Get Ready to Garage Sale

A well-planned garage or yard sale can make room in your home, get rid of unused items and make some money but it needs some planning to be successful.

• Start early to research and plan
• Promotion is key
• Display items attractively
• Price items right
• Organize checkout

Saturdays are generally the best day but there may be some exceptions.  Experienced garage-salers believe that a well-planned one-day event will do as well as a multi-day event.  Serious purchasers will look for the “new” sale and most people don’t come back multiple days.

Advertise in local newspapers and free online classified sites like craigslist.  If several families are going together for the sale, mention that in the ad; it will be a big draw.  Mention your bigger-ticket items like furniture, equipment and baby items.

Garage sale signs can be purchased or made at Staples, Fedex Office or Kwik Signs.  Signs need large lettering so they’re easy to read while people are driving. Most important info: Garage or Yard Sale, address, date and time.  Directional signs are also important.  Balloons and streamers to attract attention to the signs are very helpful.

Consider using the service Square so that you can take credit cards.  The cost is 2.75% per swipe and can be done on your smartphone or iPad.  You’ll need to sign up at least two weeks in advance to receive your reader.

Unless you’re having an estate sale, keep your home locked.  You don’t want people wandering through your home while you’re outside.  If you start to accumulate a lot of money, take some of it inside.  Don’t discuss how much money you’ve made during the sale or how successful it has been.

People will want to bargain; it’s the nature of the game.  Consider this strategy: less negotiations early in the sale and possibly, more toward the end of the sale.

Homeowner Tax Benefits

There are many reasons for wanting to have a home of your own like a place to raise your family, share with friends and feel safe and secure.  While investment opportunities rank high for most people based on the fact that homeowners’ net worth is over forty times higher than that of renters, so do the tax benefits that reduce tax liability.

• Taxpayers who have owned and used a home for at least two out of the last five years, can exclude a maximum of $250,000 of gain as a single taxpayer and up to $500,000 of gain for married taxpayers filing jointly.
• If the gain on a principal residence exceeds the allowed exclusion, the balance is taxed at the lower long-term capital gains rate rather than the marginal tax rate of the homeowner.
• Homeowners can deduct the interest paid on up to $1,000,000 of acquisition debt used to buy, build or improve their first or second home.  They may also deduct the interest on up to $100,000 over acquisition debt that is a recorded lien on their first or second home.
• IRS will allow taxpayers to decide each year whether to take the higher of the itemized deductions or the standard deduction.
• Points paid on new loans for home purchases are considered interest and can be deducted in the year paid. On the other hand, points paid for refinancing a home must be amortized over the life of the mortgage.

For more information, talk to your tax professional and see IRS publication 523 and IRS Publication 936.

ICE Can Save Lives

Everyone knows that ice can make a drink cool or reduce swelling, but if you put it on your cell phone, it might just save your life.

The concept is simple.  Make a contact record in your address book with the name “ICE”, which stands for In Case of Emergency.  In the note section of the record, you would list your name, blood type and medical conditions along with prescriptions and physicians.  You’d also list the people and their phone numbers that can be contacted in case of an emergency.

Several years ago, a British first responder came up with the idea when his emergency unit responded to a call where the victim was unable to communicate due to illness or trauma.  The victim’s wallet didn’t indicate specific persons to be notified in an emergency.  The fireman went through his cell phone to try to identify a relative and wasn’t successful.

That’s when he came up with the idea of a universal entry into the address book for ICE where the necessary parties and special information could be kept.  The story received a considerable amount of publicity and spread across the pond to the United States and into many other countries.

While it isn’t recognized everywhere, it is becoming increasingly more popular.  Even if emergency technicians didn’t find it, the slight possibility that they would find it and it would make a difference would justify the few minutes it will take to create it.  Click here to download a card to carry in your wallet or purse.

Being a Good Neighbor

A good neighbor might be characterized as someone who’ll look after your home when you’re out of town by picking up your mail and watering your plants.  You’d most likely reciprocate for anyone who’d be so generous toward you.

In some cases, you might only be able to name one or two of your neighbors who would step up to that level of service.   Wouldn’t it be nice if more people on your street would be happy to make that offer?

The solution may just start with being a better neighbor first.  The following suggestions go a long way to improving your neighborhood and making new friends at the same time.

• Meet your neighbors and exchange phone numbers and email addresses.  Agree with each other that you’ll let them know if you see something strange going on at their home. 
• Slow down when driving through the neighborhood; it will make it safer and everyone will appreciate it. 
• Control your dog: keep it on a leash; pick up after it; don’t let it bark too much.
• Don’t park in front of your neighbor’s home.
• Notify your immediate neighbors when you’re having remodeling done and ask them to let you know if any of the contractors cause damage to their property.
• Let your neighbors know when you’re having a party and that there will be more cars on the street than usual.
• Maintain your home and yard so that it adds to the beauty of the neighborhood.
• Put your garbage out for collection on the correct day and bring the containers back in promptly.

