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How to's and money-saving tips from resident homeowner and mortgage professional, Cathy West

Category Archives: Helpful Homeowner Hints

Learn more about coastal living.

Is buying a home on the coast worth the expense?

Before paying a premium for oceanfront property it's important to asses the extra hassles and expenses that come with such a desirable location. These key considerations can help buyers determine if the drawbacks outweigh the rewards. 

Con: Property taxes
Homeowners can be certain that the taxes they pay on their waterfront property will be significantly higher than comparable non-waterfront homes. Zillow reported that the average price of a single-family waterfront home was more than double the national average. It makes sense that a coveted location will increase the appraised value of the property and subsequently hike up the taxes owners have to pay on it. Before purchasing a costly home on the coast, prospective buyers should consider whether they can afford the annual tax expenses that will come with it.

Con: Weathering and erosion
A house on the coast provides incredible views, but it also provides exposure to a lot of costly wear and tear. Salty ocean air can have massively corrosive effects on a home's facade. Consistent exposure may lead to a breakdown of concrete foundations and rotting of wood surfaces. Potential buyers should factor in the cost of coating and treating materials to prevent damage from salt air and harsh weather. In addition to weathering, waterfront property is at risk of devaluation due to rising sea levels. 

Con: Flood insurance
With rising sea levels come rising insurance premiums. Home insurance often does not include water damage for properties in flood zones. This means waterfront homeowners need to purchase special flood insurance and should factor in this annual expense. The New York Times reported that rising premiums have given pause to many potential buyers. 

Pro: Rental revenue
Many homeowners turn their waterfront property into an easy source of income by renting it out to vacationers or seasonal renters. Rental properties in popular vacation destinations can be a cash cow for owners, generating enough revenue to make the investment a smart one if they are not planning on living in their waterfront home all year round and are ready to take on the role of property manager.

Pro: Intangible benefits
Despite hefty concerns about the potential risks of coastal living, millions of people live happily by the water and enjoy countless unparalleled benefits. Waterfront residents appreciate the healthy lifestyle and access to activities like swimming, kayaking, water skiing and fishing. There is also a certain serenity that comes with waking up on the water that is difficult to replicate elsewhere. Homeowners often find that the joys of a coastal lifestyle outweigh the drawbacks. After all, it's tough to beat that view.

Buying a home on the coast can be a tricky decision; while the extra expenses can be quantified, most of the advantages are not measured in dollars but rather felt in emotions and quality of life. Prospective buyers should talk to local residents, real estate experts and financial advisors before deciding whether buying a home on the coast is right for them.

Rental property upkeep is an important cost for rental owners to keep in mind.

How much should rental owners spend on upkeep?

Renting out property can be a great source of extra income. However, when the time comes to consider repairs and updates, landlords are often unsure as to how much they should be spending on their rental property. It's important to keep in mind that the condition of a property is a huge factor in renters' interest and willingness to pay the full rent that landlords request.

With these tips, rental owners can rest assured that they are handling the upkeep of their property efficiently.

Know the rule of thumb for estimating maintenance costs
It is generally understood that rental owners should plan on spending about one percent of the property's value on its maintenance each year, according to Zillow. For example, a property valued at $200,000 would require about $2,000 worth of maintenance each year. This can be a helpful standard, though every property has a range of traits that will affect its condition and needs. These include how newly renovated the home is, whether or not there is a pool, whether it is a single-family home and so on.

Regardless, it's always smart to plan for costs to be slightly higher than expected. Rental owners should be prepared at any time to act fast when repairs are needed so that the property's condition and value don't decrease.

Be prepared for routine replacements
Any home goes through some wear-and-tear while being lived in. It can be tough for rental owners to justify paying for repairs and replacements that only became a problem after renters had lived in the space. But, it's the landlord's responsibility to cover the costs of routine replacements and repairs. According to Rentec Direct, routine replacements include but are not limited to:

  • appliance maintenance and replacement
  • flooring
  • roofing
  • pest control
  • painting
  • landscaping
  • emergency maintenance.

Some routine replacements, like painting, will take place every time a tenant moves out to prepare for the incoming renter. But other routine replacements, like pest control, could happen anytime.

Renter accountability
Property renters choose to rent homes rather than buy so they can avoid the added costs and responsibilities that come with maintaining a home and yard. But, when damage in the home is directly caused by renter action, a discussion is necessary to determine who is responsible for paying for and scheduling repair. Unlike typical wear-and-tear put upon appliances or spaces by being lived in, obvious damage like a hole in the wall or a broken window is more likely caused by irresponsibility by the renter.

In cases of this type of property damage, bills can and should be directed to the renter. However, as Rentec Direct noted, tenants might not have the money to pay for the damage they caused, which means the expense falls to the owner.

The catch with renting out properties is that despite receiving income for renting the space, maintaining its condition is the owner's responsibility. Rental owners should be sure not to cut corners when in comes to property upkeep, so as not to decrease the value and livability of the property.

Make remodeling this weekend's project.

Easy ways to boost the value of your home

Improving the value of a home doesn't always require thousands of dollars and countless hours of sweat equity. In fact, it can be a lot simpler and less taxing than that. Whether getting ready to sell or just looking to increase the value of their property, homeowners can tackle these simple project ideas to spruce up their homes.

Ready, set, garden!
The first thing a potential buyer sees when checking out a property is the exterior of the house. To make a great first impression, owners should give their property a facelift by cleaning up the yard, fertilizing the grass and adding a fresh layer of mulch to garden beds. Simply planting attractive flowers or shrubs, adding outdoor seating or installing a fire pit can enhance curb appeal. Other easy fixes to the exterior of a home can also yield high rewards for sellers. In their annual Cost vs. Value report, Remodeling magazine listed the average return on investment for replacing a garage door at 98.3 percent

Start with the basics
It's common for homes to get a little run down through years of natural wear-and-tear. But minor defects that a seller may hardly notice anymore often jump out at potential buyers. Simple, cost efficient fixes like replacing a broken light fixture or a leaky faucet, patching up any holes or dents in the walls or swapping out rusted doorknobs or handles for newer models can positively change a buyer's impression of a home and won't break the bank.

