Monthly Archives: March 2010

Tips For Renting Out Your Home to Vacationers

elkhavencabins.com

It is that time of year where we are dusting off our swimsuits, checking our vacation hours and planning our vacations.  Money is tight for most of us still, so many people are choosing to stay close to home.  If you own a home in what is considered a vacation hot-spot or resort town you might want to think about renting it out to help cover the costs of your own trips.  These areas include near any large tourist attractions, mountain get-a-ways, beach communities or big cities.  Here are a few thing you should know before soliciting potential renters.

  1. Check with your home owners association and/or local zoning regulations to make sure residential property rental is allowed.  If not, don’t worry you just may need to obtain a variance.
  2. Change or add to your homeowners insurance policy to include coverage for damage done by renters to the property and contents as well as liability in the event of an injury on the premises.
  3. Remove all valuables, real and sentimental from your home completely.  Do not simply put it away in a closet or attic.
  4. Choose what furniture to leave and what to store.  Store any fragile or family heirloom pieces and consider furnishing the home with inexpensive and sturdy furniture while your things are stored off-site.
  5. Make sure that all your appliances and electronics that you leave are in good working order.
  6. Hire a cleaning service to come in before you leave and put this same service into your rental agreement for the renters to hire when they leave.  Consider including cleaning fees and taxes as part of your rental contract and expenses.
  7. Create a list of your trusted service people to leave with the tenant or even consider hiring a property management company to handle repairs and emergencies.
  8. Be sure to obtain a security deposit even for short-term rentals to protect you from rent defaults or damages.
  9. Pay all basic bills in advance or online.
  10. Board your pets or take them with you to avoid any liability issues.
  11. Meet your potential tenants in person beforehand if possible and spend the money for the background check (runs between $10 to $150).
  12. Keep all your income and expense records for your Federal Income Taxes.  While your revenue is taxable, if your records are good you should be able to deduct property taxes, the mortgage and other relevant expenses.
  13. Create and leave a local reference packet that includes maps of the area, names and numbers of local businesses, emergency information and names of trusted neighbors.  This information is especially good when the renters are from out of the region.
  14. Research other rental properties in your area to keep a competitive edge with pricing and amenities.  Offer deals during less-traveled times. 

While this list is mostly for those with a second home in a vacation or tourist heavy area, some of these tips are also applicable if you are wanting to rent out your primary residence during peak travel times.  This being said, you do need an alternate place to stay during this time and make sure that you are not spending more on that than you are bringing in by renting!

Famous Hoaxes Not On April Fools Day

Face it, some people get off on making everyone else look stupid.  Alright, maybe that’s a bit harsh, but suffice to say, they enjoy fooling people, getting their goat, yanking their chain.  You get the idea.  Hoaxes.  Some are clever, others are just mean (and therefore probably more funny).  These are a few of the most famous.

Cardiff, New York : Cardiff Giant

Cardiff Giant Image via Wikipedia

Atheists and ministers… the two don’t always get along.  In the 1860’s an atheist tobacconist named George Hull got into an argument with a fundamentalist minister named Mr. Turk.  Sparks flew and the main point of contention became Mr. Turk’s unfaltering belief that giants did indeed wander the Earth as stated in Genesis 6:4.  Hull, being a jerk, and rich, and admittedly kind of funny, decided to have a fake petrified giant created.  The ten foot high giant was carved out of gypsum then weathered with chemicals.  Hull then had it buried on his cousin’s farm.  A year later, the cousin hired two men to dig a well where Hull had buried the giant.  The giant was, of course, discovered.  A big brouhaha was made.  People gathered.  People paid money to see it.  Hull’s cousin doubled the price.  Scholars immediately could tell it was fake, while religious fundamentalists insisted it was real.  Hull laughed himself silly and sold the giant for almost fifteen times what it cost him to make.  P.T. Barnum wanted to lease it, was turned down, so had a replica made.  Today both the giant and its replica still survive and are on display.  Marvin’s Marvelous Mechanical Museum in Farmington Hills, Michigan claims to have the replica, while the original is housed at the Farmers’ Museum in Cooperstown, New York.

