Nearing retirement – should you downsize to a smaller home?

As retirement approaches, your lifestyle and priorities begin to change. Chances are the days when you wanted more space– the sizable dream home with the backyard big enough to entertain a growing family – are long gone. Instead, many retirees are looking for convenience, simplicity and accommodations more suited to their needs as “empty nesters.” As you approach this new life stage, take time to assess how your current living arrangements suit your changing lifestyle.

downsizing

Here are five questions to consider as you decide whether downsizing is right for you:

Does your home still have the right feel?

A big house that was perfect for a family may seem overly spacious with just one or two inhabitants. It may be time to consider a change if you find that there are under-used rooms in your home or if you’re ready for a new environment. However, if you are enjoying the freedom more space brings, then your current house may be just the right fit. That might also be the case if your home is a gathering place for extended family and friends.

Is the upkeep sustainable?

In general, a larger house requires more work and regular investment. As you move into retirement, you may want to reduce the stress of cleaning and home projects. If working around the house and yard is something you enjoy, it may make sense to stay put. But, a smaller home will likely be less of a burden, especially if it’s move-in ready.

 

Are you ready to de-clutter?

Moving to a smaller space is a reality check for many people. All of the things you’ve been accumulating and storing for years probably won’t fit in a smaller home if you decide to downsize. That means you need to spend time going through your personal belongings to determine what’s of real value and what can go. This can take time, so it’s a good idea to get started well before it is time to move.

 

Are there cost savings?

In many situations, a larger house can be sold for a price that is higher than the cost of a smaller home. This could result in a smaller (or no) mortgage and potentially some extra money in the bank. But it is not always so simple. There are costs associated with buying, selling and moving into a new place that could impact your retirement savings if you’re not careful. Evaluate how downsizing would affect your budget and review your situation with a financial professional before taking action.

 

Where are you spending your time?

If your retirement dreams include traveling, visiting family or owning a vacation property, you may be away from home more often in retirement than you were in your working years. Having a smaller home that is easier to maintain could make sense in these situations. Alternatively, you may be looking forward to staying put and finally having time to enjoy the home you worked so hard to maintain over the years.

Downsizing doesn’t need to be rushed. Consider your priorities and if you decide to downsize, give yourself plenty of time to do it right.

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Selling Your Home for Maximum Value

HomeChecklistSelling a home is almost as exciting and nerve-wracking as buying your first property. Fortunately, if you work with an experienced real estate agent and take the time to prepare your home, it will sell faster (and most likely net you an excellent price.)

Don’t underestimate the power of home improvement projects and home staging—these things can amp up your home’s appeal inside and out, and have buyers fighting to make an offer. Preparing your home for the market is a chance to make money and gain experience—take advantage of this opportunity by working hard.

Home Improvement Projects and Repairs

Small repairs and upgrades often have the biggest impact. Buyers want a home that is move-in ready. Minor things like burned-out lights, broken windows and cracked pavement detract from a home’s perceived value. Make sure everything is in good working order, and then tackle the upgrades. With a return on investment of 130 percent, replacing your front door is the top improvement.

If you’ve lived in your house for years, you probably have a few projects that have been on your to-do list forever. Some of these may be good choices, but others may be prohibitively expensive—projects that have excellent returns share these traits, as they are affordable and reduce maintenance requirements. They improve efficiency, and they address problems.

Improvements for Kitchens and Baths

The kitchen and the bathroom are prime candidates for remodeling, but you might be able to get away with less—replacing drawer handles and knobs is an excellent step. You may also want to repaint or refinish drab cabinets if they are structurally sound. Purchasing a new fridge or oven is also a nice step, as a premium appliance can give a room a measure of quality.

Installing modern light fixtures is another winning effort. In the bathroom, neutral colors create a classic look. Install a new shower head, and make sure the floor and shower itself are in good condition. Replace the caulk. Review thishome improvement guide to see which projects are worth the work.

What about Paint?

Fresh paint is one of the most welcome and recommended improvements if you’re selling your home. This project is simple and inexpensive. With good preparation, paint can cover minor blemishes and nicks—it can also conceal the bold paint in a child’s bedroom (buyers generally prefer neutral colors). You can maximize your return and achieve professional results by completing appropriate prep work, masking the trim, spackling holes and sanding the base coat. Low-VOC paint is an excellent choice and can be a selling point when you’re marketing your home.

Outdoor Upgrades

Exterior improvements are extremely beneficial for improving your home’s market value. Purchase new house numbers, replace broken or drafty windows, or install a new garage door. Invest in new siding, or make sure that your existing siding is free from mildew and stains. If you want to make a more major improvement, build a deck or patio. These functional areas will help buyers visualize a new life in a new home.

Landscaping for Curb Appeal

Landscaping can increase your home’s curb appeal and value considerably—the challenge is knowing where to start. First, how does your landscaping compare to other homes in the neighborhood? Is it lagging behind, or is it leading the way? Second, if your home has overgrown landscaping, it should be trimmed back, or even removed completely. Dying, neglected or overgrown plants will decrease your curb appeal. However, if you add a variety of landscape plants, your home’s value can increase by as much as 10 percent. You can easily double the money spent on plants, mulch and other supplies.

