5 tips to stay on top of home maintenance

Where to find reliable contractors

By Dian Hymer
Inman News®

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You're not alone if your roof is leaking and you're kicking yourself for not having called a roofer during the summer months. Most people have a limited concept of preventative maintenance. This can lead to big problems that end up being more expensive than if you had routine maintenance in place.

Many buyers don't understand that home maintenance goes with homeownership. When you rent, someone else usually pays for repairs. As a homeowner, you're responsible for keeping your home in good condition.

Unless you're handy at home repairs, it can be costly to maintain a home properly. But there is a benefit at the end of the line. Buyers pay more for homes that are well-maintained and show a pride of ownership.

It can be a hassle to properly maintain your home unless you organize and prioritize the projects that need to be done. You also need to set a schedule and stick to it.

Most home maintenance can be done annually: roof maintenance (including gutters and downspouts); sealing exterior cracks; weatherproofing; a furnace and air conditioning inspection; and inspecting and cleaning the drainage system.

Mark these events on your calendar so that they can be scheduled for about a month before you'd like to have the work done. If you wait until just before the rainy season to start your annual maintenance, you could have trouble finding good contractors to help you.

Don't wait until your roof is leaking to repair or replace it. There will be collateral damage to the interior of the house. Your homeowners insurance company might pay to repair the interior damage, less the amount of your deductible, but it won't pay to replace the roof. Too many claims could be grounds for not renewing your policy.

HOUSE HUNTING TIP: Assemble a crew of contractors and tradespeople who can help you with your home maintenance. It's not always easy to find reliable people who do good work. You'll end up frustrated and having to do more oversight if you work with people who don't show up or do the job right.

Ask your real estate agent or acquaintances who own homes in the area to recommend tradespeople to you. If the seller is happy with people who have worked on the property, ask for a list of names and contact information when you close the sale.

Homeowners who haven't the time or expertise to determine what needs to be done to keep their home in good shape could ask the home inspector that inspected the house for them to do a reinspection periodically to point out areas that need attention.

One of the keys to good home maintenance is to take care of critical items as soon as they become apparent. For instance, don't postpone repairing a plumbing pipe leak. Have it repaired as soon as you notice it.

Don't assume that because your house is new that you won't have any maintenance issues. If the gutters back up on any house, even a new house, water can leak into the house or down the inside of the walls. This, left unchecked, can lead to a major repair to the framing. If repaired right away, you may just need to seal and touch up the paint.

Likewise, even though you just had the exterior painted, you still may have areas that will need touch up every year or so, especially if they receive intense sun exposure.

THE CLOSING: Don't go for the cheapest contractor or building materials just to save money. If an inferior-quality job has to be redone sooner than anticipated, your savings will dwindle.

Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide."

23 and 1/2 hours: What is the single best thing we can do for our health?

Why Rent to Own?

Although owning a house is one of the most powerful ways to increasing your wealth and stability, many people are unable to obtain the necessary financing or make the full commitment based on varying circumstances.  This is why considering a rent-to-own program may be right for you. 

These programs will typically offer a lower initial down payment and monthly rent credits which will be applied to the purchase price, freedom to make minor repairs or updates to the current property, and the ability to help improve credit while investing in the home that you would have an option to buy at the end of the term.

Some options a buyer would have to acquire the necessary funds for a down payment would be through the use of savings, borrowing from a family member, income tax refunds, or investment plans.  Another benefit to the program is that you are not obligate to buy at the end of the term.  This offers you flexibility and peace of mind if circumstances were to change for any reason.

So, should you consider it?

Before deciding on whether or not to do a lease option, it is very important to consider the potential risks that you may face as well.  In order to offer you full transparency, let's look at the problems that are involved for buyers in a lease option agreement.

Unfortunately, there are people who will decide to move forward with a contract on a home with reasonable terms under the assumption that they will be able to qualify within the 1-3 year period to which the agreement has been set. However, just like fad diets or New Year’s commitments, if you do not change your actions and habits, you will be exactly where you started when the time comes to make your decision to buy.

The downside to this is if you decide to make the down payment and apply credits towards a home that you are unable to buy at the end of the term, you would end up losing that hard earned money.  Therefore, we do not recommend for buyers to jump in on a deal until they are fully confident that they have a set plan to improve their credit and save the money necessary to refinance and make the purchase. 

