Provided By Yahoo! Personal Finance
Many lenders will offer a 'no-cost' loan in lieu of a traditional mortgage. 'No-cost' loans are generally priced at a higher interest rate than a traditional mortgage. The higher rate allows the lender to make enough money on the interest rate spread from the underwriter to pay for all your closing costs and provide them with their profit. Go to the calculator to help determine if a no-cost loan with your lender is better than a traditional mortage.
If you have questions about home loans give us a call at 972-772-7000 or email us at rockwall@kw.com.
Showing posts with label yahoo finance. Show all posts
Showing posts with label yahoo finance. Show all posts
Friday, February 25, 2011
Wednesday, May 26, 2010
Small Projects That Pay Off Big
Written By Arianne Cohen
Published By Yahoo Finance
Provided By Money on CNNMoney.com
THE ENTRYWAY: TILE THE FLOOR
Do-it-yourself: $200 for tiles (four feet by four feet); $65 for tools
What you'd pay a pro: $1,000
Skill level: 2/4
Time: 1 day
Do this if... Your neighbors all have tile entries and you don't. And definitely if you have carpeting or linoleum, says carpenter Rick Crowe of Albany, N.Y. "The cheapest ceramic tile has more curb appeal than the most expensive linoleum."
Payoff: A buyer's first impression will be a good one. "Tile makes a house look worth something," says Adam Berlin, a contractor in Littleton, Colo. and host of DIY network's Sweat Equity.
What sells a house best: Anything that looks like stone, says Berlin. "Natural stone is timeless - everybody wanted it 2,000 years ago in Rome, everybody wants it now."
It's also pricey ($4 and up per square foot); porcelain is a durable, cheaper alternative ($2.50 and up) that can look similar.
You need: Tiles, spacers, adhesive, notched trowel, grout, sealer and plywood
The basic job: You must pull up the old flooring and install a layer of plywood. Then glue, grout and seal. The hardest part is cutting the tile, which you'll likely have to do around borders. Ask the tile store if it provides this service for free.
Where to find directions: Go to doityourself.com/miscellaneousfloor.
Tip: Go for six-inch tiles or bigger. The less grouting there is, the easier cleanup will be.
THE KITCHEN: PAINT THE CABINETS
Do-it-yourself: $135 for tools and paint supplies; $5 and up per knob
What you'd pay a pro: $1,200, refacing; $5,000, replacing
Skill level: 2/4
Time: 2 days
Do this if... You're selling soon. You won't recoup the cost of fully replacing shabby cabinets with new ones (that's $5,000 and up). Refacing them is harder and costly too ($1,000-plus). A coat of paint, on the other hand, can cheaply do a lot to spiff up what you have, even if it's a bit of a cosmetic fix. "Over the long run, it'll chip and wear," cautions contractor Berlin. But hey, that's someone else's problem.
Payoff: "If buyers like your kitchen, they will go through the rest of the home," says Davis.
What sells a house best: Neutral colors like white or brown, suggests Berlin
You need: Drill, bits, tarp, sandpaper, primer, oil-based or latex acrylic paint or stain, paintbrushes (avoid rollers because they can add unwanted texture) and knobs
The basic job: On the first day, you'll remove the cabinets, sand them and apply primer. Wake up the next morning and paint or stain. Add fresh hardware to make them look brand new.
Where to find directions: doityourself.com/stry/paintcabinets
THE FAMILY ROOM: BUILD BOOKSHELVES
Do-it-yourself: $500 for two six-foot-by-eight-foot oak shelves; $200 for tools
What you'd pay a pro: $1,200
Skill level: 1/4 (fixed shelves); 3/4 (adjustable)
Time: 1.5 days
Do this if... You have an odd nook that otherwise would seem like wasted space - say, under the stairwell or alongside the fireplace - or You need: to add dimension and character to a room that lacks any architectural detailing.
Payoff: "You'll give the buyer an idea of how the space can be used," says realtor Camp.
What sells a house best: Hardwoods like oak ($10 a linear foot) and mahogany ($12) are sturdier and more appealing to buyers than cheaper fiberboard and particleboard (both $15 per eight-foot piece).Fixed shelves are beloved by realtors and designers for their clean look. Read: no unsightly brackets.
But there's also a case for adjustable. "Some people will have vases, others books," says New York City interior designer Chris Coleman. "This gives the buyer some flexibility." As for color, aim for innocuous - natural woods or woods painted off-white or beige are best.
You need: Precut wood, drill, bit, brackets and rails or shelf clips and a handsaw
The basic job: You'll spend the most time screwing brackets and uprights into the wall.
Where to find directions: Go to acehardware.com /infohome and select Project How-To's; then scroll down and click on Building Shelves.
Tip: Avoid installing shelves if your family room is small. They can make tiny rooms too cozy.
THE DINING ROOM: REPLACE THE OVERHEAD FIXTURE
Do-it-yourself: $39 to $300 for the lamp; $40 for tools
What you'd pay a pro: $700
Skill level: 2/4
Time: 4 hours
Do this if... You haven't replaced the lighting in years, and it's not meant to look antique. Brass should definitely go, says Berlin, since "that springs cheap."
Payoff: "Good lighting is critical, especially in the dining area," says realtor Camp. "The right chandelier sets the tone and makes a dramatic impact on the buyer."
What sells a house best: Think universal appeal. In other words, don't go all Liberace if your house is country-style. Also, beware of an oversize or undersize fixture, which can make the room seem out of proportion. Use your dining table as a judge: The chandelier's diameter should be 12 inches less than the table's width.
You need: Chandelier (stick to models that are less than 30 pounds - heavier ones require a fan brace to support, "and you're better off hiring a pro to install that," says carpenter Crowe), metal outlet box, wire nuts, electrical tester, electrical tape, safety goggles, bulbs and wire cutter
The basic job: First you must shut off the circuit breaker. In most homes you'll be able to hang a lightweight chandelier from an existing electrical box (more likely if it's metal). Expose the wires and unscrew the wire nuts to remove the previous fixture; then match up the wires from the lamp with the wires in the box.
Where to find directions: Go to lowes.com and select How-To Projects from the Project Center pulldown menu, then Lighting and Electric from the menu at left.
THE MASTER BATH: ADD GLASS SHOWER DOORS
Do-it-yourself: $300 to $800 for the glass-door kit; $70 for tools
What you'd pay a pro: $1,150
Skill level: 3/4
Time: 4 hours
Do this if... The room isn't particularly spacious. "A curtain divides it and makes it seem smaller," says Camp.
Payoff: Because the eye doesn't stop at the curtain, "glass doors give the appearance of more open space," Camp adds.
What sells a house best: Frameless doors, which have a clean, spa-like look. Thing is, these are hell to install on bathroom walls that aren't quite flush. Framed doors, while less ideal, are still an improvement on a curtain. If you plan to live in the house while you're trying to sell, you might consider frosted glass, "especially if your neighborhood has hard water," says Crowe. "Clear glass will show the soap scum."
You need: Caulk gun, silicone adhesive (waterproof caulk), file, hacksaw, drill, bit, punch, miter box and anchors
The basic job: You'll attach the bottom track with adhesive, then drill in the bottom and side tracks. After you install the door and panels, you'll put in the top tracks; finish by sealing the tracks with waterproof caulk.
Where to find directions: Read the paperwork that comes with the door kit - every model is different.
Tip: Pick out doors in person, visiting the showroom with dimensions in hand. Do you really want to mail back a glass door ordered online?
Are you interested in selling your home? Give us a call at 972-772-7000 or email us at rockwall@kw.com.
Published By Yahoo Finance
Provided By Money on CNNMoney.com
Make your home more appealing to buyers (and yourself) with these easy indoor upgrades you can do on your own.
THE ENTRYWAY: TILE THE FLOOR
Do-it-yourself: $200 for tiles (four feet by four feet); $65 for tools
What you'd pay a pro: $1,000
Skill level: 2/4
Time: 1 day
"The foyer is the buyer's first impression of your house," says Sid Davis, author of Home Makeovers That Sell. "If people walk in and see a bad floor, they're going to wonder, 'What else is wrong with this dump?'"
Do this if... Your neighbors all have tile entries and you don't. And definitely if you have carpeting or linoleum, says carpenter Rick Crowe of Albany, N.Y. "The cheapest ceramic tile has more curb appeal than the most expensive linoleum."
Payoff: A buyer's first impression will be a good one. "Tile makes a house look worth something," says Adam Berlin, a contractor in Littleton, Colo. and host of DIY network's Sweat Equity.
What sells a house best: Anything that looks like stone, says Berlin. "Natural stone is timeless - everybody wanted it 2,000 years ago in Rome, everybody wants it now."
It's also pricey ($4 and up per square foot); porcelain is a durable, cheaper alternative ($2.50 and up) that can look similar.
You need: Tiles, spacers, adhesive, notched trowel, grout, sealer and plywood
The basic job: You must pull up the old flooring and install a layer of plywood. Then glue, grout and seal. The hardest part is cutting the tile, which you'll likely have to do around borders. Ask the tile store if it provides this service for free.
