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Category Archives: Helpful Homeowner Hints

How to build equity in a home.

How to quickly build equity in a house

Home ownership is a big investment, and if you're planning to purchase a property, your best bet would be to plan to stay in that home for as many years as possible to make the most of that investment. By living in your home for at least five years, according to Realty Times, you can start to build equity, turning it into an emergency fund or increasing your profit if you decide to sell.

What is equity?
First time homebuyers may have never heard of equity before, as it's not something you encounter if you're renting. Equity is the difference between what you owe on a home, and what it's worth, according to Bank Rate. It's calculated based on a number of factors, including similar home values in the neighborhood, specific details about your house, and any improvements that have been made. Because there are a number of factors involved in calculating equity, your home's equity can fluctuate throughout the years. This is completely normal and expected. Your best chance at building equity, then, is to stay in the home that you purchase for a number of years and pay off as much of the mortgage as possible. 

There are a couple of other ways to build equity quickly. 

  • Traditional payments: Paying your mortgage on time every single month is crucial to paying down your principal – the amount that you borrowed initially – and thereby increasing home equity. If you're late on a payment, or don't pay in full, you'll be assessed late fees and other charges depending on your financial institution. Paying a partial amount of the bill  means that your payments only apply towards interest fees and not the principle itself. Over time, these interest payments increase because the principle isn't being lowered, and you'll find that paying off your mortgage will take years longer than expected.
  • Increased payments: While paying your monthly mortgage in full is key to building equity, you can jump start the process by increasing your payment amount above what is being asked. This can be a small increase, like rounding up your payment from $1256 to $1300 every month. You can also make larger increases, such as payment an extra $100 on top of your monthly mortgage payment. Eevery penny counts and helps to pay off your mortgage more quickly while building equity.
  • Home improvements: Making both minor and major home improvements is an oft-used method for building home equity. Adding a room, replacing a garage door, or replacing the attic insulation all raise the value of your home by making it safer and more attractive. Just be careful to assess the improvements you want to make before starting construction, since some improvements add more value to your home than others.
  • Additional payments: Every chance you get, add another payment to your schedule. You can do this by contributing every birthday dollar, career bonus, and monetary gift to your mortgage instead of using it for personal spending. Instead of just making higher payments on a regular basis, you might want to make another unscheduled payment mid-month. Some families also choose to become dual-income households, but continue to live on a single income. In this way, the entire second paycheck can be applied to the mortgage on a regular basis. This is a great way to accelerate equity building fast.

For more information about this article, call 866-614-5959.

How to comply with rental laws

Tips for complying with rental laws

Rental properties are a great option for a passive income stream that can lead to long-term payoffs. With a great property manager on board, rental units can be easy to keep up with and relatively low-stress for years. With every investment, there is risk and with rentals that is introduced through state and federal law compliance.

Differences from state to state
Rental laws can be vastly different across regions, according to Legal Zoom, so it's vital that you understand exactly what laws affect your property. Most of these are designed to provide some level of legal protection for both the landlord and renter, but in different states they can be more favorable for either the landlord or the renter.

Luckily, it's easy to find the rental laws that relate to your property with a quick internet search. When you decide to purchase a rental property, one of the first steps you should take, even before purchasing the property, is to research the regulations for that state and city so that you know what issues you'll legally be held accountable for including leases, non-payment and renter-caused maintenance issues. Once you are aware of these laws, you can take measures to protect your investment. 

How to find information
To find information on these rental laws, simply search the internet for the terms "landlord tenant law" along with the name of the state in which the property is located. You can also search for variations of that term, such as "landlord tenant ordinance" combined with the state abbreviation or neighborhood in which the property is located.

Even if you write your own lease for every renter, regional laws will still take precedence over signed documents when it comes to certain points, explained Rentalutions. These can include the grace periods that you must allow a renter between the date that rent is due and the date that you're legally allowed to file for eviction or even charge a late fee.

