Archive for Austin Real Estate
Before You Call the Repairman
Have you ever had a service company to your home to repair something and find out that it really wasn’t “broken”? It probably conjured up ambivalent feelings of joy that it wasn’t something serious and frustration that you had to pay a service call for something so simple.
Before you call the repairman next time, keep these things in mind to see if it is something simple: 
- Disposer not working – check to see if the reset button has been thrown. It is usually on the bottom of the disposer. If the disposer is making a humming sound, the blades may be stuck. While the disposer is turned off, use a wooden broom handle as a lever to gently rotate the blades. Remove the broom handle and turn on the disposer to see if it works properly.
- Air conditioner not working – check to see if a breaker has thrown on your electric panel. You might need to flip the breaker completely off and flip it back on.
- Electrical outlets not working – Electrical plugs in bathrooms or outside, especially on a porch or patio, are many times connected to a ground fault interrupter. The GFI will be a wall outlet and it may be located in the garage. Locate the outlet and reset the button that may have tripped.
- Clogged drain – a simple way to correct a slow or clogged drain is to use the water pressure from a garden hose. You’ll need a helper to turn on the water full-blast once you have safely placed the hose in the drain and are holding a hand-towel around the hose to direct the water to the drain. Be prepared to tell your helper to turn off the water when needed.
Whether it’s preparing a home to market or arranging repairs required by the sale, REALTORS® know reputable, reasonable and reliable service contractors. We’re here to share our contacts with you to help make home ownership better.
Fix It Anyway
“If it isn’t broke, don’t fix it” is certainly popular advice, but if you’ve ever had a serious plumbing leak, you certainly wished you had taken care of the problem earlier.
Washing machines, like all appliances, are supposed to work and when they don’t, it’s time to have them fixed or replaced. However, there is a critical connection from your water supply that may even be older than your washing machine itself.
As someone whose hose broke while my family was out of town, I can attest to how quickly the water can damage walls, and possessions. In my case the only saving grace in this lesson was that my utility room is located in the garage – typical for the age of my home – and most the of the damage was confined to the utility room and garage. Almost anyone can replace the hoses with a pair of pliers for under $30.00 to avoid this potential catastrophe.
As you’re shopping for the replacement hoses, consider the braided stainless steel connectors. The advantage is that the stainless steel offers additional protection should a soft spot develop in the hose beneath. They’ll cost a little more but offer considerably more protection for a nominal price.
The Ideal Investment
Rental homes can be the IDEAL investment in today’s market because they offer a much higher rate of return than alternatives without the volatility of ups and downs in the stock market. 
IDEAL serves as an acronym to identify the advantages of rental properties:
- Income from the monthly rent contributes to paying the expenses and a return on the investment
- Depreciation is a non-cash deduction that contributes a tax shelter
- Equity grows monthly as the mortgage amortizes due to some of each payment being applied to the principal
- Appreciation is achieved as the value of the property goes up
- Leverage can increase the return on investment by using borrowed funds to control a larger asset
Great Investment
If you invest in a savings account, you’ll make less than 1% and will have to pay income tax on the earnings. On the other hand, contribute something extra to your house payment on a regular basis and you’ll essentially, earn at the mortgage interest rate which is certain to be more than you’re earning in the bank.
Making additional principal contributions on your mortgage will save interest, retire debt and build equity. An extra $100 a month in the example shown will save thousands in interest and short the term of the mortgage as well.
Reducing your cost of housing is another way to improve the investment in your home. Becoming debt-free is a worthy goal that is achieved with discipline and good decisions. Suggestions like this are part of my commitment to help people be better homeowners when they buy, sell and all the years in between.
Deductible Points?
Points refer to prepaid interest on a home mortgage and can be fully deductible by the buyer in the year paid if the right conditions exist. The points must be used to buy, build or improve a taxpayer’s principal residence but not all fees charged by the lender are necessarily deductible.
According to IRS Publication 936, “The term ‘points’ is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. A borrower is treated as paying any points that a home seller pays for the borrower’s mortgage.”
If you purchased a home in 2011, have your tax professional evaluate your closing statement to see if there are loan fees that may be used as a deduction on your tax return regardless of whether you or the seller paid them.
Refinancing a principal residence or purchasing an investment or income property require that points must be deducted ratably over the term of the mortgage rather than deducting them fully in the year paid. Borrowers in these situations should consider the benefits of lower interest rates from paying point to higher interest rates without points.
This article is meant to provide information that can be discussed with your tax professional about your specific situation and is not to be considered tax advice.
Choose Your Deduction
One third of all U.S. households, 75% of households with more than $75,000 income and most homeowners itemize their deduction on their federal income tax returns. It makes sense because the interest paid on their mortgage and their property taxes probably exceeds the allowable standard deduction.