Where to find directions: Go to doityourself.com/miscellaneousfloor.
Tip: Go for six-inch tiles or bigger. The less grouting there is, the easier cleanup will be.
THE KITCHEN: PAINT THE CABINETS
Do-it-yourself: $135 for tools and paint supplies; $5 and up per knob
What you'd pay a pro: $1,200, refacing; $5,000, replacing
Skill level: 2/4
Time: 2 days
"You'll make or break your sale in the kitchen," says Sid Davis, author of Home Makeovers That Sell. "It's the first room people head to when they look at a home, and if it doesn't meet their expectations, forget it."
Do this if... You're selling soon. You won't recoup the cost of fully replacing shabby cabinets with new ones (that's $5,000 and up). Refacing them is harder and costly too ($1,000-plus). A coat of paint, on the other hand, can cheaply do a lot to spiff up what you have, even if it's a bit of a cosmetic fix. "Over the long run, it'll chip and wear," cautions contractor Berlin. But hey, that's someone else's problem.
Payoff: "If buyers like your kitchen, they will go through the rest of the home," says Davis.
What sells a house best: Neutral colors like white or brown, suggests Berlin
You need: Drill, bits, tarp, sandpaper, primer, oil-based or latex acrylic paint or stain, paintbrushes (avoid rollers because they can add unwanted texture) and knobs
The basic job: On the first day, you'll remove the cabinets, sand them and apply primer. Wake up the next morning and paint or stain. Add fresh hardware to make them look brand new.
Where to find directions: doityourself.com/stry/paintcabinets
THE FAMILY ROOM: BUILD BOOKSHELVES
Do-it-yourself: $500 for two six-foot-by-eight-foot oak shelves; $200 for tools
What you'd pay a pro: $1,200
Skill level: 1/4 (fixed shelves); 3/4 (adjustable)
Time: 1.5 days
"Since about 20 years ago, when builders started putting in family rooms off kitchens, these spaces have really come up in importance," says Sid Davis, author of Home Makeovers That Sell.
Do this if... You have an odd nook that otherwise would seem like wasted space - say, under the stairwell or alongside the fireplace - or You need: to add dimension and character to a room that lacks any architectural detailing.
Payoff: "You'll give the buyer an idea of how the space can be used," says realtor Camp.
What sells a house best: Hardwoods like oak ($10 a linear foot) and mahogany ($12) are sturdier and more appealing to buyers than cheaper fiberboard and particleboard (both $15 per eight-foot piece).Fixed shelves are beloved by realtors and designers for their clean look. Read: no unsightly brackets.
But there's also a case for adjustable. "Some people will have vases, others books," says New York City interior designer Chris Coleman. "This gives the buyer some flexibility." As for color, aim for innocuous - natural woods or woods painted off-white or beige are best.
You need: Precut wood, drill, bit, brackets and rails or shelf clips and a handsaw
The basic job: You'll spend the most time screwing brackets and uprights into the wall.
Where to find directions: Go to acehardware.com /infohome and select Project How-To's; then scroll down and click on Building Shelves.
Tip: Avoid installing shelves if your family room is small. They can make tiny rooms too cozy.
THE DINING ROOM: REPLACE THE OVERHEAD FIXTURE
Do-it-yourself: $39 to $300 for the lamp; $40 for tools
What you'd pay a pro: $700
Skill level: 2/4
Time: 4 hours
"People who do a lot of entertaining will pay attention to this room," says Jay Fellhauer, a ReMax agent in Grand Junction, Colo.
Do this if... You haven't replaced the lighting in years, and it's not meant to look antique. Brass should definitely go, says Berlin, since "that springs cheap."
Payoff: "Good lighting is critical, especially in the dining area," says realtor Camp. "The right chandelier sets the tone and makes a dramatic impact on the buyer."
What sells a house best: Think universal appeal. In other words, don't go all Liberace if your house is country-style. Also, beware of an oversize or undersize fixture, which can make the room seem out of proportion. Use your dining table as a judge: The chandelier's diameter should be 12 inches less than the table's width.
You need: Chandelier (stick to models that are less than 30 pounds - heavier ones require a fan brace to support, "and you're better off hiring a pro to install that," says carpenter Crowe), metal outlet box, wire nuts, electrical tester, electrical tape, safety goggles, bulbs and wire cutter
The basic job: First you must shut off the circuit breaker. In most homes you'll be able to hang a lightweight chandelier from an existing electrical box (more likely if it's metal). Expose the wires and unscrew the wire nuts to remove the previous fixture; then match up the wires from the lamp with the wires in the box.
Where to find directions: Go to lowes.com and select How-To Projects from the Project Center pulldown menu, then Lighting and Electric from the menu at left.
THE MASTER BATH: ADD GLASS SHOWER DOORS
Do-it-yourself: $300 to $800 for the glass-door kit; $70 for tools
What you'd pay a pro: $1,150
Skill level: 3/4
Time: 4 hours
"If you're going to put money into a home, you should start in the rooms with running water," advises Adam Berlin, a contractor in Littleton, Colo. and host of DIY network's Sweat Equity.
Do this if... The room isn't particularly spacious. "A curtain divides it and makes it seem smaller," says Camp.
Payoff: Because the eye doesn't stop at the curtain, "glass doors give the appearance of more open space," Camp adds.
What sells a house best: Frameless doors, which have a clean, spa-like look. Thing is, these are hell to install on bathroom walls that aren't quite flush. Framed doors, while less ideal, are still an improvement on a curtain. If you plan to live in the house while you're trying to sell, you might consider frosted glass, "especially if your neighborhood has hard water," says Crowe. "Clear glass will show the soap scum."
You need: Caulk gun, silicone adhesive (waterproof caulk), file, hacksaw, drill, bit, punch, miter box and anchors
The basic job: You'll attach the bottom track with adhesive, then drill in the bottom and side tracks. After you install the door and panels, you'll put in the top tracks; finish by sealing the tracks with waterproof caulk.
Where to find directions: Read the paperwork that comes with the door kit - every model is different.
Tip: Pick out doors in person, visiting the showroom with dimensions in hand. Do you really want to mail back a glass door ordered online?
Are you interested in selling your home? Give us a call at 972-772-7000 or email us at rockwall@kw.com.
Friday, May 7, 2010
Own Your Piece of Paradise
Provided By Yahoo Finance
Source Kiplinger.com
Four-year-old Jonathan Killmer dips his toes into a creek and watches, enthralled, while his dad unloads sacks of deer feed from a pickup. As he works, Bill Killmer explains to a visitor why he bought hundreds of acres of rolling pine and hardwood forest in northeastern Georgia. Killmer, 50, grew up in Ohio, the descendant of farmers. He says he's "sort of retired" after selling a travel business and a building-maintenance company in Atlanta. He doesn't intend to plant corn or soybeans on his spread, which he calls Rosser Creek Farm -- the upcountry red clay wouldn't be suitable. His agenda: Hold the land as an investment for at least five years and "have a lot of fun while we own it." Then he may sell the farm in pieces, subdivide some land at the edges for estate-home sites -- or perhaps do nothing at all.
Killmer has counterparts all across the country, mostly in Texas, the South and the western mountain states. Investors are paying anywhere from $1,000 to $20,000 an acre for land that doubles as a private recreational escape and a diversifier for a long-term portfolio. Killmer hunts some, but as the parent of Jonathan and three teenagers, he sees the farm as a family retreat -- a place to spend lazy days angling for bass, catfish and brim in the property's ponds, as well as camping, hiking, swimming, spotting turkeys and other wildlife, and just hanging out.
About 75 miles east of Atlanta's beltway, Killmer's acreage isn't exactly in the wilderness. But it wasn't easy to acquire because it wasn't on any multiple listing service. Kevin Teston, a land broker in Augusta, Ga., worked with Killmer for a year to find the tract.
Teston believes that the land, formerly the property of a big timber company, has doubled in value since Killmer bought it two and a half years ago. Some of that appreciation is a result of its location. Atlanta is close enough that nearby crossroads towns, such as Madison and Greensboro, are sprouting coffee shops and nice restaurants. But similar vacant land twice as far from Atlanta is also heating up.
Just as other real estate investments have started losing their appeal, a growing inventory of recreational land is attracting more buyers. Major landowners, such as International Paper, Mead Westvaco and Weyerhaeuser, are divesting their forest holdings, usually to banks and insurance companies. Hardscrabble farming no longer provides a living, so kids raised on former crop land have long since marched off to Atlanta or Nashville or New York City. Old home places end up in the hands of banks and other groups of investors, who carve the property into tracts of 200 to 1,500 acres and sell it to small-scale developers and hunting clubs -- and people like Bill Killmer.
Is this a backwoods version of the investor-owned real estate glut that sank the condominium markets in Florida and Las Vegas? Possibly. Chris Hawley, chief executive officer of Mossy Oak Properties, a network of recreational-land brokers in nine states, says a recreational expanse "is just a different kind of condominium. It's just not at the beach and there are trees growing on it." But for now, Hawley, who lives and works in rural Livingston, Ala., is a very busy man.
What's it worth?
