“Slow” Season or “Serious” Season?

As the days get shorter and temperatures drop, many sellers ask if they should wait to list their home instead of putting it on the market now.  For those looking to sell their home now, there’s good news:

According to a Huffington post article and Redfin, now is the BEST time to listing your home!

“Anytime between December and May is an ideal time to list your home — and February is the hands-down the best month. The company’s analysis of nationwide listings from 2014 showed that 74 percent of homes listed in February sold within 90 days, and 13 percent of them sold for more than the list price. (Compare that to September, when 61 percent of homes sold within 90 days and October, when just five percent sold above list price).

In short, “shoppers in January and February are motivated,” says Christin Camacho, a Redfin spokesperson. “They’re looking in winter because they need to move, not because they’re just looking for fun.” And if people are going to brave the cold to househunt during winter, then they’re going to make their effort worthwhile.”

Visit this site to read the whole article: http://www.huffingtonpost.com/2014/12/13/best-time-to-sell-home_n_6311086.html

 

 

Swtichback Kitchen Design

With the beam in place and the brick up as a backsplash, it was time for the fun task of designing the kitchen here at Switchback Manor!

Kitchen when we bought the house

We wanted the design to be in keeping with the old feel of the home while still having the modern amenities of a new kitchen.

We first installed the flooring to ensure that the flooring would be under all of our cabinetry in case we ever changed the layout in the future.  After that, it came time to pick out cabinets and countertops.

We chose ivory cabinets to carry the color of the fireplace built-ins and trim from the rest of the house and make the cabinets feel more original than brand new.  One thing I made sure to do was to have the cabinets extend to the ceiling to ensure both authenticity and as much storage as possible.  I am not a fan of soffits and since they are a relatively recent kitchen design, they did not belong in the house.

For our layout, we worked with our existing, opened galley kitchen by adding a large centrally located island separating it from the open family room.  We then also added a dry bar/office nook behind the family room to create a cohesive feel and add yet more storage.

For countertops, we chose soapstone.  This would not only have been a stone that was used in the early 1900’s, but it is a great countertop option for multiple reasons.  It is non-porous so unlike granite, it does not require yearly sealing.  Instead you can oil the surface to bring out the natural veining.  The more you oil it the darker it gets.  The surface can also stand up to high heat.

For appliances, we chose stainless to help modernize the space.  I love how the old works so well with the new in this space.

Flooring: Eco Friendly and Attractive

It is looking much more finished here at Switchback manor with the flooring down!

When we bought the house, most of the house was demo’d down to the sub floor.  There were a few areas that had original hardwood remaining but they torn up in parts and were also level with other added subflooring in other parts.  It would have been more work to try to save them and would have resulted in a choppy feel to the house.

Formal living room

dining area

Family room

Kitchen

master bedroom

4th bedroom turned closet

2nd bedroom

Instead, we chose an option that would not have been around in the 1930’s but has a distressed finish to blend with our “new old home.”  We picked bamboo which is actually harder than oak when chemically pressed and will be great for a home with pets.  It is also eco friendly as bamboo grows quite fast.

The installation process was the same as for tongue and groove wood flooring:  after laying out a thin underlayment for sound, the planks were fitted to each other and nailed using a special nail gun designed for flooring.

Family room Hall

The boys hard at work

Living/Dining room

Crusoe and Piper supervising

Upstairs Hall

Entrywall (formerly slate tile)

Master Bedroom

Bedroom 3

The best part? Because of the distressed, darkened finish, if it does get scratched will can simply use a stain pen to darken the area and it will blend with the existing distressed marks!

Overall, I am so happy with the dark flooring next to the pale gray walls.  Next step..trim!

Great Post on Making Millions in Real Estate!

Sometimes a team can accomplish far more than a group of lone individuals. For example, cyclists in the Tour de France take turns riding at the front of their group, decreasing the wind for those behind them. Wolves hunt in packs to take down animals 20 times their size. And for those of us who were children of the ’90s, we all rememberDucks Fly Together.

This brings up another team that can accomplish amazing things — not a team of people, but a team of benefits which, when combined, can help you achieve your greatest financial goals. Specifically, I want to talk about real estate.

