Planning For Retirement - Start Early

Many people don't start to think about retirement until they reach their 60's.  That is really too late.  Certainly, once the kids are gone at about 50 years old or sooner, if you have kids, it is time to start planning for retirement.  Even before then if your employer offers a 401K savings plan with or without an employer contribution, it makes sense to put money away for retirement.  This money goes in tax free and will only be taxed later when accessed without penalty after someone is 59 1/2.  Roth IRA's for those who qualify are good too.  Those are funded after tax, but then grow and come out tax free.   Most important, don't have too many eggs in one basket because what goes up will come down. 

But planning for retirement goes beyond financial planning.  It also includes longer term living plans.  Where do you want to live in retirement.  Some people living in cold places decide to move to warm places, which is why states like Arizona, Florida, Nevada, Texas and the Carolinas are popular aside from better states from a tax standpoint than many other states.

And, then there is housing.  By the times the kids are gone maybe it makes sense to downsize.  Why have the expense of a big home when a smaller home could do just fine.  Part of planning for retirement is simplifying life.  Having less home to take care of is a good thing.

At Paragon Home Resources, we assist our clients with life decisions at all stages of life.  We work with clients to sell and buy homes all over the country.  We know that talking through the issues people face is a way to help sort life's decisions.  

Buying A Home Tenants In Common

With home prices going through the roof, it may be necessary for single people to buy a home with a friend or relative.  Usually doing so would require purchase as Tenants in Common.  That means ownership based on the percentage of down payment.  So, if each party comes up with 50% of the down payment, the ownership position would be 50/50.  The mortgage presumably would be in both names, which means each person must qualify for the loan.   

That is the easy part.  There would need to be a side agreement to deal with the What If's.  What if one of the buyers later wants out of the deal?  What if one of the buyers dies or need to relocate for a job?   It could be that unless the agreement is extended by mutual agreement, that the home is owned for the sooner of both deciding to sell or 5 years.  This does not mean that the home must be sold within 5 years; but it would at least create a date certain if one party wanted out of the deal. 

Either way, if one person chooses to sell their interest in the property, it is possible provided the arrangement allows the other person to agree on the buyer he or she will now be living with.  It could mean the need to get a new mortgage.  The best possible scenario would be turning the home into a rental investment some time down the road, which requires a whole different agreement.  

Buying a  home Tenants in Common is basically two people coming together to make an investment in real estate.  It could work out just fine provided there is a side agreement in place that clearly deals with the What If's.  If that is not done, this investment could turn into a big mistake.  

Buying A Home Alarm System

Unless you live in a gated community and even then maybe it makes sense to have an alarm system.   The good news is that prices have come way down and installation is easy.  Some alarm companies basically give the system away in order to get the monthly fee, which may range from $30 to $50 a month.  The only downside is false alarms.  If you leave your home and forget to turn off the alarm before you open the door to go out, if the police come after the first call or two, they will begin charging you for false alarms.  Depending on the locale, it could be $150 to $250 for a false alarm.

Certainly, if you live in or near a high crime area having an alarm system can provide an added measure of security.  Some of them are also tied to life alert systems for older people should you fall and not be able to get back up.  Further, if you travel a lot and your home is left with no one in it for weeks or months at a time, an alarm system just may prevent a robbery.

And, the real issue is violent crime.  Older people in particular are targets.  Many who commit robberies are on drugs.  These are not stable individuals.  They would kill to get money to buy drugs. Sadly, it happens all too often.  Older women living alone are their best targets.  Short of owning a gun for self protection, which many people feel compelled to do, an alarm system is just an added, cost effective measure of additional protection.  Any more, we can't always count on 911.  Many police departments are short of cops, so the next best thing is an alarm system to provide some peace of mind.  

Using Real Estate To Balance Your Investment Portfolio

The key to a good investment strategy and planning for retirement is balance.  Real Estate and especially your personal home should be part of that strategy.  Very often when the stock market is up, real estate is down.  We now have a situation when both the stock market and real estate values are at record highs.  This is happening because interest rates are so low and because the federal government is pumping trillions of dollars into the economy.  

Frankly, it all scares me a bit because I remember both stock market and real estate market crashes and down turns.  Buying when either market is at record highs can be dangerous in the short run.  People with a long term horizon will do just fine as long as they are not forced to sell in a downturn, which is when real losses would be realized. 

Maybe a good rule of thumb is to have a third of assets in real estate, a third in moderate risk stocks and the remaining third split between bonds and money market cash, or government guaranteed CD's.  What goes up will surely come down.  Both stock and real estate markets are cyclical.  It is only a matter of time when we will see a downturn, particularly if President Biden raises taxes and or the Federal Reserve raises interest rates.  

The key is not having too many eggs in one basket.  Working with a good financial advisor is the best way to go to diversify assets.  But whatever you do, real estate that carries with it certain tax advantages should be part of the picture.  Over time, homes will increase in value.   However, watch what happens with the tax code and make your investment decisions accordingly.  