Unlike the values for homes and crop farms, prices for recreational property -- land that's not being actively farmed -- don't appear in familiar real estate indexes. The Federal Reserve Bank of Kansas City studied wildlife-related recreational land use -- hunting, fishing, camping -- and concluded that recreational appeal adds to land values, but it couldn't pinpoint precisely how much. Besides, many land investors will tell you they have no idea what their return actually is. They just know they are ahead.
Drew Kyle is one of them. Kyle, 47, owns an office-supply business in Tuscaloosa, Ala., and is an avid investor in stocks and mutual funds. But he's also accumulating Alabama forest property 50 miles west of Tuscaloosa. Kyle added 585 acres in 2006, bringing the total owned by himself and his family to 2,300 acres.
Kyle earns a little income by harvesting timber (see the box at right), but his priorities are peace and isolation, family time at the weekend house he built on his property, and a plan to restore an old, wooden tenant-farmer's house. "I can't tell you the rate of return on any of this," says Kyle.
He could probably make an educated guess. It's likely that timber revenue offsets taxes and the cost of maintenance, such as clearing kudzu and other invasive plants. Kyle paid $360 an acre 15 years ago and $1,820 an acre in 2006 for similar land in adjacent counties. That's a compound annual growth rate of 11% -- less than the 14% annualized total return for the average real estate investment trust that owns domestic property.
But when you consider that raw land doesn't generate dividends -- a hallmark of REITs -- that's a handsome rate of appreciation. And the values seem to be accelerating. Plum Creek Timber, an investment company that's the nation's largest private owner of timberland, says land it has sold for recreational development has gone from $2,300 an acre in 2004 to more than $4,000 now. There are regional variations, but Plum Creek's chief executive, Rick Holley, thinks more and more of his company's timber holdings across the country will go from wood production to residential or recreational use, especially with wood prices falling.
Off the beaten path
When you're traveling 60 miles per hour on the highway, all recreational land looks the same. Indeed, Bill Killmer's and Drew Kyle's properties could be side by side, even though they're 300 miles apart and in two different states.
But once you leave the main road and bounce along dirt tracks in a heavy-duty four-wheel-drive vehicle, you discover that every spread has its own character, with creeks, ponds, man-made lakes, hiking trails, clearings and mountain views. Trees aren't just trees. Thirty-year-old hardwoods are valuable timber, but young pines aren't worth harvesting even for pulp and eventually need to be thinned so that they don't kill off other trees. If you're interested in anything larger than a building lot, you'll need to do more than cruise the Internet. You ought to walk the land yourself.
Teston, who calls himself a buyer's broker, says your first step is to know what you want to do with your property. If you're into hunting, you'll need a minimum of 300 to 500 acres for a varied terrain and patches of cleared pasture to plant food crops for deer and other wildlife. If you just want a secluded house with a pond and enough forest to hear the wind and the birds, 25 acres is enough. But you'll pay more per acre for a smaller piece.
Water is a big deal. If you get permission to dig a lake, which opens up opportunities for private boating, fishing and swimming, prepare to spend tens of thousands of dollars to complete the work. A tract that already has a pond or riverfront land will cost more at the outset. But in the end, water is worth the price.
President Bush's ranch in Crawford, Tex., is an example of the value of water access. Texas land appraisers say that plain-old dry pasture land in McLennan County, Tex., is worth $800 an acre today, or just about what Bush paid in 1999 for his 1,600-acre property. But creek or river access (which came with the ranch) or a lake (which the President added later) adds value. Appraisers say rural land that comes with water access in Bush's county now sells for $1,800 to $5,000 an acre.
With its security and other infrastructure upgrades, Bush's ranch isn't your run-of-the-mill property. But even if someone else had purchased it, the place would still have more than doubled in value in eight years. And the waterside section would be as much as six times more valuable.
When Killmer purchased his land for about $2,700 an acre, he financed it by making a tax-deferred exchange for other land he owned closer to Atlanta. Buyers of rural property who own other real estate investments often use these so-called 1031 exchanges to delay paying capital-gains taxes. Other buyers simply pay cash.
If you borrow, know that a land loan is a cross between a mortgage, which is secured by the property, and a personal loan, which has more stringent terms than a mortgage. Figure on putting 25% to 30% down, with a loan term of ten to 20 years. Interest rates were recently about 8%.
Other money matters
Your best sources of credit are local commercial banks and farmers' cooperative banks. Even as lenders tighten credit for suburban housing lots and condos, they're eager to finance recreational properties, especially within three hours of a major city, because they are gaining value. Steer clear of so-called land-loan specialists, which are finance companies, not banks, and charge double-digit interest rates.
If you're buying land for personal use, the interest is not deductible. If you're buying it as an investment, the interest is considered investment interest, like the margin interest on stock purchases. That makes it deductible to the extent that you report taxable investment income, but the deduction does not shelter capital gains and qualified dividends. To get a more useful deduction to offset the cost of the land, finance part of the purchase with a home-equity loan. Interest on up to $100,000 in home-equity debt is deductible.
While you're waiting for your acreage to appreciate, it'll be yours to enjoy. But there will be expenses. Most rural land for sale lacks accommodations other than maybe a rude cabin, so you may want to build a house. Figure on paying $700 to $1,000 an acre to clear land for a pasture or a building site. You'll need a well and a septic system. Roads suitable for vehicles that don't have four-wheel drive can cost thousands of dollars. Digging a lake is a major undertaking because of drainage concerns and the need for a specialized contractor familiar with environmental and other regulations. And you'll need liability insurance, in case someone drowns in the lake you've just dug or has a hunting accident.
Without a house on the property, taxes should be low. Land is generally taxed based on its current use, so taxes on timberland may set you back as little as $2 per acre per year.
The more improvements you make, the more valuable the underlying land will be. But don't expect to cash out quickly. Well-heeled investors can afford to be patient and particular. It takes an average of about six months to sell 500 acres, and it may take as long as two years.
Still, it's comforting to know that land is one investment that won't crater on news of an unexpected earnings shortfall or the madness of crowds entering trades on computers. The saying that money is "tied up" in land endures as surely as the red-clay soil of northeastern Georgia.
Make your land pay
Unlike rental property, land doesn't provide you a regular rent check or a tax break for depreciation. But you may be able to eke out enough cash to pay your property taxes and set up a reserve fund for maintenance and small projects.
Timber. Hardwoods, such as ash, hickory, maple, oak and poplar, take as many as 50 years to mature. They're more valuable than the ubiquitous pine, which can be cut for pulp after 15 years. You'll need advice from a forester, and you'll probably sell to local sawmills.
Hunting rights. You can rent your land for anywhere from $5 an acre per year to several times that, depending on its location, the lay of the land, the length of the hunting season and the variety of wildlife. Deer and turkey are common; quail hunters pay top dollar.
Energy. Most recreational land isn't in oil-and-gas country, but you might be on the periphery of, say, a known Appalachian gas field. You could find a taker for drilling rights in exchange for a royalty of one-eighth to three-sixteenths of production plus an annual per-acre retainer.
Copyrighted, Kiplinger Washington Editors, Inc.
Looking for your future paradise to call home? Give us a call at 972-772-7000 or email us at rockwall@kw.com.
Source Kiplinger.com
Enjoy your rural getaway and at the same time diversify your investments.
Four-year-old Jonathan Killmer dips his toes into a creek and watches, enthralled, while his dad unloads sacks of deer feed from a pickup. As he works, Bill Killmer explains to a visitor why he bought hundreds of acres of rolling pine and hardwood forest in northeastern Georgia. Killmer, 50, grew up in Ohio, the descendant of farmers. He says he's "sort of retired" after selling a travel business and a building-maintenance company in Atlanta. He doesn't intend to plant corn or soybeans on his spread, which he calls Rosser Creek Farm -- the upcountry red clay wouldn't be suitable. His agenda: Hold the land as an investment for at least five years and "have a lot of fun while we own it." Then he may sell the farm in pieces, subdivide some land at the edges for estate-home sites -- or perhaps do nothing at all.
Killmer has counterparts all across the country, mostly in Texas, the South and the western mountain states. Investors are paying anywhere from $1,000 to $20,000 an acre for land that doubles as a private recreational escape and a diversifier for a long-term portfolio. Killmer hunts some, but as the parent of Jonathan and three teenagers, he sees the farm as a family retreat -- a place to spend lazy days angling for bass, catfish and brim in the property's ponds, as well as camping, hiking, swimming, spotting turkeys and other wildlife, and just hanging out.
About 75 miles east of Atlanta's beltway, Killmer's acreage isn't exactly in the wilderness. But it wasn't easy to acquire because it wasn't on any multiple listing service. Kevin Teston, a land broker in Augusta, Ga., worked with Killmer for a year to find the tract.
Teston believes that the land, formerly the property of a big timber company, has doubled in value since Killmer bought it two and a half years ago. Some of that appreciation is a result of its location. Atlanta is close enough that nearby crossroads towns, such as Madison and Greensboro, are sprouting coffee shops and nice restaurants. But similar vacant land twice as far from Atlanta is also heating up.
