Wednesday, March 26, 2008
Consider Renting While Your Home is Listed
Dear Sue,
It looks like the market is starting to rebound. I have read recent stories about multiple offers on bank owned homes. I also heard that February home sales were up!
I want to buy a new home while the prices are still down but I want to let prices rise a little before I sell my current home.
What do you think of me buying a new home, moving into it and then renting my old house out while it’s on the market?
What are the things that I need to consider?
Landlord Larry
Dear Larry,
Renting is generally better than leaving your home vacant. Rental income can off set your expenses and a home that is lived in is less likely to be vandalized.
Becoming a landlord is serious business. If you don’t have landlord experience, I recommend paying for the services of a reputable property management company.
Property managers may be an additional expense but they are set up to do thorough tenant screening and selection. Good tenant selection is vital. A bad tenant can be costly and throw a huge monkey wrench into your plan.
Your property manager can select a tenant that understands that your home is for sale. A free month’s rent or below market rent is an often used incentive for a cooperative tenant.
Property managers also have an array of cleaners, painters, plumbers, electricians and general all around property maintenance personnel. Let them handle the early morning “Fix-it” calls.
Insurance is a consideration. You, the landlord will have a significantly lower premium because you will not be insuring the contents. The tenant should be required to have their own insurance policy with extended liability coverage. Some insurance companies will not fully insure a vacant home. In any case check it out with your insurance agent.
If your home takes longer than three years to sell, you may lose your $500,000 capital gains tax exclusion. To qualify, you must live in your personal residence two out of the last five years. If you get close to losing your exemption, you might want to cut your price and bail. Your accountant can help you with that decision.
If you decide that renting is not for you, consider professional staging and pricing your home for current market conditions. It will be a matter of good Home $$s and Sense.
It looks like the market is starting to rebound. I have read recent stories about multiple offers on bank owned homes. I also heard that February home sales were up!
I want to buy a new home while the prices are still down but I want to let prices rise a little before I sell my current home.
What do you think of me buying a new home, moving into it and then renting my old house out while it’s on the market?
What are the things that I need to consider?
Landlord Larry
Dear Larry,
Renting is generally better than leaving your home vacant. Rental income can off set your expenses and a home that is lived in is less likely to be vandalized.
Becoming a landlord is serious business. If you don’t have landlord experience, I recommend paying for the services of a reputable property management company.
Property managers may be an additional expense but they are set up to do thorough tenant screening and selection. Good tenant selection is vital. A bad tenant can be costly and throw a huge monkey wrench into your plan.
Your property manager can select a tenant that understands that your home is for sale. A free month’s rent or below market rent is an often used incentive for a cooperative tenant.
Property managers also have an array of cleaners, painters, plumbers, electricians and general all around property maintenance personnel. Let them handle the early morning “Fix-it” calls.
Insurance is a consideration. You, the landlord will have a significantly lower premium because you will not be insuring the contents. The tenant should be required to have their own insurance policy with extended liability coverage. Some insurance companies will not fully insure a vacant home. In any case check it out with your insurance agent.
If your home takes longer than three years to sell, you may lose your $500,000 capital gains tax exclusion. To qualify, you must live in your personal residence two out of the last five years. If you get close to losing your exemption, you might want to cut your price and bail. Your accountant can help you with that decision.
If you decide that renting is not for you, consider professional staging and pricing your home for current market conditions. It will be a matter of good Home $$s and Sense.
Monday, March 24, 2008
Should I Pay off my House?
Dear Sue,
My husband and I have been thinking about paying off our existing mortgage in preparation for our retirement.
Do you think such a move is wise? Is there anything we need to know?
Wannabe Wise
Dear Wise,
Equity has never been more important than it is today. I know of only two ways to create equity: through debt reduction and though appreciation.
Americans were encouraged to tap into their home equities as if they were their own personal ATM machines as real estate appreciated at record rates over the past several years.
College educations, vacations, BMW’s and other investments were all financed with the equity drawn from people’s homes. There was very little worry because real estate was appreciating at record rates. As money was taken out it was immediately replenished because of the unprecedented appreciation.
