Area Real Estate News & Market Trends

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June 19, 2024

Why First Time Home Buyers Should Think Like Investors

Hot Take: First Time Home Buyers SHOULD be Thinking Like Investors.

Here's what I mean...

If you are or know a first time home buyer right now, you're probably thinking and hearing a lot of the same things: 

  • The price of homes that I really want are too high!
  • These interest rates are keeping me from being able to afford a house I love!
  • My dream house isn't out there.
  • If this house only had_______!

How, as a first time buyer can you shift your thinking about your first home? Think like an investor!

Instead of searching for the perfect house, or one that even checks all or most of your boxes, find one that has the biggest plus going for it right now: opportunity.

A house that presents with what you might see as challenges (an unfinished basement, no central air conditioning, an outdated kitchen, only one bathroom when you'd rather have two) but is workable for you now, can actually be your best move. Here's why:

1. Purchasing a home instead of renting gets you paying your own mortgage instead of someone else's plus more.

2. When you pay your monthly mortgage payments, you're building equity!

3. While you own your home, it will appreciate in value!

4. Making improvements slowly over a few years, like finishing a basement, adding a central heating and cooling system, updating that kitchen, and adding a second bathroom into the floorplan increases the value of your home! When the value increases, so does your equity!

When you're ready to move up to that next home, you have options: Sell the home and cash in on your equity and your house that's increased in value - OR - turn your home into your first rental property & create some passive income for yourself! (Bonus: you can do a cash out refinance to pull some of your equity $$ out toward your new home AND keep your rental property too!)

If you're a first time home buyer and the prospects look a little disappointing, it's going to take a little re-framing right now. Your first house probably won't exactly be a dream house, but look at it, instead, as a rung on the ladder that will get you there!

Looking and want help crunching the numbers and seeing the possibilities? I'd love to work with you to do just that and get you investing in yourself and your future happiness and financial stability!

April 11, 2024

Should You Include Utilities in Your Monthly Rental Fee?

There are a LOT of things to consider when setting your rent rate for your investment property, but one of them that is often overlooked is whether or not to include the cost of utilities in your tenants’ monthly payment, or to have the tenant pay utilities themselves. Seems like a simple enough question, right? 

 

Pros of Including Utilities:

#1 - Convenience is key. Tenants will be attracted by having one bill to pay versus several bills! Plus, it gives them a budgeting advantage; their bill for everything about their housing will stay the same every month! 

 

#2 - Fewer late rental payments. When the tenant only has one bill to pay per month, it makes budgeting easier for them which makes them more likely to pay on time. Plus, fewer late payments from the tenant keeps your income steady.

 

#3 - Lack of Service Interruption. Being the one responsible for the utilities allows you to ensure that they don’t get cut off for lack of payment. Power being turned off could mean freezing pipes, damaged appliances, and a lot of money spent repairing the damage! 

 

Cons of Including Utilities

 #1 - Higher Rent Costs. Factoring in all, or some, utilities will make your rental more costly than those who don’t. The key is to make sure you highlight what’s included so you don’t deter prospective renters!

 

#2 - Tenant Accountability Goes Down. I’ve seen it firsthand: when tenants aren’t financially responsible for the usage of their utilities they don’t exactly have incentive to conserve resources, which leads to excessive usage and higher costs for you. Also, they’re less likely to report leaks or heating/cooling systems that aren’t functioning properly because they’re not seeing the increase in the water or power bill! The key here is to monitor and or have a usage threshold where they pay an additional fee for higher usage.

 

#3 - Landlord Liability Goes Up. When utilities aren’t paid, services get cut off. Now, that burden is 100% on you. If a tenant is late on their rent, you may not have enough income to cover their monthly utilities along with being out their rent! Even if they stop paying and you have to go through the eviction process, you’re obligated to maintain the utilities. 

 

What do I do?

In my rental properties, I try to include as little in the rent as possible that can’t be exactly measured to eliminate variables on my end. Sometimes, you can’t do that if you have a property where a utility isn’t metered by unit so you have to estimate. In that case, I would have an average usage and set a usage threshold to add to your lease! If your use is above X, then you will be billed for the overage each month. This eliminates tenants who will run the AC & leave windows open, not report water leaks because it’s inconsequential to them, etc. Plus, schedule a property inspection either quarterly or twice per year to monitor for any leaks or other issues that could be causing higher than normal usages.

July 31, 2017

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We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.

Posted in Market Updates