Just as other real estate investments have started losing their appeal, a growing inventory of recreational land is attracting more buyers. Major landowners, such as International Paper, Mead Westvaco and Weyerhaeuser, are divesting their forest holdings, usually to banks and insurance companies. Hardscrabble farming no longer provides a living, so kids raised on former crop land have long since marched off to Atlanta or Nashville or New York City. Old home places end up in the hands of banks and other groups of investors, who carve the property into tracts of 200 to 1,500 acres and sell it to small-scale developers and hunting clubs -- and people like Bill Killmer.
Is this a backwoods version of the investor-owned real estate glut that sank the condominium markets in Florida and Las Vegas? Possibly. Chris Hawley, chief executive officer of Mossy Oak Properties, a network of recreational-land brokers in nine states, says a recreational expanse "is just a different kind of condominium. It's just not at the beach and there are trees growing on it." But for now, Hawley, who lives and works in rural Livingston, Ala., is a very busy man.
What's it worth?
Unlike the values for homes and crop farms, prices for recreational property -- land that's not being actively farmed -- don't appear in familiar real estate indexes. The Federal Reserve Bank of Kansas City studied wildlife-related recreational land use -- hunting, fishing, camping -- and concluded that recreational appeal adds to land values, but it couldn't pinpoint precisely how much. Besides, many land investors will tell you they have no idea what their return actually is. They just know they are ahead.
Drew Kyle is one of them. Kyle, 47, owns an office-supply business in Tuscaloosa, Ala., and is an avid investor in stocks and mutual funds. But he's also accumulating Alabama forest property 50 miles west of Tuscaloosa. Kyle added 585 acres in 2006, bringing the total owned by himself and his family to 2,300 acres.
Kyle earns a little income by harvesting timber (see the box at right), but his priorities are peace and isolation, family time at the weekend house he built on his property, and a plan to restore an old, wooden tenant-farmer's house. "I can't tell you the rate of return on any of this," says Kyle.
He could probably make an educated guess. It's likely that timber revenue offsets taxes and the cost of maintenance, such as clearing kudzu and other invasive plants. Kyle paid $360 an acre 15 years ago and $1,820 an acre in 2006 for similar land in adjacent counties. That's a compound annual growth rate of 11% -- less than the 14% annualized total return for the average real estate investment trust that owns domestic property.
But when you consider that raw land doesn't generate dividends -- a hallmark of REITs -- that's a handsome rate of appreciation. And the values seem to be accelerating. Plum Creek Timber, an investment company that's the nation's largest private owner of timberland, says land it has sold for recreational development has gone from $2,300 an acre in 2004 to more than $4,000 now. There are regional variations, but Plum Creek's chief executive, Rick Holley, thinks more and more of his company's timber holdings across the country will go from wood production to residential or recreational use, especially with wood prices falling.
Off the beaten path
When you're traveling 60 miles per hour on the highway, all recreational land looks the same. Indeed, Bill Killmer's and Drew Kyle's properties could be side by side, even though they're 300 miles apart and in two different states.
But once you leave the main road and bounce along dirt tracks in a heavy-duty four-wheel-drive vehicle, you discover that every spread has its own character, with creeks, ponds, man-made lakes, hiking trails, clearings and mountain views. Trees aren't just trees. Thirty-year-old hardwoods are valuable timber, but young pines aren't worth harvesting even for pulp and eventually need to be thinned so that they don't kill off other trees. If you're interested in anything larger than a building lot, you'll need to do more than cruise the Internet. You ought to walk the land yourself.
Teston, who calls himself a buyer's broker, says your first step is to know what you want to do with your property. If you're into hunting, you'll need a minimum of 300 to 500 acres for a varied terrain and patches of cleared pasture to plant food crops for deer and other wildlife. If you just want a secluded house with a pond and enough forest to hear the wind and the birds, 25 acres is enough. But you'll pay more per acre for a smaller piece.
Water is a big deal. If you get permission to dig a lake, which opens up opportunities for private boating, fishing and swimming, prepare to spend tens of thousands of dollars to complete the work. A tract that already has a pond or riverfront land will cost more at the outset. But in the end, water is worth the price.
President Bush's ranch in Crawford, Tex., is an example of the value of water access. Texas land appraisers say that plain-old dry pasture land in McLennan County, Tex., is worth $800 an acre today, or just about what Bush paid in 1999 for his 1,600-acre property. But creek or river access (which came with the ranch) or a lake (which the President added later) adds value. Appraisers say rural land that comes with water access in Bush's county now sells for $1,800 to $5,000 an acre.
With its security and other infrastructure upgrades, Bush's ranch isn't your run-of-the-mill property. But even if someone else had purchased it, the place would still have more than doubled in value in eight years. And the waterside section would be as much as six times more valuable.
When Killmer purchased his land for about $2,700 an acre, he financed it by making a tax-deferred exchange for other land he owned closer to Atlanta. Buyers of rural property who own other real estate investments often use these so-called 1031 exchanges to delay paying capital-gains taxes. Other buyers simply pay cash.
If you borrow, know that a land loan is a cross between a mortgage, which is secured by the property, and a personal loan, which has more stringent terms than a mortgage. Figure on putting 25% to 30% down, with a loan term of ten to 20 years. Interest rates were recently about 8%.
Other money matters
Your best sources of credit are local commercial banks and farmers' cooperative banks. Even as lenders tighten credit for suburban housing lots and condos, they're eager to finance recreational properties, especially within three hours of a major city, because they are gaining value. Steer clear of so-called land-loan specialists, which are finance companies, not banks, and charge double-digit interest rates.
If you're buying land for personal use, the interest is not deductible. If you're buying it as an investment, the interest is considered investment interest, like the margin interest on stock purchases. That makes it deductible to the extent that you report taxable investment income, but the deduction does not shelter capital gains and qualified dividends. To get a more useful deduction to offset the cost of the land, finance part of the purchase with a home-equity loan. Interest on up to $100,000 in home-equity debt is deductible.
While you're waiting for your acreage to appreciate, it'll be yours to enjoy. But there will be expenses. Most rural land for sale lacks accommodations other than maybe a rude cabin, so you may want to build a house. Figure on paying $700 to $1,000 an acre to clear land for a pasture or a building site. You'll need a well and a septic system. Roads suitable for vehicles that don't have four-wheel drive can cost thousands of dollars. Digging a lake is a major undertaking because of drainage concerns and the need for a specialized contractor familiar with environmental and other regulations. And you'll need liability insurance, in case someone drowns in the lake you've just dug or has a hunting accident.
Without a house on the property, taxes should be low. Land is generally taxed based on its current use, so taxes on timberland may set you back as little as $2 per acre per year.
The more improvements you make, the more valuable the underlying land will be. But don't expect to cash out quickly. Well-heeled investors can afford to be patient and particular. It takes an average of about six months to sell 500 acres, and it may take as long as two years.
Still, it's comforting to know that land is one investment that won't crater on news of an unexpected earnings shortfall or the madness of crowds entering trades on computers. The saying that money is "tied up" in land endures as surely as the red-clay soil of northeastern Georgia.
Make your land pay
Unlike rental property, land doesn't provide you a regular rent check or a tax break for depreciation. But you may be able to eke out enough cash to pay your property taxes and set up a reserve fund for maintenance and small projects.
Timber. Hardwoods, such as ash, hickory, maple, oak and poplar, take as many as 50 years to mature. They're more valuable than the ubiquitous pine, which can be cut for pulp after 15 years. You'll need advice from a forester, and you'll probably sell to local sawmills.
Hunting rights. You can rent your land for anywhere from $5 an acre per year to several times that, depending on its location, the lay of the land, the length of the hunting season and the variety of wildlife. Deer and turkey are common; quail hunters pay top dollar.
Energy. Most recreational land isn't in oil-and-gas country, but you might be on the periphery of, say, a known Appalachian gas field. You could find a taker for drilling rights in exchange for a royalty of one-eighth to three-sixteenths of production plus an annual per-acre retainer.
Copyrighted, Kiplinger Washington Editors, Inc.
Looking for your future paradise to call home? Give us a call at 972-772-7000 or email us at rockwall@kw.com.
Friday, March 26, 2010
Buying Your First Home
Published By Yahoo Finance
Finding the right first home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you'll need to consider before investing in what may be your biggest asset.
Topics
1.Buying Your First Home
2.How Much Mortgage Can You Afford?
3.Costs of Buying a Home
4.Ongoing Costs
5.Choosing a Neighborhood
6.Finding a Broker
1. Buying Your First Home. Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.
Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.
Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.
2. How Much Mortgage Can You Afford? Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.
The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28% of your monthly gross income.
The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36%.
Many home buyers choose to arrange financing before shopping for a home and most lenders will "prequalify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.
In addition to qualifying for a mortgage, you will probably need a down payment. The 28% to 36% debt ratios assume a 10% down payment. In practice, down payment requirements vary from more than 20% to as low as 0% for some Veterans Administration (VA) loans. Down payments greater than 20% generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
3. Costs of Buying a Home. Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3% and 8% of your purchase price.
4. Ongoing Costs. In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
5. Choosing a Neighborhood. Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.
Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.
