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Category Archives: Real Estate

Hiring Property Management Companies, Here Its Advantages

There are always headaches that go along with investment property. There is no such thing as the perfect property to invest in, with the perfect tenant renting from you. Your investment property can be a lot less stressful, however, with a little help. We’re going to take a look at some of the advantages of hiring property management companies, and what to look for when interviewing them. A competent property manager can add significant value to your investment, which is why many seasoned real estate investors will tell you that a good management company is worth their weight in gold. Here are a few ways that a good property manager earns their keep :

Marketing

A good property management company knows how to market your investment property. This includes keeping your unit(s) full almost all of the time. A good manager will know the different avenues to advertise your vacant property, and know ahead of time when to start advertising because a lease is almost expired. Marketing your property also includes doing local market studies on what the maximum you should be charging for rent while making your property competitive with other units.

Another useful tool that property management companies provide is finding the right tenants for your property. They are well versed in conducting security and criminal background checks. Your manager will also be able to run credit reports on prospective tenants, and will be able to verify previous landlord references.

Management

The management aspect of this includes collecting and depositing your rent, which is especially helpful if you have multiple properties. It also includes providing routine and emergency maintenance for your units, and conducting routine inspections of your property. As for the maintenance, a property manager with any previous experience will have a list of contractors with whom they have done work with, and have done a good job for them in the past. As for the inspections, once a year is acceptable, once every six months is preferred. You will also want to know how you will be notified of these results, and when.

Another thing I don’t like to deal with is conflict resolution. This could be between two different tenants, a tenant and a neighbor, or a tenant and their lease. Either way, if your tenant has an issue, they call the property manager, and it is their job to sort these issues out. You will usually only be notified if there is an immediate legal issue that needs resolved by you.

Higher Quality Tenants

Think of tenant screening as the moat and draw bridge around your castle. It is certainly possible to get a bad tenant out of your home once they are in, but it’s a real hassle and you are so much better off never accepting them in the first place. A thorough screening process results in reliable tenants that:

  • Pay on time
  • Rent longer
  • Put less wear and tear on the unit
  • Generally cause less problems

An experienced property management company has seen thousands of applications and knows how to quickly dig for the real facts about candidates and analyze that information for warning signs. By allowing a management company to handle the screening, you will also be shielding yourself from rental scams directed at owners, and discrimination lawsuits resulting from an inconsistent screening process. This kind of experience takes time, and insomuch as it means avoiding bad tenants, scams and lawsuits it is arguably one of the most significant benefits a property management company will provide.

Fewer costly and time consuming legal problems

Veteran landlords know it only takes one troublesome tenant to cause significant legal and financial headaches. A good property manager is armed with the knowledge of the latest landlord-tenant laws and will ensure that you are not leaving yourself vulnerable to a potential law suit. Each state and municipality have their own laws, these plus federal law cover a number of areas including but not limited to:

  • Tenant screening
  • Safety and property conditions of the property
  • Evictions
  • Inspections
  • Lease addendums
  • Terminating leases
  • Handling security deposits
  • Rent collection

Avoiding a single law suit can more than pay for the property management fees, and spare you time and anguish.

Shorter vacancy cycles

A property manager will help you perform three critical tasks that affect how long it takes to fill your vacancies:

  • Improve and prepare the property for rent – A property manager will suggest and oversee cosmetic improvements that maximize revenue.
  • Determine the best rent rate – Too high and you are stuck waiting, to low and you’re losing money every month the tenant is in the unit. Determining the optimal price requires knowledge of the local market, data on recently sold comparables, and access to rental rate tools.
  • Effectively market your property – An experienced property management company has written hundreds of ads and understands what to say and where advertise in order to get a larger pool of candidates in a shorter period of time. Additionally because of their volume they can usually negotiate cheaper advertising rates both online and offline. Lastly, they are familiar with sales and know how to close when they field calls from prospects and take them on showings.

Tighter rent collection process

The way you handle rent collection and late payments can be the difference between success and failure as a landlord. Collecting rent on time every month is the only way to maintain consistent cash-flow, and your tenants need to understand this is not negotiable. By hiring a property manager, you put a buffer between yourself and the tenant, and allow them to be the bad guy who has to listen to excuses, chase down rent, and when necessary, evict the person living in your property.

If you let them, your tenants will walk all over you. They have to be trained to follow every part of the lease or deal with the consequences. Property managers have an advantage because tenants realize that they, unlike the owner, are only doing their job and are obligated to enforce the lease terms. Many property managers will tell you that it is considerably easier to manage other people’s units rather than their own for this reason.

Regarding evictions, there are strict laws concerning the eviction process, and doing it wrong, or trying to evict a “professional tenant”. A good property management firm knows the law and has a good process for obtaining the best possible outcome given the circumstances. Never having to handle another eviction can be a compelling reason to consider hiring a property management company.

Better tenant retention

While its easy to see the effects of lost rent, there are other equally serious problems with a high tenant turnover rate. The turnover process involves a thorough cleaning, changing the locks, painting the walls and possibly new carpet or small repairs, not to mention all the effort associated with marketing, showing , screening and settling in a new tenant. This is a time-consuming and expensive process that can often be averted by keeping tenants happy and well cared for.

A good property management company will have a time-tested tenant retention policy that ensures happy tenants with lengthy stays in your properties. These kinds of programs require a consistent, systematic approach, which is where a good property management company will shine.

Personal benefits for owners

  • Less stress – Avoid having to deal with middle of the night emergencies, chasing down rent, evicting people from your property, tenants who wreck your property, rental scams, lousy vendors, piles of paperwork.
  • More freedom – Live and invest wherever you want with the constraint of needing to be near your properties. Additionally you can live and travel without the requirement of always being available in the event that your tenants have a need you have to tend to. Once you have found a good management company, it doesn’t matter if you live in the same state. Some landlords live in other countries and simply collect their check every month without ever seeing the property.
  • Free up more of your time – Time is money, and for many investors, their time can be more profitably spent in areas other than servicing their properties. When you focus on asset management you’re working ON your business, when you manage your own properties you work IN it. Additionally you have more time to spend with family or friends doing things you enjoy.

