Tag: investment property

8 DIY Projects that Can Increase the Value of Your Lake Home

Posted on Glenn S. Phillips

If you’re lucky enough to own a home by a lake, you know how peaceful sitting looking out over the water can be. You’re also likely aware that such homes generally have a steady stream of people interested in buying them as soon as they go on the market.

Although a lake home can be prime real estate, there are several things you can do to both enhance your enjoyment of your property as well as increase your home’s value when it comes time to sell it. The good news is that you don’t have to spend a fortune to reap the benefits.

The following are 8 DIY projects that can increase the value of your lake property:

1. Improve your landscaping

Although the lake water can be captivating, your home will increase in desirability if you spruce up your landscaping by adding trees, shrubs, and bedding plants to your property. The concept of curb appeal applies to lake homes as well as suburban ones.

2. Give your kitchen a cheap facelift

You can make your cottage kitchen look more current without having to spend a lot of money. A fresh coat of paint on the walls and the cabinets as well as new drawer pulls and cabinet handles can update your kitchen for less than $100.

3.  Add an outdoor seating area

Every lake home should have an outdoor seating area. However, you don’t have to spend a lot of money on a multi-level deck to be able to enjoy the outdoors. Pouring a small, concrete patio can be a DIY project. Or, you can carve out a secret seating area with a garden bench or pergola and add a stone or brick path leading from the house.

Swapping faucets 4. Swap out the faucets

Getting rid of tired bathroom and kitchen faucets are another inexpensive DIY to update your rooms. Modern faucets not only are less likely to drip or leak, but they add a sleek look to your rooms.

5. Update your lighting… inside and out

Replacing your old lighting fixtures is an easy and affordable way to add value and beauty to your lake home. And, don’t stop with the inside lights, solar lights lining a pathway to the water and/or well-placed spot lights that accent your planting can add intrigue and allure to your landscaping.

6. Anything that saves energy

According to the Residential Energy Services Network, you’ll boost your home’s property value by $20 for every dollar your improvement saves on your annual energy costs. You don’t have to invest a lot to make a big impact. Things like weather stripping, additional attic insulation, and a blanket for your water heater can add hundreds to your home’s value.

7. Replace your front door

According to “This Old House” magazine, replacing your front door and door hardware is one of the best ways to add value to your property and make it more attractive to potential home buyers. They maintain that home buyers make up their mind about a property in the first seven seconds. That means your entrance way needs to look sharp.

8. Install new flooring 

DIY installing flooringThe right flooring can pay you back double your investment when it comes time to sell. This is especially true with lake homes, where sand and water can take their toll on traditional flooring. Good choices for lake homes include vinyl flooring, which is virtually impervious to water and cleans up easily.

Remember: you don’t have to spend a fortune to enhance your lake home’s property value. A little paint, some well-placed trees and shrubs, an outdoor sitting area, and some new lighting can take your home from mediocre to marvelous without breaking your budget.

Top 10 Real Estate Investor Mistakes

Posted on Glenn S. Phillips

Investing in real estate property can be a career, or it can be a valuable sideline. Either way, it is not at all the same as buying a home for your family to live in. It’s a business. If you don’t treat it that way, you won’t make money. You could easily lose your investment, and more.

The purpose of any investment goal is to grow your capital. Avoiding these 10 real estate investor mistakes will keep your ROI trending in the right direction. Continue reading “Top 10 Real Estate Investor Mistakes”

Why Cash Is Still King In Real Estate Home Buying

Posted on Glenn S. Phillips

ResearchCash down payment for home buying has shown that cash is still king in real estate home buying. Millions of people who are buying homes and commercial business properties across the globe are increasingly opting to pay using cash as opposed to other means of financing.

Cash deals on homes account for more than half of the sales in major markets.

One thing that you need to understand is that cash buyers are better positioned to get better deals in the marketplace.

Sellers are FAR more comfortable dealing with a buyer who pays in cash. Rather than someone who opts to pay using other financing sources.

What about first-time buyers, is a cash purchase a good ideas?

Many experts out there argue that cash deals are negatively affecting first-time home buyers. This is not always the case. Many first time buyers love to depend on home loans and mortgages when purchasing a home for their families. Though, there are still those first time home buyers with cash on hand.

The good thing with paying by cash is that you typically get the opportunity to negotiate with the seller. Too, you can agree on terms on a more personal basis. This might be an ideal choice for first time buyers who want to get the most value (lowest price) of an all cash home purchase.

Cash buyers are on the rise

Research shows that in 17 of the largest cities in the United States, 32% of home buyers currently prefer to pay for their initial purchase with the use of cash. What’s more, statistics show cash purchases in the United States have been on the rise since the year 2011.