While most state laws won't dictate how you should structure a rental deposit or the amount that it must be, they can dictate how you should receive and respond to money received. Some of these laws include a statute that you must provide a written receipt for all monies collected or you could end up owing the renter interest on their deposit. Something as critical as this should be understood and researched before any leases are  created.

Other laws to note
Additionally, state laws may include standards for maximum occupancy levels, such as dictating that a three bedroom house can have a maximum of six occupants. Local rental laws can also influence what portions of property maintenance are the landlord's liability and which are the renter's. These are both common clauses of rental agreements.

Keep up with changes
Of course, rental laws are subject to change over the years and as new regulations are passed and old ones are struck down. How can you keep up with new changes to your state's rental laws?

There are a couple of ways:

  • You can join a landlord association. Most charge annual or monthly dues, and in exchange provide monthly or quarterly brainstorming, networking, or informational sessions to help area landlords stay on top of important changes in their communities.
  • You can also set up Google alerts for keywords associated with your state and rental laws, landlord tenant laws, or landlord tenant ordinances. The alerts will email you a daily snapshot of news, allowing you to check in with laws in your community.

You can always get information about rental laws on the Housing and Urban Development website: HUD.gov, which includes links to laws in every state.

Navigating a busy market

Navigating a busy market

Over the course of the past year or so, the amount of buyer interest in the housing market has skyrocketed, leading to potential issues for would-be buyers. This level of activity may be particularly difficult for first-timers with limited budgets to navigate, simply because they might not know how to deal with bidding wars, putting in offers on multiple homes simultaneously and other issues.

For these reasons, it's vital for would-be buyers – especially those with little or no experience shopping for homes – to work closely with a real estate agent and do as much studying as possible about various tools that can help them succeed in their quest to make a purchase, according to On Course Learning. For instance, they can utilize the latest real estate apps to set up criteria for the kinds of homes they're looking for, then get automatic alerts when one hits the market.

Taking advantage
When these kinds of alerts are in place, shoppers can then quickly contact their agents to start the process of looking at the property and potentially putting in a bid, the report said. When agents know they have the green light to work quickly, they can probably get even the most inexperienced buyers started off on the right foot more often than not.

However, it's also important for first-time buyers to make sure they know exactly how much home they can afford, and ensure their bidding conforms to those strictures, according to The Balance. It can be very tempting for first-timers in particular to get into a bidding war and say to themselves, "Well, I can afford to go a little higher." But that might not always be the case, at least as far as keeping a mortgage affordable for years to come.

Those looking to get an advantage in the bidding war might make some headway by asking listing agents to let them view the home and submit a bid even before a scheduled open house, the report said. This can help establish a buyer's eagerness to get involved with a property, potentially giving them a small edge on the competition.

Get ready
However, before the home shopping process even starts, it's absolutely vital for first-time buyers to have mortgage preapproval in place, because any delays in actually getting a home loan can make the owners go with another offer, according to U.S. News and World Report. Indeed, this will not only help them speed up the purchasing process, but also ensure they don't end up going over budget.

This kind of preapproval may take a little extra financial work beforehand, both to further build up savings and improve a credit score, but it's vital to being able to remain competitive in today's busy market. Moreover, with better financial and credit standings, buyers may be able to cut their long-term borrowing costs by as much as tens of thousands of dollars over the lives of their mortgages.

For more information about this article, call 866-614-5959.

Should you hire a property management company?

Should you hire a management company for investment property?

If you currently rent out space or are thinking of purchasing an investment property, you may be considering hiring a property management company. Before spending the money on outside professionals, it's best to get a good idea of what you're looking for and how much you'll need to pay. 

What is a property management company?
A property management company handles everything from screening tenants to dealing with repairs, according to NOLO. These companies are hired as independent contractors so you don't need to handle payroll for any handymen. 

If you're in an area where you have frequent or prolonged vacancies, an outside company can help market your rental units, screen applicants and handle leases for new renters. Once the new person moves in, they'll communicate with the property management company instead of you, which means the property manager handle all complaints and questions accordingly. Best of all, these companies have an in-depth knowledge of rental law so they're more likely to follow the proper steps in an eviction. 

