A bit of investigation can save you a lot of trouble in the long run.
Whether you have an old home that won’t sell, can’t afford to buy in your current neighborhood, or just want to earn a passive income, there are plenty of reasons to enter the rental property market. Choosing the right property and pricing it appropriately are critical, but many first-time landlords overlook what may be the most important task of all: finding the right tenants.
A good tenant can provide you with years of uninterrupted income and actually work to keep the property well-maintained. A bad tenant can be a nightmare, damaging property, leaving bills unpaid, and moving out unexpectedly. There’s no foolproof way to separate good from bad tenants, but there are a few basic rules that can dramatically increase your odds.
Homeowners can recoup 30% of the costs of solar-powered water heaters in a 2012 tax credit.
If winter has your home feeling a bit cold or drafty, you might want to take advantage of federal tax credits and consider some home improvements.
While the 2011 tax year’s insulation tax credit has disappeared, there are still plenty of ways to make your home more energy efficient while receiving a tax break. The federal government is offering a 30 percent tax credit–with no upper limit–on green technologies like geothermal heat pumps, residential wind turbines, and solar water heaters. This tax credit applies to new construction and existing homes, and covers principal residences and second homes. Continue reading →
Major structural renovations can increase livability, but generally aren't good short-term investments
Remodeling can be a fantastic way to breathe life into an older home, but be careful about the type of work you choose to do.
According to Remodeling Magazine’s Cost versus Value report, the only midrange or high-end remodeling project that will recoup its costs is a steel front door replacement, which increases an average the average selling price of a home by a paltry $25. Everything else is a money-losing proposition, so if you’re hoping to dramatically increase your home’s value, look elsewhere. Remodeling is not a way to make a quick buck.
So why should you remodel? There are two very good reasons: to build the home of your dreams and to help your home stand out in a crowded market. The trick is understanding which is more important, because they don’t play well together.
A college crowd can increase turnover and wear-and-tear.
There are plenty of reasons to purchase rental properties. They can provide steady, passive income when the housing market is slow, allowing you to sell only when conditions are right. They can allow first-time buyers to enter the market when they’re priced out at home, and are an excellent way to build equity in a retirement or vacation home.
Whatever your reason, if you’ve decided to buy a rental property, follow our five tips to make the process as smooth and economical as possible.
1. Do not expect a quick profit
If you have visions of flipping your rental property in just a few years, stop now. Historically, rental properties have been an excellent source of long-term income, but their resale prices are based more on income streams than spikes in home prices. This is particularly true of multi-unit dwellings, and is even more pronounced in a depressed market. There’s little debate that you will be able to sell your rental property at a tidy profit some day, but unless your primary focus is on building equity and earning passive income over time, you’re in the wrong part of the business. Continue reading →
A rental property can provide a much more stable investment than Wall Street.
According to the National Association of Home Builders, 72.9 percent of homes sold in the United States during the third quarter were affordable to families earning the national median income of $64,200. That’s close to a national record, and if you live in Fairbanks, Alaska, Indianapolis, Indiana, or Toledo, Ohio, those numbers are far better.
In fact, if you don’t live in the Northeast or California and you’re in the market for a new home, you’re in luck. Housing prices have plummeted over the past three years, and homes are more affordable than ever. If you’ve kept an income and savings through the recession, you’re in a position of power.
But not all cities are equal. Los Angeles, New York, San Jose, Richmond, and other metros (see the Wall Street Journal’s interactive graphic here) have retained a large percentage of their value, and may still be far out of the average consumer’s reach. For example, in Santa Cruz, CA, the median home price is roughly $599,000–a steep decline of almost 20 percent from three years earlier, but still too pricey for the median Santa Cruz resident. Continue reading →
Being a landlord means maintenance, contracts, and responsibilities you might not have planned on.
You’ve found the perfect new home, and you’re ready to make the move, but do you sell your current home or try to rent it out? Selling now could give you some handy cash up-front, but renting could provide a long-term income source and a nest egg for retirement or hard times.
Your situation may not allow you to consider renting. For example, if you need a large amount of money in a a short period of time, a second home may be a luxury you can’t afford. But if you think you might be able to squeak by without selling and are wondering if you should, take our four-question quiz. Continue reading →
Creative accounting may haunt you when you apply for home financing.
Downsizing, outsourcing, and improvements in telecommuting technology have made self-employment more popular than ever. For some, leaving the 9-to-5 routine is a matter of temporary survival. For others, it’s a choice that provides a lifetime of flexibility and rewards. In both cases, it can create problems with home financing.
Banks want stable, predictable borrowers, and salaried workers fit the bill. With a few W-2s, a quick credit check, and possibly a call to the employer, a lender can predict precisely what a borrower will earn this year, next year, and in the future. Self-employed workers are more problematic, and tend to have a tougher time finding financing. Some of the top problems include: Continue reading →
Gifting your home over time can save tens of thousands of dollars or more in estate taxes.
We’re deep into the season of giving, and tax time is approaching. If you’re still looking for last-minute gifts, you might want to consider your home.
Depending on the value of your home, insurance policy, and other assets, estate taxes can cut a substantial chunk from what you pass on to your heirs. The federal government allows each person a gift tax exemption of $11,000 per recipient, per year. A married couple can give $22,000 per year per recipient, tax free. For most of us, holiday gifts are much smaller, but by gifting a portion of your home every year, you can transfer ownership of your most precious asset to your heirs over time, and possibly avoid inheritance taxes altogether.
We all know home values have crashed since 2008, but it looks like the worst is behind us. While certain metropolitan areas continued to bleed in 2011 (some cities in Southern California saw a dip of more than 20 percent from 2010), others stabilized, and quite a few saw modest gains. With unemployment remaining high, and a financial crisis in Europe, no one can say if this s truly the bottom of the market, but the ups-and-downs are smaller, and interest rates remain low. So if you’ve been on the fence, will 2012 be your year to buy?
Whether you’re planning to sell your house or pass it on to your grandchildren someday, there’s always a reason to improve your home. From refinishing a bathroom to building an additional wing, there are as many kinds of home improvement as there are homeowners, but one thing remains the same–the contractor.
A contractor is a knowledgable professional you hire for his or her expertise–someone who will get the job done quickly, safely, and well. But how can you be sure you’re getting all they promise? Here are five tips to add to your checklist during the selection process.
Get References and Referrals
A flashy Web site or a full-page spread in the Yellow Pages might indicate a well-established contractor, but it might just as well be the mark of someone who values slick marketing over doing a solid job. There’s nothing wrong with starting your search with names you recognize, but a word-of-mouth referral is worth 100 pages of ads. The best source of referrals is friends you trust, followed by non-anonymous review sites, like Angie’s List.
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Less Options
We all know home values have crashed since 2008, but it looks like the worst is behind us. While certain metropolitan areas continued to bleed in 2011 (some cities in Southern California saw a dip of more than 20 percent from 2010), others stabilized, and quite a few saw modest gains. With unemployment remaining high, and a financial crisis in Europe, no one can say if this s truly the bottom of the market, but the ups-and-downs are smaller, and interest rates remain low. So if you’ve been on the fence, will 2012 be your year to buy?
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