Investing in a home is a great way to build passive income but earning from your investment will take a little groundwork to become a well-oiled machine. This is your beginner’s guide to owning an investment property so you can set up that foundation properly to avoid future headaches.
Make sure it’s livable
It’s important to start with your home inspection before you start making plans. Use the inspection report to prioritize the maintenance issues.
Before a tenant moves in, make sure the home is livable. Handle the important items that affect the livability of the property, either now or in the near future. If the inspector noticed a leak in the roof or holes that could lead to infestation, take care of those first. Other maintenance issues to prioritize are the fuel and the hot water source.
If your city has inspection and registration requirements, be sure to cross check those inspection checklists with your current property. If the property wouldn’t pass now, make sure it will pass by the time the city sees it.
Upgrade the space
Once your property is in livable condition, it’s time to upgrade. If you have any left-over budget after the necessities are handled, consider adding a bedroom or a bathroom where you can find the space. These rooms heavily impact the rental price, and the more you have the higher the price. If there’s no space for another bed or bath, think about finishing the basement or upgrading some of the appliances to make the property more attractive to potential tenants.
Use similar properties in your neighborhood as your inspiration. These units are your competition, think about what you can add, or even take away, that would help you compete. Ask yourself what about your home is unique and in what ways does that affect your rentability? If every unit in your area has hardwoods, how can you make your carpeted home appealing? Maybe new carpet? Or is switching to hardwoods, or vinyl laminate that looks like wood, worth it?
Market it to future tenants
You need two things in your listing: 1) Great Photos 2) An Amazing Description
After you’ve perfected the property, it’s time to tell potential tenants that it’s available. Creating the listing is essential in drawing eyes on the unit so you can show it to as many people as possible.
Renters looking to move are quick to make their first impression of a property with thumbnail photos on a map. So, take lots of great, bright, photos of the entire place to showcase the amenities and show potential tenants what it looks like, then choose the best photo to be the first in the lineup. Remember to get the lighting is just right to show every corner of the listing. Dark photos scare tenants away, making them think the unit is dingy and dirty. Light and bright photos show a clean home that’s move-in ready. They can imagine themselves living there a lot easier than in dark and cramped looking units.
Next, they’ll read the description. This is again where other listings in your area can help you.
Read other listings to structure your description and to draw inspiration on what tenants might think is important. Find the selling points and emphasize those above the unique features, especially if those unique features are obvious in the photos.
When I was growing up, my family must have moved a dozen times. After the first few moves, we had it down to a science: timed out, scheduled, down to the last box. Despite our best efforts, plans would change, move-out and move-in days would shift, and the experience would stress the entire family out. Despite the stress, we always managed to settle in our new home and sell our old one before the start of school.
With a lot of planning and scheduling, you can minimize the stress of selling your house and moving. Here are some tips:
Know when you want to be moved out and into your new home and have a backup plan in case it falls through. Before you sell your home, familiarize yourself with local and state laws about selling a home so you’re not caught by surprise if you forget something important.
Lists and schedules are going to be your new best friend through the process. Have a timetable for when you want to sell your house when you have appraisers, realtors, movers, etc. over. Also, keep one for when your things need to be packed and when you need to be moved into the new place. I suggest keeping it on an Excel sheet so you can easily update it as the timeline changes (and it will – stuff happens).
First time selling a house? Check out some great resources on what you need to know. US News has excellent, step-by-step guides on what you need to know to sell. Appraisers and realtors can also be good resources, and since you’ll be working with them through the process, be sure to ask them questions or have them point you to resources.
Have your house appraised before you sell so you know your budget for your new home. This will help you look for an affordable home that meets your family’s needs. It will also help you maximize the amount you can receive for your old home. You can also learn useful information from an appraisal, such as which repairs need to be made, if any.
Does your house need repairs before you move? If so, figure out whether you’ll be covering them, or whether your buyers will (this will be a part of price negotiations, so factor it in with your home budget). Will you need to make repairs in your new house, or will that be covered? Either way, make sure you know which repairs need to be made – and either be upfront with buyers about them or make them before you sell.
Prepare to Move
If you’re moving to a new town or a new state, you need to prepare more than just a new home. Research doctors and dentists, places to eat, and what to do for fun. If you have school-aged children, look at the local school district or private school options – not only to learn how to enroll your kids, but also to get a feel for the school culture, see what extracurricular activities your kids can do, what standards/learning methods your kids’ new school will implement, etc.
