The Pros and Cons of Being a Homeowner

We’ve seen that most people regard a home as the most important investment of a lifetime. In contrast, there are others who feel that buying a property is not really an investment, but something that’s required for a stress free existence.

Whatever the case, home purchase does involve spending a substantial amount of money that could be used elsewhere for possible better purposes. But yes, there are certainly some intangible benefits associated with buying a home. And you cannot easily set a price for these. We’ve listed some advantages for you:

There most likely won’t be a reason for you to get kicked out of your home

Even if you’re comfortably settled in a rented house and are utterly blissful, who knows how long it’ll last. All said and done, you’re not the owner of the house. Your landlord has the liberty to unceremoniously give you a notice of 30 days and there your blissful world comes crashing down.

You have to frantically search for another suitable rental and a moving company. Maybe you’ll never get the same lovely neighborhood again, the same conveniences and goodbye to many other things!

If you have your own home which has been properly selected to include everything you ever wanted, you’re in an eternal blissful state. No one tells you to move out and you can live there as long as you wish.

You can customize your home

When you’re staying in a rental, there’s almost zero desire to improve it. Why bother? You’ll spend money and maybe your landlord will have objections. You might even lose your deposit if you try.

In a place you own, you can make little customizations to make life cozier. For example, you could make your home more energy efficient, which would save money and benefit planet earth too. You could do things like splitting a room into a couple of smaller ones, plan a garden and do other interesting things.

Though it’s hard to measure, some improvements really improve happiness levels. On the flip side, homeownership has its own disadvantages.

What if the new neighbors are a nuisance?

Your lovely neighbors moved away and now you’re stuck with noisy, troublesome ones. They hate your dogs. Worse, they’re considering getting a vicious pitbull. Annoying neighbors can make life truly difficult.

Resolving the issue by selling your house is an expensive affair- definitely more expensive than changing a rental, even if it involves breaking a lease.

What if there’s a rotten homeowners association at your condo?

We’ve heard horror stories related to egoistical HOA presidents who have their own highly priced pet projects. Also expensive assessments that you’re forced to accept. Suffer in silence – it’s a way of life, no choice.

Homeownership costs money

While some people regard mortgage payments as a type of forced savings, isn’t living on rent forced frugality? Almost all renters are free of hassles related to weekly trips to the Home Depot. They don’t have to worry about what type of kitchen tiles to get when some break. Simply calling the landlord resolves most issues.

5 Options to Consider if You Can’t Find a Buyer

Selling a house can be difficult if there are too many houses in the market. If you have a home for sale, you probably already know how difficult it is to find a serious buyer in the existing real estate market scenario. Now, in case your search for a buyer is taking longer than you expected, here are a few options you can consider:

Rent the house 

Renting allows you to generate some income from a property that has been in the market for a while. Of course, you can't make a lot of money by renting, but this is definitely an option you can consider if you feel that finding a home buyer is taking longer than usual. What's more, if you place it on rent for long enough, the market conditions in your locality may improve. People who hold on to their property during a slump will be able to sell it for a higher price when the economy recovers.

Not every seller will want to rent his house. They suspect that the renter will not take proper care of the property. What's more, renting your house to the wrong person can invite a lot of trouble. Evicting a problem renter may take many months and cost a few thousand dollars.

Lease the house

Leasing your home is another option you can consider. When you lease your house, you will receive an extra fee besides the standard monthly rent. Of course you will have to sell the house to the renter at a later time in the future for a pre-determined price. Now, in case the renter decides not to buy the house later, you can keep both the rent and the extra fee.

Rent the house for short periods

If your house is in the vicinity of a tourist spot, you can consider renting it for short periods. Some companies also rent homes to provide accommodation to their non-permanent employees. In popular tourist areas, you can find brokers specializing in short-term rentals.

Sell the house to a realtor 

Some big realtors buy homes and later sell them for a profit. Since they have huge cash reserves, they will have no trouble holding on to the property until they find a good buyer. However, you can't expect these buyers to offer a good price. You may consider this option only if you are desperate to sell or are willing to accept a lower price.

Short sale

This is the least attractive of the five options we discussed here. Lenders want to avoid foreclosures at any cost. So if you are unable to pay off your home loan, the lender might even consider selling your home for a price less than the actual value of your loan. This allows the bank to get a bad loan off their books. They also save the expenses involved in the foreclosure process.