How much do they cost? 
According to The Balance, fees for a property manager can range from 4 percent to 10 percent of the unit's monthly income. For buildings with more units, the percentage tends to be on the lower side since the dollar amount will be higher, whereas single-family homes tend to require a higher percentage. If you're still paying off a mortgage and struggling to cover costs with rental income, this might be an unaffordable expense. However, owners who have a portfolio of properties and a small amount of debt may find the expense worthwhile. 

When do you need to hire outside help? 
Not every owner needs outside help to deal with renters. If you have one single-family home that you rent out and have long-term tenants who handle a lot of their own repairs, there'd be little to no reason to seek a professional. However, if you start acquiring additional properties, the amount of time spent managing your portfolio will increase. If you still have another job, outsourcing management tasks could be a big help. 

For landlords with limited time, hiring a professional to find tenants, handle regular maintenance and do rent collection may be a huge asset. Hounding tenants for payment every month can be time consuming and difficult to manage for an already busy person. 

Another reason to hire a company would be if you're located far away from the property. Working from another city or state to coordinate repairs and collect rent can be complicated. By hiring a local company, you'll always have help nearby if needed. 

To figure out if a property management firm is right for you, make a list of all recurring and possible tasks related to managing renters. Decide if the items on that list fit into your current lifestyle or if you'd be overwhelmed with the burden. Then, create a comprehensive spreadsheet to make sure the amount you bring in from the property will cover any associated fees. As long as the money works out, hiring a professional could be a great idea. 

How to manage rentals with technology

Technology that makes managing renters easier

Managing multiple renters and properties can take up huge amounts of time. With a single family home, work may be limited since you're only dealing with one tenant at a time and have a finite amount of repairs. However, once you start adding properties or begin to rent out a multi-unit building, tasks can quickly expand and become more complex. Trying to accept rent across multiple due dates, coordinate repairs with contractors, and allow access to maintenance staff as well as new tenants can end up being a full time job. 

Instead of hiring a superintendent or property manager, these new apps and services can help make the process easier while saving you time and money:

1) Cozy

This free app provides nearly identical functionality as its paid-for competitors. Allow renters to submit applications digitally and then use the credit and background checks to screen them. Landlords can set when rent is due, send digital reminders and accept payments through the app for a standard 2.5 percent fee which is similar to other payment processors.

For an additional fee, you can get in-depth maintenance tracking features so tenants can submit repair requests to you and you can save receipts, keep logs and more. This allows you to save all tenant complaints and communication in one place in case you ever need to reference a conversation in the future. 

2) Homee on Demand

Instead of having a notebook full of contractors' phone numbers, Homee allows you to use an app to contact qualified professionals when you need them. Each professional listed is extensively screened before being allowed to accept jobs. They are all current on their trade licenses and do not have a criminal record. To use the services, just download the app and request a professional who will provide transparent pricing.

Once you approve the contractor, they'll arrive quickly to begin work. You don't pay until you check out the finished product and confirm completion on your phone. Then, the money will automatically go to the person standing in front of you, no cash needed. This is also convenient if you need a tenant to verify the work for you while you confirm completion from another location.

3) Kwikset Vacation Locks 

Especially for landlords with multi-unit buildings or short term rentals, finding a time to coordinate key exchanges and change locks between tenants can be a massive undertaking. Letting a contractor into an apartment while you're off-site and a tenant is at work can prove near impossible, especially without a full-time handyman or superintendent.

Instead, by using a SmartCode lock, you can set access codes for renters or repairmen from a mobile app. Schedule what days and times the code should be available, and you'll prevent any handyman from trying to enter using the same code at a later date. Plus, by providing renters with codes rather than keys, you never have to worry about calling a locksmith when a key go missing.