In fact, the rise in these all cash home purchases started in the year 2007 when the housing bubble burst. It was during this time that cash purchases accounted for close to a third of all purchases by the year 2011.

Another element that has triggered this is the tightening of mortgage lending standards, fewer home sales, and investor purchases. Since it is quite hard to qualify for a mortgage from most lenders today, cash is a much better option.

When you take a look at the housing market in the United States and other parts of the globe, you’ll find that the largest percentage of homes bought without a mortgage are on the low and high ends of any market. As prices get to the upper level, everything seems to change. All cash purchases start to become more likely and a preferred option among most high end buyers.

What does the future hold for real estate purchases?

A considerably large percentage of wealthy home buyers in the United States are starting to come from overseas buyers. Apparently, a large number of them prefer to pay for their purchases in cash. This further proves that cash is still king in the real estate home-buying sector.

As for the future, things look brighter for both buyers and sellers. People are willing to pay for purchases using cash instead of mortgage financing and sellers typically find the cash option to be most desirable.

How To Find A Lake Home For A Bargain

Posted on Glenn S. Phillips

Finding a lake home for a bargain can take time, a reasonable budget, and the ability to go outside of your original expectations in both location and layout.

Though you might not think that getting a lake house at a fairly low price is attainable, people do it all the time. Taking a deeper look at each of these factors can help you in your journey to finding a lake home for a great bargain.

Shopping for a Bargain May Take a Lot of Time

Searching for a lake home bargainBeing able to wait until the perfect opportunity comes along is probably the most important aspect of getting a lake home for a bargain. In places where there is a “seller’s market” this can be especially true.

When the right house does come up, time again plays a factor as you need to be able to get on it right away.

There may be times when there are hardly any homes on the market. Other times, there may be lots of them.

If you have the discipline to wait until the right home comes along at the right price, you can get a second home at a very large bargain.

Understand Your Lake Home Budget

Your budget is going to have a lot of influence on how good of a bargain you can get for a lake house. For smaller houses that more people can afford, you are less likely to be looking at a bargain. You will be more likely be looking at the seller getting pretty close to fair market value for their house.

Where budget does come into play is when there are very large or relatively expensive houses on the market compared to other homes nearby.

When there isn’t a very large pool of buyers for a home because of the price, you can sometimes score a good deal. This is because the sellers know that someone else may not come along for a very long time.

In these cases, you are getting a relative bargain not because you got it for such a low price compared to all the other houses in the area, but because you got it for far less than it’s fair market price.

Home Location Impacts Price

Where a home is located plays a sizable role in getting a bargain. If it is in a neighborhood that is highly sought after, there probably won’t be too many opportunities to get a home at a bargain. What you need to do is start looking away from the beaten path.

Homes in areas that aren’t as popular can often have excellent deals available. This is due to houses tending to languish on the market and a seller may be more willing to come down a lot more on the price.

The region of the country the house is in can determine what kind of price point it will be offered at. Too, whether or not you are going to be able to score a good deal on it. Places that are seeing an influx of buyers will have far fewer good deals than places where there seems to be a lot of inventory on the market.

Knowing the general market in your region of the country can help you make a decision on whether to look earnestly for a lake house now, or to wait it out until prices, or the number of buyers, come down.

You May Have to Compromise in Home Layout

Understanding what is popular with buyers in your area in terms of the number of bedrooms, bathrooms, and square footage, can help you find hidden bargains that you might not have otherwise known about. A place that is popular with families will result in prices close to fair market value for houses with lots of bedrooms.

On the other hand, that same area will see sellers with smaller homes have a much harder time trying to sell their house for close to their asking price.

Upgrades on the inside and house layout can play a part in whether or not you can get a deal on a lake house.

Most people go for open floor plans these days, while some older houses have much more compartmentalized layouts. If you don’t mind a few extra walls, you can get a good house for a very good price.

The great thing about looking for a lake house as either a second home or an investment property is that you are going to be able to negotiate from a position of strength.

Any house that has been on the market for more than a couple of weeks means that you likely won’t have much competition bidding for the house, and if the current owners need to get out quickly, you can have it for an even lower price.

How To Spot A Real Estate Bubble In Your Market

Posted on Glenn S. Phillips

A real estate bubble refers to a run-up in home prices. This is sometimes caused by speculation and a mix of market factors. A bubble tends to start with the combination of rising demand and a growing limited supply. Speculators help drive up prices, thinking they can make short term profits.