Real Estate Markets - Buyer Beware

Anyone buying a home today in many markets better have at least a 5 year horizon because it is not just a seller's market, it is a super seller's market.  Homes are selling above list price in some areas as there are bidding wars going on.  This all makes me very nervous because I have lived and worked through several real estate downturns when things changed and it was a buyer's market.

When that happens homes can go down in value 10 - 50%.  I have seen it before.  It can and does happen.  Certainly, when interest rates go back up, the housing market will cool.  The only reason it may take a while is that we are 4 million homes short to meet demand.  However, when that happens and builders see the potential for profit, they will start building homes like crazy to meet demand.  It could take 3 years or more to catch up; but often this leads to over building and that is when prices start to fall. 

The reason to buy today is to lock in a very low fixed rate mortgage for 15 or 30 years.  Even though the home prices could be very high, the payment could still be quite reasonable because rates are so low.  But, this assumes staying in place to potentially ride out a down cycle when one comes. 

People who do not plan to remain in the home for several years probably should not buy now.  Of course, the best laid plans can change suddenly as a result of events beyond our control.  But when we are at the top of the market, it is not wise to buy a home thinking that you will sell in a year or two.  You would be buying at the top of the market, which is always risky in the short term.  Buyer beware.  Timing is everything in the real estate market.  

At Paragon Home Resources, we work with people to sell and buy homes across the country.  We can advise on the best price and terms and help our clients sort through what is best for them.  

Keep It Simple In Retirement

Many people have big homes in retirement because they can afford them; but is it a smart thing to do.  There is a saying in the senior community industry that older people are just one fall away from moving into a senior community.   And, it has become clear to this blogger that not everyone lives to be 90.  In fact, life span in the US for men on average is 76 and for women is 81.  By the time we are 70, maybe it really is time to downsize, not because we have to, but because it is just planning ahead. 

There is something to the idea of keeping things simple in retirement.  Living in a one story home, perhaps in a gated community with lots of amenities both within the gates and nearby will allow older people to live independently longer.  Having less to maintain is a good thing.  So homes built on smaller lots with just enough patio to enjoy outside without being overwhelmed by it makes perfect sense. 

So what size home is ideal.  That really depends on family and friend visits.  If family and friends are  not local and they will be coming to visit, then maybe having additional guest bedrooms is a good idea.  Having bathrooms for each bedroom is always a plus.   Many people today want a home office, or den for a desk and some storage.  And, there is always storage that can be built in a garage that comes in handy.

Most important is proximity to medical services and good hospitals as nearby as possible.  It has become pretty obvious to me that the more we own the more things we must maintain.  So maybe owning less stuff is a good thing.  

Reinventing Shopping Malls Into Multi-Generational Housing

With the advent of on-line shopping, many bricks and mortar stores are going away.  It is a perfect opportunity to reinvent the old enclosed shopping malls built in the last 40 years.  We are short 4 million housing units in the United States.  This solution could quickly add more homes across the country.  It would be relatively easy to tear down anchor stores to create apartments and condos connected to the main body of a mall. 

Literally, this could be multi-generational living catering to first time home buyer on one end of the mall all the way up to 55 and older living at the other end.  In between could be all the services and or goods required of all generations; so child care, urgent care, stores and restaurants catering to all age groups.  In essence, these repurposed malls would become enclosed walking cities.

Many would be attracted to this life style.  It could be very cost effective as anchor stores are torn down to build 4 and 5 story apartments and condos at various sized units and price points.  Residents would be able to walk to all amenities needed for daily life.  This is a wonderful way to utilize these old malls rather than tearing them down completely, which is happening is some locations.

Wall Street can create REIT's (real estate investment trusts) to buy these malls and convert them.  If there is money to be made investors will invest like always.  This could be a win win for our country and all concerned.  Expect it to happen because real estate always goes to its highest and best use over time.  Right now we need more housing and less bricks and mortar stores.  This concept is coming.  

Living In A High Rise Building

While nothing I would prefer, there are many in America that live in high rise buildings and there are likely to be more in big cities where land is scarce and even some suburbs in high cost locations.  This could also be the key to more affordable housing in the future, since we are currently 4 million housing units short to fill demand.  

Some are built with an outside terrace usually small; but a little bit of outside for those who need it. The most expensive high rise buildings come with amenities like a door man, exercise facility, pool etc.  Parking if offered would be underground; but in many situations it is off site.   There is usually a homeowner's association in buildings that are owned condos or co-ops that can be quite expensive depending on amenities.  

These high rise buildings can be rentals, or owned condos or co-ops.  It is definitely a different life style to live in a high rise building, but it is an option that could be coming to a town near you.  The question is will it be right for you.  Some people like the fact that they can come and go without the responsibility of any upkeep for the property.  That would be true for most rentals.  There could be many 55 or older high rise building on the horizon to deal with the millions of retiring Baby Boomers. 

In some cities, this is so common that there is no other option.  High rise buildings are the wave of the future.  It could be the answer to the housing shortage in many areas. 

