What are the Benefits of Owning Real Estate Besides Your House?

Here’s my answer to that question just asked on Quora

Owning your house is the biggest and best benefit. It means you can paint the bathroom whatever color you want, remodel the kitchen, plant what you want in the yard, and on and on…all for your personal comfort and enjoyment.

If you have a mortgage, the interest you are paying is tax deductible (and for about the first 15 years of a typical 30-year mortgage your payment is more than half interest if you don’t pay taxes and insurance from the same payment. And the property taxes are probably deductible whether you paid with your mortgage payment or separately. No part of rent payments are deductible.

Besides that, owning a home has been a good investment over a long period of time. Yes, there are times when the value of a home may go down, but you only “lose money” if you see during one of those times. In 1950 the median (half were more, half were less) home price in the U.S. was $7,354. By 2000 it was $119,600 and today is $236,400. But be careful here, that 1950 house was less than 1,000 square feet with two bedrooms and one bath. Today it’s just short of 2,500 square feet and the majority have at least four bedrooms and three baths.

Nevertheless, buying a home (and living in it) has almost always been a good investment. One way to lose money on a house is to sell it one or two years after you buy it. If you’re likely to live there for at least two years, my advice is rent.

Posted on July 7, 2018 at 11:21 am
Dave Sutton | Category: Home Buying, Home Mortgage, Portland Real Estate, Portland Real Estate Statistics | Tagged , , , , , , ,

What’s a Faster Return on Investment: Renting or Flipping real estate?

Here’s answer I wrote recently to that question on Quora:

 

I’d guess flipping shows the greatest short-term potential, but as with most investments return is related to risk, and there is certainly risk in flipping. For example, what if in the remodel process you discover something not in your original estimate? What if the market turns between the time you buy and finish the remodel? What if the adjacent property is bought for something undesirable – pig farm, shopping center, fast-food restaurant, 10-story condo or apartment

Buying something to rent is lower risk but you need to be in it for the long haul. Investors I’ve worked with look at it for a minimum five year project and, depending on cash flow and their financial situation probably longer. The biggest single advantage to buying investment property is in the depreciation, but that’s not of as much value if you don’t have other income on which it can offset your tax bill. Cash flow depends as lot on how tight the rental market is. Portland right now is super-tight, but the City of Portland also prevents no-cause evictions and/or rent increases of more than 10%/yr without paying relocation costs to the tenant which range from $2900 (1-BR or SRO) to $4500 (3-BR or more).  This does not apply to Portland area properties outside the Portland city limits

If you’d like the same patient, professional help I’ve given other real estate investors, please contact me. 

 

Posted on June 20, 2018 at 12:55 pm
Dave Sutton | Category: Home Buying, Portland Real Estate, Portland Real Estate Statistics | Tagged , ,

The Best Mortgage Information comes from?

With mortgages, there is no “one-size fits all”.  Mortgages (and the rates) vary according to your personal situation: income, debts, down payment, credit score and so many more items. Your best source for mortgage information is a local, experienced, mortgage broker.  If you don’t know one, contact me for an introduction to my preferred lender. 

Fannie Mae, which indirectly finances the fast majority of mortgages in the US, recently did a study on the most influential sources of mortgage information.  Here’s what they found

This shows we have a lot of smart people in this country.  Almost one third relied on a mortgage lender.  Slightly fewer named their Realtor.  Before I get too flattered with that, a Realtor is not the best source of mortgage information.  If you ask me about mortgages I’ll tell you exactly that and introduce you to my preferred lender, who is a mortgage broker.  Next most often used, family and friends, may be a good source if they’ve recently financed a home purchase (but the best mortgage for you is almost certainly not the same as the mortgage your family or friend got). The best source remains a mortgage broker. The reason is that mortgages are so varied and complex (and changing) today that you have to be in the business every day to have good, up to date, knowledge of what’s available that best matches for a particular borrower.   A mortgage broker has access to dozens of mortgage sources and probably works with 8-10 on a daily basis.  They are the best place to find the best mortgage for you.  

Posted on January 11, 2018 at 2:22 pm
Dave Sutton | Category: Home Buying, Home Mortgage, Portland Real Estate | Tagged , , , , , , , , ,

Home owners #1 complaint – should have bought bigger home

We continue to buy ever larger homes, now average 2700 SqFt (up 1,000 from 1973).  41% of renters wish they’d bought.  Full details here.

Posted on July 19, 2017 at 11:25 am
Dave Sutton | Category: Home Buying, Home Mortgage, Home Selling, Portland Real Estate, Portland Real Estate Statistics | Tagged , , , , , , , , , ,

Triple your down payment money – free !

