Life Expectancy of Housing Components

In our last post we covered a plan for home maintenance.  However, in this post we will be covering the life expectancy of housing components. With home components the better you take care of them the longer they will last. When it comes time to sell your property buyers can certainly tell the difference. The difference between a property that has been well taken care of and one that has not been.  Buyers often will pay more for the home that has been well maintained.  That should be reason enough to take the time and spend some money one home maintenance.  Consider it protecting your investment.

Below is a chart of the Life Expectancy of Housing Components

A chart showing the life expectancy of home components

The actual life expectancy of the components of a home depend on several factors.  Those factors include level of maintenance, climate conditions and the intensity of use. If you never use your stove when you cook it will last longer than someone that uses their stove frequently.  This graph does not warranty or guarantee the life expectancy of any particular product. However, this chart can be used as a guide. With this guide you can plan for expenses. 

When you buy a home the seller’s property disclosure often tells you the age of the components.  If you purchase a home that has a 12 year old refrigerator, an 8 year old dishwasher, you should plan on saving for new kitchen appliances. This chart does not include all components of a home but can be used as a general guide for the life of the components listed. If there is a specific component you are concerned about Contact us with your questions about housing components and when to replace them. We can also provide you with a list of qualified professionals who can help repair or replace components as needed.

1 Small Thing To Increase Home Value

We often say that the front door is your first chance to make a good impression. Therefore, a front porch refresh can be very beneficial if you are planning to put your home on the market. It is a small thing to increase home value.

Black Door, a small thing to increase home value.

Statistically speaking homes with a front door painted black sell for as much as $6,000 more than their similar counterparts. Painting the entire exterior of your home can be costly. However, painting your front door could easily be completed in a weekend on your own for about $100 dollars. If you are feeling adventurous you can even replace your door hardware to complete the fresh look. Workers at your local hardware store can even key the new hardware to match your old set at no charge.

Avoid Bold Exteriors

Let’s talk about exterior colors. Painting the body of your home’s exterior too bold of a color can be detrimental to your home’s value. A recent Zillow analysis showed that homes painted yellow sold for as much as $3,400 less than similar counterparts. While some people might appreciate it, the majority of home buyers prefer neutral homes in both decor and color. Buyers also want neutral interiors. Dark colors like browns and reds are difficult to paint over and tend to be viewed as out of style. These could cost you as much as 2,300 at time of sale vs. painting these rooms a lighter color.

Backyard Woes

Another detriment to your home’s value is having a backyard that is singularly children focused. Many people do not have children. Therefore, a built in sandbox or similar amenity simply will not appeal to their needs. In fact, it will likely cost them money to have to remove after closing. If they don’t remove it that unused sandbox typically turns into the neighborhood litter box. Homes with kid centric backyards appeal to a smaller pool of buyers. This means sellers will likely not recoup the cost of the installation of playground type infrastructure. Instead of having a kid friendly backyard makeover, invest the money elsewhere and have the kids go to the neighborhood park.

Consider the Neighbors

Finally, any substantial alteration to your home that is outside of the realm of comparable properties will not benefit your homes value. Installing big time amenities like a sauna or an elevator in homes that are in the middle of the market will not appeal to that type of buyer and simply not drive up your homes valuation. That type of buyer is interested in much larger more lavish homes and will pay the extra money to purchase that one, with a long list of amenities included. Middle of the market buyers are not willing to pay substantially more for your home because of a sauna when the one down the street is just as nice but lacking that amenity. Moral of the story, spend wisely based on your location in the local real estate market.

If you have any questions about small things to increase home value don’t hesitate to reach out to your top real estate expert in Fort Collins, Colorado, Lestel Meade.

How to be a great Landlord?

In order to have great tenants and keep them you have to know how to be a great landlord.  What does that look like?  Great landlords treat their tenants as customers.  They follow the law and the lease that is in place. Additionally, a great landlord is professional and remembers that they are running a business and their actions reflect this.  

Here are some tips on how to be a great landlord.  You can decide if this is something that you can do.