I’m a real estate investor, and I firmly believe that real estate is the best traditional investment on Planet Earth today. However, just because you buy a piece of real estate doesn’t mean you’re going to make money.

As I explain in The Book on Rental Property Investing, big wealth is built through real estate investing by capitalizing on something I call “the four wealth generators of real estate.” Alone, each of these benefits can help you make more money, but together they’ll make you rich.

***Hey, you! Yes, you! I want to invite you to this week’s BiggerPockets Webinar, The Top 10 Mistakes Real Estate Investors Make (and How to Avoid Them). We’ll be talking about some common mistakes made by both new and experienced investors — and how you can beat the odds and avoid them! Hope you can make it! And now back to the post!***

Download Your FREE Rental Application Form!

It may seem like a small thing, but having a solid rental application is the first step in finding great tenants. Since BiggerPockets is all about helping you succeed in real estate investing, we’ve put together a complimentary Rental Application for you to use. Download it today and go find some great tenants!

Click Here For Your Free Rental Application

1. Cash flow

Cash flow is the extra profit left over after all of the expenses have been paid on a property. For example, if my rental property produced $2,000 in income and my expenses came to $1,700, my cash flow would be $300 that month.

Related: One Simple Habit the Vast Majority of Wealthy People Practice Every Single Day

Now, I know a lot of you are saying, “Three hundred dollars is not going to make me a millionaire.”

Probably not. But remember, we are just talking about one of the wealth generators. There are still three more to go!

Additionally, that $300 might be from just one property. If I owned ten similar units with the same cash flow, that’s $3,000 per month. If I owned 100 units, that’s $30,000 per month. This cash flow can go a long way toward helping you quit your job — or helping you save for a future big purchase, or retire wealthier.

2. Appreciation

When I talk about appreciation, I am not referring to how much I like you (though I do appreciate you!). I’m referring to the natural rise in value that real estate experiences. For example, if you purchased a property for $200,000 ten years ago, and today that property is worth $300,000, the appreciation made you $100,000 richer!

Of course, appreciation doesn’t cause values to increase every year (consider 2007!). However, historically, real estate prices have appreciated over the long term. So, again, appreciation alone is not likely going to make you a millionaire, which is why I don’t recommend that people purchase bad deals hoping that appreciation bails of them out.

However, appreciation is combined with the other “members” of the wealth generation team, powerful stuff can happen.

3. The loan pay-down

When you purchase a rental property with a mortgage, each month you make a payment to the lender. That payment includes two parts: principal and interest. Interest is the profit for the lender, but the principal is money you are paying down the loan with.

For example, if you purchased a house five years ago for $100,000 and obtained a $80,000 mortgage (we’ll say it was a 30-year mortgage with a 5 percent fixed rate), today you would owe only $74,000. Ten years from now, you would owe only $65,000. This means that every year your equity increased (equity is the difference between what a property is worth and what is owed on it), you’d gain value, as long as the property value didn’t drop.

Of course, if you paid all-cash for a property and didn’t obtain a loan, you would forfeit this wealth generator. This is something only you can decide.

4. Tax benefits

Finally, the fourth wealth generator in real estate is the tax benefits the U.S. government gives to investors. These benefits are numerous and realized in several distinct parts of the real estate process.

For example:

• Unlike most businesses, the government doesn’t look at cash flow or appreciation as self-employment income; thus no self-employment tax is typically due.
• The income tax that is due is often offset entirely by a deduction known as depreciation.
• Additionally, when you sell rental properties, the profit is taxed at the long-term capital gains rate, if at all.
• You can often defer any tax using a 1031 exchange offered by the government as a way to trade up into bigger or better properties.

The bottom line: If you make $100,000 per year from your job, your mom earns $100,000 per year from a business she owns and I earn $100,000 per year from real estate, who do you think keeps more? That’s right, I do.

Related: The Ultimate Guide to Real Estate Investment Tax Benefits

Of course, I’m not a CPA, so you should definitely consult with one before making any financial or tax decisions.

Putting it all together: an example

As I mentioned, each of these wealth generators can be powerful in itself. However, putting the four together can make you exceedingly wealthy because of the synergy among them.