Slap on a fresh coat of paint
One of the quickest ways to change the look and feel of a house is to paint its walls. However, some remodelers tend to go overboard. Homeowners should decide room by room whether the walls need repainting or just a good scrubbing to avoid making the project unnecessarily daunting. Choosing a color is especially important when repainting. According to Consumer Reports, most realtors recommend repainting walls in white, beige or neutral tones that won't distract buyers from the home's other features. After all, sellers want buyers to picture their own vision for the home rather than focus on the feeling they get from the color of the room.  

Get cooking on that kitchen
When it comes to deciding which room to give a little extra TLC to, homeowners should turn their attention to the kitchen. For most buyers, this is the heart of the home and it can be a major selling point if it looks good. Upgrades like stainless steel appliances, modern cabinets and drawers or new countertops can give the space a polished look and make it more attractive to buyers.

It's crucial that people checking out a home are able to appreciate all the work sellers have put into it to get it market ready. That's why it's is so important to clear out as much unnecessary junk as possible.  Clutter on the countertops or on the floor will distract buyers from those beautiful new remodels so remember to keep it clean.

Curb appeal matters for rental properties

Curb appeal matters for rental properties

Regardless of how you approach the rental process, your investment home needs to have some serious curb appeal to attract a steady stream of prospective tenants. Airbnb, as well as other apps and methods to get short- and long-term renters are awash with properties these days, and those that have better curb appeal will tend to gain the eyes and attention of seekers more consistently than those in need of some work. 

Sweyer Property Management notes that some investment property owners get lulled into believing curb appeal has nothing to do with the overall financial success of a rental home, but this could not be further from the truth. Rather, landscaping, exterior paint jobs and other aesthetic elements of the property will play a major role in renters' decisions, so the time is now to get moving on some curb appeal-boosting projects. 

Affordable options
Just because you need to boost your property's curb appeal does not necessarily mean you will have to pony up a tremendous sum of cash. Rather, there are plenty of frugal options to improve the exterior's appeal in the eyes of potential renters.

Vertical Rent suggests taking a relatively relaxed approach to the exterior, fixing up mailboxes, adorning the front door with dressings, brightening up the shutters with a new paint job and incorporating some comfortable seats into the front yard or porch areas. None of these will break the bank and all of them can add a certain element of charm to the property. 

Simply cleaning the exterior's most obvious components can also go a long way, especially if you have not done so in a long time. This includes the windows, pillars, steps and the like. Hiring a professional cleaner for a job like this should not take too much time nor cash to get done. 

More involved projects
If you have a large front yard, you might want embark on some more involved and expensive projects to boost curb appeal, notably landscaping. Especially since the spring has arrived, sprucing up the front yard with some seasonal flowers and arrangements can make your property pop in the eyes of potential renters. 

Better Homes and Gardens recommends adding aesthetically appealing outdoor lighting, re-installing planter beds, incorporating some artwork and expanding upon existing landscaping to make the property truly glimmer among the other houses on the block. 

If you have not really focused at all on landscaping since last spring, you will likely need to enlist the help of a professional service provider to get the job done. However, given the fact that your investment into curb appeal improvements will make your property more attractive, this represents a very smart investment going into the summer months, especially if your home is in a popular summertime destination. 

Should you decide to use a management company, work with them to establish the best plan to improve your rental property's curb appeal while still matching the look and feel of the surrounding area. 

Gaining equity: A beginner's guide

Gaining equity: A beginner’s guide

Homeowners enjoy many benefits compared to those who rent, one of the most important being the building of equity over time. Equity is essentially defined as the percentage of your home's overall value that you have paid off and thus own. The larger the amount of equity you have in your home, the more you will walk with should you choose to sell, and a solid amount will also translate to more opportunities should you choose to finance a second home or make another major financial move. 

Before going into the best practices of gaining equity, it is important to know how it is calculated. 

What is equity?
The Balance explains that the raw figure of equity is easy enough to understand upon the purchase of a home, it gets a bit more complex over time. For example, the website states that the initial equation is nothing more than the cost of the home minus what was borrowed to purchase it. Over time, though, the percentage of what you own is the key, as the home's actual value might rise or fall.

So, if the real estate value rises when you have paid off about half of the mortgage, you will have to compare the remaining balance of your loan to the new value of the home. The Balance notes that property value could rise simply because of the area in which your house is located, or because of work you have done to the home. 

Building equity
The most obvious method to gain equity is to pay off your mortgage on time each month, or even overpay against the principal. However, NerdWallet suggests shorter-term mortgages and higher down payments can give homeowners a bigger head start in this regard. Additionally, the news source states that certain property improvements can raise the property's value, thus giving the homeowner more organic equity. 

Not all home improvement projects will have a direct impact on the property value, but NerdWallet explains that the returns on upgrades average around 64 cents to each $1 spent. 

Further steps
Once you have gained equity, you will have a bit more flexibility and control over your finances. For example, Bankrate reports that home equity lines of credit can be used to accomplish a range of goals, such as debt consolidation and coverage of certain renovation or home improvement costs. The website notes that the two major forms of these products, home equity loans and home equity lines of credit, are very different, and that the first tends to be fixed-rate while the latter is variable. 

Because one of these loan products could have an impact on your credit and financial standing in general, make sure you discuss your options, as well as the pros and cons of each method, before applying for one.

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.