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Every Rental House is like a small 401(k)

Savings interest rates have been hovering around 1% for the past 10 – 12 years, while inflation has been exceeding 5% per year for the past two years. The stock market has had its ups and downs, some sectors have done well and others have gotten clobbered.

It’s difficult for most of us to figure out how to grow a nest egg without getting it being eaten up by inflation, devaluated by the sudden whims of the stock market, and erosion by the numerous fees on investments vehicles.

After the great recession (circa 2008) our company started going all-in on Rental Houses, buy-fix-hold-rent, in particular, is our flavor of choice but we will also do buy-hold-rent of turnkey properties if the numbers make sense.

We’ve come to look at each rental property like a small 401(k) retirement saving account. Of course, rental houses aren’t actual 401(k)’s but when acquired and managed properly they can provide significant long-term savings benefits such as appreciation, monthly cash-flow, cash-out ability as well as several short-term and long-term tax advantages.

There are at least 5 potential areas to profit from with a rental house investment:

  • Appreciation – the increase in value of the home over time
  • Monthly Cash Flow – the amount of money left over each month, or each year after paying all expenses such as mortgage, taxes, insurance, property management, repairs..etc.
  • Cash Out Ability – the equity over 30% of market value in a rental property can be unlocked/withdrawn in certain conditions by refinancing.
  • Annual Tax Savings –  being able to claim legitimate business expenses against the property, taking generous depreciation deductions, and extending the SALT (State and Local Tax) deduction limit are some of the most popular tax savings methods available to Real Estate investors.
  • Long-Term Tax Savings – capital gains treatment, 1031 exchanges, and tax-deferred retirements accounts are some of the long-term tax savings vehicles available to real estate investors.

Not all properties will always realize all of these potential benefits as real estate investors often have different wealth-building objectives and tax situations. It’s always helpful to seek the advice of attorneys and accountants who are well versed in real estate investing before taking the plunge.

One of the things that tend to hold would-be investors back is Fear of Tenants, as there is no shortage of bad tenant stories. Attracting, selecting, and retaining quality tenants, providing and enforcing a strong lease, and dealing with repairs on a timely basis are key to operating a successful rental property.

Bassett Property Management takes the stress out of the day-to-day tenant side of the business by providing management services to their clients. Visit our website at http://www.bits.ws to learn more.

Fear of Missing Out (FOMO) Home Buying

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Ideas for accent walls

An accent wall can totally transform a room, taking it from boring and drab to bold and exciting. Accent walls create a new focal point for your space, add liveliness and contrast, and are typically a very inexpensive DIY project.

The starter accent wall

You can easily add an accent wall to your room in one afternoon by applying a new paint color. Deep blues and bright oranges are common choices for accent walls but choose a color that will complement your existing decor and overall design aesthetic.

Interesting textures

Bright, contrasting paint is a good starting point, but there are other options for accent walls that are even more eye-catching and distinct. Floor-to-ceiling wood planks can make your home seem both rustic and modern all at once and provide a natural, outdoors-inspired feel. It’s more work than simply painting a wall, but it’s still relatively inexpensive. You can source the wood from pallets on Craigslist and stain it yourself before attaching it to your wall. It takes a little extra elbow grease, but it’s worth the effort.

Patterns, murals, and more

Paint and wood are bold enough on their own to transform a room, but they’re still pretty subtle compared to other accent wall options. A chalk paint accent wall is a creative idea for any room and makes for some fun moments when you’re entertaining. There are also endless options for wallpaper and stenciling if you want some patterns or you can get really bold with a mural or oversized art print.

5 Negotiation tactics that kill a sale

Negotiation is a subtle art in real estate, but skilled negotiators can usually find some common ground that satisfies all parties. On the other hand, using the wrong negotiation tactics can sink a deal pretty quickly. Here are some negotiation tactics buyers (and real estate professionals) should avoid:

  1. Lowball offers: Going far below market value when you make an offer damages your credibility as a buyer and can be insulting to the seller. The seller has a range in mind that they’ll accept, and if you’re not even approaching the low end of that range, they won’t even consider the offer.
  2. Incremental negotiations: Don’t continue to go back to the seller with small increases in your offer ($1,000 or less). The constant back-and-forth can grow tiresome and lead the seller to consider other opportunities.
  3. “Take it or leave it”: Try not to draw a line in the sand with your initial offer. The seller can get defensive and consider other offers if you immediately show that you’re unwilling to budge. Even if it’s true, don’t make a show of it.
  4. Nitpicking after inspection: Obviously, if an inspection reveals a major issue, it should be factored into the final sale price. But insisting on a lower price for every minor repair can put negotiations in a stalemate.
  5. Asking for more, more, more: Some buyers will request that the sellers throw in add-ons like furniture or appliances that weren’t included in the listing. Try to avoid giving the seller a reason to build up resentment and think that you’re being greedy.

UPSIZING YOUR HOME

Unfortunately, our homes don’t always grow with us. What may have initially worked fine for a single person, a young couple’s starter home, or a family with a newborn can quickly become too small as families expand and multiple generations live under one roof.

Remodeling and adding to your home is one option for creating more space, but it can be costly, and the size of your property may be prohibitive. That’s when moving to a bigger home becomes the best solution.

WHERE DO YOU NEED MORE SPACE?
The first thought when upsizing your home is to simply consider square footage, bedrooms, and bathrooms. But it’s important to take a more critical approach to how your space will actually be used. If you have younger children (or possibly more on the way), then focusing on bedrooms and bathrooms makes sense. But if your children are closer to heading off to college or starting their own families, it may be better to prioritize group spaces like the kitchen, dining room, living room, and outdoor space—it’ll pay off during the holidays or summer vacations? when everyone is coming to visit for big gatherings.

MOVING OUTWARD
If you need more space, but don’t necessarily want a more expensive home, you can probably get a lot more house for your money if you move a little further from a city center. While the walkability and short commutes of a dense neighborhood or condo are hard to leave beyond, your lifestyle—and preferences for hosting Thanksgiving, barbecues, and birthdays—might mean that a spacious home in the suburbs makes the most sense. It’s your best option for upsizing while avoiding a heftier price tag.