The Risks, Rewards, and Benefits of Owning Rental Property

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One area of the real estate market that is thriving right now is rental property. In the first quarter of this year, landlords and property managers across the country rented more apartments and homes than they have during the first quarters of the past ten years. And according to the Wall Street Journal, the amount that renters are willing to pay has also jumped to a nationwide average of $991 per month.

All indications suggest that the rental market will continue to improve because of the combination of low vacancy rates and rising rents. In fact, the demand for rentals is predicted to far exceed supply through 2015, with some 4.5 million new renters expected to enter the market in the next five years.

What to consider before buying a rental
Being a landlord has its challenges. The recession took a toll on rental prices for a few years and any future economic downturns could do the same. Once the job market returns to normal, there’s a strong possibility that more people will choose to move from rentals into homes of their own. And the demand for rental properties could become oversaturated at some point, resulting in an investment bubble of its own.

What’s more, while the income from a rental property can be significant, it can take at least five years before you’re making much more than what you need just to cover the mortgage and expenses. In other words, the return on your investment doesn’t happen overnight.

However, in the long run, if you select the right property, it could turn out to be one of your best investment decisions ever—especially since rental real estate provides more tax benefits than almost any other investment.

Tax deductions for the taking
One of the great things about owning rental properties is the fact that you’re able to deduct so many of the associated expenses—including a sizable portion of your monthly mortgage payment.

The commissions and fees paid to obtain your mortgage are not deductible, but the mortgage interest you pay each month is—including any money you pay into an escrow account to cover taxes and insurance. Whatever your mortgage company reports as interest on your 1098 form at the end of each year can likely be deducted.

For example, you may be eligible to deduct credit card interest “for goods and services used in a rental activity,” repairs made to the building, travel related to your rental, expenses related to a home office or workshop devoted to your rental, the wages of anyone you hire to work on the building, damages to your rental property, associated insurance premiums, and fees you pay for legal and professional services. However, as is the case with any transaction of this type, be sure to consult your attorney or accountant for detailed tax information.

What to look for
As with any real estate investment, the location of the property and its overall condition are both key. But with rental properties, there are some other factors you’ll also want to consider:

 Utilities: Look for a building with separate utilities (water, electric, and gas, etc.) for each rental unit. This will make it far easier to legally charge for the fair use of what can be a very costly monthly expense.

 Competition: If your property is one of the few rentals in the neighborhood, there will be less competition for interested renters.

 Transportation: Rentals that are near popular public transportation options and / or major freeways (without being so close that noise is an issue) are usually easier to rent—and demand more money.

 Landscaping: Properties with small yards and fewer plantings are far easier and less expensive to manage.

 Off-street parking: Not only is off-street parking a desirable feature (people with nice cars usually don’t like to park on the street), it’s also a requirement for rental properties in some communities.

How to start your search
Unlike homes, rental properties do not typically have a visible ‘for-sale’ sign standing out front (as landlords don’t want to irritate, bring attention to their current renters, or turn off any prospective renters). Therefore, if you are interested in a rental property, your best option is to schedule an appointment with your real estate agent/broker to discuss your investment goals and identify what opportunities currently exist in your market place.

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It’s Tax Time

You probably don’t need a reminder that this is tax season.

Not only because tax returns are due in two weeks but also because you will soon receive your property tax notification in the mail.

Every two years your County re-assesses the value of your property and then sends that new value to you.

When this happens, many of our clients:

  • Don’t agree with the new assessed value
  • Aren’t sure what to do
  • Are confused by the process
  • Want to save money on property taxes

Good news! We have a webinar that will help you. On the webinar we will show you:

  • How to read the information from the County
  • What it means for you
  • How to protest the valuation if you want
  • How to get an accurate estimate of your property’s value

You can listen to the webinar live or get the recording. In any case, you can sign up at www.WindermereWorkshop.com

The webinar is April 17th at 10:00. If you can’t join live, go ahead and register so you can automatically receive the recording.

This is a complimentary online workshop for all of our clients. We hope you can join!

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Fantastic Ranch Style Home in Fort Collins!

