Showing posts from March, 2024

Smart Home Tech: Is It Real Property or Personal Belongings in a Home Sale?

Many of today's homeowners have accumulated multiple high-tech "smart" devices to make their home more convenient, economical, and fun to operate.   When they decide to sell the home, they need to make the listing agent completely aware of whether they will be included in the sale of the home.   Some of these things easily meet the definition of real property because they are permanently installed like thermostats, doorbells, cameras, garage door openers, and pool equipment monitors.   A rule of thumb mentioned frequently is that if it were removed, the functionality would cease or if there would be evidence of where it had been, it is probably real property and is included in the sale. Other devices like virtual assistants made by Amazon, Apple, or Google, may not specifically meet that criteria but they are needed to operate things like electrical switches and plugs, or lamps.   It becomes a grey area of whether it is real property when TV's, doorbells,

Leverage your home's equity into rental property

There can be many reasons homeowners aspire to have their home paid for.   They can include no mortgage payments, financial security, debt reduction, lower expenses, retirement planning, financial freedom, legacy planning, no risk of foreclosure, and reduced stress, just to name a few. All those things have a cost attached to them which is the loss of the earning power which is tied up in an asset that only benefits the owner by appreciation.   In the past few years since the pandemic began, homeowners have experienced a dramatic increase in equity due to appreciation. As an example, let's set up a comparison of how the yield on equity decreases as the property appreciates.   A homeowner has a debt-free home worth $400,000 that is expected to appreciate at 4% a year for the next five years. The future value of the home would be $486,661 and the owner would have earned a 4% return on his investment in the property. In scenario #2, the homeowner refinances the property t

Adapting to Life's New Chapters

All of us encounter major life events and they have the possibility of disrupting our lives temporarily, if not permanently.    The homes we live in may have met our needs originally but due to a change in our life, it may no longer be adequate or the best fit for us, which will require a move. The decision to change one's living situation often comes as a response to these pivotal moments, and the reasons behind such changes can be as diverse as the events themselves.   The number of things that can influence these changes is numerous.    It may be the birth of a new child, or the ages of the children are getting such that you simply need more room.   Marriages generally merge two households into one.    The possibilities are endless, but it could be two single people or two single parents each with children who need the right space to blend the families. A promotion, transfer, or a new job could require a change in housing, or maybe just make it more convenient

House-Hacking your way to multi-unit rentals

House-hacking refers to buying a multifamily property on an owner-occupied mortgage, living in one unit and renting the others.    If you're thinking about becoming a rental mogul, starting early is an advantage.    Not only will you have longer to accumulate a larger portfolio, but you can also increase the leverage on the first owner-occupied acquisitions.   Leverage is the use of other people's money to finance an investment.    The higher the loan-to-value, the greater the leverage which can increase the yield.    The lower down payment gives the investor more leverage which can increase the return on their investment.   FHA, VA, Fannie Mae, and Freddie Mac each have programs for buying owner-occupied two-to four-unit properties with the same minimal down payment required for a single-family home.    The advantage is that non-occupant investors must have a 20-25% down payment where the owner occupant is much less. A qualified veteran could get into the first