Relax...There's an Alternative

Is the stock market keeping you up at night?  Are you consuming more antacids than ever before?  Are the ups and downs causing more stress than you want or need?  There is a simple alternative in rental real estate.

Single family homes for rental purposes offer an excellent rate of return in an investment that most people understand better than other investments.  The concept is simple: stay with predominantly owner-occupied homes in a slightly below average price range.  In most areas, tenants are easy to find and they’ll usually stay two to three years or more.

For the person who doesn’t want to be bothered with calls from tenants, professional management is available and commonly won’t dramatically affect the rate of return.  Managers can achieve economies of scale that individuals can’t due to managing multiple properties and having good connections with the best workmen.

Unlike most commercial property, single family homes are much more liquid because of the higher demand for residential property.  Single family homes offer the investor the opportunity to borrow high loan-to-value mortgages at fixed interest rates, for long periods of time on appreciating assets with tax advantages while providing the investor a higher than normal level of control.

Spend an hour investigating the benefits and you might sleep better at night, eat less antacids and find yourself more mellow than you’ve been in years.

Save Interest, Build Equity & Shorten the Term

If you invest in a savings account, you’ll make less than 1% and would have to pay income tax on the earnings. On the other hand, contribute something extra to your house payment and you’ll earn at the mortgage interest rate which is certain to be more than you are earning in the bank.

Making additional principal contributions on your mortgage will save interest, build equity and shorten the term. An extra $100 a month in the example shown will save thousands in interest and shorten the term of the mortgage as well.

Reducing your cost of housing is another way to improve the investment in your home. Becoming debt free is a worthy goal that is achieved with discipline and good decisions. Suggestions like this are part of my commitment to help people be better homeowners when they buy, sell and all the years in between.

Check out what would happen if you were to make additional payments on your mortgage.

Enjoy Your Improvements and Profit by Them

Homeowners can raise the basis or cost in their home by money spent on capital improvements. The benefit is that it will lower their gain and may save them taxes when they sell their home.

Improvements must add value to your home, prolong its useful life or adapt it to new uses. Repairs are routine in nature to maintain the value and keep the property in an ordinary, operating condition.

Additions of decks, pools, fences and landscaping add value to a home as well as new floor covering, counter-tops and other updates. Replacing a roof, appliances or heating and cooling systems would be considered to extend the useful life of the home. Completing an unfinished basement or converting a garage to living space are common examples of adapting a portion of the home to a new use.

Other items that can raise the basis in your home are special assessments for local improvements like sidewalks or curbs and money spent to restore damage from casualty losses not covered by insurance.

Here’s a simple idea that could save you money years from now.

Every time you spend money on your home other than the house payment and the utilities, put the receipt or canceled check in an envelope labeled “Home Improvements.” Regardless of whether you know if the money would be classified as maintenance or improvements, the receipt or cancelled check goes in the envelope.

Years from now, when you’ve sold your home and you need to report the gain on the property, you or your accountant can go through the envelope and determine which of the expenditures will be adjustments to your basis.

Some people disregard this idea because of the generous exclusion allowed on principal residences. At the unknown point in the future when you sell your home, circumstances may have changed and the proof of these expenditures will be valuable. The tax laws could lower the exclusion amount or eliminate it altogether. Your marital status may change because of death or divorce. The market value of your home may skyrocket.

Since the future is unknown, it is better to keep track of the improvements as they are made and how much is spent on them. Download an Improvement Register and examples or read more in Publication 523 on Increases to Basis.

Sold & Relocated to Snellville, GA! - Relocation Tips

Congrats to my clients for relocating to Georgia and closing on this gorgeous home!

Isn't the curb appeal just stunning?!

I am often in conversation with people who want to relocate. They are either moving to or from Georgia and the reasons are endless. From retiring and moving closer to family, to downsizing, to getting a new job offer, or simply wanting a change of scenery.

Picking up and moving cross country, or to another state, isn’t always easy. One must find a home, a job for a spouse, perhaps schools if children are involved, not to mention get a feel for the community and general lifestyle before settling into a new location. Having relocated myself from New York to Florida, and then again from Florida to Georgia, I know personally what relocation entails and I enjoy helping my clients through the relocation process!

The following are some tips that will help ease long distance relocation woes and ensure the most smooth move and transition...

Get organized. Put together a list of the key information you need before settling in to a new city or town, such as:

• What is the cost of living? How far will my money go?
• What is the price of a similar sized house in the new location?  
• What is the community like? 
• How are the school systems?  
• What is the noise factor?  
• Will this be a good area for my spouse to find work?

Do your research. To learn more about the typical lifestyle of the new area, as well as community events and crime rates, get a few back copies of the local newspaper, or log on to the local paper's Web site. This third party information, along with what you learn from the local Chamber of Commerce, will provide you with the personality of the area.

Use the Internet. Searching the web and web sites such as www.SoldByNat.com can provide visitors with a multitude of useful information. Other information that can be helpful: median age and income, percentages of married couples and children, recent home sales, and a listing of elementary and high schools with demographic information on the schools.

Field reconnaissance. When you begin working with a real estate sales associate, consider having him or her take you through neighborhoods at various times to get a feel for the environment. Also check if and how much new construction and remodeling work is taking place. This will tell you whether the neighborhood is popular and whether current residents plan to stay.

Coffee talk. Try having conversations with locals. Most likely, they know the neighborhood and surrounding areas well.

Work With Your Employer. Make it clear to your new employer your significant other is now in need of a job. The company likely has relationships with relocation experts and executive recruitment firms to assist.

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Are you thinking about RELOCATING? Perhaps BUYING a home in Georgia or SELLING your home and moving elsewhere? I would love to assist you!

Give me a call at (404) 857-2508!

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Natasha Liburd Bazile is a Realtor and the Lead Home Stager with Heart of Decor in Georgia. She prides herself in being a guide to her clients and finds fulfillment in helping them achieve their goals.

Direct Phone: (404) 857-2508 
www.SoldbyNat.com -  Email - Facebook - Twitter - YouTube

Opportunity Costs

Sometimes, there are costs associated with not taking a particular action.  If a person left their money in a certificate of deposit earning 2% when they could have made an investment that earned 8%, the difference is the opportunity costs associated to not taking action.

If a couple has a down payment and good credit, locking in a low interest rate mortgage for 30 years could easily provide their lowest cost of housing.  If that couple waits three years to purchase a home, the price would probably be higher as would the mortgage rate.

However, assuming the price and interest rate remained constant, look at what the opportunity costs might be compared to doing nothing.

If their money was invested in a certificate of deposit at 2.00%, in two years their $8,750 would have grown to $9,104.  They would have earned $354 and had to pay ordinary income tax on the interest.

If their money was invested in the stock market that had increased 7%, in two years they would have a profit of $1,268 which would be subject to long-term capital gains tax.

On the other hand, it the same investment was used to buy a home that increased in value at 3% annually, the equity would be $31,938 or an increase of $23,188. Tax would not be triggered until the home is sold and may not be due then based on their homeowner’s principal residence exclusion.

The home goes up in value due to appreciation and the unpaid balance goes down because of amortization.  The dramatic difference in growth in the equity of the home is effected by leverage: the use of borrowed funds controlling the asset.

A home is a place of your own where you can feel safe and secure, to enjoy with your family and friends and in many instances, a very good investment.  It is difficult to measure the opportunity costs of intangibles but not necessarily money.

Make your own projections with Your Best Investment.