Think: how soon are you moving, what will you need to use before you move, what can get boxed and what needs to stay out? The sooner you’re moving out, the sooner you need to pack, but if you have time, just take a day per weekend to organize a room, pack what you want to take and arrange to donate what you want to get rid of.
Moves are a great time to purge old, unwanted and unused stuff from your home. Sometimes, it’s necessary if you’re moving into a smaller space. Either way, as you pack each room, think about whether you use what you’re packing to take with you. If you do, pack it to go. If not, put it in a separate box to go to your local donations place. You can also call some organizations to have your unwanted things picked up, no hassle.
If You Have Kids
Moving with kids can be extra stressful. Be sure to include them in the process. This is a wonderful opportunity to teach younger children about moving and prepare them for the changes it brings. Older children can help out with responsibilities, like packing their room or researching their new town.
Your New Place
Moving into a new place takes some planning as well. Once you’ve bought your new home or condo, design at least a basic outline for where your stuff will be set up. Make necessary repairs and decorate (painting, for example) before you unpack. Ideally, you should have some time to do these things before, but if you don’t, don’t be in a hurry to unpack everything – it can be a hassle to paint if you have all your furniture and bookshelves up!
Staying In Touch and Making New Friends
Finally, moving can mean good-byes with family and/or friends. Social media is a great way to keep in touch with people after you’ve moved, but distance can still weaken these old relationships. Make some time to call or message your old friends to keep in touch. Pair that work with a concerted effort to meet new people. See what hobbies or groups are in your new area and start there. It doesn’t seem like a lot, but it can make your new house a home and make your new town a community you can enjoy.
For more than 20 years, the benefits of staging a home have been well documented. Numerous studies show that staging helps sell a home faster and for a higher price. According to the National Association of REALTORS®, 88 percent of home buyers start their search online, forming impressions within three seconds of viewing a listing. When a home is well staged, it photographs well and makes the kind of the first impression that encourages buyers to take the next step.
Studies also indicate that buyers decide if they’re interested within the first 30 seconds of entering a home. Not only does home staging help to remove potential red flags that can turn buyers off, but it also helps them begin to imagine living there. Homes that are professionally staged look more “move-in ready” and that makes them far more appealing to potential buyers.
According to the Village Voice, staged homes sell in one-third less time than non-staged homes. Staged homes can also command higher prices than non-staged homes. Data compiled by the U.S. Department of Housing and Urban Development indicate that staged homes sell for approximately 17 percent more than non-staged homes.
A measurable difference in time and money
In a study conducted by the Real Estate Staging Association in 2007, a group of vacant homes that had remained unsold for an average of 131 days were taken off the market, staged, and relisted. The newly staged properties sold, on average, in just 42 days, – which is approximately 68 percent less time on the market.
The study was repeated in 2011, in a more challenging market, and the numbers were even more dramatic. Vacant homes that were previously on the market for an average of 156 days as unstaged properties, when listed again as staged properties, sold after an average of 42 days—an average of 73 percent less time on the market.
Small investments, big potential returns
Staging is a powerful advantage when selling your home, but that’s not the only reason to do it. Staging uncovers problems that need to be addressed, repairs that need to be made, and upgrades that should be undertaken. For a relatively small investment of time and money, you can reap big returns. Staged properties are more inviting, and that inspires the kind of peace-of-mind that gets buyers to sign on the dotted line. In the age of social media, a well-staged home is a home that stands out, gets shared, and sticks in people’s minds.
What’s more, the investment in staging can bring a higher price. According to the National Association of REALTORS, the average staging investment is between one percent and three percent of the home’s asking price, and typically generates a return of eight to ten percent.
In short, less time on the market and higher selling prices make the small cost of staging your home a wise investment.
Interested in learning more? Contact your real estate agent for information about the value of staging and referrals for professional home stagers.
Have you ever rented the unit in someone’s basement? Maybe your spouse’s mother moved into your “Mother-In-Law Unit” above your garage? Or have you ever traveled and stayed in a pool house for your stay? Commonly referred to as “Mother-In-Law” units, homeowners use these as a way to fill the space in their home and gain residual income, either from vacationers or long-term tenants.
The official terms for these units are Additional Dwelling Units (ADU) or Detached Additional Dwelling Units (DADU’s), and are defined as extra spaces in homes and on properties where someone can live completely independent of the main house.
