Apr 16, 2021

Real Estate Investment Trusts (REITS) Buying Up Homes To Rent

Huge Real Estate Investment Trusts (REITS) are buying up homes to rent.  The trend began back in the 2008 - 2009 Financial Crisis when so many homes went into foreclosure and or lost significant value.  The sharks on Wall Street swooped in to buy the bargains for cash.  They attracted investors into huge funds seeking a good return like any other investment.  And, boy have they gotten it in the last ten years as values have sky rocketed and so have rents.  

The problem is the sweet spot for these REITS are middle class housing in great neighborhoods with great schools.  REITS pay cash so no mortgages needed to qualify.  They work with national property management companies some of which they actually set up when they bought thousands of homes in key markets during the last financial crisis.   They operate their REITS like any business looking for economies of scale to cut cost to generate more profit. 

Now that this investment modality has been discovered, it is not likely to go away any time soon.  It is just another way to diversify a portfolio.   Real Estate is generally a good hedge against inflation and has very favorable tax treatment.  So buyers today need to realize that they are competing with multi billion dollar REITs in the marketplace making it harder to buy a home.  Renters need to understand that there is a pretty good chance that they are renting from one of these REITS that will regularly raise rents and process evictions as allowed by law for failure to pay rent.  To REITS, this investment is strictly business with nothing emotional about it.  

Apr 15, 2021

The Housing Market Is 4 Million Homes Short

It is estimated that the housing market is short about 4 million homes to meet buyer's demand.  Builders have just not kept up with the need in the marketplace.  To say it is a seller's market is an understatement.  Houses are often selling above list price as buyers bid up prices.  Home inspections are being waived, or at least ignored in terms of required repairs as home are being sold "as is".  

What all this means is that it may take more than 3 years to catch up with demand as long as interest rates remain low, prices are likely to remain high.  However, if President Biden raises taxes, it could cause a recession.  If that happens, there will be lay off's and fewer people in a position to buy homes.  If interest rates go up besides, which is likely because of projected inflation coming our way, it could bring home prices down.  

A lot of this is a crap shoot.  What we know today is that home prices have gone up dramatically.  Average home prices nationally are above $300,000.  In many markets, prices are significantly higher.  The cost of building materials are going through the roof, which insures that new home prices will keep going up.  Used homes bench mark against new homes.  So used homes are usually about 20% less expensive that new homes.  So as the price of new homes goes up, so will the price of used homes. 

At Paragon Home Resources, we work with families all over the country to sell and buy homes.  We know how to negotiate the best price when selling and the best price when buying.  In these times, having an expert on your side is even more important.    

Making New Friends After Moving

What we have discovered from the Covid Pandemic is just how much our family and friends mean to each of us.  Social isolation has led to all sorts of problems in the last year.  So when people move away from family and friends, it is really important that new friends take their place in the new location as quickly as possible.  That means finding things in common with other people to make acquaintances.  

Some communities have Welcome Wagon groups.  The easiest way to meet new friends is to buy into a master planned community that has a recreational facility and all sorts of organized clubs.  Of course, it is possible to join a country club; but more expensive.  The least expensive way to meet new friends is to join a church, temple or mosque.  In that case, people have their faith in common. 

Most important, it is critical to understand that new friends don't just happen.  It could take years for people who are shy and not very talkative to make new friends.  That is why joining groups centered around activities in common is the best way to meet new people.  Further, in some ways hanging on to old friends in the old location as a crutch, not that old relationships should be abandoned, but they can be somewhat counter productive.   Those old friend interactions can actually impede the need to have social interaction with new friends.

Rooting in a new location is all about making new friends.  The sooner you just jump right in, the happier you will be.  

Apr 13, 2021

Buying A New Home - What To Expect

If you are thinking of buying a brand new home from a tract home builder expect lotteries to get on a waiting list.  There is little if any standing inventory in many markets.  And, many builders may not commit to a final price because the cost of building materials is going through the roof.  Further, if you are lucky enough to land a home, expect it to take 10 - 12 months to complete from the time you sign a purchase contract.  Many people are selling their current homes quickly because the markets are so hot and then finding themselves with no place to live.   

If you do sell your home and must wait for the new home to be completed, you may need to rent a home or apartment and put things in storage.  Rents are not cheap and neither is storage.  Try to do a six month lease if the owner will agree and then month to month after that with 30 days notice so you can move quickly when your home is ready.  Don't be surprised if the landlord demands a 12 month lease.  Though you will pay more, if you rent big storage lockers, make sure they are temperature controlled because otherwise, your furniture and other belongs could be ruined from excess heat during hot months.  

If you do buy a brand new home, expect to pay at least 20 - 30% above the list price for upgrades and lot premiums.  What you see in the models are highly upgraded homes.  What you get without the upgrades is really crap.  This can be a very frustrating process; but with a little patience, it can be done.  If you are thinking of building a custom home expect a 2 - 3 year process from start to finish and a whole lot more money. 

Apr 12, 2021

Living In A Desert Climate

Many times people who live in a desert climate try to bring a little bit of back home with them; planting grass and other water hungry plants.  That is not a good idea especially since many of these cities like Las Vegas are low on water.  It is a whole smarter to embrace desert landscaping.  If you must have grass or something green in some patches, there is artificial grass that works just fine.  But otherwise, planting succulents, cactus and desert tolerant trees and bushes are the way to go. 

And, of course, all of it requires a drip system so that not one one drop of water is wasted in sprinkler spray or run off.  Where there are no plants, rocks come in various sizes and colors to complete the job. Stay away from small grain sands that blow away in the wind.  Go with gravel size, or larger rocks. 

There are a wide variety of flowering trees and bushes that complement cactus, which also flower.  Bougainvillea, that come in many colors do particularly well in desert climates.   These bushes grow large as a hedge to cover an entire wall, or can be trimmed into bushes.   Either way, the flowers are very attractive when in bloom.  

Living in the desert does not have to be drab or boring.  Fortunately, lots of flowering plants and trees can create a really beautiful environment that is stingy on water.  

Buying A Home In A Seller's Market

Buying a home in a Seller's market can be tough to accomplish.  First, prices are higher than might otherwise be the case.  Sellers don't really need to negotiate much because they know they can get their price.  And, even if the buyer requests a home inspection, Sellers don't don't have to make repairs.  They can sell the home in "as is" condition.  

Further, many sellers may not accept offers contingent on mortgage approval because in a lot of cases and markets they can generate all cash offers.  So what is a buyer to do.  In some cases, it may be smarter to rent until the market cools down.  The risk is that though prices may fall when there is more inventory, when that happens mortgage interest rates are likely to be higher.  So whatever is saved by a lower price could be eaten up in higher payments over time.  

The best scenario is the all cash buyer.  If downsizing in particular, if the buyer can make an all cash offer with a quick close, the chances are the seller may negotiate on price a bit.  After closing on the home, the buyer can then take out a mortgage if needed to claw back some of the cash for living or other investments.  This is the best scenario that can be expected in a seller's market.  

Otherwise, be prepared to pay top dollar to buy a home and perhaps even be out bid with another buyer willing to pay more than list price.  It is very frustrating; but since real estate like all investments is cyclical.  The day will come when it is a buyer's market.  

Apr 11, 2021

Making Your Home Retirement Friendly

Unless purchasing a single story home in a retirement community, odds are pretty good that your home is not retirement friendly.   Certainly any two story home with the master bedroom and or other bedrooms upstairs is not the best living space for retired people, since stairs or steps of any kind are the enemy as people grow older.  Falling is the single biggest cause of serious injury for people over 65, so at all costs avoiding any circumstance that could cause a fall is critical.  

So, the first step in making your home retirement friendly might be to move from a two story home to a one story home.  If that is not possible, then if not already the case, making first floor the primary living space, would be the next best option.  That could involve some renovation to at least create a master bedroom and bath on the first floor along with a guest room and office if needed.  If none of this is possible, then putting in an elevator, or stair step so that actually using the stairs to get to the second floor will be come unnecessary. 

If the laundry is in the basement, it needs to come up or down to the living space.  Fortunately, with stackable washers and dryers, a closet can be converted to house both units.  Carrying laundry up or down stairs is not a good option.  This problem must be solved one way or another.  And, then there is bathing.  Old bathtubs can be converted to a shower with a sit down bench, which is much safer.  There are the walk in tubs that can also be installed in the space of an old bathtub if that is preferred.  Either way, the notion of climbing into a bath tub is dangerous.  Which ever option is selected, grab bars must be installed to allow for holding on when bathing.  

Making the kitchen easier to use is also something that should be done.  High cabinets that require a step stool to get to is a No No.  In fact, climbing on a ladder to do anything is a No No.  Again the chances of falling are too great.  Instead, dishes can be put in pull out drawers instead of overhead cabinets.  Glasses should never be higher than the first space in an overhead cabinet.  

Making an existing home retirement friendly just takes some good thinking.  It could be much cheaper than moving.  Most important, as we all grow older, living in a home that is retirement friendly is important to the quality of life.   