If you spend just 2 percent of your home’s estimated value on landscaping, you’ll see major returns. A study by Virginia Tech found that adding landscaping increased the value of a $150,000 home by more than $8,000. The sophistication of the design, the diversity of the plants and the size of the specimens are generally the most important aspects.

If you’re getting ready to sell, you should have about two months to make changes to your landscaping—a bag of lawn fertilizer and a load of mulch are ideal for sprucing up a home quickly. Outdoor furniture, potted plants and seasonal flowers are excellent choices for improving the appearance of your yard, and adding value to your home.

The Best Times of the Year to Sell

You’ve worked hard to spruce up your landscaping, and you want buyers to see the result. However, this might be impossible if your yard is covered by a foot of snow. Timing a sale is tricky, and it can’t always be helped, but you can maximize your returns by understanding what drives the market. Traditionally, spring has been the best time to sell, though this may not be the same in every case.

Buyers are active, and families want to get their kids settled before school starts. Approximately 60 percent of families who move do so in the summer, which shows how many homes sell in the spring. However, this trend is slowly changing. If you aren’t ready to list in the spring, you still have a good chance to profit—new data shows that November is one of the hottest months for home sales. But why?

Today, more than half of home buyers are retirees, single millennials, and couples without children. The school calendar doesn’t affect these individuals—in fact, listing in the autumn and winter is advantageous, because the housing supply is lower. It becomes a seller’s market!

As a general rule, homes listed in the fall and winter are 10 percent more likely to sell for the listing price, and to sell within six months. Don’t fear the holiday season either! If you can handle showings during this hectic time of year, feel free to list your home. Wintertime buyers are often in a hurry to relocate for a job, and thus need a home quickly. If your home is available, they may be willing to pay a premium price.

Staging a Home

Homes that are staged sell faster, and for more money. You could hire a professional, but many of these things can be done on your own (and for a fraction of the cost). Home staging starts with a thorough cleaning—strip waxed floors, shampoo carpets, and make every surface spotless. How much light a home has is also a major selling point.

Wash the drapes, or buy new curtains. Clean the windows and screens to let in more sunlight. Put in high-wattage bulbs that show off your home.

After you’ve cleaned, it’s time to declutter. Remove family photos and keepsakes. Clear out the garage. Donate items that you don’t use. Then, store the rest!

Ideally, your home should be 90 percent packed when it’s time for a showing. Closets and storage spaces are especially important to buyers. Make sure closets are tidy and no more than half full.

Finally, arrange furniture to give each room a distinct purpose. Multi-purpose rooms give buyers a mixed message—it’s better if the buyer imagines a home office in a spare bedroom, rather than seeing a computer desk crammed next to a daybed.

Test your improvements by walking around your home and looking at everything like a buyer would. Staging gives you the power to decide what potential buyers see (and what they don’t see), including your children and your pets. This process starts before you list your home, and continues through the showing. It can be a good idea to brainstorm a variety of home staging ideas in advance.

Aromatherapy for Home Sellers

Staging makes your home look great in listing photos, however, pleasant smells can make your home appealing in person. Before you get out the air freshener, it’s important to remove unwanted odors. Pet odors and cigarette smoke are two of the biggest turnoffs for home buyers. If you have a problem with either, take steps to address these issues early in the process.

Some homes suffer from musty odors. Open the windows regularly to draw in fresh air. Clean the walls, carpets, upholstery and any surfaces that harbor unwanted odors.

Scientists know that olfactory experiences have a great effect on behavior. Neutral and natural scents, such as lavender, orange, lemon and pine, appeal to potential buyers. Avoid overbearing blended fragrances or artificial air fresheners. Studies show that strong scents create a mental disturbance and inhibit the decision-making process that is critical when someone is making the biggest purchase of their life.

Vanilla extract and essential oils are excellent choices for perfuming various areas of your home. You can also boil cinnamon sticks or orange peels about an hour before a showing.

Think seasonally, and consider what fits your home and the buyer. Avoid derisive scents like patchouli, and keep in mind that many people are sensitive to powerful fragrances.

Hiring the Right Realtor

All of your hard work up to this point won’t pay off without an effective real estate agent. The right realtor can make the process of selling your home easy and profitable. It’s tempting to hire the realtor who originally sold you the home or who found the perfect property for a friend, but these choices can prove to be less than ideal.

A selling agent needs to be on top of the market and understand all the nuances of your neighborhood, including the sale prices of comparable homes—pricing a home is an art!

If you start with the right number, you’ll get more offers and still have room to negotiate. If you start too high, your home might sit on the market, face price reductions and eventually sell for less than it would have.

Look for an agent who is experienced and works in your area regularly. You need an accurate market analysis, not an inflated valuation. Here are a few questions to ask to help you find the right realtor.

1. How quickly are your homes selling? How does this compare to the average selling time?

2. Did the homes sell for more or less than the listing price?

3. What will you do to market my home locally and online?

4. How often will you update me on any progress?

5. May I speak to your most recent clients? Ask about the agent’s communication skills, sales strategy and interaction from the listing through the closing.

How well you prepare your home for the market can alter a buyer’s perception and help you get top dollar. Everything you do should send the message that your home is well-maintained and ready for new owners. If you’re preparing to move, you’re probably ready to buy, which means that you should be able to see your home from a buyer’s perspective. These strategies will help you sell your home quickly, and capitalize on its full value.

