What to Know About Solar Power for Your Investment Home

Solar Power, Investment Property, Solar Panels

Solar Power, Solar Panels, Solar ElectricityAs more people start taking action to counter climate change and reduce dependence on nonrenewable energy sources, residential solar power has become increasingly popular. With more than a million solar installations across the country, the benefits of switching to this form of green energy are numerous.

First and foremost, solar panels are considered an upgrade that will likely increase your investment home’s value in the same way a renovated kitchen or bathroom would. In fact, many eco-conscious buyers are willing to pay a premium for a solar home. In addition to reducing greenhouse gas emissions and other pollutants, a solar system may lower your electric bill, provide tax credits on federal income taxes as well as state taxes, and even allow you to earn money with SREC (solar renewable energy certificates).

But before you invest in solar power for your investment home, there are a number of steps you will need to follow and consider.

Examine Your Property

Homeowners should first assess their energy use by conducting a home energy audit to identify areas of improvement. Oftentimes, huge savings can be made on electricity costs by simply switching your light bulbs to LED ones, replacing dated appliances with energy-efficient ones, and weatherizing the property.

Because installing solar panels requires ideal roof conditions to work at full capacity, make sure your roof is up to scratch. Consider the age of your roof and how long until it needs to be replaced. If your roof is old or in any way damaged, you’ll want to address these issues before going any further.

Remember to take into account nearby shade trees that can block the sun and diminish your home’s solar potential. Though most roofing materials are compatible, the ideal roof will face south with a tilt between 15 to 40 degrees.

Work with Your Installer

Installing a solar power system involves numerous steps, including preparing the roof for mounting panels, wiring the panels to a power grid, obtaining permits, and testing. The timeline for the installation will range from one to three days, depending on the size of the system you are installing.

Be sure to find qualified and insured professionals with the proper certification and request at least three bids based on the same metrics. Bids should state the maximum generating capacity of the system measured in Watts or kilowatts, an estimate of the amount of energy produced on a monthly or yearly basis, and the total cost of installation (including hardware, labor, permitting, sales taxes and warranty).

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

Picking the Right Neighborhood for Your Investment Property

Neighborhood for real estate investment propertyKnowing well the area of town or neighborhood for your investment property plays a big part in a sound financial decision. While factors such as your investment goals and price range can help you winnow out some neighborhoods right off the bat, there will likely be hundreds of cities and neighborhoods that may pass muster – each with its cons and pros.

To make sure you pick the best neighborhood for your investing dollars, you may want to consider the following additional factors.

Safety

Lower crime rates are at the top of real estate investors and homebuyers’ must-have lists. Luckily, there is a wealth of online tools out there to help you research a neighborhood’s safety levels, such as ADT Crime, Neighborhood Scout, and SpotCrime.

A neighborhood that ranks high for safety not only provides peace of mind to buyers and tenants, but it can also keep property values high.

Convenience and Amenities

Convenience and amenities are valuable attractions for homebuyers. A convenient neighborhood is reasonably walkable and located in close proximity to schools, shopping areas, parks, gym, public transport, and more.

When it comes to amenities, consider neighborhoods that boast facilities such as swimming pools, play fields, tennis courts, club houses, community docks, and lakes. Other outside features that can pique homebuyers’ interest are nearby parks, open play meadows, and direct access to water bodies.

Growth

The expectation that the value of the property will continue to appreciate over time should inform investors’ decision when purchasing a home, hence the importance of market dynamics and macroeconomic factors. Look for neighborhoods that display attributes such as higher-than-average population growth rates, job growth rates, rental growth rates as well as low unemployment rates.

More broadly, the tax environment has been a key factor driving investments in the country, as seen in places such as Austin, TX and South Florida.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

Home Improvement Tips to Boost Your Investment Property’s Value

Home Improvement

Home ImprovementHome improvement projects can be an effective way to boost your investment home’s value and attract high-quality tenants while you put your creative spirit to work. The greatest thing about home upgrades is that they can fit every budget and timeline. Here are some tips to enhance your home’s value in a cost-efficient fashion.

Set a Budget

As a real estate investor, you want to maximize your profits or break even, at worst. Setting a budget from the get-go not only helps to keep you from overspending, but it can also help you cut costs. In addition, sticking to a budget will put you in a better position to make sound financial decisions and allow you to complete the project on time.

