Is it a Good Idea to Rent Rather than Sell Your Home?

With more homeowners considering that now may be a good time to sell their home, we thought it would be a good idea to consider whether renting might be a better idea.

According to Fannie Mae’s June 2015 National Housing Survey, 52% of respondents said that now is a good time to sell. Perhaps more interestingly, 59% of respondents expect home rental prices to increase. 

Naturally, when you are considering selling your home, and you notice rental prices elevating, you are likely to consider renting. And who wouldn’t? Residual income on an owned asset, or having your house work to pay for itself sounds pretty good, right? This is when it makes sense to ask the question:

Are You Ready to be a Landlord?

Before you jump head-first into the world of being a landlord, take a look at this list. Sometimes what seems to be an obvious benefit can come with some hidden challenges.

10 Questions to ask before renting your home

1. If your tenant says they can’t afford to pay the rent this month because of more pressing obligations, how will you respond? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
2. Because of the economy, many homeowners cannot make their mortgage payment. What percentage of tenants do you think cannot afford to pay their rent?
3. Have you interviewed experienced eviction attorneys in case a challenge requiring one does arise?
4. Liability is greater in a non-owner occupied home. Have you talked to your insurance company about a possible increase in premiums?
5. Will you allow pets? Cats? Dogs? How big a dog?
6. How will you actually collect the rent? Electronically? By mail? In person?
7. Repairs are part of being a landlord. Who will take tenant calls when necessary and/or emergency repairs come up?
8. Do you have a list of licensed tradesmen readily available to handle these repairs?
9. How often will you do a physical inspection of the property?
10. Will you alert your current neighbors that you are renting the house?

The Takeaway

If you are prepared to handle the responsibilities that come with being a landlord, renting your home could be a great investment. Historically, renting residential real estate has been just that. However, if you are planning to sell before too long, the responsibilities that can come with renting your home may make any short-term economic benefit not worth the hassle.

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Seeking the American Dream of Home Ownership

Are you living the American Dream?

Most of us have a pretty good idea about what the American Dream is. In case you don’t, we looked it up:

“The American Dream is a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility for the family and children, achieved through hard work in a society with few barriers.” – source: Wikipedia.com

If we carry this definition further, we find that many Americans see homeownership as an important part of that dream. Let’s look at some recent statistics.

Existing home sales in May of this year were 9.2% higher than the same time last year. Home sales in the Midwest and Northeast saw gains of at least 10%.

If the growth of home sales alone isn’t enough to convince you that owning a home is “living the American Dream,” there’s more. Studies have shown that purchasing a home is making an investment that will appreciate over time. What does that mean? Let’s look at an example. If you already own your home, you are enjoying an average of 7.9% gain in the value of your home just in the last year!

In addition to the financial benefit, owning your home is a slice of freedom. No paying rent to a landlord. No sharing an apartment complex floor with 30 other people. It’s yours.

As the housing market continues to show signs of strength, now could be the best time to invest in your piece of the American Dream. Whether you are looking for a home that is worth $100K or $1M, at Benchmark, we are here to welcome you into the rising trend of homeownership. You will receive more than just another set of keys…you will be given the keys to your HOME.

Fact Sources: NAR’s Existing Home Sales Report 6/22/15

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Renting vs Buying a Home and Accumulating Wealth

Does it make more financial sense to buy or to rent? Is the American dream of home ownership still alive? That depends. Let’s explore renting vs buying a home and the effects on family wealth.

Recently, the BH&J Buy vs. Rent Index seems to conclude that renting is surpassing buying as the better choice. Is it really? Should we let others draw our own conclusions for us? A closer inspection breaks it down. The summary says,

The index conducts a “horse race” comparison between an individual that is buying a home and an individual that rents a similar quality home and reinvests all monies otherwise invested in homeownership.

Let’s assume for a moment that this is true. Any funds that would have been spent on homeownership really is diligently invested by renters rather than spent. Is this a realistic expectation?

We should first consider the general economic advice of not spending more than 25-30% of one’s income on rent. We should also recognize that recommendations are often more conservative than what the population is actually doing. When we put these ideas together, the quoted text above begins to look more like wishful thinking.

