Month: August 2021

If you’ve ever thought about owning a rental property and becoming a landlord you likely have a few questions. What’s in store for you? How easy is it to be a landlord? What problems are you going to face? Is it really a profitable business model? Let’s take a look at some of the pros and cons of owning rental property to answer your questions.

Advantages of Being A Landlord

• You own property – an asset that can be sold, borrowed on and essentially increases your net worth.

• Income – Rental properties generally offer an income. Depending on the property and its location, the income will vary. And it’s essentially passive income. You may be required to maintain the home, however, the monthly rental payments generally cover that labor and more. 

• Homes tend to increase in value. This means that as you own the property it will appreciate or become more valuable. It’s not guaranteed, however. As the property increases, you can increase rent depending on your goals and your tenants.

• There are definite tax advantages to owning rental properties. In fact, your rental income may be tax free if you do not receive net cash flow after expenses are deducted.

• And you can refinance your loan if interest rates fall and your property appreciates. This is tax free. Or if you sell the property and reinvest in another property, the profits can be tax free. IT’s called a tax free exchange.

• You also have the satisfaction of working for yourself if you own several properties. This can be your full time job and it generally doesn’t require full time hours. This can be a huge advantage to being a landlord.

Disadvantages Of Being A Landlord

• Properties don’t always increase and you may end up breaking even.

• There is also the problem of finding tenants or having to deal with problematic tenants. 

• Liability problems. Being a landlord means being responsible for what happens in the home. If someone gets hurt, they may decide to sue you. Insurance can be costly and liability can be stressful. It’s your responsibility to make sure your rental home is up to code and safe for living.

• Unexpected expenses and repairs. Homes need repairs, it’s a fact of life and home ownership. And generally those repairs cost more than we expect and happen at the worst times. Being prepared for unexpected expenses and repairs with a savings account can mitigate this disadvantage.

Owning a rental property is full of ups and downs. Deciding if it is the right choice for you requires weighing the pros and cons. Consider talking with other landlords and rental property owners before making a decision. To your success!

Selling a home doesn’t have to be a difficult situation. If you have a real estate agent, she’ll handle all the negotiating tactics and act as a buffer between seller and buyer. However, you can successfully negotiate the sale of your own home by knowing a few tips ahead of time. Make sure that you have a strategy. This lets you plan in advance for the scenarios that might crop up. You’ll be ready to handle anything or discuss anything that might arise during the negotiation process. You have to start by knowing what it is that you want out of your home when it comes to the price. By knowing your bottom line for profits, this allows you to keep your mind on your goal rather than getting sidetracked by all the different tactics buyers will sometimes use. 

Be prepared to defend your position. They may want an explanation for why you’ve set your price at the amount that it’s at – or to know why you’re not offering certain concessions. You can defend your position by doing your research ahead of time. Know what the market is doing. Understand if it’s a buyers’ or a sellers’ market. Have your home price set so that it fits the market and the neighborhood that you’re living in. 

If you’re selling a home for $200,000 in a neighborhood where the highest home value is $150,000, that’s a poor strategy. You need to do your homework so that you’ll know how to correctly value your home. You can do a market analysis, but you can also get the home appraised before the negotiations start. That way, you have proof on hand with what your home is worth and anything that needs to be taken care of first. You might have a fixed price in mind when it comes to selling your home – but don’t be afraid to listen to the other side. By being willing to pay attention, you might end up with an even better deal.

Know ahead of time that it’s rare for both parties in a home sale to get exactly what it is they planned to get. The negotiation process works as a give and take and both sides need to be willing to make concessions. Don’t try to hide the flaws in your home. A buyer knows that every home has flaws. Point yours out and either offer to fix those as part of the deal or take money off the asking price in exchange for him assuming the needed repairs once he’s the homeowner. 

The first offer that you get might be a lot less than you’re expecting. This is simply the art of negotiation. Just make a counteroffer. Keep calm and keep your eyes on what it is that you want out of the negotiation and you should be able to get through it easily.