I just learned of a new down payment match offer from Guild Mortgage, the largest local mortgage lender in the NW.  It’s really simple: you put up 1% of the purchase price of a home and Guild makes a grant of 2% so you qualify for a conventional 3% down payment mortgage.  Yes, you just tripled your money.  You can buy a $350,000 home with only $3,500 of your money down (plus closing costs).  You could buy a nice $100,000 condo with $1,000 down.  There’s even more good news in the fine print in the detail flyer my preferred lender, Kelly Parkman at Guild, gave me today

2% Down Payment Grant

And here’s a short video of Kelly himself explaining it.  We’ve worked together for five years and I’ve never seen him so excited.  

Contact Kelly at 503/528-9800  or KParkman@GuildMortgage.net or contact me and I’ll help, too  

 

 

Posted on June 6, 2017 at 3:58 pm
Dave Sutton | Category: Home Buying, Home Mortgage, Portland Real Estate, Portland Real Estate Statistics | Tagged , , , , , , , , ,

First time buyer? Ask me about a no-down payment mortgage.

Posted on May 31, 2017 at 2:41 pm
Dave Sutton | Category: Home Buying, Portland Real Estate | Tagged , , , , , ,

What to Do About that Annoying (house/car/business/neighbor).

"That house down the street has 3-foot tall weeds all over the front yard"

"That car has been parked there for weeks"

"The business on the corner is so noisy I can't sleep"

"The neighbor's dog barks all day and night"

"I don't think that apartment being built over their garage complies with code"

In the City of Portland, there is a place to file a complaint for all these issues and more.

Click Here for a list of the right phone numbers for each of these issues, and many others. You can also file a complaint on line for almost all.  

Personally, I've only filed one complaint like these.  It was for a home under construction that had stopped the building process and let the weeds get 3-4 feet high.  I filed an on line report and in two weeks they had been mowed.  

Beyond removing an irritation to living, some of these things actually affect the value of all the homes in your neighborhood.  So among other things, you're protecting your home's value when you file a legitimate complaint.  

Posted on May 13, 2016 at 10:35 am
Dave Sutton | Category: Home Buying, Home Selling, Portland Real Estate | Tagged , , , , , , , , ,

Harvard says (what we already know but sometimes forget) about home buying

Nevermind all the pure joy of living in your own home, where you can decide what color to paint the kids' rooms and what to plant in the yard and hang on the walls in the kitchen and on and on…  Harvard researchers point out five purely FINANCIAL REASONS to own a home. 

Harvard’s 5 Financial Reasons to Buy a Home | Keeping Current Matters

Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. Last year, he released a paper on homeownership – The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home.

Here are the five reasons, each followed by an excerpt from the study:

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You're paying for housing whether you own or rent. 

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially.

Harvard’s 5 Financial Reasons to Buy a Home | Keeping Current Matters

Posted on August 15, 2014 at 11:20 am
Dave Sutton | Category: Home Buying, Portland Real Estate | Tagged , , , , , , , ,

I will not “sell” you a home !!

If that sounds strange coming from someone whose favorite activity is working with people who want to buy or sell a home, let me explain.

What I will do is help you find the right home for you.  When you see it, you'll know it's the one.  No "strong arm" needed from me. I write it because

If this seems like a strange post from a Realtor, it's because I think some people hesitate to ask a Realtor a question or talk about their dreams and desires for a home because they fear being pushed into buying something that's actually not the right home for them, or at the right time. 

My clients will tell you what they most appreciate is my patience and my professionalism.  I love to answer real estate questions, even if you're not ready to buy or sell right now…or ever !  What's your question?  Call or text me at 503-505-9722, or Tweet @DaveSuttonHomes

Posted on March 4, 2014 at 10:13 am
Dave Sutton | Category: Home Buying, Home Selling, Portland Real Estate | Tagged , , , , , , , , ,

Should You Buy or Rent a Home? Or Invest in Rental Homes?

 

This chart is the simplest answer to both questions. 

The longer you rent, the higher the cost, and while you have paid for a place to live, you have nothing to show for it but rent receipts. 

On the other side, buying a property to rent has all the advantages the renting does not.  In either case, a fixed rate mortgage would hold your costs level (OK taxes might go up, but that's a minor part of the equation), while your rental income increases.  

And in both cases, there are significant tax advantages.  For Home Owners, mortgage interest is tax deductible.  For Investors, you also get depreciation and other deductions. Don't believe me?  I can recommend a good Portland CPA.

2.24 Blog Visual

Posted on February 27, 2014 at 4:36 pm
Dave Sutton | Category: Home Buying, Portland Real Estate, Portland Real Estate Statistics | Tagged , , , , , , , , ,