In reality, it is fairly obvious; you just have to think of the things that you’d want from your neighbors.  Be friendly; don’t be noisy; offer a helping hand when available and respect each other’s boundaries.  Having a sense of community and that you all share the neighborhood can be underlying principles that will guide your behavior.

A good neighbor would be aware of suspicious activity and would call their neighbors and the police if warranted.  This might be something you can discuss with your neighbors.  Click here for a template to record your immediate neighbor’s contact information and keep readily available if needed.

Holiday Tree Safety

Fresh holiday trees are beautiful, smell great and really add to the spirit of the season.  Following some proven safety tips might help you avoid a disaster and keep the Grinch away.

• Select a tree with fresh green needles that don’t fall off when touched or when the trunk is tapped on the ground.
• When trees are cut too early, they have a greater risk of drying out and can become more dangerous especially with electrical lights.
• Cut 1” to 2” off the base of the tree before placing it in the stand to facilitate it drawing water to the limbs and quills.
• Trees require water similar to cut flowers or they’ll dry out. Tree stands should hold at least one gallon of water and it should be checked every day.  A six foot tree could use up to a gallon of water every two days.
• Position the tree a minimum of three feet or further from heat source like fireplaces, space heaters, heat vents or candles.  Do not allow the tree to block an exit.
• Lights should be labeled from an independent testing laboratory and intended for indoor use.
• Follow manufacturer’s recommendations for how many strings of lights can be connected to each other.
• Turn off all tree lights when you go to bed or leave the home.
• If the tree becomes dry and begins shedding needles, it can be a fire hazard and should be removed from the home.  Even if the holidays are not over, it is not worth the risk to keep it in your home.
• After the gifts have been opened, don’t return the paper and boxes under the tree.
• Remove the tree as soon as possible after the holidays.
• Trees should never be burned in a fireplace.  The trees will burn very hot and quickly when they are dry and could spread outside of the fireplace which could cause an unfriendly fire.
• Check to see if there is a recycling program for holiday trees in your community.

The National Fire Protection Association reports that “one of every three home Christmas tree fires are caused by electrical failures and a heat source too close to the tree causes roughly one in every six of the fires.”

Money Down the Drain

Private mortgage insurance is necessary for buyers who don’t have or choose not to put 20% or more down payment when they purchase a home.  It is required for high loan-to-value mortgages and it provides an opportunity for many people to get into a home who otherwise would not be able.

The problem is that it is expensive and a homeowner’s goal should be to eliminate it as soon as possible to lower their monthly payment and avoid putting good money down the drain.

FHA loans made after 6/1/13 that have 90% or higher loan-to-value at time of purchase have mortgage insurance premium for the life of the loan.   FHA loans made prior to 6/1/13, can have the MIP removed after five years and if the unpaid balance is 78% or less than the original loan-to-value.

VA loans do not require mortgage insurance.

Conventional loans, in most cases, with higher than 80% loan-to-value require mortgage insurance.  The cost of that insurance varies but with a $250,000 mortgage, it could easily be between $100 and $200 a month.

Your monthly mortgage statement should itemize what your monthly fee is for the mortgage insurance.   Unlike interest that is deductible, most homeowners are not able to deduct mortgage insurance premiums.

If you plan to remain in the home or to stay there for a considerable number of years, the solution may be to refinance the home.   If the home has increased since it was purchased, the loan-to-value at its new appraised value may not require PMI.  You might even be fortunate enough to obtain a lower rate than you currently have.

Cash Flow and Equity Build-up

Many years ago, Las Vegas hotels would entice customers with inexpensive rooms, meals and entertainment so they would gamble.  It may have worked initially but if you’ve been to Las Vegas recently, the bargains are gone.  Hotels expect each division to be a profit center on its own.  As a consumer, I might not like the changes but as an investor, I’d have to be pleased with increased profitability.

Years ago, real estate investors used to accept negative cash flow buoyed by tax incentives in hopes of making a big payday due to appreciation when they sold it.   Today’s investors are focusing on tangible, current results like cash flow and equity build-up.

Cash flow is the amount of money you have left over after collecting the rent and paying the expenses.  Since rents have gone up considerably due to supply and demand in the last few years and mortgage rates are at near record lows, income is up and expenses are down, making the cash flows attractive.