New York City : War of the Worlds

War of the Worlds via Wikipedia

Imagine it, you’re a genius storyteller.  You’ve adapted the work of another genius storyteller.  Tonight’s the night you perform, and your performance is so convincing that your audience thinks it’s real.  They’re panicking, they’re calling the police, they’re contemplating suicide.  Who are you?  You’re Orson Welles, and you’ve just convinced a whole lot of people that Martians have invaded New Jersey.  Good times.  Yep, on October 30th, 1938, Orson Wells and his “Mercury Theatre on the Air” performed a radio adaptation of H.G. Wells “War of the Worlds”.  The gimmick?  The performers didn’t introduce it.  They just cut in with, “We interrupt this program” and went into a series of News Reports about a Martian Invasion that had just landed.  The show also had no commercials, which made it all the more convincing.  Alright, so maybe the people who thought it was real weren’t such dopes.  This was Orson Welles they were dealing with.  It’s likely he timed key points of show to occur when listeners were flipping through the dial, so they’d happen upon the show right as something gripping was happening under the guise of a news broadcast.  Those who were fooled were of course outraged afterwards.  CBS was apparently banned forever from using “We interrupt this program” for dramatic purposes.  Welles, of course, immediately became one of the most famous storytellers in America and soon left for Hollywood.

Winchester, Hampshire, England & Various : Crop Circles

crop circles

Most prevalent in England, the best part of the crop circle hoax is probably how much it tends to humiliate the so-called experts.  For almost two decades, mysterious crop circles would appear throughout England and the rest of the world.  The crops were not cut, they were bent.  It was “impossible” apparently for humans to bend crops this way.  This must be the work of supernatural forces.  These people were, of course, complete morons.  And this was proven in 1991 when two men from Southampton, England stepped forward and claimed they were the two who started the whole modern craze.  They proceeded to show how they did it using hats, wire, rope, and a long plank of wood.  Their reason for stepping forward?  One of the two men was afraid his wife thought he was cheating on her.  What, with the late hours and enormous mileage being put on his car, what else could she think he was doing?  He couldn’t possibly be using tools a veritable caveman would have to create things experts thought had to have been made by UFO’s.

Image via flickr

Cottingley, England : Cottingley Fairies

Image via wikipedia

Oh my god, those are photographs of fairies!  Sorry, but this hoax is especially laughable by today’s standards.  Why today’s standards?  What’s changed?  That’s simple.  Star Wars.  Why Star Wars?  Two words.  Special effects.  We’ve spent the last thirty years surrounded by them.  We’re used to them.  We can tell when they’re great, and we can tell when they stink.  Now, go back 100 years.  When motion picture film was first invented and a clip of a train arriving in a station was shown in a theater, people in the audience ran screaming in fear of being run-over.  What am I getting at?  No offense to those who came before us, but when it comes to movies and photography in general, we’re a much more sophisticated audience than they were.  In 1917, cousins Frances Griffiths and Elsie Wright took five photos of “real fairies”.  The photos became public a couple of years later and a large number of people believed they were authentic.  So why is this so laughable?  Because by today’s standards the photos are blatantly fake.  This hoax is a product of its era.

Piltdown, East Sussex, England : Piltdown Man

image via wikipedia

It’s 1912 and the missing link between man and apes has finally been found!  Actually… it hadn’t… but it would take 40 years for anyone to widely figure that out.  Over the course of several trips to a gravel pit in the small village of Piltdown, pieces of a skull and jaw were discovered.  Once assembled, the skull itself resembled that of a modern man, the jaw looked like an ape’s.  In 1923, a German Anatomist named Franz Weidenreich took a look at the remains and said, “Yeah… uh, guys?  It’s a human skull… with an orangutan jaw.  *cough*”  You’d think someone would have paid attention, but nope.  In 1938 a memorial was erected where the skull was found.  This was an important discovery!  In 1953 “The Times” published a report.  The skull was a human skull from medieval times, the jaw was 500 years old and an orangutan’s with teeth from fossilized chimpanzees.  The bones had been stained with chromic acid.  The hoax is believed to have lasted for so long because it confirmed (incorrect) beliefs by scientists that human evolution from apes started with the brain.  It was also a matter of national pride for the British.  The forger has never been identified, but the man who discovered the bones, Charles Dawson, is the prime suspect.