However, with interest rates as low as they have been in the last two years and the price of homes having come down considerably, it is possible that the standard deduction may be the better choice.
Each year, the taxpayer can compare the total of the itemized deductions to the standard deduction to select which method will result in the most benefits. The 2011 standard deduction is $11,600 for married couple filing jointly and $5,800 for single filers.
The Housing and Economic Recovery Act of 2008 allows homeowners to take the standard deduction and the lesser of their actual property taxes of $1,000 if filing their return married jointly. For more information, see Schedule L found on www.IRS.gov and consult your tax advisor.
The “Right Size” Home
Work hard, buy a home, start a family and continue to upgrade your home until everyone has enough room. This has been the blueprint for lots of homeowners for the last fifty years but there is certainly a shift in thinking that could change all of that.
Interestingly, Americans live in much larger homes than most people in other countries throughout the world. The U.S. Census reported in 2006 that the average single family home completed had 2,469 square feet which was 769 feet more than in 1976.
Once the children are grown and have moved out, homeowners are finding they have too much room. Even if their home is paid for, they have higher property taxes, insurance, utilities and maintenance on the larger home than they’d have if they were living in the “right size” home.
Some homeowners state that they’re keeping their larger home because it has luxury features that smaller homes don’t have. There’s a movement that seems to have started in the United States to find the “right size” home with the amenities and convenience that homeowners want.
This philosophy has been expressed by Sarah Susanka in her book Creating the Not So Big House. It proposes a house that “values quality over quantity with an emphasis on comfort and beauty, a high level of detail, and a floor plan designed for today’s informal lifestyle.”
This Year I’m Going To…
“This Year I’m Going To…”
Every year, it seems like the same things are on the list but this could be the year you really do invest in a rental home.
Rents are climbing, home prices are cheap and mortgage rates are low for even non-owner occupied properties. A $125,000 home with 20% down payment can easily have a $300 to $500 monthly cash flow after paying all of the expenses.
There are lots of investment strategies that work but one that is easy to understand and execute is to stay with below average price range homes in predominantly owner-occupied neighborhoods. These properties will appeal to the broadest range of tenants while you hold them and buyers when you’re ready to sell.
Single family homes offer an opportunity to borrow high loan-to-value mortgages at fixed rates for long terms on appreciating assess with tax advantages and reasonable control
This is the year to make some real progress on your resolutions. First, invest some time learning about rental properties by attending a FREE webinar on January 4th at 7:00 PM Central time by national real estate speaker Pat Zaby. Click here to register.
There’s No Place Like Home!
You don’t have to be Dorothy in the Wizard of Oz to feel like there’s no place like home.
Home is a place to call your own. It’s a place to raise your family and share with your friends. It’s a place to create memories. A home is a place to feel safe and secure.
Inspect all of your decorations and electrical lighting before using them. While you’re enjoying the holidays this year, it’s important to pay attention to some of the things that may affect your safety.
- Extension cords should not be placed under the carpet or rugs or bundled together which could cause overheating.
- Limit three standard size sets of lights to a single extension cord.
- Consider using portable or permanent ground fault circuit interrupters with all lighting to avoid possible shocks.
- Turn off holiday lights when you leave the home or got to bed.
- Avoid using candles near trees or wreaths.
- Do not allow natural trees to dry out during the time they’re displayed to potential fire hazard.
- Make certain that all trees are on a firm, steady base to avoid tipping over.
- Don’t burn wrapping paper in fireplaces.
- Small children are particularly susceptible to accidents and should be protected from potential harm.
Full Price or Special Terms?
No one wants to pay more than its value regardless of the product. When you buy bananas for 49 cents a pound at one store and see them for 39 cents a pound at another store, it’s not the ten cent difference as much as it is about overpaying.
It seems like the natural way to start the negotiation process is to offer less than the asking price for the home. However, instead of the price, a buyer could negotiate condition, timing or terms. A few thousand dollars off the price may not make much difference in the monthly payments but it might make a big difference if it was negotiated in one of the other areas.
A buyer who only has enough available funds for down payment and closing costs will have to live in a home exactly the way it is for some time. They may not be able to make the changes that would really make it feel like home until they’ve saved more money.
Let’s say you found a home that needed $5,000 worth of improvements and the seller would lower the price by that amount. Financing those improvements with a separate bank loan will result in higher payments due to a higher interest rate and shorter term than your mortgage.
Offering full price and asking the seller to make the improvements will result in lower monthly payments based on today’s low mortgage rates and 30 year term. Another alternative is to negotiate with the seller to pay your closing costs so you’d have the cash to make the improvements.
Paying full price may cause the seller to consider concessions regarding condition or terms which can be balanced to affect the value of the property. Buyers can and should negotiate to acquire the home that meets their needs at the lowest possible cost of housing.
