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How to Decorate a Rental
Abiding by rental rules is important, but so is style and making a house feel more like a home. Thus, we’ve put together a little list for you to help personalize your home, while still insuring you get your security deposit back by the end of it.
Storage – Let’s be honest, rentals often lack sufficient storage place, and since custom cabinetry isn’t usually an option for renters, investing in some added storage is key. Add some simple shelves, bookshelves, baskets, or under the bed storage.
Blinds – Vertical blinds may be the ultimate decorating sin. No one likes feeling as if they’re living in a motel room. We suggest you either take them down or hide them under curtains. Just don’t throw them out or you may not get your security deposit back!
Accessorize – Pillows, throws, candles, books, light fixtures… the only way to get a truly genuine space. This is by far the easiest and a MUST.
Wall Art – Those pesky holes might keep you from hanging art or photos on your walls, but when it comes down to it, they’ll only take a few minutes to patch up when it comes time to move out. This doesn’t mean you have to hang an entire art gallery, but hanging one statement piece and placing the rest of the photos on a mantel or shelf should do the trick.
Rugs – Last but not least, rugs: the peanut butter to your rental jelly. If there are scratched hardwood floors or stained carpets, you can cover those up easily with a throw rug. Not only that, a rug is a great investment piece that will add your personal flavor to any space. And they absorb noise and make a room feel comfy.
For more information on Windermere Evergreen, please contact us here.
Pricing your home to sell
When it comes time to sell a home, most people want the property to sell quickly for the highest possible return. Setting the correct listing price is the most important step in reaching this goal. Price a property too low and it might sell quickly, but you could pocket less profit. Set it too high and you run the risk of pricing yourself out of the market.
Why overpricing a home is risky
Some sellers want to list their home at an inflated value, believing that they can always lower the price down the road if needed. But this can be a risky strategy. New listings generally get the greatest exposure in the first two-to-four weeks on the market, so setting a realistic price from day one is critical. If a home is priced too high, your strongest pool of prospective buyers is eliminated because they think it’s out of their price range. Conversely, buyers who can afford it will compare it to other homes that have been fairly priced and decide that they can get more home for their money elsewhere.
Once it has been decided to reduce the price, you’ve unnecessarily lost time and money. Your strongest prospective buyers may have found another home, while the over-inflated price could result in a negative impression amongst agents and buyers who are still in the market. Not to mention, reengaging buyers after those first critical few weeks can be very challenging. As the saying goes, “time is money”; so the longer a home is on the market, the lower the selling price will likely be in relation to the initial listing price.
Setting a home price too high has other costs
When a home languishes on the market, the seller loses in a number of ways. Each month the home goes unsold is another month of costs to the owner in mortgage payments, taxes, and maintenance—expenses that are not recovered when the home is sold. Furthermore, until the house is sold, the owner is on hold and can’t move forward with whatever plans prompted the decision to sell. If the seller is still living in the home, it can also be fatiguing to keep the property in ready-to-show condition month after month.
How to set the right price for a home
It’s not easy to be objective about your own home. That’s why it’s best to have a real estate professional work with you to set a reasonable price. According to a study done by the National Association of REALTORS®, homes that were sold using a real estate agent netted an average of $25,000 more than those without agent representation.
There are a number of factors that your agent will consider when determining a sales price for your home. Here’s a quick overview.
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- Comparable sales. One of the best guides to pricing your home is knowing what recent buyers were willing to pay for similar homes in your area. So, one of the first things your agent will do is prepare a Comparative Market Analysis (CMA). A CMA is a written analysis of houses in the community that are currently for sale, homes that have recently sold, and homes that were offered for sale but did not sell. While no two homes are identical, the report highlights only homes that most resemble yours. The CMA will include details about these properties, such as the number of bedrooms and baths, square footage, noteworthy amenities—and the listing price and sale price. The report will also include the Days on Market (DOM) for each property, which is the number of days it took to sell the home once it was listed. The CMA helps determine a price range that will be appropriate for your home.
