Timeshare Got You Down?

This post Timeshare Got You Down? appeared first on Daily Reckoning.

I’ve had the “timeshare debate” with my mom several times. She has friends — including money-savvy ones — with properties, and I know at least one is trying to unload at the moment, too.

About $8 billion worth of timeshares are sold in the U.S. each year. And it’s easy to understand how folks fall for the allure of basically buying a hotel room.

Let’s say it’s the dead of winter … ice, snow, sub-freezing temperatures. And you spot an ad for a free vacation at an upscale, beachfront resort in Florida. The only requirement: You have to attend a timeshare meeting that should last about 90 minutes according to the fine print.

No big deal you think. So you go.

The day after you arrive, you gather in a dining room for the 90-minute presentation.

While the wilted spinach salad and wine is being served, you watch a video showing tanned vacationers basking on a beach, sipping tall drinks with little umbrellas sticking out of them, and laughing it up. Then you’re taken on a one-hour tour of the resort.

After you return you dine on salmon or prime rib. With dishes cleared and chocolate cake and coffee in front you, you’re nice and relaxed.

A smiling sales representative sits at your table.

You can’t resist the picture she paints of vacationing here one week every year for the rest of your life. The unit she’s showing has two bedrooms, a kitchen, and a washer and dryer. And the maintenance fee is just $300 per year.

Plus she tells you that you could exchange your unit for one at other resorts around the world, such as Aspen or Paris.

Then she adds that it’s real estate … a great investment since real estate always goes up in value.

With that assurance, you sign on the dotted line and make a deposit with your credit card. Bells ring, people cheer, and wine glasses are raised to celebrate your timeshare purchase.

Looking back … it was exciting.

Fast Forward 10 Years…

You’re about to retire and relocate to a Sunbelt state. The timeshare is paid off. But it no longer fits into your lifestyle. The maintenance fee has shot up to $1,800 — the smiling sales rep failed to mention annual increases.

On top of that, you received a notice of a $2,000 assessment that may be needed to pay for recent hurricane damage.

So you decide to sell it for a tidy profit.

You paid $15,000 for your unit. New ones in an adjacent building are going for $20,000.

You soon find though, that buying the timeshare was easy and fun. Selling it is nearly impossible and frustrating. And you might have to settle for pennies on the dollar or even pay someone to take it off your hands.

What’s more, you might not be able to give it back to the timeshare company. Or if you’re lucky, they’ll do you a favor by offering to take it back without you paying a contract cancelation fee of perhaps $1,000.

The annual maintenance fees go on forever, and the unit is yours for the rest of your life. So often times, death is the only way to get out of the contract.

Those frustrations have fueled the …

Timeshare Exit Industry

Timeshare exit companies promise to help owners get out of their timeshares.

Many, however, are scams …

They’ll contact you by phone, mail, or online with alleged offers to rescue you from your timeshare. The offer might claim that it’s a sellers’ market and eager buyers are lined up.

All you have to do is pay an upfront fee — anywhere from a few hundred to a few thousand dollars — and they’ll sell your timeshare for profit or at least the amount you paid. They might promise a money-back guarantee if they can’t sell your timeshare quickly, often within 60-90 days.

The scam comes in when they don’t deliver on the promises, keep your money, and disappear.

Then you may be contacted by a timeshare fraud recovery company offering to provide assistance in recovering the money you lost in the resale scam … all for a modest fee.

But that could be a scam too, according to the FBI. The feds have identified some instances where people involved with the recovery company had a connection to the resale company, thus setting victims up to be scammed twice by the same fraudsters.

Exit Options

You can try selling on sites like Craigslist.org, ebay.com, and RedWeek.

Timeshare Users Group is packed full of information on timeshares. And once you pay a $15 annual membership fee, you can list your unit on their marketplace page, for free.

Or seek out a real estate agent familiar with the area and doesn’t charge an upfront fee.

The Resort Owners’ Coalition, a group that represents timeshare owners, has listings of licensed real estate brokers who specialize in timeshares.

You might also consider contacting an attorney who specializes in timeshare law. They possibly have more leverage in convincing a developer to take your unit back.

As a last resort, you can simply stop paying the maintenance fees. However, the timeshare company could threaten to ruin your credit rating and eventually foreclose.

So I suggest if you are about to buy or refinance a home or car, do that before reneging on the maintenance fees.

To a richer life,

Nilus Mattive

Nilus Mattive

The post Timeshare Got You Down? appeared first on Daily Reckoning.

4 Considerations Before Doing This to Your Mortgage

This post 4 Considerations Before Doing This to Your Mortgage appeared first on Daily Reckoning.

According to the Employee Benefit Research Institute (EBRI), home and home-related expenses are the single largest spending category for older Americans.

It’s understandable then to be tempted to pay off your mortgage if you are retired or getting closer to retirement.

Before you do that, though, there are four questions you should ask yourself to make sure it’s the best move for you.

Question #1: Where will the money come from?

Many people have a big chunk of their wealth in tax-favored retirement plans, like 401(k)s and IRAs. And money you withdraw from those accounts is taxable at your ordinary income tax rate. Plus there’s a 10% penalty if you’re younger than 59 and a half.

So it’s certainly conceivable that you’d need to withdraw at least $130,000 to pay off a $100,000 mortgage.

But that’s not all …

Suppose you’re collecting Social Security benefits?

The additional money you withdraw from retirement accounts could push your income up to the point that 85% of your benefits become taxable.

Even if the money is coming from other sources that are not taxable, such as Roth IRAs and jointly-owned brokerage accounts, sinking that money into a home means it won’t be available if you need a large amount down the road.

Question #2: Is there a better use for the money?

Do you have a large credit card balance? The average American household has $8,400 in credit card debt and is paying 17.21% interest.

If you fall into this group, it would make more sense to get rid of that burden before considering paying off a low-interest rate mortgage.

The same if you aren’t contributing enough to your 401(k) to receive a full-employer match. For instance, a 50% match on the first 3% of your contributions is like getting a guaranteed 50% return on those dollars.

How about your investments?

