Tati DaSilva's Blog
Property owners got clobbered in the Great Recession of 2008, but that was the exception rather than the rule. Real estate typically weathers hard times well compared to other investments. Still, there’s always the possibility you could get squeezed if property values drop or if your personal or business income takes a hit. Whether you’re an individual homeowner with perhaps a second home or a rental or two, or you have significant investments in many kinds of real estate, here are a few thoughts about readying yourself for a recession.
Preserve and Increase Liquidity
A big recession risk is that your income will decline (either real estate rentals or unrelated income) and you’ll have trouble meeting mortgage payments or other expenses such as upkeep and taxes. You may be forced to sell property at an unfavorable time. Having cash, or assets easily converted to cash, helps you meet your obligations. In addition, there will be others eager to sell and bargains to be had, and if you have cash on hand you’ll be able to take advantage.
If you suspect hard times are on the horizon, consider some these options:
Get rid of low-performing assets. This includes selling real estate that produces inadequate return or is at risk of depreciating. It might also be time to rebalance your non-real estate portfolio toward more recession-friendly assets.
Defer major expenditures. Put off buying that vacation home or taking that expensive vacation. Don’t get in a position where you hold assets that are hard to turn into dollars.
Be prepared to reduce your good tenants’ rent. They may be struggling too, and getting something from them is better than if they move out and give you nothing at all, or if you acquire problem tenants in their place. The goodwill you generate may pay off.
Own the Right Kind of Real Estate
All properties are not equal when the economy retracts.
The most hard-hit are vacation rentals, industrial properties, office buildings and hotels.
Apartments will generally continue to do well. Also multi-family units such as duplexes, triplexes, and multiplexes. In many parts of the country there are high occupancy rates and demand for your apartments could actually increase. Student apartments in college areas are another good bet.
Self-storage units do well when families have to downsize and store belongings.
REITs and crowdfunded real estate follow the same patterns. Those investing in apartments and multifamily dwellings are the best positioned.
Invest based on cash flow rather than hoped-for appreciation. You may be in for a few years where cash flow is all you get.
When the next recession comes, it’s unlikely that real estate will bear the brunt, but that doesn't mean you can pooh-pooh the risk. However, if you have access to enough cash and own recession-friendly properties, you have a good chance of coming through in solid shape.
Making your home a little more green won’t take much time or effort, but the results will pay off for years to come. You’ll consume fewer products, be exposed to fewer chemicals and even spend less money every month. Incorporate one or more of these easy green ideas into your home routine to see just how easy it is to live in an eco-friendly way.
- Buy local: When it comes to food, items that are in season or produced near your home not only cost less, they don’t have to be trucked a long way to get to you. Less gasoline is consumed and your food is fresher, too, when you buy local produce, eggs and meat.
- Swap out light bulbs: Swapping your conventional light bulbs for LED or smart bulbs can cut your energy consumption and the amount of bulbs you use. You don’t have to do this all at once, simply replace bulbs with more energy efficient models as they burn out.
- Check for leaks: Faucets, outdoor hoses and toilets that run or leak are wasting water, and probably generating higher bills each month. Track down and repair leaks to conserve water and save.
- Lower your water temperature: Lower the temperature on your water heater and you’ll save money. You’ll also make your home safer for kids or elderly family members, since overly hot water can lead to burns.
- Green Clean: You can buy home cleaners that are made with fewer chemicals – or even make your own. Switch out over time, as you run out of conventional cleaners, and you’ll end up with a greener, healthier home.
- Choose cloth over paper: It’s not always feasible, but using cloth napkins and towels in place of paper ones will cut your consumption. Save the disposable ones for bad spills and messes, and use cloth for everything else. You’ll use much less paper and see a dip in your spending, too.
Any of these ideas can help you go green at home, without much effort or expense. Choose one to start with and incorporate it into your routine – even small steps make a difference when you are opting for a greener lifestyle and home.
Smart home devices are becoming increasingly popular among U.S. property owners. Yet deciding which smart house gadgets – if any – are right for you may prove to be difficult. Fortunately, there are several things that you can do to determine if a smart home device is a must-have, such as:
1. Consider a Smart Home Device's Purpose
A smart home device that works well for one homeowner might fail to meet the needs of another property owner. If you assess a smart home device's purpose closely, you can determine if a particular gadget matches your expectations.
For example, if you are searching for a quick, easy way to keep your home's floors dirt- and debris-free, a smart robot vacuum may be ideal. This vacuum will take the guesswork out of cleaning your house's floors. Best of all, this device will allow you to speed up the process of vacuuming your house.
On the other hand, if you are on the lookout for energy-efficient lighting, smart light bulbs could provide viable investments. These light bulbs are simple to install throughout a house. Furthermore, smart light bulbs will continue to perform for an extended period of time.
2. Evaluate Your Finances
Your budget may dictate your smart home device investments. If you analyze your finances, you can establish smart home device priorities. Then, you can gradually integrate smart home devices into your residence.
It usually is a good idea to take a slow, steady approach to smart home device purchases. If you try to do too much at once, you risk spending beyond your means to acquire and install smart home devices across your residence.