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- Unique property features. Since no two homes are exactly alike, looking at comparable sales is just one part of the equation. Many properties have distinctive features that add to their overall value when it comes to pricing. The importance buyers place on different features can vary by region, but examples might include a particularly pleasing view, artisan-quality interior detailing, outdoor entertaining space, or exceptional landscaping.
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- Current market conditions. The real estate market is constantly fluctuating, and those cycles have a direct impact on pricing. Here are some of the market conditions an agent may consider when evaluating how to price a home:
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- Are home prices trending up or down?
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- How quickly are homes selling?
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- Is the inventory of homes on the market tight or plentiful?
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- Are interest rates attractive?
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- How is the overall economy performing? Is the local job market strong or in decline?
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- Current market conditions. The real estate market is constantly fluctuating, and those cycles have a direct impact on pricing. Here are some of the market conditions an agent may consider when evaluating how to price a home:
Other factors that can impact pricing include the condition of the home, seasonal influences (i.e. summer versus winter), condition of surrounding neighborhood, local amenities, and how quickly the seller needs to move.
There are a lot of factors that go into setting a home’s sales price, but it’s by far the most critical step in the overall selling process. The best course of action is to look to your real estate agent for guidance; they have the experience and market knowledge that will help you achieve your goals and reach a desired outcome that best fits your individual needs.
For more information on Windermere Real Estate please contact us here.
New Year’s Tips for the Home Aficionado
Now that the end of the year is upon us, it’s time to start thinking about some New Year resolutions. At Windermere, our resolutions change very little year after year. That’s because the highest expectation we can set for ourselves is to anticipate and respond to the needs of our clients, while supporting the communities in which we serve.
If you’re 2018 resolution is to buy or sell a home, here are some suggestions to help you along the way. For everyone else, we’ve added some tips about building equity and investing in updates to your home.
Buying:
If you’re in the market to buy your first home or if you’re upsizing/downsizing, here are some ideas that can help you make this dream a reality:
- Create a buying timeline and work towards your goal
- Check your credit scores and work to improve your rating
- Start or increase your savings for a down payment
- Start the loan pre-approval process
- Meet with your real estate agent
- Start looking for homes
Selling:
If you are planning to put your home on the market in 2018, here are some good places to start:
- Create a selling timeline to work towards having your home ready for market
- Make a list of home improvements and a plan on how to manage them
- Get rid of the clutter
- Contact a real estate agent
Building Equity:
You may not be moving this year, but you can create a plan to increase your equity in the home you have now. Here are some tips:
- Take advantage of low interest rates by refinancing to a lower rate
- Consider refinancing to a shorter term loan
- Make extra lump-sum payments. Consider using your tax refund, cash gifts, work bonuses, garage sale money, or any other unexpected income toward paying down your principal.
- Pay every two weeks instead of once a month. A biweekly payment plan can substantially reduce the amount of interest you pay because you are breaking the interest accrual down from 30 days to every 15.
- Pay a little extra each month. Even if you’re only rounding up to the next $100 increment, putting a little extra money towards your principal every month can add up.
Investing In Your Home
You can add a lot of value and additional enjoyment to your home by investing in improvements and upgrades.
- Choose a home improvement project that will yield a good return on investment when you do choose to sell
- Create a home checklist to track maintenance projects over the year
- Make eco-improvements to increase your home’s sustainability and reduce your utility payments over the long-term. These improvements are generally a good return on your investment when reselling.
o Upgrade furnace to an efficient model
o Upgrade windows for better insulation
o Add alternative energy resources, such as solar power
o Update toilets and showers to low-flow
o Install a programmable thermostat
o Update to energy-efficient appliances
What are your New Year’s resolutions?
For more information on Winderemere Evergreen please contact us here.
Homeowners Insurance: Protect your home and your loved ones
In addition to providing shelter and comfort, our home is often our single greatest asset. And it’s important that we protect that precious investment. Most homeowners realize the importance of homeowners insurance in safeguarding the value of a home. However, what they may not know is that about two-thirds of all homeowners are under-insured. According to a national survey, the average homeowner has enough insurance to rebuild only about 80% of his or her house.
What a standard homeowners policy covers
A standard homeowner’s insurance policy typically covers your home, your belongings, injury or property damage to others, and living expenses if you are unable to live in your home temporarily because of an insured disaster.