Home Improvement Ideas

Whether you are planning to list your home soon or simply considering what home projects to do next, it is important to know which ones will add the most value to your property. Following are some cost-effective projects to consider that have a high return on investment:

Kitchen Upgrades – Updating appliances will not only catch the eye of potential tenants, but also increase your investment home’s value when the time comes to sell it. Alternatively, minor kitchen upgrades that include new cabinets and modern finishes are sometimes all that is needed to impress sellers and regain some of the original investment.

Hardwood Flooring – Adding new hardwood flooring to your home can provide an average return of 106%. Homebuyers know that hardwood flooring is sturdy and timeless, making it an appealing feature.

Vinyl Siding – Curb appeal is the best way to lure in homebuyers. By giving your vinyl siding a facelift, you can expect a return of around 63%.

Hire a Home Improvement Company

Hiring a contractor to manage and execute a home improvement project can oftentimes be your best decision, especially if you are taking on bigger projects. Check your local business directory or search the internet for competent and affordable house improvement companies and contractors in your area.

Make sure to get at least three quotes from different companies and contractors. And remember to do your due diligence on their track record and experience.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

6 Cost-Effective Ways to Boost Your Investment Home’s Curb Appeal

Curb AppealWhether you are planning to list a fix-and-flip house soon or prep it for rental, it is important to know which curb appeal improvements will add the most value to the property. To make sure your investment home’s curb appeal is up to snuff, we put together a list of six home improvements projects to take a stab at this summer.

Upgrade the Garage Door

Replacing your garage door is an item that is high on the list of desired home renovations. According to Renovation Magazine, home sellers recoup 84% of the investment of replacing a garage door. A whiter, cleaner door will help with curb appeal or give a more modern look.

Try a Front Door Facelift

Consider painting or staining your front door to give it a fresh new look. Summer is an excellent time to make a bold color choice that will help your investment home stand out.

Keep Up with Your Lawn Care

It may seem simple, but basic lawn care and a well-kept yard can add significant value to your property’s curb appeal. Make sure to keep your lawn and shrubbery well-manicured and water your plants and flowers to keep them lively.

Pressure-Wash Your Driveway

Over time, concrete driveways and sidewalks can collect mildew and stains, making them unsightly and decreasing the curb appeal of your investment home. These stains can also weaken the concrete, making it more susceptible to cracking. You can rid your sidewalks and driveway of stains quickly and efficiently by using a pressure washer while using less water than a traditional garden hose.

Upgrade Your Walkways

In addition to power-washing the driveway and walkways around your investment home, replace any chipped or broken stones and trim away weeds and grass along the edges to give them a more refined look. There are several types of lawn edging tools for every budget, from manual to electric to gasoline-powered ones.

Update the Lighting

Exterior lighting is a simple and inexpensive way to add gorgeous curb appeal as well as security to your home. To create a dynamic impact for your home, there are few more cost-effective options than lighting. A simple spotlight can accent your landscaping and showcase your home’s façade, while floodlights can provide additional safety. Even inexpensive solar lights along walkways and gardens can make a big difference.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

Considering Location When Purchasing Real Estate Investments

There’s no doubt that location is one of top criteria real estate investors consider when purchasing an investment property. And it certainly makes sense that you would want to carefully weigh potential neighborhoods in the balance before you settle on a house. While you can renovate a home, put in a pool or add more livable space, it is not possible to move your property elsewhere.

If you are on the fence about a neighborhood, here are some factors real estate investors will consider when picking the right location:

Price

As obvious as it may sound, some neighborhoods are just more expensive than others. If you are looking to buy a property in a more affluent area and still maximize your profits, chances are you are going to have to compromise on certain features. That often means settling for less square footage, fewer amenities, or properties that are older or in need of repair. Ultimately, it comes down to whether or not you are willing to sacrifice some wish list features to stay in budget.

Amenities and Recreation

Amenities and recreational facilities are valuable attractions for homebuyers. These facilities may include swimming pools, play fields, tennis courts, club houses, community docks and lakes. Other outside features that can pique homebuyers’ interest are nearby parks, open play meadows, and direct access to water bodies.

Safety

Lower crime rates are yet another important factor real estate investors and homebuyers pay close attention to. The good news is that there are many online tools out there to help you research a neighborhood’s safety levels, such as ADT Crime, Neighborhood Scout, and SpotCrime.

School District

Before any property purchase, you will likely do your due diligence about the quality of the school district. Families with school-age children will make a special effort to live in areas where their kids have access to good education. It’s a good idea to buy properties in neighborhoods served by well-rated schools so you don’t miss out on that market share.