The seller is not responsible for assessing your own personal situation.  This is something you need to do your homework on and make sure that you are fully comfortable with the terms and the likelihood of being able to buy when the time comes for you to make your decision.

Feel free to contact me to discuss the issue further or get together with a lender to discuss your options.

Foreclosure Property Purchasing Pitfalls

Due to the mortgage crisis our country has faced over the last several years, there are continually more and more foreclosure properties that are being put up for sale everywhere you turn.  Of course, this can be very tempting for homebuyers as people can sometimes get properties for 30% or even less on the dollar.

However, if you are considering a foreclosure property for your next purchase, there are some common pitfalls that you will need to avoid along the way to protect yourself and your future asset. 

Here are some areas to be aware of before making any serious offers:

1.     Avoid Making Emotional Offers: When you are planning on putting a bid down on a property, you need to be extremely confident with the home’s current condition, its true market value, and what will be needed to fully restore the property. 

Too many buyers will think that they found a slamming deal and fear that they will lose the home to another bidder.  So instead of taking the time to truly do their homework and complete the proper inspections and analysis, they can end up locking up a property for more than it’s actually worth.

2.    Estimate Neighborhood Values: Consider what other comparable properties are selling for and talk to a real estate professional who has a working knowledge of the area.  In fact, it’s a wise decision to thoroughly review these questions and any other recommendations your Realtor may make:

• Is this neighborhood a desirable location and how are crime rates?
• What schools would be available for my kids or future buyers?
• Were there any other foreclosures or investor sales that could negatively affect the future value of my home?
• How long do I plan on living there and how could that affect things?
• What type of appreciation should I expect?

3.    Get Preapproved: Before you even start looking at homes, you must get preapproved on a mortgage in order to know exactly what you can afford.  Sadly, many buyers can miss out on some phenomenal deals or spend hours of wasted time because they avoid this step.  Show lenders that you are a serious buyer and have your financing in place!

4.     Get Professional Help: Not only should you seek the expertise and of an experienced Realtor, but you may also need guidance from a real estate attorney or financial consultant as well.  Each professional can ensure that you are making the right choices throughout the process and can protect you from any issues you may come across along the way.

Remember that there is a lot more than meets the eye when you are trying to buy a foreclosure property.  Negotiating with the banks, filling out paperwork properly, and undergoing all the necessary inspections can be a very detailed and tedious procedure. 

I encourage you to find someone you can trust that has years of experience assisting other clients buying foreclosures for their next home or investment property. 

Happy home and investment hunting!

3 Sources of Financing for Real Estate Investors

One of the most important aspects to investing in real estate is how to finance your property.  Although all other factors may look favorable, having little to no access to good terms could be a deal breaker.  So before doing anything else, it is important that you begin to line up some potential sources and explore what options are available to you.

There are various ways to start investing in homes, and each source has its own set of strengths and weaknesses.  Your exit strategy, the condition of the property and various other factors will play a part in how you may be able to finance each specific investment.  So let’s explore 3 of these top sources:

Traditional Financing

If one of your strategies is to buy, hold and rent, then using banks may be a safe bet for some of your investment properties.  This is a source that can be considered up front when a property is in considerably good condition.  Most banks will not support the financing of a fixer upper until repairs are completed, due to the amount of risk involved.

Therefore, you may need to spend a little extra time searching for those diamonds in the rough.  Traditional financing is extremely favorable, because you can usually get some of the best interest rates, terms and closing costs when approved.  The process certainly will take longer than using cash buyers or hard money lending for example, but it can be worth the wait.

Hard Money Lenders

For those who will either be flipping a property or would need to conduct significant repairs in order to refinance may want to consider building a relationship with a hard money lender.  It is advisable to shop around to at least 2 or 3 in your area when possible to see which terms you find to be most favorable.

These loans will come with much higher interest rates (typically 12% or more), points and some type of balloon payment near the end of the agreement.  Hard money may be offered for 6 months to a year while the repairs are made, until the home is ready to be sold or refinanced for better rates. 

It is important that investors are prepared to either rent out or lease-to-own their property if perhaps the home is unable to sell on the market quickly enough.  Also, newbie investors beware!  Flipping houses can be more difficult that it may seem, and you must have a solid plan in place so that you are not forced into a tight financial situation.

Private Lending

Before ever considering this option, it is strongly encouraged that you talk with a local attorney that specializes in SEC policies.  Laws can vary on a state by state basis, so it is important that you have a good understanding of those guidelines before building any relationships with private lenders.

