Try On Your New Home Before Buying

Its commonplace to try on suits, dresses, trousers or shoes before buying them. People instinctively know they need to try on clothes to be sure they fit, feel comfortable and are attractive on them. What about a home? Its probably the most expensive purchase youll ever make. Isnt it even more important to try on a home before you purchase it?

What on earth do I mean? Well, its usual to look for a home in places that are convenient to work and schools. Most folks take the daily commute into consideration when shopping for a home. Why not take the daily, weekly, and even monthly activities of family members consciously into account, too?

Case Study

I once helped a young, single woman named Wendy to find and buy her first home. She worked for Geico, was rising very nicely in the company and wanted a home of her own and the tax break home ownership affords. She asked my advice about choosing, and we had a conversation in which I mentioned many of the sorts of things Ive said here. We made a list of what mattered to her. Then we went shopping. We looked at a lot of houses. After we came out of each one, we had a talk about how it measured up to Wendys list.

One of the houses we looked at belonged to the young woman who later became my daughter-in-law. It was brick, all on one level, had a fireplace in the living room, and had patio doors from the master bedroom and dining rooms to an enormous deck with a hot tub. It was beautifully decorated in a sort of pared down Victorian style. There was a brass bed, some wicker, lots of healthy house plants, and a few Victorian pieces of furniture that were actually old, family pieces. Silver framed family photos were clustered on top of the piano.

After we emerged from the house, Wendy started down the two steps to the car and then froze in place. She had the oddest expression on her face. I asked what was wrong, and she began to look sheepish and confessed,

That house is so pretty and so nicely decorated, I just enjoyed looking at it and didnt give any thought to how Id live in it. I just wanted it.

We went back inside. Wendy still admired what had been done with the house, but decided it wasnt right for her. Knowing whats important to you can save costly mistakes. The process of trying on a house helps you evaluate whats important. I think youll find its worth the effort.

Condo, Hotel, Panama

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Dangers In Flipping Real Estate

If you have recently purchased some real estate for investment purposes, you are in good company. Recent reports suggest that as many as 25% of these purchases are made by those who plan on using the property for investment purposes only. If you hope to “flip” the property there are 4 things you must be aware of that can put a crimp on your profits.

1. Property Taxes. Keep the property for a few years and you may experience a surge in property taxes especially if your taxes are reevaluated during that time. Some hot real estate markets have seen taxes nearly double in just 5 or 6 years.

2. Renovation Expenses. You may have purchased a “fixer upper” at a bargain rate. Once your project is complete will you be able to recover the expenses and make a profit especially if the value of your renovated property is above those in your neighborhood? In addition, can you withstand a correction in real estate values?

3. Insurance and Mortgage Costs. You will pay more for homeowners insurance if you do not occupy the residence and you have tenants. If you are financing the property you know that your mortgage rate is higher as well.

4. Rental Pressures. A market saturated with rentals will mean that the rents you can charge will be less than what you had hoped to receive. In some markets you are required to get special licensing in order to be a landlord. In other markets the legal rights of tenants mean you could have a lengthy and expensive battle in ridding yourself of a bad tenant. Will the lower income levels coupled with the added expenses drag your investment down?

Of course, you can limit your risks and costs by doing the majority of the upgrades yourself, appealing excessive property tax increases, and finding for yourself a trusted and dependable tenant. It isn’t easy flipping a home, but with a lot of pluck and determination it can result in strong profits for you.

Condo, Hotel, Panama

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