The S&P 500 returned about 5% in 2018, a far cry from the 12% long-term average. Even with that, if your money is currently invested in ETFs or mutual funds that track the overall market, the return far exceeded the 4% or so you’re paying in mortgage interest.

So keeping the mortgage is a no-brainer … right?

Not so fast …

Stocks might not do as well in the future. Moreover … they could easy have a negative return if investor sentiment turns against you.

Consider this phrase that’s in every mutual fund prospectus or investment disclosure:

“Past results are no guarantee of future performance.”

Whereas paying off a mortgage, with for example a 4% interest rate, gives you a guaranteed return.

Question #3: Is your mortgage interest deductible?

Deducting mortgage interest has frequently been one of the benefits of home ownership. But for many, the 2017 Tax Cuts and Jobs Act changed that.

The Tax Act almost doubled the standard deduction from 2017. For 2019 it’s:

  • $12,200 if you are single or married filing separately
  • $24,400 if you are married and filing jointly
  • $18,350 if you are a head of household

Those high limits mean there’s a greater chance that you’ll simply take the standard deduction rather than itemizing your deductions, which include mortgage interest.

In other words the way the tax law stands now, mortgage interest could become worthless to you as a tax deduction.

For example, if you file married jointly and had $6,000 in property tax, $10,000 in mortgage interest, and $3,000 in charitable contributions, your itemized expenses would total $19,000.

However, the standard deduction is $24,400 … so your mortgage interest didn’t give you any tax benefits.

What’s more, there are caps on the size of the mortgage in which interest is deductible: $1 million if you bought before 2018; $750,000 thereafter.

There’s one more factor to consider before paying off that mortgage …

Question #4: Liquidity vs. illiquidity

A home is an illiquid asset, meaning that it generally cannot be quickly sold without taking a loss. On the other hand, your bank or brokerage account is liquid … it can be sold easily because there is a large number of buyers and sellers.

When you take money from a liquid account and pay off your mortgage, you are reducing the liquid portion of your net worth and increasing the illiquid portion.

If you are still determined to pay off the mortgage with your liquid assets, you might consider opening a home equity line of credit — a HELOC — for as much as the lender will offer.

A HELOC would give you access to your home’s equity in the event you needed cash in a hurry, say for an emergency. And you will only pay interest on what you borrow.

You’ll have to pay a fee to open a HELOC, and there might be annual fee. But at least then you won’t have to tap your IRAs or other liquid accounts for withdrawals.

Bottom Line

Going into retirement mortgage-free can be comforting.

Yet getting rid of that debt may not always be the best strategy.

Before making the decision consider your overall financial situation, including risk tolerance, other assets you hold, and whether you plan to stay in the home during your golden years.

And if you understand the logic of keeping the mortgage but know you’ll sleep better if it’s paid off … pay it off.

To a richer life,

Nilus Mattive

Nilus Mattive

The post 4 Considerations Before Doing This to Your Mortgage appeared first on Daily Reckoning.

Time to Exit your Timeshare?

This post Time to Exit your Timeshare? appeared first on Daily Reckoning.

I’ve had the “timeshare debate” with my mom several times. She has friends — including money-savvy ones — with properties, and I know at least one is trying to unload at the moment, too.

About $8 billion worth of timeshares are sold in the U.S. each year. And it’s easy to understand how folks fall for the allure of basically buying a hotel room.

Let’s say it’s the dead of winter… ice, snow, sub-freezing temperatures. And you spot an ad for a free vacation at an upscale, beachfront resort in Florida. The only requirement: You have to attend a timeshare meeting that should last about 90 minutes according to the fine print.

No big deal you think. So you go.

The day after you arrive, you gather in a dining room for the 90-minute presentation.

While the wilted spinach salad and wine is being served, you watch a video showing tanned vacationers basking on a beach, sipping tall drinks with little umbrellas sticking out of them, and laughing it up. Then you’re taken on a one-hour tour of the resort.

After you return you dine on salmon or prime rib. With dishes cleared and chocolate cake and coffee in front you, you’re nice and relaxed.

A smiling sales representative sits at your table.

You can’t resist the picture she paints of vacationing here one week every year for the rest of your life. The unit she’s showing has two bedrooms, a kitchen, and a washer and dryer. And the maintenance fee is just $300 per year.

Plus she tells you that you could exchange your unit for one at other resorts around the world, such as Aspen or Paris.

Then she adds that it’s real estate… a great investment since real estate always goes up in value.

With that assurance, you sign on the dotted line and make a deposit with your credit card. Bells ring, people cheer, and wine glasses are raised to celebrate your timeshare purchase.

Looking back… it was exciting.

Fast Forward 10 Years…

You’re about to retire and relocate to a Sunbelt state. The timeshare is paid off. But it no longer fits into your lifestyle. The maintenance fee has shot up to $1,800 — the smiling sales rep failed to mention annual increases.

On top of that, you received a notice of a $2,000 assessment that may be needed to pay for recent hurricane damage.

So you decide to sell it for a tidy profit.

You paid $15,000 for your unit. New ones in an adjacent building are going for $20,000.

You soon find though, that buying the timeshare was easy and fun. Selling it is nearly impossible and frustrating. And you might have to settle for pennies on the dollar or even pay someone to take it off your hands.

What’s more, you might not be able to give it back to the timeshare company. Or if you’re lucky, they’ll do you a favor by offering to take it back without you paying a contract cancelation fee of perhaps $1,000.

The annual maintenance fees go on forever, and the unit is yours for the rest of your life. So often times, death is the only way to get out of the contract.

Those frustrations have fueled the…

Timeshare Exit Industry

Timeshare exit companies promise to help owners get out of their timeshares.

Many, however, are scams…

They’ll contact you by phone, mail, or online with alleged offers to rescue you from your timeshare. The offer might claim that it’s a sellers’ market and eager buyers are lined up.

All you have to do is pay an upfront fee — anywhere from a few hundred to a few thousand dollars — and they’ll sell your timeshare for profit or at least the amount you paid. They might promise a money-back guarantee if they can’t sell your timeshare quickly, often within 60-90 days.