Apr 9, 2021

Getting Your Home Ready for An Appraisal

In many cases, a mortgage appraisal of your home when selling it will be necessary for your buyer to obtain a mortgage.  Lately this has become a problem because appraisers look at history to determine value rather than what the market may be doing today.  So, in a hot market, your home may sell for more than the appraised value.  If the home does not appraise, your buyer may have to come up with more down payment to qualify for the loan.

Even so, you want your home to appraise for top dollar.  So get rid of clutter so the appraiser can see the home.  Spruce things up.  Paint exterior wood work if needed.  Do some work on the landscaping if over grown.  Plant some flowers.  The appraiser is just like anybody else.  Some of what they do is predicated on emotion; but most of what they do is based on recent comparable sales.  

When negotiating your sale, the real estate agent must put in language to deal with the eventuality that your home may not appraise for the price agreed to in order to prevent the buyer from coming back to demand that you lower your price.  Of course, in a hot market, there could very well be cash buyers and or other buyers that can come up with the down payment to close on your sale.  Don't waste time with buyers that don't have money to close your sale.  

Your real estate agent will demand proof of funds to close the deal and should require the buyer to show that they have money beyond the initial down payment in the deal to close the sale.  You can even make the deal not contingent on mortgage qualification.  This is a seller's market in many areas so the seller gets to set the terms of the deal if the buyer wants the home.  

Apr 8, 2021

Living In A Motor Home

There are presumably retired people choosing to live in a fancy motor home.  They follow the sun so to speak and move their motor home to camps with great weather through out the year either as their second home or even only home.  It certainly would not be my cup of tea, but I can see some advantages.  I suspect the big fancy motor homes must cost $200,000 or more; though smaller ones would cost less.  It probably would be necessary to tow at least a small car because once you are parked in a camp site, using the motor home to get around is not too practical. 

There are places like Quartzsite in Arizona about 20 miles from the California border that fills up with motor homes, thousands of them, from December - April.  Presumably these are snowbirds coming from cold places that winter in Arizona.  The nearest town is Blight, California and it is not much of a town.  Phoenix is three hours away driving time.  So for serious medical and or shopping or any other amenity it would mean a long drive or helicopter ride. 

Anyone considering this life style really needs to be closer to good medical in particular in case crap happens.  So getting closer into a big city would make more sense.  There are many camp sites all over the country that could accommodate this life style.  Choose wisely in case crap happens.  

Apr 7, 2021

Mortgage Foreclosures and Loan Modifications

There are millions of homeowners in the United States that have lost their jobs because of business closures and as a result, they have been unable to make mortgage payments.  Lenders have been prevented so far from foreclosing on those mortgages. The federal government may be extending until the end of the year the prohibition preventing lenders from foreclosing.  That is the good news.

Homeowners in trouble can seek loan modification from their lenders.  It is not an easy process and it takes 60 or more days, but it is possible to get done.  You can ask for a lower interest rate, lower payments, interest only on the loan or other modification that may make it possible to stay in your home. 

Mortgage companies have departments set up to assist with loan modifications.  Don't get frustrated.  Just hang in there and provide the information requested.   Even though the real estate market is hot right now, mortgage companies really do not want to foreclose on your home.  They know that to do so creates a non performing asset for them for some extended period of time.  They would rather work with you to extend your mortgage terms to allow you to stay in your home.  Be patient to make it happen.  

Apr 6, 2021

Buying Home Insurance

 If you have a mortgage, the lender will require you to have home insurance to protect their interests.  In essence, when you buy insurance the lender becomes a co-insured.  Home insurance is even more important if your home is paid off.   Many people have done business with the same insurance company for years so when rates go up, we all just end up paying it.  However, when your current provider announces a rate increase, maybe it is a good time to shop the policy with various companies to get the best rate and terms. 

One of the games that some insurance companies play these days is insisting on a deductible that is one percent of value.  So, if your home is worth $350,000 that would be $3,500 out of your pocket before they pay any claim.  It is better to have $1,000 deductible.  You may pay a little more for it, but at least you cap your out of pocket expense in the event you do need to file a claim. 

And, then there is always the fine print.  You may think you have coverage when in fact you don't.  Things like flood and earthquake insurance require riders to get coverage.  In addition, antiques and jewelry of special value would also require riders to be insured.  Ask lots of questions when speaking to the insurance agent to make sure you have the coverage that you need.

Finally, make sure you have enough insurance to cover a total loss of your structure and that means building replacement cost not just a flat amount of money that may not be enough.  Right now the cost of building materials has skyrocketed so you may need more insurance coverage.  The last thing you want in case of a total disaster is haggling with your insurance provider. 

Apr 4, 2021

Living In A High Rise Condo

There are many people, usually in big urban cities or near the beach that live in high rise condos.  It is definitely a different life style than living in a single family home, or even a regular condo, or town home.  Some of the more expensive ones and they can cost millions of dollars have terraces to provide some outdoor living; but most do not offer any outdoor space.  There is a distinction between a Co-op that is really buying stock in the building and fee simple condo ownership, which is the same as buying any property. 

In order to buy a Co-op, the Co-op board must approve the sale, which can take weeks or months.   This Blogger is not in favor of that sort of ownership because when it comes time to sell, the seller is at the mercy of the board that must approve the buyer before a sale can take place.   Either way, people who live in high rise building should expect very high Home Owners Association fees.  Many of these buildings have door men and other amenities that can be very expensive.  Occasionally, the building may be tied to a high end hotel that actually provides services to owners in the building.  

Further, high rise buildings may or may not come with any parking under the building So, if you own a car, you may need to make arrangements to buy monthly parking nearby in a parking structure.  High rise living is basically owning an apartment that can be nothing special, or incredibly luxurious for millions of dollars.  This life style is clearly not for everyone.  Before you do it, maybe it would be best to rent an apartment in a high rise building for a few years to make sure the life style is for you. 

Living Life Outdoors

Now that warmer weather is coming our way, people love living life outdoors.   It might relate to our primal past.  This could involve a simple barbeque and a few lounge chairs, or elaborate outdoor kitchens and all sort of outdoor furniture.  Backyards have become an oasis especially including a resort style pool and spa.  The backyard has become an extension of the home's interior like never before. 

More expensive homes often have glass sliding doors that open up indoor space to outdoor space.  Areas that have bugs in summer often have homes with screened in patios, or in some places like Florida, the entire pool area can be covered by a screened in enclosure.  This is to rid the backyard of those mosquitos that everybody hates.

People are spending hundreds of thousands of dollars to make their backyards into incredible entertainment spaces like never before.  Often heaters are added to allow for cooler nights so that using the space in climates where when the sun goes down so do the temperatures.  These can be portable propane, or natural gas or electric installed in the ceilings of patio covers.   And, then there is lighting entire backyards to extend entertainment into the night.

All of this can be very simple, or incredibly extensive and expensive.  The backyard has clearly become a way to make even a small home much bigger as homeowners see the backyard as a place for entertaining family and friends.    

Apr 2, 2021

Eliminating the State and Local Tax Limit Deduction

When President Trump implemented his tax cuts, which positively impacted all Americans that pay income taxes, as part of the deal state and local tax deductions were limited to $10,000.  Though you could still deduct home mortgage interest on loans up to $750,000,  state income and property tax deductions were limited to no more than $10,000.  Naturally states like California and New York and others that have very high state income taxes and property taxes screamed because their most wealthy residents were marginally impacted.  

However, since the top federal personal income tax rate went from 39.6% to 36%, it could be argued that giving up this deduction really did not have much impact for high wage earners.  In any case, now that President Biden wants to raise rates again to 39.6% for high wage earners making more than $400,000 a year, blue state members of Congress want to restore the SALT deductions.  Ironically, it really benefits high income earners the most.

The key to all of this is that President Biden is planning the largest tax increase since 1993. Homeowners in particular will need to watch to see how it impacts them.  There will no doubt be winners and losers when the dust settles.  There always is any time they tamper with the tax code.  

Selling Your Home For Sale By Owner - Think Twice

Often people look to save real estate commissions by selling their homes, For Sale By Owner.  Unless you have a friend or relatives interested in buying your home, it may not be the best idea.  Once you put that sign on your front lawn, people you don't know will begin knocking at your door. These could be crooks looking to get into your home to case it out for a robbery.  Or, they could just be nosey lookie lou's interested in seeing your home; in other words, not serious buyers.

Real Estate Agents provide a valuable service.  In addition to exposing your home on the multiple list as the best way to find a qualified buyer, they screen potential buyers.  They don't waste time on lookie lou's and or people that can't possible purchase your home.  They know who they are showing your home to before an appointment is ever made.  Further, they will be there to negotiate the best price and terms and then coordinate the closing through the escrow or title company.  Most important, you don't have a sale until the sale closes and money changes hands.

The agent is there to make sure that the sale closes because otherwise their commission is never paid.  So, the agent is motivated to make the deal happen and to close the sale.  Selling a home and moving is stressful enough.  So before you consider For Sale By Owner, think twice.  It is better to  hire a professional to get the job done for you.

