Whether you're a new homeowner or you've been in your house for years, why not resolve to make 2007 "the year" you whip your house and household finances in top shape? It could prevent you from encountering costly problems down the road - and assist you in getting top dollar when it comes time to sell.
The first thing you should do is develop and then implement a maintenance plan.
"A homeowner who makes the necessary yearly investment will end up saving in the long run because routine maintenance can help avoid larger, more expensive repairs that can add up to the tens of thousands of dollars or more," said Mike Kuhn, director of technical services for Housemaster, a New Jersey-based home inspection company. "It is just like giving your home its annual physical."
The Insurance Information Institute, the American Society of Home Inspectors, and the National Association of Home Builders offer a host of maintenance tips - tips that you should resolve to adopt wholeheartedly in the year ahead.
Water. Check visible water pipes and sewer lines for cracks, rusting and leaking; turn on faucets to test water pressure and volume; and look for clogged or sluggish drains or dripping faucets. If pipes are galvanized or steel and the house is old, be sure to check carefully along the entire length of the pipe. Wrap your pipes with heating tape every winter and insulate unfinished rooms such as garages if they contain exposed pipes. Also check for signs of leaking or rusting on your water heater.
Electricity. Check your electrical system's load center and see if there are fuses or circuit breakers; also check its age and look for signs of wear or exposed wires.
Heat. Check your heating system for gas leaks and cracks in the heat exchanger. Maintain your furnace, fireplace, boiler, water heater, space heater and wood-burning stove and have your heating system serviced every year. Clean and vacuum dust from vents, baseboard heaters and cold-air returns.
Gas. Check smoke and fire alarms and carbon monoxide detectors and change your heating and air conditioning filters. Have your appliances inspected for gas leaks and adequate ventilation.
Insulation. Your attic should be five to 10 degrees warmer than outside air. Check weather stripping and caulking around windows and doors and replace or repair it as needed. Also repair broken glass and loose or missing putty on windows.
Basement/Attic. Well-insulated basements and crawl spacers will protect your pipes from freezing. Check the basement for signs of water leaking, dampness, flooding, dry rot and termites. Check the attic for signs of leaks and any rodent or insect infestation.
Exterior. Remove all debris from gutters. Maintain your steps and handrails. Inspect your roof for damaged or loose shingles; gaps in the flashing where the roofing and siding meet vents and flues; and damaged mortar around the chimney (especially at the joints, caps and washes). Inspect your home's exterior walls, looking for possible weather-related damage like cracks and loose or crumbling mortar.
You should also resolve to get your finances in order. Eric Tyson and Ray Brown in their book Home Buying for Dummies say it's especially important to build up your reserves and get your financial house in order after you buy a home.
You should begin by resisting the temptation to splurge. Refrain from using a credit card and keep your other financial goals, like retirement, in mind. You should have at least three months' salary in your emergency fund. Try to stay away from unnecessary spending until you reach this goal.
Think about E-payments, which ensure that you never pay late, and late payments can tack on an extra five percent late payment fee.
You'll also want to think about taxes and refinancing options.
If home prices have dropped in your neighborhood since you've moved in, you may want to consider appealing your assessment since the tax is based on your home's value in most communities. Also keep your financial documents organized so you'll be more prepared at tax time.
If interest rates go down, think about taking out a new loan at the lower rate to replace your original loan. Be sure to consider how much refinancing the loan will cost you. Refinancing won't benefit you unless you plan on staying put for at least five years.
Also, plan and budget for any major repair, remodeling or decorating projects you'd like to pursue in 2007. Take your time, shop around for the best prices, and if you're hiring a contractor, get plenty of references.
If you've been putting off landscaping your house, make plans to do it now. The right landscape can increase the value of your home by 15 percent, allowing you to recoup 100 to 200 percent of your investment, according to the Association of Landscape Contractors of America.
And if you do any home improvement projects, keep your receipts. You may be eligible to minimize the capital gain that may come your way when you eventually sell. The improvement must be one that permanently increases the value and useful life of the house (like a new roof).
By keeping your house and finances in order in 2007, you're sure to thank yourself at this time next year. Written by Michele Dawson
Friday, January 12, 2007
Thursday, January 4, 2007
Buying Houses Just One Way To Invest In Real Estate
Everyone generally understands that as a real estate investor, the concept is to let someone else's rent payments pay for your mortgage and to hopefully come out with a positive cash flow at the end of the month.
There are plenty of ways to get started in real estate investing. Here are some one-line descriptions of how to do it including the pros and cons of each alternative.
Foreclosure
How it works: Purchase the property at a courthouse auction -- hopefully for less than it's worth. Fix it up, sell it or rent it out.
Pros: This is a common sense approach to getting started in real estate investing. If you can get the property for a wholesale price and then rent it out for more than your mortgage, you're on your way to building wealth one month at a time.