Beautiful 3 bedrooms and 3 bathrooms ranch-style home at 3314 Yule Trail Drive in the popular Trailhead community. Located just minutes from Old Town Fort Collins, your new home features a wide-open floor plan with vaulted ceilings, large living room and gas fireplace. Great kitchen with hardwood floors, gas range oven and plenty of storage. Sprawling master suite with five-piece bath. Covered porch and fenced backyard for entertaining and relaxing. Huge unfinished basement for future expansion. A great home and terrific value! Contact Jon Holsten for your private showing at (970) 237-2752 for more information or click the link below for more details.

http://windermerenoco.com/listing/93256828

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Is Buying a Short Sale Right For You?

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By Richard Eastern

If you’re shopping for a home, you may have noticed that a large number of the homes that are currently on the market are short sales. A short sale occurs when a homeowner owes a lender more than their home is worth, and the lender agrees to let the owner sell the home and accept  less than what is owed. Lenders may agree to a short sale because they believe it will net them more money than going forward with a lengthy and costly foreclosure process.

Short sales do differ in a number of ways from conventional home sales. Here are a few things to consider if you’re thinking about buying a short sale property.

    • Short sale homes sell for less, but not significantly less than market value.

Buyers hoping to snap up a home for half the market value will be disappointed. The selling price for short sales average about 10 percent less than for non-distressed properties. The bank is looking to recover as much of the value of the home as possible, so they will not accept offers that are significantly under market value. That said, with savings that can equal tens of thousands of dollars, a short sale is a great way to get more house for your money.

    • Short sale properties are sold “as is”.

The lender will not be making repairs to the home. Any improvements that need to be made are most likely going to be the responsibility of the buyer. A savvy buyer’s agent/broker will get contractor bids for any necessary repairs and use those to help negotiate a lower sales price with the bank.

    • A short sale will take longer than a conventional home sale.

Once you and the seller have mutual acceptance on an offer, you need to allow 60 to 90 days for the lender approval process. There are often long stretches when the offer is slowly winding its way through the bank’s system, so buyers need to be patient.

    • If you have to sell your home first, a short sale is probably not the best fit.

Lenders generally will not take contingent offers on a short sale.

    • A short sale is one real estate transaction that you shouldn’t attempt on your own.

Short sales are complicated transactions that involve a different process and significantly more paperwork than a standard real estate sale. An agent/broker that is unfamiliar with short sales can write an offer in such a way that they inadvertently cause their buyers to lose the deal. An experienced short sale agent/broker will protect your interest and help the process move forward smoothly.

The bottom line: As long as you can be patient, and are working with an agent/broker who understands the process, buying a short sale is a great way to purchase the house you want at a price you’ll love.

EasternRichard

Richard Eastern is a Windermere agent in Bellevue and co-founder of Washington Property Solutions, a short sales negotiating company. Since 2003 he has helped more than 600 homeowners sell their homes.  A Bellevue native and a UW grad, Richard is an avid sports fan and a devoted Little League and basketball coach. You can learn more about Richard here or at www.washortsales.com.

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Fantastic Ranch Style Home!

This ranch style home at 3930 Grouse Drive sits nestled in a cute neighborhood in Evans conveniently located close to HWY 34 and HWY 85. The main level has wood floors, granite counter tops in the kitchen, finished basement, and a deck in the backyard. Fantastic opportunity and phenomenal value with this great home! No HOA for this property! Contact Philip Cooper for your private showing at (970) 232-4844 for more information or click the link below for more details.

http://windermerenoco.com/listing/93233746

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Top 10 qualities to look for in an agent

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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:

    1. Someone you like. More than likely, you will be spending a lot of time with your agent, so look for someone that you enjoy interacting with.
    2. Someone you trust. 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.
    3. Someone who listens. 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.
    4. 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.  Your agent should also be fully trained in contract law and negotiations.
    5. Knowledgeable. A great agent is someone who is out in the neighborhoods, exploring communities, visiting listings, performing marketing analyses, and collecting all the information that you need to make an informed, confident decision about your real estate needs.
    6. 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.
    7. 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.
    8. 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.
    9. Straight forward. You want an agent who will work hard to help you find the best home, but you also want someone who will be straight forward with you about the process, the market reality, and what is realistic for you.
    10. 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. You can also search for agents based on area, so you know you’re getting someone who is knowledgeable of the neighborhood(s) you’re interested in. Click here to learn more about the buying process.

