Wednesday, January 4, 2017

Real Estate and Your Money Investments


Real Estate and Your Money Investments

In the times we live in the ability to possess comfortable living throughout your lifetime is becoming more and more challenging with the constant fluctuations of the U.S. dollar.  Because of this many consumers as they age begin to seek ways to invest to help ensure they have adequate funds for living the length of a lifetime.  Many select various retirement fund programs which is the most popular among middle income workers that have access to retirement plan options with their employer.  While others that have incomes that permit invest in stocks, bonds, and various other money market options available to the general population to secure potential incomes for their retirement needs.  In the last few decades however, an increase has been seen in the form of investment in land and property for the purpose of securing options for retirement income.  The reason for this is believed to be because of the lower risks involved in property investment.  Although not every financial investor agrees with this developing investment option for retirement, for many it is the most convenient and less risky route to go since an asset becomes a fixed possession they have when investing in property. As we all know the stock market and money exchanges in this country as with most other countries can fluctuate drastically from year to year.  Unfortunately these fluctuations also affect property values as well.  However, unlike stocks, bonds, and other market investment options, property investment provides a small difference that cannot always be guaranteed with cash investment endeavors.  Since land is an immovable asset there is a guarantee that it will always exist once purchased since land cannot be moved or vanish.  For this reason investing in land does create a way out for an investor who chooses to select this as a part of their retirement funding.  Although much like any other investment real estate can increase and decrease in market value from year to year depending on the value of the economy and the U.S. dollar. However an owner of property can choose to continue to make consistent gains on the investment by renting the property on a monthly basis in the form of a lease to a tenant.  While the return on investment may fluctuate depending on the demand for rental property the fact still remains that the asset remains in tact, a net profit can continue to be gotten from it, and at a time when the market value increases it can still be sold.  Many individuals reason that even if the value of a property decreases from the original purchase price the rental income over a period of 8 to 12 years can stabilize the losses in value until the market is more favorable for a sale for the residual amount to get a full return on the investment property rarely with much of a loss. It is because of this concept that many are diversifying their investments with buying real estate.  However, unlike purchasing a home for a personal residence there are a lot of differences that must be carefully evaluated before investing. For starters, down payments required for investment property is often a minimum 20% of the purchase price when lending is to be used for the purchase.  Homestead exemption is usually not an option for tax breaks since the owner will not be occupying the space as a primary residence.  Insurance coverage may be slightly higher due to the nature of the liabilities associated with tenants occupying the space.  The location is of greater importance if the property is to be rented consistently from month to month. The cost of management and tenant screening along with other legal expenses such as eviction processes should this arise also need to be considered.  Although these items seem to add to the cost of the investment there are quite a few taxation provision that will offset these added cost such as most maintenance and repairs can be deducted as expenses. If a mortgage is still in place in many states the mortgage amount, interest payments, and taxes on the property may be deducted from expenses of the rental property. The cost of management and legal fees often also can be deducted in the annual tax deduction allotments provided by the government authorities.  Unlike most personal residences larger deductions may be allowed for property damage when caused by the tenant. Perhaps the largest mistake made by individuals when buying investment properties is the poor selection of properties for the intended purpose of rental use.  For this reason it is a good idea to get a real estate professional involved to handle investment in property for rental use as each property must be carefully evaluated for median rental incomes, supply and demand comps should be evaluated, life of the potential rental income availability term needs to be calculated, and of course as with any property the market value must be considered in depth to ensure a good investment is made.  Naturally the best investment purchases are those with the most ownership of equity in the property as this increases the net profit on a monthly basis when renting the unit.  What this means is it is a good idea to be able to pay more than the 20% down amount required to obtain lending to give a little more wiggle room for maintenance and the occasional costs involved with maintaining a rental property, such as the cost of a real estate professional that can adequately screen tenants to ensure the best occupants for your property is found as well as legal contracts put in place to protect the interest of leasing your property.  Many individuals that have some real estate or legal background can manage their property however very few of these individuals are required to continue their education on rental laws and requirements annually by law as real estate professionals are required. Because of this often times an owner managing their own property may run into legal issues with tenant laws and requirements set forth in each state for the protection of consumers. Hence, if you feel you cannot or do not have the time needed to manage your own properties by way of studying the annual law changes in regard to landlord and tenants in your state it is usually best to obtain a real estate professional to manage your properties at a monthly cost that is usually minimal in comparison to the expenses that come with rectifying legal breaches of state housing and leasing laws. So where do you start if you think property investment is something that would be advantageous to you? Unlike buying and selling your personal residence it is almost absolutely a necessity to hire an investment REALTOR to handle your property and the growth of more units to increase your retirement income investments. In case you hadn't thought about it.......realtor fees associated with investment and rental properties are also deductible tax filing items! 

Should You Sell Your House?


Should You Sell Your House?

