Hope for your financial life and beyond

6 Ways We Survive the Dark Side of Rental Real Estate

My wife and I purchased our first home to be used as a rental property seven years ago. That move was the culmination of several years’ worth of reading about and planning to own rental real estate. It took us that long to feel knowledgeable and confident enough to put a plan into action that would earn us a steady income stream aside from our normal careers.

For the most part, our experience has been a positive one. In fact, I’d say overall it has been great. However, we have had our share of challenges along the way, like:

rental real estate…an unexpected new well we had to drill and install (that was pricey!)

…leaky copper pipes that had to be replaced in an entire house

…a dual tenant situation where one roommate left, leaving us with half the monthly revenue stream on that property until another roommate could be found

…tenants who don’t inform you of repair issues in a timely manner (“Really? It’s been leaking how long?”)

…tenants who won’t pay on time, or ever

…tenants, who by their actions force you into court (that’s a post in itself!)

…managing the finances to account for repairs, taxes and the house that sits vacant for months while you do said repairs or find a new tenant

…dealing with the emotions that come when facing these tough circumstances

…the time it took away from our already busy schedule to take care of all this

Are you prepared for all that and more? If you are game, then I have five suggestions that will help you manage through some of the dark times that will inevitably come. And I’ll tell you the sixth thing we’ve done recently that has taken our rental real estate business to the next level.

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Your Mental To Do List Before Starting a Room Addition

So you’ve made all your plans and crunched the numbers and are finally ready for a room addition. That’s great news! But are you sure you know what to expect for the next couple months?

room additionMost homeowners think they know exactly what is coming. The truth is that most people have not done a room addition.  Consequently, they overlook some of the details that are involved. To that end, here is a list of daily activities and truths involved with any room addition you need to be aware of.

Prepare For Dust

You need to prepare for the worst if you or members of your family have OCD (obsessive-compulsive disorder) or are used to very clean environments. Things will most definitely get dirty. Walls will be removed, electricity re-routed, grading and excavation among other activities that cause a lot of dust and dirt.

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4 Ways to Fund That Extra Mortgage Payment

For most people making one monthly mortgage payment is challenging enough. Why in the world would you want to make an additional one? Seems like that extra mortgage payment would be pushing the monthly budget a bit too far.

extra mortgage paymentWell, if you can see the bigger picture, the money you put towards an extra mortgage payment now can have significant impact on your long-term financial health. The more you pay and the earlier you pay it will reduce the amount of interest you owe over the life of the loan. You could be looking at tens of thousands of dollars saved in the long run.

If you don’t believe me, run your own numbers on any online mortgage calculator. You’ll be amazed on how much you can save.

Making an extra mortgage payment each month (or even a partial payment) takes a strategy. More importantly, it takes extra money. That’s where the real problem lies. When you look at your monthly budget you may be left scratching your head wondering where that extra money is going to come from.

Back when my wife and I decided to pay off our mortgage early, we faced the same problem. Here are the ways we came up with to free up some money to make that extra mortgage payment.

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Managing a Home While on Vacation: Do’s, Don’ts, & Money Saving Tips

Going on vacation soon? Then you will enjoy this post today by Hank McKinsey, rental property owner and blogger at Homebyhank.com.

Taking a vacation can be a fantastic way to relax and regroup from your daily and weekly routine. While vacations are exciting to prepare for, one thing that often gets neglected is your home.

vacationPrepping your home for your time away will ensure that it stays safe and secure, and things like pets or plants aren’t left without care. Vacations can be expensive, so it’s also important to save money during these preparations. With a few quick tips your home, pets, and garden will be happy even in your absence.

The Basics of Going Away on Vacation

Do’s

As part of your vacation planning you should make sure there is a system in place to help you keep your house safe and secure:

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The Best Home Renovation Projects That Hold Their Value

home renovation projectsIt’s the depths of winter but spring will be here before you know it. With that your thoughts might be turning to that home renovation project you’ve been waiting for. Now’s the time to get the final plans and cost in place so when the weather turns nice you can hit the ground running.

A home renovation isn’t simply painting a room or putting down new carpet. Those things are nice to do and are needed from time to time. When I say home renovation I’m referring to big projects…ones for which you might want to call in a contractor. For the most part these are projects that are going to cost thousands of dollars, maybe even reach into 6 figures.

With that much money at stake it’s important to do your research ahead of time. One of the big issues is how much return you can expect to receive on your home renovation investment. You don’t want to dump $20,000 into a project only to see it’s value dwindle to nothing.

We’ve been thinking recently about finishing our basement. We could add several additional rooms of living space there along with perhaps a bathroom. We know it would add value to our home life (giving us more personal space) and add value to the home itself. But how much money to put into it is the real question. What could we expect to get back in value if we ever sell our home?

With that in mind, check out this infographic from Contractor Quotes. It shows the typical cost of each major home renovation and what you can expect to recoup in cost when you sell your home.

Home Renovation Projects That Increase a Home’s Value

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How to Avoid a Foreclosure When You Are Struggling Financially

If home ownership is the American dream then a foreclosure is a homeowner’s worst nightmare. Thousands of people face this situation every day because they are struggling financially and have failed to pay the mortgage. It can definitely lead to some sleepless nights worrying over whether or not the bank will come take your home.

avoid foreclosureAvoiding foreclosure is extremely important for several reasons. For starters, it damages your credit score. You may see a drop of 200 points or more even if you had perfect credit beforehand. In addition, the information stays on your credit report for seven years. This makes it very difficult to secure a new mortgage loan or open other lines of credit in the future. It’s a stain on your personal financial record that takes years to overcome.