Assistance with taxes

A property management company can help you understand which deductions you can claim, as well as organize the necessary forms and documentation to make those claims. Additionally, the property management fees themselves are also tax deductible.

Lower maintenance and repair costs

Good maintenance and repairs keep tenants happy and preserve the value of your investment which make them a very important part of land-lording. By hiring a management firm you gain access to both their in-house maintenance staff, as well as their network of licensed, bonded and insured contractors who have already been vetted for good pricing and quality work. This can translate into significant savings compared to going through the yellow pages and hiring a handyman yourself. Not only is the firm able to get volume discounts on the work, they also know the contractors and understand maintenance issues such that they are capable of intelligently supervising the work.

Increase the value of the investment

Preventative maintenance is achieved through putting systems in place that catch and deal with maintenance and repair issues early on, before they grow into larger more costly problems. This requires a written maintenance check program, detailed maintenance documentation and regular maintenance visits. The management firm can also offer you suggestions and feedback on upgrades and modifications, both how they will affect the rent you can charge, as well as their impact on maintenance and insurance.

Great Time Buying A Home

Now that you are prepared financially, you might consider what the best time is to buy a home. Ideally, the best time is when interest rates are low, when it’s a buyer’s market, and when the move fits your current situation, such as before the start of school, so your children are settled before starting a new school.

Unlike other goods and services that enable you to pinpoint a key buying time – buying cars at the end of the tax year, for instance, or buying linens in January – there really isn’t a perfect time of year, although there are factors that do affect the timing.  Include a little bit of excitement in the seriousness and you will be making a strong financial move. It is time to trade your rent payment for a mortgage payment? Does a mortgage payment sound too serious for you? It shouldn’t, chances are the mortgage payment on a new home will be very close to the amount you are shelling out each month in rent for an apartment or house.

Getting the Best Interest Rate

Interest rates, for instance, will affect your monthly payment as you saw in the section on costs associated with buying a home. When rates are low, you’ll pay less. When rates are high, your payment will be higher. Economic factors such as inflation, cost of living and market conditions, affect interest rates. In the past few years, rates have been at all-time lows.

Note that if you have a high-interest mortgage, you may be able to refinance to a lower rate. Likewise, if you have an adjustable-rate mortgage, you may convert to a fixed rate mortgage.

Buyer’s or Seller’s Market?

The type of market also affects pricing and availability of homes for sale. In a seller’s market, the demand for homes is high. Homes sell quickly and usually at the asking price or higher. Sellers have the advantage in negotiating. In a buyer’s market, the market is slow: Houses may sit unsold, you may find more choices and you have the bargaining edge. Your real estate agent can tell you more about the current market. If you are buying a home for the first time and are able to buy during a buyer’s market, you are in luck. If you are buying and selling, you break even. Yes, you might get a great house for a great price, but you also sell your home in that same market.

First Time Home buyers Assistance

We all know that out of the mortgage banking crisis has come tougher restrictions on getting a mortgage. The requirement of higher down payments and higher credit scores being two of those restrictions. Take a deep breath, that is not the case for first-time home buyers. Don’t have enough cash to make a 20% down payment? You don’t have to. First-time home buyers still have the advantage of using government backed FHA loans. These loans have not changed and require very little down, typically 3% of the purchase price. In addition, you can have less than perfect credit and still qualify for a FHA loan.

Parameter of Buying Home

The price range maybe the major factor in buying a property but other parameters for home-buying also play a key role. Whether you are purchasing your home as an investment, a lifestyle upgrade or both, one of the most important decisions you will make is where you want to live. Your home’s location will help determine not only the future value of your investment, but also many aspects of your everyday life. Here are some factors you should consider carefully when selecting a location.

Location and Neighborhood

The first criterion for anybody purchasing a new house is location. Be it the suburbs, the country side or the city, one should only decide after evaluation all the pros and cons. For example, the suburbs and the country side are less expensive. The property may have huge acres of beautiful land ideal for farm-houses. Since it is located by a small town, the livelihood is also simple. The negative is the long drives especially if the workplace is far off.

The city properties may be chic and stylish with the entertainment and workplace nearby; the urban lifestyle can prove to be hectic. Traffic jams and higher crime rates deter many.

City vs. Suburb vs. Rural
The setting you choose within the city or town you select will affect the amount of peace and quiet you have, lot size (if you’re buying a house), primary and secondary education options for your children, proximity to shopping, entertainment, medical services and anything else you might want or need, and more.

Types of homes

The next factor that affects the decision is the type of home that one wants. From the expensive condos and penthouses, to the more convenient single family flats, the choices are limitless. While the urban condos and penthouses are expensive, they are usually situated in high security apartments and usually are maintenance free. The single family apartments are private and but requires more maintenance. The other factor that affects house buying is the level of the apartment. Some may prefer the ground level and some the duplex.

School District
If you have or are planning to have kids, school district is certainly an important consideration. Living in a good public school district will save you tens of thousands of dollars that you might otherwise be tempted to spend on private school. And even if you don’t have kids, it may still be a good idea to consider the quality of neighborhood schools when choosing your location in order to maximize your investment. If you have difficulty finding a public school that meets your standards, you may have to pay a premium to live in a neighborhood with good schools. You will have to consider how that premium compares to the cost of paying for private school or sending your children to a sub-par educational institution.

Proximity to Work
The length of your daily commute can have a significant impact on your disposable income, quality of life and how much time you get to spend at home with your family. How long of a commute can you endure? Are you planning to stay at your current job long-term or do you expect to switch jobs in the near future? If you plan to stay at your current job, how close to work do you want to live? If you plan to switch jobs, what are the job prospects in or near the area where you’d like to live?

