Local Real Estate News

 |  May 2016

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.

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.

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.

Existing-Home Sales Spring Ahead in March

Bolstered by big gains in the Northeast and Midwest, existing-home sales bounced back in March and remained slightly up from a year ago, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 5.1 percent to a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February. Sales rose in all four major regions last month and are up modestly (1.5 percent) from March 2015.

Lawrence Yun, NAR chief economist, says home sales had a nice rebound in March following February's uncharacteristically large decline. "Closings came back in force last month as a greater number of buyers – mostly in the Northeast and Midwest – overcame depressed inventory levels and steady price growth to close on a home," he said. "Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures."

"The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly," adds Yun. "Additionally, a segment of would-be buyers at the upper end of the market appear to have been spooked by January's stock market correction."

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage ticked up from 3.66 percent in February to 3.69 percent in March, but remained below 4 percent for the eighth straight month. The average commitment rate for all of 2015 was 3.85 percent.

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