At some point, however, demand diminishes while supply increases, causing the bubble to burst. The following tips on how to spot a real estate bubble can help you when considering real estate investment decisions in your market.

Study Real Estate Market Prices

Visit local real estate websites to research “comparable” local market data. You should also survey your local real estate market experts to get feedback on what state the market is currently in.

It’s a good idea to get various opinions since some real estate experts may have an interest in painting an optimistic view of the market to investors. Check the real estate section of your local online news source for additional expert opinions.

You can analyze historical sales and pricing data on local real estate websites. Getting some historical perspective within the past 1-3 years on the real estate market will provide a clearer picture of how steadily prices have moved up in the past.

One clue that the market may be in a bubble is the rate at which prices are moving up. If prices seem to move too far too quickly, there’s a chance that prices are inflated and are primed for a pull-back.

Look at the Overall Economic Picture

Consider the overall global, national, state and local economies. If your market in general is outperforming other markets, then it could indicate the presence of the boom end of the cycle rather than a real estate bubble. The key economic indicators are unemployment, median average salary and cost of living.

Rising home prices in areas of high unemployment and rising cost of living may be an indicator that the market is being driven by investors rather than owner-occupied buyers.

It’s also helpful to study the price-to-income ratio in the market, which compares home prices with income in the region. When the ratio becomes high, such as 8 to 1, it means home prices are out of reach for the market.

Another indicator that your real estate market is in a bubble is if the cost of paying a mortgage is much higher than renting a home.

Learn From History

A lot can be learned about real estate from the real estate bubble of the late 2000’s.  Legislation and mortgage companies made lending to first time home buyers easy, which opened the floodgates to many new buyers, who bought homes with low variable interest rates only to be devastated by rising interest rates down the road.

Since the housing crash, lending laws have tightened and it’s not as easy for speculators to buy homes, as they must meet strict income levels.

One of the main problems with the housing bubble of the 2000’s was that it coincided with jobs in the U.S. being replaced by lower paid outsourced jobs overseas. In markets that relied heavily on one industry, such as Detroit or Las Vegas, many people lost their jobs as the economy slowed down, losing their homes as housing prices plunged.

Distinguishing Real Estate Bubble from a Boom

https://www.links-financial.com/when-the-real-estate-bubble-bursts-its-going-to-be-due-to-lack-of-resources/Several markets have recovered since the housing crash of 2007 through 2009, although home prices generally remain lower in 2014 than levels prior to the crash. In the cases in which prices are at an all time high, it’s a signal to exercise caution.

One of the main indicators of the real estate industry is the progress of median home prices year over year. By what percentage are prices up from the previous year and where are prices in relation to the all time high? Double digit growth can indicate a speculative bubble.

Despite the fact that banks have still kept some foreclosure properties off the market, it appears now that home prices have begun to stabilize. Cash buyers have improved median home prices across the country by focusing on higher priced homes.

Home lenders are now much more focused on the most credit worthy clients, according to the Mortgage Bankers Association with credit becoming more difficult to access for those with bad credit.

Indicators that a real economic boom is underway occur when thousands of new jobs come to town, home builders build new homes and home inventory remains low. Over-expansion of new homes, however, can depress home prices.

As more money flows in the market, home prices naturally rise. Booms make much safer investment cycles than bubbles, which can collapse at any time. If the overall local economy appears to be healthy then it’s probably a safe time to invest.

Staging Your Lake Home Property for Sale

Posted on Glenn S. Phillips

Selling a lake home can present certain challenges and opportunities that you may not find with a house away from the water. Staging can help tremendously to secure the highest price for your home and also help to sell it more quickly.

Staging your lake home provides a unique opportunity to tie in elements of your home with the lake or, at a minimum, put the lake on the forefront of a potential buyer’s mind relative to other properties in the area.

Outdoor Staging

The exterior or a home should showcase the fact that along with the house, the buyer will be purchasing the chance to take full advantage of the lake nearby. One of the best ways you can do this is to put some kind of boat either by your dock, or on your beach, depending on how you gain access to the lake.

While any kind of boat will do, from a kayak to a pleasure boat, it is important to take into account what the rest of the neighborhood is like. If everyone else has nice looking boats moored to their docks, you probably want something similar, even if you don’t own one, you may want to think about renting one for the period of time that the house will be shown.

Family/Living Room

here is a good chance that one of the main living areas in your home will have a very nice view of the water. Position your furniture to make that view the focal point of the room.

If you have more than one room with large windows and an excellent view, you don’t necessarily need to do the same thing with each of them. Potential buyers know that they need to be able to put a TV somewhere, and they’ll also want some level of privacy at night as well.

