February 24, 2014
This week we were joined by Deb Newell from Real-Time Leasing and Jennifer Dierkhising from Wells Fargo. The first topic of discussion was alternative solutions for putting your home up for sale. An obvious alternative would be turning it into an investment property. Leasing your property instead of selling is a great way to build your investment portfolio and just ends up working better because some people cannot sell their property. If you decide to dive into owning investment properties there is the option of hiring a leasing company. A few things to look for when finding a good leasing company is figuring out what you need from that company. Do you want a full-service company or just someone who will find tenants an place them in your properties. You should also screen property management companies the way you would when trying to find a real estate agent. After all, you are giving them a huge asset in your life to take care of so you better be sure you trust them with it.
When you decide to turn your old home into an investment property, you should make sure you are as involved as you want to be with the leasing company. A full service company will take care of the maintenance, management, accounting, leasing, marketing, pretty much everything and if you have that personal connection with the property you may choose not to have them take care of that much so that you can still be involved. Another thing to consider when deciding how much responsibility you want to hand over to a leasing company is how much your time is worth. Many renters are going to call after 5pm about frozen pipes or a leaky faucet and if you are working a full-time job yourself and just want to go home after you’re done, then you may want to have the full-service leasing company so that they can deal with the issues that come in at all hours of the day.
Jennifer Dierkhising brought up an economist outlook for the year of 2014. There is a healthy economy ahead of us and you can definitely see it with how people are getting more confident in selling their homes. Appreciation is happening, 401k’s inflated a little bit last year, so people are starting to feel more prepared in making a move or buying a home. With this healthier economy, comes higher interest rates which really only makes people eager to buy and fight over homes because people are now happier and ready to spend the money.
In 2013 there was about a 2.8% increase in income across the board. With incomes increasing, property values tend to rise along with them. There are a lot of pent up people that are waiting to make a move but are watching inventory and as soon as inventory starts popping, people are going to be on it, buyers and sellers. With the new desire to buy and sell with this healthier economy, also comes a lot of new construction. When people can afford it, they love construction with the ability to build your home however you want to with whatever colors, your own appliances, etc.
Here are a few questions and answers from the show:
Tommy from St. Louis Park: If my girlfriend and I lease her townhouse, how does non-homestead tax enter into all of it?
Jeff Zweifel: Once you start leasing that other property, the taxes will go to non-homestead.
Anne from Stillwater: I have a life estate and am thinking about downsizing. Will that transfer to another home that I get or how would that work?
Jeff Zweifel: It will not transfer. You would have to create the life estate in your new home. In the old home that you are selling, when you transfer the property, the other parties that have the rest of the interest have to participate in transferring or selling your current home. You should seek legal advice from an estate planning attorney to create a life estate for your new home.
Jeff from Richfield: Is the absence or presence of radon a disclosable item in the truth in housing form?
Andy Prasky: Yes, there are new disclosure statements that started at the beginning of the year where there in a new radon portion in the statements.
Josh from Maple Grove: My wife and I are currently selling our home and have it listed high because its winter and we think we have leverage because we don’t want to sell necessarily right away. Do sellers have more leverage in the winter because they may not want to sell unless it’s high?
Andy Prasky: You really shouldn’t waste your time. Buyers are too smart right now and your house is worth what its worth. If you can’t sell in 8 weeks, you need to look at what’s wrong. There are 3 main things: price, condition, and location. Use feedback and market analysis to make changes to your property and then you should be able to sell much easier and faster.