6. Finding a Broker. If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.
Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5% to 7% and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.
Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.
Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.
Summary
Buying a home can mean building significant value through the years.
Prequalifying with your lender is a good way to determine how much house you can afford.
You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
Remember to consider resalability when buying your home.
Are you a first time home buyer? If you need help finding your new home, call us at 972-772-7000 or email us at rockwall@kw.com.
Finding the right first home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you'll need to consider before investing in what may be your biggest asset.
Topics
1.Buying Your First Home
2.How Much Mortgage Can You Afford?
3.Costs of Buying a Home
4.Ongoing Costs
5.Choosing a Neighborhood
6.Finding a Broker
1. Buying Your First Home. Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.
Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.
Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.
2. How Much Mortgage Can You Afford? Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.
The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28% of your monthly gross income.
The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36%.
Many home buyers choose to arrange financing before shopping for a home and most lenders will "prequalify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.
In addition to qualifying for a mortgage, you will probably need a down payment. The 28% to 36% debt ratios assume a 10% down payment. In practice, down payment requirements vary from more than 20% to as low as 0% for some Veterans Administration (VA) loans. Down payments greater than 20% generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.
How Much Home Can You Afford?
Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28% yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).
Their total debt ceiling of 36% is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.
3. Costs of Buying a Home. Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3% and 8% of your purchase price.
4. Ongoing Costs. In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.
Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.
5. Choosing a Neighborhood. Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.
Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.
6. Finding a Broker. If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.
Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5% to 7% and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.
Home Buying Costs
Down Payment 0% - 20% of purchase price
Home Inspection $200 - $500
Points $1,000 and up for 1% - 3%
Adjustments 3% - 8% of purchase price
Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.
Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.
Summary
Buying a home can mean building significant value through the years.
Prequalifying with your lender is a good way to determine how much house you can afford.
You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
Remember to consider resalability when buying your home.
Are you a first time home buyer? If you need help finding your new home, call us at 972-772-7000 or email us at rockwall@kw.com.
Friday, March 19, 2010
Which Backyard Features Add Value?
Provided By Yahoo Finance
Source Kiplinger.com
Is it worth it to spend as much money renovating a backyard as it costs to buy a small house? Depends on whom you ask. But if you're going to fork over the big bucks to revamp your yard -- or even if you're on a tight budget -- you should consider putting your dollars into features that add the most value to your property. Here's some advice from the pros:
Which features add value?
Jason Cupp, co-founder of design/build, landscape company Highland Outdoor, Olathe, Kan., says his clients frequently ask whether renovating their yards will add value to their property. If two similar neighboring houses were for sale and one had a great landscape design, that house would sell faster, he says.
However, he and other landscape designers agree that you probably won't get a return on your investment if your property is the only one in the neighborhood with the outdoor fireplace and kitchen, waterfall, custom-made pool and spa. That's why you should weigh your needs versus your desires when it comes to renovating your yard and deciding which features to add -- especially if you're on a tight budget. Even a little bit of money can go a long way if you prioritize and opt for features that are functional rather than purely aesthetic, says Brett Wendell, director of design build for HighGrove Partners in Austell, Ga.
Quality landscape design and installation will add value to your property and help it sell faster, landscape pros agree. If you're on a tight budget, hire a landscape architect or designer to create a design then install the landscaping yourself -- over time, if you have to. "Some advice is better than none," says Jeff Carbo, an award-winning landscape architect in Alexandria, La. A landscape architect charges $85 to $135, on average, to create a design plan, Wendell says, and could spend 12 to 18 hours creating that plan. A landscape designer typically charges $50 to $75 an hour. To find a designer or architect, talk with friends or family who have used one or check the American Society of Landscape Architect's FirmFinder and Association of Professional Landscape Designers' database of firms. Wendell recommends interviewing several pros, talking to their customers and checking out their projects. The designer or architect should ask you lifestyle questions (Do you like to garden? Will you maintain the landscaping or will someone else?) so he or she can give you what you need.
Also, if you make a significant investment in landscape, Cupp says, "it won't look as good if you don't have a proper irrigation system, and your investment will erode." Again, if you're on a budget, install the irrigation system before the landscaping, Cupp says. Expect to pay at least $3,000 to $4,000 for irrigation.
Outdoor living rooms, in particular, have been a growing trend over the last ten years, especially since the Sept. 11, 2001, terrorist attacks, Carbo says. In fact, designing and furnishing an outdoor room is the second most popular home remodeling project after remodeling kitchens, according to the Propane Education & Research Council. Homeowners spent $3.7 billion on patios and terraces in 2004 -- a 366% increase since 1994, according to the Census Bureau. The number of people who are complementing their patio with furniture and larger grills is growing (42% in 2005 versus 32% in 2003), according to a study by Hearth, Patio & Barbecue Association.
Outdoor living rooms often include a fireplace or firepit, cooking station and comfortable furniture. "We're finding that we have more and more clients spending money creating rooms outdoors," Cupp says. But this is an important area to decide whether you're spending money on something that's functional and will add value to your property versus something that is purely a luxury item.
Covered patio -- adds value. "There's no reason to have a great outdoors without an area to sit and enjoy it," Cupp says. For a patio to add value, though, it's got to be more than a concrete slab. He says 95% of the patios he installs are paver patios (brick-like material made of concrete that comes in a variety of styles and colors). The price of materials and installation runs from $12 to $15 a square foot up to $40 to $50 a square foot. And Carbo says patios should be covered to provide shade or protection from rain. Otherwise, you'd be wasting your money if you created a space without a cover to protect you from the elements.
Fireplaces -- luxury item only. The outdoor fireplace -- as well as the firepit -- is a relatively new trend and is growing in popularity, says Carol Kaplan of the Hearth, Patio and Barbecue Association. Portable firepits are a cheap way to create a cozy outdoor setting. The actual built-in fireplace, though, can cost $8,000 to $35,000, is beautiful to look at but isn't that functional, Wendell says. Because of the maintenance involved, outdoor fireplaces usually are used just during parties or when guests visit. So you probably won't get a return on your investment with this pricey feature, he says.
Kitchens -- add value. For anywhere from $15,000 to $100,000, you can have a refrigerator, grill and sink installed to cook and dine al fresco. "Why not have it all outside where cooking is part of the process of entertaining," Wendell says. He recommends getting a professional invovled to properly locate your outdoor kitchen so you can get the most out of it.
Television -- luxury item only. The cool factor is high here, but functionality is low because it's usually too bright during the day to watch outdoor TVs.
Swimming pools are one of those features that can be both functional and aesthetic and can add value -- or detract -- depending the type of pool and type of home buyer or owner. A 2004 National Association of Realtors study of home sales in the Philadelphia area from 1996 to 2003 found inground pools added 8% to sales price of home. However, all of the landscape designers we talked to said for a pool to add value to property, it has to be custom-made -- not a prefabricated pool that can be found in any backyard. A basic customized concrete pool can cost $60,000 to $80,000. Throw in a hot tub and water feature, such as a waterfall, and you could spend well into the six digits. The problem is, landscape designers say, some home buyers want nothing to do with a pool and will steer clear of houses with one -- regardless of whether it is custom-made or prefabricated. So a pool actually could lower the value of your property in some people's eyes.
Water features, such as a pond or waterfall, also are somewhat questionable as to whether they add value. Cupp says water features are popular and have a high level of value. Costs can range from $1,000 for a small pool of water to $25,000 or more for a pond with a waterfall. Wendell agrees water features are popular but are expensive to maintain. He says they usually aren't worth the money you have to put into them because 50% are abandoned or ignored after the first four years.
Need help selling your home? Call us at (972) 772-7000 or send us an email at rockwall@kw.com.
Source Kiplinger.com
Turn Your Backyard Into Paradise
Even if you're not trying to sell your home, you can increase its value by landscaping your lawn and creating a retreat that you, your family and friends can enjoy. Americans spend billions of dollars each year creating outdoor living spaces with comfortable furniture, built-in grills or complete kitchens, fireplaces, televisions, pools and spas.
Is it worth it to spend as much money renovating a backyard as it costs to buy a small house? Depends on whom you ask. But if you're going to fork over the big bucks to revamp your yard -- or even if you're on a tight budget -- you should consider putting your dollars into features that add the most value to your property. Here's some advice from the pros:
Which features add value?
Jason Cupp, co-founder of design/build, landscape company Highland Outdoor, Olathe, Kan., says his clients frequently ask whether renovating their yards will add value to their property. If two similar neighboring houses were for sale and one had a great landscape design, that house would sell faster, he says.
However, he and other landscape designers agree that you probably won't get a return on your investment if your property is the only one in the neighborhood with the outdoor fireplace and kitchen, waterfall, custom-made pool and spa. That's why you should weigh your needs versus your desires when it comes to renovating your yard and deciding which features to add -- especially if you're on a tight budget. Even a little bit of money can go a long way if you prioritize and opt for features that are functional rather than purely aesthetic, says Brett Wendell, director of design build for HighGrove Partners in Austell, Ga.