Selling a house can be both a time consuming and stressful process for most folks contemplating to sell their current home. If you have lived in your home for a long period of time no doubt you have worked hard putting in a lot of sweat and labor to improve it so that it fits your needs just right! For some owners, a family has been raised, lots of  holiday memories have been created, friends and neighbors have melded together here, just to mention a few of  the many things that frequently build on the sentimental values associated with a home. Often times these factors are considered by a homeowner first and foremost when assuming what their  home could be sold for. Unfortunately, the truth on determining a value is completely the opposite. While years of time and energy has gone into the maintenance and care of the house to make it a home for your family, the retail market places very little emphasis on sentimental values when calculating an actual market value when a home is to be sold. With the continuous trends evolving on what is chic and stylish in our society, homes older than 5 to 8 years often need alterations done to make them more appealing to the current buyer's market. For most seller's again the issue becomes difficult to decide, as humans tend to make improvements based on what they perceive to be of valued in their way of living. What should the seller spend on to increase the selling value and which items should they not spend on? Another factor that many sellers fail to consider is the diversity of their neighborhood and the growth over the years.  For example if the sellers house was built 15 years ago the floor plan and the the size of it most likely is a bit smaller than houses that were built 5 to 10 years later as the area developed. However, there are instances where the opposite is the case.  The seller has a house that is larger than most others in the area that were built after their home.  Either scenario highly impacts the values of each individual's home in these circumstances since the current market value and lending trends are based on averages of all houses in a certain radius of residential living. Another factor a seller is faced with is the  economic effects caused by growth of businesses and other establishments accessibility from the location of their home and the impact these have on the market values of the area be it more value or less value depending on the demand and availability of homes for sale.  To be added to these items are such issues as advertising a home successfully through the proper media options that best suit the type of buyer that may be able to qualify for the property. The cost of advertising for the length of time it may take to get a house sold can often become quite costly for the seller to be successful at selling their home.  The ability to provide access to the property for viewing by potential buyers also come into play especially if the family has to continue to function with their daily activities of life.  To compound all these matters legal documentation and proper contractual agreements with many legal requirements by the government authorities to protect consumers can often be confusing and quite daunting for a seller that has little or no experience with real estate transactions.  As if these matters aren't enough, the seller also has to find a middle ground for selling their that will provide them with enough funds to both payoff the current house mortgage as well as leave enough residual to have at least 10% of the funds anticipated for the home they intend to buy after the sale of their current home if the house has not been paid in full.  With all these variables most sellers can find selling their home very stressful to accomplish.  So to get your home sold all of these matters have to be addressed and carefully planned to ensure you the seller doesn't end up without housing if the property sells.  In regard to selling your home it is best to begin with evaluating whether or not the home you have can or cannot be renovated or improved to stay in it. If you find that family growth, job relocation, or other life changes makes it necessary to sell then it is a good idea to consult with a real estate professional to help you decipher what the current value of your home may be and if it will meet the needs of all the costs required to purchase another home.  Most REALTORS will provide a free consultation to evaluate your home and provide what is called a CMA report (cumulative market analysis) to give you an idea of what your net profit from the sale of your home would look like if you successfully sold it.  Keep in mind that this evaluation does not replace an appraisal but usually is accurate enough to help you make a decision on whether it is a good time to sell or if you may need to wait for the market values to increase in your area before selling.  It is a good idea to have all pertinent information on your home such as any records or improvement you made to the house, any liens or debts that have been placed on your house that must be paid to have them removed, and of course what the estimated cost of a replacement house will be based on your planned budget to obtain another home. Once all of this has been carefully considered speak with your preferred real estate professional to begin a plan of action to get your home sold and line up another home to purchase upon the sale of your home. 

Should I Buy or Continue Renting?