Creating a budget for new homeowners

Creating a budget for new homeowners

People looking to buy homes in today's market have likely been squirreling away money to save for a down payment for months or even years, but experts often caution that one thing many new homeowners do forget about the importance of maintaining a sensible budget after the purchase has been completed. 

One of the biggest issues for inexperienced homeowners is that they may budget for many of their normal costs – mortgage payments, increased utilities costs, etc. – but not necessarily all the things that can help them stay financially successful going forward, according to NerdWallet. For instance, there are many hidden costs associated with homeownership that might not always get factored in, such as real estate taxes, homeowners insurance premiums, maintenance costs and unexpected repair expenses.

Other issues to consider
At the same time as all those other previously unnecessary expenses are being taken into consideration, new homeowners also need to be able to budget for saving to build an emergency fund just in case any unforeseen issues arise not only with a house, but also automobile or other problems that can require thousands of dollars in costs all at once, the report said. The size of this savings fund should, ideally, be equivalent to the expenses that will cover between three and six months of living comfortably.

Likewise, it might also be wise for homeowners to take out life insurance policies to protect their loved ones financially in the event of their untimely death, the report said. Along similar lines, being able to make sizable contributions to a retirement account is vital.

What can be done?
The first thing hopeful homeowners need to do is sit down and figure out exactly how much all these efforts are going to cost them each month versus how much they're bringing in, according to Home Source Dallas. This kind of foresight is vital simply because it will help consumers determine "how much house" they can actually afford based on their current financial situations. Typically, real estate or financial professionals will be able to advise them on what they can typically expect to encounter in terms of costs, and that will inform better decisions that help ensure long-term financial success.

Finally, it might be important for new buyers to make sure they're also factoring in the costs associated with moving into a house for the first time, or what they will need to pay to furnish an entire house instead of just an apartment, according to Trulia. These can stretch into the thousands of dollars in a lot of cases, so making sure they're properly accounted for will likely be key going forward.

Generally speaking, the more research would-be buyers can do, and the more advice they get, the better off they will be when it comes to being able to absorb all these new costs associated with homeownership. That effort, in turn, could really pay off for years to come.

For more information about this article, call 866-614-5959.

Never have an empty rental

Never have an empty rental

If you have an investment property, there are a few things you can do to make sure it's never vacant.

Plan ahead
First of all, do regular maintenance to prevent the building from falling into disrepair.

Next, set a reminder for a month before any leases expire. Check in with the current tenant to see if they plan on renewing. If not, ask them if there are any repairs that need to be done and schedule a time for a move-out inspection. If there are outstanding repairs, call a contractor immediately so you can fix the problem before the space is vacant. A move-out inspection will allow you to see for yourself if there are any issues the renter may have missed while simultaneously deciding if you'll return the tenant's security deposit.  

The more repairs you can get done while the unit is occupied, the less time you'll have to wait to schedule showings for new tenants. 

Advertise openings
In order to rent your property, people need to know it's available. To keep costs low, you don't need to pay for advertising. Instead, use a free listing website like Craigslist, Apartments.com, Trulia or Zillow. Both Trulia and Zillow send out listings to other real estate aggregators, so your rental will get in front of the most eyes possible. On the other hand, Craiglist tends to attract young tenants, people looking to move quickly, and short-term renters if you need to fill a property for less than a year. 

Outside major cities, it can take longer to find an occupant since you're pulling from a smaller population. In that case, print out fliers with a picture of the property, price and major highlights. Hang the notices on community bulletin boards, in coffee shops and, if allowed, on street posts where there is a lot of foot traffic. 

If you are renting a vacant home rather than an apartment, try putting a "For Rent" sign in the yard with your phone number. That way, people looking for a home in your neighborhood will be able to contact you directly. 

Provide amenities 
Renters want to live in a space that feels like home. To make a space more comfortable, people are looking for a few main amenities. Off-street parking and in-unit laundry are near the top of the list, according to RealEstateAgentU. A dishwasher didn't top the "must-haves," but it was determined to be a major annoyance for tenants once they've moved in.