Quality landscape design and installation will add value to your property and help it sell faster, landscape pros agree. If you're on a tight budget, hire a landscape architect or designer to create a design then install the landscaping yourself -- over time, if you have to. "Some advice is better than none," says Jeff Carbo, an award-winning landscape architect in Alexandria, La. A landscape architect charges $85 to $135, on average, to create a design plan, Wendell says, and could spend 12 to 18 hours creating that plan. A landscape designer typically charges $50 to $75 an hour. To find a designer or architect, talk with friends or family who have used one or check the American Society of Landscape Architect's FirmFinder and Association of Professional Landscape Designers' database of firms. Wendell recommends interviewing several pros, talking to their customers and checking out their projects. The designer or architect should ask you lifestyle questions (Do you like to garden? Will you maintain the landscaping or will someone else?) so he or she can give you what you need.
Also, if you make a significant investment in landscape, Cupp says, "it won't look as good if you don't have a proper irrigation system, and your investment will erode." Again, if you're on a budget, install the irrigation system before the landscaping, Cupp says. Expect to pay at least $3,000 to $4,000 for irrigation.
Outdoor living rooms, in particular, have been a growing trend over the last ten years, especially since the Sept. 11, 2001, terrorist attacks, Carbo says. In fact, designing and furnishing an outdoor room is the second most popular home remodeling project after remodeling kitchens, according to the Propane Education & Research Council. Homeowners spent $3.7 billion on patios and terraces in 2004 -- a 366% increase since 1994, according to the Census Bureau. The number of people who are complementing their patio with furniture and larger grills is growing (42% in 2005 versus 32% in 2003), according to a study by Hearth, Patio & Barbecue Association.
Outdoor living rooms often include a fireplace or firepit, cooking station and comfortable furniture. "We're finding that we have more and more clients spending money creating rooms outdoors," Cupp says. But this is an important area to decide whether you're spending money on something that's functional and will add value to your property versus something that is purely a luxury item.
Covered patio -- adds value. "There's no reason to have a great outdoors without an area to sit and enjoy it," Cupp says. For a patio to add value, though, it's got to be more than a concrete slab. He says 95% of the patios he installs are paver patios (brick-like material made of concrete that comes in a variety of styles and colors). The price of materials and installation runs from $12 to $15 a square foot up to $40 to $50 a square foot. And Carbo says patios should be covered to provide shade or protection from rain. Otherwise, you'd be wasting your money if you created a space without a cover to protect you from the elements.
Fireplaces -- luxury item only. The outdoor fireplace -- as well as the firepit -- is a relatively new trend and is growing in popularity, says Carol Kaplan of the Hearth, Patio and Barbecue Association. Portable firepits are a cheap way to create a cozy outdoor setting. The actual built-in fireplace, though, can cost $8,000 to $35,000, is beautiful to look at but isn't that functional, Wendell says. Because of the maintenance involved, outdoor fireplaces usually are used just during parties or when guests visit. So you probably won't get a return on your investment with this pricey feature, he says.
Kitchens -- add value. For anywhere from $15,000 to $100,000, you can have a refrigerator, grill and sink installed to cook and dine al fresco. "Why not have it all outside where cooking is part of the process of entertaining," Wendell says. He recommends getting a professional invovled to properly locate your outdoor kitchen so you can get the most out of it.
Television -- luxury item only. The cool factor is high here, but functionality is low because it's usually too bright during the day to watch outdoor TVs.
Swimming pools are one of those features that can be both functional and aesthetic and can add value -- or detract -- depending the type of pool and type of home buyer or owner. A 2004 National Association of Realtors study of home sales in the Philadelphia area from 1996 to 2003 found inground pools added 8% to sales price of home. However, all of the landscape designers we talked to said for a pool to add value to property, it has to be custom-made -- not a prefabricated pool that can be found in any backyard. A basic customized concrete pool can cost $60,000 to $80,000. Throw in a hot tub and water feature, such as a waterfall, and you could spend well into the six digits. The problem is, landscape designers say, some home buyers want nothing to do with a pool and will steer clear of houses with one -- regardless of whether it is custom-made or prefabricated. So a pool actually could lower the value of your property in some people's eyes.
Water features, such as a pond or waterfall, also are somewhat questionable as to whether they add value. Cupp says water features are popular and have a high level of value. Costs can range from $1,000 for a small pool of water to $25,000 or more for a pond with a waterfall. Wendell agrees water features are popular but are expensive to maintain. He says they usually aren't worth the money you have to put into them because 50% are abandoned or ignored after the first four years.
Need help selling your home? Call us at (972) 772-7000 or send us an email at rockwall@kw.com.
Friday, February 26, 2010
10 Ways to Increase the Value of Your Home
By Katie Adams
This article is part of a series related to being Financially Fit
In a dour housing market, wouldn't it be nice to know that your remodeling project would pay off when you went to sell the property? Remodeling Magazine evaluated the top remodeling projects, how the cost-to-value has changed since the housing market implosion, and which projects are still worth the investment. Using the magazine's "Cost Vs. Value Report for 2008-2009," let's look at some of the best projects you can undertake and recoup the majority of your cost.
Upscale Projects
Siding Replacement (fiber-cement or foam-backed vinyl). With the economic slump, home buyers aren't being dazzled by bells and whistles as much as they are improvements that will ensure lower repair and utility bills. Although replacing current siding with fiber-cement has lost value from 2007, it still nets an astonishing 87% ROI. If you prefer a foam-backed vinyl product replacement instead, you can still look to recoup 80% of your cost.
Window Replacement (vinyl or wood). Windows are not only an aesthetic feature. For most homeowners, they represent one of the easiest ways to lower home heating and cooling bills. By replacing your current windows with more efficient vinyl or wood ones, you can save on your utility bills, attract future home buyers and net a nearly 80% (vinyl) or 77% (wood) return on your investment.
Bathroom Remodel. Depending on the size and amenities of your desired bathroom, you could expect to pay over $50,000 to tear out walls, repair joists and wall studs, change structural elements and make major layout changes, such as switching a toilet and shower. However big the price tag, you can still expect to recoup nearly 71% of the cost (which would be $36,400 if you have a $50K bill) when you go to sell. This project increased its value since 2007, while its sister project – adding a complete bathroom – fell in value.
Major Kitchen Remodel. Kitchens are typically the most frequently used room in a home, so it makes sense that investing money here is going to pay off when it comes time to sell. While a major kitchen renovation is usually the most time-consuming and expensive home improvement job (averaging more than $110,000), it's also one of the most profitable. Regardless of the size of your financial layout, you can expect to get a nearly 71% ROI.
Deck Addition (composite product). With families cutting their entertainment budgets, they're spending more time at home, so it makes sense that adding a deck (composite, not wood) is a good investment. You can plan on recouping 63% of your total job cost to boost your home's value by nearly $24,000 if you paid the average job cost of $37,000.
Mid-Range Projects
While all of the mid-range projects dropped in value versus cost since 2007, there are still numerous projects that will net you a significant ROI. Here are a few of the best bets for your money:
Deck Addition (wood). If your bank balance can't swing the higher price tag that comes with composite decking, you may still be able to afford a wood addition on to your home. While a wood deck would cost you, on average, in the neighborhood of $10,000, the resale value it will add to your home is more than $8,600 – an 81.8% return on your investment.
Siding Replacement (vinyl). Fiber-cement or foam-banked vinyl are often more preferable siding upgrades, but getting vinyl siding replacements instead is still a good choice. You can recoup nearly 81% of your cost which, if the job cost you more than $10,000, means you could add more than $8,200 to your home's value.
Minor Kitchen Remodel. With belt-tightening in style, people are turning to minor kitchen improvement projects instead of major overhauls. It turns out that that choice is not only frugal, but financially wise. While major kitchen remodeling jobs can still, on average, return a nice 70% ROI for homeowners, minor kitchen remodeling jobs net an even higher 79.5% return.
Attic Bedroom. Anytime you can add bedrooms, you're going to add to the overall value – and listed purchase price – to your home. If your attic's dimensions allow you to convert it to a bedroom, you may want to consider investing the money to do so. You'll add some sleeping space and net a nice 74% return when a new buyer puts your home under contract.
Basement Remodel. If you're fortunate enough to live in an area with a water table high enough to permit basements, you should think about squeezing all the value you can out of it. By remodeling and finishing a previously-unfinished basement you can expect to get nearly 73% of your investment returned with a higher list price, come time to sell.
Conclusion
If you have savings or access to reasonably-priced credit, it's worth it to consider home improvement projects that will produce the best return for your time and money. Make sure you work with a reputable, licensed contractor (to avoid costly errors or budget overruns), and before you undertake any project it's a good idea to check and see if it could significantly increase your property tax bill.
While it may still make sense in the long-run to undertake the project and add overall value to your home, you may need to make a few budgetary changes so that you don't get caught off-guard when the tax bill comes.
This article is part of a series related to being Financially Fit
In a dour housing market, wouldn't it be nice to know that your remodeling project would pay off when you went to sell the property? Remodeling Magazine evaluated the top remodeling projects, how the cost-to-value has changed since the housing market implosion, and which projects are still worth the investment. Using the magazine's "Cost Vs. Value Report for 2008-2009," let's look at some of the best projects you can undertake and recoup the majority of your cost.