The policy likely pays to repair or rebuild your home if it is damaged or destroyed by disasters, such as fire or lighting. Your belongings, such as furniture and clothing, are also insured against these types of disasters, as well as theft. Some risks, such as flooding or acts of war, are routinely excluded from homeowner policies.
Other coverage in a standard homeowner’s policy typically includes the legal costs for injury or property damage that you or family members, including your pets, cause to other people. For example, if someone is injured on your property and decides to sue, the insurance would cover the cost of defending you in court and any damages you may have to pay. Policies also provide medical coverage in the event someone other than your family is injured in your home.
If your home is seriously damaged and needs to be rebuilt, a standard policy will usually cover hotel bills, restaurant meals and other living expenses incurred while you are temporarily relocated.
How much insurance do you need?
Homeowners should review their policy each year to make sure they have sufficient coverage for their home. The three questions to ask yourself are:
· Do I have enough insurance to protect my assets?
· Do I have enough insurance to rebuild my home?
· Do I have enough insurance to replace all my possessions?
Here’s some more information that will help you determine how much insurance is enough to meet your needs and ensure that your home will be sufficiently protected.
Protect your assets
Make sure you have enough liability insurance to protect your assets in case of a lawsuit due to injury or property damage. Most homeowner’s insurance policies provide a minimum of $100,000 worth of liability coverage. With the increasingly higher costs of litigation and monetary compensation, many homeowners now purchase $300,000 or more in liability protection. If that sounds like a lot, consider that the average dog bite claim is about $20,000. Talk with your insurance agent about the best coverage for your situation.
Rebuild your home
You need enough insurance to finance the cost of rebuilding your home at current construction costs, which vary by area. Don’t confuse the amount of coverage you need with the market value of your home. You’re not insuring the land your home is built on, which makes up a significant portion of the overall value of your property. In pricey markets such as San Francisco, land costs account for over 75 percent of a home’s value.
The average policy is designed to cover the cost of rebuilding your home using today’s standard building materials and techniques. If you have an unusual, historical or custom-built home, you may want to contact a specialty insurer to ensure that you have sufficient coverage to replicate any special architectural elements. Those with older homes should consider additions to the policy that pay the cost of rebuilding their home to meet new building codes.
Finally, if you’ve done any recent remodeling, make sure your insurance reflects the increased value of your home.
Remember that a standard policy does not pay for damage caused by a flood or earthquake. Special coverage is needed to protect against these incidents. Your insurance company can let you know if your area is flood or earthquake prone. The cost of coverage depends on your home’s location and corresponding risk.
Replacing your valuables
If something happens to your home, chances are the things inside will be damaged or destroyed as well. Your coverage depends on the type of policy you have. A cost value policy pays the cost to replace your belongings minus depreciation. A replacement cost policy reimburses you for the cost to replace the item.
There are limits on the losses that can be claimed for expensive items, such as artwork, jewelry, and collectables. You can get additional coverage for these types of items by purchasing supplemental premiums.
To determine if you have enough insurance, you need to have a good handle on the value of your personal items. Create a detailed home inventory file that keeps track of the items in your home and the cost to replace them.
Create a home inventory file
It takes time to inventory your possessions, but it’s time well spent. The little bit of extra preparation can also keep your mind at ease. The best method for creating a home inventory list is to go through each room of your home and individually record the items of significant value. Simple inventory lists are available online. You can also sweep through each room with a video or digital camera and document each of your belongings. Your home inventory file should include the following items:
· Item description and quantity
· Manufacturer or brand name
· Serial number or model number
· Where the item was purchased
· Receipt or other proof of purchase \Photocopies of any appraisals, along with the name and address of the appraiser
· Date of purchase (or age)
· Current value
· Replacement cost
Pay special attention to highly valuable items such as electronics, artwork, jewelry, and collectibles.
Storing your home inventory list
Make sure your inventory list and images will be safe incase your home is damaged or destroyed. Store them in a safe deposit box, at the home of a friend or relative, or on an online Web storage site. Some insurance companies provide online storage for digital files. (Storing them on your home computer does you no good if your computer is stolen or damaged). Once you have an inventory file set up, be sure to update it as you make new purchases.