At Paragon Home Resources, we have worked with families all over the United States to sell and buy homes.  We work with the best real estate agents in the local market to get the job done.  And, clients that come through us receive a cash back reward once the sale closes.  We assist with negotiating the best price so that in the end our clients benefit from our assistance. 

Mar 31, 2021

Snowbirds Often Flee Cold Places in the Winter

Very often retired people that live in cold places spend their winters in Arizona or Florida.  The high season in terms of rental homes in these states is December - April.  And, nicer homes in great golf course gated communities with country club amenities usually book as much a year in advance.  Snowbirds can expect to pay $3,500 to perhaps as much as $20,000 a month during high season depending on location, home size and proximity to the beach etc.  Further many owners require multiple months during high season of at least 3 months. 

Usually most of the monies are paid upfront, sometimes in two or three payments, but for sure all in advance at least a month before move in.  If the tenant cancels any time in the process, monies are forfeited unless the landlord is able to secure another renter for the same time period.  That is often not a problem because highly desirable homes in great areas usually experience demand from last minute renters who did not book months in advance.  But it rarely happens unless there was some medical emergency.  Snowbirds love their snowbird rentals.  

Renting for the cold months from an expense standpoint can make more sense than buying a second home for the months selected.  Rents are typically all inclusive and include access to the club or recreation facilities,  utilities, trash, cable, WIFI, gardener etc.  And, these homes are fully outfitted so all the tenant needs to do is move in with the clothes they plan to wear during their stay.   It is no muss no fuss.  

So for a lump sum of money buying three or four months during winter can be much cheaper than actually owning a second home that will not be used for most months of the year.  This usually works very well for retired people that have family back home with grandchildren they want to be close to for most of the year.  You can find homes for rent on snowbird websites.  There are thousands available in both Arizona, Florida and other states.  

Mar 30, 2021

Great Schools Are Important To Property Values

The state of Nevada where I live ranks 49th out of 50 in terms of its public schools.  The fact is that 9 out 10 kids in the state do not have the scores, or the grades to go to college.  Yet, there are some neighborhoods in Nevada that have great schools with ratings of 8, 9 or 10 out of 10 in the Great Schools rating system.  Those areas tend to have the highest property values in the state.  Unless you are moving into a retirement community, whether you have kids or not, you should try to buy a home in a neighborhood with great public schools that rank 8, 9 or 10.

You will pay more for that neighborhood; but when it comes time to sell, you will get more back.  Most important if and when a downturn comes, which is inevitable,  homes in the neighborhoods with the best schools tend to retain a good share of their value.  Part of the adage of location, location, location aside from the specifics of the particular property involves great schools.   Always remember, there are no bargains in real estate.  And, if you buy crap, you will own crap. 

There are some exceptions to the rule.  There are cities with high property values because of supply and demand that have lousy public schools.   And, any area near the beach is going to have homes that sell for a lot whether the schools are good or not.  In both those cases, parents will be putting their kids into private schools so they don't pay much attention to the public schools.  But again this is the exception to the rule.  Even if you plan to put your children into a private or religious school, it is still best to buy where there are great public schools. 

At Paragon Home Resources, we work with families to sell and buy homes all over the country.  We can help you identify the best schools in the best school districts to insure that you are making a good investment.  

Mar 29, 2021

Paying Off Your Mortgage - Does It Make Sense

Most people believe it is a good idea to have a home paid off by the time you retire.  However, with interest rates so low, it may not be a good strategy for everyone.  It is possible to get an interest only loan today usually for up to 10 years.  And, while it is true, interest only means that nothing is going to pay off the principal, the payment is likely to be half what you would be paying if the loan was fully amortized.  And, since very little money goes to pay off the loan anyway until the last 10 years of a 30 years mortgage; maybe just paying interest for 10 years makes sense to provide more spending money in retirement during the years while you are still healthy enough to travel and live a great life.  

Ultimately, odds are that 10 years from now, you may choose to move anyway.  That could be the time to downsize into a retirement community in a low cost, low tax state.  And, or if you have a lot of equity in your home, you could do that now to eliminate a house payment altogether.  

Of course, everybody's financial circumstances and life spans are different.  A good rule of thumb; though certainly not fool proof is to take the average of your parents ages when they died and assume you will live that long.  Not everybody lives to be 90.  We know that because on average men in the United States live to be 76 and women 81.  

So as you consider your financial decisions plan to enjoy life.  If you need more money to live now, just maybe paying off your mortgage is not a good idea.  The day will come when you won't be able to travel.  That will be the time when staycations and living in a great community with amenities at your doorstep and family nearby will be the most important.  Talk to your accountant to devise the best financial plan for you. 

Home Warranty Insurance - Buyer Beware

Should you choose to purchase home warranty insurance be sure to read the contract before you sign on the dotted line.  Like all insurances the fine print matters.  Typically, they place limits on coverage so that while you think you are covered, you may find that when it comes time for them to pay, it can turn into a real hassle.  Some of the companies operate from overseas call centers.  You can spend hours on the phone attempting to resolve a claim.  And, plan on dealing with call center hell.  

One of the problems with these companies is replacement of an appliance in the event it can't be fixed.  If you own high end appliances, odds are pretty good they will not be compared with high end appliances to determine a replacement value.  In fact, you may be offered half what the actual cost to replace is since they will compare what you have with much cheaper appliances that are available at Home Depot or Lowes.  This is a particular problem for people that own custom homes and or people that have just chosen high end appliances for their homes.  It can be a very frustrating experience.  

These could be the reasons that Dave Ramsey, a leading advisor on financial issues advises against buying home warranty insurance.  Instead, he recommends self insuring, in essence putting money aside to deal with home repairs that are inevitable.  If your appliances, air conditioner etc. are more than 10 years old, the odds are pretty good that repairs will be needed.  So plan for it.  Make sure you have your emergency repair money sitting somewhere to cover repairs that will be needed.  

Mar 27, 2021

Moving Outside The United States To Retire

Many people facing retirement on a limited income consider moving outside the United States to retire.  First, if you do so, try it before making the decision permanent.  Rent in the country for a year or two.  Don't sell your home in the United States unless it is in a location that is not where you would want to return if you do come back to the United States.  Most important, consider medical issues.  Medicare is not applicable outside the United States.  So, depending on the country, you may need to buy medical insurance, or perhaps buy into the government program if they have socialized medicine.  Aside from the financial issues, the real question is access and capability.

As we all get older crap happens.  The odds are pretty good that most of us will have some serious medical issue after we turn 70 and sometimes even before.  It is true, you could come back to the United States assuming you are not dealing with a medical emergency that would require immediate care.  Many countries do not have good medical care once you get outside their capital cities and even then it may not be as good as the technology and care that is available in the United States.   Certainly, if you are dealing with some chronic disease think long and hard about leaving the US and even then it is best to retire to a city that has state of the art medical care.  Even in the US some second and third tier cities are short on doctors and hospitals. 

Then there are the language and cultural issues.  If you move to a non English speaking country, you will need to learn the language because not all of their citizens will speak English.  And, you can't be indignant when they can't understand you.  Further, Americans tend to want things done yesterday when in many of these countries manana never comes.  It may take weeks to get things done.  So, you will need to be very patient.  If you are a Type A personality, it may not work for you.

In any case, think long and hard about moving out of the United States to retire.  There are many lower cost options in our own country within 100 miles of a major city that could be a better choice.  

Mar 26, 2021

Turning Your Principal Residence Into A Rental Property

Designating your home as your principal residence comes with some great tax advantages at least for now.  So, if you sell your home and realize a capital gain on sale, a single person can avoid tax on $250,000 of gain.  A married couple can avoid tax on $500,000 of gain.  If you have owned your home a long time, it is very possible that you could see a major gain on sale in various markets where prices have risen dramatically.  

However, before turning your principal residence into a rental property, talk to your accountant to discuss the tax treatment.  Once you start earning rental income and taking depreciation on the property and various write-off's, you may jeopardize that capital gains tax treatment that comes from designating your home as your principal residence.  In order to get back on track, you must move back into your home for two years before selling to take advantage of the tax free gain.  But again, talk to your accountant before you take these steps. 

And, keep watching the news.  President Biden is intent on raising taxes in 2022.  If it happens, there could be an impact on capital gains treatment that could change this entire discussion.  Never give up tax free income if at all possible.  

Mar 25, 2021

Home Sale Disclosures

When selling a home or land just about anywhere in the country, the seller will be asked to sign an extensive disclosure statement concerning the condition and history of the land, home, surrounding properties and just about anything else that could have an impact on value.  Believe it or not, if someone died, or was murdered in the home, it often must be disclosed.  And, just so you know, if there was ever an insurance claim on the home, it is recorded and will come up when the buyer attempts to buy home insurance.  A claim on the home counts as a ding and could result in higher insurance rates as a bit of an assigned risk.  It is like a pre existing condition related to medical insurance.  