For example, you might purchase $1,000,000 worth of multifamily real estate with a $200,000 down payment. Let’s assume this property produced $30,000 per year in cash flow, but it also might be increasing in value at 5 percent per year. This means that after 10 years, it could be worth $1.6 million, and you would have earned another $300,000 in cash flow.

On top of that, after those 10 years, that initial property could be paid down so that you owe only $650,000, giving you $1 million in net worth on that one property alone.

And to top it all off, the tax benefits during that decade would help you keep far more of that profit than had you earned it any other way.

Real estate is not the only way to get rich today, but it certainly is a simple one to understand, thanks to the four wealth generators of real estate.

Now that’s a team I want to be a part of.

https://www.biggerpockets.com/renewsblog/2016/02/10/4-powerful-ways-real-estate-millionaire/

 

Playing With Power Tools: Taking up Tile in Switchback

Though we want to keep many original features of the home untouched, there were a few tile floors that needed to go.  In the entryway, the floor was not original but 1960’s slate tile.  While slate is a great product, this tile was not the look we were going for in the house.

There was also original tile in the master bath we would have loved to keep if it would have worked with the revamped layout.  It was also damaged in multiple sections so saving it would have been hard anyway.  Luckily the same tiles will be saved in a different bathroom down the hall and the bathroom on the main level also has original tiles.

 

One of the things we love about this house was that it was built to last.  The original builder poured 2 inches of concrete before setting the bathroom tiles and the entryway was done in a similar manner to match the existing height level of flooring throughout the house.

Of course, when you build something to last that also means it is difficult to get rid of! Dealing with the removal meant using a jackhammer to bust of the tile and concrete.  The process was messy but actually quite fun since it isn’t every day a person gets to use a jackhammer in their house.  The most difficult part was shoveling and removing the heavy debris from the house.  We ended up using the broken up concrete as fill for parts of the hill our house was built on that needed protection from erosion.

After everything was removed and cleaned up, the floor could be prepped and ready to go for new flooring to be installed.  We plan to carry the same floors through the main level and entryway to create flow.  In the bathroom, we have picked out beautiful herringbone marble tile!

Plaster, Patching, and Drywall at Switchback Manor

Now that all of the wallpaper is in the past, dealing with the plaster underneath is a major undertaking.  Because many rooms are being changed and walls were removed, the original plaster was quite damaged or altogether missing in many spots.

Open kitchen/family room

We insulated and drywalled the kitchen, but tried to patch most parts of the house where we could.  One of the worst patching areas was in the master bedroom where the original closet was removed and the the adjoined bedroom was opened up to the room to become a walk-in closet/dressing room.  A large hole was left in the intact plaster and the existing plaster varied in depth.

In some areas, we used multiple layers of drywall to patch in and in others we used one layer of drywall with many layers of plaster on top to eventually get a smooth surface.

The same thing happened in the family room where we exchanged the old square recessed lights for new round can lights.  In some areas, the plaster was almost 2 inches thick requiring 3-4 layers of  1/2 inch drywall!

Though it is a long and tedious process patching old plaster, I am so happy with the end result and love how it turned out. Let the painting begin!

 

Dreaded Task: Wallpaper Removal at Switchback

Wallpaper removal… a task hated by all!  While some people think wallpaper is making a design comeback, I have removed too much of it to ever have the desire to add more to this world.  There are some beautiful designs out there, but I want none of it!

master bedroom

2nd bedroom

4th bedroom turned closet

The walls of our 1930’s house were almost entirely covered in wallpaper at one point.  Some of it had been removed from the main level before we purchased it, but the 2nd floor was still completely papered.  Not only did every room have wallpaper, many walls had 2,3 and even 4 layers!

We experimented with different methods of removal including several chemicals, hand scraping and using a power sander but we found the most helpful tool to be a $20 steamer from Menards.  It was a long process but room by room, the paper was removed and the glue was much easier to get off.  Bonus:  the steam acted as a daily facial 😛

We found varying degrees of damage to the plaster under the wallpaper as we went.  The master bedroom and the room being converted to the master closet had plaster that was almost pristine.  Another bedroom had many layers of peeling paint that we ended up steaming and scraping off as well.  Underneath that, the plaster required some patching before it could be primed and painted.