Safety
For most people, safety is a top consideration. You’ll often pay less to live in an area with higher crime, but if you’ll have to live in fear or if you one day become a victim, no price discount will be worthwhile. It may also be harder to resell your home or get a good price for it if you decide to sell.

The specifications inside the house

Different people have different requirement for the interiors like the number of bedrooms and bathrooms, square footage and the bonus rooms etc. The number of rooms and bathrooms needed by the customer all play an equally important. Big families need more rooms and a couple will only need two room house or apartment.

The more number of rooms means more carpet area and hence more costly. However, the square feet rating also depends on the location of the property.

Proximity to Friends and Family
The best home may not feel very homey if you live too far away from your friends and family to see them on a regular basis. On the other hand, your friends and family might end up moving at some point, so make sure this isn’t your only reason for choosing a location.

Proximity to Leisure Activities
What do you enjoy doing in your free time? If you have season tickets for a particular sports team, you may not want to live too far from their stadium. If you love to go out to eat, you might not be happy living somewhere with few restaurants. On the other hand, if your favorite thing to do is stay home, you might have more choices available to you when it comes to this aspect of choosing your location.

 

Other Facilities

The additional factors like nearness to the local school and hospitals also affect the price of the property. Plumbing, electrical, heating and cooling amenities conditions also determine the choice of the purchasers. Another thing that most new home buyers keep in mind is the repair expenses that they have to undertake after moving in. The maintenance of the house is another aspect that affects the prospective client’s decision.

Investment Property

Investment PropertyIf you decide to buy an investment property the first question you should ask yourself is how much can you afford to contribute towards the purchase each week. The answer affects what type of property you should look for and the location.

There are two types of property investment:

(a) cash flow positive property which often has little potential for capital growth; and

(b) cash flow negative property which often has potential for capital growth and often provides negative gearing opportunities which minimizes the amount of personal tax you pay.

Negative Gearing

Negative gearing is the situation where the total costs of owning the property (eg. interest payments, council rates, water rates, strata levies, insurance premiums, depreciation and the like) are higher than the income (rent) you receive in relation to the property each year. Assuming the title of the property is in your name any loss can be deducted from your personal income which can reduce the tax that you have to pay.

With this type of purchase the buyer banks on the capital value of the property appreciating over time so that when it is sold the sale price covers all the costs and still gives a profit. Capital gains tax is then paid on the profit at your marginal tax rate.

Cash Flow Positive Property

A cash flow positive property is a property where the income from the property (ie. the rent) exceeds the costs associated with owning the property leaving a profit. Assuming the title of the property is in your name the profit must be shown in your personal income tax return and you will pay tax on it at your marginal rate.

Often properties that achieve high rental returns are in areas where the property prices are already very high (eg. mining regions) and there is little opportunity for capital growth. The strategy here is to hope that the high rents cover the purchase and holding costs of the property in ashort period so that the rent becomes profit.

Buying a home now with the idea of selling it a few years or profiting from the purchase of a fixer-upper that can be resold at a much higher price, here’s what to look for when considering real estate as an investment :

Plan on a big down payment. Mortgage insurance isn’t available for investment properties, so a 20 percent down payment is required to get traditional financing. And putting even more down can result in a better rate. Also, loan costs are generally higher for investment properties.

Beware of fixer-uppers. If you’re new to investing in real estate, beware of taking on a bigger challenge than you can handle. Unless you have the skills for large-scale improvement – or know someone who does quality work at bargain prices – you’ll likely pay too much to rehabilitate the property and still make a profit on its sale. A better option is to look for properties that need modest repairs that are priced at below-market rates.

Enjoy being handy and fixing things. Opting for the landlord route brings with it lots of challenges, including making repairs. Be sure to have enough savings on hand to handle any unexpected repairs in the short term – before the rent checks start rolling in.

Income varies. Tenants come and go, and it may take a while to rent out a just-vacated unit – especially if it needs substantial repairs or rehabbing, reducing your income. But you’ll still have to pay the bills, including mortgage, property taxes and insurance.

Start small. While repairs present a challenge, so can buying a larger property than you’re ready to handle. Starting small – purchasing a single apartment, condo or duplex, for example – can help you get grounded in the idea of investing in real estate and decide whether it’s really the right step for you.

Choose your partners wisely. If you can’t afford to buy property on your own and wish to enlist co-investors, be sure you’re comfortable not only with your business partner but the agreement struck up to purchase and manage the investment.

Property taxes. Depending on the type of rental property purchased and how long it is kept, investors could discover a big increase in property taxes, if a homestead exemption had been in place for the previous owners.

 

Take These Advantage Using Home Inspection

home inspectionIf you are considering investing in a home and realizing your home buying dream, then first it is advisable to get a home inspection done. A home inspection report is of great value to home buyers.

If you are new to this, don’t you worry! In today’s post we’ll be providing you quality information on how to use home inspection to your advantage.

Home Inspection Checklist for Home buyers
First off, if you discover something about a home during the inspection that makes you uncomfortable about purchasing this home, make sure this matter is resolved in some fashion before signing your life away. However, once all that paperwork at closing has been finalized, now is the time to take care of all the small problems listed in the home inspection report.

The best time to handle these projects is before you move in and while you are moving and setting up your new home. Once you are settled and old routines are in place, you are less likely to pursue projects that are potentially disruptive to your daily flow, and some issues on that report require immediate attention.

Interior Home
Electrical: If the inspection report says that you need more load to handle the tvs, computers, printers, and other electrical items, do this as soon as possible, especially if this is an older home.

Heating & Air: Have the filters changed on both systems. It’s not a bad idea to do this twice a season, but they each need to be changed once a year at minimum. If the heating unit is nearing or past 15 years old, its efficiency is likely to be terrible. Make sure to replace this before the height of the season so that you won’t be left in the cold.

