Thursday, September 26, 2013

Autumn Maintenance Checklist

'Tis the season for a little outdoor maintenance! You could put it off or pretend it isn't important, but that might come back to bite you. So, since it shouldn't be avoided, we're hoping to make your life a little easier with a quick list of the must-do tasks. We've covered outdoor chores this week, but check back again soon for a short list of important indoor jobs as well!

The Lawn:
- Trim trees & bushes
- Fertilize the lawn
- Clean & store yard equipment
Make sure you trim branches back so they don't pose as a risk to power lines during winter storms.  If you're worried about trimming large branches check with the city or local government. It may actually be their responsibility to do major trimming in some situations. Also, take a little time and rip out the dead annuals from your flower beds and you'll save yourself the hassle next spring.

The House:
- Clean & repair gutters
- Inspect your roof
- Clean the chimney & fireplace
- Inspect & clean outdoor lights
- Check for peeling paint
- Seal cracks & gaps with caulk or weather stripping
Cracked or falling siding, a leaky roof, or full gutters are a recipe for disaster when mixed with harsh winter conditions. Take your time checking windows, doors, and your foundation for gaps. These few tasks may help to prevent serious (and costly) problems that can have a long term impact on your house.

- Store things like paint, caulk, and adhesives somewhere they won't freeze
- Seal driveway
- Clean & cover your air conditioning unit
- Prep your deck & store outdoor furniture
- Unhook hoses and prep pipes for freezing weather
These final few tasks may not apply to every house, but shouldn't be overlooked if they're relevant to you. Continual freezing and thawing, which we can say with complete certainty will happen (this is Michigan after all), can wreak havoc on a cracked driveway, your wooden deck, and liquids left out in the cold. Stop and consider how your outdoor assets will hold up in the weather.

Finally, take a moment to jump in a leaf pile and enjoy another gorgeous Michigan Autumn!

Tuesday, September 24, 2013

Equity Dynamics

Equity small.pngEquity is the difference in what your home is worth and what you owe. Ideally, as the value goes up and the unpaid balance goes down with each amortized payment made, the equity grows from two directions.

This dynamic leads to increasing a person’s net worth much faster than many other investments.

A homeowner has minimal control over value. It is necessary to maintain the property to avoid depreciation and make good decisions on capital improvements. After that, appreciation is generally controlled by supply and demand and the economy.

Mortgage management is something that the homeowner does have control. Making the decision to select a shorter term mortgage at a lower interest rate can have an impact on equity build-up. Lower interest rates amortize faster than higher interest rates which will also affect equity growth. Currently, it is possible to get a 1% lower rate on a 15 year mortgage than a 30 year mortgage.

Compare two alternatives of a 30-year and a 15-year mortgage. The payments will definitely be higher on the shorter term because it pays off quicker. However, if a person can afford the higher payments of $362.53 more per month in this example, the equity will be greater. Even after you take into consideration the higher payments, the increased equity is $17,236 at the end of the seven year holding period.

Equity dynamics.png

Another decision that can affect equity build-up is making additional principal contributions along with the regular payments. Whether you’re making an occasional lump sum payment toward principal or regular monthly contributions, it will save interest, build equity and shorten the term on a fixed rate mortgage. Estimate your personal savings with this Equity Accelerator.

Thursday, September 19, 2013

Spotlight Listing: 2560 W. Saginaw Road

Today's Spotlight Listing is a little bit of paradise. Nestled on eight acres following the Salt River, this beautifully maintained and updated home is the perfect oasis from busy life.  Between the Rail Trail, fishing, hunting, and canoeing, you’ll never be bored with this retreat- although you may find yourself very relaxed.  Let us walk you through 2560 W. Saginaw Road.

A covered front porch runs the full length of the house and provides the perfect place to relax on a warm afternoon.  The front door opens to the spacious living room with beautiful hardwood flooring and coved ceilings.  This inviting space connects to a dining area with Andersen French doors which open to a second covered porch.  This area could easily be converted into a screened in porch or four-season room.  Why not take advantage of the picturesque landscape year-round?

Off the dining area is a kitchen that you won’t soon forget.  It has been updated to perfection and is befit for a culinary master.  Stainless steel appliances include a professional five-burner range, dishwasher, and refrigerator with drawer-style freezer.  The newer maple cabinets and ceramic tile floors perfect the space.  The side door to the home opens into the kitchen where there is also access to the partially-finished full basement.

Back through the living room a short hall leads to a full bath and all three bedrooms.  The highlight of this side of the house is certainly the addition built in 2003 which houses the master suite.  This expansive room is over 20 feet long, allowing for a cozy sitting area right in the bedroom.  Also within the suite is a private master bath and walk in closet.  More Andersen French doors lead to the covered porch along the back of the house.

If our little tour has left you wanting to find a comfy chair and a good book in this relaxing retreat, we understand- and there’s good news! The home is filled with low-maintenance and high-efficiency amenities, ensuring that you’ll have time for that comfy chair and good book.  Steel siding, a new roof, and garage doors were installed in 2012. There are also newer windows and doors and a new septic and drain field as of 2003. The whole house has been insulted with fiberglass and Styrofoam, and there is a high efficiency furnace ensuring you won’t spend all your money heating and cooling this fabulous home.