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Weekend Warrior: Quick projects to upgrade your home

Memorial Day traditionally represents the kick-off of summer. Kids are getting out of school, families are making summer vacation plans, and backyard barbeques are on everyone’s minds. This is also a great time of the year to get your house in order and ready for the summer season. The following is a handful of ideas and tips to help you with this process.

Outdoor spaces

GardeningGardening– It’s not too late to start your garden! This weekend I will be planting an herb garden; I planted summer vegetables a few weeks ago.  If you’re thinking of doing the same, just make sure you use starts because many summer harvest vegetables won’t start from seed this late in the season.

Outdoor living– My home has an outdoor space with great potential, including a partially covered patio perfect for entertaining. This weekend I plan to upgrade the space with small touches to make it summer party ready. This includes finding outdoor lighting options, updating the seating and cleaning up the barbeque.

BBQ- Make sure your grill is ready to go this season by making sure everything is clean and in working order before you fire it up. In the northwest that includes making sure the fuel lines are spider-web-free. Also, make sure you have propane or charcoal on hand for impromptu dinners.

Clean Windows- Now is a great time to clean your windows, inside and out. Sun shows more dirt and smudges.

Lawn care- Prepare your lawn for the months ahead. Depending on where you live this means different things. Check your sprinkler system to make sure it wasn’t damaged over the winter; upgrade your lawn care to ensure fuller greens, check for and remove moss to prevent dead patches and start your weeding regimen.

Pool prep- If you have an outdoor pool get this ready for a summer season of fun in the sun, (unless you are lucky enough to enjoy your pool year-round). Same goes for hot-tubs. Make sure your equipment has been serviced, chemicals are available and your pool is clean and ready to use. OR, head to the local hardware store and buy your kiddie pool now before they run out, as I learned one particularly hot July!

De-winterize- I once was doused head to toe when we were turning the water back on to our exterior pipes because the pipe had split in the winter- so make sure all your pipes survived the cold, check your winterized projects and prepare your house for summer.  This is also a good time to look around the exterior, checking roof, gutters and siding.

Summerize- Check or replace AC filters, window screens, and household fans to make sure these are all functioning and will help provide maximum circulation in your house. Consider installing an attic fan or vent to help pull heat out of your home all winter long. Pack away excess cold weather items such as heavy blankets, jackets and other items so they aren’t in your way. Same goes for any sundry items you only use during fall and winter.

 

Inside spaces

Lighten the Space- Though I likely won’t spend much time inside once the mercury rises, I want to keep the house as light and cool as possible. I have found that replacing the curtains with a lighter shade lets the light in, but also keeps the rooms from overheating from sun exposure. Summer always makes me want to lighten up with the accessories- lighter colors, more whites, bright accents and less clutter.

Rearrange – Freshen up spaces by rearranging some of your wall art. If you don’t have enough wall pieces to rearrange regularly it may be time to add to your collection. You can find inexpensive original art online at stores such as Etsy or in person at local galleries. You can always play with other items like framed images from books, vintage posters or record albums. Here are some terrific ideas for using what you have to add interest to a room.

SpringCleanupAir it out- Open all the windows, shake out the rugs and update home fragrances to fit summer moods (citrus, freesia, clean linen, coconut, melon, fruits and tropical, etc.). You can create your own diffuser with essential oils to distribute fragrance. This may be more symbolic than practical but it always makes me feel ready for summer.

Paint- If you have a room you really want to refresh, a three-day weekend is a good time to take on a project of scale, so you have plenty of time to prep, paint, dry, and clean up. Painting is one of the least expensive ways to really transform how a room feels. Need help picking colors and paint type? Here is some good advice.

Garage or Basement- Tackle a big space that makes a big difference. Our garages and basements often become year-long dumping grounds for seasonal decorations and clothing, items that don’t fit in cabinets, memorabilia and maintenance tools. Go through your items and sort by keep, throw out and donate/sell and then group your keeps by function. Make sure your tools are accessible for easy gardening and entertaining by making sure your tools are accounted for, ready to go, and easy to reach. Here is a useful video on garage organization.

Yard/Garage Sale- If you have overflow at your house, plan a yard/garage sale to get rid of items you no longer need or want. Just make sure to pack everything up and donate it at the end of the sale otherwise you are just letting the clutter back in!

Plan a party- Once your space is all cleaned up and redecorated you will want to show it off! Plan a summer BBQ, dinner party, pool party, picnic or any other gathering.

What are your planning for Memorial Day weekend?