The scam comes in when they don’t deliver on the promises, keep your money, and disappear.

Then you may be contacted by a timeshare fraud recovery company offering to provide assistance in recovering the money you lost in the resale scam… all for a modest fee.

But that could be a scam too, according to the FBI. The feds have identified some instances where people involved with the recovery company had a connection to the resale company, thus setting victims up to be scammed twice by the same fraudsters.

Exit Options 

You can try selling on sites like Craigslist.org, ebay.com, and RedWeek.

Timeshare Users Group is packed full of information on timeshares. And once you pay a $15 annual membership fee, you can list your unit on their marketplace page, for free.

Or seek out a real estate agent familiar with the area and doesn’t charge an upfront fee.

The Resort Owners’ Coalition, a group that represents timeshare owners, has listings of licensed real estate brokers who specialize in timeshares.

You might also consider contacting an attorney who specializes in timeshare law. They possibly have more leverage in convincing a developer to take your unit back.

As a last resort, you can simply stop paying the maintenance fees. However, the timeshare company could threaten to ruin your credit rating and eventually foreclose.

So I suggest if you are about to buy or refinance a home or car, do that before reneging on the maintenance fees.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post Time to Exit your Timeshare? appeared first on Daily Reckoning.

What to Do If You’re House Rich but Cash Poor

This post What to Do If You’re House Rich but Cash Poor appeared first on Daily Reckoning.

If you are “house-rich” but “cash poor,” a reverse mortgage might be a way to access some additional cash for your retirement years.

On the other hand, it could be a costly temptation with upfront and ongoing expenses that erode the equity in the home you spent years paying off.

Basically, a reverse mortgage is the opposite of a regular mortgage where you gradually pay off the original principal and accruing interest of the home loan.

With a reverse mortgage, you already own the house (or at least a good amount of equity). The loan amount for a reverse mortgage is not paid down. Whatever interest the lender is charging compounds upward.

Advantages of a Reverse Mortgage

Reverse mortgages have a couple of advantages.

They are FHA guaranteed. That means that at the end of the mortgage whatever price the home is sold for, the value of the home will never be less than the amount owed.

Also, if the lender dies, the estate will not have to pay the lender the difference if the home sale is less than the remaining mortgage amount.

The borrower can receive the loan amount in a variety of ways:

  • a line of credit for the maximum amount of the loan
  • monthly payments for a specific number of years, or for the life of the loan
  • a lump sum amount for cash (applies only to fixed-rate loans)

Note: As of December 14, 2018, the FHA has increased the 2019 limit (or “claim amount”) to $726,525. Assuming a 5.25% mortgage interest rate, a borrower aged 73 with a high-value home could realize an additional $22,000 from an HECM.

Eligibility Requirements/Options for Heirs

Single-family or two-to-four-unit owner-occupied dwellings or townhouses and some condos and manufactured homes can qualify for a reverse mortgage.

The youngest borrower on the home’s title must be at least 62 years of age and meet financial qualifications established by HUD. If the home has an existing mortgage, the borrower must pay off the original mortgage with the proceeds of the HECM.

The borrower’s heirs have the option of repaying the reverse mortgage loan and keep the home in the family, or they can put the home up for sale.

Any home equity, if any, passes to the heirs. Again, the borrower or heirs will never owe more than the loan balance, and only the home is considered an asset when it comes to repayment liability.

Know the Costs Involved

The costs of opening a reverse mortgage can be quite high. For example, the lender can charge a loan origination fee based on the value of the home. Allowed fees range from 2 percent for homes worth $200,000 or less.

For more expensive homes, expect to pay $4,000 plus 1% of the home’s value above $200,000. High value homes will generate origination fees up to $6,000. 

Then there is the upfront cost of the initial mortgage insurance premium. The premium is based on the value of the home. If the borrower does stays below the 60 percent limit in accessing the loan principle during the first year, the initial mortgage insurance premium will be $500 for every $100,000 of the home’s value.

Note: The mortgage insurance premium is how the FHA guarantees the value of the property. Even if the lender goes out of business, the FHA will protect both the borrower and lender from loan default.

Ongoing mortgage insurance premiums are due for the life of the loan. Expect to pay an annual mortgage insurance premium equaling 0.5% of the outstanding mortgage balance. Expect to pay a monthly loan servicing fee of up to $30.

So far with loan origination costs and mortgage insurance, the reverse mortgage borrower who owns a home worth about $350,000 is facing over $7,000 in expenses. There are more.

Anticipate a HECM counseling fee for around $125. HUD requires that counseling to make mandatory counseling so that borrowers are fully aware of the consequences of the process.

Also, consider miscellaneous processing fees. Those closing cost includes fees for loan recording, title insurance, credit checks, etc. As in a regular home mortgage, expect to pay an appraisal and home inspection fees which can add another $500 to the upfront expenses.

Regular Costs of Home Ownership Continue

Continuing costs include your annual mortgage insurance payments over the life of the loan.

There are loan servicing fees as well, which add another $30-$35 a month to your mortgage account. Likewise, borrowers are still liable for property tax and home insurance payments.

Signs that a reverse mortgage is not the best idea:

A reverse mortgage might be just the ticket for a senior who needs more retirement income. Reverse mortgages, however, can be difficult to understand, and their interest and upfront fees can cut into a substantial portion of the home’s equity.

For most older adults, there are better solutions. Consider the following four warning signs that a reverse mortgage may not be the best choice:

1. The borrower wants to leave the home as an inheritance.

A reverse mortgage could add complications for the heirs. The only way someone in the family could inherit a home encumbered by a reverse mortgage is to pay off the reverse mortgage debt.

2. Someone else lives in the home.

If the borrower dies, sells out, or moves, and someone who is not on the mortgage lives in the home, that person no longer has a place to live. They must vacate the home immediately when the lender or heirs sell the home.

3. The borrower has medical bills.

Reverse mortgage payments could be a source to pay off medical bills. However, if the borrower’s health deteriorates and must move to a nursing home, the mortgage becomes due.