Please consider: Housing’s 30-Percent-of-Income Rule Is Nearly Useless from Bloomberg.

When we look at consumer savings rates, this “wishful thinking” hypothesis is all but confirmed.

United States Personal Savings Rate

 

source: tradingeconomics.com

It stands to reason that the savings potential of the “if-then” scenario posed by the BH&J Buy vs. Rent Index summary is simply unrealistic. If the average consumer is spending at least 30% of their income on housing, and saving less than 6%, this becomes an unfair comparison. Why?

Forced Savings and the Accumulation of Wealth

An article in the New York Times published November 29, 2014 makes the case for home-ownership against renting. It is a well thought-out article that, if you are weighing the issue of wether to rent or buy, you may want to read.

As the rate of homeownership has declined, from a peak of nearly 70 percent in 2004 to a 20-year low of 64.3 percent recently, the number of owner-occupied homes has barely budged, while the number occupied by renters has increased by nearly 25 percent.

Those trends have led to questions about the future of homeownership. Would more and longer rentals be a bad thing? Are the benefits of homeownership overrated? More…

The article goes on to say,

Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.

What Does This Mean for You?

If you are taking an honest look at whether it is a better idea to rent or to buy, it is a good idea to consider the facts. There are good reasons for either renting or buying. Whatever decision you make, we at Benchmark are happy to look at your personal situation to help you make the right choice.

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What Every First Time Home Buyer Should Know

If you’re planning on buying your very first home, chances are you are not taking the decision lightly, and for good reason. You should conduct as much research as possible about the process before you commit to your first home. Here are some things that every first time home buyer should know before purchasing a home.

Location Vs. Space

When it comes to purchasing a home, you’re likely going to have to choose between location and space. Should you go for a small house in your favorite city, or should you get the large house located in a less desirable area? Therefore, before you start shopping for a home, you should definitely know where your priorities lie. You need to decide beforehand whether space or location is more important to you. Doing this will make the home-buying process much easier for you, and it also reduce the chance of you experiencing buyer’s remorse later down the road.

Don’t Commit Too Early

One of the worst things you can do as a first time home buyer is commit too early to a home. Since owning a home is such a big and expensive commitment, you should only purchase a home when you’re sure that you’re ready for the responsibility. Know that your monthly housing expenses will likely increase by hundreds, even thousands, of dollars when you become a homeowner. Besides the monthly mortgage payment, you should consider if you’re financially ready to pay for property taxes, HOA fees, and homeowner’s insurance as these costs can truly add up.

Down Payments

If you have the money and can afford it, you should definitely make a down payment on your home. In fact, you should be saving up money now, so you can make a substantial down payment on your new home once the time comes.

Believe it or not, but a down payment is never a bad investment. When you invest money in the stock market, while there’s a chance that you will gain, there is also the likelihood that you will lose money. However, when you put money down on a home, it minimizes the risk and it enables you to begin with some equity.

Consider School Districts

Even if you don’t have children, you should still consider the neighborhood’s school district when going shopping for a home. A good, desirable school district can actually raise the value of your home. Reselling a home located near quality schools is usually easy, because demand for a good home in an excellent school district is always high.

Check Building Plans

Before you purchase your first home, you should check the future building plans for the neighborhood. First of all, you don’t want to live next to the sound of nails being hammered for months and months. While this situation will only be temporary, you may not want to be located next to the project being built. For example, if you don’t have any children, the last thing you’ll want next to your home is a playground, because you’ll have to listen to the squeaking of swings and the yelling of children, and you won’t benefit at all.

Look Deeper

When inspecting a home, you should take the time and effort to look deeper. Take the words of others with a grain of salt, and check out the house for yourself. If a problem happens to pop up during your inspection, take it seriously, especially if it’s a problem that could be particularly expensive to fix.

If you end up discovering a flaw while inspecting the home you like, you can actually use it to your advantage. After the inspection, try negotiating to bring the price of the house down, using the flaws of the home to support your case. As you can see, it’s not impossible to get a great deal on a home even after the inspection.

Establish Your Budget

Before you even start hunting for your perfect home, you should establish your budget. There’s nothing more disappointing than completely falling in love with a home, only to not able to purchase it due to lack of financing.

