How to Decide Whether to Remodel or Relocate

Deciding between remodeling and relocatingNot happy with your home and contemplating whether to relocate or remodel? Well, it’s a choice that depends on emotional and financial calculations. Buzzle puts down a few factors to consider in order to help you come to a decision.
Tip
Before remodeling, check the zoning restrictions in your area. While your existing house may be complying with the standards, consider how your remodeling activities fit in the larger scheme of things.
Many times when children grow up, the house which was comfortable earlier for a small family may seem to shrink in space. You may need to allocate separate bedrooms to children, and the house just doesn’t offer that liberty. The only option left with you is to either remodel the house or relocate. While the former is a relatively cheaper option, it may take up too much time and cause inconvenience. On the other hand, moving to a different location may be costlier and will not leave much option for customization. Remember that there is no one-size-fits-all solution to the problem of remodeling or relocating. You will have to compare both the options for different parameters, like requirement, cost, convenience, etc., to get the exact answer. For further help and insight, read the following points.

Cost

Cost Comparison
Make a cost comparison. Understand if you can afford a mortgage loan or a home equity loan. Know the money you will have to put into remodeling. If you find moving out will be cheaper, go ahead and do that instead of spending a huge chunk of your savings on redoing the house. Many times, remodeling will be cost-effective.

Financing Options
Financing a remodeling project is not as easy as buying a new house. You will have to avail a homeowner or bank loan. It will allow you to take a second mortgage on the property. You may require a higher credit score for this. You may even get an increased rate of interest and shorter term of payment.

Added Remodeling Expenditure
Apart from considering the cost, there are several other expenses that will also need to be factored in. You will have to store your belongings in a storage, move furniture, be put up at a hotel, or get alternate living quarters and thrive on takeout meals. All this will definitely add up to your cost of renovation.

Community

Some people like the community they live in, and enjoy the company of their neighbors. This happens mostly when people are staying in the same locality for a long period of time. You tend to have a strong bond with the people in the community and the security it offers. If you do not feel like leaving your ‘comfort zone’ and moving to another place, you can opt for remodeling your house instead of relocating.

Customization

Even if you buy a new home, unless you do some kind of remodeling, it will not fit in your idea of a dream home. Hence, instead of incurring so much cost, you can customize your existing home by making the necessary changes as per your requirements.

Change is the Only Option

You may not like a few features in your current home like proximity to the main road, away from the urban area, too far from your workplace, traffic, pollution, etc. Such things often affect the quality of one’s living. So, one can think about moving to a quieter and pollution-free place. At such times, there is no point in remodeling the place as it will rarely help solve your problems.

Compare Amenities

Suppose your family has just expanded and you need an extra bedroom for your baby. Owing to this, you decide to move out and go to another place. However, you will have to settle for a place that will give you an extra bedroom, but may compromise on other aspects like a patio, sun deck, space, etc. At such times, remodeling your existing space is much better than moving out.

Security

You may be living in an area where security in the neighborhood might be a prime concern. At such times, you will have no option but to move out. No amount of security measures like a burglar alarm will make you feel safe. Moving out will be the only option. However, ensure that you study the crime rate in the area where you plan to move.

Buying a New House

Many times, while buying a new house, we only consider the purchasing amount to be the expense. We conveniently forget the sales commission, real estate fees, appraisal expenses, taxes, legal costs, interest on loan, rent for storage, moving costs, interior decoration, insurance, etc. This can really multiply your total cost. Hence, after considering all the points if the new house is blowing up your budget, there is no point in buying a new one.

Buying a Secondhand House

If you buy a secondhand house, sometimes, it comes with an added cost. Not only does it require repairs and refurbishment, but also some serious overhauling work which will increase your cost. If the house is by the sea, you will have to get a lot of items replaced as they usually detonate due to the salty air. All this will cost you a bomb; instead if you can make some changes to your existing place, it will be cost-effective.

Inconvenience

For all the days that remodeling goes on in your house, you will have to bear the brunt of extreme inconvenience. It may take months for the remodeling to get over, which will mean that you will have a difficult time throughout that period. Especially if you have a pregnant woman, baby, or elderly people in your family, it will maximize their troubles. Hence, if moving into a new house with all the required amenities is easier, go for it.

Heirloom

So, you live in a house that has been a witness to history since the early 20th century and has been passed down to you through your ancestors. While you have sentimental attachment with it, you still long for more comfortable interiors. Selling the house will not be a solution. Go ahead and renovate; expand it to suit your needs, but don’t sell or remodel it completely.

Condition of the House

If it is a particularly old house, it may not be fit for a full-length remodeling effort. Sometimes, the very foundation of the house may not be in a good condition, and renovating will not help. It is advisable that you get a professional to study the house before you take a decision.

Tax Benefits

Buying and selling a new house has certain tax benefits. You will need to consult a tax expert to know about them, along with the favorable conditions. You may even get a tax credit if you buy the property at a certain period of time. Under some conditions, a married couple may also be allowed to exclude a certain amount from the sale of property. Hence, buying a new house will prove to be more beneficial.