4. The borrower is financially strapped.

While the FHA requires proof that the lender can afford to stay in the home, unexpected financial emergencies can put a strain on retirement resources. Home maintenance, insurance, and taxes are relentless expenses could make a reverse mortgage a bad choice.

There are alternatives.

A reverse mortgage is an option for someone with lots of equity in their home, but with not enough money coming in for their retirement.

On the other hand, for someone who needs more income and wants to protect the value of their home, there are other strategies:

  • Refinance the existing mortgage to lower the monthly payments and free up cash.
  • Get a home-equity loan, which is essentially a second mortgage that leverages the existing equity of the home.
  • Sell the home and downsize to something more affordable.
  • Use the proceeds of the home sale to buy a less expensive place to live with lower maintenance and utility expenses.
  • Consider renting and be free of major home-ownership costs like property taxes, insurance and repairs.

Finally, another creative alternative to a reverse mortgage is to sell the home to the heirs. This approach could be a sale-leaseback arrangement. The owner sells the house to his or her children and then rents it from them with the cash from the sale.

This alternative avoids the expenses of an equity-wrecking reverse mortgage. Best of all the senior owner can continue to enjoy living in the home.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post What to Do If You’re House Rich but Cash Poor appeared first on Daily Reckoning.

7 Reasons NOT to Buy a House with a Pool

This post 7 Reasons NOT to Buy a House with a Pool appeared first on Daily Reckoning.

A friend of mine recently confessed that he’d made a big mistake buying a home with a swimming pool.

He said if he had a do-over, he would never have considered a house with a pool in the backyard knowing what he knows now.

I asked why, since it seemed to me like a good investment at the time — with his two young boys and daughter —  I would have guessed the pool was getting a lot of use.

But after an hour long chat, it became pretty clear that the list of cons for owning a swimming pool clearly outnumber the pros.

Here are my friend’s 10 biggest regrets to owning a swimming pool:

Regret #1: Costly Maintenance

Whether you hire a pool maintenance service or do it yourself, there’s no cheap way to maintain a pool. If you do it yourself, you have to buy equipment, vacuums, nets, hoses, and add chemicals. These expenses all add up. And if you get someone else to clean your pool, you’re looking at close to $500 per month.

The average cost to maintain a 14 ft. by 18 ft. pool is $125 per week. Service includes skimming the water’s surface for floating debris, vacuuming the pool floor, brushing the pool walls, cleaning the filter, as well as checking the water and pH levels. 

On top of that, you need to adjust your budget based on where you live. If you’re in temperate areas like Washington or Ohio, pool season typically starts around Memorial Day and ends just after Labor Day.

But, if you live in Florida or Arizona, pools are year-round affairs that suck your wallet and time dry.

Regret #2: Repairs

In addition to regular weekly maintenance, your pool will occasionally need repairs. It could be something minor like a small leak in the lining that you can patch up yourself or you might be on the hook for a costlier repair.

On average, you’ll pay $200 to have a professional come repair a tear in a vinyl liner. If the entire liner needs to be replaced, expect to pay a minimum $1,700 for parts and labor.

If you have issues with your pool’s plumbing, which can lead to problems with your pool filter pump and heater, you’re looking at around $1,000 to have someone come look at the issue and fix whatever is wrong.

A good tip if you’re considering buying a house with a pool is to ask the seller lots of questions about previous repair work. If you find out there’s been quite a few small repairs, that’s a warning sign there could be something larger to come.

Regret #3: Higher Energy Bills

If you think your energy bills are high enough in the heat of summer, look at someone’s bill who owns a pool. My friend says he pays an extra $300 a year in electricity to run his pool pump and whatnot.

And if your pool is heated, you’re looking at spending an average $100 – $600 a month! If you have a heat pump, you’re on the low end. If your pool uses an electrical resistance heater, you’ll be paying even more. Gas heaters are also common and will run you about $200 – $400 a month.

Regret #4: Safety Risks

According to the Consumer Product Safety Commission, nearly 300 children under the age of five drown in swimming pools every year. A lot of cities require safety barriers to be installed around residential pools to prevent accidental drownings.

A pool fence for an above-ground pool starts at $50 per panel at Home Depot. In-ground fencing will cost you a lot more. You can also get door alarms and other safety features that add up.

Regret #5: You Might Need Additional Insurance

Insurance providers like to call residential pools “attractive nuisances.” Because your liability increases when you own a pool, you may need to bump up liability coverage on your homeowners policy.

A good idea would be to look into buying personal umbrella insurance. If you ever get sued, the umbrella policy kicks in once you’ve exhausted your homeowners liability coverage, which usually maxes out around $100,000-$300,000. You can buy a $1 million umbrella liability policy for as little as $150 a year.

Regret #6: The Resale Value Is Not What You Think

Adding a swimming pool to your backyard should boost your home’s resale value, or at least that’s what you’ve been told. The reality is homeowners with pools only saw a 48% return on investment at resale, according to the National Association of Realtors’ newest remodeling impact report.

In contrast, a new wooden deck would recoup 80% of the cost at resale. So although a pool is nice to have, it’s not going to increase the resale value of your home by much.

Regret #7: Water Attracts Wildlife

This might not sound like such a bad thing if you love animals. But when a raccoon is swimming in the same water you dunk your head in every morning, it’s not so nice.

Not to mention mosquitoes and other water-loving bugs will be drawn to your backyard oasis.

Skimming the surface to remove bugs helps, but it’s time-consuming and you spend less time actually swimming than you do cleaning.

Bugs also attract larger animals, like raccoons and birds, which carry some nasty parasites that can contaminate the water. Ducks and geese droppings also can lead to illnesses like Salmonella and E. coli.

And if you live where there’s alligators and snakes, you might find an unwelcome guest one morning making a home in your pool.

There you have it. A few things to consider before buying a house with a pool. That said, a pool is still a personal preference.

Lots of people find the pros outweigh the cons so it’s up to you to decide what’s best.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post 7 Reasons NOT to Buy a House with a Pool appeared first on Daily Reckoning.

10 Upgrades to Sell Your Home 10x Faster

This post 10 Upgrades to Sell Your Home 10x Faster appeared first on Daily Reckoning.