Upscale Projects
Siding Replacement (fiber-cement or foam-backed vinyl). With the economic slump, home buyers aren't being dazzled by bells and whistles as much as they are improvements that will ensure lower repair and utility bills. Although replacing current siding with fiber-cement has lost value from 2007, it still nets an astonishing 87% ROI. If you prefer a foam-backed vinyl product replacement instead, you can still look to recoup 80% of your cost.
Window Replacement (vinyl or wood). Windows are not only an aesthetic feature. For most homeowners, they represent one of the easiest ways to lower home heating and cooling bills. By replacing your current windows with more efficient vinyl or wood ones, you can save on your utility bills, attract future home buyers and net a nearly 80% (vinyl) or 77% (wood) return on your investment.
Bathroom Remodel. Depending on the size and amenities of your desired bathroom, you could expect to pay over $50,000 to tear out walls, repair joists and wall studs, change structural elements and make major layout changes, such as switching a toilet and shower. However big the price tag, you can still expect to recoup nearly 71% of the cost (which would be $36,400 if you have a $50K bill) when you go to sell. This project increased its value since 2007, while its sister project – adding a complete bathroom – fell in value.
Major Kitchen Remodel. Kitchens are typically the most frequently used room in a home, so it makes sense that investing money here is going to pay off when it comes time to sell. While a major kitchen renovation is usually the most time-consuming and expensive home improvement job (averaging more than $110,000), it's also one of the most profitable. Regardless of the size of your financial layout, you can expect to get a nearly 71% ROI.
Deck Addition (composite product). With families cutting their entertainment budgets, they're spending more time at home, so it makes sense that adding a deck (composite, not wood) is a good investment. You can plan on recouping 63% of your total job cost to boost your home's value by nearly $24,000 if you paid the average job cost of $37,000.
Mid-Range Projects
While all of the mid-range projects dropped in value versus cost since 2007, there are still numerous projects that will net you a significant ROI. Here are a few of the best bets for your money:
Deck Addition (wood). If your bank balance can't swing the higher price tag that comes with composite decking, you may still be able to afford a wood addition on to your home. While a wood deck would cost you, on average, in the neighborhood of $10,000, the resale value it will add to your home is more than $8,600 – an 81.8% return on your investment.
Siding Replacement (vinyl). Fiber-cement or foam-banked vinyl are often more preferable siding upgrades, but getting vinyl siding replacements instead is still a good choice. You can recoup nearly 81% of your cost which, if the job cost you more than $10,000, means you could add more than $8,200 to your home's value.
Minor Kitchen Remodel. With belt-tightening in style, people are turning to minor kitchen improvement projects instead of major overhauls. It turns out that that choice is not only frugal, but financially wise. While major kitchen remodeling jobs can still, on average, return a nice 70% ROI for homeowners, minor kitchen remodeling jobs net an even higher 79.5% return.
Attic Bedroom. Anytime you can add bedrooms, you're going to add to the overall value – and listed purchase price – to your home. If your attic's dimensions allow you to convert it to a bedroom, you may want to consider investing the money to do so. You'll add some sleeping space and net a nice 74% return when a new buyer puts your home under contract.
Basement Remodel. If you're fortunate enough to live in an area with a water table high enough to permit basements, you should think about squeezing all the value you can out of it. By remodeling and finishing a previously-unfinished basement you can expect to get nearly 73% of your investment returned with a higher list price, come time to sell.
Conclusion
If you have savings or access to reasonably-priced credit, it's worth it to consider home improvement projects that will produce the best return for your time and money. Make sure you work with a reputable, licensed contractor (to avoid costly errors or budget overruns), and before you undertake any project it's a good idea to check and see if it could significantly increase your property tax bill.
While it may still make sense in the long-run to undertake the project and add overall value to your home, you may need to make a few budgetary changes so that you don't get caught off-guard when the tax bill comes.
Wednesday, February 24, 2010
Finding Your Ideal Neighborhood
Buy the Neighborhood
By Elizabeth Brokamp
Provided By Motley Fool Green Light
If you're in the market for a home this year, look beyond its four walls and directly at your neighbors. No, I'm not advocating spying (violating "peeping Tom" laws doesn't create a great first impression), but do thoroughly check out a prospective neighborhood before plunking down hundreds of thousands of your hard-earned dollars.
Learning the hard way
A few years back when my husband and I were house-hunting, we looked at a home in what we christened "the hot dog neighborhood." On Halloween night each year, this particular neighborhood blocks off one of its streets, holds a parade, and then grills hot dogs for the neighborhood kids. That was enchanting -- a real neighborhood party in which everyone seemed to know and like one another, welcomed children, and celebrated holidays with zest. The problem? We weren't nearly so fond of the house -- its exterior was clearly a 1960s experiment gone awry and the interior was just plain odd. We passed on it, despite the warm-fuzzy neighborhood feel.
Many years and a couple more children later, we wish we'd gone for the hot dog house. Why? Because now we live in a neighborhood that just doesn't suit our personalities, our family's needs for socialization, or even our politics, if you get down to it.
We didn't know all of that when we purchased the sturdy five-bedroom with a pleasant layout and a big yard. We just knew it was a "nice" neighborhood in which we could afford a home. Sure, we'd driven around the neighborhood and chatted briefly with the folks next door before we made an offer. But our research went something like this: "So how do you like living here?" Having conducted this sort of research in all of the neighborhoods in which we've lived, I will tell you: We have never talked with people who spoke badly about their own neighborhood. Occasionally, they will add helpful tidbits about specific neighbors ("We've been trying to get the guy in that house to clean up his yard for years!"), but seldom do they say anything nasty about the larger area. It seems that people, like dogs, don't sully the place in which they sleep.
If you want to get the real dirt on your neighborhood, you're going to have to do some digging. So dust off your trench coat and dark glasses, and get ready to go on a sleuthing expedition.
Tips for finding your ideal neighborhood
• Contact the community association for the neighborhood you are considering. Often, it publishes newsletters, holds meetings, or sponsors community activities, all of which hold potentially useful bits of information about your neighborhood.
• Subscribe to the local paper or call and ask for a sample of back issues.
• Locate the community hang-outs. Is there a neighborhood pool or community center? If so, try and visit so you can get a sense of who lives in the area and whether there is a strong community feel.
• Look for sidewalks. For us, living in a part of the neighborhood with no sidewalks means many things -- we don't go for as many walks (and therefore don't meet and greet the neighbors as much as we'd like), our young kids have fewer safe places to ride their bikes, and it seems to prevent other folks from walking our way much, too.
• Visit the neighborhood at different times of the day and at least once on a weekend rather than a weekday. Are most of the folks working out of the home? Is the neighborhood composed of retirees? Are there loads of school-aged children? Are there many young mothers with babies and toddlers?
• Study a map of your neighborhood to see the proximity of parks, libraries, the nearest hospital, and other amenities. Likewise, try driving different routes to the home so you can see the good, the bad, and the ugly in the surrounding area.
• Arrange a visit to the school your children would attend, check out the school's test scores, and find out how many veteran teachers are on staff.
• Talk to the neighbors and ask them very specific questions. For example, you may want to ask about their perceptions of crime, location, noise, traffic, and community feeling. Is the neighborhood changing? If so, how?
• Head down to city hall to check on issues with zoning or find out about any projects in the works. You should be able to find out if there are any major road or construction projects planned for the next few years.
• Pump your real estate agent for information. How long do homes in this area stay on the market? What's their resale potential?
• Check your town or city's website for real estate tax assessment information. By looking at our local real estate tax office website, I can see the value of the assessment, how much of that total is land versus the structure, how the assessor rated the structure's condition, and recent home sales in the area.
• Head to the nearest police station to ask for crime rate information. Be sure to ask about the typical response time for emergencies.
• Check the national registry for sex offenders.
Once you've gathered as much information as you can, review it. Does the neighborhood seem to meet your needs? Did you find any information that's a deal breaker? Can you picture yourself living here happily? Be as picky as you can afford to be; no returns or exchanges are offered on neighborhoods.
Copyrighted, The Motley Fool. All rights reserved.
By Elizabeth Brokamp
Provided By Motley Fool Green Light
If you're in the market for a home this year, look beyond its four walls and directly at your neighbors. No, I'm not advocating spying (violating "peeping Tom" laws doesn't create a great first impression), but do thoroughly check out a prospective neighborhood before plunking down hundreds of thousands of your hard-earned dollars.
Learning the hard way
A few years back when my husband and I were house-hunting, we looked at a home in what we christened "the hot dog neighborhood." On Halloween night each year, this particular neighborhood blocks off one of its streets, holds a parade, and then grills hot dogs for the neighborhood kids. That was enchanting -- a real neighborhood party in which everyone seemed to know and like one another, welcomed children, and celebrated holidays with zest. The problem? We weren't nearly so fond of the house -- its exterior was clearly a 1960s experiment gone awry and the interior was just plain odd. We passed on it, despite the warm-fuzzy neighborhood feel.