Not only should you establish your budget, but you should also secure financing. Many people make the mistake of not locking down a mortgage quickly, because they believed that house hunting for the perfect home would take a long time. By the time they’ve secured a loan for their home, they often end up losing the very home they had such high hopes for.

Check Out Renovations

One thing you should pay close attention to is whether the renovations of the home you’re interested in were done by a professional. While structural details are very important, a home’s aesthetic details should not be ignored. Many DIY remodelers use low-quality materials for a quick, cheap fix. These materials are often low in durability, resulting in problems for future homeowners when everything is said and down.

Inspect the Landscaping

Many people don’t realize that updating the exterior of a home can be just as costly, if not more so, than remodeling a home’s interior. If your goal is to not spend much money on the details once you’ve found a home, you should definitely pay attention to the landscaping of the home. Look for a property with landscaping and amenities that you already consider ideal without any costly changes. For example, it’s typically much cheaper to purchase a home that already has a fence than to install the fence yourself. However, just as you should when inspecting the interior of a home, you should pay close attention and figure out whether renovations were done by a professional.

The home buying process is far from being a piece of cake, especially if it’s your very first time going through the process. Therefore, you should make an effort to become as informed and knowledgeable as possible before making a decision. Being a homeowner is a huge responsibility and commitment, so you definitely want to avoid doing something you’ll regret later on.

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Lesson: Home Insurance 101

One aspect of buying a home that people don’t pay enough attention to is homeowner’s insurance. Although lenders require everyone buying a house to get some insurance covering basic risks like theft and vandalism, fire and smoke and other common forms of unintentional damage, such insurance is usually inadequate for your long term needs.

Adequate Coverage

Soon after becoming a homeowner, one of your top priorities should be to expand your homeowner’s insurance so that it becomes more comprehensive. For example, you will want your insurance to cover such things as personal items, your furniture and any structures on your property besides the house. These structures could be a garage, a shed or even a pool. However, if any of these additional structures are used for a home based business, then to cover them you will need a different type of insurance entirely, one that is geared more towards business needs.

Not Covered

If you don’t have a home business, but nonetheless keep business equipment at your home, then it will not be covered under standard homeowner’s insurance. The coverage is also likely to be minimal for such calamities as earthquakes and natural disasters or for the loss of extraordinarily expensive items in your house such as jewelry or works of art. You will need to purchase supplemental insurance in order to cover these things.

Personal Liability

One category where you should definitely add extra insurance is the area of personal liability to protect you from lawsuits if someone is injured on your property. It also gives you protection should your child or pet cause damage to other people’s property. Few lenders require you to have liability insurance, but it can prevent you from losing your home if you end up liable for somebody else’s medical bills or property repairs.

Protecting Your Insurance

The ease of availability for homeowner’s insurance varies from state to state. However, once you purchase insurance, you need to take steps to protect it. Resolve to avoid making claims unless it is absolutely necessary and fully justified. Otherwise, you may find your premiums rising to unaffordable levels or being discontinued entirely. One good idea is to have a high deductible so you are not tempted to makes claims over minor matters.

The best way to ensure that you are not caught short with too little insurance is to call your insurance professional today.

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Top 10 Family Vacation Spots

Where it used to be difficult to decide on a vacation spot that would please the whole family, a new trend, family-friendly resorts solves the problem of where to go for that great family trip. Experience everything from an African Safari to the Wild West with one of these top 10 family vacation spots.

#1 Disney’s Animal Kingdom Lodge

Experience the thrill of an African safari without leaving the continent at Disney’s Animal Kingdom Lodge in Orlando, Florida. Start by greeting the 33-acre property via the lobby’s 65-foot window. Over 200 animals from 100 different species roam the property.

#2 Hilton Waikoloa Village

If a trip to the islands is on your agenda, take the family to the Hilton Waikoloa Village on the Kohala Coast of Hawaii. Parents can sign kids up for Camp Menehune, a day and night camp where they get to feed swans, hunt for treasure and search the tidepools for sea life.