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Realtor Marketing SEO

SEO_image_2SEO for Realtors is a hot topic in Realtor Marketing circles. I spend a lot of time talking to Realtors who are totally confused about what Realtor SEO is today and how they can get their website to the top of the rankings on Google. This post is long, but worth reading in its entirety if you are going to be spending time marketing your website with SEO.

A History of Realtor SEO

If you are paying attention to the Realtors who have top Google rankings in your marketplace, you probably notice one or two have all the top listings. Whenever I find this, I can guess a couple of things that will make a difference for you now.

First off, they have older sites that have been around for a while. Google thinks domain age (how long your URL has been in existence) is a good indicator of quality content.

Secondly, they probably got those rankings sometime in the past when there was less competition. For example, I rank in Google because I have been writing  since 2011 and because my content is old.

If you are going to try and knock off those old sites and take their top spots, just know that you are going to have to do more work to beat them than they will have to do to stay there.

The good news. I have to say that many of the “old dog” sites that have those rankings are now taking them for granted. They are not working as aggressively to keep their rankings as they did in the past to get them. This leaves the door open for an aggressive Realtor (like you) to step in and start taking them away.

To dos.

1. Check your competition’s domain age. I like using Webconfs.com for this.

2. One thing that you can do to make Google more confident in the longevity of your site is to register it for 5 years or more (paying for your domain name or URL for 5 years). The cost is minimal (about $60) but the benefits are HUGE. By paying for it for 5 years or more, you are signaling to Google that you will not be just a flash in the pan.

Paid Listings and The Aggregators

In what I have talked about so far, I am specifically talking about your local competition. But if you pull up a Google search for something like “Fayetteville Real Estate” you will see that there are some heavy hitters competing for that term.

The first three on the top and the ones down the side are paid listings done through Google Adwords. Now, it may be worth your while to pay for these, but that is a post for another day.

The next ones are Realtor.com, Zillow and Trulia and finally there is one little independent site, Townsend Real Estate.

SEO For Realtors Broad Google Search

As an independent agent or broker, I am sure you would like it if those spots weren’t all taken up by the “Big Dogs”, but they are. Those sites like Zillow, Trulia and Homes.com are called aggregators because they combine the data from all of the different MLSs and put it in one place.

And it is kind of okay that they are there. If someone is searching for Fayetteville Real Estate, they are probably REALLY early in a home search and will probably not settle on an agent for a while. Plus, there is no use belly-aching about it, that is just the way Google works.

Additionally, if there are no ads at all, that is probably not a keyword that converts well for getting buyers or sellers. People who are spending money want to know for a fact that their hard earned dollars will return them revenue. At least early on, if there are no paid keywords ignore that term for now.

To dos.

Check out your “actual” competition like Townsend rather than focusing on the big aggregator sites like Realtor.com and Zillow.

Checking Out The Competition

So next you will want to see what kind of site your competition has.

Rank In The World

My first stop is always Alexa.com. Put the domain name in there and hit submit.

WOW! According to the Alexa search, this site is not actually all that popular (4,638,250, having just lost 2,206,222 places). This means that a Realtor in Fayetteville would have a chance!

Alexa Search For Realtors

Domain Age

Now let’s look at Webconfs.com and see how old the site is…OVER 17 YEARS old. So Jimmy Townsend was a smart cookie back in the 1990’s and established himself as a player with his site. He DESERVES that ranking for how long he has had it. (not to say we would try to pick him off!)

Domain Age - SEO For Realtors

Incoming Links 

Google uses an algorithm (a computer program) to rank websites and one of the key things that they think is important are the number of sites that link to a website.

With that in mind, we have to find out how many incoming links your competitors website has. For this I like to use a tool from Moz, https://moz.com/researchtools/ose/.

MOZ Backlink Checker - SEO Realtors

For such a high ranking site I am surprised that they have so few incoming links! That is good news for anyone trying to compete for this keyword!

Site’s Number of Pages

Now we want to know how big the website is. This will help us to know how many pages we might need to be able to compete with the current top ranking site. To do this we will go to Google.com and type in site:domainname.com. This is what it looks like:

Checking Number of Indexed Pages - Realtor SEO

Once I do the search I get a result that looks like this:

Fayetteville Real Estate Search - SEO Realtors

Holy cow they have a lot of pages! Not to get too technical, but the site is made in ASP which is an older programming language (many sites are now made in PHP which is what WordPress is built in). Even so that is a lot pages! I would not try to compete directly with Jimmy on that top ranking term right off the bat.

Site Keywords

Now we want to find out what Google thinks his site is about. To do this we need to use the Keyword Planner Tool in Google Adwords.

Note: it can be a little scary to log into Adwords for the first time, I think you need to add a credit card, but if you don’t set up any campaigns it doesn’t cost anything.

Adwords Keyword Planner Tool SEO Realtors

Ohhh another interesting little nugget here, they are really ranking most highly for charlotte keywords terms and not so much for Fayetteville.

Site Research With Long Tail Pro

I KNOW, this much research seems like it could take a long time. There are many paid sites out there that will give you some or all of this at once but what I don’t like is that they are subscriptions that cost money each month. What I do like is Long Tail Pro, which is a program that you can buy outright and use as much as you like without costing more money!