How to Avoid a Foreclosure

In the end you may have no choice but to foreclose. However, don’t assume all hope is lost because you may be a month or two behind on the mortgage.

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The Difference Between Married and Single Homebuyers (Infographic)

Perhaps you heard that existing home sales rose 5.1% in May from April according to the National Association of Realtors. That’s the strongest pace for homebuyers since September 2009. It’s good news but don’t get too excited just yet. The housing recovery is happening but has been slow and uneven at best (sales were down in April).

The rise in home sales in May was attributed to first-time, younger homebuyers entering the market. These buyers have been cautious about purchasing a home having seen what the recent recession did to home values. Traditionally, first-time homebuyers have made up about 40% of the housing market. Right now that mark sits at 32% so we have a bit to go before the statistics return to normal.

Buying a home versus renting remains a difficult decision. So many variables come into play – from affordability, to employment security, to school systems, to size, to neighborhood – the list goes on and on.

My wife and I bought our first home after we had rented for two years. Job security prompted the purchase, as we were confident my career in education would keep us in one location for some time. We were first-time homebuyers at age 27 and bought a typical ranch-style starter home.

The biggest priority for our home purchase was affordability. We didn’t care about driving distance to work, location to activities or size of the property. We wanted something small but with enough room so we could expand our family (in other words – have children).

Married vs. Single Homebuyers

Had I been single and not looking to start a family, I doubt I would have bought a home in the suburbs at age 27. My priorities would have been on friends, activities and advancing my career. Anything but settling down.

It speaks to the difference that age and marital status have on the decision to buy a home. Where a person is at in life factors into when/if they buy and what they look for in a home. Today’s infographic from my friends at Choice Home Warranty highlights these differences between married and single homebuyers.

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Understanding the Basics of Refinancing Mortgage Loans

What does it mean when you consider refinancing mortgage loans. Why would a person even consider it? Please welcome Jessica Kane as she shares her insights on the subject.

refinancing mortgage loansMany homeowners who have owned their property for more than a year or two have already refinanced a home mortgage. Some of your friends and family members may have casually mentioned that they were in the middle of a refinance loan process, or they may have talked about the great interest rate they got or their plans for their home equity funds.

If you are not familiar with mortgage refinancing, you may be wondering what this actually means, how you can do it and what the benefits would be for you. By spending a few minutes learning more about it, you may decide that now is the right time for you to contact a mortgage lender about refinancing your home loan.

What Is a Refinanced Loan?

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How to Make a Home Inventory Checklist in Case of a Catastrophic Loss

Recent events surrounding the theft and eventual recovery of our family basketball goal have me thinking more about home security. One issue that presented itself during that incident was that I did not have proof (like a model number or receipt) or identifying marks on the goal that it belonged to me. If I had that proof the police could have pursued the matter more aggressively.

home inventory checklist in case of lossDuring the ordeal I had a conversation with a friend of mine who used to be a detective. He mentioned a case he investigated where a man had his entire music collection stolen. Fortunately for him, he had written down the title and artist of every CD in his collection. He gave that list to my friend who, believe it or not, was able to track down the collection. Of course, he was aided in his search by the fact that the not-so-intelligent thief sold the entire collection at once…to one pawn shop.

Wasn’t too hard to link those to events together.

My friend went on to say he has made a home inventory checklist of everything of value in his home. In case of a catastrophic loss such as a house fire, he will be able to present his home inventory checklist to the insurance company showing concrete evidence of what he did own. Of course that won’t help him recover the sentimental items he lost but it will give him a better chance of recouping the fair market value to replace all the consumer products he lost.

So, guess what the kids and I started doing over Christmas break?

How to Make a Home Inventory Checklist

We haven’t entirely completed our project but these are the steps we are taking to make our home inventory checklist:

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Home Maintenance Items Landlords Should Do Between Tenants

As a landlord, I would love to keep tenants in my properties forever. While some stay a long time, most eventually leave – either by personal choice or through an eviction – to seek housing elsewhere. Whenever that time comes it’s the landlord’s responsibility conduct some home maintenance and get the unit ready for the new tenant.

home maintenanceTurning a rental house around for the new tenants can be a time consuming and financially draining time. Hopefully, as a conscientious landlord, you’ve kept track of what is going on at the property and have a good idea of what to expect in terms of potential home maintenance. There really shouldn’t be any surprises, but it seems like there always are.

Because even minor renovations will cost money and require time to complete, some landlords choose to skimp on or refuse to complete repairs. I disagree with this philosophy. As much as possible, I want the property to be in pristine condition for the new tenants so that our relationship begins on the right foot. They need to know that I’m a landlord who prides myself in the condition of the unit and wants to treat them well. Hopefully this pride will bleed into the tenant’s minds and they will in turn do their best to keep the property as clean and damage free as can be expected.

Home Maintenance to Conduct Between Tenants

Some repairs and home maintenance will obviously be required before the new tenant moves in. While all facets of the house need inspection, these five areas are a must for any landlord to address:

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Debunking a Few Home-Buying Misconceptions

The following is a guest post by Tali Wee of Zillow.com.

couple looking at a home to buyNavigating the home buying process as a first-time buyer can be confusing, risky or even defeating. Buying a home is one of the most expensive purchases buyers make in their lifetimes, so it’s vital they make informed decisions. Some common sense negotiating tactics don’t translate to the housing market, confusing even the savviest shoppers. Plus, risky strategies work well for some buyers’ circumstances but disadvantage others.

It’s important for buyers to do their own research before accepting rumors as truths. Here are a few common house-buying misconceptions.

Misconception #1: Buying a home is a quick process, especially in competitive markets.

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