These units can be almost anywhere on the property, but they are usually located in the basement, in the backyard, or above the garage. They have their own bathroom and kitchen facilities, and sometimes they share laundry with the main house.
Thinking of adding a unit to your home? Here are some benefits and risks, as well as important aspects to consider before you build:
Homeowners can maximize their investment by renting out the extra space to long-term tenants for short-term vacationers. These tenants can help pay off debt or create an extra stream of income to pay for other needs or wants.
Depending on several factors, including the size of the unit, the market in the area, and other factors, each homeowner should decide which option they are more comfortable with. These decisions should be made before they list the unit for rent to best market to the right audience.
An obvious risk is that when you open your space to a stranger, there’s a possibility that things might end poorly. Either the tenants could turn out to be untrustworthy, or unreliable, leading to a financial burden.
To minimize the risks, it’s a good idea to use an application process to check backgrounds and employment history as a tool to get to know the potential tenant. Make sure to adhere to the National Fair Housing Laws and your local regulations.
Things to Consider:
- What are the shared spaces?
- Would you be comfortable sharing those spaces, and potentially appliances, with a new person each weekend, or would you rather get to know the long-term tenant who would use those on a consistent basis?
- Rooms like the kitchen can be great for those who want to get more interaction from their vacation renters. However, sharing one bathroom between the homeowners and the visitors can be uncomfortable and risky.
- Would you be okay with a long-term renter using your laundry facilities? What kind of access would they need to the house in order to use those machines?
- What is the size of the ADU/DADU?
- Is it truly a space where someone could live, or would it be too tight to fit all the necessary appliances?
- Does the unit adhere to your local housing codes as a livable space?
- How close are the units and what noise level are you comfortable with?
- As a long-term landlord, tenants have the right to quiet enjoyment without the landlord barging into their space or controlling their activities. If the unit is in the basement and the tenant has friends or family over, that noise could permeate into your unit in the late hours of the night. A way to prevent this is to be sure to layout quiet hours and expectations before they sign the lease or make an agreement so that you and the tenant are on the same page.
- The same goes for the rules in the vacation rental listing. Managing expectations is the first way to create a relationship with the tenants, even those there for the weekend.
- What improvements are required to make the unit livable?
- Do you need to add a kitchen or a bathroom? What are the costs associated with those improvements and would the market-rate rental prices make up for those improvements? You might not get your money back within the year, but if you’re dedicated to making the space worth it to rent it out over the next few years, these improvements, and financial obligations are necessary.
- If these initial investments aren’t viable for your situation, it might be a good idea to look at other options to earn rent from your home, including adding roommates with whom you’re willing to share all the common spaces.
Whatever you decide, it’s important to be familiar with the rental market and regulations in both your local region and your neighborhood.
Do you have an ADU or DADU on your property? How do you use it? Let us know in the comments.
Whether you’re starting a family, moving for your job, getting ready to retire or embarking on a new chapter in your life, when your home no longer suits your current situation, it’s time to think about selling it. Although this can be a bit complicated, with the help of your agent, you can minimize the hassles, get the best possible price, and shorten the distance between “For Sale” and “Sold”.
Price it right
If you want to get the best possible price for your home and minimize the time it stays on market, you need to price it correctly from the beginning. Your agent can give you a clear picture of your particular market and can provide you with a comparative market analysis (CMA). A CMA contains detailed information on comparable homes in your area, including square footage, date built, number of bedrooms, lot size and more. It lists pending sales and houses sold in your area in the past six months, along with their actual sale prices.
By comparing your home to similar homes in your neighborhood and reviewing their list prices and actual selling prices, your agent can help you arrive at a fact-based assessment of your home’s market price.
Prepping your house for sale
You want to make a positive first impression when you list your home for sale. Here are some tips on how to enhance your home’s best features:
Work on your curb appeal
Some great things to improve your home’s curbe appeal are to get rid of moss on your roof, power wash your front walk, porch, deck and patio. Clean up the garden and mow the lawn, trim the hedges, weed the flowerbeds and add spots of color with container plants. Clean all the windows inside and out and repair them if they don’t open and close easily.