We invest a lot in our homes, so it’s important we take the necessary measures to safeguard it against financial and emotional loss in the wake of a disaster.
What tips do you have for creating a home insurance inventory?
For more information on Windermere Evergreen please contact us here.
What Can We Expect From The 2018 Housing Market?
It’s the time of the year when I look deep into my crystal ball to see what’s on the horizon for the upcoming year. As we are all aware, 2017 has been a stellar year for housing across the country, but can we expect that to continue in 2018?
Here are my thoughts:
Millennial Home Buyers
Last year, I predicted that the big story for 2017 would be millennial home buyers and it appears I was a little too bullish. To date, first-time buyers have made up 34% of all home purchases this year – still below the 40% that is expected in a normalized market. Although they are buying, it is not across all regions of the country, but rather in less expensive markets such as North Dakota, Ohio, and Maryland.
For the coming year, I believe the number of millennial buyers will expand further and be one of the biggest influencers in the U.S. housing market. I also believe that they will begin buying in more expensive markets. That’s because millennials are getting older and further into their careers, enabling them to save more money and raise their credit profiles.
Existing Home Sales
As far as existing home sales are concerned, in 2018 we should expect a reasonable increase of 3.7% – or 5.62 million housing units. In many areas, demand will continue to exceed supply, but a slight increase in inventory will help take some heat off the market. Because of this, home prices are likely to rise but by a more modest 4.4%.
New Home Sales
New home sales in 2018 should rise by around 8% to 655,000 units, with prices increasing by 4.1%. While housing starts – and therefore sales – will rise next year, they will still remain well below the long-term average due to escalating land, labor, materials, and regulatory costs. I do hold out hope that home builders will be able to help meet the high demand we’re expecting from first-time buyers, but in many markets it’s very difficult for them to do so due to rising construction costs.
Interest Rates
Interest rates continue to baffle forecasters. The anticipated rise that many of us have been predicting for several years has yet to materialize. As it stands right now, my forecast for 2018 is for interest rates to rise modestly to an average of 4.4% for a conventional 30-year fixed-rate mortgage – still remarkably low when compared to historic averages.
Tax Reform
Something that has the potential to have a major impact on housing are the current proposals relative to tax reform. As I write this, we know that both the House and Senate propose doubling the standard deduction, and the House plans to lower the mortgage interest deduction from $1,000,000 to $500,000. If passed, the mortgage deduction would no longer have value for home owners who would likely opt to take the standard deduction.
If either of the current proposals is adopted into law, the potential reduction in mortgage-related tax savings means the after-tax cost of home ownership will increase for most home owners. Additionally, both the House and Senate bills also end tax benefits for interest on second homes, and this could have a devastating effect in areas with higher concentrations of second homes.
The capping of the deduction for state and local property taxes (SALT) at $10,000 will also negatively impact states with high property taxes, such as California, Connecticut, and New York. Furthermore, proposed changes to the capital gains exemption on profits from the sale of a home (requiring five years of continuous residence as compared to the current two) could impact approximately 750,000 home sellers a year and slow the growth of home ownership.
Something else to consider is that all of the aforementioned changes will only affect new home purchases, which I fear might become a deterrent for current home owners to sell. Given the severe shortage of homes for sale in a number of markets across the country, this could serve to exacerbate an already-persistent problem.
Housing Bubble
I continue to be concerned about housing affordability. Home prices have been rising across much of the country at unsustainable rates, and although I still contend that we are not in “bubble” territory, it does represent a substantial impediment to the long-term health of the housing market. But if home price growth begins to taper, as I predict it will in 2018, that should provide some relief in many markets where there are concerns about a housing bubble.
In summary, along with slowing home price growth, there should be a modest improvement in the number of homes for sale in 2018, and the total home sales will be higher than 2017. First-time buyers will continue to play a substantial role in the nation’s housing market, but their influence may be limited depending on where the government lands on tax reform.
by Matthew Gardner, Chief Economist, Windermere Real Estate
For more information on Windermere Evergreen please contact us here.
Is Condo Ownership Right for You?