Proximity to Public Transport

Homebuyers in sprawling cities should consider the proximity to public transport when purchasing an investment home. It is clear that public transit can increase the property’s value and rents. However, the cause-effect relationship is affected by many factors and conditions, such as local regulatory framework, regional connections, and national and regional economics. Thus, real estate investors must carefully examine the impact of transit on the property’s value.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

Making a Fair Offer on an Investment Property “As Is”

Selling a house “as is” means that the seller is putting the house on the market without making any repairs or improvements to it. There are a number of reasons why people choose to sell a house as is. Perhaps the seller is in financial trouble or must relocate quickly to care for an ailing parent. Sometimes, a home is inherited by an out-of-state relative who doesn’t have the time or resources to maintain or renovate it. More often than not, they simply want to avoid making costly repairs.

Whatever the reasons may be, many real estate investors build their business models around helping homeowners in these kinds of situations to move out and get on with their lives. If you have your eyes set on an investment property listed for sale “as is” and want to make sure it is priced right, your offer should be based on these key factors:

  • Comparable homes in the neighborhood
  • The potential cost of repairs

For example, if comparable homes in the area are worth $250,000 and the cost of repair is around $30,000, a fair market value would be no more than $220,000. Though this math can be helpful in determining how much you may be willing to pay, a fair offer will also factor in whether the area is experiencing a seller’s market, the number of houses available for sale, the growth outlook for the area, and seasonal patterns in the market.

To ensure the purchase makes sense, investors should always elect to do a home inspection. While you will have to foot the bill for the inspection, it is well worth it as it may reveal any additional problems and can often help you negotiate down the final price.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more.

4 Maintenance Tasks to Boost Your Property’s Resale Value

Investing in real estate is the roadmap to passive income and financial freedom. Additionally, investors may take advantage of tax benefits, all the while seeing their property appreciate over the next months and years. To ensure that your property’s resale value continue its upward trend, you won’t necessarily have to undertake a series of home improvement projects. Rather, making a few basic home maintenance tasks your top priority may reap more benefits than you could imagine.

Let’s have a look at four of these maintenance tasks that can help bump up your investment property’s resale value.

Yard Work

Regularly mowing your lawn will help maintain the curb appeal of your investment property and attract higher-paying buyers. Homes with neglected, overgrown yards will spook prospective homebuyers and have a negative impact not only on your property’s value but also your neighbors’.

To avoid getting in trouble with your HOA and unloading your investment home at a fraction of what you could sell it for, pay close attention to your lawn by frequently mowing, watering, weeding, and fertilizing the grounds.

Garden

Starting a garden can increase the value of your home while attracting wildlife and adding flavor to your cooking and fragrance to your home. Spring is the best time to start a garden so you can watch your plants grow throughout the season.

To create a bountiful garden, be sure to mark out the area that you are planning to clear and improve the soil using organic compost first.

Erosion Control

Land degradation from soil erosion can have devastating effects on your property’s resale value. Without a protective topsoil layer, homes can start to slide, putting an enormous strain on their foundation. This can lead to cracks, sagging roofs, buckling walls and even a total foundation failure. There’s also an increased chance for landslides and flooding.

Fortunately, there are several ways to reduce the impact of erosion and prevent its far-reaching effects on your investment home. Planting bushes, trees, and grass around your home can be an effective maintenance strategy. If the soil isn’t suited for planting, you can use rocks and mulch. Having gutters and downspouts properly placed to divert rainwater away from your home is also very important.

Pest Control

Pest and rodents can make a serious dent in your property’s value if left unchecked. They can also pose health issues to occupants and cause significant damage to garden plants. The best way to prevent infestation is to remove possible entry points to your home and hire professional exterminators.

Just keep in mind that treating the area during blooming season may scare pollinators away from your home, so it’s best to wait until it is over. When it comes to pesticides, there are a lot of options out there that are harmless to bee and other pollinators.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

What Are Capital Gains Tax, Short-Term Capital Gains Tax and Taxes on Rental Property Income?

Person doing taxes, rental property taxes, investment lendingIf you are a new investor, you will quickly learn that buying investment properties adds an extra layer of complexity when the time comes to file taxes. The IRS taxes all capital gains but has different approaches for long-term and short-term capital gains. Long-term capital gains are the returns earned from a property that was held for more than one year and sold for more than its purchase price. The taxes are determined by a unique tax bracket that is lower than the ordinary tax rates that apply to income. A capital gain rate of 15% applies if your taxable income is $78,750 or more but less than $434,550 for single filers; $488,850 for married filing jointly or qualifying widow(er); $461,700 for head of household, or $244,425 for married filing separately.