Many years and a couple more children later, we wish we'd gone for the hot dog house. Why? Because now we live in a neighborhood that just doesn't suit our personalities, our family's needs for socialization, or even our politics, if you get down to it.
We didn't know all of that when we purchased the sturdy five-bedroom with a pleasant layout and a big yard. We just knew it was a "nice" neighborhood in which we could afford a home. Sure, we'd driven around the neighborhood and chatted briefly with the folks next door before we made an offer. But our research went something like this: "So how do you like living here?" Having conducted this sort of research in all of the neighborhoods in which we've lived, I will tell you: We have never talked with people who spoke badly about their own neighborhood. Occasionally, they will add helpful tidbits about specific neighbors ("We've been trying to get the guy in that house to clean up his yard for years!"), but seldom do they say anything nasty about the larger area. It seems that people, like dogs, don't sully the place in which they sleep.
If you want to get the real dirt on your neighborhood, you're going to have to do some digging. So dust off your trench coat and dark glasses, and get ready to go on a sleuthing expedition.
Tips for finding your ideal neighborhood
• Contact the community association for the neighborhood you are considering. Often, it publishes newsletters, holds meetings, or sponsors community activities, all of which hold potentially useful bits of information about your neighborhood.
• Subscribe to the local paper or call and ask for a sample of back issues.
• Locate the community hang-outs. Is there a neighborhood pool or community center? If so, try and visit so you can get a sense of who lives in the area and whether there is a strong community feel.
• Look for sidewalks. For us, living in a part of the neighborhood with no sidewalks means many things -- we don't go for as many walks (and therefore don't meet and greet the neighbors as much as we'd like), our young kids have fewer safe places to ride their bikes, and it seems to prevent other folks from walking our way much, too.
• Visit the neighborhood at different times of the day and at least once on a weekend rather than a weekday. Are most of the folks working out of the home? Is the neighborhood composed of retirees? Are there loads of school-aged children? Are there many young mothers with babies and toddlers?
• Study a map of your neighborhood to see the proximity of parks, libraries, the nearest hospital, and other amenities. Likewise, try driving different routes to the home so you can see the good, the bad, and the ugly in the surrounding area.
• Arrange a visit to the school your children would attend, check out the school's test scores, and find out how many veteran teachers are on staff.
• Talk to the neighbors and ask them very specific questions. For example, you may want to ask about their perceptions of crime, location, noise, traffic, and community feeling. Is the neighborhood changing? If so, how?
• Head down to city hall to check on issues with zoning or find out about any projects in the works. You should be able to find out if there are any major road or construction projects planned for the next few years.
• Pump your real estate agent for information. How long do homes in this area stay on the market? What's their resale potential?
• Check your town or city's website for real estate tax assessment information. By looking at our local real estate tax office website, I can see the value of the assessment, how much of that total is land versus the structure, how the assessor rated the structure's condition, and recent home sales in the area.
• Head to the nearest police station to ask for crime rate information. Be sure to ask about the typical response time for emergencies.
• Check the national registry for sex offenders.
Once you've gathered as much information as you can, review it. Does the neighborhood seem to meet your needs? Did you find any information that's a deal breaker? Can you picture yourself living here happily? Be as picky as you can afford to be; no returns or exchanges are offered on neighborhoods.
Copyrighted, The Motley Fool. All rights reserved.
Monday, February 22, 2010
Rent or Buy?
By Mary Dalrymple
Provided By The Motley Fool Green Light
Home prices, mortgage rates, and housing bubbles have gotten their fair share of print in the news lately. If you're a renter wondering whether to take the leap into homeownership, it may all seem a little overwhelming.
When considering whether it's better to remain a renter and let your landlord fix the plumbing leaks, your area's real estate market should be one consideration. But it's not the only one, and it may not be the most important one. Here are some things to ask yourself when considering whether to become a homeowner.
Will you remain in the house for more than a few years?
Housing prices have definitely skyrocketed in many regions, but that doesn't mean they'll stay on that path forever. A few areas have seen prices starting to decline. That can be great when you're the buyer, but not necessarily when you're the owner.
You'll want to stay in your home long enough to at least recoup your buying costs. If you know you'll move in fewer than three years, your house may not have appreciated enough to cover those expenses. You may want to plan on staying at least three to five years to give yourself more time to cover your costs.
How does it compare with renting?
When renting, it's easy to calculate whether a new apartment will fit in your budget. Just ask about the monthly rent and the average utilities. Once you start thinking about buying a home, this calculation gets a lot more complicated.
Luckily, there's a handy Motley Fool calculator that will tell you whether you're better off renting. As you'll see from the questions the calculator asks, this equation depends on the expected appreciation of your home, your tax rate, your mortgage interest rate, your homeowners' insurance, and your property taxes, to name a few things.
What else would you do with the money?
If you purchase a home, you may shell out more each month for your housing costs. That doesn't mean it's better to remain a renter. You're likely to get a discount on some of those costs, including mortgage interest and property taxes, through various tax deductions.
Also, your mortgage payments won't climb every year with inflation, the way your rent can. (Unfortunately, the same can't always be said of your property taxes.) When you pay your mortgage each month, you're building equity in your house. When you pay your landlord each month -- and he keeps raising the rent -- you're not gaining anything but the same old apartment, for more money.
On the other hand, homes require some upkeep and maintenance, which can get expensive. Depending on the real estate market in your area, you may find no advantages to buying a house. Maybe you're better off investing your money and improving your financial situation through stock ownership, instead of real estate.
Can you place a down payment?
To get the best mortgage arrangement, you'll want to be able to put down 20% of the purchase price of the home. You can get a multitude of arrangements that let you avoid that down payment, but some can be costly. You'll either have to pay private mortgage insurance to protect the lender in the event that you default, or you'll need a second loan that will probably come at a higher interest rate.
There are many programs around to help people, especially first-time homebuyers, who cannot put down the traditional 20% down payment. You may qualify for one of these arrangements. In the meantime, consider whether you'd rather rent longer and save more money toward a down payment.
How do you feel about homeownership?
Some people cannot wait to paint the white picket fence and plant daisies, while others dread the idea of doing their own maintenance chores. If you know exactly where you stand on that question, there may be no debate about whether you should keep renting or start home-hunting.
Copyrighted, The Motley Fool. All rights reserved.
Provided By The Motley Fool Green Light
Home prices, mortgage rates, and housing bubbles have gotten their fair share of print in the news lately. If you're a renter wondering whether to take the leap into homeownership, it may all seem a little overwhelming.
When considering whether it's better to remain a renter and let your landlord fix the plumbing leaks, your area's real estate market should be one consideration. But it's not the only one, and it may not be the most important one. Here are some things to ask yourself when considering whether to become a homeowner.
Will you remain in the house for more than a few years?
Housing prices have definitely skyrocketed in many regions, but that doesn't mean they'll stay on that path forever. A few areas have seen prices starting to decline. That can be great when you're the buyer, but not necessarily when you're the owner.
You'll want to stay in your home long enough to at least recoup your buying costs. If you know you'll move in fewer than three years, your house may not have appreciated enough to cover those expenses. You may want to plan on staying at least three to five years to give yourself more time to cover your costs.
How does it compare with renting?
When renting, it's easy to calculate whether a new apartment will fit in your budget. Just ask about the monthly rent and the average utilities. Once you start thinking about buying a home, this calculation gets a lot more complicated.
Luckily, there's a handy Motley Fool calculator that will tell you whether you're better off renting. As you'll see from the questions the calculator asks, this equation depends on the expected appreciation of your home, your tax rate, your mortgage interest rate, your homeowners' insurance, and your property taxes, to name a few things.
What else would you do with the money?
If you purchase a home, you may shell out more each month for your housing costs. That doesn't mean it's better to remain a renter. You're likely to get a discount on some of those costs, including mortgage interest and property taxes, through various tax deductions.
Also, your mortgage payments won't climb every year with inflation, the way your rent can. (Unfortunately, the same can't always be said of your property taxes.) When you pay your mortgage each month, you're building equity in your house. When you pay your landlord each month -- and he keeps raising the rent -- you're not gaining anything but the same old apartment, for more money.
On the other hand, homes require some upkeep and maintenance, which can get expensive. Depending on the real estate market in your area, you may find no advantages to buying a house. Maybe you're better off investing your money and improving your financial situation through stock ownership, instead of real estate.
Can you place a down payment?
To get the best mortgage arrangement, you'll want to be able to put down 20% of the purchase price of the home. You can get a multitude of arrangements that let you avoid that down payment, but some can be costly. You'll either have to pay private mortgage insurance to protect the lender in the event that you default, or you'll need a second loan that will probably come at a higher interest rate.
There are many programs around to help people, especially first-time homebuyers, who cannot put down the traditional 20% down payment. You may qualify for one of these arrangements. In the meantime, consider whether you'd rather rent longer and save more money toward a down payment.
How do you feel about homeownership?
Some people cannot wait to paint the white picket fence and plant daisies, while others dread the idea of doing their own maintenance chores. If you know exactly where you stand on that question, there may be no debate about whether you should keep renting or start home-hunting.
Copyrighted, The Motley Fool. All rights reserved.
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