Looking to Sell Your Home? Become a Landlord Instead!

When a person owns a home and decides that it’s time to upgrade or relocate to another area, they have a big decision to make. Should they sell their old home or turn it into a rental property? To answer that question, it’s important to analyze all of the factors that are involved. Here are five of them to consider:

What Does The Cash Flow Look Like? 
The first factor that should be examined is if a property will produce a positive cash flow when it’s rented out. If the rental income is more than expenses like taxes, monthly mortgage, insurance, vacancy, utilities, repairs, etc., it will be profitable and may be a good candidate for creating rental income.

Considering Taxes
The Internal Revenue Service allows homeowners to avoid paying taxes on the sale of their home if it has been their primary residence and they have lived in it for a minimum of two of the last five years. This is based on sales that are at least $500,000 when married and $250,000 for individuals who are single. On most capital gains, an individual has to pay taxes that are equal to as much as 20 percent of the sales price.

Tough Markets
By renting out a home, it leaves a back-up plan during times when it would be difficult to sell. For example, if a person gets a job offer in a new city and the value of their house is currently below what they paid, they’d have to bring cash to the table. By renting, it would give them time to see if the market can recover.

Handling Tenants
Another consideration that should be analyzed is if a person wants to actually become a landlord. While there are a number of good tenants, some individuals require patience and time to deal with. There is always the option of using a professional property management company to handle everything, but that would cut into your bottom line.

How Does The Future Look?
If the future for appreciation looks bright, a person may want to keep their home, rent it out, and see if its value escalates in the next three, five or ten years. While no one has a crystal ball and can accurately forecast this, a person can gauge if growth is possible. Are current homes being renovated? Are retail buildings being constructed in the same location? These type of indicators are positive signs that the value of a home could appreciate in the future.

For more real estate blogs, check out my professional website. 

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Pets are Taking Over the Real Estate Market

Millennials are now one of the biggest contributors to real estate markets across the globe. This means their wants and needs are significantly driving supply and demand.

More and more adults are waiting until later in life to start a family, choosing instead to focus on travel or career opportunities. However, it isn’t uncommon for young adults to have a pet. In fact, the American Pet Products Association claims that 73% of American millennials own a pet.  A recent study indicated that one third of millennials buying a first home were influenced by their pet’s needs when making their decision.

For many pet owners (especially those who own a larger breed of dog), renting isn’t an option. Properties that allow pets are either expensive, too small or non-existent. This means buying is more attractive, but the home has to be just right.

Yard Space

In past years, it was popular for people to want a decent yard for their children to play in. People with a dog now more commonly desire the yard for a different reason. Similarly, they want the yard to be private and somewhat fenced in. For people with larger dogs that can easily jump a 3-foot fence, the higher the better.

Flooring

Understandably, both cat and dog owners prefer hard floors over carpeting. It makes clean-up easier. There is also a concern with soft or cheap floors because a pet’s claws could cause expensive damage.

Stairs

Single-level homes aren’t just appealing to the aging population. They are also great options for people with elderly pets who have trouble with stairs.

Research suggests that the millennial desire for smaller, single homes that suit a pet’s needs are causing prices of those homes to rise because there isn’t enough supply to meet the demand. Assuming a high percentage of apartments continue to enforce animal bans, the desire for single homes will likely continue to rise.

The desire to keep their pets happy isn’t a second thought for many young people. It is at the top of their priority list, putting some properties out of the running immediately. Their pets are seen as part of the family, so ensuring their pet’s comfort and happiness is equivalent to ensuring their own peace of mind.

See my professional website for more posts on the real estate market. 

How Changing Seasons Affects the Real Estate Market

It’s no secret in the real estate industry that spring is peak season for potential buyers to start looking at homes. Families want to relocate while the kids are out of school and there won’t be any chance of snow-related issues during the move.