We all know that times have changed. We experienced the appreciation cycle for many years. It has run its course and we are now in the inevitable depreciation cycle. Home values are going down nearly as fast as they went up. Today some banks are freezing those credit lines. People are finding their ATM machines out of order. Many Americans are even struggling to make their house payments. Many are wondering why they should even bother to make those payments since their mortgage amounts are higher than what their property is worth.
In a market of decreasing values, the only way to build equity is to reduce the mortgage debt.
In answer to your question is paying off your mortgage a wise move? There is no “one size fits all” answer. It depends on many factors both emotional and financial. The emotional factor is “peace of mind.” The financial factors include the tax advantages as well as future retirement plans.
What ever you decide to do I recommend that you create an over all financial plan with the assistance of your tax advisor and financial planner.
I recommend that you compare the return on other investments with that of paying off your home. For example, if the interest rate on your mortgage is 5% and your savings bank is paying 3%, it makes sense to make an extra 2% by paying down the mortgage. If you find an investment that safely pays above 5%, it makes more financial sense to put your money there, unless of course peace of mind is of more value to you.
Paying off a mortgage may seem overwhelming. However it can be done one dollar at a time. Many people use their income tax refunds to make annual principal reductions. Making an extra house payment every year can reduce the mortgage period by 10 years or more. Some banks offer bimonthly payment plans to decrease the pay off time. Go on-line and find a good mortgage calculator. Plug in some examples and see for yourself.
When the day comes that you make that final payment, be certain that there is no pre payment penalty and make sure that the note holder signs and records a full
reconveyance .
If you need available cash in the event of an emergency, you can always get an equity line of credit.
If you are 61 or older and need money for any reason, a reverse mortgage is also an option.
If you own the property free and clear, and you wanted to sell your home, you will be in a sweet financial position as the banker holding a first trust deed.
Paying off your mortgage can be a matter of good Home $$s and Sense.
My husband and I have been thinking about paying off our existing mortgage in preparation for our retirement.
Do you think such a move is wise? Is there anything we need to know?
Wannabe Wise
Dear Wise,
Equity has never been more important than it is today. I know of only two ways to create equity: through debt reduction and though appreciation.
Americans were encouraged to tap into their home equities as if they were their own personal ATM machines as real estate appreciated at record rates over the past several years.
College educations, vacations, BMW’s and other investments were all financed with the equity drawn from people’s homes. There was very little worry because real estate was appreciating at record rates. As money was taken out it was immediately replenished because of the unprecedented appreciation.
We all know that times have changed. We experienced the appreciation cycle for many years. It has run its course and we are now in the inevitable depreciation cycle. Home values are going down nearly as fast as they went up. Today some banks are freezing those credit lines. People are finding their ATM machines out of order. Many Americans are even struggling to make their house payments. Many are wondering why they should even bother to make those payments since their mortgage amounts are higher than what their property is worth.
In a market of decreasing values, the only way to build equity is to reduce the mortgage debt.
In answer to your question is paying off your mortgage a wise move? There is no “one size fits all” answer. It depends on many factors both emotional and financial. The emotional factor is “peace of mind.” The financial factors include the tax advantages as well as future retirement plans.
What ever you decide to do I recommend that you create an over all financial plan with the assistance of your tax advisor and financial planner.
I recommend that you compare the return on other investments with that of paying off your home. For example, if the interest rate on your mortgage is 5% and your savings bank is paying 3%, it makes sense to make an extra 2% by paying down the mortgage. If you find an investment that safely pays above 5%, it makes more financial sense to put your money there, unless of course peace of mind is of more value to you.
Paying off a mortgage may seem overwhelming. However it can be done one dollar at a time. Many people use their income tax refunds to make annual principal reductions. Making an extra house payment every year can reduce the mortgage period by 10 years or more. Some banks offer bimonthly payment plans to decrease the pay off time. Go on-line and find a good mortgage calculator. Plug in some examples and see for yourself.