Things like remediation for asbestos or mold can be big deal killers because even though the problem may be fixed, some buyers won't chance it. It is always a good idea to provide a home warranty policy for one year at the seller's expense to guard against the buyer coming back and demanding repairs on major systems after the sale closes.

At Paragon Home Resources, we have worked with families to sell and buy homes all over the country.  We can provide counseling assistance concerning the in's and out's of home sale and home purchase disclosures.  If problems do surface, it may be an opportunity to negotiate a lower price or repairs before the sale closes.  But just remember, failure to disclosure anything that matters could result in litigation after the sale, so don't do it.  

Preparing For A Natural Disaster

Since we happened to be in Dallas when the tornado sirens went off as lightening, buckets of rain and  golf ball sized hail came down, I could not help but think of being prepared for a natural disaster.  Unfortunately, most homes in Dallas, which is in tornado alley do not have basements so about the best we could do was hunker down in the middle of the house away from windows.  Fortunately, the electricity never went out because all utilities where we were are underground.  

But clearly since various parts of the country experience floods, fires, hurricanes, tornadoes and earthquakes everyone should be prepared for a natural disaster that can strike at any time.  It means having lots of battery powered lighting; not candles that can cause fires, storing plenty of water in case the water system goes out and maybe even having canned goods to last a week.

Being prepared for a natural disaster is the best way to avoid days of hardship.  And, even so having an evacuation plan if the need arises to leave the area is a pretty good idea too.   We have lived though major earthquakes in California along with fires across the street from our home in both California and Nevada.  We have had to evacuate.  It can be a pretty scary time; but good planning in advance makes it a bit easier.  

Mar 23, 2021

Forget About Post Office Mail Delivery To Your Home

The United States Post Office has been losing billions of dollars every year.  The end result already in the works is higher first class postage and much longer times to get a letter to your home.  As a result, if you have not already done so, it is time to go paperless with auto debit from your checking account for all bills to insure that your bills are paid on time.  This is particularly important for any credit card, mortgage company, or other bills that will incur interest charges, or stiff penalties if not paid on time.  You can also call in payments as an option tied to your checking account.  

The US Post Office is really gravitating more toward package delivery and junk mail that is not time sensitive.  Amazon uses the Post Office to deliver many of its packages at very low discounted rates, which is why they can offer Amazon Prime free deliveries.  You should assume 7 - 10 days for a first class letter to get to you, or whom ever you mailed one too.  The notion of 3 - 5 day turn around is long over.  

The fact is that Congress demands that the US Post Office provide services to rural areas that are just not cost effective.  There is literally a post office in every little village in America.   The federal government will ultimately have to bail out the post office if this expectation continues. 

If you choose to live in a second or third tier city, expect delays in your mail.  It will take ever longer for first class mail to get to you.  It is what it is.  Go paperless.  It is good for the environment and probably the only real alternative anyway.  

Mar 22, 2021

Housing Prices - What Is Next

Housing prices are at record highs in many markets driven by high demand, very low inventory and mortgage interest rates and the price of building materials sky rocketing, which in impacting new homes prices.  Home prices are always about supply and demand.  When there are fewer sellers than buyers, prices go up.  When there are more sellers than buyers prices go down.  But the question is what is next related to home prices. 

Many economists believe that President Biden's recently enacted $1.9 Trillion Covid Relief Bill will lead to inflation because of so much money being pumped into the economy.  On the other hand, Biden is proposing the largest personal and corporate income tax increases along with increases in Capital Gains and Social Security taxes.  If the Congress votes to raise all of these taxes, they will go into effect on January 1, 2022.  And, there is no doubt that these massive tax increases with slow down the economy.  If that happens real estate values and stock market prices will fall particularly if the Federal Reserve also raises interest rates.  

Real Estate Values seem to run in 10 year cycles.  So, we are now in an up cycle with values at very high prices.  It will not last forever.  At some point supply and demand will equalize.  When that occurs, we are likely to see prices come down.    

At Paragon Home Resources we have assisted families with selling and buying homes for more than 30 years.  We have worked through good and bad markets.  We know how to achieve the best price when selling a home and the best price when buying a home.  

Mar 21, 2021

Multi - Generational Living

Many years ago, it was not at all uncommon for multiple generations to live in the same home.  In many countries, they still do.  Grandparents, parents and their children often lived together.   As our standard of living in the United States grew, the trend was not as prevalent.  Parents looked forward to the day when the kids would leave the nest as they became empty nesters.  When the financial crisis hit in 2008 - 2009, we started to see millennials remain home longer because they could not locate good paying jobs in many cases.  

And, now with 10,000 people a day turning 65 years old for the next 15 - 20 years, there will be many senior citizens that not only require care; but perhaps the financial need to live with their 40 - 60 year old children.  This is particularly the case when Mom is a widow and living alone, which tends to be the case more often than not since men usually die first.  Not everyone can afford to pay $4,000 - $6,000 a month to living in senior living communities.

All of this in addition to housing prices going through the roof gets us to the possibility of multi-generational living, once again as occurred years ago, when perhaps three generations could be living in the same home.  The implications related to home design are obvious.  Grandma needs a bedroom preferably with bath on the first floor.  Married children if living home need a bedroom preferably with bath in one wing of the house for some privacy.  And of course, the parents will want a large master bedroom with bath as a retreat to get away from them all for some peace and quiet at times.  Obviously, there needs to be some family friendly spaces for gathering and dining and more often than not a home office.  Homes built with a bonus room as a second living space is also useful.

At Paragon Home Resources, we work with families to sell and buy homes all over the United States.  We can help with finding just the right home to meet the family's needs to accommodate multi - generational living, which is becoming quite common again.  

Mar 20, 2021

Home Are Selling Above List Price

In many markets across the country, homes are actually selling above list price in bidding wars.  Driven by high demand, record low interest rates, rising materials cost related to new homes and little or no inventory, buyers desperate to buy homes are actually driving up the prices of properties.  It is an exciting time to be a seller; but not so exciting time to be a buyer.  

If you find yourself in a bidding war, money talks loudest.  So all cash buyers have a real advantage.  And, forget about buying homes on contingency, or even with inspections.  Buyers often waive inspections to speed up the process.   That is a little dangerous; but the reality is that even if something is found in an inspection, the seller is likely to insist on an "as is" sale forcing the buyer to waive their rights demanding that repairs be done.  

If you do need to get a mortgage, be prepared to put more money down if the home does not appraise at the price you are paying.  Since appraisers work off sale history, it could be that comparables will not substantiate the price you are paying.  If that happens you may have to come up with more down payment to close the loan.

At Paragon Home Resources, we assist families with life decisions.  We have worked with our clients to sell and buy thousands of homes over the years in rising and declining markets.  We know how the game is played so we can help you win the game to sell or buy your next home.  

Mar 19, 2021

Buying A New Home - Beware The Added Cost

In the old days when buying a new home there were very few options.  Normally, buyers could choose carpet and maybe some other flooring; but normally everything else was "standard".  Today, that is all different.  The base price of the home is just the starting point.  Builders have learned that they can increase their profits by allowing for all sorts of costly options starting with lot premiums.  So bigger, more desirable lots come at a higher price.

Once you sign on the dotted line, you will be sent to a design center to choose all your options.  Naturally, the models are loaded up.  They are not what you get for the base price.  If you want anything resembling the model, a good rule of thumb is that you will pay 20 - 25% of the base price to add all the options you want from cabinetry, built-in's, appliances, flooring, tiles etc.  And, in some areas basic landscaping in included in the price of the home.  In other areas, there is no landscaping or exterior hardscape.  Depending on the size of the lot, exterior landscaping expense can go from $50,000 to way more if you are planning a pool, outdoor kitchen etc. 

Buying a new home will cost 20 - 30% more than the same square footage in an existing home.  Of course, you will get an updated floor plan with all the options you choose, all new appliances, heating and air conditioning and most likely higher energy efficiency, but you will be paying for it.  

Mar 18, 2021

Housing Prices Are Reaching All Time Highs

Housing prices are reaching all time highs in many parts of the country, driven by high demand, low inventory, low mortgage interest rates and the sky rocketing cost of materials.  At the same time, the stock market is at record levels.  This all makes me very nervous.  President Biden is proposing the highest taxes increases since 1993.  If those tax increases go into effect, it will cause a slow down in the economy; though we are likely to have high inflation with all the new government monies going out into the system.

It is a great time to sell a house, but be careful about buying a home at very inflated prices.  It ok, if your horizon is five to ten year  out especially if you will need a mortgage to complete the deal.  It is hard to pass up these very low mortgage rates.  At some point, rates will go back up, which will moderate prices; but at the same time payments will go up.

As always buy location, location, location.  If you buy crap, you will own crap.  There are no bargains in real estate.  Buy as much home as you can afford to grow into in it.  Single family homes are better bets than condos in the long run unless a condo is all you can afford. 