Condominium homes are a great, low-maintenance choice for a primary residence, second home, or investment property. This alternative to the traditional single-family home has unique issues to consider before buying, as well as unique benefits. Here’s some background information to help you decide whether purchasing a condo is a good match for you.
The popularity of condominiums with baby boomers and young professionals continues to surge. Condo sales are up 23 percent from 2013 with a medium price of $209,600 according to the National Association of Realtors. Many buyers are realizing that condominium homes can be a great way to enjoy the benefits of home ownership combined with extensive amenities and a low-maintenance lifestyle.
Increasingly, condos are not just for first-time homebuyers looking for a less expensive entry into the housing market. Empty-nesters and retirees are happy to give up mowing the lawn and painting the house. Busy professionals can experience luxury living knowing their home is safe and well-maintained while they are away on business. If you are considering buying a condominium for a home, here are a few things you should know:
Condominium basics:
With condominiums, you own everything in your unit on your side of the walls. Individual owners hold title to the condominium unit only, not the land beneath the unit. All owners share title to the common areas: the grounds, lobby, halls, parking areas and other amenities. A homeowners’ association (HOA) usually manages the complex and collects a monthly fee from all condominium owners to pay for the operation and maintenance of the property. These fees may include such items as insurance, landscape, and grounds upkeep, pool maintenance, security, and administrative costs.
The owners of the units in a condominium are all automatic members of the condo association. The association is run by a volunteer Board of Directors, who manage the operations and upkeep of the property. A professional management company may also be involved in assisting the board in their decisions. The condo association also administers rules and regulations designed to ensure safety and maintain the value of your investment. Examples include whether or not pets are allowed and the hours of use for condominium facilities, such as pools and work-out rooms. Should a major expense occur, all owners are responsible for paying their fair share of the expense.
The pros and cons of condominium living:
The condominium lifestyle has many benefits, but condominium ownership isn’t for everyone. Part of it depends on your lifestyle. Condominium living may not be optimum for large families with active kids. The other factor is personal style. By necessity, condominium associations have a number of standardized rules. You need to decide whether these regulations work for you or not. Here are some points to keep in mind if you’re considering condominium living.
Cost: Condominium homes typically cost less than houses, so they’re a great choice for fist-time buyers. However, because condominiums are concentrated in more expensive locations, and sizes are generally smaller than a comparable single-family home, the price per square foot for a condominium is usually higher.
Convenience: People who love living in condominiums always cite the convenience factor. It’s nice to have someone else take care of landscaping, upkeep, and security. Condominium homes are often located in urban areas where restaurants, groceries, and entertainment are just a short walk away.
Luxury amenities: May condominiums offer an array of amenities that the majority of homeowners couldn’t afford on their own, such as fitness centers, clubhouses, wine cellars, roof-top decks, and swimming pools. Lobbies of upscale condominiums can rival those of four-star hotels, making a great impression on residents.
Privacy: Since you share common walls and floors with other condominium owners, there is less privacy than what you’d expect in a single-family home. While condominiums are built with noise abatement features, you may still occasionally hear the sound of your neighbors.
Space: With the exception of very high-end units, condominiums are generally smaller than single-family homes. That means less storage space and often, smaller rooms. The patios and balconies of individual units are usually much smaller as well.
Autonomy: As a condominium owner, you are required to follow the laws of the associations. That means giving up a certain about of control and getting involved in the group decision-making process. Laws vary greatly from property to property, and some people may find certain rules too restrictive. If you long to paint your front door red or decorate your deck with tiki lanterns, condominium living might not be for you.
Things to consider when you decide to buy:
Condominium homes vary from intimate studios to eclectic lofts and luxury penthouses. The right condominium is the one that best fits your lifestyle. Here are a few questions to ask to determine which condominium is right for you.
How will you use it?
Will your condominium be your primary residence? A second home? An investment property? While a studio may be too small for a primary residence, it might be a perfect beachfront getaway. Also consider how your lifestyle may change over the next five to seven years. If you are close to retirement, you may want to have the option of turning a vacation condominium into your permanent home.
Where would you like to live?