3. Shop Around
There is no shortage of state-of-the-art smart home devices available at both online and brick-and-mortar retailers. Thus, if you conduct an in-depth search for smart house gadgets, you may find quality devices that won't force you to exceed your budget.
Of course, if you shop around for smart home devices, you can differentiate between average gadgets and best-in-class ones. You also can use online tools and resources to learn about different smart home devices and select gadgets that will perform consistently.
4. Keep Things Simple
Investing in smart home devices should be a fun, exciting experience – not a stressful one. If you feel overwhelmed as you search for smart home gadgets, take a step back and review your options. This may help you alleviate your worries and re-start your search for smart house gadgets with a fresh perspective.
Lastly, it sometimes helps to collaborate with family members and friends as you shop for smart home devices. Family members and friends can help you weigh the pros and cons associated with smart house gadgets. With the support of family members and friends, you could boost the likelihood of making an informed smart home device purchase.
Take advantage of the aforementioned tips, and you could pick up a wide range of smart home devices that will help you transform your ordinary house into a spectacular residence.
If you are preparing to sell your house, you need to be honest with yourself and others. That way, you can increase the likelihood of a fast, profitable home selling experience.
Ultimately, it pays to be an honest home seller for a number of reasons, including:
1. You can establish a competitive price for your house.
It is important to understand that what your house is worth today is unlikely to match what you paid for it, regardless of when you bought your home. Fortunately, an honest home seller is realistic about his or her house's value and can plan accordingly.
Generally, an honest home seller will allocate the necessary time and resources to conduct a home appraisal. Because with an appraisal report in hand, this home seller can establish a competitive price for his or her house based on actionable data.
2. You can identify home problems before a buyer does.
If a home seller tries to hide home problems from a buyer, the consequences could be significant. In fact, a seller may put a potential home sale in jeopardy if he or she fails to be forthright and honest with buyers from the get-go.
For example, consider what might happen if a buyer submits an offer on a house and discovers myriad home problems during an inspection. In this scenario, a buyer may ask the seller to perform various home repairs or request a price reduction. Or, a buyer may choose to walk away from a home sale altogether.
As a home seller, it helps to take an honest approach to inform potential buyers about the condition of a house. If a residence requires assorted repairs, a seller may want to complete these repairs before listing his or her residence.
Comparatively, a seller can always include information about a home's condition in a house listing. If a seller does so, he or she can help buyers make an informed decision about a possible home purchase.
3. You can avoid rash decisions throughout the home selling journey.
An honest home seller usually is calm, cool and collected throughout the home selling journey. This seller understands the pros and cons of his or her house, and as such, can take an informed, logical approach to make the best-possible decisions.
Perhaps most important, an honest home seller is unafraid to receive negative feedback about his or her house. As a result, this seller may be better equipped than others to avoid rash decisions during the home selling journey.
There are many great reasons why a home seller should strive to be honest at each stage of the home selling cycle. Of course, if you need extra help as you sell your house, you may want to hire a real estate agent as well.
Typically, a real estate agent will provide honest, unbiased home selling recommendations and suggestions. He or she will even help you get your house ready for the real estate market. And with this housing market professional's support, a home seller can move closer to achieving his or her desired results.
Buying a home is a big financial endeavor that takes planning and saving. Aside from a down payment, hopeful homeowners will also need to save for closing costs and moving expenses.
When it comes to the down payment amount you’ll need to save, many of us have often heard 20%, the magic number. However, there are a number of different types of mortgages that have different down payment requirements.
To complicate matters, mortgages vary somewhat between lenders and can change over time, with the ebb and flow of the housing market.
So, the best way to approach the process of saving for a down payment is to think about your needs in a home, and reach out to lenders to start comparing rates.
However, there are a few constants when it comes to down payments that are worth considering when shopping for a mortgage.
In today’s post, we’re going to talk about some characteristics of down payments, discuss where the 20% number comes from, and give you some tips on finding the best mortgage for you.
Do I need 20% saved for a down payment?
With the median home prices in America sitting around $200,000 and many areas averaging much higher, it may seem like 20% is an unattainable savings goal.
The good news is that many Americans hoping to buy their first home have several options that don’t involve savings $40,000 or more.
So, where does that number come from?
Most mortgage lenders will want to be sure that lending to would be a smart investment. In other words, they want to know that they’ll earn back the amount they lend you plus interest. They determine how risky it is to lend to you by considering a number of factors.
First and foremost is your credit score. Lenders want to see that you’re paying your bills on time and aren’t overwhelmed by debt. Second, they will ask you for verification of your income to determine how much you can realistically hope to pay each month. And, finally, they’ll consider the amount you’re putting down.
If you have less than 20% of the mortgage amount saved for your down payment, you’ll have to pay for private mortgage insurance (PMI). This is an extra fee must be paid in addition to your interest each month.
First-time buyers rarely put 20% or more down
Thanks to FHA loans guaranteed by the federal government, as well as other loan assistance programs like USDA loans and mortgages insured by the Department of Veterans Affairs, buying a home is usually within reach even if you don’t have several thousands saved.
On average, first-time buyers put closer to 6% down on their mortgage. However, they will have to pay PMI until they’ve paid off 20% of their home.
So, if you’re hoping to buy a home in the near future, saving should be a priority. But, don’t worry too much if you don’t think you can save the full 20% in advance.