When the day comes that you make that final payment, be certain that there is no pre payment penalty and make sure that the note holder signs and records a full
reconveyance .
If you need available cash in the event of an emergency, you can always get an equity line of credit.
If you are 61 or older and need money for any reason, a reverse mortgage is also an option.
If you own the property free and clear, and you wanted to sell your home, you will be in a sweet financial position as the banker holding a first trust deed.
Paying off your mortgage can be a matter of good Home $$s and Sense.
Thursday, March 13, 2008
Kids Can be Influenced by Feng Shui
To continue our discussion of Feng Shui throughout the home, I asked Sandra Bridges, professional Feng Shui consultant, about kids’ rooms.
She told me that there are some unique challenges in applying good Feng Shui in children’s rooms.
The biggest challenge is that a kid’s room usually serves several purposes—sleeping, playing, and studying. Secondly, children frequently share a room with a brother or sister, which also creates some issues. Lastly, but perhaps the biggest challenge, is the never-ending battle to keep the room clean.
To encourage restful sleep Sandra said that a children’s room should be painted soft colors like butter yellow, lavender, peach, soft pink or blue.
If a child is sickly, a soft green color will encourage health.
If you have a child who has a hard time going to sleep, paint the ceiling a soft blue with lots of billowy clouds and a few stars to encourage creativity. However, anything hanging from the ceiling directly over the child’s head is not a good idea. Overhead objects feel threatening.
The bed should be facing east and never under a window or kitty corner. Never allow mirrors to be seen from the bed.
Electronics, schoolwork and action toys, since they are all agitating influences, should be covered at night. Clutter in general should be kept to a minimum for the same reason.
If kids share a room, each one should have equal personal space. This will help them to learn respect for others and give them a sense of well being and self esteem.
Bunk beds are good as long as the kids like them. Bunk beds encourage conciliation and a similar point of view. Of course as children mature they may need to change their sleeping arrangements.
If kids are in separate beds in the same room, they need to face the same direction. This will also help them cultivate a good attitude with one another.
Cleaning the room shouldn’t be treated as a punishment. Sandra suggested explaining to older children how space clearing makes room for new things to come into their lives. Keep closets clean and fun. You can even decorate closets.
Sandra also brought up some general suggestions.
Hanging pictures of family members is a good idea. It makes children feel secure and guarded. They should also have a bulletin board on display featuring their accomplishments and artwork but it needs to be kept current.
Children’s rooms should have wood floors because they add “tree energy” and contribute to growing tall and strong. Their rooms should be well lit with fabric window coverings which slow down energy.
Using Feng Shui principles in your child’s room is a matter of Good Home $$s and Sense.
She told me that there are some unique challenges in applying good Feng Shui in children’s rooms.
The biggest challenge is that a kid’s room usually serves several purposes—sleeping, playing, and studying. Secondly, children frequently share a room with a brother or sister, which also creates some issues. Lastly, but perhaps the biggest challenge, is the never-ending battle to keep the room clean.
To encourage restful sleep Sandra said that a children’s room should be painted soft colors like butter yellow, lavender, peach, soft pink or blue.
If a child is sickly, a soft green color will encourage health.
If you have a child who has a hard time going to sleep, paint the ceiling a soft blue with lots of billowy clouds and a few stars to encourage creativity. However, anything hanging from the ceiling directly over the child’s head is not a good idea. Overhead objects feel threatening.
The bed should be facing east and never under a window or kitty corner. Never allow mirrors to be seen from the bed.
Electronics, schoolwork and action toys, since they are all agitating influences, should be covered at night. Clutter in general should be kept to a minimum for the same reason.
If kids share a room, each one should have equal personal space. This will help them to learn respect for others and give them a sense of well being and self esteem.
Bunk beds are good as long as the kids like them. Bunk beds encourage conciliation and a similar point of view. Of course as children mature they may need to change their sleeping arrangements.
If kids are in separate beds in the same room, they need to face the same direction. This will also help them cultivate a good attitude with one another.