Some people love the excitement and sophistication of urban living. Others dream of skiing every weekend. Whether it’s the sound of the surf or the lure of the golf course, a condominium home affords you the ability to live a carefree lifestyle in virtually any setting.
What amenities are most important to you?
The variety of condominium amenities increases each year. Decide what you want, and you can be assured of finding it. Most urban and resort condominiums have an enticing array of extras, from spas to movie screening rooms to tennis courts.
What are your specific needs?
Do you have a pet? Some associations don’t allow them; others have limitations on their size. Parking can be a major issue, especially in dense, urban areas. How many spaces do you get per unit? Do you pay extra if you have more vehicles?
Finally, once you’ve found a property you like, examine the association’s declaration, rules, and bylaws to make sure they fit your needs. The association will provide you with an outline of their monthly fees and exactly what they cover so you can accurately budget your expenses.
Review the association board’s meeting minutes from the past year to get an idea of any issues the association is working on. An analysis of sales demand and property appreciation compared to like units may help ensure that you make the best possible investment.
For more information about Windermere Evergreen please contact us here.
Love Letters: How to set yourself apart in a seller’s market
Love letters are a lost art form, in romance and home buying. Yes, home buying. If you’re a buyer and you want to set yourself apart from other buyers, you might want to state your intentions clearly by declaring your abiding love for the seller’s home in a letter. Here are a few tips for writing a love letter that works (for love letters of a romantic nature, you’re on your own).
Consider what about the home makes it your dream home. Do you see yourself raising a family there? Do you have a special attraction to the architectural/design style? Does the home evoke a sense of nostalgia? Consider your emotional reaction to the home. Many sellers are emotionally tied to their homes, and they often want others to see value in the things that make the home appealing and unique.
Share your home-buying journey. Whether you’re buying your first home, upgrading to something larger, or seeking a place for retirement, those personal stories can help a seller empathize with you.
Share commonalities. If you have any information about the people selling the house, share what you have in common. This could be anything from children to hobbies.
Show, don’t tell. If you can, paint a picture of what your life will be like when you live there. For example, “I can imagine pancake breakfasts with our two children in the lovely kitchen.” If the seller has had similar experiences, continuing those traditions may be important to them.
Don’t over-compliment the seller. A love letter should be an authentic message about your interest in the home. A seller can tell if you’re genuine, so keep your compliments sparse and real.
Keep is short and simple. Your love letter should be a sonnet, not a novel. Keep to the point and try to remain under 200 words.
Show stability. You might find yourself bidding against all cash buyers or people willing to pay more than you are. Your letter may set you apart from the competition emotionally, but don’t forget to share that you’re a financially viable candidate. Also, if you have unique (and strong) resume attributes, consider including a couple of key points. You never know what might draw the seller to you.
Don’t point out flaws or improvements to be made. Even when you’ve found your dream home, you may still have plans for improvements. This is not what sellers want to hear. Make sure not to point out the household flaws, or renovations you will make once the ink has dried. This could sour the seller to your overture.
Consider a multi-media love letter. Last year, a Windermere agent helped his client purchase the home of her dreams. She was a violinist and the home she desired required a certain acoustic quality. He followed her through the home while she played in different rooms. When she sent this video to the sellers, it helped set her apart from other buyers bidding on the home.
Be professional. While this is a love letter, and somewhat emotional, it is also a part of a business transaction. Do not be overly familiar. Remember to format, address, and copy edit your letter as you would with any other business correspondence.
Here are some samples of love letters.
If you are submitting a love letter with your bid, make sure to consult your agent. They may have inside information about the people selling the home through their connections with the selling agent. Your agent can advise you if your letter is appropriate and what information it should contain.
In a competitive seller’s market a love letter will not always work, but as in love, it is always worth a try.
Have you ever written a love letter with a house offer? What was your experience?
For more information on Windermere Evergreen please contact us here.
Investing in Real Estate Rentals
Real estate investments are a large percentage of all home sales, accounting for 24 percent of real estate transactions in 2012, according to the National Association of REALTORS®. If you are looking to feather your retirement nest, rental properties can provide an additional source of monthly income. They’re also a good way to diversify you investment portfolio if your 401(k) or other retirement plans are primarily held in stocks and bonds.