At Paragon Home Resources, we assist families with life decisions.  We can help you sell your home for the highest price possible and get a good deal on the home you buy.  Like everything in life, timing is everything.  

Mar 16, 2021

New Home Prices Are Surging

New home prices are surging driven by both demand and the sky rocketing cost of materials. Lumber cost alone has gone up by 170% from a year ago along with all other materials needed to complete a home.  Some people are canceling contracts because of higher prices demanded by builders.  Some builders are using lotteries to sell homes.  To compound the problem, there is very little inventory related to resale homes.  So those prices are going up to driven by intense demand.  There are just very few existing houses on the market.  

So what to do.  Of course, it is a seller's market so demanding top dollar for the sale of your home is logical.   But is it a good time to buy.   The answer is Yes and No.  If you will need a mortgage to purchase a home; then getting one now makes sense since mortgage interest rates are at historical lows.  So even if you overpay a bit now, since your payments will be much lower than when rates go up, you should be ok.  However, if you are a cash buyer, maybe it makes sense to sell and then rent until the markets cool off.   The key is to sell when everybody else is buying and buy when everybody else is selling.  

Of course, timing the real estate market, like timing the stock market does not always work out.  But, if you can play the long game, you could make a lot of money.  At Paragon Home Resources, we assist with life decisions.  We can help you determine what options are best for you.  We work with families all over the country to sell and buy homes.  We have been there done that thousands of times so we know all about timing the market.  

Moving To A No Income Tax State

President Biden is proposing massive tax increases that will impact federal personal and corporate income taxes, capital gains taxes and who knows what else.  In fact, we have not see tax increases like the ones being talked about since 1993.  Don't think these tax increases will just impact the rich because at the end of the day, all Americans will be impacted one way or another.  Businesses just pass higher taxes along in the way of higher prices. 

No way to know for sure if these tax increases will get through Congress, but the Democrats can use Reconciliation to get it done without one single Republican vote so there is a pretty good chance that it may happen even if moderated.   So now is the time to think about moving to a no  income tax state to at least mitigate the amount of taxes you will be paying.  There are 9 states that have no state income tax.  They are Alaska, Florida, Nevada, Texas, South Dakota, Washington, Wyoming, New Hampshire and Tennessee.  The last two New Hampshire and Tennessee do tax investment income so depending on your circumstances, they may not be the best choices.  And, obviously some of these states have harsh winters so maybe they should be off the table.  

That leaves Florida, Nevada and Texas as the best choices.  Arizona is not listed because they do have a state income tax; though many people are moving there too.  Property values in these states though rising are still quite reasonable especially when compared to states like California, Illinois and New York.  You can find houses at all prices ranges in these no income tax states.  You do need to compare other taxes like property taxes, which are high in Texas, the cost of home insurance, which can be high in Florida and Texas, state sales taxes and any other fees and charges that could come into play.

Nevada basically breaks down into Reno Tahoe and Las Vegas.  Reno Tahoe is high desert climate so some cold months in winter; though not terrible.  Vegas is real desert so 4 months of hot weather; but again not unbearable.  The problem with Nevada to some degree in comparison to other states is access to good medical care.  There are good hospitals; but not by comparison to availability in Texas, Florida and Arizona.  

At Paragon Home Resources, we assist with life decisions.  We can help you sell your current home and buy a home in one of these no income tax states.  We can provide information to help you make the right decision for your family.   It is important to see this train coming and act now.   

Mar 15, 2021

Owning A Second Home

Many people with means have a principal residence sometimes in a no income tax, or low income tax state and then maintain a second residence somewhere else.  It could be a vacation get away like a mountain cabin or a regular home perhaps the home they owned before they moved for tax reasons.  This is all fine; but maintaining two homes is expensive.  If the purpose is having a vacation home, it would be much cheaper to rent a home for a few weeks or months a year. 

Many snowbirds do just that.  They live in cold places during spring, fall and summer; but rent in warm places January - April.  Arizona and Florida are favorites for those high season months.  While it may cost $4,000 a month or much more depending on the home and amenities, usually all inclusive, it still much cheaper than owning a second home.   

People who maintain two homes as a principal and secondary residence should factor in all the costs.  If the purpose is to avoid state income taxes by moving to a no or low income tax state, if the cost of maintaining the secondary residence is greater than the tax that would have been paid, just maybe it makes no sense.  Of course, there could be many reasons for keeping the secondary residence that usually ties to family, friends and other life style issues that many be relevant.  

Most important could be appreciation.  If the second home is in an area with good appreciation maybe the rising value will offset the carrying cost so that eventually if the home is sold all or most of the cost to maintain the home will be recouped.  And of course, the tax treatment is different for primary and secondary homes so it is important to consult a good accountant on the tax treatment.  

At Paragon Home Resources, we assist families with life decisions.  We often work with families selling and buying homes and that would include second homes.  

Mar 14, 2021

Millennials Flocking to Florida, Texas and Colorado

A new report indicated that Millennials are flocking to Florida, Texas and Colorado, since many are now able to work from home so they can live anywhere.  They are looking for low tax states with a great quality of life.  They want to be in cities with great amenities and the ability to walk to them.  Thinking ahead, since many are married now and either have children, or are planning on having children, great schools are factoring into their decision making process.  

Politics may be a factor, as well as, Millennials either gravitate towards cities that are liberal or conservative depending on their personal political ideology and there are plenty to choose from.  These are often first time home buyers.  And as always, my advice is location, location, location.  Further, if you buy crap, you will own crap.  Clearly, there are no bargains in real estate.  Homes that sell for less than homes nearby usually have some negatives that command a lower price.  Don't do it because selling it later will be a problem.   

Buying in a good neighborhood with great schools, even if you don't have kids is critical to property values.  Consider curb appeal.  I know young people often like contemporary styling that is trendy; but keep in mind what looks good today, may not command the highest price in years to come.  Generally, more traditional architectural styles with "charm" are safer down the road.  As young people, buy as much house as you can afford and grow into it.  With interest rates so low and the ability to deduct mortgage interest on loans up to $750,000, now is the time to buy a home.  As a first time home buyer, you can even get a loan with just 3% down.  

At Paragon Home Resources, we assist with life decisions.  We can help in particular with buying that first home.  The advice we provide will stand the test of time.  

Mar 12, 2021

Living On A Fixed Income

No matter what your life style was during your working years, once you retire, you should be living on a fixed income designed to last you many years.  Yes, you could die young; but what if you live to be 90 or longer, which is not that unusual.  As you grow older, things like expensive travel may diminish, but there is a pretty good chance that your medical expenses will increase in addition to needing home care, or eventually even moving to a senior living community.    

Downsizing in retirement makes sense.  A  smaller home, fewer cars not only cuts expenses, it is just a lot less to worry about and care for.  The key is to live a stress free life in retirement to the degree possible.  Many Type A personalities just can't stop.  They work at retirement.  They maintain a calendar that keeps them on a thread mill.   Maybe it is a fear of dying.  Maybe some people think if they are really busy, they will live longer.  It does not always work that way.

Making time for family and really good friends is always important.  And, it is time to distinguish between friends and acquaintances.  In addition to allocating your money every month, you will need to allocate your time.  Clearly as we get older, time is just as precious as money because with each passing day, we will have less of both.   

So make a budget and stick to it.  It's ok to splurge every once and a while; but if you do it too often you could run out of money when you need it most.  And, consider how you are spending your time between family and friends and other pursuits that bring you joy.  The saying that life is too short is true. Life really is too short and it goes by quickly so make every day count.  

Mar 11, 2021

Choosing A State For Retirement

If you plan to move from a cold place to a warm place when you retire, do your homework.  All states have pluses and minuses.  Florida is high on the list; but as it turns out as many move out as move in.  Florida is very humid many months of the year, has hurricanes in areas near the coast and bugs that they call palmetto bugs; but they are really just big cockroaches.   If you do buy in Florida make sure your home is built to withstand a Category 5 hurricane if you are anywhere near a coast.  That will probably mean a newer home built with cement block construction.  

And, while everybody likes to be near water, it could come with a surge during a hurricane that could destroy your home.  It could be that areas further inland are safer.   However, anywhere there is fresh water, there is a chance that alligators could be lurching around.  So fencing may be needed to protect pets and small children.  Either way, you will need regular bug spraying monthly because humid climate means more bugs. 

And, then there is Arizona.  No hurricanes.  You will get an occasional dust storm; but they don't destroy homes.  8 months of wonderful weather; but 4 months of very hot usually dry weather.  There could be an occasional scorpion, but manageable with regular bug spraying.  Greater Phoenix has everything.  Medical, sports, universities, entertainment, shopping etc.  Homes at all prices ranges.  There is traffic especially when the snowbirds are all in town; but every big city has traffic.  Personally, though I like the greenery of Florida and there is no personal income tax in Florida, which is a plus, the desert can by beautiful too.  

The Carolinas are nice.  Lots of golf resorts.  Less chance of hurricanes.  Still humid with bugs.  If moving to Texas,  I would avoid Houston that has experienced devastating hurricanes and also very humid.  Dallas, though with lots of traffic, is better.   Austin is a great city, very liberal, but about 20% more expensive than Dallas.  

