renting

Buying a Home in 2016 May Be a Good Idea

January 27, 2016 By Amanda Blankenship 2 Comments

With the housing market the way it has been for the past few years, people have been cautious when it comes to buying a new home. However, 2016 may be the year to buy a new home. A multitude of factors combined are making the conditions right for an up market when it comes to buying a home.

Prices Are Falling

Real estate prices have been high for quite some time now. However, in 2016 the price hikes are expected to slow greatly. The rise in real estate prices is expected to only be 3.5 percent. This will give many people a chance to hop into the buyers market for real estate. This could potentially lead to a high influx of buyers throughout the year. There is potential for the sale of six million homes between April and September, which is unheard of. Although there will be a decrease in price, it won’t be drastic enough for low-income buyers. There will also be places, like New York and San Francisco that will continue to have higher prices.

More Homes Will Hit The Market

It will be a buyers market in 2016. Because of the drop in prices of homes, more people will be listing their homes for sale, giving buyers more of a choice. The number of people putting their homes up for sale will rise and so will the number of new homes. More and more builders will be focusing on starter and middle-range homes in 2016 for people just getting into their first home or possibly even second.

Rates Will Be Higher

Cheap mortgages will be a thing of the past in 2016, but most of the rates will be higher. The Federal Reserve is expecting to increase loan rates soon, so the age of low mortgage prices is coming to an end. The mortgage rates will be rising slowly though, so the earlier in the year you can buy, the better.

Rent Prices Rising

Just because 2016 will be a year that rates will be a bit higher and more homes will be hitting the market, it doesn’t mean any rent rates will be any lower. In fact, rent is supposed to stay about the same if not go up in many parts of the country. Even though many mortgage rates are going to rise, buying a home may still be the better deal. Of course, buying a home is an investment, but in most cities buying a home will still be cheaper than renting.

Buying a Home

If you are buying a home in 2016, there are always a few things you should keep in mind. Always use a trusted realtor when you go to buy. You also shouldn’t necessarily buy for the life you live today. For instance, you and your fiancé may buy a home with extra bedrooms if you plan on having children. Also, be sure you are buying the house that you know that you can afford and not necessarily the “dream home.” You can always make renovations.

Either way you have it, if you’re looking to buy a home, 2016 is the year to do it! Happy house hunting!

Photo: Flickr: Dan Moyle

Renting or Homeless? Minimum Wage Challenge

December 11, 2012 By Jeffrey Strain 18 Comments

One of the biggest decisions I need to make that will determine whether this living well on minimum wage challenge will be successful or not is my living conditions. I’ve spent a lot of time thinking about this and there is little doubt that renting would definitely be the safer, cheaper option.

The first question I asked myself was do I really need to pay for a place to live? Could I create an arrangement where I could live someplace for free? Would it be possible to find someone leaving the country for a year and housesit for them in exchange for a place to live? Could I find a family that would let me live rent free if I was willing to do their grocery shopping for them since they would end up getting thousands of dollars worth of food each month for pennies on the dollar? Could I find a place with an older couple that would trade basic maintenance for a room? While I think these possibilities are out there and that it’s worthwhile keeping my eyes open for them as I do this challenge, they probably are not ones that I could arrange before the beginning of the year. So while I will keep these in the back of my mind, I needed to look at some more realistic possibilities for the beginning of the New Year.

The next question became what type of rental could I get that was inexpensive, yet still a decent place to live. Looking through advertisements it quickly became apparent that renting an apartment for myself, even if just a studio, was going to be $400+. Then there would be the need to furnish and to pay utilities and other fees. Even worse, most had a minimum of a 6 month commitment, with most wanting a year. While this certainly could be done, it would be pretty basic and wouldn’t allow me to take advantage of other opportunities if they arose.

As I continued to explore, it became apparent that renting a room within a house was often priced in about the same range, but often came with furnishing and sometimes with utilities and other fees included. There were still time commitments on most, but many would allow for a month to month for a slightly higher price. The trade-off was that there would be a lot less privacy since the kitchen and other rooms would be communal. While ideally I would prefer a place all to myself, I think that the better house conditions and locations would make a room in a house a better overall deal given the right circumstances. I began to search to see what I could find in this area.

After sending out some emails and making some calls to family and friends, I was able to find someone who was looking to rent an extra room in their house for $400 a month with a six month commitment which would include all utilities. They would be willing to do a month to month arrangement for $475 a month. It’s already furnished so I wouldn’t need to buy anything extra which would be a great savings. I would have my own bathroom and shower, but the kitchen and living room would be shared. That would be a flat $4800 for the entire year if I went with the 6 month commitment, it would be easy to budget, and there would be little risk involved with additional or unexpected charges hitting me from out of the blue.

If this was simply a “minimum wage challenge,” this is probably the choice I would make without hesitation. If finances were the only aspect to the challenge, it would be a no brainer. However, an essential part of this challenge is the “living well” portion. For me, that means getting out and traveling a fair amount. Living in a set place would greatly inhibit my ability to do this, especially on such a restrictive budget.