  • First and most importantly provide your new tenant with a clean place to move into. Moreover, that means appliance and the carpet professionally cleaned too.  
  • Be warm and welcoming to your tenant.  If they are new to the area, provide them with some helpful hints and ideas on where to get groceries, pharmacies and where to get a good burger in town.  Let your tenant know trash day, where to park and other information so they can feel at home. 
  • Stock the bathroom with toilet paper.  Make sure there is a roll of paper towels in the kitchen and perhaps a bottle of an all-purpose cleaner.  Furthermore, this shows them you care about cleanliness.

Some Other Ideas

  • Review the lease with the tenants.  Make sure they know what is expected of them. This benefits both of you.  Let them know that you follow the lease to the letter, ALWAYS.  That way they know exactly what to expect.    
  • Be professional and look the part.  Tenants are not your friends but a friendly professional relationship is ideal. It is a business relationship.  Keep your emotional distance.
  • Always keep your cool whatever the situation. Additionally, be respectful.
  • Be accessible.  If your tenant needs to reach you, you need to be reachable. Respond promptly when your tenant emails or calls. If you are going to be unavailable for a period of time, provide them with an emergency contact. 

Being a good landlord is not complicated. 

Treat others the way that you would want to be treated.  Additionally, be respectful, professional and available.  Make sure that you properly maintain your property and you will be considered a great landlord. Contact us to learn more and ask to be placed on an email list for our upcoming book The Naked Truth About Being a Landlord.

What is an ideal investment?

Ask a Realtor and they will more than likely tell you that real estate is an ideal investment. But why do they think that? Realtors like to invest in real estate because it is something that they know and they have some control over a real estate investment. But what are some other advantages to this type of investment and why does it make sense for just anyone to invest in real estate? Here is a list of reasons why real estate is such a good investment.

Income. An investment in real estate generates income when rent on at property is more than the expenses there will be a positive cash flow. Of course you get income from a savings account and income on a stock if it pays a dividend. But stocks don’t produce the income until they are sold.

Depreciation. This is a tax benefit that is unique to rental real estate and is one of the few tax shelters that are still available as a part of the tax code. This is a non-cash deduction from taxable income for wear and tear on the asset.

Appreciation. Most real estate properties will go up in value over time. According to the National Association of Realtors the annual price growth over the last 10 years has been 6.4%. In just the last five years it has grown at 7.3% annually. If you are considering investing in a particular community it is wise to check what kind of appreciation they have had in the last 5 to 10 years.

Equity buildup. This is the result of the amortization of the mortgage. Each payment applies less to the interest and more to the principal. This increases the equity that you have in the property each month that you make a payment.

Leverage. This occurs when borrowed funds are used to control an investment. An example of this is when you purchase a property for $100,000 cash. You rent the property and paid the expenses and have $10,000 left, your investment will have generated a 10% return.

You can always just leave your money in the bank. It is insured and safe. Interest rates today on savings are between 0.35% and 0.5%. Not a very good investment if you ask me. Another option is the stock market. The stock market is a record high levels and that may look like a very appealing option for investing in. But it is volatile and you may not have the know how to make money investing there.

Most homeowners are familiar with the general operation of a home and the maintenance, taxes and insurance on a home. Making the move to real estate does not feel like a completely unknown thing to jump to.

Connecting with a good real estate agent that has investment properties themselves is a great way to learn about what to look for when asking what is an ideal investment. Also consider joining an real estate investment group in your community to start learning about investing in rentals. Then make the jump and buy an investment property. The benefits are real…and you can do it!

Capital Gains When Selling A House

Capital gains when selling occurs when you sell real estate for more than you paid for it. The difference between the original sales purchase price paid and the new sales price is the gain. In other words:

New sales price, minus purchase price of the property, minus the cost of sale = the amount of gain on the property.

This calculation can mean that most all sellers that are selling their home in Northern Colorado would show a gain on their property. Our market has seen nice appreciation of property values in recent years and this can lead to nice gain when it comes time to sell. It is great to sell your home for top dollar, but the IRS may want a piece of the gain that you receive.