Refresh, repair and repaint
This goes for interiors and exteriors. If you see peeling paint, add a fresh coat. If it isn’t already, consider painting rooms a neutral shade of white or grey. It’s also a good idea to make necessary repairs as you don’t want to turn off a buyer with a dripping faucet, a broken doorbell, a clogged downspout or a cracked windowpane.
Deep-clean, from floor to ceiling
Clean rugs, drapes and blinds, and steam-clean carpeting. Get rid of any stains or odors. Make sure kitchen appliances, cupboards and counters are spotless and that bathrooms shine.
Declutter and depersonalize
Clean, light-filled, expansive rooms sell houses. So be sure to downsize clutter everywhere in your home, including cupboards, closets and counters. You might also consider storing some furniture or personal items to make rooms look more spacious. Take advantage of views and natural light by keeping drapes and blinds open.
Show your house
After you’ve taken care of all the repairs and cleaning tasks outlined above, your home is ready for its close-up: an open house. It’s actually best for you and your family to leave when potential buyers are present so they can ask your agent questions. But before you go, you might want to:
· Take your pets with you
· Open the shades and turn on the lights
· Light a fire in the gas fireplace
· Bake cookies or use candles and plug-in’s
· Keep money, valuables and prescription drugs out of sight
Be flexible in negotiating
If you get offers below your asking price, there are a number of strategies you can try in your counteroffer. You could ask for full price and throw in major appliances that were not originally included in the asking price, offer to pay some of the buyer’s fees, or pay for the inspection. You could also counter with a lower price and not include the appliances. If you receive multiple offers, you can simply make a full-price counter.
Your agent can suggest other strategies as well and help you negotiate the final price.
If your house doesn’t sell or you’ve received only lowball offers, ask your agent to find out what these prospective buyers are saying about your house. It might reveal something you can consider changing to make your house more appealing in the future or switch up the marketing strategy a bit to better manage expectations.
Breeze through your inspection
When a buyer makes an offer on your home, it’s usually contingent on a professional inspection. A standard inspection includes heating and cooling, interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; and the foundation, basement and visible structure. The inspector will be looking for cracks in cement walls, water stains and wood rot.
You can always opt for having an inspection done prior to putting your house on the market, so you can address any potential problems in advance. Your agent can give you several recommendations for qualified inspectors in your area.
Close with confidence
Whether this is your first time or your tenth, your agent can help guide you though the complex process of selling a home. Moreover, he or she can answer any questions you may have about legal documents, settlement costs and the status of your sale.
Your agent’s expertise, resources and extensive network also work for you when you’re buying your next house. Even if you’re moving out of the area, your agent can refer you to a professional agent in your new community.
Buying a home is one of the most significant financial and emotional purchases of a person’s life. That’s why it is so important to find an agent that can not only help you navigate the home search process but one who can also answer your questions and represent your needs from start to finish. Most importantly, your agent should care about your happiness and ensuring that you find the home that best fits your needs.
Here are some qualities to consider when selecting a real estate agent:
- Likable. More than likely, you will be spending a lot of time with your agent, so look for someone that you enjoy interacting with.
- Trustworthy. One of the best ways to find an agent who you feel you can trust is to ask friends and family for a referral. Another way to do this is to interview different agents and ask for client references.
- Effective listener. While your agent can’t read your mind, they should be able to make educated recommendations and offer advice by listening closely to your needs. Make sure you talk to your agent about your priorities, what types of features appeal to you, as well as any factors that could be deal breakers. This will arm your agent with everything they need to help find you the perfect home.
- Qualified and experienced. Make sure your agent has the qualifications and experience to meet your specific needs. For example, some agents have more experience with short sales, while others might be experts on certain neighborhoods or types of housing. Find someone who is good at what you’re looking for. Ask specific questions when you interview them so you can get a better idea of what they’re great at, and if they’ll be a good fit for your search.
- Knowledgeable. A great agent is someone who is out in the neighborhoods, exploring communities, visiting listings, up to date with market and industry news, and collecting all the information that you need to make an informed, confident decision about your real estate needs.
- Honest. Your agent should be upfront and honest with you about every aspect of your home search process – even if it involves delivering bad news. The best real estate agents are more concerned about finding the right home for their clients, not just the home that brings in the fastest commission check.
- Local. Every community is different and all real estate is local, so it’s important to find someone who really knows the local market and can provide you with whatever information you need to familiarize yourself with a particular area.
- Connected. A well-connected agent will have relationships with lenders, inspectors, appraisers, contractors, and any other service provider you might need during your home search.
