Can't Sell Yet?...Rent It Out

For many people who cannot or don't want to sell their home in this depressed market, renting it out can be a practical option.

Many homeowners fail to get a bid that they're willing to accept so what do you do when you just can't afford the mortgage? If you're one of the many folks who are in this situation, you look into renting your home -- it can lessen the financial burden, and you might be able to turn a small profit.

Pros and cons of renting out your home include:

Pros
• You can keep your property to sell later at a better price
• The rental income covers mortgage, taxes, insurance, etc
• The tax breaks offset rent or other income

Cons
• You are the landlord
• Tenants may damage your property
• Could be taxed on gains if you later sell

But consider the tax breaks you can get from renting out your home. You can deduct pretty much any out-of-pocket expenses related to owning and managing your property when you rent it.

This includes deducting your mortgage interest payments, insurance, property taxes, maintenance, repairs, cleaning services and even the cost of travel and local transportation expenses incurred in the maintenance and management of the property and the collection of rent.

Then, there is the other deduction, called depreciation. This is the portion of the property value you can take as a deduction each year.

And the really good news is the amount by which rental expenses exceed rental income is a tax deduction that can be used to offset up to $25,000 of other income, including salary. This juicy tax break is available as long as your adjusted gross income is $100,000 per year or less (this applies to single filers as well as married individuals). For those with income above $100,000 this tax break begins to be phased out and is phased out completely above $150,000.

Keep in mind, renting a home will come with headaches and problems. You'll still need to maintain the property or pay someone else to do it for you. You'll also need to check with your home owners insurance company to make sure you are still covered for damages while renting your home. If not, then you'll need to revise or change your coverage.

Lastly, look to the tax benefits to sweeten your financial results and when the rental payments start to fall short of your out-of-pocket costs, It's time to sell.

Voting for HOA Board Members

Why do so many homeowners have issues with their home owner association and board members? Probably because you're voting in the wrong people who don't have a clue what your community needs.

Homeowner associations are designed to be representative democracies governed by a board of directors elected by the members. Electing directors to the board that can thoughtfully govern is extremely important. To accomplish this, elections must be carefully planned with the candidates thoroughly researched, not hatched at the last minute.

Here are important components of a successful election process:

Find Worthy Candidates. When seeking nominations, a job description should be prepared so potential candidates know what is expected of them. Some refuse to run because they fear the unknown or an open-ended commitment. The director job and term of office can easily be summarized in a paragraph as can the descriptions of officer jobs (president, treasurer and secretary). Take the time to make sure all potential candidates understand and commit to fulfilling the job description by informing them of expectations in advance.

Candidates are identified a number of ways:

1. By a Nominating Committee. The board can appoint a Nominating Committee which can identify, interview and recommend certain individuals for election. While the Nominating Committee's recommendations are worth considering, any member in good standing is still entitled to run for office even if not recommended by the Committee.

2. Nominated by Self or Others. Any member may nominate themselves or be nominated by another member. It's best to do this as soon as the nomination process begins, far in advance of the annual meeting, so the name and credentials can be known to all members. Since it is common for some members not to attend the meeting and to provide a proxy to someone that does, if a candidate is not known in advance, those not attending the meeting will not have the ability to support that candidate.

3. Nominated at the Annual Meeting. Nominations are usually accepted from the floor at the annual meeting. Unfortunately, this option fails to inform members who have not attended the meeting; it is often difficult to get elected when nominated from the floor unless there are not enough candidates to fill vacancies.

4. Write-in Candidate. Writing someone's name on a ballot does not ensure that person is actually qualified for the job or interested in running unless the person was nominated from the floor.

Candidate Qualifications. Candidates should present their qualifications and platforms to the members in writing. This can be done door to door, by email, by letter, in the HOA newsletter, by the HOA website and at the annual meeting where the candidates can also answer questions posed by owners. Since some members may not be able to attend the meeting, circulating candidate qualifications before the meeting is very important.

It is definitely in the community’s best interest to identify candidates who have experience that will benefit the HOA such as:

-Having an organized president is essential. Seek those that are comfortable in that role. The president should also have experience in dealing with different personalities.

-Having a treasurer who regularly works with financial matters like a bookkeeper or CPA.

-Having a secretary who understands or can learn the art of minute taking.

-Having directors that are available and committed to attend all board meetings. This requirement cannot be understated. If board meetings fail to achieve a quorum or directors, official business cannot be done.

Good board members act to protect the interests of all members. Handle the candidate selection process carefully by seeking out the best candidates available. When it comes to board elections, rather than expect a train wreck, elect the right person for the job!

