Tag: investment property

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!

10 Top Investment Tips for Buying A Vacation Home

Posted on Glenn S. Phillips
Investment Lake Home

If you’ve decided you’d like to buy an investment property and are focusing on vacation homes, take careful consideration before you make the final commitment.  Buying a home, no matter what the circumstances might be, is a significant investment and enormous responsibility.

While real estate has undoubtedly been a safe investment medium in the past, buying a vacation home as an investment is not necessarily a sound option for everyone.

However, if your heart is set on making a vacation home investment, these tips can help you avoid some of the downsides associated with second home ownership.

1. Run the numbers early. Use an online mortgage calculator to learn how much you can qualify for before you get too deep into the search for your vacation home.

Most home sellers are more willing to negotiate with a pre-qualified buyer than a buyer without proof of ability to pay.

Knowing how much money is in your investment property budget will also help narrow your home options, saving everyone time.

2. Use a local Realtor. A local real estate agent who lives, works, and plays in a particular market will know much more about the location than you’ll be able to learn. Even if you spend weeks studying the area.

They may also know about plans for road improvement, new developments, and zoning changes. These could impact the home you’re considering.

3. Don’t view the home as strictly an investment. The last few years have demonstrated that investing in residential real estate doesn’t necessarily provide a guaranteed payoff. Especially if you plan to sell the home after a few years.

Even though most vacation homes are in attractive locations, keep in mind that some vacation hot spots have two distinct populations.

The second home buying market has deeper pockets than many of the full-time residents who work in service or support capacities, limiting potential home buyers.

4. Inflate the cost of ownership. Develop a budget for the home and include all your conceivable expenses. When creating this budget, keep in mind that climate and geography impact the cost of ownership. Homes near the ocean tend to experience more corrosion on metal and wood from the salty air. Unlike mountains, which have higher incidences of roof and deck damage from heavy snow loads or severe thunderstorms. Also consider the likelihood of rising property taxes, utility costs and appliance replacement.

Lastly, don’t forget to account for your travel expenses going to and from the property. Include one or two unscheduled trips in the event of emergencies that can’t be handled remotely.

5. Joint investments. Buying a home with a group of people will split the cost of ownership. Often, this makes the investment property more affordable. Be certain that you hire legal counsel to make sure that each owner’s rights to the property, and the equity in the property, are amenable to everyone and the agreement is documented legally.

6. Use caution with foreign investments. If you want to purchase a home in a foreign country, have a lawyer help you through the process. As a foreigner, you may not enjoy the same property protections that citizens do.

7. Research the weather year-round. If you want to use the vacation home throughout the year, choose one that’s in a climate you can handle. Blistering heat, high humidity, or frigid temperatures may limit your enjoyment to just a few seasons a year.

8. Assess the year-round habitability of the home. What starts out as a vacation home could become a rental down the road.

If the home you’re considering lacks some of the amenities that many consider necessities, like a dishwasher or washer and dryer, you may run into objections from likely renters wanting these, and other, features that make full-time living more enjoyable.

9. Consider properties with homeowners’ associations carefully. While the homeowners association could offer the services you want and need, like landscaping or building maintenance, realize that over time, the HOA fees for doing so are much more likely to rise than fall.

Some associations have strict rules about what you do with the outside of your home and visible window treatments from the street. Make sure that the association’s rules fall in line with what you can live with and expect. If they’re too restrictive or not restrictive enough, you may want to reconsider the vacation home.

10. Avoid land purchases in locations prone to strict zoning and building requirements. Instead of building the home of your dreams, you may end up starting construction on a home that never gets built. Strict zoning and building requirements can result in delays and high architectural and engineering costs if the local planning department’s demands are excessive.