Lots to choose from in deciding on a place to retire.  But do you homework.  Moving can be expensive so you will only want to do it once.  At Paragon Home Resources, we work with families to sell and buy homes anywhere in the country.  We assist families with life decisions.   We can help you sort through the pluses and minuses of any state.   

The Golden Girls - Women Live Longer Than Men

It should be no surprise that on average women will out live men by 5 years.  In my mother's case, she outlived by father by 17 years so she beat the odds.  After being a full time caregiver for my dad the last two years of his life; though no doubt she missed him, she must have been relieved because the burden was huge.  The good news was that we had moved my parents to a patio home in a 55 or older gated community years before.  So though my father was gone, my mother was completely safe and secure at 75 years old, relatively healthy and with no dementia.  She had managed their financial matters all their life so she did not skip a beat. 

Matter of fact, within one week of my father being buried, she cleaned out his closet.  She then immediately told me she wanted the house painted and new carpet and drapes.  My mother was a very strong self-sufficient woman.  We were lucky.  It does not always happen that way.  

My mother then became one of the Golden Girls often pairing up with other widows to go out to dinners, the movies and even travel a bit.  My wife and I were there to give her any daily support she needed but otherwise, she took care of her own affairs until the falls came.  Sadly, she fell three times, breaking her leg.  There were two surgeries and grueling recoveries.  The third fall was so severe that surgery was impossible.  Just a soft cast and lots of pain.  But she even recovered from that fall.

At 87 years old, it was time for independent living in a nice assisting living community.  She actually lived there until she died at 94 years old.  We had her home to refurbish and sell; but she moved out within 3 weeks of making the decision to go into assisted living.  Once there, we downsized her three times to buy more services for her as she aged.  My mother experienced independent living, home care, all the stages of assisted living, convalescent case, skilled nursing and finally hospice.  There is no doubt, my mother was one of those Golden Girls we see on TV.  

Mar 10, 2021

Selling Your Home - Curb Appeal

There is not much you can do about the architectural style of your home.  It is what it is.  Some people like contemporary modern styles; others do not.  Most people like more traditional styles with "charm", which is something to think about when buying another home.  The key is getting a buyer to get out of the car and come in to see your home.   To make that happen, first impressions matter and that is called "curb appeal"/

There are simply things you can do to increase the curb appeal of your home.  Spruce up the landscaping.  Get rid of dead or overgrown plants.  Fertilize your lawn so it is nice and green.  Plant colorful flowers.  If there is wood work even if you don't paint the whole exterior of the house have the wood work painted especially the front door if it is a painted door.  Put trash cans away in the garage, or completely out of view.

Add some solar lighting just in case your buyers come back at night.  Neighbors can be a problem.  If you live in an area with an Home Owners Association, if any of your neighbors are violating the rules, have the HOA contact them to make them correct the problems.  A buyer will not buy your home if the one next door is an eyesore.  

Stand in front of your home.  If it is appealing to you, it will be appealing to a buyer.  If not, you have some corrective work to do.  At Paragon Home Resources, we work with families to sell and buy homes.  We can counsel you on curb appeal to determine the best return on investment related to monies you might spend to increase your curb appeal.  At the end of the day, it is all about getting the buyer to get out of the car and walk into your home.  Curb appeal is critical to making that happen.   

Mar 8, 2021

Cooking Does Not Need To Take All Day - The Kitchen Matters

We Italians instinctually know how to cook.  It is in our genes.  That is why having a great kitchen is really important to us.  But, what I have found is that you can spend all day cooking a great meal, or you can figure out the quick and easy way to get the job done.   I like to make great soups and meatballs that do take time to achieve perfection.  However, there are other meals that I have figured out how do in 30 - 60 minutes tops.  

One example is Ciopinno, which is really a delicious fish stew.   Normally, if made taking hours, it requires fresh shrimp, lobster, clams all with shells, calamari and any other fish you can throw in.  Usually, it is made with white wine and a spicy tomato sauce all from scratch.  Or, you can use my quick and easy recipe.  Go to Trader Joe's if you are lucky enough to have one in your area; or sometimes a good market will do.  They have frozen fish, shrimp, seafood mix, scallops, langostino, which is like lobster.  Buy a couple of cans of clams.  Throw is some diced boneless cod or other fish.  Defrost them all if frozen by just running under cold water.  Sauté the mixture for a few minutes in olive oil and garlic to half cook.

Add a large bottle of cheap Sauvignon Blanc wine and two bottles of spicy tomato sauce right in the big frying pan, any brand will do.  Cook for about 30 minutes and you are done.  You can eat this as a fish stew soup with crusty Italian bread, or use the mixture over linguini.   Trust me, it is just as delicious as if you had spent hours making it.  

While you don't need a gourmet kitchen to make this dish, having a fully equipped kitchen with the right pots and pans always helps.  The kitchen is the most important room in the house.  At Paragon Home Resources, we work with families to sell and buy homes and the kitchen is always high on the priority list when choosing a new home.  

Selling Your Home - Pet & Other Odors & Clutter

If you are planning on listing your home for sale, you need to be aware that there could be odors in your home that you may not smell anymore.  Without a doubt, if you own indoor pets, dog and cat odor is there.  And, you may be cooking with certain spices that also permeate carpet, drapes, furniture, even your walls etc.  If these are the case, you will need to have professionals come in to do a deep clean of your home.  That probably means having your pets stay with a friend, or even in boarding afterward if necessary to prevent the odor from coming back.

And, if you cook with a lot of strong spices, like cumin, garlic and others that are now present in your home; after the deep clean, you must cease and desist.  Strong odors are a real turn off to buyers.  If they smell those strong odors even if they are pet lovers, they may walk in and walk right out.  

Further, if you are a hoarder even if a neat hoarder, it is time to get rid of stuff including furniture that you may not want after a move to make rooms look bigger.  Years ago, we viewed a condo and the woman was a collector of everything bunny.  There were all sorts of rabbits all over the home including on the stairs going up to the second floor.  It was a though the rabbits had multiplied times a thousand.  Her real estate agent should have told her that the rabbits had to be boxed to show the home, but that just did not happen.  It was impossible to actually see the home.  We walked in and walked right out.  

Selling a home means getting rid of any negative that a buyer may not like.  If your walls are painted in various colors; maybe painting them a neutral color is a good idea.  The buyer needs to be able to picture their things in your home.  And, if there are smells that are offensive, it is very hard to get that picture.  

At Paragon Home Resources, we work with families to sell and buy homes all over the country.  We can offer advice on things you can do to make your home the most marketable to get the highest price possible.  It starts with the easy stuff like getting rid of odors and clutter.  

Mar 7, 2021

Enjoying Your Home - Things To Do

A side effect of the Covid Pandemic has been people spending far more time in their homes, either working from home, or being forced to stay home because so many stores and restaurants were closed.  Maybe that has been a good thing, since the expense of your home is already baked into your budget.  And, just maybe it should continue; by making your home a place for a staycation.  Look around your home.  Is it time to buy some new furniture that is more comfortable and better for entertaining.  Putting in a high end entertainment system with a big flat screen TV has never been more affordable. 

But let's go further,  If it is not already an oasis, you can make your yard an extension of your home by adding lush landscaping, comfortable furniture, a great barbeque, heaters and a portable fire pit.  Further if you live in a buggy climate in the spring and summer, maybe adding a screened in patio would extend the use of your yard.  You would be adding value to your home so it is a good investment.  

And, then there are the simple things; like playing cards with friends and family or playing board games.  Don't forget the toy box for when the grandchildren come over to entertain them too.  You will find that doing these things creates a lot of fun and laughter.   As the saying goes, "the heart is where the home is".   Your home is not just a place to eat and sleep.  It should be a friend and family gathering place.    

At Paragon Home Resources, we work with families to sell and buy just the right home.  Now more than ever, owning the right home has become even more important.  

Mar 5, 2021

Grandparents Can Be Fun

There is nothing more joyful than having grandchildren.  Yet, many grandparents are often not very involved in the lives of their grandchildren.  That is unfortunate.  Sometimes, it is not possible to live nearby for in person experiences.  The good news is that in those cases Face Time works real well to stay in touch.  For those of us lucky enough to live near our grandchildren, we often schedule regular play dates to spend time with them.  Of course, any grandparents that have a swimming pool and good weather are an automatic draw.  

In our case, we outfitted our home with a pack and play, stroller, high chair and a wonderful toy box so that when our younger grandchildren do visit, our home is entirely kid friendly.  We also move things out of the way to prevent accidents because kids will be kids.  Grandparents need to take advantage of quality time with grandchildren before they are 12 years old.  After that, between sports and other activities and friends, it gets harder to book those play dates. 