Fixed vs. Variable Interest Rates

The most confusing of all the steps in buying a home is probably deciding whether to choose a fixed or variable interest rate mortgage. Some lenders attract borrowers into variable interest rate plans with special offers that last for just 2-5 years. So, how do you decide between these two?

Variable Rate

Lenders and banks base their variable rates on indexes; for example, prime rate, treasury bills and Federal Reserve discount rate. To this figure a percentage or two is either added (which is most common) or deducted as a margin or points are charged. The net of these is charged as interest to you. This prime rate varies on a daily basis up or down - taking your interest rate with it.

Fixed Rate

Some buyers prefer the stability and predictability of a fixed rate to a variable interest rate, even if it's just a percentage or two more. The Truth in Lending Act requires that the rise in fixed rates be communicated to borrowers at least 15 days in advance.

However, once the special offer ends on the variable interest rate mortgage, borrowers usually forget to (or can't) refinance or move their mortgages and end up paying high interest rates. Variable rate mortgages are advantageous only when interest rates are low; however,these rates could overtake the fixed rate and you could end up paying even more that you originally planned.

Townhouse or Single Family Home?

Buying a home for the first time is riddled with so many issues: planning, searching and talking to real estate agents, banks and lenders. There is another aspect of the utmost importance that you may want to consider - deciding between purchasing a townhouse or a single family home.

Townhouse:

Townhouses today share common dividing walls and are built very stylishly. Condominiums are sometimes called townhouses. In an urban setting, townhouses are very much in demand and now identify with wealth. In rural areas, they are very affordable and so they are the first choice of low-income families. Townhouses provide an opportunity to live in a community with peace and security. Common yard and other amenities are shared, as are maintenance expenses.

Single Family Home:

A single family home is a separate dwelling that is neither attached to nor share any common walls with another home. Built over a large area for a garden and backyard, they are a bit more expensive. A rarity nowadays in city centers, single family homes are commonplace in suburbs. They offer freedom, are stylish and you can decorate them to your liking.

Decision making:

You should base your decision primarily on financial factors. If your credit (FICO) score is not excellent, and you don’t have much money for a down payment, you can opt for a townhouse in a suburban setting. This will help you save on monthly payments. Take care to check for any restrictions and regulations of townhouse associations. Some of them have lots of restrictions such as not allowing pets and small children to live in the townhouse community.
There are maintenance issues you also need to look into. Though the expenses are shared in a townhouse community, common walls and water supplies create maintenance problems at times. Often, what maintenance issue affects one townhouse will also create the same problem in the adjacent one.
Townhouses and condos are selling very well despite their shortcomings. Buyers preferred townhouses over single family home in the last couple of years across the country. Compromising on shortcomings is a small price to pay considering the savings you could make on your mortgage payments.

The Secret Weapon to Competing in a Renter’s Market

There’s an abundance of rentals and competition on every block so how do you make your home irresistible and market-ready? Comps and Extras speak volumes to those trying to get more for their money.

Apartment buildings do it; Commercial landlords are doing it; so why not follow suit and compete on the same level?

The secret weapon to renting out your home among the masses is to show it like it’s the last of its kind. Show prospective tenants all they can get if they were to rent out your home.

People are looking for value; they want to live like royalty while remaining within their budget but how many of us actually can find a place that luxurious with all the bells and whistles? As a landlord you must think outside the box to entice renters.

1.Less “stuff” makes a home seem roomier. Most homeowners believe a home that looks lived in will rent out quicker but that’s just the opposite. Homes that are empty allow prospective clients to visualize where their furniture and mementos can be placed. Empty fosters imagination. All you need is a good paint job and a clean bright home that welcomes you in.

2.Offer more than the landlord down the street; many landlords compare and then decide to lower their price to meet demand and while that may be smart it should be the last option. How about offering free cable with the monthly rent? You can negotiate a package deal with your cable company and offer the most basic package perhaps with 1 premium channel; that may run you $30 per month that can be integrated into the rent. How about free internet? Again, you can get a package deal from most vendors.

3.If you live near a community center with a fitness club think about throwing in a membership and it’s not as expensive as you think. Most community centers offer a monthly or 3 month package deal that may run you $50 for 3 months. You could offer prospective tenants a 6 month deal.

4.If your rental home is near a golf course a great enticement is a membership towards weekend golfing.

5.Think about offering maid service; call around to compare services and prices and perhaps offer a once-a-month service that’s included in the rent.

6.Offer military veterans a special – a lower monthly rent or smaller security deposit.

7.Offer uniformed police a deduction in rent for a longer lease.