One of the coolest surprises we found was in the larger spare bedroom that only had one layer of wallpaper.  I was going along, removing the paper and feeling a bit grumpy as it was the day before Christmas Eve and I was hard at work instead of attending some holiday party and celebrating.  On one wall, I started to see a few letters and numbers and hurried to remove more paper to look at the whole message.  Reading it changed my whole outlook as it said “Merry XMAS and Happy New Year from Purl, Al and Walt 1974.” It had been written by former owners before they wallpapered that room and it was so cool to know they had been doing it the same time of year I was working on the place.  It reminded me why I was taking this project on and how I wanted to remember each and every part of the process because this home is a piece of history and some day, I will become a part of that story as well.  Though I never met those people, we share something in common: a love for this house on a hill overlooking the Illinois River.

Maybe I don’t hate wallpaper remove all that much after all…

The Single Biggest Reason to Invest in Real Estate

There are many reasons why investing in real estate is a good idea.  The reasons range from creating passive income to taking advantage of tax incentives.  The most important reason in my opinion?  To build lasting wealth for yourself and your family.  I invest in property for my own financial security, but I also want to be able to leave something to my future family as well.  Ever heard the saying, “the rich get richer while the poor get poorer?”  This sentiment is actually quite true and is well demonstrated by an article by FORBES:

According to French economist Thomas Piketty, there’s a simple equation to explain the rise in wealth inequality in the United States:r > g.

The rate of return for owned capital (r) exceeds the overall rate of economic growth (g). Thus, families and individuals who control wealth will accumulate it at a faster rate than the economy can produce it and so will control a much larger portion of the economic pie. The rich get proportionally richer, and the poor get proportionally poorer. And unless something happens to alter the status quo, this trend will continue.

Piketty’s provocative message, shared in his new book, Capital in the Twenty-First Century, as well as in a review article published Thursday to Science, comes amidst growing concern over wealth and income inequality. Two-thirds of Americans, comprised of majorities of Democrats, Republicans, and Independents, are dissatisfied with wealth and income distribution in the U.S. Currently, the richest 10% control 71% of wealth and take home 48% of income. While the former value isn’t unprecedented, the latter is, and when it’s accompanied with the expected widening in the gap of r > g over the coming decades, we can expect to see the top 10% control more wealth than ever before.

(Figure above: The large drop in rate of return (r) in the early-mid 1900s coincided with the massive destruction wrought by World Wars I & II)

Piketty arrived at his conclusion with the aid of researchers from around the globe, particularly economists Anthony Atkinson of the University of Oxford and Emmanuel Saez of the University of California, Berkeley. Together they accumulated a wealth of data the likes of which economics has scarcely seen: tax records for twenty countries dating back to the early 1900s. When assembled into a database, the information allowed Piketty and his colleagues a groundbreaking view of income and wealth inequality.

“Until the Piketty revolution swept through the field, most of what we knew about income and wealth inequality came from surveys, in which randomly chosen households are asked to fill in a questionnaire, and their answers are tallied up to produce a statistical portrait of the whole,” Nobel Prize-winning economist Paul Krugman noted in his review of Piketty’s book. But, he added, those surveys are limited in scope.

“They tend to undercount or miss entirely the income that accrues to the handful of individuals at the very top of the income scale. They also have limited historical depth. Even US survey data only take us to 1947.”

Other economists respect Piketty’s attempt to gather massive amounts of empirical data, but question whether or not it grants a complete picture. Kevin Hassett of the American Enterprise Institutecontends that Piketty’s tax data leaves out the billions of dollars given out by the federal government via programs like Medicare and income support. Garett Jones, an associate professor of economics at George Mason University argues that r won’t outstrip g as Piketty predicts.

“There’s no inherent tendency for capital to outpace the economy forever.”

Piketty disagrees, offering a more pessimistic outlook. As population growth slows, economic growth will stagnate with it, he says, leading to more inequality. This, in turn, allows the wealthy to exact more control of democracy through monetary contributions.

