Buyers • Real Estate Investing • June 1, 2018

Investing in Rental Property: The Risks, Rewards, and Benefits of Owning Rental Property

by Kailee Harvey

One area of the real estate market that is thriving right now is rental property.

All indications suggest that the rental market will continue to improve because of low vacancy rates and rising rents. In fact, the demand for rentals is predicted to far exceed supply through 2016, with 4.5 million new renters expected to enter the market in the next five years.

What to consider before buying a rental

Being a landlord has its challenges. The recession took a toll on rental prices for a few years and any future economic downturns could do the same. Once the job market returns to normal, there’s a strong possibility that more people will choose to move from rentals into homes of their own. And the demand for rental properties could become over saturated at some point, resulting in an investment bubble of its own.

What’s more, while the income from a rental property can be significant, it can take at least five years before you’re making much more than what you need just to cover the mortgage and expenses. In other words, the return on your investment doesn’t happen overnight.

However, in the long run, if you select the right property, it could turn out to be one of your best investment decisions ever—especially since rental real estate provides more tax benefits than almost any other investment.

Tax deductions for the taking

One of the greatest things about owning rental properties is the fact that you’re able to deduct so many of the associated expenses, including a sizeable portion of your monthly mortgage payment.

The commissions and fees paid to obtain your mortgage are not deductible, but the mortgage interest you pay each month is, including any money you pay into an escrow account to cover taxes and insurance. Whatever your mortgage company reports as interest on your 1098 form at the end of each year can likely be deducted.

For example, you may be eligible to deduct credit card interest for goods and services used in a rental activity, repairs made to the building, travel related to your rental (local or long distance), expenses related to home office or workshop devoted to your rental, the wages of anyone you hire to work on the building, damages to your rental property, associated insurance premiums, and fees you pay for legal and professional services. However, as is the case with any transaction of this type, be sure to consult your attorney or accountant for detailed tax information.

What to look for

As with any real estate investment, the location of the property and its overall condition are both key. But with rental properties, there are some other, unique factors you’ll also want to consider.

Utilities

Look for a building with separate utilities (water, electric, and gas, etc.) for each rental unit. This will make it far easier to legally charge for the fair use of what can be a very costly monthly expense.

Competition

If your property is one of the few rentals in the neighborhood, there will be less competition for interested renters.

Transportation

Rentals that are near popular public transportation options and/or major freeways (without being so close that noise is an issue) are usually easier to rent—and demand more money.

Landscaping

Properties with small yards and fewer plantings are far easier and less expensive to manage.

Off-street parking

Not only is off-street parking a desirable feature (people with nice cars usually don’t like to park on the street), it’s also a requirement for rental properties in some communities.

How to start your search

Unlike homes, rental properties do not typically have a visible ‘for-sale’ sign standing out front (as landlords don’t want to irritate, bring attention to their current renters, or turn off any prospective renters). Therefore, if you are interested in a rental property, your best option is to schedule an appointment with your real estate agent/broker to discuss your investment goals and identify what opportunities currently exist in the market place.

Housing Trends • May 31, 2018

12 Sanity Savers to Get You Through Your Home Remodel

by Kailee Harvey

It’s easy to get excited about a home project at the beginning, when the work seems theoretical and you hear yourself saying things like, “Oh, we could just knock all of these walls out, no problem!” Then reality sets in. The workers you hired go AWOL, your budget is blown and you can’t find your good shoes under the pile of scrap wood and duct tape. It’s time to take a deep breath and make a plan. Read on to find a dozen ways to stay sane while you are creating your dream home, no matter how long it takes.

Preview (opens in a new window)

Sanity Saver 1: Richard Bubnowski Design LLC, original photo on Houzz

1. Have a plan A … and a plan B and C too. Even when you set what seem like perfectly reasonable goals, things have a way of coming up unexpectedly to bump your project completion date further and further back. Having a back-up plan (or two) is key.

I find it helps immensely to think of your goal in three parts. There is the ideal goal — if everything went right and there were no snafus, this is what you would want done by a certain date. Then there is your plan B, where you pare down your list to the essentials. To make a plan C, pick just one thing that if you got done would still make you feel somewhat accomplished.

Sanity Saver 2: Soorikian Architecture, original photo on Houzz

2. Take “before” photos. In fact, take lots of photos throughout the process. When you feel motivation beginning to falter, take a look at pictures from early on in the process to remind yourself just how far you have come.

Sanity Saver 3: Young House Love, original photo on Houzz

3. Start a blog. Just like many diet and exercise programs recommend sharing your plans with supportive friends and family members, I advocate starting a blog as a way of holding yourself accountable during the renovation process. After a rough day, when nothing went as planned, at least you can vent your frustrations in a blog post and get kind words of support in return from readers all over the world.

They did it: Sherry and John started their blog Young House Love while they were fixing up their first home, and it became a wildly popular and award-winning site that attracts many visitors each day. Realistically, most of us won’t become the next Young House Love, but starting a blog can still be a worthwhile project and documentation of your home progress.

