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Under Contract

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We are now officially under contract!!!

Not hubs & I (we still haven’t even started house-hunting, but plan to start in August!! Can’t wait!!!) – my dad’s Utah house!

After receiving a couple competing offers, we accepted one that we felt was more than fair (it’s actually over our listed asking-price). We’ve already completed inspection and all the requested repairs are super minor, so we’re paying a handyman to get it all fixed up.

At this point, the last hurdles are in regard to the buyer’s financing. Our realtor has been in contact with the lender and believes the loan will be funded without a problem. Given that the buying price is above the list price (and above the comparables our realtor pulled), we’re holding our breath and crossing our fingers that the appraisal comes in high enough to cover it. Fortunately, our realtor is a rock star and has made up a whole list of home improvements for the inspector and feels confident that the appraisal shouldn’t be a problem.

If all works out with buyer’s financing, we are set to close on August 15th! Super pumped!

Initially, we were thinking we wouldn’t make too much off the sale of this home. Remember, both my siblings were in favor of renting it instead of selling due to this reason.

But given our higher-than-expected sale price, we should stand to net nearly $100,000!!! Not too shabby!

The next question is what to do with the money.

My dad does have a decent-sized net worth but, to date, we’ve done next-to-nothing with his investments. Everything is still in the original investment accounts he selected and has not been touched. We want to be somewhat conservative because my dad is legally disabled and will never be able to work again (if interested, read more about his condition here). His physicians have said that his illness tends to have a life expectancy of 2-20 years. If he lives another 20 years, he could easily burn through all of his savings. He’s already in assisted living and his care is incredibly expensive. So we really need to be smart and manage his money wisely so that costs of his care don’t end up falling on the shoulders of my siblings and me.

I’m a fan of pretty boring investment strategies. Mutual funds and such. My brother has talked about perhaps investing in real estate back in the Austin area (which makes it less complicated and risky than an out-of-state rental). He’s even thrown out the idea of establishing an LLC for a rental property so my dad’s other assets are protected. Depending on cost, we could possibly pay for a rental with liquid cash without needing to withdraw from current investments (the alternative would be putting a large amount down and taking out a small mortgage).

I’m open to various ideas, but I’m also a fan of EASY. Taking over my dad’s affairs has been incredibly time-consuming and, frankly, none of us has time for it. Meeting with an investment advisor once or twice a year is infinitely easier than dealing with rentals and such. That being said, in the past year that we’ve been in charge of my dad’s finances, his investments really haven’t performed great. He’s averaged about a 4% rate of return. I’d like to see closer to an 8-10% return, if at all possible. At only a 4% rate of return, we’re eventually going to eat into his nest egg. Fortunately, he had enough cash in the bank that we haven’t touched any investments at this point but eventually the liquid money will dry up and we’ll have no other option but to raid his investments in order to pay for his care.

What do you all think? If you were charged with caring for a parent’s estate, what types of investments might you make? What are your thoughts of investing in mutual funds versus investing in real estate?

Another possibility is to still invest in IRAs. My dad technically has an “earned income” because he received a generous severance package from his previous employer before having to leave due to his health issues (it’s paid out monthly for another year still). So would it be better to actually fund a retirement account versus buying mutual funds? Or is it better to keep the money more liquid than in retirement or real estate? Something like mutual funds that are easier to sell and claim the cash?? My dad is 60, by the way. I’d value any and all input you may have!


Profitable Rental Properties

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With home prices touching record highs, there are more families renting than owning in many parts of Britain. It’s a great time to enter the rental property market. You will never have to look for long to find your next eager tenant.

Yet, the path to take from deciding to get into the rental market, to being finally ready to receive your first rent cheque, can be a challenging one. There is a lot that you need to keep in mind making your investment, and there are plenty of things that you need to learn before you are able to successfully navigate the rental market. If you’re ready to take the plunge, what follows is a short guide.

Getting help looking for an income generating property

Many first-time home investors will attempt to bring a home listings broker in right away as they begin to look. It can be a problem having such help very early on, though, when you don’t know what exactly there is out there. Looking on your own gives you the freedom to make your own observations without having someone influence you.

If you do need guidance from a professional starting out, it should be from a well known rental agency such as AladeMaid.co.uk. If the agency sees that there is a chance that they can retain your business, they can let you in on lots of great information on what to look for to make the best of the market.

The neighborhood is more important than the home itself

When you look for a home to live in yourself, it may be very important to you that you find a neighborhood that you are able to form an emotional bond with. If it’s a rental that you’re looking to buy, though, your feelings don’t really count. People coming to rent your home won’t be looking to fall in love. They are likely to be more interested in checking off points on a list. It would be sensible if you could do the same. It’s important to focus intently on the best possible neighborhood for schools, jobs and amenities.

You also want to look out for your own interests

While you don’t want to judge rental property on personal appeal, you do want to look at a few technical points of your own. To begin, property tax levels are important. The ease with which you can obtain building permits for future home improvements are a significant point, as well. Rent levels, demand for rentals in the area and proneness to natural disaster, are all important areas to judge a neighborhood (or a city, for that matter) on.

Judge the property in a professional way

If this is your first time investing in a rental unit, you’d do well looking at flats, rather than individual homes. With a flat, you get to leave all the maintenance to the building’s managers. All you need to do is to take care of the interior.

It’s important to look for the right kind of unit. Homes suitable for families, rather than single people, are likely to be far easier to manage. Families are usually more financially stable, and are likely to pay their rent on time.

Be realistic thinking about money

It can be very hard to accurately judge how much house you can afford. It isn’t just about buying whatever property you can afford the mortgage on. There are all kinds of other costs involved in closing the deal, and you can have a very hard time predicting how reliable those rent cheques will be. The first couple of houses that you buy, it’s a very good idea to buy 75% of what you believe you can actually afford.

Be careful of a few unpredictable areas

When it comes to investing in property, there are few things that you can completely rely on. In some cases, property taxes have been known to rise very quickly, wiping out any profits planned. You also need to be prepared for eventualities involving crazy tenants who like to damage the homes that they are in. The deposit is unlikely to cover major repairs. If you tap your home insurance, you’ll find that your premiums rise dramatically.

It’s important to plan for major expenses even if it means cutting down on your profit outlook. Leaks, failed furnaces and the effects of poor construction can all catch you unawares.

Even more importantly, if you should ever want to manage your rental yourself, rather than ask a professional to do it, you’ll find that setting rules and implementing them is not for the faint of heart. You do need to turn hard-nosed businessman.

Yet, it can all work out perfectly well. As long as you go in planning conservatively, rather than optimistically, rentals are a gold mine that you can depend on to carry you through life.

Martha Rivera has been buying and flipping properties for the past few years, and thankfully, she has found she has a talent for it. Not one to keep the pie for herself, she shares some tips and insights with others online.