But the data reveals a path for the trend in wealth inequality to slow or reverse. Piketty recommends reinstating high tax rates on upper level incomes and increasing inheritance taxes.

“When top tax rates were high from 1933 to 1980, bottom 99% incomes grew fast while top 1% incomes grew slowly. In contrast, after 1980, when top tax rates were low, bottom 99% incomes grew slowly while top 1% incomes grew fast.”

But, he acknowledges that his ideas likely won’t be instituted anytime soon.

“In democracies, policies reflect society’s view. Therefore, the ultimate driver of inequality and policy might well be social norms regarding fairness of the distribution of income and wealth.”

Whether or not you agree with Piketty’s policy recommendations, you have to respect his work to bring empiricism back to economics, a “science” too often full of political propaganda and devoid of data.

Whether or not the forecast growth reaches the extent reported in the article or not, the trend is easy to see.  The good news is that there is something you can do about it.  Invest in property! Start with a personal residence, then add an investment property (or many) to the mix.  You have a great deal of power in your ability build wealth.  It is a step you can take now to make your life and your family’s life better in the future when there is an even wider gap in the distribution of wealth.

Screened Porch to Sunroom Conversion

One of our favorite parts of the house when we purchased it was a very large screened porch with a built in fireplace/grilling area.  The room was an addition from some time in the 60’s or 70’s and it showed.  Though it allowed for a great entertaining spot in the summer, we wanted to be able to use it throughout fall and spring as well.  It also was showing signs of wood rot due to it being exposed to the elements for so long.

We decided to remove the siding and instead to install a row of sliders on the river side of the property and have another slider on the forest side.  We planned to replace all the screens with actual windows to make it air tight.   We ripped up the green indoor/outdoor carpet and started the process of removing the walls.  As we went, we found that the rotten wood was pretty extensive and we were forced to reframe a good portion of the structure.  We made sure to use treated lumber when replacing the old rotten wood to keep it from having issues for a long time.  We then also wrapped the base of the structure with waterproof sheeting to keep it water tight.

 

Then came time to add the 4 sliding glass doors and windows! To save money on the project, we repurposed several windows we removed from the kitchen and they fit perfectly.

We put on new siding that will be painted once the weather warms up.  The room is not yet finished inside but is serving as a make-shift workshop as we finish the rest of the house.  Now that it is air tight, we have been able to keep a fire going to keep the room warm.  Later we will finish the inside adding wood flooring and experimenting with paint colors on the fireplace.  We love the way the sliders open up the space to the outdoors without having to worry about weather.

And now… on to the next project!

Fresh and Neutral Staging for Top Results

One of the best parts of my job is staging vacant homes so they can really shine when listed.  While each home is unique and requires certain distinct accessories to showcase its specific features, there is definitely a formula for creating invitingly staged vignettes.

The first thing to consider is furniture and how it should be arranged to create a conversation area.  It is important that there still be plenty of space for potential buyers to walk around the room during showings.  A house that is too full does not show well because buyers cannot easily access all areas of the rooms including looking through windows and doors throughout the house.  It is important to remember that the furniture is there to demonstrate how the space is to be used, not to fill empty space!

The 2^nd piece of the puzzle is to accessorize.  I love to use fresh looking accessories such as orchids and grasses to bring energy into a vacant house.  It is amazing how quickly a home can be brought to life with a few plants.   It is important to remember to keep accessories simple and only to use them to showcase a feature of the house.  Decorative items should be used to accentuate countertops, built-ins and fixtures rather than to distract from them.  If done correctly, the kitchen island centerpiece will draw a buyer’s eye to the island itself rather than the decoration.  Items on a bookcase will remind them of how much storage built-in shelving will give them rather than what is currently on the shelf.

After the furniture is in place and accessories are added, the next step is to walk through the home again to make sure everything inside flows from room to room.  The home pictured here does a wonderful job of carrying finishes  throughout the house.  My job as a stager was to continue that flow in the style of accessories and the color choices.

The end result is a listing with much more appealing photos and a more warm and inviting feel during showings.  If you have a vacant home you need to sell, staging is well worth the cost and effort.

**OR list with Kate of the Mari Halliday Team and have it staged for free!