However, when done correctly this can be a powerful resource available to you, that doesn’t require credit checks or adhering to all the strict guidelines enforced on mortgage companies.  Private lenders can be nearly anyone who has access to the necessary funds for your purchase (i.e. your doctor, friends, family, or investor club).

Typically private lenders can receive anywhere from around 9% and up for their investment, which is secured by the property and can be a great investment for them based on today’s rates.  Loans can be negotiated on a property by property basis so that each investor only funds the deals that they are comfortable with.

With these 3 examples alone, you may have all that is needed to start funding real estate deals.  So now you can take action and begin building the relationships and networks of lenders that you will need in order to start investing.

Are you in need of referrals?  If you need a list of preferred lenders that I  can recommend for your investment business, please feel free to send me an email: rhonda@rhondasrealestate.com.

7 Tax Benefits Of Owning Real Estate

There are so many advantages to purchasing your own home.  For instance, it offers the pride of ownership, provides an overall sense of accomplishment, and is a place where you and your family will build many lasting memories.  Among others, real estate opens the door to many tax benefits as well.  Here are some of the ways that owning a home can help to create a tax shelter.

1. Mortgage Interest & Points: If mortgage debt is $1,000,000 or less, married couples filing jointly can deduct the full amount of their interest.  Otherwise, those filing separately can write off up to $500,000 worth.  This also includes second homes or adjacent land to your main residence.  Points on either a home purchase or refinance can also be deducted, but these must be amortized for the latter.

2. Property Tax Deductions: All state and local taxes regardless of how many properties you own can be deducted, up to the alternative minimum tax required by law.  Funds that are held in escrow accounts can only be written off once the taxes are paid.

3. Private Mortgage Insurance (PMI): A portion of PMI can also be deducted if household income is less than $109,000 per year or $54,500 for those filing separately.

4. Interest On Home Equity Loans: As long as you have the necessary equity in your home to secure the required debt, you can write off the interest on a loan of up to $100,000 for those who are married filing jointly, or $50,000 when submitted separately.

5. Working From Home: That’s right!  Even those who use a portion of their home for work purposes are able to deduct a percentage of the home’s depreciation, utility/maintenance costs and insurance.  This is one you definitely want to review with your tax professional to make sure you are getting the maximum available to you.

6. Home Maintenance Interest: This is a tricky one, as you can write off the interest on any capital improvements made to your home, which will increase value and/or prolong the life of your home.  This includes certain types of restorations or additions made to the home with no cap on the investment.  However, you will not be able to deduct minor patching or cosmetics made to the home.

7. Capital Gains/Selling Costs: As long as you have lived in your primary residence for at least 2 of the last 5 years, you are permitted to sell your property for up to $500,000 of profit for married couples filing jointly, or $250,000 for singles with absolutely no tax penalties.  However, if you end up selling for an amount above either threshold, you can subtract the amount of closing/selling costs that you incurred from your total gain.  Those who fall outside of the 2 out of 5 year limitation may be granted an exception given certain unique circumstances such as health problems, relocating for work or other such occurrences.

Therefore, it pays to consider the benefits of homeownership and to discuss with your tax professional what you may qualify for.  Especially for those who are entertaining the thought of buying instead of renting, it is very important to consider the long-term impact that owning real estate can have on your overall financial future.  There are advantages whether you are buying for yourself or investing in properties for additional income.  For more information to start exploring what options may be available for you, feel free to contact me...I'd love the opportunity to assist you!

How to Better Manage Your Credit Score & Maintain Peace of Mind

 Credit Crusher:

Let’s face it.  We live in a credit crazed society.  The times have certainly changed, and more and more business is now being conducted with the simple swipe of a card.  In fact, a high percentage of the purchases we make on a daily basis are completed by using either credit or debit.  These cards are very convenient, easy to carry and are usually safer than walking around with a wad of cash in our wallets or purses. 

On the other hand, credit is a strong indicator of your spending habits, and can even make or break you when applying for loans or larger purchases.  Just like fire, if credit is not contained and channeled properly, it can easily consume your financial status and engulf everything in its path.  Therefore, we need to know what is healthy, how the bureaus evaluate our information, and what we can do to employ better habits in our own lives.