To determine if investing in a rental property is the right choice for you, here are a few things to consider.
Figuring out the dollars and sense
The first step is to calculate the potential cash flow; this is the amount of money a property brings in and the amount you need to pay out to cover expenses. It’s not uncommon for rental properties to start out having a negative cash flow which means that the amount you collect for rent does not cover the mortgage payment. If that is the case, you need to determine whether you feel comfortable making this additional cash outlay each month. Here’s how to estimate what your monthly cash flow will be.
1.Estimate your income
The first step is to determine the amount of rent you can charge for the property. Look at what comparable homes (same size, location, amenities) are renting for in your area. You can get a good idea by browsing craigslist, Zillow or Trulia for rental properties. When estimating your income, allow for the amount of time that your property may be vacant. Most landlords factor in about five percent per year; however, figures vary depending on the current rental market in your area.
2.Tally up your expenses
Your monthly mortgage payment and property taxes are your largest expenses. You may also end up picking up the tab for utilities, such as garbage, water, or gas. Again, check what comparable rental properties are offering in your market. If you do plan on paying utilities, use your own usage as a ballpark estimate.
Property insurance is another cost. Your insurance company can tell you what the premium will be if you utilize the property as a rental.
Rental properties need repairs and maintenance just like any other home. Appliances break, plumbing leaks, fixtures wear out. Figure on spending about one percent of the property’s value per year on maintenance, repairs, and cleaning.
Finding a good tenant always pays in the long run, but it does take time and money to conduct and effective search. If you use a property management company or rental broker, include those fees. If you are conducting the tenant search yourself, add in any advertising expenses and a nominal cost, about $30, for running credit checks on prospective tenants.
The good news about all these operating and maintenance expenses is that they may be deducted from your rental income on your taxes. If you’re thinking about upgrading the property, keep in mind that expenses related to improvements to the property must be depreciated over time, rather than deducted in the year paid. Improvements are designed as actions that add to the value of the property or substantially prolong its life. Examples include adding a new bathroom, remodeling a kitchen, installing insulation or building a deck.
3.Calculate the cash flow
Now total all the monthly expenses and subtract that number from your estimated monthly income to determine your cash flow. To fully evaluate the investment, you also want to factor in the tax write-off benefits of depreciation. Depreciation is an accounting deduction that the IRS allows you to take for the overall wear and tear that occurs on the home over time. Only the building can be depreciated, not that land. The value of a residential structure is depreciated over 27 ½ years at a rate of 3.64 percent of the building value per year. For example, if you buy a residential rental property for $300,000, and the building is worth $200,000, you can take $7,280 each year as a depreciation deduction ($200,000 x .0364)
In addition, if your rental property shows a loss for the year, you may be able to deduct the loss on your tax return. It’s a good idea to consult with your tax advisor to help determine which deductions you qualify for and other tax implications for your situation.
For more information on Windermere Evergreen please contact us here.
How Neighborhood Affects Home Value
Whether you’re buying or selling, accurately pricing a home requires professional assistance from someone who knows the neighborhood.The “estimated” home prices you see posted online can be off by tens of thousands of dollars – not because they’re dishonest, but because the computer programs generating these guesstimates don’t take into account the current condition of a house, the amenities that are included, the qualities of the surrounding neighborhood, and so much more.
A real estate agent’s appraisal will not only consider the selling prices of surrounding properties, as the online services do, but also take into consideration a host of other criteria. For instance, when it comes to assessing the surrounding neighborhood, the following factors can often significantly affect the market price of a home:
School quality
The quality of neighborhood schools has a dramatic impact on home price, whether buyers have school-age children or not. In the most recent study on the subject, researchers from the Federal Reserve Bank of St. Louis found that above-average public schools (those with math scores 4.6 percent better than the average) increased the value of nearby homes by 11 percent (or an average of $16,000) in the St. Louis area.
A park within walking distance
Parks are so important to families today that simply having one within a quarter mile can increase the value of a house by 10 percent, according to a new study from the University of Pennsylvania’s Wharton School.