The Kitchen Is The Most Important Room In The Home

Years ago, kitchens were always in the back of the home behind closed doors.  The thinking was that cooking is messy and should be out of sight.  This emanated from very big, expensive homes at a time when there may have been servants.  Even in modest homes later on, the kitchen was always hidden.  Today, everybody wants "open concept" even in expensive homes where the kitchen has become the center of the home.

People have discovered that having people over for dinner can often involve cooking together as a group activity.  It is part of the fun of entertaining.  So now, kitchens are often designed with big islands with prep sinks and multiple ovens and dishwashers.  There is a wide variety of kitchen counters from tile, to stone, granite, quartz etc.   

There is no doubt that the kitchen has become the most important room in the house.  In considering a renovation, investment in the kitchen has the biggest return on investment adding to the value of the home.  

Adding a walk in pantry for storage is a must.  Pull out drawers in the cabinetry to put dishes down low rather than up high has become very popular too.  And of course, now wine refrigerators have become popular because everybody seems to be into wine.  

If you are considering a renovation, best to work with a kitchen designer that can help with all the choices.  Expect to spend between $50,000 and $100,000 plus to get what you want.  It will be worth it because it will increase the value of your home.   

Time To Be With Family and Friends

Many people in our country have suffered greatly as a result of the Covid Pandemic.  And, I am not just talking about those that actually got Covid that were very sick and even died.  I am talking about the social isolation that has taken place for more than a year.  So now, if you have been vaccinated,  it time to schedule time with family and friends and even to start traveling again.  

This could mean small dinners at home and or meeting up with friends and family at restaurants.  To be candid, we just can't take it anymore.  Human being are social animals, we need to be with people to feel good.   So the weather is getting nice in many areas as spring is here and summer is approaching.  If nothing else get those backyard barbeques going again.

We waited a year for the vaccines.  Now most people have had at least one shot with the other on the way. While it may be a courtesy to wear masks indoors, they certainly should not be needed outdoors once vaccinated.

We must get back to some semblance of normal.  Businesses have been destroyed.  People have been negatively impacted in many ways like never before in our history.  It is time to start enjoying life again.    

   

Commercial Real Estate Being Converted Into Other Uses

Covid has accelerated trends that were happening anyway.  More people are now working from home permanently, which causes the need for a fully outfitted home office; not just a desk someplace in the home.  This means that companies just don't need the office square footage they may have rented in the past.  This is causing a glut of office space on the market many times in desirable locations.  If not torn down completely, the high rise office buildings can be rezoned as residential and repurposed into a more urban environment with various types of shopping and restaurants on the first few floors and apartment or condo living up above.  

Some of these buildings could be 55 and older, while others cater to younger first time home buyers perhaps with young families.  I have been saying for years with the decline of retail stores that entire shopping malls could become like self contained cities.  The anchor stores could be either torn down, or converted into apartments and condos with the the connecting shopping areas used for all sorts of amenities.  These would be green walking cities with parking in the parking structures or underground. 

Our country is short 4 million housing units.  There is a demand for all sorts of housing.  Higher density can mean lower sale prices in some locations, which would be a good thing.  Walking cities would also mean less of a carbon foot print.  Walking to amenities would even be good for people by adding a little more exercise each day.  

And, then there are all the hotels.  With Zoom and other means to connect used for the last year, I suspect business travel will be greatly diminished.  Many of these hotels can be repurposed into senior living.  Hotel rooms can be combined to create one or two bedroom apartments with common dining and recreation areas.   Converting hotels is a no brainer.  

Commercial real estate will be converted into other uses in the next 5 - 10 years.  It is an exciting opportunity to create more affordable housing.  

Time To Get Computer Smart At Home

For some people over 65 years old that never used a computer during work, they learned real fast just trying to set up an appointment for a Covid shot that it was next to impossible to do so without computer connectivity.  They often had to rely on family or friends to make the appointment.  Things are actually getting worse just to deal with daily life without computer connectivity.  

Companies like airlines, banks, utilities and many others have so limited their call centers to make it impossible to speak to a human being that the only way to access their products or services is by computer connectivity.  This is a real problem for older people who do not have computers, nor the skills to use them.  Further, computer connectivity means having the Internet, which is not cheap.  Companies that have virtually eliminated their call center connections to their customers to employ fewer people have in essence shifted the cost to the consumer.  

In some cases, teaching an old dog new tricks just doesn't work.  Computer applications often involve intuitive knowledge, or experience that comes from use.  It is easy to see why some older people just will not be able to develop computer skills.  My mother had problems just using the remote control of her TV so much so that she just left the TV on one station.  On the other, hand there are people that can take some basic classes and at least learn enough to use the Internet.  Though I must say that I have worked with computers for years and had to have my bank walk me through their on line banking system just to show me where to look to access the information I needed.  Eventually, through trial and error, I figured it out. 

For older people that just can't master a computer and or can't afford the Internet, they will have to rely on family and or friends to do things for them.  That means providing them credit card numbers, social security numbers, driver's license numbers etc. that are often required to get things done.  There is often no other way.  

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.  

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.  

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. 

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.  

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.   

 

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.  

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.  

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.  

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. 

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.    

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.