I get this question a lot from readers ready to downsize:

Why would I renovate my house now if I’m going to sell in [pick a short timeframe]?

It’s a valid question for two reasons: First, if you make upgrades before you’re about to sell, you won’t get to enjoy the money you’ve invested. Second, a lot of upgrades don’t necessarily deliver the return on investment you would imagine.

According to Remodeling magazine’s 2019 Cost vs. Value report, most home remodeling efforts only increase a home’s value by 50% – 80% of the average project’s costs.

For example, the average remodel for a mid-range bathroom is $20,420. According to the report, you’d make back only $13,717 (67.2%) when you sell.

Your best bet is to make small upgrades over a longer period of time. This way you can enjoy the upgrades while you’re still living in the house and it’s not one big expense or project you have to deal with when you eventually sell.

Of course, this is easier said than done. And if you’re asking the question, I assume you don’t have much time to waste.

So, what kind of upgrades deliver the best bang for your buck today and what kind of upgrades will get your home off the market fast?

Here are 10 upgrades to consider in 2019:

Upgrade #1 –  Exterior Lighting

85% of buyers want this feature and the cost to install exterior lighting is relatively cheap. You’re looking at around $65 per fixture.

If your lawn is well kept, exterior lighting is a nice finishing touch that will grab a buyer’s attention before they even walk through the front door.

In fact, exterior lighting is the second most-wanted outdoor feature, according to the National Association of Home Builders. Choose between spotlights, walkway lights and pendant lights.

Exterior lighting also signals safety. Even just having motion-sensor lights can be a big plus.

Upgrade #2 – Laundry Room

91% of buyers say they want a laundry room. The investment varies but you’re looking in the neighborhood of $1,000 to $5,000 for a small-scale project.

If guest bedroom looks anything like mine, you know why homeowners rate a laundry room as a must-have feature.

Homeowners want a separate room to fold and iron clothes, a place that keeps the mess out of the main living spaces. 

If your house doesn’t currently have a laundry room, the basement is typically the easiest (and cheapest) place to put one. Utility lines are already there, and most basements are unfinished so you don’t have to demolish anything to start.

A basement laundry room will set you back $1,000. If you want a laundry room or laundry closet close to your bedroom that fits just a washer and dryer, you’re looking at $5,000.

And if you want a full laundry room with sink and storage cabinets included, the price climbs to $10,000 or more.

Upgrade #3 – Garage Storage Space

85% of buyers say they want garage storage space. Buyers with growing families especially need more storage space.

And unlike a backyard shed or the attic, garage storage is more easily accessible. For cost, you’re looking at around $2,025 – $2,363 per 380 square feet.

Upgrade #4 – Energy Efficient Appliances and Windows

89% of buyers want energy efficient appliances, windows, and doors. The cost of owning a home is not cheap, so buyers are looking for anything to lower monthly utility bills.

Energy-efficient windows can trim heating and cooling costs by 12%, while Energy Star-rated appliances, like washing machines, can save homeowners around $45 a year or more.

Energy Star-qualified windows use an invisible glass coating, have vacuum-sealed spaces filled with inert gas between panes, sturdier weather stripping than regular windows.

And they use better framing materials to reduce heat gain and loss in the home.

Upgrade #5 – Patio

87% of buyers want a backyard patio. If you’re thinking of installing a concrete patio, your cost is around $963 per 120 square feet.

Only recently have outdoor living spaces gained in popularity. I blame the backyard makeover shows, but it’s good news for sellers.

A nice patio will help sell your home faster because buyers can envision themselves sitting outdoors with friends having drinks or cooking meals.

Also, installing a patio is a lot cheaper than adding an addition to your home. So you get more living space for less.

Upgrade #6 – Ceiling Fans

85% of buyers say they want ceiling fans installed. Similar to the Energy Star-rated windows and appliances, homeowners these days want anything that will lower utility costs.

A ceiling fan with light kit and remote control will set you back $466. Because ceiling fans create a wind-chill effect, a person sitting in a room will feel cooler when the fan is on.

According to Energy.gov, homeowners should be able to raise the thermostat level by four degrees without a reduction in comfort while the fan is in use.

Upgrade #7 – Walk-In Pantry

83% of home buyers want a walk-in pantry. Costs vary based on design but the reason why most home buyers today want a walk-in pantry is because kitchens get overcrowded when there’s not enough space to store essentials.

Unlike reach-in closet pantries, walk-ins allow for more storage. Which is critical for larger families that buy in bulk.

Most walk-ins are about 5 x 5 feet and have open shelves. Just make sure your pantry is installed somewhere cool and dry.

Upgrade #8 – Hardwood Floors

83% of buyers say they want hardwood floors. For cost, you’re looking at spending around $999 per 120 square feet of red oak flooring.

Homeowners like hardwood floors because they’re easy to clean, look nice, and are more durable than carpet. You can also refinish hardwood floors, extending their life even longer.

If you can’t afford to install true hardwood, engineered wood flooring is another good option. The cost is typically a few hundred dollars less or about 15% cheaper than pure hardwood and you’ll still get most of the benefits mentioned.

Upgrade #9 – Walk-In Closet

Walk-in closets are one of the most sought after features for first and second-time homebuyers.

They rank among the top five for must-have features. So if your current home has only a reach-in closet, you might want to consider revamping it.

Couples want a closet with more space, because they have to share. And singles like the flexibility of storing all their stuff in one organized space. Homes with walk-in closets in the master bedroom are a lot easier to sell than ones without.

Upgrade #10 – Eat-In Kitchen

Again, these are popular with first and second-time homebuyers. Eat-in kitchens are popular because they’re great for families with small kids.

Everyone can meet in the kitchen for breakfast before work and school and in the evenings for dinner. Costs vary based on your space but it’s not as expensive as you can imagine.

Removing a non-load-bearing wall to make room for a small table and some chairs will set you back about $1,000. Of course this can be scaled up quickly but that’s for you to decide.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post 10 Upgrades to Sell Your Home 10x Faster appeared first on Daily Reckoning.

I’m a Terrible Landlord… But Even I Can Make Money in Today’s Real Estate Market!