If the cash flow is sufficient, you could have a good investment even if the value of the property never increased.  Cash on Cash doesn’t consider appreciation and measures the cash flow before tax advantages by the initial investment.  A rental with $3,170 CFBT divided by an initial investment of $29,000 would generate a 10.93% Cash on Cash rate of return.

Low down payments on investor properties are also a thing of the past.  Non-owner occupied mortgage money is available but the investor should expect to put down 25-30%. An advantage of having a smaller mortgage is a lower payment.

Most mortgages are amortized loans with both principal and interest due with each payment.  The forced savings of the principal contribution builds equity in the property and can be considered a part of the rate of return.

A $100,000 mortgage at 4.5% for 30 years would have $1,613.29 applied to principal in the first year.  Divide that by the same $29,000 initial investment and the amortization would generate another 6%.

Without factoring in appreciation or tax advantages, this rental example generates much more than most alternative investments.  There certainly are many different aspects that affect the risk and return on rental investments.  If you haven’t scrutinized single-family rental opportunities in a while, you should look again.

Which Filter to Use?

A dirty air filter decreases the effectiveness of your HVAC system because it inhibits airflow and allows dirt, dust, pollen and other materials to blow through the system.

The challenge is how often it should be changed to keep the system working efficiently and extend the equipment life. Too often and you’re wasting money and not often enough and your increasing the operating and maintenance costs.

Fiberglass panel filters are inexpensive and easy to find but they’re not very efficient and they allow most dust to pass through. They were popular years ago but there are much better products available currently.

Pleated air filters are available in MERV ratings from 5 to 12. As these filters collect dirt and other particles, they become less efficient to the point of impacting air flow. Allergy sufferers can benefit from this type of filter. These should be changed every two to three months based on local conditions.

HEPA filters stand for High Efficiency Particulate Arrestance. They are very efficient and more expensive than previously described filters. Since they are very efficient, they require changing more frequently; possibly, every month.

Electrostatic air filters are permanent and washable. They generally cost more initially but the savings will be based on how long they last. This type does not add to landfill issues or produce ozone.

Improperly maintained filters will lower the quality of the air in the home, have a negative impact on air flow, cause it to use more electricity and eventually require maintenance to the systems.

In an attempt to easily comparing filters, a rating system was created called MERV, an acronym for Minimum Efficiency Reporting Value. The rating from 1 to 16 indicates the efficiency of a filter based on standards set by ASHRAE. Higher ratings indicate a greater percentage of particles are being captured in the filter.

To create a system to remind you when to change your filters, set a reminder on your electronic calendar to recur for whatever frequency you determine is best for you. Be sure to keep a supply of filters on hand to be ready to change them out when the time comes.

How's Your Memory?

How old is your bedroom furniture and what did you pay for it?  Don’t know?  That’s okay, let’s try an easier question.  When did you buy the TV in your family room and is it a plasma, LCD or a LED?

Whether you are the victim of a burglary, a fire or a tornado, most people are comforted they have insurance to cover the losses.  However, unless you’ve filed a claim, you may not be familiar with the procedures.

The adjustor will want to know the date and how the loss occurred.  Assuming you have contents coverage, the claim for personal belongings is separate from damage to the home.

You’ll be asked to provide proof of purchase, like receipts or cancelled checks, or a current inventory.  If they’re not available, you can reconstruct an inventory from memory.  The challenge is trying to remember things you may not have used for years and may not miss for years more.

Relying on memory can be a very expensive alternative.  A prudent homeowner will create a home inventory with pictures or videos while all of their belongings are in the home and they can see them.

Download a home inventory to make your project a little easier.

Reverse Mortgage

With all of the encouragement from celebrity spokespersons like Fred Thompson, Robert Wagner and Henry Winkler, there is a growing awareness of reverse mortgages.  The fact is that our population is getting older and more than 25 million homeowners meet the age requirement.

A reverse mortgage will allow homeowners age 62 or older currently living in their home to tap into their equity. The amount available is determined by the borrower’s age, the home’s current value and current interest rates.  The loan proceeds can be received in a single, lump-sum or periodic payments.  The closing costs can be paid in cash or rolled into the loan amount. 

There are no payments on a reverse mortgage but the homeowner is still responsible for property taxes, insurance, maintenance and other home costs. 

When the borrower dies, moves or fails to fulfill the terms of the loan, the lender is paid from the sale of the home.  The borrower or their estate is not responsible for more than the proceeds of the sale.  However, if the proceeds are greater than the amount owed to the lender, the remainder goes to the homeowner or their heirs.

Unlike normal mortgage requirements, the borrower’s income and credit are not used to determine the amount of the loan.  The homeowner must occupy the home as their principal residence and it must be free and clear of encumbrances or have substantial equity.