Cons: You get into the property and find out it has major problems costing a lot more than you'll ever recover. Ever heard of concrete being flushed down the drain (usually out of spite from the former owner)? It means having to remove all the sewage drains. Hidden defects can run costs up and give you a red ink bath before it's done. Since the bank/note holder is selling the property as-is, there's not much recourse.
Fixer-Upper
How it works: Purchase a property that needs major repairs. This is not a property that just needs paint and carpet. This type of property usually has rot, flooring, roofing, basement and just overall problems. But that's what makes it so enticing.
Pros: For investors with their repair ducks lined up in a row, this can be a good money maker. The key here is to hammer on the seller early in the negotiating process. Get the house for as low as possible and know what your bottom line really is.
Cons: For those wanting to flip the property, if you can't make $30,000 -- $50,000 on the projected profit, then you may want to pass. Why? An unseen defect can run into the tens of thousands of dollars really quickly.
Retail Investment
How it works: Keep your eye open for under-priced properties in an area where rentals are brisk. This would be a house that really does just need paint and new carpet. Be sure you know what the rents are before going into the property. You want a positive cash flow before you even walk into the property.
Pros: A house that is in good shape can rent for years without any major expenses if it was taken care of early on.
Cons: Good rental properties -- say, in a college town or near a military base -- don't come on the market often, so you could be waiting a while before you find one. (Experienced investors usually scoop these up before the novices even know they're on the market.)
Paper Real Estate
How it works: This one is where you invest in the mortgages of real estate instead of the real estate itself -- financing second trusts, purchasing mortgages at a discount, wraparound mortgages, etc.
Pros: For those who have cash, this one can give major returns on your money. For example, if you can pick up a $20,000 note at 12 percent for $15,000, your return on the note jumps to 16 percent. This is not going to fluctuate like the stock market is sure to do.
Cons: Your mortgagee (the borrower) could skip town, leaving you to foreclose -- right behind the first-trust note holder who usually gets paid first in a foreclosure.
These are just a few of the ways you can get started in real estate investing. For more education, find a good REALTOR® to start working with who can show you the ropes and help you avoid the pitfalls. Written by M. Anthony Carr
Wondering What Your Home Is Worth? -- Let me show you.
There are plenty of ways to get started in real estate investing. Here are some one-line descriptions of how to do it including the pros and cons of each alternative.
Foreclosure
How it works: Purchase the property at a courthouse auction -- hopefully for less than it's worth. Fix it up, sell it or rent it out.
Pros: This is a common sense approach to getting started in real estate investing. If you can get the property for a wholesale price and then rent it out for more than your mortgage, you're on your way to building wealth one month at a time.
Cons: You get into the property and find out it has major problems costing a lot more than you'll ever recover. Ever heard of concrete being flushed down the drain (usually out of spite from the former owner)? It means having to remove all the sewage drains. Hidden defects can run costs up and give you a red ink bath before it's done. Since the bank/note holder is selling the property as-is, there's not much recourse.
Fixer-Upper
How it works: Purchase a property that needs major repairs. This is not a property that just needs paint and carpet. This type of property usually has rot, flooring, roofing, basement and just overall problems. But that's what makes it so enticing.
Pros: For investors with their repair ducks lined up in a row, this can be a good money maker. The key here is to hammer on the seller early in the negotiating process. Get the house for as low as possible and know what your bottom line really is.
Cons: For those wanting to flip the property, if you can't make $30,000 -- $50,000 on the projected profit, then you may want to pass. Why? An unseen defect can run into the tens of thousands of dollars really quickly.
Retail Investment
How it works: Keep your eye open for under-priced properties in an area where rentals are brisk. This would be a house that really does just need paint and new carpet. Be sure you know what the rents are before going into the property. You want a positive cash flow before you even walk into the property.
Pros: A house that is in good shape can rent for years without any major expenses if it was taken care of early on.
Cons: Good rental properties -- say, in a college town or near a military base -- don't come on the market often, so you could be waiting a while before you find one. (Experienced investors usually scoop these up before the novices even know they're on the market.)
Paper Real Estate
How it works: This one is where you invest in the mortgages of real estate instead of the real estate itself -- financing second trusts, purchasing mortgages at a discount, wraparound mortgages, etc.
Pros: For those who have cash, this one can give major returns on your money. For example, if you can pick up a $20,000 note at 12 percent for $15,000, your return on the note jumps to 16 percent. This is not going to fluctuate like the stock market is sure to do.
Cons: Your mortgagee (the borrower) could skip town, leaving you to foreclose -- right behind the first-trust note holder who usually gets paid first in a foreclosure.
These are just a few of the ways you can get started in real estate investing. For more education, find a good REALTOR® to start working with who can show you the ropes and help you avoid the pitfalls. Written by M. Anthony Carr
Wondering What Your Home Is Worth? -- Let me show you.
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