Long Tail Pro Competition

This one tool will help you check out your competition MUCH more easily giving you the site age and number of links all in one place (it does even more that we will talk about later!)

> Check outLong Tail Pro now!

 

Beating A High Ranking Site

Before I go on to talk about what keywords to target yourself, let’s talk in general about how to beat a high ranking Realtor website that is already established in your marketplace.

1. All the little boats method.

My first suggestion is to have LOTS of little keywords that you rank for that add up to a bigger keyword you would like to target. So instead of trying to rank for Minneapolis real estate, you write posts to rank for:

  • Best Minneapolis Schools | Minneapolis Real Estate
  • Top 10 Luxury Neighborhoods In Minneapolis | Minneapolis Real Estate
  • Types of Homes For Sale In Minneapolis | Minneapolis Real Estate

There is no way you can write just one blog post that will beat the incumbent site. Instead you need to have an accumulation of posts that lets Google know what your website is about and then use those to “help all the little boats rise at once”.

It is by having lots of pages about a specific topic that you will start to rank in Google for your target keywords.

2. Write Hero Blog Posts

I know that there information out that saying that you can have 300-500 words in your posts, but you need to have at least a few that are big giant posts with lots of words relevant to the keyword you are trying to rank for.

For example, I am trying to increase my ranking for Realtor Marketing AND SEO for Realtors in this post. I have LOTS of great content that will show Google that this post is a good one to show people searching for this keyword.

Now, on thing to know right off the bat is that I don’t do SEO for Realtors. I am not available for hire that way so my goal for this post is:

1. To get more traffic to my website
2. To increase my rankings for my big keyword Realtor Marketing
3. To capture Realtor email addresses with my popup box so I can sell them things that I do want them to buy

This page will wind up being over 2,000 words of content related to those two keywords and while I am not “stuffing” it (using them over and over again), just by the length and the quality of content it will have.

Picking Keywords To Target

You will want to check the top two or three competing sites for each keyword that you are targeting. But how do you know what are good keywords to check out?

Are You A Listing Agent or a Buyers Agent?

I know, I know, you are both and you can help anyone with all their real estate needs. But when you are working on your SEO you need to think strategically and figure out whether you are going to target keywords that will attract buyers or sellers.

For example, here are Buyer keywords:

Homes for sale in Tampa | Tampa Real Estate
Top Seattle Neighborhoods | Seattle Real Estate
Where are the best schools in New York City | New York Real Estate

Here are seller keywords:

Selling Your San Diego Home | San Diego Realtors
How To Get Top Dollar For Your Home | Denver Realtors
Top Realtor In Tacoma | Tacoma Real Estate

Think about it, that old saying is true, Buyers buy houses, Sellers buy marketing. A home buyer is looking for homes for sale keywords and a seller is looking Realtors to help them sell their home fast and for the most money.

And yes it is “realtors” not “realtor”. When your pipes are leaking and you need a plumber you look for “plumbers” to help you fix it, not just one specific “plumber”. If you did have a specific plumber in mind you would search for his business name rather than doing the broader search.

Realtor versus realtors search - Adwords

This happens in almost every market. While I do remember one years ago that was opposite, it was the only one ever!

So here is an interesting thing….only 170 searches per month for New York Realtors (I am looking this up in the Adwords Keyword Planner Tool). This is a GREAT example of what you need to do succeed in Realtor Keyword Marketing! I was really perplexed about this until I thought, well damn, NYC is HUGE, I bet they search more so by their boroughs.

Manhattan Realtors Adwords Search

Hmmm still not enough, let’s dig a little deeper.

Chelsea Keyword Planner Tool

Okay, that was bummer, but this is how keyword research goes. Just by-the-by, here is the suggested search terms that Google is giving us for that search term. I am super surprised that the number of searches for New York City real estate terms is so low. If you were an agent in NYC you would have to try to rank well for a wide range of terms to get any traction at all!

NYC Realtor Keyword Terms

Next you want to look at how many competing site there are with the EXACT term you pick to use. Go to Google and do a search for that term with quotation marks around it.

Manhattan Real Estate Google Search

Okay, there are 448,000 results. That is kind of high for a new or small site to try to rank for out of the gate. That said, most searches look more like this.. (let’s head back to Fayetteville and see what is going on there!

Fayetteville Realtors Keyword Search

Okay, that is much more doable to try to rank for! You could knock off a bunch of your competition for this search with a nice meaty post that has the keyword in the title and lots of content.

A Little Bit Easier (or a lot)

Now you can do this over and over again to try and search for keywords with high monthly searches and lower competition, or you could use my friend Long Tail Pro that does all that preliminary searching for you!

Longtail Pro Keyword Tool Checker

So with this I see that just using “Fayetteville” and not “Fayetteville NC” would be a waste (who knew there were so darn many Fayettevilles in the country). Additionally it suggested some neat terms to think about like “Real Estate Companies”.

But wait there is more! You can click any of those ideas and immediately see data about the competing sites!

Long Tail Pro Competing Sites

Check outLong Tail Pro now!

 

Alright, I think that is enough to really get you started on your way to doing your SEO for Realtors! But I know that doing this kind of research can be funny if you don’t have a real system to use. With that in mind I made you a worksheet that you can use to check out each keyword and pick some potential candidates to target with blog blog posts or web pages.