Grandma's often share special time with granddaughters including occasional sleep overs.   It is a wonderful opportunity for grandchildren to bond with their grandparents.  Grandparents often get to say Yes to a lot things that Mom and Dad say No to.  It's ok.  It is just what grandparents do.  At Paragon Home Resources, we work with grandparents to sell and buy homes often moving from a cold place to a warm place to retire.  Under the best of circumstances when these moves do take place hopefully family is nearby.  

Finding Reputable Home Repair Contractors

There are many scam artists purporting to provide "expert"  home repair services.  Be careful.  First, only do business with companies and or people that are licensed.  Next, get recommendations from friends and neighbors.   This Blogger likes to use Homeadvisor.com to source home repair experts.  Thus far, we have been very happy with the resources they have provided.  

But in some markets, companies just are not available particularly to do small jobs because of the building boom that is going on.  We waited months to find a roofer available to do a small repair job.  If you purchase home repair insurance, they will send out a repair man usually within a few days; but not always.  Home Repair insurance companies will tell you that they will either repair the appliance, after you have paid a deductible, or replace it.  Not quite.  

What this Blogger has found is that in the event of replacement, the home repair insurance companies often seek to do a money settlement that is not necessarily based on the cost to actually replace what you currently own.  This is a problem particularly if your appliances are high end.   And, you could spend hours on the phone seeking a resolution to the claim.  This is why some of these companies have lots of complaints and bad ratings.  

Finding reputable home repair contractors is not always easy.   Electricians and plumbers are busy.  If you develop long term relationships with companies that you can rely on, stick with them.  You might pay a little more for their dependability; but it is worth it.   

Mar 3, 2021

Buying A Home Tenants In Common As An Investment

People who are married normally buy a home as Joint Tenants.  That means that if one dies the other automatically inherits and owns the home.  You don't have to be married to buy as Joint Tenants, but since it involves inheritance rights that is usually the practice.   People who decide to buy a home together who are not related often make an investment as Joint Tenants.  When that occurs usually, they each put their share of the down payment into the investment and they take out a mortgage in both names.  Both have to qualify for the mortgage; but since there are usually two incomes, it becomes easier to qualify for the loan. 

If one of the investor joint tenants were to die, their share of the property could be left to his or her heirs.  In other words, the share does not automatically go to the other partner unless it is so specified in a will or estate plan.  This could mean that the investor would either have to buy out who ever inherits the share, or they could be forced to sell the home to pay off the new half owner.  This can get pretty complicated.

If buying a home with someone else as an investment as joint tenants, there should be a side agreement to deal with the what if's to prevent misunderstanding.  What happens if one of the parties wants out of the investment.  Maybe there should be a specific term for the investment; perhaps five or 10 years unless both parties agree to keep the home longer.  Though two unrelated people may choose to buy a home together as an investment, it should be seen as not only a home both may be living in; but also a real estate investment.  And, or if the home was bought to be a rental from the start, it is a much easier discussion.  In that event, the questions that come up relate to the cost to carrying the home and necessary repairs and improvements should the monthly rent not cover all expenses.  

If purchasing a home as a rental investment, it would be best to set up a joint checking account to be used solely for money in and money out related to funding the property.  Putting three months carrying expenses into that account is a good idea.  One of the partners will probably end up managing the property and keeping the books, which would be necessary for year end tax reporting. 

Either way, investing in real estate is a long term investment.  No one should assume that they are going to buy a home with the intention of flipping it quickly.  While that works in some markets, the odds are pretty good that you should look at the investment in terms of 10 years or longer to reap the tax advantages and deductions along with appreciation that could make the investment worthwhile.  At Paragon Home Resources, we work with people to sell and buy homes all over the country.  We can help with this important investment decision to provide advice in choosing a home that will offer the best return on investment.  

Mar 2, 2021

Home Entertainment Systems - Cheaper Than Ever

It used to cost thousands of dollars to install high tech home entertainment equipment to replicate the movie theater experience.  Covid aside, there is no reason to go to a movie theater every again spending $20 for a ticket and $25 for popcorn and a drink.   Now we can enjoy movies On Demand, or by Netflix in our homes on a big screen flat screen TV attached to a great sound system that provides all the feel of going to a movie theater for $1,000 - $2,000.   

Just don't go too crazy.   Flat screen TV's now come up to 85 inches or more.   It take a big room to handle an 85 inch TV.  Odds are pretty good that 65 inches is plenty big.  You can attach a wireless sound system to it that will give you surround sound.  That's it.  You are done except for the popcorn and snacks.  You can purchase movies from your cable station or Netflix pretty cheap.  

No looking for parking at the movie theater, or dealing with night time traffic or weather.  You just need comfortable seating in your great room or bonus room.   So you can have your date night at home with your spouse, family and friends.    If you want, have dinner brought in.  Pizza is always great.  Keep it simple.  Now this is not good for the movie theater industry; but Covid and trends that were happening anyway has changed everything.  You can have great home entertainment at your finger tips.  Go for it. Enjoy your home.  

Mar 1, 2021

Get Ready - Energy Prices Are Going Up

Whatever your politics, limiting the use of carbon energy production in our country, is going to cause energy prices to go up pretty dramatically.  It is already happening.  Just look to California that has already gone down the Green New Deal road.  All energy prices in California are significantly higher for gas, electricity, water and natural gas than in many other parts of the country.  The cost of energy drives up the cost of everything.  One thing that is easy to do is to move from a high cost, high tax state to a lower cost, lower tax state.  It is called voting with your feet. 

But either way, since energy cost will go up as a result of actions we see happening today by the current President, the time is now to do the things that might help lower your energy cost.  The easiest thing to do is to change out appliances that are 10 years or older in favor of more efficient units.  The same is true for air conditioning and heating units that are 10 years or older.  You are bound to have costly repairs come up as they get older so rather than repair them, replace them. And, then there is home insulation.  It might be time to put in a higher rated insulation in your antic, which will save on both heating and air conditioning cost.  Take a look at your your windows.  Newer windows come with better heat and cold resistance.  While it is expensive to replace windows, it might be that the return on investment is about 5 years.  So if you plan to say in your home, it could be worth doing.  

The real question on all of this is how long do you plan to stay in your current home.  If you do move to a newer home, chances are that the newer home; though more expensive than an older home will be more energy efficient because regulations require it.   At Paragon Home Resources, we work with families to sell and buy homes.  Today, buying an energy efficient home should be a high priority.  And, or if buying an older home, then as part of the decision, monies should be factored in to upgrade to more energy efficient appliances and systems.  The cost of energy will be going up in the next few years. The time to act now one way or another could save you a lot of money.  

Pro's & Con's Of Owning A Home With A Pool

Anyone considering buying a home with a pool, or thinking of putting one in should see it as a luxury expense.   The cost of maintaining a pool will add to monthly water, gas, electricity and other maintenance costs.  Assume an extra $200 - $300 a month depending on the size of the pool.  It is possible to put in solar heating of the pool; but that addition will cost thousands of dollars.  The real question is how often will the pool be used and does it makes sense for the area you live in if it has a short window to actually use the pool.  

In warm places with an extended season to use the pool, the pool may add value to your home.  In places with a short season, the pool could actually be a determent to finding a buyer, since many would not want the expense of a pool.  In those case, the pool probably would not add value to your home.  In many instances, it could be best to belong to a home owner's association, or other Club that provides a pool as part of the dues structure.  This would provide access to a pool without the personal additional expense and upkeep. 

Think long and hard before buying a house with a pool and or putting one in.  If the pool will only be used a few times a year, it might be best to consider other alternatives.  At Paragon Home Resources, we work with families to sell and buy homes.   We can help you decide if a pool is right for your family by going through all the options and potential additional expenses.  

Feb 28, 2021

Working After Retirement

Many people seek to work part time after retirement.  But be careful.  Unless you have reached you full retirement age when you can earn as much money as you want and not be penalized, if you retire earlier, you will be penalized.  If you earn too much, you will be forced to give back some of your monthly Social Security payments.  And, if you earn too much, you could end up in a higher tax bracket related to monies owed for Medicare, which is means tested and specific to 401K and other pension distributions.   

So before you take a job after retiring, check with your accountant to see if it makes sense.  Obviously, if you are going to net less money overall by making a few bucks, better to volunteer your time at non profits that you support if you are just looking for something meaningful to do.  

Maybe a better strategy related to money management after you retire is cutting your living expenses to achieve the same end result.  Downsize your home.  Move to a lower cost of living and preferably no income tax state to reduce any tax burden you may have.  Consider your options.  At Paragon Home Resources, we work with many people every year moving to retire usually from a cold place to a warm place.  However, proximity to family and tax considerations are also big factors in choosing where to retire. 

Feb 26, 2021

The Right Time To Downsize

Moving from a larger home to a smaller home can happen at various stages in life.  Certainly, once the kids are gone and the couple are now officially empty nesters, it could be a good time to downsize.  It might also be the time to determine what floor plan makes the most sense for that stage in life.  One story living is always better as we get older.  It might be that fewer bedrooms make sense in favor of a home office or exercise room. 