While it may be tempting to go with a nautical theme in a lake house, you might consider alternative design motifs that are less overstated. There is certainly nothing wrong with a few nautical-themed pieces throughout the house, unless you know for certain that your potential buyers are very water sports-minded, sticking with a theme that showcases the lake is a safer strategy.

Kitchen

If your kitchen has windows that face the lake, be sure to completely open up the curtains or blinds, letting buyers know that they have a great view waiting for them every time they use the kitchen.

For a kitchen that opens up into a dining or living area, display a few fresh fruit items or a small bouquet of flowers on the table. You won’t need anything elaborate, just a small bowl of fruit or a small bouquet of freshly picked flowers is all you need.

The important thing is to help convey the feeling of freshness to someone looking at the home, you want to try and convey the feeling that the home is vibrant and welcoming.

Bedrooms

Staging a bedroom in a lake house is a lot like staging one in any other house – you really want to maximize the appearance of space. This means a bed, a couple of pieces of furniture, and not much else on the floor.

People want to know that they are going to have plenty of space in their bedroom and what you are giving them is the maximum amount of space possible.

When the buyer moves in, they know that their items are going to take up more space than what you have in the bedroom, which is its so important to convey the appearance of space within the home, even in small areas.

Bathrooms

As opposed to the rest of the house, a bathroom may be a great place to put up a few nautical motifs. Toothbrush holders, hand towels, soap dishes, boat pictures or anything that can provide a pop of color and give a bathroom a little bit of character.

When someone walks through a house, the last thing they want to see is a bathroom that lacks cleanliness or character. If it’s messy or uninteresting, that thought could start to creep into their mind about the rest of the house. That’s not the lasting impression that you want to leave a potential buyer.

Investing In A Lake Home? Things To Watch Out For

Posted on Glenn S. Phillips

Investing in a lake home can be a fantastic idea, whether you’re looking to buy property on the water as a primary residence, or as a vacation home.

However, there are a lot of different things that you need to consider when investing in lakefront property. Buying a lake home is much different than buying a normal home on land – things such as cost per acre or cost per square foot don’t apply in the same manner to lake homes.

The following are a few things you should keep in mind when looking at lakefront properties: Continue reading “Investing In A Lake Home? Things To Watch Out For”

Top 10 Tips on Waterfront Home Buying

Posted on Glenn S. Phillips

Waterfront homes are unlike any other type of property. They carry a unique beauty and versatility since you’re getting land and water at the same time. However, they can also be more complicated to buy than land-locked real estate.

Here are the top 10 tips for how you can make your waterfront home buying experience more successful:

1. Inspect carefully and comprehensively.

Water might be easy on the eyes, but it’s hard on a building. Whether you have water intruding into the basement from the high water table, corrosion on your exterior because of salt air, or mildew and mold issues from higher moisture levels in the air, an expert inspection can help you understand what you might be up against. Surveys, elevation certificates, water quality tests, and other land and water-based inspections that you might not have done on a regular home can be very important with waterfront homes.

2. Choose the right water.

Waterfront homes aren’t all the same. If you want the smell of salt air, there’s no substitute for a beachfront home, but if you want to hear crashing surf, a home on a bay might not be the right place for you. Property on a large lake gives you the ability to sport about in a powerboat, but if you want peace and quiet, you might be better served by being on a smaller body of water that’s devoid of noisy powerboats and peering eyes.

3. Walk the property carefully.

Spending some time on the water helps you see if the property is as good as you think. For instance, you could have a beautiful view, but not have good access to the water. On the other hand, the lake that looks fantastic from the window could actually be choked with weeds and debris. When a home has an unattractive backyard, you can change the landscaping. With a waterfront home, you’re also buying the water, so getting it right is crucial.

4. Check insurance requirements.

Waterfront homes frequently have an increased risk of flood damage and some beachfront homes are also at risk of a hurricane or even earthquake damage. If insurance is available, it could be cost-prohibitive, so it’s best to know before you sign a contract.

5. Look for hidden costs.

Waterfront homes can sometimes carry additional expenses that buyers might not be aware of. For starters, water and sewer rates can be more expensive than inland rates. Boat dock and lift fees, as well as septic tank and well upkeep, are additional potentially hidden expenses to inquire about as well.

man holding calculator explaining the top 10 tips on waterfront property buying

6. Research the shoreline’s history (and future).

Water and dirt mix in interesting ways and, sometimes, the shore moves. If the water level goes up, you could end up losing your property. If the water line moves away, your waterfront home could end up being a quarter-mile walk from any water.

