’t having your tenants pay online that is a red flag for two reasons. One, it slows down the speed at which you can get paid. Two, it makes it easier for tenants to miss paying the rent. If payment is online, tenants can automate their payment and these two problems are avoided. 13) Do you conduct property inspections and, if you do, what charge is associated with them? Your property is at risk if your property manager doesn’t conduct inspections. This should require a small fee and it will be one of the best investments you can make. It ensures you catch problems before they spiral out of control. 14) Do you offer eviction warranty (also called a “screening guarantee”? Some companies, such as ourselves, will offer eviction warranty. It is only a small fee, but it will give you major coverage should you need to evict a tenant. 15) What steps do you take to market properties? Your property manager should be advertising properties through a variety of channels. If they are still just placing newspaper ads and hoping for the best then you should steer clear. 16) How long are your properties typically vacant? The average vacancy time after a property is ready should be about 2-4 weeks. Any longer than this suggests the property manager is struggling to find tenants, any shorter than this suggests that your asking rent amount is too low and you might be leaving money on the table. Either of these scenarios is bad for you and your rental property. 17) What are your income and screening requirements for applicants? If they don’t set a standard then how can they be sure this tenant will make rent? It should go without saying that a tenant needs to have enough income to pay the rent. 18) What control do I have over the tenant lease agreement? Your property manager should give you some input into the lease agreement if there are one or two issues that are important to you. However, if you are putting in lots of additions, you should have just written it yourself. Make sure your prospective property manager is confident in the leases that they have written for tenants by asking this question. 19) Do you mark-up maintenance and repairs? You need to make sure that a prospective property management company doesn’t make a profit any time they do maintenance. If they are willing to charge you for maintenance then your profits could greatly diminish. 20) How often will I get updates on my portfolio? Just like payment statements, you should be able to get updates on your portfolio as often as you need them. Your properties are your business and to not offer updates as often as you want would be the equivalent of telling your property manager that they can’t check their email for a week. It is a situation that would guarantee failure.
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