Downsizing once the kids are gone is actually a pretty easy decision to make.  What is harder is downsizing as we grow even older.  If we are lucky enough to be married for many years into our 70's and beyond, sadly the day will come when a spouse will die.  Aside from the trauma of losing a life partner, all of a sudden the remaining person must face many decisions.  If the spouse that died used to take care of all the day to day finances, bill paying etc., it may be that the remaining spouse knows little or even nothing about what it takes to run the household.  Hopefully, there is a good will or estate plan in place to deal with financial matters; but it can still get very complicated related to just daily living.

This Blogger's mother outlived my father by 17 years.  She was 75 years old when my father died and in pretty good physical and mental shape.  They lived in a 55 or older secure, gated community in a low maintenance patio home with one story living.  We had moved them there many years before.  And fortunately, it was my mother who handled their finances, so there were no gaps in day to day management of her finances or home.  There was no reason for her to move until she was 87 years old when she decided to move into a senior community.  

Even so, as soon as my father died, I took over my mother's finances really to make things easier for her.  So, I took over the check book, which she really did not need to deal with anymore.  All bills went on auto debit.  I gave her whatever cash she wanted monthly since it was her money and or she just used her bank debit card to access cash.  She had a credit card that she used when buying things that was automatically paid every month out of her checking account. 

The point is that we thought ahead.  When my father died, while my mother dealt with her grief, since we had moved them into a brand new home in a very safe community from a home they had owned for 31 years,  my mother experienced no disruption to her life.  If they had still been in their old home, given that they lived many miles from family, we would have had to deal with a move then, or even sooner during the 2 years my father was very sick before he died, which would have been much more difficult. 

As we hit our 70's, we need to start having the "what if" discussions with family.  What if a spouse dies, which is inevitable.  It is best to plan ahead and make a move when both husband and wife are healthy.  The home should work for the remaining spouse when the other spouse dies.  Dealing with grief is more than enough to face, without the need for a move too.  At Paragon Home Resources we assist families with downsizing for a variety of reasons.  We understand the stress of moving; but we make it as easy as possible as we assist with both selling and buying homes, as well as, dealing with household goods.  We get the job done to make life decisions as easy as possible.  

Your Home Is An Important Investment

Many people do not see their homes as an investment; but the reality is that your home may be your most important investment.  Over the years, we have often learned the hard way that having too much money in the stock market is not the best idea.  Yes, the stock market today is at a record high; but it seems that every ten years or so, we see a major downturn in the stock market.   Certainly, anyone 60 and older should be in conservative investments to prevent major losses should the stock market take a tumble.  There are age adjusted mutual funds that get more conservative as someone grows older, which may make the most sense in order to protect assets if the market does fall dramatically.  

Just maybe your home should represent 50% of your overall portfolio to create balance.   As it happens right now both the stock and real estate markets are strong.  But it does not always happen that way.  The reason both are strong is because interest rates are so low.  When interest rates go up many will switch from stocks to bonds to secure a guaranteed return on investment of 3% or more.  When that happens stocks prices will go down.  However, real estate works a little differently.  Real estate is very much predicated on interest rates as well.  So as mortgage interest rates go up, home prices are moderated.  But, real estate is also dependent on both supply and demand and what is happening in the local economy.  

If there are more buyers than sellers, real estate prices go up.  If there are more sellers than buyers, real estate prices go down.  So states or areas with strong economies that are growing will see increases in real estate values.   States that are not growing usually because of high taxes and regulations generally will see less real estate value appreciation.

Most important, every time you make a mortgage payment you are growing equity in your home.  Over the years, if you have not used your home as a piggy bank to make purchases by refinancing and taking equity out of your home, you will pay off your home.  Once that happens, you will have options related to downsizing or moving to a lower cost area.  And, since you can deduct mortgage interest on your home with a mortgage up to $750,000, it will cut your income tax liability so the cost of owning a home is diminished.  You need to look at your home as an investment and important part of your portfolio.  It is just another place to put money; but in this case, you can live in it too.  

Feb 24, 2021

Buying A Home In A Seller's Market

Real Estate markets are hot all over the country.  In many places there are just weeks of inventory rather than the usual months.  This often means two things; fewer homes to choose from and at higher prices.  However, the good news is that if you are also selling a home particularly if moving from a higher cost area to a lower cost area, you will get top dollar for your home.  Yes, you will pay top dollar to buy another home in many cases, but if you have the equity to do it from the sale of your existing home, it is probably ok. 

Some might think, it could be smart to sell a home now and wait to buy another one until it is a buyer's market.  The problem with that scenario is mortgage interest rates.  There is no way interest rates can remain at these historically low rates forever.  The ability to lock in a 30 year mortgage at a 3% interest rate is incredible.  Historically, rates have averaged about 8%.  So while higher interest rates would moderate the prices of homes, the payments on a lower priced home when rates go back up could actually be more than the payments on a higher priced home with a 3% mortgage.  So waiting might not be a good strategy.  

The real issue today is finding a home that works for your family when there is so little inventory. Brand new homes are likely to sell for 20% more than an older home with the same square footage.  And, in many cases it is taking months to actually close on a new home because construction times are usually about 6 - 10 months, since most likely there are few desirable homes ready for immediate move in.  

Whatever the market, a buyer should always consider location, location, location.  Always remember there are no bargains in real estate.  If you buy crap, you will own crap that will be hard to sell when the day comes that you want to move.  So, take your time.  At Paragon Home Resources, we work with customers in all phases of life to assist with life decisions.  We can help you sell your home for the best price possible and buy another for the best price.  We have worked in good markets and bad markets for years.  We know how to maximize opportunities to make the right decisions that will stand the test of time.  

Feb 23, 2021

Having The Right Home Insurance Coverage

Many people know little about their home insurance coverage until disaster strikes and then they learn the hard way that they may not have sufficient coverage to rebuild their home in the event of a fire or other disaster.  The best advice I have ever gotten related to home insurance came from a few questions from the insurance broker in reference to buying insurance for my parent's home.  He asked me if my parent's home was paid off.  The answer was Yes.  He then asked if my parent's had the savings to rebuild their home in the event of a total loss.  The answer to that question was No.  He then said that my parents needed the maximum coverage so that if their home burned to the ground, they would have full replacement value, which was just common sense.  

If you have a mortgage on your home, the mortgage company will require that they be named as a co-insured on your policy so that in the event of total destruction, they will get their loan repaid.  The three mistakes people make are 1. Not Having Enough Coverage.  2. Not Having the Right Coverage and 3. Not Having Coverage for Natural Disasters.  

Home insurance must be reviewed annually to make sure the coverage is sufficient to rebuild your home in the event of a total loss.  That means having an understanding of local building costs, which could change.   You will want to have replacement value insurance so that your home will be rebuilt if needed.  Insurance on your personal items like furniture is a separate rider to the policy.  If you live in areas that have floods, tornadoes, hurricanes and earthquakes, unless you have insurance coverage for natural disasters, which can be very expensive you may not have coverage at all if you don't purchase it.  You also need to be aware of deductibles that you may have to pay out of pocket before the insurance company will pay.  A flat dollar amount is better than a percentage of value. 

It makes sense every year to review your home insurance coverage with your insurance broker to make sure you have the coverage you need.  You certainly can shop your policy with various firms to get the lowest price and deductibles.  Most important, it is better to be safe than sorry.  Any kind of insurance only matters when it matters.  The last thing you want to experience are hassles to deal with rebuilding your home in the event of a total loss.    

Choosing A Place To Retire - Think Ahead

It is very common for people ready to retire to move from cold places to warm places.  That is the reason states like North and South Carolina, Florida, Arizona, Nevada and even Texas are high on the list in addition to lower or no income taxes and cost of living considerations.  But there are other things to consider as well.  Having family near by should be a consideration because the day will come when a Senior may need help to deal with daily issues. 

However, even before then if moving to a second or third tier city,  one of the most important things to consider is good medical care within 30 minutes driving time.   That means full service hospitals.  While you can leave town for a planned surgery if needed to get to a better hospital, if what occurs is a medical emergency, that local hospital will be critical.  And, for people with chronic ailments, many second and third tier cities have a shortage of doctors and especially specialists.  So before you make a move, make sure there are doctors available that can take you and that will accept your medical insurance coverage.  Many have practices that are full.  Don't move where you can't get good medical care.  

Next, are amenities like shopping, restaurants, sports, live theater if that is important to you and continuing education.  Can you get your car serviced nearby.  Believe it or not, there are some smaller towns that do not have all brand dealerships.  My rule in retirement is that I like everything within 10 miles of where I live so if I have to drive further, I am not interested in living there.  Sometimes people choose to live in very rural areas in retirement far away from medical care and other amenities.  That is not likely to be a good long term decision.   Don't do it because it will result in another move in the future.  

At Paragon Home Resources, we often work with Seniors both moving to retire and also Seniors moving into Senior Care Communities.   We are in a position to assist with life decisions as people consider their options.  It is important to think about life today and life tomorrow to make the right decision when choosing a place to retire.