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How To Become A Millionaire Through Real Estate (Really)

pexels-photo-186077-1200x818

Real estate can make you a millionaire.

Sure, this might sound like the promise of a late-night television salesperson trying to get you to attend the latest “free seminar,” but the reality exists: real estate is a powerful wealth building tool that has made millions of individuals millionaires.

Could you be next?

Maybe – but here’s the catch: not everyone who buys a piece of property becomes rich. In fact- many people buy real estate only to find stress and empty bank accounts. They struggle for years and years but never build the kind of wealth they’ve dreamed of (or the riches promised by the late night TV guru.)

So – how does someone use real estate to truly become a millionaire?

As I discussed recently in the longest article I’ve ever written, How to Become a Millionaire, there are four primary “wealth generators” at play when you invest in real estate, depending on the strategy you get into:

Cash Flow. This is the extra income you’ll get to keep each month (or year) that you own the property. Cash flow can be deceptive because it fluctuates when certain repairs are higher or lower in different months, so it’s important to factor in non-monthly costs like vacancy (the amount of time the property sits vacant), repairs, capital expenditures (expensive projects that need to be replaced on a home every so often, like appliances, roofs, windows, plumbing, etc.), along with the regular expenses (utilities, management, etc.).
Appreciation. When the value of a property increases, we call this “appreciation.” While appreciation is not always guaranteed (just ask people who bought in 2006 and sold in 2010!), over time, historically, real estate has always increased in America, averaging 3% per year over the past century. Another type of appreciation that can come into play is known as “forced appreciation,” the concept of increasing the value by physically improving the property.

Loan Pay-down.  When you buy a property with a mortgage, each month your loan balance decreases. This means, over time, your tenant is essentially paying the loan down for you, helping you build wealth automatically. To make this concept clearer, pretend for a moment you owned a property that you bought for $1,000,000 with a mortgage for $800,000, and it made $0 in cash flow (it “broke even”) and never climbed in value. However, after that thirty-year mortgage is paid off, you’ll now have a property worth $1,000,000 that you didn’t actual save for. Your tenant paid it off due to the “loan pay-down.”

Tax Benefits. The final wealth generator from real estate are the tax benefits associated with owning property in the United States. The U.S. government likes real estate investors and uses the tax system to encourage our purchase and leasing of properties. From extra tax write-offs to the lack of “self-employment tax” to the 1031-exchange and more, real estate investors can pay significantly less tax than other business owners, using the extra cash to buy more properties or pay of the loan faster — helping to build greater wealth.

Of course, just buying some real estate will not give you all of the above benefits. Different strategies in real estate will give you different benefits. For example, when you “fix and flip houses,” you are most likely not paying off a loan, thus you will not get the benefit of the “loan pay-down” nor are you getting cash flow or many tax benefits. Instead, flipping relies mostly on the “forced appreciation” you get by fixing it up.
Recommended by Forbes

One of the reasons I love buying rental properties so much is because they may capitalize on all four of the wealth generators — if you buy it right. Let’s use a quick example:

Jenny wants to build wealth through rental properties. So Jenny finds a duplex for $250,000 in her neighborhood. After running a careful analysis, she determines that it is a good deal. Jenny uses a $50,000 down payment and obtains a 30-year loan for $200,000. Combined, both units bring in $3,000 per month, but Jenny’s expenses average just $2,500 per month, leaving her with $500 per month in cash flow, which increases each year as rents climb with inflation. Although that income is taxed, she doesn’t have to pay any because of the depreciation deduction she gets on the property, thus part of the tax benefits of owning it. Over the next 30 years, the value of the home increases to $600,000 (a 3% per year increase due to appreciation). Finally, each year during those 30 years the loan has been paid down, and Jenny owns the duplex free-and-clear. She now has an asset worth $600,000, plus she’s making thousands per month in cash flow.

This example above is not “pie in the sky” numbers — these are real life options when you buy the right deal and utilize all four of the four wealth generators. Imagine what Jenny’s net worth would be after 30 years if she had purchased two duplexes — or four, or twenty of them early on.

Now, of course, no one wants to wait 30 years to become a millionaire. So how do you speed up this process?

Well, there are a few ways you could speed this up:

  • Get a better deal. In the example with Jenny above, what if she was able to negotiate stronger and get that same duplex for $200,000 instead of $250,000? This would supercharge her growth.
  • Buy more deals. Jenny could have also purchased more properties. Perhaps she would buy one each year.
  • Buy in appreciating areas. While I used a 3% average for appreciation, Jenny could have researched job growth and other growth indicators to find an area where appreciation would be higher, perhaps 5-8% instead of 3%.
  • Force appreciation. Jenny also could have purchased a fixer-upper property that she could improve, increasing the immediate appreciation on the property. For example, maybe she could buy it for $150,000, put $30,000 of work into it, and it might be worth $275,000 at that point. This could also increase the speed at which her wealth would build.
  • Trade up. If you are familiar with the board game Monopoly, you’ll know the value in trading from four houses to a hotel. The same is true in real estate. Jenny could upgrade to bigger/better deals every few years to maximize her return. This is perhaps one of the fastest ways to achieve wealth through real estate — and if you want to know more, be sure to read How to Make a Million Dollars from Real Estate: A Step By Step Path.