This post I’m a Terrible Landlord… But Even I Can Make Money in Today’s Real Estate Market! appeared first on Daily Reckoning.

I’ve got a confession to make: I’m a terrible landlord.

No, I don’t own a run-down apartment complex where people have to deal with poor living conditions. Quite the opposite in fact!

When we outgrew our old home when our fourth child was born, I kept the house intending to make some extra income by renting it out. I thought it would be easy money!

Boy was I in for a surprise…

As I found out, my personality just isn’t cut out for being a landlord.

But it’s OK! Because the lessons I’ve learned along the way could help you fare much better than I did. So today, I want to talk about how you might be able to tap into today’s red-hot real estate market to generate reliable income for your family!

The Problem with Being a “Nice Guy”

The first family I rented our house to looked good on paper. The couple had a new child, and the husband worked as a pilot for an airline. His income left him with plenty of cash to pay their rent and everything went well for a few months.

Then the pilot had an affair and left his family. The mom and her baby had no income. And of course I couldn’t put them out on the street.

So I let them stay in the house for several months while the divorce proceedings took place. And of course, I paid the mortgage out of my own pocket while they lived in my house.

Not a great first experience for this landlord!

The second set of tenants wasn’t much better.

Again, I rented the house out to a young family that had enough income with jobs that appeared to be stable.

But the husband lost his job and the family could only afford to pay for basic groceries and utilities with the mom’s income. So once again, I found myself paying the mortgage out of my own pocket with no income from my rental home.

I literally took a side job delivering wings that year, just to keep my own family’s finances intact.

In talking the situation over with a friend, I was told that I was being too nice.

“Zach, I hate to say it, but you’re just getting taken advantage of. Maybe this isn’t the best income strategy for you.”

My friend was right. I’m not cut out to be a landlord.

Fortunately, I now rent the property out to my brother who takes great care of the place and always pays his rent on time. Of course, I cut him an exceptionally good deal. But I’d rather get less income from the house and know that I can count on the check every month.

One day when my brother decides to move out, I’ll take an entirely different approach to being a landlord…

Better Options for “Nice Guy” Landlords

This week, I had a conversation with a friend who is in the market to buy rental property. He’s looking forward to generating passive income from property he owns, while watching that property increase in value over the years.

When I told him my story about being a horrible landlord, he laughed.

“I’m not going to be the one collecting the checks, Zach. And if someone doesn’t pay, I don’t have to be the one handling the eviction process.”

Brandon told me about a service — Roofstock — that allows you to shop for rental property in many different markets around America while helping you with the actual business of renting to tenants.

For instance, the site can help you find a property that already has a tenant in place, and tell you how many months are left on the lease agreement.

Roofstock can also put you in touch with local property managers who can take over the process of renting out your property once it becomes vacant. This is the type of service I could have used years ago, because I was too easy when it came to people’s stories about why they couldn’t pay to live in my house.

Deciding on managing your property with Roofstock will be different for everybody’s individual situation. But I wanted to pass the information along to you because it looks like the kind of opportunity that could really help you if you’re interested in generating income from real estate.

An Excellent Time to Own Rental Property

Despite my personal challenges with being a landlord, the rental business is actually an excellent way to generate income!

And today, the opportunity to make money in this area is especially good.

That’s because mortgage interest rates are actually declining. The Fed has paused its campaign of interest rate hikes, and some economic concerns are causing interest rates to fall.

Lower interest rates make it a lot more affordable to get a mortgage for purchasing property that you can rent out.

At the same time, demand for housing is picking up as a new generation of young adults looks for a place to live.

After the financial crisis 10 years ago, many young adults delayed moving out of their parents homes. A recent Barron’s article noted that about 15% of 25-35 year old adults still live with their parents.1

But now that unemployment has dropped to the lowest point in decades and wages are steadily moving higher, more of these young adults can move out.

This demand for housing has started to drive home prices and rental rates higher.

That means you might have to pay a bit more than you expected to purchase a rental house.

But this trend should continue as more and more adults move out and look for a place to live, which means you can charge higher rental rates — and eventually sell your house for a higher price — as the real estate market heats up.

So today, as you look for more ways to generate income, consider a rental property! Just don’t be a horrible landlord like me.

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
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1 How Your Kids Can Ruin Your Retirement — and How to Make Sure They Don’t

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The Secret to Getting Rich on Real Estate

This post The Secret to Getting Rich on Real Estate appeared first on Daily Reckoning.

Before I began my business career, my rich dad insisted that I learn to be a real estate investor. At first, I thought he wanted me to invest in real estate simply for the real estate itself. As the years went on and my base of education grew, I came to better understand the bigger picture of the world of investing.

Rich dad said, “If you want to be a sophisticated investor, you must train your mind to see what your eyes cannot see.”

What my eyes could not see were the legal and tax advantages that real estate investing offers (informed) investors. In other words, there is far more to real estate than land, sticks, and bricks.

Today I make my money from all for asset classes: commodities, businesses, real estate, and paper assets. (And if you like quick-market gains, I have a video you need to see…)

But I hold the bulk of my wealth in real estate. I am able to magnify my wealth using the advantages that real estate offers the sophisticated investor.

There have been challenges for real estate investors in the recent past. But if you learn the ins and outs of real estate investing, you can make money in real estate whether the market is going up, down, or sideways.

That is why my rich dad preferred investing for cash flow instead of capital gains. As long as your property is cash-flow positive, you can ride out a downturn in the real estate market. The flippers and capital-gains buyers who are left holding properties for resale in a plummeting market are the ones who will be hurt the most.

You also need to surround yourself with good advisors. As a real estate investor, you must seek tax and legal advice from professional.

I do not know all of the details of the tax and legal advantages he describes—but I am glad that he, as my advisor, does.

Right Side of the Quadrant

We’re taught to “park” our money. So, it sits there, doing very little but waiting for us to use it.

Most people are on the left side of the Quadrant, working for their money instead of having their money working for them. In that scenario, the bulk of their money pays off bills—liabilities—while only the “leftovers” go into savings or investments. So, most of their money is flowing away from them.