Getting Good Contractors

It is very important that you get good contractors for your work. Get a proper estimate for everything before they resume work. Otherwise, your work will be extended for months at a stretch, and the cost will keep increasing. Unless you’re absolutely sure that you have the right contractor for the job, renovating your house can be a risky affair.

By opting for remodeling, you will definitely be able to do away with buyer’s remorse. Before remodeling, ensure that you will get your investment back. If the prices are not going to rise in your neighborhood, there is no point in investing in it.

Buying a Foreclosed Home

The pros and cons of buying a foreclosed home should be considered by the buyer before embarking on the same. Besides, one must bear a few tips in mind to strike a genuine deal, when buying a foreclosed home.
In the current scenario, buying a foreclosed home seems like a wonderful investment. A number of economists feel that today, homes are as affordable as they were in 2004. Of course, there is a chance that people may not witness noteworthy appreciation in the price of the property for a long time. Given the state of affairs, a foreclosed home may be good purchase for people, who need a place to stay, rather than people looking at it from an investment perspective. However, aspiring homeowners need to be very cautious while buying a foreclosed home. More so, if the foreclosed property is going to be their first home purchase.

Find the Listings

The internet is the best place to find foreclosure listings. Typically, bank websites and the Housing and Urban Development (HUD) websites have detailed foreclosure listings. People should look for foreclosed homes sold by the Department of Veterans Affairs, Internal Revenue Service, Small Business Administration, U.S. Army Corps of Engineers, Customs, U.S. Marshals Service, Department of Agriculture and Rural Development, Fannie Mae, Freddie Mac, Federal Insurance Deposit Corporation, and General Service Administration. The website of the National Association of Realtors, also has a plethora of information on home foreclosures for sale. Newspapers, too, carry information regarding proposed auctions, the names of the homeowners, and the lenders.

Important Tips

Foreclosed homes are disposed off at auctions held on the steps of the county courthouse. People, who have considerable experience in buying foreclosures, can buy the foreclosed home at this stage. Risk-averse individuals should not buy a home that is being auctioned on account of the following reasons:

☛ The bidders are not allowed to inspect the property before making a bid, although it, certainly is possible that the home may be in need of serious repairs. The successful bidder is expected to make the payment right away and may not have time to inspect the property again. The title deed may be unclear, and there may be additional liens against property that may have to be borne by the buyer. The buyer also has the unsavory task of evicting distraught tenants from the property, and the latter may vandalize the house out of spite before bidding goodbye to a home that was once theirs. House auctions also tend to inflate the price of the property and may end up costing the bidder much more than it, actually is worth. Thus, buying at an auction is not advisable for a novice. Even a seasoned player may find it difficult to navigate the aforementioned risks of buying a foreclosed home at an auction.
☛ If the property is not sold off at an auction, the bank winds up with the deed to the property. The home that is now a part of the bank’s inventory, is referred to as real estate owned (REO). The bank may price the REO at a reasonable figure just to get rid of it. In addition to low cost, there are numerous benefits of buying a foreclosed home from a bank.
☛ The buyer can inspect the house before purchasing it. At times, banks may pay for repairs that are found during preliminary home inspection. Buying a bank foreclosed home is a good deal for the first-time home buyer, since the buyer does not have to concern himself/herself with evicting tenants. The bank also tends to negotiate with other creditors and gets rid of taxes and other liens against property.
☛ A seasoned investor may consider purchasing a tax-lien foreclosure that is the result of the homeowner defaulting on property or income tax. The home, again is sold at an auction, and it may be disposed off for as low as 60% below its market value, since the government is only interested in recovering the taxes.

Finer Points

❒ A mistake that most first-time buyers commit: They do not weigh the pros and cons before buying the property. Majority are lured by the price tag. A lower price does not mean the deal is in your favor. Well, this, precisely is not the real deal. Before you sign on the dotted line, question yourself on a few important variables. Does the house need major repairs; would you be refurbishing the house and renting it in the future; do you have the capital to maintain the house, if you don’t find a tenant to rent the place — these are a few questions that may help you judge your efforts and sort your options better.
❒ Inspecting the house, thoroughly, before you make up your mind to possess the property, is an absolute requirement. If you are planning to buy a foreclosed home in another city, you need to make several trips to the site and recce the place. Asking someone else to do the job for you is a waste of time. It is you, who needs to be proactive and take the final step.
❒ Know that the neighborhood matters. If there have been a number of foreclosed properties in the vicinity of the house you are planning to buy, you may be unable to cope with major repairs as the value of the house itself is deprecated. Besides, learn how the neighborhood looks during the day and the nighttime. The neighborhood that looks lively, however, does not breed hubbub, fetches potential buyers to invest in the property.
❒ Another important variable you must counter-check is the current condition of the house. The present state of the house does matter. It reflects on the degree of refurbishment the house requires and the amount you must shell out for the purpose. Besides the filth and the muck build up, there are various plumbing- and sewage-related problems that set in. Better check, if the pipes are in a good condition; if not, make way for modifications. If the problem is not sorted, there may be complications in the future. Water leaking, courtesy of the cracked pipes, which seeps onto the walls is not a pleasant situation to be in and amending the same after you have rented out the house is not an entertaining idea.
❒ What adds to the house price, is the landscape. Overgrown bushes, unkempt trees with occluded branches lead to depreciation of the property. There are times when overgrown branches gatecrash the spaces, predominantly the windows of the house, and pave the way for deterioration.