What situations do you have to pay capital gains when selling?

The government allows you to exclude $250,000 in gain for an individual home seller and exclude $500,000 in gain for a married couple. For example, lets say that you bought a property 10 years ago for $250,000 and sold the property for $850,000. You are a married couple, filling your taxes jointly, selling your home that you have lived in the home for all of the last 10 years. First, you subtract the $250,000 from the $850,00 and the number is $600,000. You are allowed by the IRS to have $500,000 in gain so you will only pay taxes on the $100,000 which is over the $500,000. How bad might the taxes on that $100,000 in gain be. There are factors that the IRS takes into account when figuring but for a rough estimate the tax could be between 10 and 20 %.

In order to be able to exclude the gain, like in the example above you need to have:

  1. Lived in the home for at least 2 of the last 5 years.
  2. The home needs to have been your primary residence.
  3. You can not have claimed that you sold a primary residence in the last two year period.
  4. If you are selling your home in less than two years, but moving due to work, health or an unforeseeable event, you still might qualify!
  5. You also may be able to minimize your capital gains tax if you are able to show receipts for home improvements.
    If this sounds complicated it really might be. This might be the year to have a CPA do your taxes. The money spent to have a professional review your tax situation might be small in comparison to the amount you save in taxes paid.

Contact us if you have specific questions about capital gains when selling a house.

Considering Being A Landlord?

Are you considering being a landlord?  Perhaps the last time you meant with your financial planner he/she said to you that you should buy an investment property.  Or maybe it is time to move from your current home, it is just not working for you anymore.  You are finding it too small or the floor plan just isn’t right.  It is time to move and you do have money for the down payment for the next purchase.  It would be easy to keep the current home and turn it into a rental.  But you feel like this is something you know nothing about.  What do you do?  Why should you become a Landlord?  Lets go over some of the benefits of investing in real estate and answer some of those questions you have. 

Advantages

The advantages for investing in real estate are numerous. Investors can enjoy predictable rental income from your tenants (cash flow), appreciation on their investment, tax benefits and the diversification that your financial planner was suggesting. You also have greater control over your investment.  Investing in real estate is less risky than investing money in the stock market.  Andrew Carnegie was one of the most successful businessmen ever.  At its peak his fortune was worth over 300 billion (in 2007 dollars).  He is attributed with saying that 90% of all millionaires become so through owning real estate.  He died in 1919. However real estate is currently on the list for the top-ten creators of billionaires. But you are looking at just owning a couple of properties. Data released in 2017 shows that 47% of rentals were owned by individual owners.  That is people like you! 

What does all of this mean? 

It means that people just like you can own real estate and be successful as a Landlord.  You can build wealth and appreciate the benefits of owning rental property. 

Setting yourself up for success includes many little details.  It is time to meet with professionals that can help you.  Talk to a mortgage lender, your realtor and a good attorney. Ask lots of questions. How much do I need for down payment?  Is this a good area for appreciation?  Is this fixer-upper worth the investment and why?  How much can I charge for rent on this property?  What interest rate will I be charged on an investment property?   Armed yourself with information.  Research, research, research. 

Maintain a business mindset.  Your rental property is a business with legal obligations that you must follow. Learn how to manage the property effectively.  Create systems for handling maintenance requests. Have your list of professionals that you can call including a handyman, plumber, electrician, realtor, attorney and locksmith that are available for you.  Know your rights and understand the rental laws. Have a local attorney draw up your lease.  It is your most important document for your new rental business.  It will protect you and provide you and your tenants with a guide and expectations of both of you! If you are considering being a landlord, contact us. We would be happy to help.

Top 20 Home Improvements

Here are the Top 20 Home Improvements to do to get More Money for Your Home when it comes time to sell your property.

First, Deep clean your home.  The cleaner your home the more a buyer thinks that it is effortless to keep the home clean.  You can hire this done.  Ask Lestel for recommendations.

Second and this is so important. The less things around the bigger the home appears and the less things to distract the buyer from loving your home.  Give away, sell everything you will not be taking with you.  Pre-pack everything you don’t use daily, but are taking.