If your property doesn't have parking on-site, consider renting a spot in a nearby parking lot and rolling the cost into the monthly rent. For apartment buildings with a lack of spaces, you can always ask nearby commercial and rental buildings if you can lease a few spaces for your tenants. In a suburban environment, paving or expanding a driveway could end up being the key to keeping your space occupied. 

As far as appliances, a stacked washer and dryer can fit in almost any closet and compact dishwashers are an affordable option. Make sure to get items with extended warranties since renters tend to put more wear and tear on appliances than owners. 

Open house 
When walking prospective tenants through a unit, make sure you're showing the best possible features of the property. 

Curb appeal is important. If the property is a single family home, call a landscaper to tidy up the front yard before scheduling any showings. If you have a multi-unit building, keep the common areas clean and the facade in good repair. 

Everything should be move-in-ready when showing a unit, according to SmartMove. If you are showing an apartment while it's still occupied by the previous tenants, ask them to clean up beforehand. If the space is vacant, make sure that all the floors and counters are clean and there is no debris. 

Before a person leaves an open house, make sure you've answered any questions they have and ask if they're interested in filling out an application. Sometimes, the only thing you need to do to secure a renter is ask. 

For more information about this article, call 866-614-5959.

How to handle selling your home while buying a new one

How to handle selling your home while buying a new one

As any homeowner has likely already learned, going through the mortgage process can be hectic. There are plenty of boxes that need to be checked and the process can simply take some time as well. All these issues may now be coming together to keep more current owners from selling their homes, even as prices surpass pre-recession norms and reach toward all-time highs.

However, it may not be as difficult as some owners expect to both put their homes up for sale and attempt to buy another home simultaneously.

The first thing any owner looking to move into another home needs to consider when making this decision is what the market looks like, according to the National Association of Realtors. Those who may be moving to a different region may have even more homework to do in this regard, but it's vital to figuring out the best process for simultaneously buying and selling; so too is looking into multiple buying options to make sure there are plenty of opportunities to avoid having one of these two sales processes derailed.

Other issues to take care of
Meanwhile, it's vital for homeowners to examine how carefully they're scheduling all activities related to both sales processes, the report said. For instance, making a new home purchase first can seriously alter a person's debt-to-income ratio, which would likely make the sale more difficult to complete. Owners also have to consider certain eventualities such as selling but then not being able to find a suitable property to live in, or buying but not being able to sell as quickly as they might have wanted.

For those who are having a little trouble finding a buyer on a home, it may also be possible to rent out the property after making a second home purchase, just to cover costs and reduce financial stress for the time being, according to Redfin. However, industry experts generally advise that it's wiser to try to sell before finalizing a purchase.

Plenty to consider
Of course, some homeowners may have the financial wherewithal to build a sizable down payment and cover two mortgages for a short time if need be, but most will not, according to Bankrate. For this reason, it's important to strategize with a real estate agent, lender or both to determine the best course of action based on each owner's unique financial situation.

It may also be possible to make offers made on homes that are being purchased contingent upon being able to sell the other property first, the report said.

The good news is that, in today's white-hot real estate market nationwide, sales are likely to go quickly for just about anyone looking to sell. That may, however, complicate things when it comes to buying, because getting into the market and making bids isn't likely to yield positive results on the first try. As always, when consumers take the time to consider both their own situations and the options available to them, they're going to be able to make the most informed decisions possible about when and how to get into the market.

For more information about this article, call 866-614-5959.

How 2018 tax changes effect homeowners

Tax changes in 2018 that homeowners need to be aware of

As Tax Day approaches, you may find yourself scrambling to determine what changed between 2017 and 2018. After The Tax Cuts and Jobs Act was implemented, there are important differences that will affect how homeowners file. These are intended to help simplify the filing process by raising the standard deduction and limiting the amounts that can be claimed for itemized losses or charges. 