- Straightforward. You want an agent who will work hard to help you find the best home, but you also want someone who will be straightforward with you about the process, the market reality, and what is realistic for you.
- Committed. Your agent should be in it for the long haul, meaning that they’re looking out for your best interests every step of the way, no matter how long the process takes. The best way to find an agent with these qualities is by asking around. In all likelihood, someone within your circle of friends or family will have experiences to share and professionals to recommend, if not, reach out and we can connect you with a qualified and reliable Windermere Real Estate Agent. Contact us here.
You’ll never have a second chance at a first impression, so let’s make it count! When it comes to upping your home’s curb appeal, there are plenty of small changes you can make that have a big impact. And best of all, you don’t need to call in the pros or spend a fortune to get beautiful results. Below are some helpful and affordable tips.
A Well-Maintained Yard
Mowing: The first step to a well-manicured lawn is to mow it regularly. The experts recommending mowing high because mowing it too short can damage the grass and allow weeds to set root.
Weeds: To prevent weeds like crabgrass use a pre-emergent herbicide in early spring. These herbicides manage the weeds by stopping the seeds from sprouting in your lawn. Broadleaf weeds like dandelions can be stopped by applying granular weed control products.
Feeding: Lawns consume mostly nitrogen, so look for mixes of fast and slow release fertilizers; they will feed your lawn over time while keeping it lush and green.
Watering: Nighttime watering can result in long spans of moisture on the blades, potentially exposing your grass to disease. Consider watering your lawn in the morning – the sun helps dry out the blades throughout the day.
Flowers: You can quickly and affordably dress up your yard with colorful pre-made flower pots and containers. When placing your flower pots and containers remember that asymmetrical arrangements and staggering plants will provided the liveliest setting.
Dress up the Front Door and Porch
Paint: A fresh coat of paint in a pop color can give your home a well-deserved facelift. Get some color inspiration from House Beautiful.
Replace Old Hardware: Clean off any dirty spots around the door knob, and use a metal polish on the fixtures. Change out house numbers for an updated feel, put up a wall-mounted mailbox, or add an overhead light fixture. Keep in mind that well thought through elements, instead of mix-and-match pieces, will add the most curb appeal.
Create Perfect Symmetry: Symmetry is one of the simplest design techniques to master and is the most pleasing to the eye. Maintain symmetry by flanking your front door with two sidelights (just make sure that your hardware matches); find two urn planters or a unique visual detail to put on either side of your door.
Downsizing is on the minds of many homeowners today. Some are ready to retire, others want to live more simply, and many want to save money and say goodbye to home maintenance. If you can relate to any of those sentiments, ask yourself these five questions:
Have you done the math?
The financial savings that can be generated by downsizing can be significant – especially as they add up over time. When doing the math, make sure the move will save money, rather than spend unnecessarily.
Have you researched elder-care options?
Many homeowners hold on to their current home longer than they should because their parents / parents-in-law may need to come live with them in the future. While a noble gesture, there are many excellent elder care living options available today. Often, all it takes is a tour of those facilities to realize that your loved one may actually be happier, and far better served, in a place devoted to their care and happiness.
Have you considered off-site storage?
You don’t need to immediately discard a big chunk of your belongings in order to downsize. In fact, trying to do so in one fell swoop only creates needless stress. Most people find it works much better to move some of their belongings into off-site storage for six months. During that time, you can gradually incorporate some of those items into your new living arrangement, and slowly figure out what to do with the others.
How do you feel about sharing costs and decision-making?
Townhomes and condominiums are popular downsizing options. But both require that you share the decision-making and expenses associated with any maintenance and improvement projects with your neighbors and potentially an HOA. If you’re a people-person and agree that two heads are better than one, and you like the idea of sharing the cost/responsibility for expensive repairs, you’ll enjoy condo living. If not, this may not be the best option for you.
Have you consulted with a real estate agent?
Many homeowners don’t think to consult with a real estate agent until they’ve made the decision to downsize. This leads to guesstimating about some of the most important factors. The truth is, your real estate agent is someone you want to talk with very early in the decision-making process.
The last time we saw a balanced market was late 1990s, meaning many sellers and buyers have never seen a normal housing market. Windermere Real Estate’s Chief Economist Matthew Gardner looks at more longer-term averages, what does he see for the future of the housing market?