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May 2015     






Investing in Real Estate

Real estate investment has it own risks and the decision to invest should be carefully considered. As a landlord there are certain costs that you will need to cover, potential vacancy problems that may strain your ability to pay your mortgages, and liability issues. It is important that you speak with an expert before putting yourself in a situation where you can potential over-extend yourself.

With that in mind, I have included some of the basic property types and benefits associated with real estate investment.

Single-family residence. First time real estate investors are usually advised to buy a single family detached home and rent it out as it's market value appreciates. The reason for the popularity is that they are relatively easy. They are easy to buy, easy to finance, and they hold appeal to buyers and renters. Also, if you find that the real estate investment game was not the right choice for you they are relatively easy to turn over. Mortgage brokers know this-so these properties are also usually easier to finance and refinance.

Vacation property and second homes. Investment options in this category are myriad, from outright purchase to fractional-interest contracts and timeshares. Even if the property isn't income producing, it can appreciate into a worthy investment, and mortgage interest is fully deductible. If you do rent the property when it's not in use, realized income and tax obligations depend on what percentage of the year it's kept for "personal use"-a tightly defined term you should discuss with a real estate attorney.

Apartment properties. Apartment properties require a long-term commitment, as well as a substantial investment of borrowed and equity capital, but due to the availability of professional managers they often don't demand a lot of personal time. If you are the do-it yourself type then you might find yourself spending your weekends painting, advertising vacancies, and repairing faucets - though the higher return might be worth it for you. They can have mortgage loans of up to 100% of value, while other investment types may require all cash. Loans can be amortized or paid with the income generated by rents.

Condominiums. Condominium investments provide a bit of extra risk. Their market value appreciates more slowly than for detached single-family residences, and rental rates usually aren't high enough to cover mortgage, property tax, and maintenance fees.

Vacant land. Vacant land is probably the least liquid and therefore usually the weakest choice for a profitable shorter-term investment. While undeveloped land is easy to maintain, it nearly always takes longer to appreciate and longer to sell.

Commercial property. To reduce personal liability and offset the greater expense of these properties, some investors form or join a limited liability company. Because of the extremely high risks involved with this type of agreement, consulting a real estate attorney is essential before taking this step. You probably shouldn't consider this arrangement if you aren't personally familiar with the other partners and their business expertise.



Keeping Cool this Summer

With the hottest months of the year upon us it is time to take steps to ensure that you remain cool. Not only will you be more comfortable, but you will also be saving money and energy. The following tips are ways that you and your home can beat the heat.

Block the sun. If you're installing new windows, your best defense against sun is heat-reflecting or low-emissivity windows. These windows contain a thin film sealed inside double-pane glass to slow heat absorption in summer and heat loss in winter.

Install film on existing windows. One type of film -- a window tint -- absorbs solar radiation; the other -- a reflective film -- reflects the sun's rays and is more transparent than the window tint. Install the type best suited to the climate in which you live. Films are left on windows year-round. Both should last at least 10 years.

Insulate your attic. If you live in a climate where summers are hot and winters are mild, also consider installing a radiant barrier -- a layer of foil to deflect radiant heat. Radiant barriers, however, do not replace the need for other insulation.

Attach awnings. Buy ready-made fabric or aluminum awnings, or build wood awnings that complement your house. Install awnings on east-, south-, and west-facing windows.

Mount outside sunscreens. Block the sun by covering windows that receive direct sunlight with screenings of bamboo, wood, fiberglass, or polypropylene.

Hang light-color interior shades. Reflect the sun with shades made with a shiny outer surface. Some fabric shades are backed by light-reflective materials.

Install a whole-house fan. If the humidity in your area isn't too uncomfortable, mount a whole-house fan in the ceiling just below the attic. These fans draw in cool air through open windows at night and push out hot air through attic vents.

Cross-ventilate. Exhaust air any time the temperature outside is cooler than it is inside. Make sure air can come in one open window and leave freely through another.

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Deck Maintenance

Summer is the best time to sit on your deck, hanging out with family and friends and enjoying your favorite beverage. For those very reasons it is important that you keep your deck looking as nice as possible. As your deck is constantly exposed to the elements it is not always easy to maintain a stunning deck, but following the tips below will get you started in the right direction:

Avoid buildup of moisture. Standing water will lead to wood decay and stains. Make sure that water is able to drain freely from your deck. It's important that the gaps between the boards are free from dirt and other debris so that the water can get through. Install drainage vents if you are still having problems with standing water.

Protect against water stains. There are usually drain holes on the bottom of most pots. Setting the pot or planter on the deck surface will leave a stain and might promote wood decay since the moisture between the deck and the pot can't evaporate.

Avoid spilling candle wax. Candle wax buildup not only looks bad, it can also have some degenerative effects on the quality of your deck. When using candles, you should put them on a level area to avoid spills. Place a container under the candle. If you do have a spill on your deck, use a putty knife to remove the bulk of the wax. You can apply hot soapy water and blot it up.

Keep pests and birds away. Woodpeckers can be problematic for anything made of wood. Other birds will often drop little, not-so-nice surprises onto your deck. Try placing a plastic owl or rubber snake on your deck to frighten these winged nuisances away.

Market

Existing-Home Sales Spike in March

Existing-home sales jumped in March to their highest annual rate in 18 months, while unsold inventory showed needed improvement, according to the National Association of Realtors®. Led by the Midwest, all major regions experienced strong sales gains in March and are above their year-over-year sales pace.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 6.1 percent to a seasonally adjusted annual rate of 5.19 million in March from 4.89 million in February—the highest annual rate since September 2013 (also 5.19 million). Sales have increased year-over-year for six consecutive months and are now 10.4 percent above a year ago, the highest annual increase since August 2013 (10.7 percent). March's sales increase was the largest monthly increase since December 2010 (6.2 percent).

Lawrence Yun, NAR chief economist, says the housing market appears to be off to an encouraging start this spring. "After a quiet start to the year, sales activity picked up greatly throughout the country in March," he said. "The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years."

"The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign," adds Yun. "For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market."

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage increased in March for the second consecutive month, rising to 3.77 percent from 3.71 percent in February. Despite the slight increase, the monthly average is still below 4.00 percent for the fourth straight month.

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