I’ve only just barely scraped the surface on what real estate investing can do for you in your quest to become a millionaire. In fact, there are so many different paths and strategies you could take to become a millionaire through real estate that I could write a thousand books on the topic and never cover it all. You could spend your whole life learning about real estate and never learn it all. And that often becomes a problem! People get stuck in “education mode” and never escape it.

I’d encourage you to not get overwhelmed, not try to learn everything. Pick one niche (like single family houses, commercial properties, etc.) and one strategy (like rental, flip, etc.), and focus on that. Read one or two books on the subject, and then start moving! Find someone local who is doing the same thing as you want to do, and take them out to lunch. Ask for help, but don’t stop moving!

The road might be foggy — but if you just keep moving forward, more of the road ahead will be revealed.

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How Do Streets Get Named?

 

 

For the most part, real estate and subdivision developers have the privilege of naming new streets in the United States. The name is submitted to the town or city for review, at which point the public service departments, such as police, fire, and the post office, are given the opportunity to veto the name if they feel it creates any confusion.

“The developer submits street names to the city through the relevant departments for review. The building, engineering and public works departments all comment, but the departments that have the most input and veto power are police and fire. The concern here is that the street names are unique and intelligible enough for them to distinguish and find a street and property in an emergency.

While developers can feel free to submit any name they’d like for a new street, such as the name of their child, it typically doesn’t work out because cities have guidelines and standards for certain areas that require street names to be of a specific theme.

This is why, for example, you see a large quantity of streets named after trees in one particular section of Philadelphia, or all 50 states represented in street names in Washington D.C. If the proposed name of a new street does not fit that theme, there’s a good chance it will be rejected, but how strict these policies are depends on the individual town/city. If you happen to be a developer (or decide to bribe one) and want to name a street after yourself, you’d have better luck in a newly developing suburb than you would in an established city.

With that in mind, here’s some food for thought: The names of trees and numbers make up the greatest number of street names in the country, and the most popular U.S. street name is “Second” or “2nd,” because “First Street” is often replaced with “Main Street” or something similar.

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How Much Does a Home Inspection Cost?

 

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Buying a home is a huge investment — and you can’t exactly read Amazon reviews to get a sense of any problems that might crop up after you’ve plunked down your money. That’s why it’s smart to get a home inspection before you close the deal. But since home inspections aren’t free and that cash comes out of your pocket, you might be wondering: How much does a home inspection cost?

According to the U.S. Department of Housing and Urban Development, a typical home inspection costs $300 to $500. That’s a drop in the bucket compared to the agony these inspections can save you down the road. But the exact price will depend on the size of your home, where you live, and what you want inspected, says Claude McGavic, executive director of the National Association of Home Inspectors (NAHI).

What home inspectors look for

A professional home inspector, certified by the NAHI, is trained to look at over 1,600 features of your home that can fall into disrepair (who knew there were so many?).

Inspectors mainly look at the following:

  • Grounds for possible water problems
  • Structure for foundation, window, or door problems
  • Exterior for rot, decay, and excavation problems
  • Roof for shingle, flashing, and fascia problems
  • Interior for framing, insulation, HVAC, plumbing, and electrical issues
  • Kitchen for electrical code compliance, operating cabinets, and plumbing problems

An inspection of a typical house takes two or three hours; larger homes with two or three HVAC systems will take longer, and cost more as a result.

“There’s a lot more to look at in bigger homes,” McGavic says. “The house may have two or more heating systems, several water heaters, and more bathrooms.”

What should not make a price difference is the “thoroughness” of the inspection, the final written report, and the photos the inspector delivers to his client. These should be standard features of any home inspection — not extras.

“If someone says you’re going to get a more thorough inspection, that’s just hype,” McGavic says. “And if you don’t have a written report, you don’t have a home inspection.”

Do you need special home inspections?

“Specialty” inspections go beyond the typical scope of a home inspection and evaluate anything from radon to well water. These extra inspections can inflate the price anywhere from $25 to $200, depending on whether the inspection requires special equipment or lab testing.

Although everyone should spring for a termite inspection (if it’s not included in the standard inspection), other specialty inspections depend on where you live and any specific concerns you have about your home. Californians, for instance, often ask inspectors to look at a home’s earthquake strapping, while people buying in the Midwest’s Tornado Alley might spring for safe-room inspections to protect themselves against the next twister.

How do you know which specialty inspections you need? Ask your real estate agent, of course.

“Real estate agents know what are the most common inspections performed in your particular county,” McGavic says.

How to make the most of a home inspection

A home inspection is your authoritative proof of property problems. Armed with that knowledge, you can insist that the seller fix certain issues before closing, renegotiate the price to reflect future repairs, or walk away without losing your earnest money. In other words, although a home inspection costs money, it can potentially save you far more, perhaps even tens of thousands, in return.

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If you STAGE it, you will SELL it!

Home-StagingSelling your home sounds easy enough. Just hammer a “For Sale” sign into the front lawn and start bringing in the buyers, right? Not so fast. If you want to get the highest possible sale price, you need to woo potential buyers. That’s where professional home stagers come in: Like a Hollywood set, your home can be turned into a scene that buyers will want to latch on to. If you’re serious about selling, you might want to consider hiring a professional home stager to transform your house into every buyer’s dream—or just borrow these tips from the pros to get it in ready-to-sell condition.