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Spatially Limited Gardening: The Indoors is the New Outdoors

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It is the official start to the gardening season! For those who have large outdoor spaces, it is the perfect time of year to make a trip to the home and garden store, work in your gardens,  and plant new growth. For those who live in smaller city quarters and whose outdoor space comfortably holds little more than a potted plant, we are forced to be more creative with our green space.

Decorative plants and nurturing vegetation is something that makes my house a home, even if small city living quarters has forced us to learn to take the outdoors- in and work with what space we have. Indoor plants, flowers, and gardens are a pleasing alternative when you do not have the space or the desire to be outdoors. Adding some green to your home can be decorative, fragrant, and even edible.  Planting and nurturing your growth is a fun do-it-yourself project that can be a whole household activity.

Where to start

How will you grow and what supplies will you need? First decide on your method of growing.

Traditional Potted Plants are a great starting point for the non-gardening types. Potting plants is relatively simple, cost efficient, and spatially low maintenance. Check out these ideas for potting and planting in small spaces.

Vertical Gardens break away from the customary terracotta pot. They are both modern and space saving. In a vertical garden you are able to grow a variety of plants, flowers, herbs, and vegetables. They can be practical and decorative inside or out. Learn more about creating your own vertical garden here.

Hydroponic Systems are a soil-free gardening solution that can involve little to no pesticide use. Green Tree’s Hydroponics reports that the growth rate of a hydroponic plant is 30-50 percent faster than that of a soil plant. Here’s what it takes to build your own, however you can also purchase hydroponic systems online.

Terrariums are “making a comeback” according to the New York TimesTerrariums can be uniquely ornamental and perfect for tight spaces that need a hint of green. Check out some samples and get design ideas here.

What growing methods have worked well for you?

What to grow?

That are good to eat …

Herbs: growing edible items can be very rewarding. Herbs are my go-to item to grow inside because they are low maintenance and take up little space. I prefer to pot basil, parsley, chives, thyme, cilantro, and oregano.

Grasses, like wheat grass, are becoming popular to grow indoors and decorate your home with.

Fruits and vegetables tend to take up more space and are more demanding. However tomatoes, peppers, radishes, leaf lettuce, potatoes, and carrots are a few fruits/vegetables that will grow well indoors.

That are good to look at …

 

Several flowers and house plants will flourish and bloom indoors. I enjoy the fragrance of Gardenia and the appeal of a Boston Fern in a hanging basket. However, using a plant encyclopedia will help you find which plant is right for you and your home.

What do you prefer to grow?

Making it look good?

The great part about bringing your garden inside is that it lets you use vegetation as a decoration. Whether you prefer to arrange flowersstring kokedama, or paint a fun plant pot, your vegetation and the way you display it can have an impact to your overall décor. How do you decorate with your vegetation?

Brittany Lockwood works in Marketing at Windermere Real Estate. She is the in-house expert on weatherizing, yard-sales, and interior design.

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Beautiful Ranch Style Home in Windsor!

Move in ready ranch style home at 5644 Bexley Drive in Windsor with a beautiful completed backyard that’s better than new! Open floor plan with the kitchen and living room perfect for entertaining friends. Private master retreat to relax after a long day. Finished basement is a great space for the family room and additional bedrooms! Contact Paul Hunter for your private showing at (970) 673-7285 for more information or click the link below for more details.

http://windermerenoco.com/listing/92985957

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Party Like It’s 2018!

 

Just a few months ago most people thought mortgage rates were heading to 5% and now they are back to where they were a year ago.

 

You probably saw this week’s news from the Federal Reserve declaring that they would not raise their Federal Funds rate for the rest of 2019

 

(just three months after saying they would raise rates at least twice this year).

 

While this is big news, even bigger news for mortgage rates is that the 10-year Treasury yield just hit its lowest point since January 2018. One thing we’ve learned from our Chief Economist Matthew Gardner is that mortgage rates follow the 10-year treasury (not necessarily the Fed Funds rate).

 

Last Spring it looked like mortgage rates had bottomed out and they steadily climbed through the Summer and Fall of 2018. It looked certain that they would hit 5% around January.

 

Instead they started dropping. Now with the 10-year Treasury at a 15-month low, they just dropped a little more and they are back to where they were a year ago.

 

Great news for buyers! Party like it’s 2018!

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