How do I know if I should continue renting or buy a house? This is the question many future homeowners face when they have a dream of one day owning a home. While renting often makes life easier when it comes to the challenges of maintaining a living space it also presents many issues that make it difficult to make the space your own.  When renting or leasing a space there are often limitations of most personalization options for the tenant.  Most leases have clauses that limit such things as changing paint colors, placing storage buildings in the yard, having pets and the size of your pet, adding or removing certain household conveniences, flooring choices, and the list goes on. So why rent? As a Real Estate professional I often consult with customers that want to consider buying instead of renting but, aren't sure if it is the right time for them to consider the transition.  For starters it is good to understand that renting or leasing a living space is actually a good thing if you are considering buying a home in the future.  Renting a space gives you the opportunity to first experience the duties of maintaining a living space. While most rented spaces are maintained by the owner the renter does get the opportunity to learn to manage a monthly fee for the cost of living along with monthly utility expenses. Further, renting a space that is of reasonable size gives options to begin to purchase furnishings that can eventually be used for a home with more access to your funds before having the costs of maintenance added to your budget as required with home ownership. This can actually be a good thing in that while renting, non-secured credit purchases aren't something that weigh as heavily on your housing options. Meaning, while renting making a small unsecured loan to purchase furniture over say 6 to 12 months doesn't create much difficulty for renting your space. It is a good idea to use the time while renting to purchase furniture and pay them off in full as a stepping stone to be prepared to furnish your future home purchase.   Also, obtaining basic home needs such as linens, small kitchen appliances, a dependable vehicle, lawn care equipment, and such similar items could be something a renter begins to collect and pay off the debts associated with these necessary items to better position themselves to be able to buy a home and furnish it. So, a few good questions to ask yourself is, "Have I gotten at least the minimum furnishings I need for my first home? Have I paid them off completely so that I have a low monthly debt to income ratio to qualify for a home mortgage? Have I saved enough to actually have cash assets that amount to at least 10% of the projected amount I wish to spend on a home? Have I created a credit history that reflects no late payments on my monthly bills for the past 12 to 24 months? Most likely if you can answer "yes" to all these questions you are ready to start considering moving towards buying a home. If your answer is "no" for some or all of the questions now would be a good time to begin working on the items that need to be corrected.  For most having funds for a down payment is the issue.  A good way to look at getting this accomplished is to sit and compile a budget.  Hopefully your income is three times the amount of your rent. If this is the case starting a savings fund for a down payment usually can be done fairly easily.  As a simple formula would be to divide your income into three evenly. The first portion should be used to pay your rent of course. The second third should be allocated to your utility and food bills. And the third portion should be used for car payment and various credit bills. If there isn't sufficient funds to cover the items in any of the three categories you definitely will need to work at eliminating some of your monthly overhead expenses by paying them out or at least get them down to more manageable amounts. If indeed each third / category has enough to cover everything as they should you can now look at budgeting to save. So, any residual amounts that remain from either of the second two divisions should be earmarked for your savings account.  For some depending on your spending habits this may not seem like a lot of money. However, carefully evaluating the residuals can make it easier to realistically see what is available after all costs of overhead has been paid.  Cutting back on spending on all other items that are not necessity will make it possible to save more. Things such as dining out, buying lunch for work daily, and several outings for entertainment weekly are just a few things that discipline may be needed to decrease.  For example, maybe make an allowance to eat out only twice monthly and for the rest of the month eat at home from your grocery supply.  Maybe limit entertainment to once monthly if there is a cost and for the rest of the month find other forms of entertainment that are free of costs.  Fix lunch for work daily. It is not unusual for the average American to spend as much as $60 a week just on buying lunch at quick stop restaurants. When this is multiplied by 4 weeks it adds up quickly at $240 per month. Imagine what could be accomplished by placing this amount in a savings account monthly!  To be exact this would be around $2880 annually towards your down payment.  Next consider saving your tax refund annually without spending any of it. For most in the United States this amount averages between $2700 and $3000 annually. Other things to consider would be to clean out all items that are not being used in your rental space. Whether it be rarely worn clothes or any other gadgets and items that are not in use.  For many, this can generate a significant amount of funds when sold, as Americans have a tendency to collect quite a bit of unneeded items with the constant barrage of advertising we endure at every turn of the day of our lives.  If you feel you can't create a good budget on your own, why not consult with a financial advisor or get in touch with a REALTOR such as myself that takes pride in working with clients from the very beginning at ground zero all the way to the end of successfully accomplishing their goal of buying their first home.  Keep in mind REALTORS are not finance professionals but some that are devoted to their clients take courses to assist with budgeting and financial guidance. So, check with the agent to see if this is the case. I generally will spend as much time as needed with clients to help them reach their goal.  On average I spend 6 to 18 months with each client that isn't fully prepared to buy when they contact me for real estate investing! So do not be discouraged if you decide to begin the process of getting a home and find that you have a little more work to do to get things in place to succeed. Remember, a home purchase is a major investment and the amount being borrowed or financed by a lending institution is quite a significant amount. Hence, you will have many specific criteria to meet and items to have in order before they will consider letting you invest using their money which is paid back over 15 to 30 years. So........Buy or Still Rent? Anything worth having is worth working for! 

Friday, December 16, 2016

Preferred Real Estate Agent ...... Introduction to blog!


Welcome to my Real Estate Agent blog! 
This blog was created for viewing by the general public including current clients and potential customers seeking assistance in the process of real estate investing. It is designed to offer the feel of an open table discussion of topics pertaining to real estate. Whether you are seeking to do research as a buyer, seller, rental investment individual, finance, or management options for your real estate properties, this blog-space will offer information to assist you with preparation and basic guidance on how to begin or improve your endeavors.  As a REALTOR with well over 15 years of experience all articles will be original content with some references in some cases with the source of the information listed at the end of the post.  Posts will have hash tags so that it is easy to locate past posts that may pertain to subjects readers are seeking to find information on.  Posts will provide option for comments as well as sharing through various popular social sites.  However, please keep in mind the purpose of the blog is to provide readily available information to those who seek it, so comments that are intended to promote business, advertising, or solicitations will not be permitted. Further, political, religious, or topics that are controversial opinions will not be permitted by the moderator. While most posts / articles will pertain to real estate endeavors, some post will be on topics related to property ownership such as maintenance, landlord, renters, home improvements, DIY projects and much more. Feel free to utilize the information which is intended for anyone to read and share with others if desired. Readers are also admonished to request information on topics if an article or post isn't found and the moderator will endeavor to provide posts that address the topic in future posts.