Third, remove personal items like family photos and things that show this house is yours. The buyer needs to imagine the home as theirs, this is hard to do when it looks like yours everywhere.

Fourth, add a fresh coat of paint to the front door.
The Top 20 Things to do to get More Money for Your Home

Fifth, if you have rooms that are painted strong colors, now is the time to consider a more neutral color.  Asked Lestel for the contact information for her painter.

Additionally, replace dated light fixtures. This can cost so little and make such a huge impact.

You should also open drapes and blinds and let the light shine in.

Improve curb appeal. Trim bushes, plant flowers, power wash the front, remove old leaves make the house look ready for company. Make sure the lawn has been mowed.

Additionally, have carpets professional hot water extraction, deep cleaned. This makes the oldest carpets look newer.

Take the time to clean windows.

Another idea is to change out switch plates and outlets so that they match throughout the house.

Always replace burned out light bulbs. When you have multiple bulbs in a fixture make sure that they match.

In the spring use Restore-a-finish on your wood work. Asked Lestel for more information.  Top tip that makes such a difference.

Additionally, make repairs of those small things that you know are broken or need repair. The buyer will notice and it will make a difference in how much the buyer is willing to pay for your home.

Change the furnace filter every season. This will make a difference at time of inspection.

Take the time to wipe off the top of your water heater. Having this clean can make it look well cared for and less concerning for the buyer.

Moreover, develop a plan for showing. What do you need to do when you get the call that you have a showing to insure that your home looks its best every time that it is shown.  Lestel can help with this.

Finally, Check tub and shower caulk in bathrooms. Re-caulk if discolored or missing.

You don’t need to stage the home. Lestel does this for you.  It make such a difference. No cost to you!

You also don’t need to worry about Professional photos. Lestel takes care of this too.  When a home looks good in pictures, you will get more showings.

We hope you enjoyed those Top 20 Home Improvements. Contact us for more recommendations.

Ways To Update Your Small Space

With everything going on right now many of you are stuck at home and may be working on some home improvement projects that have been put on the back burner indefinitely.  If you go on a walk you will see plenty of people working on their yards in expectation of warm sunny days. But what about the folks who live in smaller spaces without yards.

Certainly living in limited square footage is beginning to take its toll as we all stay home these days. Maybe you have gotten tired of looking at the same four walls ceiling and a floor but there are a few things you can do to switch things up, and a lot of these you can probably do without a ordering from Amazon, or having something curb delivered at your local hardware store. So without further ado here are some ways to update your small space, and don’t worry if you live in a larger space you can do these things as well.

Embrace minimalism 

The minimalist aesthetic has been popular for many years now and has other benefits beyond good looks especially when living in a small space. First of all minimalism makes finding things easier. It also means you don’t have to worry about organizing your thinks, or worry about their upkeep (think dusting).  You will also probably save money, as any one thing often leads to the need to purchase something new. For example buying a new phone means buying a new case, this is referred to as the Diderot Effect. So why not give a bit of minimalism a try. While thrift stores are not currently taking donations this is a perfect time to clean out your space and box up items that aren’t bringing value to you or your space. Set these aside to donate later.

Rearrange your furniture

As the days turn into weeks perhaps you are getting bored with your small space. There is no better way to freshen things up than to look into some new furniture orientations. One great option is to utilize Feng Shui in your home decor designs. If you are not familiar with Feng Shui now is a great time to give it a shot. If you hate it moving your furniture back the old way will give you something else to do later.

A Gallon of Paint Can Go A Long Wa

If you’re like us you probably have at least one gallon of paint collecting dust in the linen closet. Why not refresh your laundry room or another room in the house. Local home improvement stores are also still open in many places allowing you to buy a can of cheap oops paint for less than $15 and freshen up part or even all of your home. Painting is probably the cheapest and easiest home improvement task you could embark on and the results are almost instantaneous.
IMG_5874

There are just a few ideas of ways to update your small space. However, updating your space in any manner is a great use of time while you are stuck at home. Contact us for more recommendations.