7. Look for a deal. 

For many people, owning a waterfront home is a dream come true. For others, not so much, which can create some extremely motivated sellers. If you can find a motivated seller and move quickly, you just might get a great deal in helping that owner get rid of his problem.

8. Consider supply & demand.

On the other hand, if there are too many homes on the market at prices that seem like they’re good deals, it could be a sign of a weak market. Either way, consider what’s most important to you in your buying decision before moving forward.

9. Devise a strategy for the property. 

If you’re going to live full-time in the property, searching for a lakefront primary home is one strategic buying approach that you can take. On the other hand, if your waterfront property is going to be a vacation home, you might want to look into whether or not you can rent it out when you aren’t using it. Doing this can help to lower your cost of ownership while also keeping the house from sitting empty for too long.

10. Work with an expert agent.

Waterfront homes aren’t simple. Between the title issues, the structural issues and the unique way that the market looks at the property, many real estate agents can’t effectively help you through the purchasing process. A real estate agent that specializes in waterfront homes and land will know which questions to ask, who to involve in the transaction, and how to help you achieve your dream of homeownership on the water.

For more tips on buying or selling a waterfront property, read here. 

Tax Planning For Vacation Home Ownership

Posted on Glenn S. Phillips

Owning a vacation home can bring a new level of fun and luxury to your life. It also brings additional complexities to your tax liability, which can impact you both while you own the house and when you plan to sell it. Depending on how you structure your ownership, you could end up having your vacation home add to your overall tax burden.

Interest DeductionTax Planning For Vacation Home Ownership

The IRS allows you to write off the home mortgage interest that you pay on up to two homes.

The rules for your second home are the same as for your first home. For the loan’s interest to be tax deductible, it must be secured by the property.

Depending on your state, this means that the loan should have either a mortgage or a trust deed.

The IRS catch is that it applies the same deduction cap across both of your mortgages. The IRS lets you write off the interest on your first $1 million in home acquisition debt and on your first $100,000 in additional home equity debt.

Home acquisition debt isn’t just the money that you borrow to buy a home. It is also money that you borrow to improve, repair or, remodel a home.  Home equity debt is debt that you take out for any and all purposes.

Remember, though, that the cap applies against both properties. If you have an $800,000 mortgage and a $90,000 equity line on your first home and a $400,000 mortgage and a $60,000 equity line on your second home, you’ll only be able to deduct the interest on half of your second home’s mortgage and only on one-sixth of its equity line.

This happens because $200,000 and $10,000 is all that is left in the home purchase debt and home equity debt caps after your first home’s two loans.

Property Tax Deduction

The IRS is much kinder to you when it comes to deducting property taxes. Your property tax deductions aren’t capped just because a home is a second — or tenth home, for that matter.

You get to write them off along with your personal property taxes or your state income taxes. In this way, second homes have no tax disadvantage when compared to your first home.

Selling Your Vacation House

When you sell your primary home, the IRS lets you exclude the tax liability of $250,000 of the capital gain if single or $500,000 of the gain if married.

So, as a married couple, if you buy for $400,000 and sell for $800,000, you pocket the entire $400,000 with no federal tax liability.

Unfortunately, to qualify for the tax exclusion, you need to have lived in the home as your primary home for two of the past five years. You can also only claim the deduction once every two years.

If you don’t meet these rules, you’ll have to pay the same kind of capital gains taxes on a profitable sale of your vacation home that you would on a stock or bond sale. This strategy can work particularly well for retired couples.

House or Rental?

When your vacation home is a rental property, even part-time, the rules change completely. The IRS allows you to write off all of the home’s expenses to the extent that it is, or will be, used as a rental.

If it’s a rental 90 percent of the time, you can write off 90 percent of the maintenance costs, 90 percent of what you pay for utilities, and 90 percent of your management and advertising costs.

The IRS even lets you claim a portion of its value as depreciation every year, further reducing your tax obligation.

While you can also use the home yourself, if you occupy the home for more than 10 percent of the number of days in a year that it’s rented, you won’t be able to write off any losses that you incur from operating it.

If your vacation home is a rental, you could be eligible for a 1031 exchange. This can allow you to use the proceeds to buy another investment property and defer your capital gains taxes.  However, utilizing a 1031 exchange on a property that you use both as a rental property and as a vacation home for personal use can be tricky, so it’s best to seek professional help in that situation.

Your vacation home can be a ticket to family fun on the beach, at the lake or on the mountain.  Financially savvy homeowners know how to use tax planning to help with the cost of ownership.

Tax liability planning ultimately might be as important to a positive vacation home ownership experience as choosing the right property is!