You can always think of other services to offer that compliment your rental property. Finding renters is not difficult in this market but you must sell your property and let clients see all the reasons they should choose you over the rental next door.

The Allure of Walkable Neighborhoods

In suburbia there are rows and rows of little white identical houses and neat cul-de-sacs surrounded by grass and space in complete isolation. For many this sounds like a dream come true and the complete opposite from the concrete cityscapes but for other residents this type of planned development becomes a liability for social, economic and sustainable living.

More and more urban planners are dedicating new approaches to functionality, sustainability and family friendly Walkable Neighborhoods. The inviting character of any accommodating neighborhood impacts every resident in numerous ways.

Considering today’s common residential concerns choosing a walkable neighborhood can be advantageous to your waistline and your wallet.

Just think – a neighborhood with multiple destinations including clusters of grocery stores, banks, family parks, schools, daycare centers, pedestrian and pet trails, bus stops and all pertinent avenues to foster mixed-used development and less costs. How about less reasons to start up the car, go get gas and begin your lengthy ride to your next destination. These communities give consumers a wide range of choices including a more robust and diverse daily life.

Many reports that have been developed on the science and art of walkable neighborhoods echo the same sentiment; healthier lifestyles coincide with mixed-use communities. More parents will walk their children to school, spend less, economize and use public transportation more.

The benefit of nearby destinations encourages residents out of the home to interact with neighbors thus there’s a decrease of crime, a heightened awareness of whom is living in your neighborhood and a direct correlation to the quality of longer life for seniors.

Walkable neighborhoods are nothing new. Our parents sent us to the neighborhood store to pick up some sugar, eggs and milk as we passed by our neighbors chatting away on their front porch. Then along came the challenges of traffic, crime, more personal property full of grass and less sidewalks and there went the decline of our walkable communities. But these characteristics are becoming the newest trend once again.

The attractiveness of convenience is appealing to all age and socio-economic groups.

• Streetscaping for schools provide safer walkways with maximum sight distances.
• Roadways engineered with newer designs provide better designations for speed limits, intersections and raised crossings.
• Calmer vehicular traffic with safe routes for children, seniors, bicycling and walking.

• Eliminate car crashes and the potential of vehicle conflicts by introducing longer driveways, wider sidewalks and drop-off points.

• The introduction of more ramps, alternative curbs and heights and lower signals at intersections to accommodate disabled adults.

Every city in every state has a walkable neighborhood and as more developers embrace the thought of providing much more than just “another white picket fence” home buyers are embracing the thought of active living in functional communities.

Getting Past The Headlines

Surprisingly enough, in a time when the market seems unfavorable to many, it’s never been a better time for people to buy a home.

1. Interest rates are at all time lows. Currently for a 30 year fixed rate mortgage the average rate is approximately 4.375%. Rates do go up and down on a daily basis so don't be discouraged because one day they may be up and the next day they could be down. If you were to purchase a $150,000 home at a rate of 4.375%, 30 year mortgage and 5% down your monthly principal & interest payment would only be $711.48 (remember you need to factor in property taxes & insurance & PMI to get a true monthly payment). That is a great payment amount and many rental properties cost more than that each month.

2. You are able to save on taxes. The way the current tax structure is designed you are able to deduct your mortgage interest and property taxes. You can't do that while renting.

3. You gain an investment and equity. Each month when a mortgage payment is made part of that payment is for the principal balance. This means you own the property and can do almost anything to it instead of having to deal with a landlord. Also, that principal balance you are paying each month is equity. Over the long term home prices do appreciate (more than the stock market) which creates additional equity in your home.

4. New homes are energy efficient due to all of the code changes across the country homes built today are much more energy efficient and more up to date technologically (energy star appliances, higher efficiency furnaces and water heaters, high insulation values and more) than even 5 years ago. This means lower utility bills and costs for you.

5. New homes have more modern features today and offer a wide variety of floor plans and choices. Some of which include open floor plans, universal designs, home offices, egress windows making it easier to finish basements, flex space, low maintenance, innovative materials and construction techniques.

6. Builders of homes and housing complexes are offering bigger discounts on newer properties simply because people are buying less these days than before. These are the opportunities that you need to look out for because it may very well allow you to be a homeowner sooner

Don't be afraid to take advantage of the buyer's market that currently exists. After all, the current state of our economy and housing market benefits buyers and negotiating properly can mean a bigger difference of thousands of dollars in savings on a home.

Selling During The Holidays

Appeal! Giving your property that extra appeal will undoubtedly entice the masses. Holidays make buyers more emotional than usual, so use it to your advantage.