But for the people on the right, the B-I people, their money is working for them. It’s flowing toward them. Their income is passive; their own money, as well as other people’s money, time, and energy, all generate wealth for them.

Does this mean you have to give up your current career or employment? Absolutely not. It simply means that your goal should be to increase your assets—right-sided, dynamic income generators—in order to get your income working for you, and not the other way around.

To me real estate represents freedom. Real estate means control over my life and my future. I am not depending upon a retirement plan filled with stocks, bonds and mutual funds—investments that someone else manages. I want control over my financial destiny.

Cash Flow

When I speak of making money in real estate, I’m speaking of cash flow. This is income coming in every month, regardless of whether I work or not. Achieving sustainable cash flow requires a higher degree of financial education. The good news is you don’t have to go to college to get this education.

Cash flow is realized when you purchase an investment and hold on to it, and every month, quarter, or year that investment returns money to you. Cash-flow investors, unlike capital-gains investors, typically do not want to sell their investments because they want to keep collecting the regular income of cash flow.

If you purchase a stock that pays a dividend, then, as long as you own that stock, it will generate money to you in the form of a dividend.

That is called cash flow. To cash flow in real estate, you could purchase a single-family house and, instead of fixing it up and selling it, you rent it out. Every month you collect the rent and pay the expenses, including the mortgage.

If you bought it at a good price and manage the property well, you will receive a profit or positive cash flow.

The cash-flow investor is not as concerned as the capital-gains investor whether the markets are up one day or down the next. The cash-flow investor is looking at long-term trends and is not affected by short-term market ups and downs.

Capital Gains

When people say their house has appreciated in value, or they flipped a property, they are speaking of capital gains. Capital gains is the game of buying and selling for a profit. You have to keep buying and selling, buying and selling, and buying and selling…or the game and the income stop.

Capital gains occur, for example, when you buy a share of stock for $20. The stock price goes to $30, and you sell it. Your profit is called capital gains.

The same is true with real estate. You buy a single-family house for $100,000. You make some repairs and improvements to the property, and you sell it for $140,000. Your profit is termed capital gains. Any time you sell an asset or investment and make money, your profit is capital gains.

Of course, there are also capital losses. This occurs when you lose money on the sale.

The Advantage of Cash Flow Investing

The best thing about cash flow is that it is money flowing into your pocket on a continual basis whether you’re working or not. It is your money working for you.

And generally, cash-flow investing is based on fundamentals that aren’t as susceptible to market swings like capital-gains investments, which means that even in bad times, money still flows into your pockets.

Additionally, cash flow is what is known as passive income, which is the lowest taxed type of income.

This is not always the case with capital gains taxes, which vary depending on the type of asset you’ve invested in and how long you’ve owned that asset. In some cases, the taxes can be very high.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Here’s My #1 Investment

This post Here’s My #1 Investment appeared first on Daily Reckoning.

Our country is facing a retirement crisis. The unfunded liabilities of Social Security and Medicare coupled with the low savings rates and decimated 401(k) large parts of the baby boomer generation not having enough money to retire.

Retirement Funds

Unfortunately, the retirement funds of many boomers are either minimal or nonexistent. The statistics are somewhat grim: 41% of baby boomers between the ages of 55 and 64 have no retirement savings at all, and 25% have saved less than $50,000.

When you consider the possible length of retirement (20 years or longer), a yearly average income based on these figures is nowhere near a livable amount.

I do have one insider who is offering my readers a chance to save their retirement, but only if you click here to watch this video before 2pm today!

I’m starting to see articles here and there on strategies for retirement outside of the standard advice of mutual funds and bonds.

I read an article in The Wall Street Journal called “Want a Job? Become a Landlord.” To summarize, the author writes that for those facing retirement, a valid option is buying a small multi-family building, living in it, and managing it.

He also points out that rents are on the upswing in most states and that the long-term trend in the US looks to be one of renting vs. ownership. All of this bodes well for landlords.

Additionally, he says that having a job as a landlord will “provide something harder to quantify for retirees who have difficulties walking away from a full-time job: a challenge, a purpose and an opportunity for accomplishment.”

I’m happy to see this type of article in the mainstream media because I’ve been preaching for years that cash-flowing real estate is one of the ultimate investments due to the ability to leverage, receive cash in your pocket each month, and the tax benefits.

Perhaps the biggest benefit to owning an investment property is that as long as it is well maintained, it will increase in value over time. Approached carefully, these investments are a good way to prepare for the future and develop generational wealth.

While I agree with the sentiment of the article, one thing I disagreed with was a retiree spending their last years of their life “working” rather than having their money work for them.

Hire A Property Manager

If you’re buying an apartment building, why spend the time and energy renting, managing, and maintaining the building—especially if you don’t know what you’re doing? Who wants to spend their retirement years fixing toilets and changing locks?

To me, it’s short-sighted to find only one building and make managing it your job. Instead, become an investor and find more great deals that you can purchase and have professionally managed. Spend your spare time educating yourself on the market, rounding up investors, finding better deals, and building the value of your portfolio so that you can leverage it into even more deals. That will give you a purpose in retirement and build your wealth.

Property management is probably the most misunderstood simply because you don’t need to be a successful property manager to be a successful real estate investor.

One of the great things about multi-family investing is that you can factor in property management into your calculations when buying an investment property. Find a deal that can provide income while supporting professional property management.

In my experience, a good property manager will know how to improve the value of the property in three general areas: income, expenses, and systems.

1. Income

The number one misconception that can turn a good real estate deal into a bad one is by not understanding that real estate is a business, not just an investment.

As such, the most important aspect of your investment is the bottom line. The success of your deal is the dependent upon how much net operating income it produces. Rent and occupancy are two of the most important factors that determine total income.

2. Expenses

When it comes to property management, expenses are generally the factor you have the least control over. Property taxes, insurance, and utilities will be the biggest expenses a property will face and to a large extent, these are costs you simply can’t control.

There are a few things you can do. A professional management company might have better purchasing power when it comes to insurance premiums and can get a better rate than the average person. A good property manager will utilize a tax consultant to analyze whether he might be able to challenge the property tax for the property.