Hopefully, the aforementioned tips on buying a foreclosed home will be of use to a buyer, who is keen on buying his/her first home. Price of comparable properties is an important factor that has to be taken into account regardless of whether one buys a REO, a tax-lien foreclosure, or bids at an auction. The absorption rate, or the length of time required to sell the current inventory given the present rate of sales, also needs to be calculated, since a low absorption rate is a bargaining chip for the buyer.

Investing in Real Estate for Retirement

Buying real estate for retirement is currently the most preferred way of investing money. It is true that investing in real estate does require lots of liquid cash, but the returns are also much better than any other investment.
Over the last few years, the interest rates of various investments have fallen and despite all the attempts taken to make the economy stable, millions of people had to extend their work years just to maintain the minimum standard of living. Yes, everything lost has its value, but one asset has only risen in spite of this recession – real estate. Most people dream about spending their retirement period in a calm and quiet place. A place where the crime rate is low and the entire surrounding is filled with intelligent people who are just living the much-needed peaceful and retired life. However, all these dreams can only turn into reality if an individual makes intelligent decisions regarding his/her investments.

How to Invest in Real Estate for Retirement

There’s no doubt that investing in real estate is a smart move, but it is advised to check out all the loopholes before putting money in a piece of property. Buying real estate is more than just living on a piece of land. The practice of property selling and buying has become a popular practice over the last few years, and more and more people are joining this bandwagon. Yes, the real estate market has plenty of lucrative opportunities for investors, but sometimes dealing in real estate can be more complicated than dealing in stocks and bonds. In this piece of information, we understand different and safer ways of investing money for real estate.

Giving on Rent
An vacant, habitable house can rented to a tenant for a considerable period of time. The owner pays for its maintenance, mortgage and various additional taxes. The rent on the property is usually decided on the basis of its location. The land owner earns a fixed income every month which is known as rent. In due course of time many landowners charge more rent in order to gain more profit. However, the best thing to do is to charge rent which would be enough to cover the mortgage payment. Plus the value of the property is likely to have appreciated with time. As soon as the tenant moves out due to various reasons, it is advised to put up the property on the market to earn additional profits.

Real Estate Trading
This is perhaps the fastest form of making money in the market of real estates. In real estate trading, the traders buy properties from owners with the motive of holding them temporarily and selling them for a better profit later. This practice is also called ‘Flipping Properties’ and traders who follow this usually purchase properties which are highly undervalued or are very high-priced. In some cases, when traders purchase a low priced property, they try to increase its value by doing some renovations on the property. This customization can actually result into a huge profit for the trader.

REITs
One of the most easiest ways of investing in real estate is putting money in the Real Estate Investment Fund (REIT’s). A RIET is created when a trust or a corporation uses the investor’s money to buy and operate properties. RIET’s function just like stock trade. The trust or corporation has to pay out 90% of all its taxable profits in the form of dividends to its various investors. By paying the dividends, the REIT is exempted from paying corporate income tax. RIET is the perfect choice for people who want to earn regular income.

401 (k)
Most people believe that the money saved through the 401 (k) plan is simply for retirement. However, there are some smart investors who have figured out ways to invest in real estate without disturbing the money saved for retirement. 401 (k) account holders can take out a loan against their account. The money which comes from the loan can be used to buy real estate. However, there are some limitations which come with the loan. First and foremost, there’s a cap on the amount which can be borrowed. Normally the cap is of $50,000 but it can be less depending on the money in the 401 (k) account of an individual. Another thing to remember is that real estate purchased through this method is not eligible for any tax benefits.

Roth IRA
Almost everyone in the US knows about the Roth IRA (Individual Retirement Account), it is a great form of investment and is non taxable. People who open an IRA account deposit some money from their salary in the IRA for retirement. In some companies the employer deducts some part of the salary and deposits it in the IRA of the employee. The good news here is people can use the IRA money to invest in real estate. Let’s make it more simple; If you have $50,000 in your IRA account and you want to purchase a property which is priced at $100,000. You can put in $50,000 of your own money and put in more $50,000 from the IRA. This makes your IRA account nil but you can put back that $50,000 once you sell that property at a better rate.

For legal advice regarding these investments, it’s necessary to get in touch with your attorney.

Investing money in real estate for retirement is a good idea if the investor keeps himself/herself updated with the latest regulations and strategies of the market. Real estate is perhaps the best way of earning easy money in retirement but before the game of investment begins it is a good idea to know all the rules.