Buyers are attracted by the appearance of your property and when they inspect it, they are influenced by its atmosphere. The right appearance outside, followed by the right mood inside, gives you the best chance to get the highest price, fast.
You rarely need to spend thousands of dollars in renovations or repairs to make your property attractive. All you have to do is pay attention to obvious points, all of which can make a big difference to your price.

Remember the emotional aspect of buying a home? You had to picture yourself in the kitchen, the family room and cuddling up in the bedroom. Well, you have to create that atmosphere for potential buyers.

Buying a home is emotional. The feeling of a home drives the price tag. Their feelings will be the main reason they accept or reject your property.

The word ‘love’ is common with home-buying – and even with land, when buyers report loving the location. Buyers often say, “I fell in love with it as soon as I saw it and I pictured myself in the home, that’s why we bought it”. So make sure you present your property at its best. Remove or fix anything that might ‘turn-off’ the buyers.

First Impressions:

We are attracted to homes the same way we are attracted to people.

The first thing we notice is the outside. If the property is clean and neat and welcoming, we are interested. If it is scruffy or dirty, we are turned off.

To make your home look its best, attention to details is crucial. When you live in a property, you can overlook its little faults. It is now time to have a fresh look.

Try to judge your property by the standards of the buyers, not by your standards – try to see it through strangers’ eyes. The challenge is to make your property as attractive as possible without spending too much.

The Half-Way Point:

When buyers enter your property they should immediately feel at home. The inside atmosphere should be warm and appealing. A home should look and feel happily lived-in. Make the atmosphere natural and relaxed, but not gimmicky.

Remember, home truly is ‘where the heart is’ and anything that increases the emotional feeling of comfort is something we all love. Genuine appeal is what wins the buyers.

Important Factors Sellers Have to Consider

There are some important factors to keep in mind when putting your house on the market. A thorough understanding of these issues is necessary so that you can act as an informed seller.

1. Understand the Market

It is fundamental that you are aware of the price ranges in the immediate vicinity and surrounding areas and neighborhoods. Conduct your research on the town and state that you are selling in, especially in your neighborhood. Determine what sets it apart from other communities. As with any commodity, the quality of the market research is the primary consideration of success.

Ask your banker, neighbor or friends regarding the current housing market for valuable tips and information regarding your particular neighborhood. Check up on internet property listings located near your neighborhood in order to get a general pulse of the market specific to your area.

2. Timing Counts!

Proper timing, coupled with knowledge of current conditions, is the most critical factor to consider when dealing in real estate market. The quicker you need to sell your house, the less flexible you can afford to be, because you do not have the luxury of time to wait for a prospective buyer who would agree to your asking price. On the other hand, if you have all the time in the world, you can simply sit back, relax and wait for perfect buyer to come along.

3. Cleanliness is Important

All things being equal, almost all houses have the same basic amenities. In the real estate market however, the appearance of a well kept home invariably adds value and enables a house to be sold quickly and at a considerably higher profit margin.

Working With A Buyer's Agent

It is not entirely untrue that real estate agents invariably represent sellers. Agents owe their loyalty to the sellers they represent when they work with you as a buyer. It wasn't too long ago that buyers worked with these agents only. Then why was there a need for a buyer's agent?

If you are buying a home, you need to be represented by an exclusive buyer's agent to safeguard against certain things, such as a seller's agent who is loyal only to the seller. In contrast, a buyer's agent will be loyal to you, protecting only your interests during the real estate transaction.

Duties of A Buyer's Agent:

Your buyer's agent will make every effort to locate a home that suits your requirements at the lowest possible price. Since he is loyal to you, your agent will disclose all that he/she knows about the property that could benefit you, or prevent you from taking a loss during the transaction. Information such as the reason for selling the property, concessions the seller would make, and all conversations your agent has had with the seller will be disclosed to you. Information like this, however small it may seem, could potentially promote your interests as a buyer.

Some other duties of a Buyer's Agent:

1. Make a sincere and reasonable effort to find a home suitable for you
2. Follow all lawful instructions you may give
3. Should develop a CMA (Comparative Market Analysis) for you
4. Advise you on the property value
5. Handle all monies and keep records of all transactions

Hiring a Buyer's Agent To Work For You:

An agreement hiring a buyer's agent to represent you becomes necessary from the time you decide to buy a home. When you sign a contract with a buyer's agent, make sure that it clearly states both the agent's and your duties and obligations along with any fees charged to you, and how they will be paid. Typically, the buyer's agent is paid by the seller in the form of a commission.