4. Focus on making it livable first. This may sound obvious, but it is all too easy at the beginning of a project to take on too much. By saving some of the cosmetic changes (like decorative tilework) for later and choosing to focus on essentials (like plumbing) now, you will make your life much easier.

Sanity Saver 4: Richard Bubnowski Design LLC, original photo on Houzz

5. Schedule your renovation in stages. During an extensive renovation, be smart about the order you work on things if you are staying in the house at the same time. Work to finish bedrooms and a bathroom first, so you can have a comfortable area to live in while other changes are going on.

6. Set one small, attainable goal each week. Tasks like putting up new house numbers, ordering something you need online, or patching holes in a wall do not take very long, yet being able to cross something off your list — and see visible improvement— will help keep you motivated.

Sanity Saver 5: Holly Marder, original photo on Houzz

7. Help the pros by doing your job: Be decisive. Yes, contractors, architects and designers can sometimes go beyond the original schedule, but each time you change your mind or put off key decisions, know that the process will take that much longer. The best thing you can do to speed progress is to maintain a clear vision of what you want and communicate it clearly to all of those involved in the project.

8. Stay busy during downtime. It is inevitable that there will be times it seems that nothing is happening. Whether due to a tight budget, workers vanishing midproject or simply a stretch of bad weather, it is important to keep your spirits up when work stalls out.

Try keeping a list of simple tasks that you can do anytime. Then, when you start feeling antsy, pull out your list and get to work. Cleaning, organizing, decluttering and doing small repairs are all good places to start.

Sanity Saver 6: decordemon, original photo on Houzz

9. Pitch in and do some work yourself. Even if you’ve hired pros to do the bulk of your renovation, consider taking on a small DIY project of your own. Using your own hands to pitch in and improve your home can be incredibly satisfying.

10. Make your bedroom a refuge. Even if outside your door is quite literally a disaster area, having a calm, relaxing spot to rest and recharge can do wonders for your spirit.

Sanity Saver 7: Mykonos Panormos Villas, original photo on Houzz

11. Use your outdoor space. If the weather is good and your project is taking place indoors, setting up a comfortable outdoor living space is a wonderful way to get away from the noise and chaos of the renovation. I’ve heard of people setting up full outdoor kitchens to use while the indoor kitchen is being remodeled, and I think it’s a wonderful idea.

12. Remind yourself why you are doing this … Clicking through your inspiration photos is a great way to get juiced up about your project all over again. You can also try simply closing your eyes and visualizing your home project completed, vividly imagining every little detail, and how wonderful it will feel to have it all done.

… and know when to get out of town. Of course there are times when it’s best to admit it’s time for a break. When the entire house in in utter disarray, taking a spontaneous weekend getaway can be just what the doctor ordered.

Home • April 20, 2015

Spring Cleaning … My Mt. Everest

by Kailee Harvey

As we bid adieu to winter and usher into spring, it’s the perfect time to purge, clean and organize. As a realtor, I think about spring as my “busy time of year”. But as a mom, spring brings to mind the task of spring cleaning that seems like the Mt. Everest of housekeeping tasks. This year, I decided to tackle it one step at a time and try something different.

Make a Cleaning List

Lists help me stay organized – they also help me see what I’ve accomplished after I can joyfully check off each one and see my overall progress. This also helps you see exactly what you’ll need for supplies. There’s nothing worse than having to stop everything right as you’re getting in the groove to run and grab Magic Erasers for the crayon on the wall!

Make Your Playlist…

Or turn on your favorite radio station! When you can sing along to your favorite oldies station or dance around with your kids to New Hits, it makes time go by fast and puts everyone in a better mood.

Take it One Step at a Time

When you’re determined that you will get every last dust particle wiped and the entire house cleaned within 30 minutes, you’ll overwhelm yourself and anyone involved. You may even have the dog running for the woods. Take it one step at a time and set realistic goals. Try setting the goal of cleaning a certain number of rooms per weekend. You’ll be less stressed with the whole idea and you’ll have leftover time to spend with the family or take a hike.

Get Some Help

Open the windows, enjoy the fresh breeze and DELEGATE! Split your list into sections or particular jobs for the whole family to split. In our family, my husband usually tackles the outside while I am busy inside and the kids are running between us. Even the youngest of helpers can make a difference! My two year old helps mommy sweep the floors and pick up her toys. Then she bounces outside to help daddy bag any yard debris and rake the grass.

Be Patient

A rule I’ve always lived by is work smarter – not harder. If you’re having a hard time getting grime or stains up, spray your cleaner and let it sit. Move onto something else while your cleaner does all the hard work.

Reward Yourself When You’re Done!

After hours of scrubbing and dusting, you deserve a little something special. After all, having something to look forward to after a long day’s work makes it that much better when you’re done! So grab the fam or roommates and head off to one of our 20+ breweries and enjoy a cold one to celebrate that fresh-start feeling. If that’s not your style, relax in your freshly cleaned house and take it all in. You deserve it.