We may be more sophisticated these days, but we’re still just as gullible.  As we see every April 1st, people fall for hoaxes. In the 1980’s there was a huge uproar when it was announced in London that Big Ben would be converted to a digital clock.  And as long as people fall for them… well, we’ll just keep having fun at their expense.

Anti-Flipping Rules Suspended

With foreclosure rates at extremely high levels and communities full of vacant and bank-owned homes, the Federal Housing Association has lifted the restrictions on house flipping.  To flip a house in real-estate means to acquire a property with intent to resell, sometimes quickly.  When the housing market was booming several years ago, some scam artists would snap up properties at a low-cost, make a few cosmetic repairs and turn around and resell the home for an inflated value to unsuspecting buyers.  These new owners would end up defaulting on their loans and the property would end up in foreclosure, losing all insurance funds.  The FHA put a stop to these fishy deals by creating “anti-flipping” rules that didn’t allow homes whose mortgages and titles had switched hands in the past 90 days to be insured.  This hurt legitimate investors who would buy a home, renovate and resell the property.

These days foreclosure rates are at all-time highs and homes in disrepair sit vacant and owned by the bank with no prospect of a buyer.  For these reasons the FHA decided to lift the 90 day rule at least temporarily.  They are hoping that this will increase the sale of foreclosed homes and allow some first time buyers to get into the real estate market.  Restrictions are still in place to protect the FHA and end buyers however.  For example, there can’t be any conflict of interest between buyers and sellers and the price of the property can’t jump more than 20%.  For certain properties that require extensive renovations that will raise the price more than 20%, you may still qualify, however the lenders must provide documentation to justify the price increase.

These lift on the 90-day ban may only be temporary, so if you have any desire to get into a foreclosed home, repair it and resell it, now would be the time.

To Rent or to Buy?

This seems to be a pressing question on many Americans’ minds these days.  Falling home prices, record-low interest rates and the first-time home buyers tax credit are among the top reasons for long-time renters to consider buying.  Before you take that leap however, there are some things you should be aware of. 

 While many real-estate markets are stabilizing, many are still fighting an uphill battle. It may be a better idea to rent until the market re-centers if you are in one of those volatile markets. Also, rental vacancies are at a 30-year national high of 8.2% and as high as 14% in some markets.  The highest vacancy rates are in Jacksonville, Houston, Atlanta, Las Vegas, Phoenix, Tuscan, Tampa and Orlando.  In these markets you can afford to shop around and negotiate a fair rental price.  Some cities (New York, Washington D.C., Chicago, Los Angeles and San Francisco), however, still have low vacancy rates and high home prices.

One of the most important things to consider when jumping from renting to buying may be the price-rent ratio.  This number goes beyond calculating your monthly housing budget and debt-income ratio.  It actually encompasses a comparison between your city’s median home price and its median annual rent price.  For example if you take the average of several homes list prices in your area and divide them with comparable rental units prices you will get your price-rent ratio.  The general rule is that if this number is 15 or below you have a great ratio and it may be a good time to buy.  Between 16 and 18 is considered the bubble zone and home prices may still be falling and unstable.  Over 18 is considered a dangerous buy.