1. Clear Out Clutter

Whittle huge photo displays down to a few frames. Pack up collections and knickknacks that are cluttering your bookshelves, desktop, dresser and end tables. “Show potential buyers your home, not your stuff!” urges professional home stager Jan Whitlow.

2. Let Light In
Pull up the shades and draw back the curtains! “Light creates a positive, cheerful environment,” says professional home stager Trish Kim. During showings, turn on every light in every room. And leave some of the lights on in the rooms that face the street until you go to bed. “If potential buyers drive by after-hours, the welcoming light in the window is very seductive,” says Kim.

3. Make the Background Neutral
If the walls are in neutral shades, the space will feel bigger, says Barb Schwarz, CEO of StagedHomes.com. You don’t want potential buyers’ initial thought to be, “Well, I’d have to repaint the purple bedroom and the brick-red dining room, to start,” so consider repainting bright-hued walls before you start showing. Even with a neutral backdrop, you can still add “movable color” to the rooms with artwork, bedspreads or area rugs. All add visual interest, but the buyer knows you’ll take them with you.

4. Create a Lifestyle
If you think your home might appeal to someone who entertains, set the dining room for a formal dinner party, suggests Kim. Or turn your master bedroom into a quiet spa-like haven if the whirlpool tub in the master bathroom is a selling point. “Buyers are looking for an upgraded lifestyle,” says Kim. It’s up to you to help them imagine it.

5. Play Music
Have music playing softly in the background. “I call it ‘buying music,'” says Schwarz. Choose something mellow and play it just loud enough so it’s discernable. The idea is to mask the echoey sound of shoes clap-clap-clapping through an empty house—not to start a dance party. Schwarz recommends light jazz without a lot of vocals: something similar to elevator or department store music.

6. Neutralize Odors
Contrary to popular belief, no odor is the way to go. The smell of bread or cookies in the oven might appeal to you—but potential buyers may not agree, says Kim. Open the windows and let fresh air flow through your home. Sprinkle baking soda in the bottom of trash cans and place a box of it in the fridge to absorb unpleasant smells. “You can’t sell it if you can smell it,” seconds Schwarz.

7. Clean, Clean, Clean
If you’re selling your home, you can’t stash clutter in the closets or have a fridge full of messy takeout containers. Potential buyers will be inspecting every square foot—and that means you should, too. Store clutter in neatly stacked boxes in the basement—or better yet, in a storage unit. Then white-glove clean any and all surfaces, says Schwarz.

8. Rethink Your Furniture
If taking out a few pieces of furniture would make a room feel more spacious, then do it, urges Schwarz. Put pieces that are rarely used (like extra dining room chairs) in storage, then rearrange what’s left to maximize each room’s space. One thing to hold on to: items that double as storage, like an ottoman with a lid, where you can stow clutter at the last minute.

9. “Stage” Every Room
A dining room in top form won’t do you any good if your kids’ rooms look like a tornado just tore through them. “The whole house has to be staged,” says Schwarz. If your children have a hard time getting a handle on their stuff, buy underbed storage boxes and insist they toss their toys in them at the end of every day. Once a week, have them sort through the storage boxes before they’re allowed to watch TV or have a friend over, to keep the clutter under control.

10. Don’t Forget the Outside
“All of the property has to be staged,” says Schwarz. Your house number should be big, shiny and easy to read. Landscaping should be pristine—and give the impression it’s easy to maintain, so opt for simple over fancy pruning designs. Finally, the garage and shed should be in reasonable order, too.

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When Should You Retire?


Should you retire at 60? 62? 65? 70? It’s a tough decision.

A recent survey from Boston College’s Center for Retirement Research found that the average retirement age is now 62 for women and 64 for men. That has some interesting implications, and it can have each of us pondering our own retirement date.

To put those numbers in perspective a bit, know that the average retirement age for Americans overall has been stabilizing in recent years. It had been inching up over decades, because of factors such as the death of the corporate pension, the increased “full” Social Security retirement age for some, increases in overall health and longevity, and a shift away from manufacturing jobs, which can wear out a body faster. According to Gallup data, the average retirement age in 2002 was 59.

Interestingly, even though the average retirement age has increased over the past few decades, to most people, retiring at 62 or 64 seems a bit early. After all, that’s earlier than the earliest possible full retirement age for Social Security — that’s 65 for those born in 1937 or earlier (and 67 for those born in 1960 or later, and somewhere in between for those born between 1937 and 1960).

Should you retire at 62 or 64, too?
If so many people are retiring around age 62 to 64, should you do so, too? Do they know something you don’t? Well, the best retirement age for you is … it depends. There’s really no one-size-fits-all best retirement age. Here are some reasons you might want to retire early or late, followed by some suggestions.

There are pros and cons to retiring early or late. (Photo: Julia Manzerova, Flickr.)

Why retire early?
The most obvious reason to retire early is to enjoy more years of not having a full-time job. If you have a sufficient nest egg, retiring early can be a reasonable financial move, too, Social-Security-wise. That’s because although you’ll receive smaller monthly checks if you retire before your “full” retirement age, you’ll receive a lot more of them than you would if you retired on time or late. Another plus for retiring early is that despite actuarial tables, exactly how long we’ll live remains a mystery — and it would be a shame to end up with far fewer retirement years than you expected.

