Should I Rent My Home Until Prices Go Up?

With the housing market in the doldrums, many homeowners are becoming relucant landlords. Is renting out your home a good way to ride out a bad market?

There are a number of issues you may wish to consider before you decide to become a landlord. Many of these issues are complicated and personal, but you may want to ask yourself a few basic questions before proceeding.

Question #1: Will the monthly rental cover your mortgage payment? If it does, it may make sense to rent your home now and hold out for a higher price in the future, but there are other real considerations.

Is your neighborhood or town in decline? If so, home prices will likely never return to 2005 levels. Will your existing insurance cover a tenant in the property and will your premium costs increase? Do you have the time or temperment to become a landlord? If not, can you afford the 10% fee a property mananger would charge? Can you cover the mortgage and your normal expenses, if the property sits vacant or rents decrease? Do you have additional cash reserve for repairs and maintanence? A good rule of thumb to determine the costs of repairs and vacancies is 10% of the monthly rental. Do you plan to sell the home within 5 years? If so, ask your CPA about the capital gains tax exemption for owner occupied dwellings and how renting your home now may effect future taxes owed? IRS code mandiates that you must live in your home for 2 of the last 5 years to exclude your future gains from tax.

If the monthly rental will not cover your mortgage payment, consider all the above, AND...

Ask yourself how much you will have to subsidize the payments each month and for how long. Keep in mind that if home prices ever increase to previous levels, it will take a long time. For the near future know that the market is still correcting and home prices will continue to decrease for at least another year. After we reach the bottom, prices will remain flat for at least another year before any price inflation will be realized. As a rule of thumb, run the numbers for 5 years to determine how much you cash you will be laying out. Now, how much would the house price need to increase for you to break even. Do you feel that is a realistic possibility?

Whether you should become a landlord is a complicated question. Even if the numbers work on paper, there are so many variables that are difficult to nail down. Do your research and be very realistic. Being a landlord is a tough job by any definition. If you are going to take it on, make sure it pays. If it doesn't, sell now, cut your losses and move on.

For questions about the market, property managment or to share your story, email tommi@infotube.net I have actively been in the real estate business for 25 years and I welcome your input.

The Truth about Housing and Lenders

Today's news from the housing experts was dismal and some what confusing.

First, lenders reported that loan applications had increased in the past few weeks. Why are the number of applications increasing if property is not selling?

The answer lies in the drying up of the lending spigot. Even prime borrowers are discovering that no funds are available for home loans. The lack of available mortgage money means that potential borrowers are being forced to apply to dozens of lenders when searching for a loan. Thus, the increase in the amount of loan applications.

The second bit of news of interest to home buyers and sellers was issued by the large, publically traded home builders. Home builders reported record losses and they still have a glut of unsold home inventory to dump. They also reported they own a 5 year supply of land for development, so they will not be looking for purchases of land tracts anytime soon.

What does that mean to you? Home builders with deep pockets will slash prices, add incentives and will give away thousands of dollars in upgrades and cash to sell these homes. Small builders will likely face foreclosure and bankruptcy in their effort to match the deals offered by the big boys.

What is going on in your housing market? We would love to hear from you about what you see and hear. Thanks for contributing. We will pass the info along to others that are interested.

CONTRACT PENDING??! NOW WHAT?

An InfoTube customer writes: "Our home is finally under contract. We still want to accept backup offers, but think shoppers should know that the home has a contract on it. Should we advertise our home as "Contract Pending" instead of "For Sale"?

As a general rule of thumb, you should never put all your eggs in one basket. This is particularily true in a tough selling market like the one we are experiencing now.

Contracts fall through more often than they don't. As a result, many homes currently under contract will be placed back on the market. The truth is your home is not SOLD until you close and see the money. Until the home has closed, it is always advisable to continue advertising and showing your home for back-up offers.

Your concern about disclosing the pending contract to potential buyers is a legitimate one. I suggest you continue marketing your home and disclose the "pending" status when an interested party contacts you. If you feel inclined to do more, you can also indicate in the comment area of your http://www.infotube.net/ ad that the property is "Contract Pending", but also state that back up contracts are strongly encouraged.

Congratulations on your offer and best of luck on your closing and move.

OUTDATED KITCHEN GETS A CHEAP FACELIFT

Are you sick of your dark, outdated and worn kitchen? Is it an immediate turn off to today's picky home buyers? If so, you can transform your present kitchen on a tight budget, if your kitchen has a good layout and the cabinets are sturdy.

If you have a few hundred dollars to spend on updating.... consider ways to get rid of that tired look forever.

