DREAM HM NEWS




Buying and Selling a Home

10 Commandments of Real Estate

Michael Blassis, Publisher, Dream Homes Magazines
11/30/2008
TEN COMMANDMENTS OF REAL ESTATE
By Michael Blassis

1. LOCATION
The first rule of location is geography. California has proven to be one of the world's top real estate markets. Real estate in flat states like Kansas and Nevada has gone up in price, too, but there's no other spot like coastal California. In beauty, weather, and popularity, the only place that compares is the Southern Mediterranean.

2. LOCATION
In coastal California, pick the best community you can afford, and for added value, be selective about views, privacy, curb appeal, proximity to the water, quietness of the neighborhood, and good prospects for economic growth. San Diego and Orange County have been topnotch in these areas.

3. LOCATION
Additional points: Be sure that the services you value are nearby, such as restaurants, cafes, schools, shopping, and your workplace. You also want to consider the type of neighborhood you're moving into and the caliber of your immediate neighbors.

4. YOUR HOUSE IS YOUR BEST TAX BREAK
Start counting the ways. First, you can deduct the interest on your mortgage. Also, after two years of living in your home, when you sell your first $500,000 (for a couple) are tax free, or $250,000 for a single. Anything over that incurs capital gains tax, now at 15%, down from 20 %.

5. YOUR PAID-OFF HOUSE IS YOUR BEST RETIREMENT PLAN
For most of us, our housing cost is the biggest part of our budget. So when you have your house paid off at retirement time, your biggest cost item is eliminated, requiring much less income that you can use for food, transportation, recreation, and health care. You also can put off paying your property tax (until sale or death) after the age of 55.

6. YOUR SECOND PAID-OFF HOUSE IS YOUR BEST RETIREMENT PENSION
For obvious reasons, if you can buy a second house and have it nearly paid off before retirement, you can sell it and put your earnings into a pension annuity, or you can rent it out to obtain a residual income that likely will keep up with inflation.

7. YOUR THIRD HOUSE IS YOUR BEST INVESTMENT
Forget stock marketing hype! All you hear is "If only you had bought Microsoft, if only you had bought Amazon, if only you had bought Intel, you'd be rich now!" But you could have bought Enron, WorldCom, or Webvan. Stock market hype is hindsight. Success stories are "iffy." In all my years in business, I've only met one wealthy person who made it in the stock market. Everyone else made their money in business or in real estate. There's always a risk in the future. But your house is not likely to ever be worth $0, like stocks can be. In Southern California, after the market correction, the value of your property will likely keep going up. The only thing you shouldn't do is to over leverage on too many properties, because you don't want to be in a situation where you have to sell in a panic. Be prepared to hold onto your property three to five years comfortably.

8. THE SIZE OF THE LOT IS MORE IMPORTANT THAN THE SIZE OF THE HOUSE
If the lot has the room and the privacy, you always can add on another bedroom or bathroom to make the living area more expansive. If you plan to stay in the same house for a long time, the larger the lot, the more likely you will stay a happy homeowner.

9. LIMIT REMODELING TO THE VALUE OF THE AREA.
To find the limits that the value of remodeling would add to your house, talk to a Realtor who knows your neighborhood well. As a rule of thumb, you don't want your house to become twice as expensive as the next highest-priced home in your neighborhood. Otherwise, trying to sell it will be tricky. If that is the case, you might be better off looking for a bigger house in a pricier neighborhood.

10. HOW FAST YOU PAY OFF YOUR MORTGAGE IS MORE IMPORTANT THAN THE INTEREST RATE
In the last few years when there was a frenzy of refinancing, it was hard to say "Stop, don't refinance again!" However, if the balance of your loan is less than half of your original loan, and the rate of paying down your mortgage is high, you might be better off staying put and paying your mortgage down to zero. If you do refinance and take advantage of today's low rates, consider making additional payments at the level of your old payments (or more) to shorten the payoff period. Also, you can turn your 30-year mortgage into a 15 or 20-year mortgage by making one or two extra payments a year to principal. Finally, it's a good idea to keep at least six months worth of mortgage payments in the bank at all times to cushion you against unforeseen disasters.
Michael Blassis is group publisher/CEO of Dream Homes Magazines.


Print Date: 2/21/2020
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