3. Systems

The easiest way to explain how systems can improve the value of the property is to explain how a lack of systems can devalue a property.

Poor management can lead to things like poor occupancy standards, or deferred maintenance issues. Both of these things can add up to lost income.

Nothing is more important the success of your investment than good, knowledgeable property management. Oftentimes, it is the difference between meeting your investment goals and losing untold amounts of money.

Start Now, No Matter Your Age

Baby Boomers looking for steady income in retirement may want to consider real estate. Historically, it has delivered higher income than traditional fixed-income assets.

Additionally, real estate generally has a low correlation to equities and bonds, helping Boomers diversify their portfolio, and potentially hedge against increased market volatility. Also, in today’s rising rate environment, real estate may provide some downside protection as the fixed-income markets continue to struggle with rising rates.

And even though it’s true that real estate can suffer short-term interest rate shock, what really drives its performance long-term is a healthy, growing economy – similar to the current environment we’re experiencing.

As the old saying goes, “Youth is wasted on the young.” Don’t let your youth be wasted. Rather begin planning for your future by investing in your financial education and building a portfolio of assets that will provide for you and your family when you’re ready to retire.

My wife, Kim, began investing over two decades ago with one two-bedroom house in Portland, OR.

Today, she owns thousands of units in multiple states that bring millions of dollars into her pocket each year. Anyone can do this.

Start small when you’re young and build big for when you’re old.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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The 3 Assets You Already Own

This post The 3 Assets You Already Own appeared first on Daily Reckoning.

Kim and I are all about simplifying.

We like making finances simple, which is why we’ve written several books and created multiple courses to help people understand the basics of the language of money. And we support others who carry out the same mission. Like a hero of mine, and a financial genius, figured out a way to transform your retirement. (You can find out how if you watch her short video before THIS hits at noon tomorrow.)

One of the key principles we bring up over and over again is the difference between an asset and a liability. All other lessons hinge on understanding these two concepts.

In the financial world, we talk about assets and liabilities in terms of money, cash flow, and capital gains. Assets are investments that give you high returns and grow in value, like stocks and real estate. Liabilities, on the other hand, are things you buy like cars, electronics, and yes, houses, that take your money and mostly decrease in value.

Assets and liabilities can also exist outside the financial world, and the assets you already own are just as valuable as the financial investments you make.

When people start their financial journey, they immediately want to go out and start buying up financial assets. But they quickly run into problems, and start moaning:

“I can’t afford to invest in assets.”

“I don’t know how to find assets. Where do I even start looking?”

“What kind of assets should I invest in? Where do I begin?”

What they don’t realize is that you have to invest in yourself and the assets you already have before you can invest anywhere else.

Below are three assets you already own that you should invest in just as faithfully as your financial assets. They can bring you great returns and increase in value over time, and all they require is your attention and care.

Your Identity

Recently on the Rich Dad Radio Show, Kim and I spoke about protecting yourself and your identity from cyber-attacks. One of the key points I took away from this program is the idea that your identity is one of your greatest assets, and as such, must be protected.

In this digital age, your identity is composed of an abundance of information you generate every day. It includes all the data coming from your digital devices, your finances, your social data, your healthcare data, your transportation data, even your legal data.

We spend our entire lives, every minute of every day, adding to and building our identity, and it helps us buy homes, apply for jobs, open new bank accounts, travel out of the country, and much more.

Unfortunately, most people don’t realize how valuable their identity is as an asset until they have their identity stolen. When online hackers access your information, they can steal your information and use it for their own purposes, which can wreck your identity.

Once your information is stolen, an asset you once took for granted starts to prevent you from living your life.

You might try to file a tax return and be blocked. You might turn on your computer and find all your information is deleted. You might attempt to get a mortgage but find out there’s already a mortgage in your name somewhere else. Medical treatments you knew nothing about start popping up on your insurance bill.

We work hard to craft an identity that will be an asset to us. We actively build our credit scores, pay our bills on time, protect our Social Security numbers, file our taxes correctly, and have all the right insurance in place.

With this asset, we are able to increase our value and move along on your journey to monetary independence. Without it, we are prevented from accomplishing many important things in life.

That’s why having the right protection in place for this particular asset is so important. Investing in this asset means taking the steps to ensure it is protected from hackers.

Your Relationships

People often get uncomfortable when I start talking about relationships as assets. They don’t like viewing their relationships as something they can utilize for their own benefit.

But that’s the wrong way of thinking. Relationships are incredibly valuable assets. The world runs on relationships and having relationships in place that help support you and vital on your journal to having independence, in the monetary sense.

Viewing relationships as assets doesn’t mean viewing people as objects, or only befriending people in terms of how they can help you. But it does mean examining the relationships you have now and exploring how you can invest in them to make them valuable in many different ways over time.

Relationships with family, friends, mentors, business associates and colleagues, your boss and coworkers, even the people at your gym, can lead you places you never thought you would go. Take the time to invest in this asset, and the returns you receive will be exponential.

Your Mind

Your mind is one of the only assets in the world that will never decrease in value. It has infinite returns, as you can always be improving your mind. You can always learn and grow and change your thoughts, which is incredible! There is no end point to the growth of your mind.

That’s why at the Rich Dad Company, we view cultivating your mind and increasing your education as the first and most important step to achieving independence in the financial aspect of your life.

Investing in this asset means increasing your education, learning new things, trying out new experiences, and taking the time to actively grow your knowledge.

The best part is, in this day and age, investing in your mind is one of the few assets that doesn’t have to cost you a dime. With the variety of online courses and free lectures available, you can invest in your mind every single day and benefit from the returns.

Invest in Yourself First

You have to invest in yourself first before you can start investing in anything else. This is a lesson that few people seem to grasp. When people learn about assets and liabilities, they want to jump into a real estate deal or start buying up stocks and commodities, neglecting the valuable assets they already own.

The assets listed above can create a solid foundation for you that can allow you to succeed when you start investing in financial assets.

Take some time to invest in them and watch how your financial journey becomes that much easier.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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