Homeowner’s insurance is an important thing for any homeowner to have.  It covers your home and belongings if they are destroyed by disasters such as hurricanes, tornados, or fires.  But many homeowners do not realize that standard homeowner’s policies do not cover flood damage. Flood insurance is not included in regular homeowner’s insurance because most people do not live in places with high flood risks.  It stands to reason that if one lives far from any bodies of water, they should not be required to pay higher premiums to be covered in the unlikely event of a flood.  It is for that reason that flood insurance is sold separately from regular homeowner’s policies.

Flood insurance is provided by the government through the Federal Flood Insurance Program.  It can be purchased from your homeowner’s insurance agent, but it is completely separate from your homeowner’s policy.  Flood insurance is relatively inexpensive, so if you live near a body of water it is well worth considering.

Those who are not in flood-prone areas may be able to get a lower premium on their flood insurance.  Even if you’re not near a body of water, flooding is possible from melting snow or water running downhill.  If you might possibly be at risk for these occurrences, you may want to consider flood insurance as well.

Flood insurance covers the replacement value of your home and the cash value of your belongings.  There is a limit to how much they will pay on both.  To compensate, some specialized insurance companies sell excess flood insurance.  It picks up where federal flood insurance leaves off, covering the remainder of replacement value on your house and cash value of your personal property.

Often people in flood-prone areas do not purchase flood insurance because the Federal Emergency Management Agency (FEMA) offers assistance after floods there.  But FEMA can only provide assistance in areas that have been declared federal disaster areas.  If the President does not make this declaration, those without insurance have no assistance in rebuilding.

It is important to remember that flood insurance has a 30-day waiting period.  That means that if you go out and buy flood insurance after a flood warning is forecasted, your policy will not cover any damages that may be incurred from that flood.  If you believe that you are at risk for flooding, getting flood insurance right away is the practical thing to do.

Flood insurance is not required by your lender in most cases.  But if you get a federally backed mortgage in an area with high flood risk, the law requires you to have flood insurance.  Whether it is required or not, flood insurance can give you the security of knowing that your damages are covered in the case of a flood.

Despite the recent real estate woes, real estate is still a good investment strategy when it’s part of a diversified portfolio. And investing in real estate can be fun. There’s a bit of an art and a science to finding the best investment properties. You’ll need time to research, a good plan and of course some expert advice on your side. Here’s what you need to know to find the best investment properties.

Build a network of support. Make friends with real estate agents, mortgage brokers, bankers and property managers. This network of people will help you find the best deals. Stay in touch with them, connect and share information, and offer tips for getting the best deals. They can also be a valuable source of information and expert advice once you find the property you want to buy.

Make sure your finances are ready to go. This way, when a great investment opportunity presents itself, you can jump on it. If you have to get your finances in order, get approved for a mortgage and gather the capital to make a down payment, you may miss the opportunity.

Know how much you have to spend and be able to quickly assess the value of a property. Know that depending on your goals for the investment property the value may change. For example, if you’re planning on owning the property for decades and renting it out, then you can take repairs and rental profits into consideration when evaluating where a property is worth the investment.

Make sure you also have your legal ducks in a row. If you’re buying a foreclosure home for example, you’ll probably want to have an attorney help you, a real estate agent and/or a mortgage broker because there will be some negotiating with the bank. This is a different process than buying from a traditional seller. And while it offers financial benefits, it requires some additional expertise.

Become an expert at scanning the for sale ads, searching the real estate websites and for sale by owner ads. Knowing what to look for will help you quickly assess the value of a property. Make a list of what you’re looking for, your investment goals and how much you have to spend. This will help you quickly narrow your search to only the best properties. 

Finding the best investment properties requires patience, persistence and a firm knowledge about what you’re looking for and why. Make sure your goals are outlined in advance so you’re buying an investment property that meets your needs.