An Investment Route to Saving.

Helping your Children/ Grandchildren to Achieve Their College Goals.

Most people have lots of reasons to save but not always enough discretionary income after the family essentials have been met. A relatively small investment in a rental home can control a good home that will rent easily, generate positive cash flows and pay for itself.  The borrowed funds create leverage that earns a return on the total value of the home and not just the amount of cash you have invested. The strategy is simple.  Find a slightly below average priced home that will rent well.  It will appeal to a larger group of people while it's rented and when it's ready to be sold. Rent the home and maintain its condition over the years.  As the loan amortizes and the value increases, the equity will grow.  When your student is ready to start college, you'll actually have several options. You can sell the property; pay the tax on the gain at the reduced capital gains rate and fund the education.  Another option would be to refinance and take the proceeds to pay for the tuition.  This would allow you to continue to own the asset but would free your equity and under current tax laws is a non-taxable event. Regardless of whether you're trying to plan for your children's education or your own retirement, rental property offers many solid investment opportunities.  All investments contain risk.  Knowledge and expert advice from tax professionals can reduce the risk.  Contact me if you want more information.

How to Pay Off Your Mortgage.

Here are some great tips on paying off your Mortgage early.  

Pay Off Your Mortgage?

Becoming debt free is as much a part of the American Dream as owning a home but there certainly can be conflicting circumstances that make the decision to pay off your mortgage early unclear.

The advantages of paying off debt early is increased cash flow, less interest paid and a higher credit score. The disadvantages are lower cash flow available as discretionary funds for meals, entertainment and other things. If the ultimate goal is financial security, is it worth the intermediate sacrifice?

Whether you pay off your mortgage early is a personal decision that may be right for one person and not for another. Consider the following before you get started:

Reasons you should

• Peace of mind knowing that you don’t have a mortgage
• You’ll save interest regardless of how low your mortgage rate is
• Lowering your housing costs before you retire

Reasons you shouldn’t

• You can invest at a higher rate than your mortgage
• You have other debt at a higher rate than your mortgage that needs to be paid off
• You might need the money in the future and want to remain liquid
• You might not qualify for a mortgage currently
• You should pay off other debt with higher interest rates
• Your employer has a matching retirement plan that would benefit you more
• You have more urgent financial needs like emergency fund, life, health and disability insurance
• You expect high inflation and the value of your mortgage debt will decrease

Use this Mortgage Accelerator to determine how quick you can pay off your mortgage.

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Negotiations are always an important part of an offer!

Two Negotiations

There are two negotiation periods in some home sales. The primary negotiation takes place when the contract is agreed upon that includes the price, closing and possession. Buyers and sellers alike feel relieved once this first round has resulted in an agreement but there may be more negotiations to come if there are contingencies for financing, inspections or other things.

The purpose of an inspection is for the buyer to receive an objective evaluation about the condition of the home and its components to identify existing defects and potential problems. The expense for inspections can be several hundred dollars and it’s reasonable for buyers to not want to spend the money before they find out if they can come to terms with the seller. From a different perspective, sellers want to know quickly if the buyer is going to reject the home due to the inspections.
Sometimes, buyers will expect sellers to make all of the repairs listed on the report and this is where the second round of negotiations begins. If the seller refuses, the negotiations can go back and forth until the other party accepts the offer on the table or the contract falls apart.
When purchasing a new home from a builder, it is expected for everything to be in working order; after all, it is new. However, it is reasonable to expect that existing homes, that are not new, have a different standard. While it’s understandable that buyers would want to be aware about major items that are not in “working order”, normal wear and tear of components based on its age should be expected.
In a highly competitive seller’s market, buyers might do whatever they can to get their contract accepted, realizing that there is another place to negotiate when they’re not competing with other buyers’ offers to purchase.
For this to be a WIN-WIN negotiation, both seller and buyer must feel good about the transaction. Neither party should feel that they have been taken advantage of.

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What Does Your Dream House Look LIke?

Have you been thinking of a new "Dream House"  here are some suggestions...enjoy!!

Dream House   (Click Here)

Have you begun to plan your Retirement?

It’s surprising to realize that most people spend more time planning their next vacation or cell phone purchase than they do on their own retirement. Let’s look at a hypothetical situation where you have $35,000 to invest for your retirement in 15 years. Have you compared where you might have the best opportunity?

The safest place to put it might be a certificate of deposit because it’s insured but unfortunately, rates would be less than 2%. The value would grow to $47,233.26 at the end of the 15 year holding period.

Investing in a mutual fund has more risk but also a greater opportunity to earn a higher rate of return. An estimated 7% return would project an accumulated value of $99,713.14.

Using the $35,000 for a 20% down payment and closing costs on a $150,000 rental home could realize much higher proceeds. Using a familiar investment analysis spreadsheet, the $35,000 could grow to a future wealth position of $153,302. This analysis considers leverage, 3% appreciation, re-investing cash flows, 7% sales expenses and paying applicable taxes which the previous examples do not.

The rate of return on these three examples are 2% for the CD, 7% for the mutual fund and a comparable 14.19% return on the rental. As the rate of return increases on investments, additional risk is reasonable.

Most people are much more familiar with homes than they are with mutual funds, bonds and other similar investments. The same REALTOR® who helped you with your home can help you invest in a rental home.

August News

What is in your Garage?

Can you fit your car in your Garage?  Or do you need to clean out your garage and put items into storage?

Garage Cleaning Tips for the Overwhelmed