Why retire later?
Many people retire later simply because they have to, but others choose a late date because they want to beef up their finances more or perhaps because they’re afraid they’ll be bored in retirement. By working longer, you can save more of your income, and you can give all your retirement accounts more time to grow before you start tapping them. You may also be able to remain covered by your employer’s health insurance, saving more money. (The folks at Fidelity have estimated that a 65-year-old couple will spend, on average, more than $200,000 on health care during their retirement.) Better still, if you don’t start receiving Social Security benefits at your full retirement age, your monthly checks will increase by about 8% for each year you delay until age 70.

Keep in mind …
Clearly, there are many factors involved in the when-should-I-retire decision. As you deliberate, the most important question to ask yourself is, “Am I financially ready to retire?” It’s not smart to quit working early if you don’t have enough expected income in retirement to carry you through it — and through more of it if you retire early. Estimate your expected nest-egg size at retirement, your anticipated income streams in retirement (Social Security, income from IRAs and 401(k)s, dividend income, and so on) and your expected living and enjoyment expenses. Then crunch the numbers to see when retiring makes sense. (Think hard about your expenses, so that you don’t forget any significant ones. Many retirees, for example, spend a lot supporting their children. If you will, too, factor that in.)

It can be worth spending some money on a financial advisor, too, to get a professional opinion on the state of your finances, some suggested actions, and assurance that your ducks are or will soon be in a row.

Finally, remember that many people don’t get to retire at the age they choose. A job loss or health setback may push you out of the workforce before you’re ready. You can defend against being financially hurt by that by saving aggressively and investing effectively for retirement. If you end up with a little more than you need, that’s not the worst problem to have.

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A First Time Home Buyers Story!

 

I like to think of the first year of home ownership akin to (what I assume to be) the first year of marriage. It’s often the most difficult, because you don’t know what to expect. You’re used to something different (renting) and the entire year is spent adjusting. It’s just as great at you imagined it would be, but it often involves a lot of very hard work.

Next week it will be my one year anniversary of closing on the house. I’m celebrating in my own small way, but looking back on it, there are more than a handful of things I wish I’d done differently. Here are five (of many) first time home buying mistakes that cost me big time.

Buying Too Much House

I bought a house when I was engaged and expecting the single family home to be for a growing family rather than a swinging single gal. I did the best job I could and made a decision based on the set of circumstances that were true at the time. If I had a crystal ball to see if I would have been a single female homeowner three months after I bought the house then, yeah, I would have bought a lower maintenance condo in a nicer area and skipped the renovations altogether.

The relationship was far easier to get out of than the mortgage, so I think the first mistake was buying something I couldn’t manage on my own. I know buying for a current situation rather than a future one feels a bit like betting on the relationship to fail, but better safe than sorry when you’re playing the high stakes real estate game with someone you’re not married to.

I Would Have Prioritized Renovation Projects Like an Investor

It’s the old real estate adage that kitchens are what sell the home, and bathrooms hold their value. Thinking I was making a home for a family I did a bunch of other projects that would only make sense if I were going to stay in the house long term. The game changed, as did my desire to stay in the home longer than necessary and so looking back I wished I’d prioritized the renovation projects with the precise eye of an investor looking to make money.

I renovated the downstairs bathroom instead of the “master” bath simply because the green bathroom was hideous and I couldn’t stand to look at it. Yet every day when I run out of counter space or have to shower in my teeny-tiny stall in my bathroom upstairs, I wish I’d done things differently.

I Would Have Asked More Questions

I think there is a difference between paying attention and asking questions. You can pay attention your whole life and never get up the nerve to ask questions.

Looking back on it, I was definitely afraid to ask questions during the mortgage and renovation process because I didn’t want to seem unintelligent. I think being young and naive I expected someone — anyone — else to come charging in and ask them for me, not remembering that the biggest part of being an adult is having to have the tough conversations yourself.

Truth time: What you don’t know CAN hurt you and if you don’t ask you’ll never know.

Most importantly, if you don’t ask, no one else will and we’re talking about the most expensive purchase of your adult lifetime. If you neglect to ask your mortgage broker, real estate agent, or contractor something, you could risk losing thousands of dollars, so why take that risk? Just ask the darn question.

I Would Have Done More Research

I only shopped at two places for a mortgage. I only got two bids for the renovation work (partially because it was difficult to find a contractor willing to take on 203k renovation loan). I didn’t check references or anything. I just felt like I got a “good vibe” from my contractor and trusted my gut. Sometimes even your gut can be wrong, and there isn’t anything bad about backing up a “gut feeling” with a little hard research.

I Would Have Budgeted More

I had my budget for the purchase and the renovation. Even without the down-payment assistance I received from the City of Atlanta, the budget barely left any room for overages. If I’d done more research, I would have been able to make a better budget. My rule of thumb now? Whatever I think something home-related is going to cost, I double it, just in case. Better to be surprised than stressed.

I know I’m painting a very negative picture, but it hasn’t been all bad. I’ve got a lot of equity in the home to fund whatever venture I want to do next, and I now know all kinds of crazy stuff: like how to hang a light fixture, troubleshoot plumbing problems, and install shelving and closet systems. It’s been a tough journey, sure, but also and incredibly rewarding one personally and emotionally. With the purchase of a home I’m officially adulting, I just wish I could’ve saved myself a little bit of the stress along the way.

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