In contrast, short-term capital gains are taxed as though they are ordinary income. Because income tax rates are higher than those of long-term gains, it can be a good idea to hold on to a property for a year prior to selling if your transaction gains cause your income to jump into a higher tax bracket. While it is possible to turn higher profits by cashing in and reinvesting, the tax policy in place incentivizes individuals to hold their properties for a year or longer.

Regarding rental property income, your earnings are taxed as ordinary income. However, there are an array of allowable expense deductions that will lower your tax bill. These include:

  1. maintenance expenses
  2. repairs
  3. mortgage interest
  4. insurance costs
  5. advertising costs for the property
  6. payments to property manager
  7. HOA or condo fees
  8. property taxes
  9. services you pay for, such as utilities
  10. legal and other professional fees related to owning the property
  11. depreciation

It is worth underscoring the positive impact that depreciation deduction can have on your taxable rental income, which can often bring the property’s income down to zero for tax purposes. This is in fact one of the best advantages of investing in rental properties.

Do you want to know how else you can benefit from real estate investing? Contact the RLG team today to schedule some time to discuss how RLG’s vast experience in the sector can help guide you to success

The 203(k) FHA Loan: Adding on Your Rehab Costs to Your Loan

5 little red houses, The 203(k) FHA Loan: Adding on Your Rehab Costs to Your LoanAn 203(k) FHA Loan, sometimes called a Rehab loan or FHA Construction Loan, allows you to buy or refinance a home that needs work. With this FHA loan, you can include in your mortgage the dollar value needed to repair or upgrade the home. Your loan will then cover the purchase or refinance price and the cost of upgrades, allowing you to pay for the renovations over time as you pay down the mortgage. This is a superb financing tool that may allow you to get into an area where turn-key homes are more expensive. It is important to remember that in order for a lender to approve financing, the home must meet certain safety and livability standards. As 203(k) loans are insured by the Federal Housing Administration, lenders may be able to offer more lenient qualification requirements than other type of renovation loans.

The process for an FHA 203(k) loan is quite similar to that of regular home buying, but with a few extra steps:

  1. Apply with a 203(k) approved lender
  2. Get approval for the loan
  3. Select a contractor for your renovation project
  4. Get estimates for the project
  5. Close the loan
  6. Complete the repairs
  7. Move into your new home

Are you interested in a 203(k) loan or would you like more information? RLG has the tools and resources at its disposal to get you on your way. Call us today to experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

What is ARV in Investment Lending?

Key on wood background, FHA loan

FHA Loan, Key on wood background, ARV, Investment LendingThe ARV, or After Repair Value, is a figure used in the BRRR Method (Buy, Rehab, Rent, Refi) to determine the difference between the as-is price of the home and the value of the property after repairs. It is a critical number for real estate investors as loans are granted based on the loan-to-value derived from the ARV.

The after-repair value formula is:

ARV = Property’s Current Value + Value of Renovations

To calculate the property’s current value, it is important to enlist the help of a professional appraiser as they have the expertise needed to identify any issues and “quirks” that could affect the property’s value.

Once you have the property’s value pinned down, you will need to estimate the costs of renovations. Keep in mind that the costs incurred to flip the house must be less than the value of the renovation so your investment will see positive returns. Here are some factors to consider:

  1. Size of space

Remodeling a guest bathroom will almost certainly be less costly than larger areas such as the master bedroom or the kitchen. Full kitchen remodeling projects are likely to run at least $50,000. To cut back on expenses, you may want to consider a partial renovation and avoid major structural changes such as knocking down walls and rearranging the layout.

  1. Property condition

Older houses will often require more maintenance and have underlying issues. An inspection report is key in ensuring that your fixer-upper does not turn out to be a money pit.

  1. Design and Materials

When it comes to pricing, cabinetry, flooring, and windows run the gamut. Choose finished materials that fit into your budget.

  1. Contractor

Get estimates from at least three contractors to zero in on an offer that combines both quality and fair price. Asking for specifics about the scope of work, such as itemized list of repairs, is a good idea.

When determining the maximum price you should consider paying for a property, many real estate investors abide by the 70% rule. Imagine the ARV for your property is $100,000, and it needs $25,000 in repairs, then the most you should pay for it is $45,000. Lenders often times rely on the ARV to determine how much money you can borrow.