According to this price-rent ratio, Cleveland, Ohio is the most stable market right now with a ratio of 12, average monthly mortgage payment of $788 (for a 30-year-fixed-rate mortgage at an interest rate of 5.3% and 10% down) and an average rental price of $696.  In this case it makes sense to buy, since you wouldn’t be increasing your monthly payments by much and home prices are fairly stable.  If you can get a contract on a property as a first-time buyer by April 30th and close by June 30th you will also qualify for the home-buyer tax credit of $8,000.  The other top price-rent ratio cities are: Detroit, Michigan (13), Tampa, Florida (14), Indianapolis, Indiana (14), Atlanta, Georgia (14), Inland Empire, California (15), Las Vegas, Nevada (15), St. Louis, Missouri (15), Cincinnati, Ohio (15) and Jacksonville, Florida (15).

Cities like Oakland, California are on the other end of the spectrum and are in what are considered the least stable markets.  Oakland has a price-rent ratio of 34 with an average monthly mortgage payment of $2,934 and an average monthly rental price of $1,233.  In cases such as these you should hold off on buying and settle for renting for a while longer.  The other cities on the least stable list are:  San Jose, California (34), San Fransisco, California (30), Orange City, California (29), Seattle, Washington (29), Salt Lake City, Utah (27), New York, New York (27), Portland, Oregon (26), San Diego, California (26), and Tuscon, Arizona (25).

These ratios and statistics are just another piece of the puzzle in making the difficult decision to jump from renting to buying.  Overall you want to make sure not to get in over your head and keep an eye on the market and its fluctuations.  All statistics obtained from Kipplinger.com.

Top 5 Time-Saving Cities in the United States

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When moving to a new city there are many things to consider, but one that gets overlooked: how easy is it to live there and how can you maximize your most important commodity time?  Realsimple.com recently published a survey in which they analyzed data from every major US city, broke things down into five categories and ranked them on a scale from 1 to 5.

  1. Seattle came in number one with a score of 22.5 and a population of 598,541.  This score was due to mass public transport, a timely airport, short wait times for doctor’s appointments, neighborhood service centers and of course more Wi-Fi hotspots and coffee shops than any other city.
  2. Portland, Oregon, another Northwest city comes in at number 2 with a score of 21.5 and a population of 557,706.  Portland boasts 450 gourmet food carts, one of the highest cardiac arrest survival rates due to fast emergency service response, ease of movement with the fourth-largest light rail system and extensive bike options, and very few delays at the airport.
  3. San Fransisco comes in at number 3 with a score of 21 and a population of 808,976.  The golden city ranks high on technology and lifestyle with 24 hour hotlines and numerous takeout options.
  4. Boston (finally an East Coast city!) takes the fourth spot with a score of 20 and a population of 609,023.  Boston boasts the highest walk-to-work rate and scores high on green time-savers with single-stream recycling pickup and many farmer’s markets.
  5. The fifth spot goes to Minneapolis with a score of 19.5 and a population of 598,707.  Surprisingly this often frozen city ranks number one in community gardens per capita and number of farmers markets.  It is also number two for bike accessibility and a city-wide wireless network that offers low-cost internet access.

Curious as to how the categories shake out?  Here are the five categories, how they are broken down and averaged out:

The first category focuses on ease of movement around the city including timeliness of the airport, traffic congestion, how easy is it to walk around and how long is the average commute.  It also includes public transportation and general movement around the city.

The second category is health and safety.  This encompasses emergency medical services response time, physicians per capita and average wait-time for obtaining and waiting for a doctor’s appointment.

Third is based on information and technology.  How many bookstores and libraries are there per capita, what is the wireless and broadband availability and how many helpful resources like 311 hotlines are there?

Green time-savers make up the fourth category.  This category focuses on bike friendliness, number of gardens and farmer’s markets, as well as ease and cost of recycling.

The fifth and last category highlights lifestyle.  It contains things like restaurants that offer takeout per capita, number of personal organizers and trainers and all other time-saving services that don’t fit into the other categories.

For a more detailed list or to see where your city ranks check out: cnn.com.