No itemizing necessary 
In 2017, the standard tax deduction for homeowners was $6,350 for an individual, according to Time. That amount doubled to $12,000 per person in 2018 which means you can claim a larger deduction without any extra work, leaving typical owners with more money in their pockets. Unless you're doing large renovations, it's unlikely your itemized deductions, including property taxes and repairs, would surpass the standard amount. Itemizing will still make sense for anyone doing gut renovations or major work on a property. 

Changes in the way interest is claimed
In exchange for higher standard deductions, the government removed or limited the deductions for mortgage interest depending on what type of debt you have. Two kinds of loans, home equity loans and home equity line of credit (HELOCs), no longer qualify for interest deductions, reported MoneyTalkNews. Additionally, owners with more expensive properties will only be allowed to deduct interest for mortgage payments on debt of no more than $750,000 as compared to the previous year's $1 million. Keep in mind that this new rule only applies to mortgages taken out after December 2017, everyone else will be grandfathered in to the previous maximum. 

Capping deductible property
Another decrease in deductions is applied to property and other local taxes. Owners are now capped at claiming $10,000 for these items. This is another way that itemizing is being discouraged in favor for using the standard amount. 

Any time significant tax changes are made, it's best to speak with a qualified accountant to get the most up-to-date information. These changes might impact how you're currently tracking expenses and can alter the way you manage your property in the future. 

For more information about this article, call 866-614-5959.

Buyers should consider taking a more strategic approach to the home search and adopting some of the tried-and-true techniques for navigating a seller's market.

House hunting this spring? Use these homebuying strategies

House hunters intending to test the market this spring should prepare for adverse conditions. Home availability remains incredibly low, according to research from Trulia. Nationwide, housing stock dropped more than 10 percent last year. While the descent is expected to slow over the course of 2018 as builders play catch-up, overall inventory levels are likely to remain low for some time. Consequently, buyers searching for properties during the hot spring selling will likely encounter high prices and considerable competition, the National Association of Realtors reported. With this in mind, homebuyers must take a more strategic approach to the home search and adopt some tried-and-true techniques for navigating a seller's market.

Here are some of those buyer-approved methodologies:

Prepare finances ahead of time
This may seem like an obvious tactic, but a surprising percentage of buyers commence house hunts without taking the time to get their finances in order. In fact, the first step buyers across all generations take in the homebuying process is searching for listings online, researchers from the NAR discovered. While there is some merit to such an approach, setting an affordability threshold, looking into financing options and applying for preapproval should come first, according to U.S. News and World Report. This way, buyers can dive headlong into their searches and beat out less prepared challengers who struggle to provide proof of funds.

Embrace in-person shopping
According to the NAR, an estimated 95 percent of homebuyers now search for properties online – and for good reason. Web listings accelerate and streamline the purchasing process. However, some buyers are overly reliant on these resources. In some cases, this leads them to make snap judgments and pass by homes that could potentially work. Sometimes, buyers skew to the opposite extreme and submit private information – including bank account numbers and other financial data – through online portals in an effort to lock down seemingly ideal properties. This can open them up to identity thieves and scammers, the NAR reported. For these reasons, homebuyers should balance follow up in-person with sellers and spend time searching for homes the old-fashioned way: on foot.

Make a strong initial offer
Most people searching for a new home tend to subscribe to traditional negotiation techniques, which tell them to submit initial bids below asking. Unfortunately, this strategy does not often pave the way for success in a seller's market. Due to demand, owners can easily pass over buyers attempting to low-ball them knowing multiple house hunters with higher offers, many above asking, wait in the wings. This means homebuyers looking to purchase property this spring must start with strong offers that at least meet the listing price. While this methodology may preclude any sort of bargaining centered on the home itself, buyers can save money elsewhere. For example, many young homebuyers have begun negotiating real estate agent commissions in an effort to cut costs, according to analysts at Redfin. Such a strategy allows them to obtain new home in a crowded market while still saving some money.   

For more information about this article, call 866-614-5959.