Water Heater: The limit on a hot water heater is around 15 years. If yours is reaching or past this age, have it replaced. If you are looking to save money over the long haul, consider an energy efficient model.

Ducts & Vents: Have the ducts cleaned at least every other year, but this process is inexpensive enough that it won’t hurt to have it done every year.

Make sure that the attic has proper ventilation. This is a key element to good energy flow through the house. If heat is escaping into the attic during the winter, you are losing expensive energy and reducing the life of your roof.

Insulation: Proper insulation matters most in the attic, since poor insulation can also damage your roof. Insulation can always stand to be added, and definitely should be added if it has been more than 6-7 years since insulation was last added or you have seen a steady rise in your energy bills over the last few years.

Exterior Home

Windows: If the windows haven’t been replaced in more than 20 years, they likely need to be replaced. If they are younger, they need to be caulked before winter hits every year to keep them running at the highest efficiency. Think about window tinting or other window treatments to help cool your home from the sun’s rays. Treatments will also preserve the color of the floors and furniture.

Roof & Gutters: Your roof needs to be in good shape to keep out the elements and keep your energy in. If it rains and snows heavily in your area and this roof is more than 10 years old, a new roof is in order. The energy savings will help to offset the cost.

Siding: If you have siding that requires painting, take care of this during the summer. If you have natural wood siding, it needs to be treated every 4-6 years. If there is any loose or hanging siding, have it repaired before the weather affects it any more.

Foundation: Are there cracks? Is this because of settling or some more serious problem with the soil or the structure? You might need to have an engineer shore up sags in the foundation or steps.

If your gutters are clogged, your gutters and part of the roof might come down. Make sure that the gutters and downspouts are securely attached and free of debris. We have gutter cleaning contractors across the country that can help with this.

This home inspection checklist also works for sellers to prepare their homes. So rather than having egg on your face when an inspector reports on obvious problems, you should tackle these problems head on. A home inspector in Denver once said “I’ve inspected over 5000 houses, and I’ve yet to find a perfect one.” So by no means do you have to spend thousands to get a clean bill from the inspector, but these are some key points you’ll want to address before anyone shows up with a clipboard.

About Condominiums

A condominium development can take the form of apartment-style complexes, townhouses or converted multi-family dwellings. What distinguishes it from other multi-tenant buildings is that the developer has legally declared it a condominium, and individuals can purchase units in the building or complex. In most states, this means that the development falls under specially designated laws and regulations applied to condominiums.

When purchasing a condo, the owner buys the title to his or her individual unit, up to the walls, but not including them. A common description of a condominium is a “box in the air.”

Common areas of the development, such as stairwells, dividing and outer walls, fitness centers and rooftop gardens, are under shared ownership. Each unit owner holds an interest in these spaces. In order to manage the maintenance and repair of the shared common areas, every condo development has a condominium association, also known as a unit-owners’ association. The association is elected by condo owners and makes communal decisions in the interest of the community.

Condo costs include :

  • Down payment, mortgage and property tax
  • Special assessment fees. These fees may be requested when an unexpected repair or planned modification exceeds the cost of the condo fees collected
  • Condo fees, otherwise known as maintenance fees. Condo fees are paid by every resident to help with the maintenance of the building, pay the salaries of groundskeepers, concierges or handymen, and provide luxury facilities such as a pool, gym or rooftop garden. Condo fees are paid monthly and are subject to change

Condo Associations and Fees :

The condominium association budgets and determines the condo fees for all units. Condo fees are typically determined by the size of your unit, how many units are currently occupied, and the projected expenses for building maintenance and repair.

Condo associations vary in their organization and expertise. Some questions you may want to look into are:

  • Does the association maintain a reserve of funds to pay for unexpected and potentially expensive repairs? This will help you determine whether you are likely to get hit with special assessment fees.
  • Does the development have any pending legal actions? Are there any disputes between owners, with developers or with the association that you should know about?
  • What is the association’s reputation in the building? Talk to other owners for comments or complaints about the association’s activities.
  • Has the association maintained the building in good repair? Do they handle repairs and maintenance before they become big problems? Before buying, it’s a good idea to get an inspection done on the unit you’re interested in, as well as the entire structure, to identify any potential problems.
  • Does the association have plans to add any facilities, such as a pool installation or gym, in the near future? This could cause a sudden increase in your fees. Ask to see the minutes of the last few condo association meetings, which should reveal any such plans.

Here are tips to use when buying  condo :

Determine Whether a Condo is the “Right Fit”
It’s very important to ask yourself before buying your first condo, “Should I Buy a Condo?”  As mentioned above, owning a condo is much different than owning a single family residence.  Weighing the pro’s and con’s is a must!

One major difference between a condo and a single family residence is the proximity to your neighbors.  It’s very possible you may have multiple neighbors condos attached to yours instead of your own, free-standing residence.  Can you envision yourself living that close to your neighbors?

Another important consideration in determining whether a condo is the “right fit” or not, relates to the maintenance that is usually included in the association fees.  If you enjoy cutting the grass and planting your own flowers, than likely a condo is not going to be the right fit.  Most condo communities include the lawn maintenance, snow removal (if applicable), and exterior maintenance.

Research Maintenance and Management Company
Knowing who maintains the property is extremely important!  Who is in charge of cleaning the common areas?  Is the work completed by an outside company or are the residents of the community encouraged to help with the upkeep?  A condo community that is not well maintained can be very frustrating and can also effect the resale of the condo in the future!

Most condo communities have a management company.  The management company is normally in charge of day-to-day operations.  This can include enforcing the association rules and regulations, handling questions from residents, and handling the condos finances.  When buying your first condo or tenth condo, if you have questions regarding the community rules, regulations, or fees, the management company is whom you should speak with.  As you can see, the management company plays a vital part in whether a condo community is successful or not.  If the management company is non-responsive or has a bad reputation, this is something that you should consider prior to purchasing!