Stores nearby
The impact that retail areas have on home values depends on the type of community. According to a study recently released by the Massachusetts Institute of Technology, homes in urban areas sell for six percent to eight percent more than average if they’re within a quarter mile of a retail cluster (shops and restaurants). However, in suburban communities, it’s the homes that are a mile from any retail centers that sell for the most (homes located closer than that actually sell for 8 percent less than average).
Freeway access
Because we’re a car-oriented society, most people are willing to pay more to live within a couple miles of an on-ramp to a major highway or freeway, which saves gas and speeds commute times. However, if the home is located too close (within a half mile of the freeway), the associated noise and air pollution can push the price in the opposite direction.
Vacant lots in the vicinity
Being surrounded by vacant land can be a good thing in rural areas, but it’s usually a negative for urban homeowners. A recent Wharton School study found that higher concentrations of unmanaged vacant lots in an urban neighborhood drag down the values for surrounding homes by an average of 18 percent.
Proximity to nuisances and environmental hazards
Two recent studies (one from an Arizona assessor’s office, the other by the University of California Berkeley) show that homes located near a landfill or power plant usually sell for four to 10 percent less than more distant homes. The same can usually be said for homes located too close to manufacturing facilities – especially those that make lots of noise or produces noxious odors.
Neighborhood foreclosures
According to a recent study by the Massachusetts Institute of Technology, the value of a home decreases by one percent for every foreclosed home within 250 feet of it. Why? The lower sales prices of foreclosed homes can quickly drag down the neighborhood’s comparable prices. Plus, the owners of these properties usually don’t have the money or interest in maintaining them after they go into foreclosure, which can create an eyesore for all the other homes in the vicinity.
Percentage of homeowners
Are there more owners than renters living in the neighborhood? If so, property values are usually better than average. Homeowners tend to take better care of their property than renters or landlords, which improves the curb-appeal for the whole community.
Public services
Some communities have a wealth of quality public services available to them – including regular street cleanings, scheduled street repair, graffiti removal services, landscape maintenance, neighborhood beautification efforts, and more. Needless to say, homes lucky enough to be located in those areas typically command higher property valuations.
Home sellers can use these factors to justify a higher asking price. Buyers can use them to try and negotiate something lower. However, when it comes to attaching specific dollar amounts, that is something best left to your real estate agent, an objective professional with a deep understanding of the local market.
If you are looking for an experienced real estate, connect with us here.
Find a New Home in Four Steps
Whether you’re a first-time homebuyer or a current owner looking for a bigger home, the ideas below will help you better navigate that all-important first step: Finding a property that you like (and can afford).
The search for a new home always starts out with a lot of excitement. But if you haven’t prepared, frustration can soon set in, especially in a competitive real estate market. The biggest mistake is jumping into a search unfocused, just hoping to “see what’s available.” Instead, we recommend you first take some time to work through the four steps below.
Step 1: Talk to your agent
Even if you’re just thinking about buying or selling a house, start by consulting your real estate agent. An agent can give you an up-to-the-minute summary of the current real estate market, as well as mortgage industry trends. And can also put you in touch with all the best resources and educate you about the next best steps. Plus much more.
Step 2: Decide how much home you can afford
It may sound like a drag to start your home search with a boring financial review, but when all is said and done, you’ll be glad you did. With so few homes on the market now in many areas, and so many people competing to buy what is available, it’s far more efficient to focus your search on only the properties you can afford. A meeting or two with a reputable mortgage agent should tell you everything you need to know.
Step 3: Envision your future
Typically, it takes at least five years for a home purchase to start paying off financially, which means, the better your new home suits you, the longer you’ll most likely remain living there.
Will you be having children in the next five or six years? Where do you see your career heading? Are you interested in working from home, or making extra money by renting a portion of your home to others? Do you anticipate a relative coming to live with you? Share this information with your real estate agent, who can then help you evaluate school districts, work commutes, rental opportunities, and more as you search for homes together.
Step 4: Document your ideal home
When it comes to this step, be realistic. It’s easy to get carried away dreaming about all the home features you want. Try listing everything on a piece of paper, then choose the five “must-haves,” and the five “really-wants.”
For more tips, as well as advice geared specifically to your situation, contact an experienced Real Estate Agent by clicking here.