1. Go Neutral. White, beige, cream and natural materials, like wood and stone, sell houses and never go out of style.

2. Replace Lighting Fixtures. There is no excuse for living with an ugly ceiling light that causes eye-strain and casts shadows over your work surfaces. For $25- $250 you can install a new, simple fixture that matches your hardware and style.

3. Replace or Fix Old Floors. Laminate over old linoleum, sheet vinyl and chipped tiles. Todays laminates snap or glue in place. They cost only $1-$5 a square foot and you can install the new floor right over the old floor. If your home was built before WWII, chances are you have wood underneath all that mess. Simply pull up the old floor covering, sand and seal to make those old floors shine.

4. Get Rid of Wallpaper, Stenciling and Borders. They scream old and dated, make rooms smaller and cluttered looking and today's buyers hate them. Rip it down and apply a fresh coat of neutral paint for less than $50.

5. Breathe Life into Old Cabinets. A solid coat of fresh, neutral paint does wonders for old, dark wood cabinets. Replace the dated cabinet pulls. You can fill any unwanted holes with Bondo before painting. If you have a little extra money consider hiring a company that re-finishes cabinets, or DIY and install new doors with glass, inserts, etc. If the budget is extremely limited, remove some or all of the upper cabinet doors and paint the shelves for an open, commercial kitchen look.

6. Refinish Appliances. If your appliances sport an outdated color, send them to a refinisher (see your local phone book). For a few hundred dollars, they will re-enamel old appliances in the color of your choice such as stainless steel, black, red or cobalt blue.

Kitchens work hard, draw people, and according to home buyers, they are the most important room in the house. Smart money invested in updating this room will come back to you when you sell. If you have a couple of thousand dollars in the budget for kitchen updating, check in tomorrow when we outline what will give you the most bang for your buck.

'Televator" Makes Attic Access Easy

Luggage, Holiday Decorations, High School Year Books, Baby Beds packed long ago...for most of us, the list of boxes and items we save for future use quickly stack up and block access to items we need today. What to do? Simply look up. Not to heavens, but to all that space above our heads...the attic.

If you have determined that the attic is safe for storage, but you haven't determined how to get there safely and conveniently, the telescoping attic ladder named Televator may be the answer.

Unlike traditional folding access stairs, the Televator requires little effort to use and less room to open and set up. It's unique design makes it an excellent choice for the small closets and hallways where attic access is usually located. If you have a hole in your ceiling, the unit is easy to install, even for do-it-yourselfers. Televator is completely assembled and the only tools required for installation are a drill and a wrench for putting in the lag bolts.

The Televator can handle up to 250 lbs and the 8 foot model retails for around $199. The Televator may be just the answer for storing seldom used items right over your head. For more information or to locate a dealer visit http://www.wernerladder.com/

Rising Foreclosures Cause Widespread Pain

News that home foreclosures are rising is not a surprise to those that follow the headlines. New studies estimate that 1.1 million families will lose their home over the next 2 years. The brunt of the pain will be felt by those left homeless, with tax problems and ruined credit, but the after shock will be felt by all of us.

Why? Because lenders are not in the real estate business. They must dump these non-performing assets as soon as possible. As they foreclose and take possession of all this property, they will slash asking prices as an incentive to move the inventory. Translation: Lending requirements will continue to tighten, making borrowing harder for everyone and we will all feel the effects of further downward price pressure.

Who is at the most risk of foreclosure?? Anyone who closed on an Adjustable Rate Mortgage (ARM) in 2004-2006 with a low initial "teaser" rate has a 1-in-3 chance of losing their home. If you got a subprime ARM during that period, with a higher than average interest rate, your chances are at 1-in-8.

Where are the most foreclosures taking place? For the most part, area's with the highest rate of foreclosure are the same ones who experienced a great deal of speculation and unsustainable price increases.

Here's a rundown on the metro areas with the highest rate of foreclosure filings:

Stockton, Calif. (1 in 88 households)
Merced, Calif. (1 in 100 households)
Modesto, Calif. (1 in 118 households)
Las Vegas
Riverside-San Bernardino, Calif.
Vallejo-Fairfield, Calif.
Sacramento, Calif.
Denver, Colo.
Detroit, Mich.
Miami, Fla.

Unbelievably Ugly Real Estate Photos

A hilarious look at some of the worst photographs of houses for sale. Laugh and Learn, but don't repeat. Cut and paste the link highlighted below into your browser. Enjoy


http://www.visualtour.com/applets/flashviewer/viewer.asp?t=830679&sk=46&dm=teamfisher.com