Tips to Prepare Your Home For Spring

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Spring is almost upon us!  Even if that pesky groundhog  saw his shadow, flowers are blooming, trees are budding and grass is starting to poke through.  The first official day of spring is this Saturday, March 20th.  Just like we need to prepare our homes for winter and colder weather, there are also some things that we should do to prepare for the upcoming warmer months.  Here are a few tips to get you started:

  • Ever heard of spring cleaning?  It’s a great way to de-clutter your life.  Tackle one room at a time and use the rule if you don’t use it lose it!  Plan a garage sale, sell unwanted things online, give to charity or just throw it away.  The key here is that less is more.
  • If you have an air conditioner, window units or fans, clean them out including all vents and pads.
  • Store all winter space heaters, firewood and completely empty liquid kerosene heaters before storing them outside.
  • Before you turn your outside water sources back on, check around the house for pipe and water leaks.  Turn all your faucets off, check your water meter and listen for running water. 
  • Store all winter blankets, coats and clothes away in the garage in bug and waterproof containers.  You can also use plastic bags that have a vacuum suction to keep them safe and take up less room.
  • Clean your roof, rain gutters, awnings, canopies and any other areas that might collect leaves and debris and prevent water from flowing.  This will help you prepare for melting snow, upcoming thunderstorms and April showers.

These few tips should help to prepare you and your home for warmer weather, so that you can relax and enjoy it!

Accidental Foreclosures On the Rise

How would you feel if you were current on your mortgage payments or even had paid for your home in full and returned home one day to find yourself padlocked out?  This happens more than people know.  Due to the large amount of foreclosures in our current real estate market and sluggish economy banks have been accidentally foreclosing on the wrong properties and in some cases unlawfully locking out owners.  This can happen when different departments are handling foreclosures and lockouts.  Bank of America is one of these culprits.

Angela Lannelli of Pennsylvania came home one day to find her front door padlocked and her pet parrot stolen.  Bank of America had wrongfully foreclosed and unlawfully locked her out of  her home even though her mortgage had been paid.  It took her six weeks to get the house cleaned up after bank contractors cut water lines and destroyed property.  She was able to reclaim her parrot after repeated phone calls to the bank.  Lannelli is now afraid to enter her home alone and is suing the bank for both emotional and physical property damages.

Angela Lannelli is not alone.  Bank of America is also being sued by Dr. Alan Schroit for locking him out of his vacation home that was paid for and shutting off the power.  This loss of power caused his 75 pounds of salmon that he had planned to grill for a party the next day to spoil.  Schroit suspects that the bank was looking to repossess the house on the next street with the same number.  There are similar lawsuits pending in Texas and Kentucky.  These are just the ones I found too- I wonder how many more are out there with different banks?

If you are one of the unlucky ones to have your home accidentally foreclosed on you need to make sure that you have all your loan and mortgage information available.  In order to contact an attorney be sure that you are knowledgable about your foreclosure process, loan and your payments.  You may be able to bring claims for  the loss of your home, consequential damages, loss of credit and emotional damages.  The moral of the story here is even if you have paid your mortgage, you may not be safe from a foreclosure, so make sure you keep all the necessary information handy in case of a bank screwup.

Some States Save Homeowners From Foreclosure

foreclosure is a scary thing and very prevalent in today’s weak housing market and unstable economy.  Many homeowners are left jobless, upside down on mortgage payment and unsure of what to do.  The Obama sponsored program is just not working.  Pennsylvania it seems may have an answer.

The Pennsylvania Housing Finance Agency has set up an emergency mortgage assistance program in 1983 for people who have lost jobs or are facing severe financial hardship.  This program offers 3-year loans of up to $60,000 to cover mortgage payments or take care of arrears (debt that is incurred after missing one or more payment).  Pennsylvania’s program has an 80% success rate in preventing foreclosures and has distributed $450 million to 43,000 homeowners.  

How does this program work?  First, housing counselors sending the agency applications for the homeowners who need help.  If they are approved, their monthly mortgage or arrears may be covered and sometimes both.  These loan payments are made directly to the servicers, while a lien is placed on the property, and needs to be repaid in 3 years at an average of 5.25% interest rate over 10 years.