Cleaning the room shouldn’t be treated as a punishment. Sandra suggested explaining to older children how space clearing makes room for new things to come into their lives. Keep closets clean and fun. You can even decorate closets.
Sandra also brought up some general suggestions.
Hanging pictures of family members is a good idea. It makes children feel secure and guarded. They should also have a bulletin board on display featuring their accomplishments and artwork but it needs to be kept current.
Children’s rooms should have wood floors because they add “tree energy” and contribute to growing tall and strong. Their rooms should be well lit with fabric window coverings which slow down energy.
Using Feng Shui principles in your child’s room is a matter of Good Home $$s and Sense.
Wednesday, March 5, 2008
Don’t Flush Your Money Down the Toilet!
Today we continue our discussion of the way Feng Shui principles can be applied to one’s home in order to create a harmonious environment and promote health and wealth. I have been interviewing Sandra Bridges, a professional stager and Feng Shi consultant. So far we have discussed the entry, the kitchen and master bedroom.
Today’s topic is the bathroom, the home’s place for cleansing and elimination. The bathroom impacts the family wealth and health because, according to Feng Shui, it impacts the physical body’s circulation of water.
The primary source of energy loss is down any drain. The largest drain of all is the bathroom toilet. You can avoid flushing your energy and money away by keeping the toilet lid down! (sorry guys) Keep the bathroom door closed at all times. If you have a pet that needs to enter the bathroom, it’s good to install a pet door.
Never have the toilet face the door. If there is no door, hang one or put up a drape or curtain. Keeping the door closed keeps the home’s energy from circulating in the bathroom.
Mirrors are great in a bathroom but shouldn’t reflect and another image of the toilet. More toilet, more drain. Small round mirrors over the bathroom sink and toilet provide a lifting power to counteract the downward pulling effect of the drain.
Since bathrooms symbolize cleansing inside and out, they are a great place to rid oneself of negative emotions as well as bad habits. Letting go of old stuff and watching it all go down the shower drain is a very effective and healing practice. I have personally practiced this for many years. When I am showering I imagine washing away all of my negative energy down that drain.
Add life to your bathroom with green healthy plants. A plant placed higher than the toilet is a good way to help balance the elements.
The Chinese say that a clean and beautiful bathroom helps the household stay healthy and happy. Artful décor, candles and wonderful aromas in a bathroom provide peace and tranquility. Applying Feng Shui principles to your bathroom can make you healthy wealthy and wise. It’s a matter of Good Home $$s and Sense!
Today’s topic is the bathroom, the home’s place for cleansing and elimination. The bathroom impacts the family wealth and health because, according to Feng Shui, it impacts the physical body’s circulation of water.
The primary source of energy loss is down any drain. The largest drain of all is the bathroom toilet. You can avoid flushing your energy and money away by keeping the toilet lid down! (sorry guys) Keep the bathroom door closed at all times. If you have a pet that needs to enter the bathroom, it’s good to install a pet door.
Never have the toilet face the door. If there is no door, hang one or put up a drape or curtain. Keeping the door closed keeps the home’s energy from circulating in the bathroom.
Mirrors are great in a bathroom but shouldn’t reflect and another image of the toilet. More toilet, more drain. Small round mirrors over the bathroom sink and toilet provide a lifting power to counteract the downward pulling effect of the drain.
Since bathrooms symbolize cleansing inside and out, they are a great place to rid oneself of negative emotions as well as bad habits. Letting go of old stuff and watching it all go down the shower drain is a very effective and healing practice. I have personally practiced this for many years. When I am showering I imagine washing away all of my negative energy down that drain.
Add life to your bathroom with green healthy plants. A plant placed higher than the toilet is a good way to help balance the elements.
The Chinese say that a clean and beautiful bathroom helps the household stay healthy and happy. Artful décor, candles and wonderful aromas in a bathroom provide peace and tranquility. Applying Feng Shui principles to your bathroom can make you healthy wealthy and wise. It’s a matter of Good Home $$s and Sense!
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