Obtain Financing
Financing of a condo is not the same as a single family residence.  Just like purchasing a single family home it’s critical to get pre-approved prior to looking at condos as well as determining whether it is the “right fit.”  Obtaining financing can be tricky when it comes to purchasing a condo, as many lenders and loan products do not allow condo purchases.

Condos are very often purchased with cash due to the regulations of lenders and programs.  If you’re planning on obtaining a FHA (Federal Housing Administration) Loan, the first step is to make sure the condo community is on their approved community list.  Normally FHA requires that 80% of the units in the building are owner-occupied, so make sure the community is on their approved list, before falling in love with a property!

A buyer still can obtain a private mortgage for a condo purchase.  This often comes at a much higher cost, as many private lenders will require a minimum of 20% down on a condo purchase.  Purchasing a condo may not be the best fit if you do not have a substantial amount of money saved for a down payment.

Hire a Real Estate Agent Who Has Experience Selling Condos
Selling a condo is much different than selling a single family, multi family, or vacant land!  The purchase contract for a condo is not the same as it is for other types of residences.  There are different contingencies than the common contingencies that are in a residential purchase and sale contract.

One main difference when purchasing a condo is that most communities will require a contract to be signed in addition to the typical sales contract prior to closing.  The contract that a community will make you sign usually will state that you understand and agree to the association rules and regulations.

Due to these differences, it’s important you work with a real estate agent who has experience selling condos!  A real estate agent who has experience selling condos, will know how to guide you through the process and ensure important documents are not overlooked.

Know What the Condo Includes
This may sound like a silly tip, but it’s important to know exactly what the condo includes.  When purchasing your first condo, make sure you find out if the condo includes a reserved parking spot or additional storage!  Does the condo community offer additional parking for your guests who visit you?  Is the parking spot in a covered garage?

During a recent condo sale in Rochester, NY, the seller rented her parking spot out to one of her fellow community residents.  Fortunately, there was no long-term agreement between the seller and their neighbor!  It’s important you know that the parking spaces and/or additional storage areas are going to be available at the time of closing before you purchase the condo!  The last thing you want to find out is you have no where to park your car a week prior to closing.

Know What the Association Fees Are
In most condo communities, there is a monthly, quarterly, bi-annual, or annual fee that is required by each resident.  The association fees are used to cover common expenses such as insurance and maintenance.

A well-run condo community will be happy to share their financial statements to a potential purchaser.  It’s important to know when buying a condo that the community has a large amount of reserve funds in the event a major repair is required, such as a roof replacement.  Ask the community how the association fees are divided and where they are distributed too.

Association fees can also impact whether a buyer can afford the condo or not.  When approving a buyer, a lender is going to add the association fee into the monthly debts of the buyer.  If a condo community has a very high monthly fee, it’s possible a buyer cannot afford it, due to the high fee!

Know What the Association Fees Include
How much the condo community association fees are is a very important piece of information to know when buying your first condo.  Equally as important is knowing what the association fees include.  As mentioned above, the fees generally include insurance and maintenance.  Know exactly what the association fees include and what, if any exclusions apply.

In addition to the insurance and maintenance, association fees also commonly include lawn maintenance, snow removal (if applicable), landscaping, water, sewer services, road maintenance, and trash pickup.  In some cases, the association fees can even include the heating and electric!

If a condo community has additional amenities such as pools, fitness centers, tennis courts, or a clubhouse, these are able to be kept up from a portion of the association fee.  If these additional amenities are not something that interest you, than it is important to understand you are still paying for these amenities to be offered to other residents.

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Ask About Special Assessments
First it’s important to understand what a special assessment is.  A special assessment is typically a large fee that is charged to cover a significant project within the community.  An example of a significant project that would be considered a special assessment, is a structural repair to the condo.

Why is this an important tip for a first time condo buyer?  If a special assessment is in the future plans, it’s possible that the association fees can raise for a specific period of time.  For example, a condo with a monthly association fee of $400 could increase to $500 for a year to cover the expense of a roof replacement.  Any planned special assessments should be provided to a potential purchaser with full disclosure.

Review Association Rules
Seeing as most condos are in close proximity to one another, the communities association will have rules and regulations. Due to this, many associations will have lots of different rules and regulations, in order to “keep the peace” in the community!  It’s important to understand that unlike a single family home, you cannot make your own rules and do whatever you want.  In many cases, buyers don’t care to review the association rules and have their attorney review on their behalf instead.

Many communities will restrict the type of pets or if any pets are allowed period.  The last thing you want to find out is your animal is not allowed in the community!  Other common rules in many condo communities relate to whether a unit can be rented or not or whether there are quiet hours.  If you have ever had to deal with a bad neighbor in the past, you can understand why these rules are such an important part of a condo community!

Predict Your Future Plans
Predict the future?  Foolish, I know!  It’s impossible to know exactly what is going to occur in the future, but most people have a plan for their future.  This should be no different when buying your first condo!

A condos value typically will not appreciate as much as a single family residence.  This is why it’s important to have a good idea what your future plans are.  If you plan on remaining in the condo for ten years, then the rate of appreciation is not as important if you plan on moving in a year or two.  Just like knowing what  the future will hold for you, it’s impossible to know what will happen to market values in the coming years.