According to Creditcards.com, the average credit card debt per household with credit is a whopping $14,750!  This statistic is staggering evidence that we have allowed things to get out of control; thus, we must take action to improve our own situation.  Although this brief, yet seemingly long post is not intended to teach you how to pay off your outstanding debts, it will reveal the very behaviors you must begin to practice in order to maintain healthy credit and to keep your financial house in order. 

What Exactly is a Credit Score?

A credit score is simply the statistical likelihood of a person falling 90 days behind on a particular loan obligation within a 2 year period.  In fact, there is nearly a 99% higher chance of a person with a 620 or lower credit score to end up 90 days behind than for those who have an 800.  So your score is a very strong predictor of future outcomes. 

Now each credit bureau will use their own unique scoring system when evaluating your information, so that is why your score will fluctuate somewhat on every report.  These numbers will also differ depending on the type of debt your take on, such as mortgages, car loans and consumer debt.  The obvious reason for this is that each carries its own unique risk factors that must be considered.   

35% of your score is made up of your history of delinquencies (30 days plus), and another 30% is your revolving debt ratio.  Since this makes up 65% of the total pie, it is imperative that you pay your bills on time and keep down the total amount of debt you incur.  This will also help you to avoid the temptation of over borrowing when you don’t have the means to pay. 

It is noted that there should be some type of activity on your card at all times, so try paying the statement balance that is owed for the month while allowing the remaining amount to carry over to your next bill.  That way you never have a zero balance and can avoid heavy interest charges.  Also make a point of paying the debt before the statement date, so that it always reports the lower amount and boosts your score.   

Next, another 15% of your score is based on the age of your credit.  So, it's wise to always keep your oldest lines open.  The remaining 20% is split up among the combination of credit (i.e. mortgage, car, consumer, etc.) and hard inquiries.  Experts report that a healthy credit mix usually contains around 3-5 revolving accounts, 1-2 automobiles, 1-2 mortgages and 3-5 hard inquiries each year.

Now for clarification, there are both “hard” inquiries and “soft” inquiries.  Each “hard” inquiry reduces your score by almost 3% for the first 10 each year.  After that, the reduction rate goes slightly down.  “Soft” pulls would be anything that is considered to be personal or promotional in nature, such as your yearly account review.

Credit Report Resources

If you have not taken the time to review your credit report lately, you can run a free search at http://www.annualcreditreport.com.  You have the choice of pulling reports from all 3 bureaus at once, or you can choose to do one at a time throughout the year.  Each entity (Experian, Equifax, and Transunion) is required to give you one free report each year. 

Did you know it is estimated that 70% or more of reports indicate some type of error?  Therefore, it is highly likely that you will have something that must be disputed within your lifetime.  Be sure to stay on top of this, because it can affect you and your overall score greatly.

A second great resource for reporting is located at http://www.missingmoney.com.  Want to find out if you or another relative is entitled to receiving money?  It’s possible that there are lost assets out there that are rightfully yours but were in fact never paid.  This site offers a free and comprehensive search to help track down any lost assets that have accumulated over the years.

Myth Busters:

Below are five questions that involve common misconceptions about things that affect your credit score.  Take the time to answer each one.  I've provided the answers for you, so don’t try to peak just yet.  Let’s see how well you know your stuff!

1.  My credit score will improve if I close unused credit cards.

2.  FICO credit scores should fluctuate somewhat between all 3 credit bureaus.

 

3.  Once married, my credit report will be merged with my spouse’s.

4.  Your credit score is negatively affected every time you request a copy of your credit report.

5.  Annual household income is not a part of your FICO score.

Answer key: F, T, F, F, T

What Affects My Credit Score?

Now, in order to build up a credit score, you must have an account that is at least 6 months old and has had updates within the last 6 months, with no active disputes.  Any negative history can remain on your reports for up to 7 years. 

However, if you went through Chapter 7 or 13 bankruptcies, records could remain on your report for as long as 10 years.  Also keep in mind that by signing on as an authorized user with another who has strong credit will also boost your score.

Next, “hard” inquiries will only negatively affect your record for 1 year, even though they may show up on your report for 2 years.  While this is the maximum amount of time that negative marks can remain on your report, creditors can wipe records clean at any time throughout this timeframe using their own discretion.  

For scoring purposes, revolving credit will typically have more of an impact than installment accounts.  The only real exception for this are mortgages due to the size of the debt and the amount of time it takes to pay down. 