Now before you get too excited, be aware that not everyone can qualify.  You have to be able to prove that you will be able to resume payments after the 36 month period.  So if you are in severe credit card debt you are not likely to be approved for the program.  Annual  inspections of an applicant’s financial background are the key to this program’s success rate.

Programs similar to Pennsylvania’s exist in North Carolina, Delaware and Massachusetts.  The Obama administration has been researching alternate ways to boost the real estate market and slow the rate of foreclosures.  They have recently focused on Pennsylvania’s program and have announced a $1.5 billion initiative to give money to those states that have been the hardest hit (Florida, Michigan, Arizona, California and Nevada) to institute a similar program.

Now is the Time to Refinance, But Are You Able?

Current mortgage loan rates are sitting around 5%, one of the lowest rates in a half century pushed by the Federal Reserve.  The general rule when refinancing your mortgage is to try to get a full percentage point lower.  Right now according to The Wall Street Journal, 37% of borrowers with fixed rate 30 year mortgages are paying above 6%, making this the ideal time to refinance.  First American CoreLogic reports that loans that were refinanced in 2009 will save consumers $3.4 billion this year.  So why are refinance applications at their lowest levels in the past year?

Due to the real estate market crash many homeowners are down to little or no equity and many more are considered upside down on their loans, meaning they owe more than the property is worth.  It is nearly impossible to get approved for a refinance without coming up with the difference in what you owe compared to what the house is now worth.  For example, if you took out a loan on a $500,000 home and the market crashed plunging the new value of your house to $300,00, you couldn’t refinance in most cases without coming up with the $200,000 difference.  Obama started a program to reach out to these people recently, but due to confusion and logistical problems few have been able to take advantage of the program.

Higher loan fees imposed by banks, declining or loss of income and stricter lending standards also contribute to borrowers not being able to obtain new loans.  So many loans headed into delinquency in 2008 that mortgage giants Fannie Mae and Freddy Mac imposed higher loan fees requiring more money down and near perfect credit scores in order to avoid that 1% (or worse) of loan value fee.

Are you one of the lucky few who has been able to refinance or are you one of the many who just can’t seem to get your head above water?  If these issues aren’t addressed, how can the government possibly expect our economy to recover?

Simple Solutions for Living in Small Spaces

These days many of us are being forced to downsize with homes going into foreclosure or not being able to afford a mortgage due to losing a job.  We are required to find alternative living options, many times opting for much smaller accommodations.  Here are some quick and easy space-saving tips:

  1. Trade in overstuffed couches and chairs for more modern, sleeker designs preferably with hidden storage space.
  2. Mount your flat screen TV on the wall or if you have a larger TV, use a corner shelving unit.
  3. Choose a coffee table with shelves underneath for storage and an end table that also doubles as a lamp and magazine rack and hang shelves for stereo systems, CDs and DVDs.
  4. For the kitchen choose a table with collapsible leaves and hang pots and pans from the ceiling or walls.
  5. For kids’ rooms use bunk beds or loft beds that are tall enough to place a desk underneath.
  6. If purchasing a new bed choose one with storage capabilities or if using your old one buy plastic containers to store underneath.
  7. Closet solutions include storing seasonal clothing in vacuum sealed bags when not in use and utilizing hanging cubbies, stackable drawers and shoe racks.
  8. In the bathroom hang a basket over the shower head to store all your toiletries and use long wire racks above the toilet for towels.

Another important thing to remember about small spaces is that they clutter up faster.  Be sure to go through and discard your junk mail immediately, try to put shoes, hats and coats in their places as soon as you enter the door and make picking up toys a child’s nightly chore.  Try to avoid buying that knickknacks and every time you just can’t help it, use the rule that you must use it to replace something you already have.  Weekly organizational  maintainance and cleaning will go a long way toward making the transition from bigger to smaller easier!