Reasons You Should Buy a Home

There are many reasons why you should consider jumping into the real estate market and buying a home. Below is a list :

  • House prices tend to rise over time, So a house is one of the best investments you can make. Home prices in the U.S. have risen three percent to six percent a year for the past 20 years. That trend is likely to continue. So if you buy a home now, you’ve put your capital in a safe investment where it is likely to grow.
  • You’ll be able to use the equity in your home for low-cost loans for other purposes. You can access the paid-up equity you accumulate in your home in the form of a home equity loan or a home equity line of credit. Because they are secured, home equity loans and lines of credit generally carry a lower interest rate than other types of consumer loans, such as auto loans. The interest on them is generally tax-deductible, as well.
  • You’ll pay less tax. You can deduct the interest you pay on your mortgage from your taxable income. The value of this tax break depends on factors like your personal tax bracket, the size of your mortgage, the rate of interest you pay on it and how long you’ve held the mortgage. As a rule, the newer the mortgage, the greater the amount of interest you pay each month and the bigger the tax break. Therefore, recent buyers with young mortgages tend to get the greatest benefit.
  • You’ll be buying a piece of real property rather than putting money in a landlord’s pocket each month. The real cost of renting is higher than the monthly payment. There is also an opportunity cost equal to the amount you would gain by using the money to purchase a home instead. Even if the house you purchased did not appreciate in price, you would be able to sell it and recoup some of the money you put into it.
  • Interest rates are currently very low. This makes it relatively inexpensive to take out a mortgage. The lower the interest rate, the less you actually pay for your house and the sooner you can pay the mortgage off. Use our calculator to see how different interest rates affect the total cost of your mortgage and the time it takes to retire it.
  • You’ll have the stability and emotional security of owning your own home. No more worrying about dictatorial or negligent landlords, rent increases or the possibility your building will be sold and redeveloped or turned into a condo. You’ll be able to live in your house as long as you like, fix your monthly payments for as long as 30 years and you’ll be in charge.
  • You’ll be able to redecorate and renovate any way you like, any time you like. Rules about the paint colors you can use will be a thing of the past. And you’ll be able to tear out walls, install a powder room and make any other improvements you want. Best of all, if you decide to sell, you’ll recoup at least part of the cost of the improvements.
  • You can have a garden. This is one of the big pluses of ownership–a little piece of land you can call your own, where you can grow tomatoes or roses, barbeque, and play with your kids and pets.
  • You Quit Renting, why contribute to someones mortgage payments when you could be paying off your own? With programs available such as the new 40-year amortizations and no money down with a good credit score, it is easier than ever to own a home. And with the current market increase in rent it can sometimes be cheaper to own than it is to rent and there is no fear of your mortgage payments suddenly increasing.
  • You’ll have Security, You don’t have to worry about your house being sold out from under you to out-of-province investors. If renting and faced with this scenario, you could find yourself faced with an unreasonable increase to your rent, thereby leaving you potentially homeless or too poor to eat. These increases could continue indefinitely so the investors can make more money or so that you will feel forced to leave and they can turn your building into a condominium.
  • You’ll have Investment, the price of real estate continues to increase every year, therefore purchasing real estate is one of the safest long-term investments a person can make. If you had the choice between putting money towards a new car or a new house, a house should win every time as it will appreciate in value over the years whereas a car does the opposite. Once you own one house and build some equity you may also be in a financial position to buy another and rent one out.
  • Pride of Ownership, one of the biggest reasons people buy properties is the pride of saying they own something. Even if it is a little starter home or apartment style condo, it is yours and you can do with it as you please, and for that, a person should be proud, as ownership is an accomplishment.
  • Freedom, you are free to do what you want in your own home, whether you want to paint the walls in pink and black zebra or put carpet on the ceiling (not recommended of course!) You have the freedom to express yourself and your personal tastes and change the house to suit your needs. You can hang as many pictures as you want and do renovations as you please. Just keep in mind that when you are ready to sell your home, not everyone may like what you do.
  • Equity, one of the best things about owning a home is that you are building equity, which gives you more freedom financially as you can access a home equity loan. You may then borrow against the equity you have built in your home for a wide variety of reasons including home improvements, paying for school for your children, medical reasons, or even starting your own business. Check with your lender, as these vary from one to the next.
  • Privacy, if you own your own house, you don’t ever have to worry about the owners checking up on you, since you are the owner! You will gain much more independence and privacy when you have your own property.
  • Sense of Community, Owning a house gives you a feeling of belonging in that neighborhood and gives you the sense of putting down roots and getting established. There are also many neighborhood groups that you can become involved in, and if you have children it may be of benefit for schools and friends.

Guide to Set up Your Home for Sale

As with any project, selling a home is easier if you’ve got a solid plan and a bit of professional help. To make the process as smooth as possible, you’ll want to start by making a list of needed projects and involving a real estate agent.

Getting Started
Your first step in preparing your home for sale is to create an overall list of things to do. This consumer guide can help, but you would also do well to consult with an experienced real estate agent who regularly handles properties in your neighborhood. If you are still trying to decide which real estate agent to list your home with, creating a things-to-do list is a good get-to-know-you exercise that will tell you a great deal about a real estate agent’s experience and how comfortable you are working with him or her. Preparing a list will also help should you decide to sell your home on your own, since you will still need to fix up prior to putting it on the market.

Though it’s certainly possible to prepare your home for sale on your own, involving a real estate agent as you make your list can be more helpful than you might think. First, an agent experienced in working with homes in your neighborhood is the most qualified person to tell you how your home will be perceived by potential buyers who shop in your market. For instance, an experienced real estate agent can tell you whether the kitchen needs painting or needs a new floor or new countertrops. Second, a real estate agent is objective and will see your home through the eyes of an outsider, just as potential buyers will. Home sale preparation is a bit tricky for those who’ve been living in the house. Things that look perfectly fine to you because you’ve been looking at them for years and years may stand out as needing attention in the eyes of an objective observer.

Taking Objective Advice When Selling a Home
While real estate agents can be great resources, they are nearly useless if you make it clear that you don’t want any bad news. We all become quite emotionally attached to our homes. In many ways, our home is an extension of ourselves, and it is difficult to have someone tell us that the shade of paint we picked out for the den is a liability in selling the house. We are bound to be a little hurt and will often respond by, in effect, shooting the messenger.

Instead, we should make a decision up front: Do we want good advice or do we want to hear only what makes us feel good? Just hearing what makes us feel good can be expensive when the final sale price for your home is determined. Selling a house that doesn’t show well can be a real nightmare, but since a realtor does not want to lose a listing, if we make it clear that we don’t want to hear anything critical about our home, he or she won’t offer such information.