While you may get more traffic by listing your home in the spring or summer, that may not be the best choice overall. One study found that sellers are more likely to sell their home above asking price between the months of December and March. This is even true for areas with cold winters. Furthermore, homes listed in the winter sold slightly faster than those listed in the spring, on average.

A possible reason for this could be that people looking in the winter are looking because they’re more serious about buying in a timely fashion. For example, if a couple needs a bigger home before the arrival of a child or if a professional needs to move for a new job. To get in a home they love quickly, they’ll sometimes be willing to pay top dollar.

Before you make winter listings your new passion, there are a few things to consider.

  • The Area’s Housing Market

Real estate fluctuates constantly. Before listing a home, do some research. Look at the homes currently for sale when winter hits. Have they all been on the market for two months? If so, it may be better to wait until the spring when there is a heavier flow of potential home buyers. If someone sees that the home has been listed for a while, they may try to use that as leverage to lower their asking price.

  • The Asking Price

Some sellers choose to price a home low to generate a bidding war. In the winter, that’s not a great idea since you’re less likely to receive multiple offers. However, you also don’t want to list the home too high because that could be an immediate turnoff. Seasoned real estate agents are pros at finding that sweet spot to hone in the right buyers.

  • Repairs that Matter

Home buyers in the winter aren’t looking for a major fixer-upper if they’re trying to move in immediately. If there are problems with the HVAC, furnace or roof, it could be a deciding factor that sends the buyers in another direction. Be sure that the home’s major systems have been inspected and updated if any repairs are needed. Additionally, change air filters, weather-strip the windows and clean the gutters before any showings or open houses.

Winter home sales might not be ideal for every seller, but it’s an option that shouldn’t be completely off the table from the start.

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Originally posted at http://jasoncohenpittsburgh.com/how-seasonality-affects-the-housing-market/

How Cigarette Smoke Can Kill Your Property’s Resale Value

After years of school programs and radio ads, it’s common knowledge that cigarette smoke is bad for your health. However, it’s an addictive habit that many people have difficulty kicking. This is especially true for older generations who have smoked for the majority of their lives.

Two decades ago, it was completely normal for a restaurant hostess to ask if you’d prefer a seat in the smoking or non-smoking section. Smoking indoors is now banned in most public places, but this doesn’t mean homeowners have stopped smoking in their own homes.

What they may not realize is that they’re doing more damage to their wallets each year. This isn’t just because of the rising cost of cigarettes. It’s also because of the smoke damage done to the home.

Puffing Away at the Resale Value

One Canadian poll found that slightly less than half of all real estate agents said smoking reduces a home’s value. Among those who gave that answer, the exact value reduction ranged from 10-29%. Additionally, they noted that a quarter of buyers are unwilling to buy a smoker’s home.

It is very difficult to hide when a smoker lived in a home. Even air freshener, opening the windows and simmering vinegar won’t fully neutralize the smell.

When a nonsmoker is buying a home, they don’t want to expose themselves to the toxic thirdhand smoke (yes, it’s a thing) left by previous owners. Chemical compounds stick to carpets, walls, ceilings, electrical sockets, ventilation ducts, etc. The new homeowners would have to either clean or replace everything to fully get the smell and chemicals out of the house. For serious jobs, the cost could be between $1,500 and $10,000 for a professional cleaning.

Some homeowners may be tempted to paint over the smoke damage, but that isn’t a permanent solution. To prevent the tars and nicotine from resurfacing on the walls and ceiling, they must be thoroughly cleaned and repainted. A good primer like Killz is recommended for the best results. And that is just for the walls and ceiling, not considering the other home surfaces that were affected by smoke.

As a real estate professional, it’s important to keep this information in the back of your mind. Even an otherwise solid property could be tough to sell because of lingering residue from cigarette smoke. As a selling agent, you should be prepared to list the house accordingly and target the right potential buyers.

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I originally discussed this topic on my blog at JasonCohenPittsburgh.org.