On the other hand, all secured and unsecured credit cards (including department store cards) score the same.  If you use any bank issued cards, it is possible that if you pay off the full amount on your card every month, they may choose to lower your maximum available credit over time.  Remember that a higher credit limit will help lower your debt ratio, but this shouldn’t be used as a way to drive yourself into further debt.

American Express (AE) functions as a revolving account, and actually reports the total amount owed on your card as being your credit limit.  Therefore, it is wise to have all AE debts paid off before running a credit check as it will be bypassed in the report.

I hope this information is both insightful and encouraging.  As always, I'm here to help you in any way I can.  If you need further assistance or guidance, feel free to contact me at any time.  It is my goal to provide you with the best service and contacts available so that you can improve your finances and future!

Email: rhonda@rhondasrealestate.com

Investing in Real Estate vs. Stocks

When it comes to investing in land/real estate or stocks, there is no one size fits all.  Although both vehicles have proven over the long run to provide excellent returns when handled properly, each person will have their own unique goals, risk tolerance, and capital that they are willing to spend.

Additionally, this is where a financial planning specialist may offer useful insights as well.  You may have heard the advice to not put your eggs all in one basket.  Therefore, it may even be beneficial to consider pursuing both forms of investments to better leverage your profits.

So our goal is to offer an overview of both sides of the coin in order for you to start forming your own opinion.  All in all, it is most important that you proactively take your financial future into your own hands and only pursue the path that you feel will be the best for you and your family.

Benefits of Investing in Land or Real Estate

Many very successful people started out their investing careers in real estate.  Plus regardless of what happens in the economy, it is factual that people will always need a place to live.  Homes very rarely decrease in value when they are well maintained and purchased correctly.

In addition, land can be an extremely lucrative investment since the world’s population continues to increase, and as a result the demand for land used by residential, commercial and retail entities is always on the rise as well.

With real estate you are offered something that is tangible and can be easier to calculate your due diligence.  In other words, after reviewing the property specs with appraisers and inspectors, you have a fairly good idea of what you are getting into.

Downside of Real Estate Investments

First of all, there is typically a lot more time and energy invested in managing your investments.  Whether you are renting your property out to tenants or keeping your lots clean and free of debris and coding violations, this is something you will be much more actively involved in.

Next, real estate always has some sort of cost involved.  Regardless of what you decide to do with your properties, you will still be responsible for taxes, insurance, utilities, repairs/maintenance and possible a host of other expenses.  Plus you can end up overspending and losing your shirt.

Finally, you have to have the proper investment strategy in place.  Although real estate has historically been a strong hedge against inflation, you always need to consider your own local trends so you can properly leverage your investments to realize a strong ROI. 

Benefits of Investing in Stocks

Unlike real estate, this is an investment that can be essentially placed on autopilot.  Aside from keeping an eye on your portfolio for rises and dips, you can leave the management and operation of each entity up to the professional staff.  You own a piece of each company without having to work for it.

Even with the Great Depression and other scares that we have witnessed over the last century, stocks have historically proven to be the best return on investment for those who hold on through the tough times and invest their returns properly.

Additionally, it typically doesn’t take a huge upfront investment to get involved in the market, and this is very beneficial for those who don’t have a lot of cash on hand.  As long as you choose the right companies, earnings will continue to increase.  Selling your stocks is also infinitely easier than listing a property or land for sale as well.

Downside of Stocks

On the other hand, the greatest benefits of stocks can sometimes be the most detrimental weaknesses.  For example, though you do not need to actively invest sweat into each company, you are also leaving your finances in the hands of a management team that dictates how things operate.

Therefore, if business takes a nosedive so do your stocks.  Some will recover while others may crash and burn.  Also, this can be a very emotional game.  Especially for those who are getting closer to retirement, the couple scares that we have witnessed in the last decade caused many people to pull out at huge losses.

Finally, stocks can be a lot more unpredictable, especially if you are jumping on the bandwagon of rising trends or promising starter companies.  Though some may end up being a homerun, you are always listening to the speculations of gurus or your own gut feeling.  Alternatively, real estate can typically be more accurately measured.

So...it's important that you take the time to assess the investment opportunities that are available to you before making any decisions.  It is important to look out for your financial future and well being, and I'm here to support you along the way.

If you need more information about how you can get started investing in real estate or land, and want to discover the options available in the area, take the time to contact me today.  

rhonda@rhondasrealestate.com