Making Your Home Sale Preparation List
You’ve found an experienced local real estate agent, and you’ve made it clear in voice and action that you want a clear analysis of what needs to be done to prepare your home for sale. Together you can systematically develop a list of what will need to be done and why. Your real estate agent can help with the details and give you sound advice on how far to go with each project without spending money that you won’t get back.

Exterior appeal

Stand outside your home and compare it to your neighbours’ properties. If you do this and it makes you feel slightly mortified, it’s likely that you’ve already failed to impress your potential buyers.

Ask yourself :

  • When was the last time I mowed the lawn?
  • Have I ever cleaned those gutters out?
  • Could those window frames use some fresh paint?
  • Were those paving slabs always that uneven?
  • Don’t those children’s toys have somewhere to be?

Those gorgeous photographs of your daughter, husband, wife, nephew, best friend, cat and so forth that line the hallway and stairwell? Take them down. All of them. The ones in the bedroom too, and the living room, and everywhere else in the house. Don’t forget the cute finger painting your three year old made you for your birthday last year that’s still stuck on the fridge.

Your buyers don’t want to see the lovely life you’ve made for yourself in your beautiful home. They want to imagine the lovely life they could make for themselves in their beautiful potential new home. Don’t allow anything to clutter that vision.

Spring clean

Clean! Clean as though your life depended on it. We’re not talking about a quick once-over. Serious attention to detail is necessary here.

  • Dust the skirting boards (if you don’t know what a skirting board is, yours probably really need dusting)
  • Clean the windows (inside and out) and then polish them for extra shine
  • Dust light fixtures and furniture
  • Vacuum like there’s no tomorrow
  • Polish taps and mirrors
  • Clean out the refrigerator and (deodorise it by a placing an open box of baking soda inside it to soak up dours and wiping down the inside surfaces with vanilla extract)

Repair, restore, revamp

The devil is in the details, and the sale of your home could be hampered by simple little things that you’ve stopped paying attention to. Try to look at your home from the perspective of your buyer, and think about the details that would impress or dismay you if you were in their position. Then take care of those details immediately.

  • Replace broken light bulbs
  • Fix leaky taps
  • Fix doors and drawers that don’t open or close properly
  • Repair cracks in the walls
  • Touch up paint and repaint altogether where necessary (in a neutral color)
  • Replace cushion covers, bedspreads and curtains that are worn or have garish colours and patterns

Let there be light

Lots of natural light usually tops the list of things people are looking for in a home. This is great news if you own a home on a barren cliff top with ceiling-to-floor glass facing the afternoon sun, but that’s not always on the cards, is it?

Fortunately, there are other ways to maximize the light in your house – natural or otherwise – and give the impression of having plenty of bright, airy space.

  • Replace dim light bulbs with higher wattage
  • Don’t just pull open those heavy, dark curtains – pull them down altogether
  • In areas of your house that are particularly dark, install some extra light fixtures
  • Prune any trees or vines that are casting shadows inside the house

 

Speaking of clutter

Get rid of it. If you’ve accumulated a lot of bits and pieces over the years (and you definitely have), now’s the time to either a) throw them out, b) give them to charity or c) find proper, neat places for them in a closet or cupboard. You might even consider having a garage sale to purge your house of all that unnecessary ‘stuff’. Do whatever you need to so that your buyers never have to lock eyes on it.

Pay specific attention to :

  • Books, CDs and DVDs
  • Ornaments and knick-knacks
  • Kitchen tools and appliances that currently live on the counters
  • Potted plants
  • Posters on your children’s bedroom walls

Another idea many sellers have embraced is renting storage space to temporarily keep any extra furniture that could be making their house feel crowded. Be radical – remove half the furniture in your living room and see how spacious, sleek and light it looks and feels without it. As a general guide, there should be enough space for people to move around the room unhindered, and enough furniture to convey the room’s purpose.

Get out

Presumably your estate agent knows what she’s doing and has sold some houses before. Why not leave her to get on with it?

No offence, but prospective buyers don’t really want you hovering over them while they’re trying to nose around in your wardrobe and pass judgment on your crockery. It’s a bit off-putting. If they feel awkward, they’re much less likely to linger in your home and get the full impact of how great it is and how they’d very much like to buy it.

Control your pets

No buyer wants to be greeted at the door by your charming King Charles Spaniel. Or any other breed of dog, cat, rabbit, guinea pig and so on. If possible, remove pets altogether when you’re showing your property. Ask a friend or family member to take them off your hands for awhile. This brings us to our next point.

Effective Ways Tips for Home Buyers

Home BuyersKnow these tips before buying a home :

  1. Run the numbers! Conduct a financial plan to determine whether you can really afford to take the plunge. Assuming that you have squirreled away your 20 percent down payment (I’m not a huge fan of putting down less than that amount, even though FHA will allow it), there are still plenty of markets around the country where renting makes more sense than buying. Renting might still be the better deal!
  2. Get pre-approved for a mortgage: Pre-approval is a good gut check on your price range. Gone are the days that banks will fork over cash to anyone with a heart beat. The best way to start is to ask friends for referrals from mortgage brokers and to shop around with banks and credit unions. Make sure to compare apples to apples and to ask the broker the total costs to you at closing. You should also know that once you actually find a home, the mortgage process is on the same pain level as a root canal, only it requires more patience and there’s no Novocaine. That said, You’ll be required to pull a mound of paperwork and be prepared for multiple requests for even more documents as you move towards closing.
  3. Find an Agent: As much as everyone complains about realtors, I still think that it’s tough to go through the home buying process alone. In some markets, buyers brokers are available, but the most important qualities in brokers are: honesty, experience, good connections with other agents; and good referrals from buyers like you.
  4. Hire a real estate attorney: This is a major transaction in your life, so don’t try to save money when it comes to legal fees. Even if your mortgage company provides a lawyer, hire your own to help draft all documents and to ensure that your interests are being represented at every step of the process.
  5. Be an informed buyer: You’re not going to buy a house simply because there’s a pretty photo posted on line, but you can conduct a lot of price research. That said, there’s nothing better than talking to people in the neighborhood for “on the ground” intelligence that can be invaluable.
  6. Get a copy of your credit report: If you have done so in a while, go to AnnualCreditReport.com and request your free copy. It’s important that you correct any errors on the report before you start the mortgage process.
  7. Schedule a home inspection: Think you’ve found your dream house? Maybe, but unless you have an engineer walk through the premises with you, you might be buying a new roof in a couple of years. Don’t get freaked out if a problem arises during the inspection–remember that it can often be solved with a simple adjustment in price. It’s imperative to protect yourself so don’t blow off this important step.
  8. Purchase homeowners insurance: If you have only been a renter, this can be an eye-opener in terms of cost. Make sure that you understand the difference between insuring the structure and the contents; and if you are buying property that is close to water, make sure that you have an agent who can help with flood insurance.