The bottom line

Depending on the market conditions, finding the right buyer may take a year or more. None of the options discussed in this article are ideal; nonetheless they allow you to generate some income while you are still holding on to your property.

Remember, you can always rely on a free home valuation report from Neighborhood IQ to help you in the selling process. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.

The Costs of Buying and Owning Investment Property

Buying and owning investment property is a lot like buying and owing a residence. While you want to get a good deal on investment real estate, you should avoid cutting back on the property simply because you are not going to be living there. You don’t want to have unhappy tenants who call you for repairs all of the time. Also, you could very well end up living in the residence yourself. The point is not to skimp.

Before you sign on the dotted line, you should get a professional home inspection so that know every flaw the property has. Whether you are purchasing a house, condo, or small building with a few rental units, you’ll want to get an inspector that specializes in the type of property you want to buy. Remember that the bigger the property, the more potentially expensive problems you may face.

In addition to mortgage and real estate taxes, here are some costs that you may have to pay when you buy and own investment property:

Homeowners association fees and monthly maintenance fees: If the rent you are charging does not cover these fees, they are ultimately your responsibility.

Utilities: While your tenant will pay most of these directly, other utility costs will be included in your tax bill. You also may be responsible for paying the water bill and other costs.

Landscaping: Be sure to list what the tenant is responsible for if you are renting out a single-family house. If you are renting out a condo, the landscaping probably won’t be your responsibility. You’ll pay a maintenance fee every month for the management company to take care of it.

Repairs/maintenance to the exterior and interior: This includes repainting in between tenants, carpet cleaning, and any damaged parts of the unit.

Getting the property in rentable condition: Perhaps the biggest cost of buying and owning investment property involves the repairs that are necessary to get the property in rentable condition. You should take a lot of time to figure out the cost of repairing the unit after getting a professional home inspection.

Be sure to consider the advantages of knowing the true value of your home. You can obtain a free home valuation report from Neighborhood IQ to find out how much a property is worth, especially after your fall and winter home improvements and maintenance projects are completed. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.

Why Selling Rental Property is a Good Idea

The New York Times ran an interesting feature in March. The writer asked if rental property was really as safe and profitable as one assumed it was. She mentioned the story of a retired couple who had just invested in some property and mentioned the risks linked with their investment. Problematic tenants, costly repairs, and a long period of inoccupancy are some of the problems landlords face with rental property.

Renting is a profitable enterprise if you stick to your investment property for more than a few years. Inflation eats away your monthly mortgages while rents keep on rising. Initially, it will be very difficult to find tenants who are willing to pay rent that is more than your monthly mortgage – but down the line it will become easier. There are more than a few people who have been earning a large portion of their income by renting out properties.

There are many upsides to renting your property. The most attractive of them is having an asset. You are building equity that is being financed by someone. At the same time there are many downsides and risks to owning a rental property. The most common of these are:

(1) Problematic tenants

As a landlord, you will have to prepare a strategy to deal with tenants who do not pay rent on time. You may also have to be prepared to confront those who may make changes in your house without your knowledge.

(2) Emergency repairs

You are responsible for emergency repairs. You are in trouble unless you have a sound plan on how to deal with these repairs.

(3) Natural disasters

You will have to ask yourself if you can afford to rebuild your house following a natural disaster such as hurricane Sandy. Although housing insurance will cover a bulk of the costs, you will still end up spending more than you can imagine.

(4) Taxes

More rent income means more taxes. A large part of the monthly income that you get now will be going into your taxes

(5) Housing market and inoccupancy

Are you prepared to pay monthly mortgages for your investment property if the housing market starts marching south? What will you do if you fail to find a new tenant?

Unless you are prepared to deal with the above mentioned risks, it is perhaps a better idea to sell your rental property and invest the cash in more productive endeavors such as education and skill-development.

It is hard to sell an investment property, but it offers high profits. You can get an online value report on how much your rental property is worth. There are many websites that offer free home value reports, such asNeighborhood IQ. Taking that report as a base, you can put your property on sale. The government charges a higher tax on the sale of rental property. There is a way to avoid this if you want to stay in real estate after pocketing in the profits from selling your old property and investing the rest of the money into the new property.