2560 W. Saginaw Rd. is listed with Carol Park, one of Midland's most experienced agents. Give Park Place Homes a call today to arrange for your own private showing of this tranquil retreat! 989.698.1100.  To see more photos of the home, head over to our website to view the full listing.

Tuesday, September 17, 2013

Who is my agent?

Secret agent 150.jpgMore often than you’d expect, homeowners refer to the person they bought their insurance from as their agent. It sounds reasonable but it’s definitely not accurate. That person is the agent of the insurance company and they legally represent the company, not the customer. Even an independent agent who can place a policy with different companies is still an agent of the company.
A mortgage officer, in most cases is an employee and represents the company. And the same is true for a title or escrow officer. It’s important to understand the actual relationship to know what you can expect from them.
Any business person who wants to stay in business must treat their customers fairly and with a high degree of service. As a customer, you should be able to reasonably expect honesty and accountability. The difference is that employees owe their loyalty to their employer and agents owe their loyalty to their principal.
An agent owes more than just honesty and accountability. The principal can expect complete disclosure, obedience, loyalty, reasonable skill and care and confidentiality from their agent.
This advocacy is very beneficial during the buying or selling process to coordinate all aspects of the transaction. The agent can bring valuable experience to your side of the transaction to provide confidence that your best interests are being represented from start to finish.
Most states have a recognized procedure for the real estate professional to create a formal relationship between themselves and a buyer or seller. This requires a fiduciary/statutory responsibility that places the principals’ interests above the agent’s own personal interests.

Friday, September 13, 2013

Not Your Momma's Modular

Can you tell which of these homes is modular?
Top (Left to Right): Ridgeview Construction, Blu Homes  Bottom: Oasis Homes, Oasis Homes
That was a trick question...they are all modular!

Are you surprised? We thought you might be. Modular homes are often confused with, or thought to be the same as, manufactured and mobile homes; but they are distinctly different and they have a lot to offer in terms of style and flexibility.

Modular homes are built in factories under strict state and residential codes and regulations. They are shipped to their final location and placed on the foundation (including a basement or crawl space if you'd like) and final assembly steps are then completed. Modular homes are also different than site-built, or stick-built, homes and are subject to city and subdivision regulations. If you're considering a modular home be sure to do your homework first. We recommend speaking with a REALTOR©. Click here for info on the difference between modular, manufactured, and stick-built homes and the implications.

So why would you consider a modular home over a stick-built?
There are a few key advantages:

Build Time: Your construction could take weeks instead of months. Because modular homes are built in a factory, build teams can work simultaneously and delays due to weather and waiting for materials or subcontractors are rare.
Energy Efficiency: The building techniques used inside modular home factories are known for reducing air leakage- which accounts for 20-40% of the energy used to heat and cool a home. This extra insulation and sealing makes climate control much less costly. Modular homes are considered environmentally friendly and a form of "green building".
Design Flexibility: Contrary to popular belief, modular homes can be built in any architectural style, size, and shape. Publications like Dwell Magazine have inspired a wave of popularity with ultra modern modular homes, but there are numerous companies right here in Michigan that build everything from modular Victorian mansions to modular log ranch homes.  They are completely customizable from the layout to the light fixtures to the floor coverings.

Cost is the greatest concern for many people and there is no simple answer for whether modular homes are cheaper than stick-built homes. Within the last year, new-construction homes sold through the Midland Board of REALTORS had an average price of $127.78 per square foot. We've done some hunting and found companies that charge everywhere from $60 to $350 per square foot for a modular home. They are often called a "bigger bang for your buck", but the price for a modular home depends entirely on the complexity of your building plans and the quality of the finishes you choose. Contact Park Place Homes today and we can help you find land for your new home and, if you're interested, the right modular company as well!

Tuesday, September 10, 2013

Mortgage Interest Deduction

MID.pngOriginally, in 1913 with the Sixteenth Amendment, Income Tax allowed a deduction on any interest paid by a taxpayer. Prior to World War I, most interest was paid for business purposes and very little paid by individuals. Credit cards, revolving credit, student loans and home equity loans that would charge interest would not become popular for decades.

However, by the 1930’s, the Federal Housing Authority was created to help people to finance homes. Later, other quasi-governmental agencies like FNMA, FHLMC and GNMA were created to help facilitate mortgage lending. 

Even though, Congress never intended to use this deduction to encourage homeownership, it has certainly benefitted millions of people who couldn’t pay cash for their home. This deduction has made owning a home more affordable for tens of millions of people.

The Tax Reform Act of 1986 eliminated the deduction of interest on most personal debt with the exception of qualified mortgage interest debt. Two new terms were introduced to specify what was qualified.

Acquisition Debt is the amount of debt incurred, up to a maximum of $1,000,000, to buy, build or improve a principal residence or second home. It must be a recorded lien and the amount cannot be increased by refinancing. In other words, the acquisition debt is a dynamic amount that decreases as the loan amortizes.