Tips for Home Buyers

  1. Set enough money aside to cover closing costs without having to forgo eating for a couple of months. You’ve put together a down payment. Be aware that there is also a long list of expenses you may have to pay at closing, depending on where you live and who your lender is. “Closing costs can add up to between two and six percent of your loan,” says LendingTree’s Chief Consumer Officer, Ed Powell. He advises you to ask your lender or mortgage broker to give you a Good Faith Estimate of the loan-related fees you’ll have to pay. Get your real estate agent to compile a list of other expenses.
  2. Insist on a home inspection. The first really cold day you spend in your new house is way too late to find out that the furnace doesn’t work. The one condition you should always include in an offer to purchase is a home inspection. Find out how much it will cost to fix any defects and have the seller fix them before you agree to buy or deduct the estimated cost from the final price you offer. If the seller won’t help bear the costs and you want to go ahead with the purchase, make sure you can afford the necessary repairs on top of your mortgage.
  3. Know when to quit. When you act on emotion, rather than reason, you may end up paying too much money. This can happen when you fall in love with a particular house and start fantasizing about how great it will be to live there. Another reason you may be driven to pay too much is that a bidding war triggers your competitive instincts and you must buy the house at all costs which you will regret later.
  4. Try to coordinate the date you take possession of your new home and your moving date. If possible, avoid a situation where you’ve got to camp out with relatives or find a short-term rental because you must vacate your old house or apartment before you can move into your new digs. Moving once is enough.

Selling House in Buyer Market, Here Its Tips

Just because you’re full doesn’t mean you can’t browse the menu. And just because I’m not planning to move doesn’t mean I don’t check real estate websites regularly. As life changes — new jobs, growing families, overall changes in need — so do our priorities when it comes to the roof over our head. As a first-time homeowner, I’m an amateur when it comes to buying, and I’ve yet to wear the seller’s shoes. It all makes me wonder, how easy (or difficult) would it be to offload one home in favour of another?

“It’s technically a buyers market,” says Jason Shadbolt, Realtor for ViewPoint Realty, “mainly because there are far more listings than there are buyers. But I use the word ‘technically’ because buyers feel that houses are priced too high and, as a result, are not buying. Until sellers make a price adjustment, inventory will continue to increase and sales will remain low, not making it a preferred market for either buyers or sellers.”

While the biggest driving factor behind sales is price, there are other aspects that can draw or deter a sale that is competitive pricing and doing necessary repairs or upgrades to a home.

Here are tips to make your home as presentable and appealing as possible while keeping costs down at the same time!

Take the Cost out of Kitchen and Bath Remodels
Under normal circumstances, many folks depend on kitchen and bathroom upgrades for speedier sells and a prettier price tag. Unfortunately, with today’s economic uncertainty, Remodeling Magazine’s average of $55, 503 for a major kitchen remodel and $15,789 for a bathroom remodel are far from affordable in many cases. It’s true that kitchens and bathrooms are traditionally some of the most heavily scrutinized areas for prospective buyers, but instead of the projects suggested in a traditional remodel, these less involved jobs can enhance the space for a far smaller investment:

  • Instead of replacing your sink and/or bathtub, have it resurfaced.
  • Instead of replacing cabinetry, reface or paint it.
  • Instead of replacing old tile counters, walls, and backsplashes with stone or laminate, have your tile re-grouted and cleaned.

Saving Money Inside the Home
Traditionally, flooring upgrades and professional painting were often used to boost a selling price. Today, a little elbow grease can go a long way in these areas.

  • Instead of replacing carpet, have it professionally cleaned and re-stretched (if needed). Hardwood floors can be refinished to give them new life, but do the research to see if you feel comfortable tackling this job yourself.
  • Professional painters can do the job faster, but you can do it cheaper on your own!

Enhancing Curb Appeal Inexpensively
First impressions are very important, and it’s hard to imagine a prospective buyer going for your asking price if their first glimpse of the property is disappointing. In the past, many homeowners have installed new siding and called for professional landscaping to increase curb appeal, but each of these projects can easily run you thousands!

  • Instead of replacing siding, have it professionally cleaned. If you need a fresh coat of exterior paint, consider doing some or all of the job yourself.
  • Instead of hiring a professional, do your own landscaping.

Note: Always remember to make sure the front door is in good working condition!

Wrap It Up With Professional Cleaning
Home Advisor estimates the national average cost of hiring a professional maid service to be about $170. In many cases, maid services offer a single, thorough cleaning that is very affordable and will make your house look its very best at a fraction of the cost of any remodeling project!

One More Thing
Though they are probably two of the most neglected areas of the home, when it comes to prospective buyers, attics and basements can be real selling points. If they are clean, organized, and look like they’ve been paid attention to, a prospective buyer may easily imagine all that can be done with the space. If they look like no one’s been in them for the past 10 years, the possibilities of what they could become might not be so apparent!