#3 Tanque Verde Ranch

Tanque Verde literally means “Green Pool.” This 640-acre ranch is Tuscan, Arizona is a green oasis in the Sonoran Desert. Turn into cowboys and go on a specialty horseback ride with lunch in Cottonwood Grove. Riding lessons are available.

#4 Snowbird Ski and Summer Resort

Take a wonderful winter vacation at Snowbird Ski and Summer Resort near Salt Lake City, Utah.In addition to skiing, family members can enjoy ice skating, snowboarding, snow tubing, luge sledding and snowshoe tours.

#5 Atlantis Resort

Explore a lost civilization with an Atlantis Resort vacation. Located on Paradise Island in the Bahamas, it has 11 exhibit lagoons and thousands of animals such as stingrays, lionfish and sharks. This trip is for the water-loving family with miles of beaches, seven water slides and 11 different pool areas.

#6 Tyler Place Family Resort

Family vacations have been the specialty of Tyler Place in Highgate Springs, Vermont since 1933. Not only do they provide activities for grade school kids, they cater to kids from newborns to teens with musical games, a fleet of strollers, bikes with baby seats, water skiing and camp outs.

#7 Vista Verde, Steamboat Springs

At Vista Verde in Steamboat Springs, Colorado, kids can learn horseback riding basics and hold powwows in teepees while parents take a wine tasting class or have a romantic candlelight dinner.

#8 Earthshine Mountain Lodge

Located in Lake Toxaway, North Carolina, Earthshine Mountain Lodge is a refreshing way to experience pioneer life. Press apple cider, make candles, apprentice in a blacksmith shop and learn the ways of the Cherokee Native American tribe.

#9 Hyatt Regency Scottsdale Resort and Spa, Gainey Ranch

At the Hyatt Regency in Scottsdale, Arizona, parents get plenty of R&R while the kids are entertained at Camp Hyatt Kachina. There are separate programs for kids aged 3 to 6 and 6 to 12. The camp activities are influenced by Native American culture.

#10 The Hotel Hershey

The Hotel Hershey in Hershey, Pennsylvania pairs adult activities like golf and spa treatments with the Cocoa Kids Club, a supervised program featuring arts and crafts and sports activities. Older kids get to go hiking and participate in team-building activities.

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Top 10 Tips To Save Water This Summer

With the warm summer weather comes an increase in activities around your home, outside and inside, that use water. Here are 10 tips for smart water usage.

Check Your Connections

1. Check hose connections and outdoor faucets for leaks. Replace or adjust them as soon as you notice a leak. Also watch lengths of hose when water is running through them for holes or other damage.

Strategically Schedule Your Water

2. Be strategic by scheduling when you water lawns, gardens and flower beds. Watering before the heat of the day means less water is lost to evaporation. A regular watering schedule also keep plants and lawns from drying out and becoming stressed, which in turn leads to the need to water more.

Regularly Adjust Your Sprinklers

4. Stay pointed in the right direction. Regularly adjust the direction of your sprinklers to make sure you aren’t watering the sidewalk or driveway.

Make A Clean Sweep

5. Use a broom on driveways and walkways as a first step to cleaning them. Use the hose as the second step.

Maintain Your Pool

6. Don’t let your pool make an unwanted splash on your water bill. If you have a pool, make sure it is regularly maintained and thoroughly checked for leaks.

Use A Rain Barrel

7. Set up a rain barrel. Then use water collected to water trees, shrubs and flowers. In a similar vein, see if downspouts can be directed to deliver water to certain areas that need it such as lawns or garden beds.

Fill Your Appliances

8. Appliances are most efficient when full. Wait until there is a full load to run the dishwasher or washing machine.

Inspect Your Appliance

9. Inspect other appliances that use water to make sure they are performing in an optimum way. Don’t forget your evaporative cooler or hot water heater.

Don’t Wait For The Tap To Get Cold

10. Keep a container of drinking water in the refrigerator instead of letting tap water run to get cold for drinking. This has the added benefit of giving you a cool drink instantly.

Saving a drop here and a drop there really makes a difference when it comes to water usage. What looks like a small amount of wasted water adds up quickly when it happens every day or all summer long. In a similar way making what seems like a small step now will help keep your home green. Then you can enjoy summer the way it was meant to be.

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