Home Equity Debt is any amount up to a total of $100,000 over Acquisition Debt. It must also be a recorded lien against either the first or second home. It can be used for any purpose and is no longer restricted to medical or educational purposes.

In the example below, a person borrowed money to buy a home and the entire first mortgage was acquisition debt. The unpaid balance was reduced by the payments made and the acquisition debt followed accordingly. At some point in the future, after the home had gone up in value considerably, the owner refinanced a much larger amount.

The existing acquisition debt was transferred into the new mortgage. Any borrowed funds that were used for capital improvements could be added to the existing acquisition basis. The interest on those funds would be deductible.

The owner/borrower could also deduct the interest on up to a maximum of $100,000 of home equity debt. If there was still debt above the acquisition and home equity debt, it would be classified as personal debt and the interest on it would not be deductible.  













Lenders are not concerned if they are making a tax deductible mortgage on a home. They want to make sure there is sufficient equity in the property to secure the mortgage should it have to be foreclosed. A homeowner should consult with their tax professional if there is a question about deducting the interest on their mortgage.

Click Here to use a Refinancing Analysis.

Friday, September 6, 2013

Fives Years and Counting!

 Five years ago, our broker/owner Shelley Park Cluff stepped away from the safety of working for a franchise and under a broker to open her own independent real estate firm, Park Place Homes. To an outsider it would have appeared that the deck was stacked against Shelley and the success of Park Place Homes. In 2008 the real estate market had softened significantly and  the largest employer in Midland, Dow, announced a large round layoffs shortly after Park Place opened. Economic uncertainty in the community slowed the real estate market even further. What an outsider could not have seen was the vision, adaptability, and determination that Shelley leveraged to lead Park Place Homes through the tough climate and that she continues to use to grow the business. 

  Shelley has never wavered in her vision of leading a team of skilled agents who share her enthusiasm for real estate as well as her high ethical standards. She has used her leadership skills to turn that vision into reality through analysis and planning, careful team building, and decisive action.

 Today, Park Place Homes has grown into a 9 agent office and maintains a 10% market share. With a reputation for being able to sell the homes other agencies have failed to sell, Park Place Homes' approach to real estate is unique and highly effective. The office functions as a team instead of individuals competing against one another. Each agent draws from the pool of knowledge available to them. 
  Park Place Homes utilizes cutting edge technology and new marketing techniques instead of relying solely on the old and traditional methods of real estate marketing. We reach potential buyers through Facebook, Twitter, Pinterest, and our blog as well as print media and word of mouth. Our website allows viewers to search our listings as well as the entire MLS (multi-listing system) and provides useful information about the community, local professionals, and the home-buying and selling process. With five years under our belt and combined experience of more than 50 years in real estate, we are your source for Midland, Michigan real estate.
It's Your Move!

Tuesday, September 3, 2013

The Rules

The profit potential in single family homes for investment has been a consistently good long-term investment. They offer investors the opportunity of high loan-to-value mortgages at fixed interest rates for 30 years on appreciating assets, tax advantages and reasonable control that other investments don’t offer.
Last year, Warren Buffett said that if he had a way of buying a couple hundred thousand single-family homes, he would load up on them. Blackstone group L.P. (BX) has now purchased over 30,000 homes and American Homes 4 Rent (AMH) has more than 19,000 for rental purposes.
Individual investors actually have an advantage over the institutional investor but if they are not familiar with rental real estate, some basic rules could be very helpful.
  1. Invest now to get more in the future.
    Whether it is time, effort or money, the prudent investor is willing to forego immediate gratification for something more at a later date.
  2. Real estate is an IDEAL investment.
    IDEAL is an acronym that stands for income, depreciation, equity build-up, appreciation and leverage. 
  3. Invest in single family homes in predominantly owner-occupied neighborhoods at or below average price range.
    This strategy should involve homes that will increase in value, rent well and appeal to an owner-occupant in the future who will pay a higher price than an investor.
  4. Location, location, location.
    The same homes in different areas will not behave the same. You can improve the condition, modify the terms or adjust the price but the location can’t be changed.
  5. Understand your strategy – buy and sell, buy and hold or buy, rent and hold.
    These three distinct strategies involve big differences in acquisition, management and taxation.
  6. Know where your profit is coming from before you invest.
    The four contributors to profit are cash flow, appreciation, amortization and tax savings. They don’t contribute equally or the same in all investments.
  7. Profit starts with purchase.
    Buying the property below market value builds profit into the investment initially.
  8. Risk is directly proportionate to the reward involved.
    An investment that has a high degree of upside also will have considerable downside possible.
  9. Avoid functional obsolescence unless you have a plan before you buy.
    The lack of usefulness or desirability of a home that exists when you buy it will still be there when you sell it. Unless it can be cured, it will affect future profit.
  10. Good property + good tenant + good management = great investment.
    These are three solid components for a successful investment.
  11. Problems left unresolved have a tendency to get worse.
    It is generally cheaper in time or money to fix a problem earlier rather than later.
If you’d like more information about the opportunities in our market, contact me.