With this in mind, I have decided to stay purposely homeless for a three-month trial period. While there is a chance that the room will get rented out while I’m doing this trial period, I know that the person is only willing to rent out the room to someone they know well which means that there is a fairly good chance that it will still be available in three months if I need it. It’s a risk, but one that I think is worth taking to see if I can make the full-time traveling work. Basically, I’ll have an opportunity to try to do the traveling that I love to do, and have a back up plan if it isn’t working out quite as well financially as I hoped.

Of course, as soon as my sister heard I made this decision, she cried foul and said I was trying to cheat. She immediately demanded that we set a new rule to the challenge that I’m not allowed to spend more than a week with the same family member or friend per month (with the one exception being at her house where I am more than welcome to stay as long as I want to babysit her kids). Basically, she was afraid that I was going to stay long periods of time with someone for free, and that wouldn’t have made the challenge hard enough in her eyes (because, apparently, that is her main concern in all our bets — to make things as difficult as possible for me so that she can win). I figured that since doing so would defeat the purpose of why I decided to choose “homeless” in the first place (to travel more) that it was something not worth fighting over and accepted the new rule.

This choice comes with some risks, especially when compared to having a fixed living cost of renting. The main one will be the cost of hotels. There are times when the unexpected happens and I find myself in a position where I end up having to pay far more than I expected for accommodations. A perfect example was on one trip I took when I pulled into a small town mid-week where I was sure I could find a cheap place to stay only to find out that there was a popular festival going on that had most of the rooms in town booked. I ended up having to pay $150 at a dive motel, and if something like this happens too often, it could quickly ruin the budget. I think with better planning and less of the “OK, let’s just start driving as see where I end up” attitude I usually have, I should be able to avoid most of these costly mistakes.

This will also raise the cost of my food. Although I think that I can still keep costs at pretty low levels, living on the road means that couponing will be a lot more difficult (it’s hard to find deals in areas where you aren’t familiar with the stores) and it won’t be possible to stockpile the great deals the way I could if I had a place of my own. This is another area I will need to think through since it does get easy to spend a lot on food through convenience and restaurants when on the road.

So the question is, will I be able to cut down the costs of my current living lifestyle to the $400 – $500 a month range? I would estimate that these expenses are currently running in the $1000 – $1500 a month range (again, I don’t usually budget, so I’m not exactly sure), if not a bit more. There are certainly things that I can do to bring these costs down, but I’m not sure if it will be enough. That is why I will be giving it a 3 month trial period, then go onto plan B if I find that it’s just not possible for me to get down to a spending level that will allow me to remain within the budget.

While I’m aware that me choosing this option means that it’s extremely unlikely that is will apply directly to the vast majority of the readers of this challenge, and not nearly as much as renting a place would, my hope is that it ends up proving to be much more inspirational than renting would (and who knows, I may end up being there in a few months anyway). While renting would be the safe bet and be more applicable, it would also be a pretty boring choice in that I have locked in everything I could (no fluctuating utilities, no need to buy furnishing, etc). Locking in these costs when renting is the financially prudent thing to do, but it also doesn’t allow for many situations where I would need to make hard choices. I believe that by traveling, I will have much more opportunity to go through the decision-making process of choices before me. I believe it’s that decision process and looking at options creatively that ends up being a fundamental skill that can help people save money no matter the situation. I will certainly have to have my creative money-saving juices flowing to make this work…

Next entry: Car or Carless

(Photo courtesy of katerha)

Renting Responsibly: How Not to be a Victim of Foreclosure

January 11, 2009 By Ann Hartter 4 Comments

The business section of the Denver Post included a bit about Fannie Mae signing interim rental contracts with tenants of properties their landlords couldn’t pay for. What does this tell me? A renter doesn’t know the financial position of their landlords. It used to be that was a just fine arrangement, but maybe it is time to reconsider how renter contracts are signed.

I’ve lived with two specifically rocky landlords in my life. One was plagued by having to replace the century old sewer system, and having to raise the rent. Shortly after the job was completed, the place was sold and we had to sign a new contract with the new owner. Since the excavation was occurring in our front yard, it was easy to see the potential financial blow such a project could land on our lessor, so we were relatively prepared for the hike in rent and only mildly surprised at the subsequent sale.

Two years later, we rented from an elderly couple, and the next thing we knew we were paying a property management service instead. The chatty lady behind the management desk informed me one of the previous landlords had died, and that the property was being sold to their son in a different state. The elderly couple had been more than happy to reimburse us for some improvements on the property, but their son was not. We struggled with the tagged-on management fee to the rent in addition to the cost of the repairs we had already done. We managed to move before the property was sold a second time.

Today, these scenarios are playing out across the country: sales on the horizon and financial trouble for those who own the property. Hardworking, prompt-paying renters are being dealt the shoddy hand as there are no buyers and the banks take over. Good renters with steady incomes are finding themselves struggling through no fault of their own.

While the government bailed-out institution Fannie Mae can help some people in the coming months, and Freddie Mac not far behind, what can the rest of the renting population do to ensure they aren’t standing on the soft earth above the invisible hole their landlords are digging?

Check the public records of your rental property. The county assessor’s office has records on sales price, owners, tax and purchase information. Is your rent commiserate with a mortgage beginning that sale date for that sale price? Is your rental income enough to cover property taxes, too? If not, you may not be covering the expenses of the owner.
If you have a property manager, read your lease or call to determine if the company is legally responsible to you if your lessor goes under. If they are, you may be able to rent under them if you are removed from your home due to foreclosure.
Talk to your landlord. Find out if the place you’re renting is paid off or if they’re able to manage the mortgage responsibility. Ask them to call you if there are money problems ahead that may endanger their contract with you.

If you are served with an eviction notice due to foreclosure, there are tips in the article including

Find out how long you are legally allowed to stay after notice.

Find out if the lender is willing to sign a contract, as Fannie Mae is

You have a right to know if the house you’re renting is actually available for you to rent. Just because the place is vacant and someone is willing to sign a contract with you and take your money does not mean that you have a place to live. Being a good tenant is not just about being good to your landlord by paying rent on time, it also means you are good to yourself and your family by making sure there is a solid roof over your head.

Vacation Homes – Cheaper than You Think

September 7, 2008 By John Cain 6 Comments

There was a time when I thought a weeklong vacation to Hilton Head would be outrageously expensive — either that or I’d have to stay at a less-than-desirable hotel 15 miles from the beach to make it affordable. In my seemingly never-ending quest to find the best deal on everything, I serendipitously stumbled upon something that has changed my entire view about this. Before going into the details, I’ll just say that my family and I now vacation in Hilton Head every year for an amount less than taking shorter vacations in less exclusive areas.

When one breaks down the costs of a vacation, there are usually 4 major categories of expenses: travel, lodging, food, and entertainment/recreation. This article doesn’t really touch on the first one, except to say that Hilton Head is only a 9 hour drive from our home, which is more cost effective for a family than flying. Our “big secret” to a great Hilton Head vacation has been to rent vacation villas or homes directly from owners. Simply Google “vacation rentals by owner” and you’ll find several websites that list house, condo, and townhome rentals by owner.

There are several advantages of choosing your lodging this way. First, the cost savings over hotels and other commercially-run vacation rental sites can be substantial. For example, this past year we stayed in an extremely nice, 2 bedroom and 2 bath villa overlooking the 18th green of a beautiful golf courses. The ocean was only a short 5-minute walk or 1-minute drive away. The cost for the entire week was only $700, compared to hotel rates of nearly $1500 for the same week. We enhance those savings by vacationing 1 week prior to or after the peak season. Rates are greatly reduced, the weather is virtually the same and the roads, beaches, and restaurants are less crowded.

Renting villas instead of hotel rooms can also provide serious savings on food costs. We usually make a quick run to a local grocery store upon arrival and stock the kitchen. We only dine out at restaurants 3 or 4 times during the entire trip. We eat all breakfasts and lunches at the villa and grill steaks, chicken or fish for a few dinners. For a family of 3, we eat very well for $175-$200. When staying at hotels without kitchens, we’ve easily spent upwards of $400 because every meal had to be eaten at a restaurant.

As far as entertainment goes, Hilton Head is one place that you can enjoy yourself without spending a lot of money. Sure there is golf, tennis, ocean cruises, etc. that can be a little pricey, but a day at the beach is free. Another amenity included in our last trip was a beach-side locker stocked with chairs, umbrellas, and beach toys. There was no need to purchase or rent anything and the best part was we could just lock everything in the locker at the end of the day without lugging it all back to the villa.

Furthermore, bicycles were provided, which allowed us to enjoy several hours cruising under moss-covered oaks for free. This particular villa sat on property with a private lake and lagoon. All I had to do was take about 30 steps off the back porch and cast my rod for some pretty decent bass and crappie fishing. Finally, although this might turn a few people off, it was really cool to watch alligators sun on the banks of the lagoon.

Of course, when renting vacation rentals from owners, you should thoroughly research the particular Web site and understand what is involved. Unlike a hotel, if you show up and the lodging is less than what you expected, you simply can’t request a different room. Make sure you ask for updated photos and get a contract with terms of agreement. Many of the sites also have guest books signed by past renters who can give you a better idea of what the villa or home will be like.

While I do this at Hilton Head, it’s something that can be done anywhere. Those previously-mentioned Web sites have vacation rentals for nearly any place within the U.S. that one would want to travel. Just spend some time searching and I’m sure you’ll find a great place that offers substantial savings.

Image courtesy of Jim Frazier