Reverse mortgages are an opportunity to generate income or funds for capital expenditures but they can pose risks to homeowners.  HUD, the largest insurer of reverse mortgages, is concerned about misleading or deceptive program descriptions encouraging borrowers to obtain HUD reverse mortgages also known as the HECM (Home Equity Conversion Mortgage).  As of June 18, 2014, FHA will only insure fixed rate reverse mortgages where the homeowner is limited to a single, full draw made at closing.

A reverse mortgage, like any financial decision involving a home, is an important decision that deserves careful consideration, due diligence and expert advice. 

For more information, check out The National Association of REALTORS® Field Guide to Reverse Mortgages, FAQs about HUD’s Reverse Mortgages  and Reverse Mortgages – Alternative Home Equity Funding by Real Estate Center at Texas A & M.

How Was It Measured?

In an attempt to compare homes, one of the common denominators has been price per square foot.  It seems like a fairly, straight forward method but there are differences in the way homes are measured.

The first assumption that has to be made is that the comparable homes are similar in size, location, condition and amenities.  Obviously, a variance in any of these things affects the price per square foot which will not give you a fair comparison.

The second critical area is that the square footage is correct.  The three most common sources for the square footage are from the builder or original plans, an appraisal or the tax assessor.  The problem is that none of sources are infallible and errors can always be made.

Still another issue that causes confusion is what is included in measuring square footage.  It is commonly accepted to measure the outside of the dwelling but then, do you include porches and patios?  Do you give any value for the garage, storage or other areas that are not covered by air-conditioning?

Then, there’s the subject of basements.  Many local areas don’t include anything below the grade in the square footage calculation but almost everyone agrees that the finish of the basement area could add significant value to the property.

Accurate square footage matters because it is used to value homes that both buyers and sellers base their decisions upon.

Let’s say that an appraiser measures a home with 2,800 square feet and values it at $275,000 making the price per square foot to be $98.21.  If the assessor reports there are 2,650 square feet in the dwelling and the owner believes based on the builder, there is 2,975 square feet, you can see the challenge.

If the property sold for the $275,000, based on the assessor’s measurements, it sold for $103.77 per square foot and by the owner’s measurements, it sold for $92.44 per square foot. Depending on which price per square foot was used for a comparable, valuing another property with similar square footage could have a $30,000 difference.

The solution to the dilemma is to dig a little deeper into where the numbers come from and not to take the square footage at “face value”.  It is important to recognize that there are differences in the way square footage is handled.

Don't Leave Home Without...

Planning a summer trip is usually focused on what you’ll do, see and experience.  Enjoy it even more by spending a little time before you leave to make sure your home is safe while you're gone.

Consider these suggestions along with your other normal efforts:

• Tell your neighbors you’ll be out of town and to be aware of any unusual activity.
• Notify your alarm company .
• Discontinue your postal delivery.
• Use timers on interior lights to make it appear you’re home as usual.
• Don’t make it easy for burglars by leaving messages on voice mail or posting on social networks.
• Post on social networks about your vacation after you’ve returned.
• Remove the hidden spare keys and give one to a trusted neighbor or friend.
• Lock everything, double-check and set the alarm.
• Take pictures of your belongings in case you need them.
• Disconnect TVs and other equipment in case of unexpected power surges.
• Adjust your thermostat.
• Arrange for lawn care.
• Consider disconnecting the garage door opener.
• Put irreplaceable valuables in a safety deposit box.

 It’s nice to go out of town on a well-deserved trip and it’s always nice to get back home…especially when it is just the way you left it.

Making Room in Your Rooms

The more things you have, the more you have to take care of.  And in this case, the more that you have to store that gets in the way of finding the things that you actually use.  Periodically, you need to go through every closet, drawer, cabinet and storage area to get rid of the things that are just taking up space in your home and your life.

Every item requires the decision to retain or remove.  Consider these questions as you examine each item:

• When was the last time you used it?
• Do you believe you’ll use it again?
• Is there a sentimental reason to keep it?

You have four options for the things that you’re not going to keep.  If you know someone who needs it or will appreciate it, you can give it to them.  You can sell it in a garage sale or on Craig’s List.  You can donate it to a charity and receive a tax deduction or you can discard it to the trash.

Start with your closet. If you haven’t worn something in five years, get rid of it.  Then, go through the things again and if you haven’t worn it in two years, ask yourself the real probability that you’ll wear it again.

Another way to do it is to move it from your active closet to another closet.  If a year goes by in the other closet, the next time you go through this exercise, those clothes are on their way out.

If the items taking up space are financial records and receipts, the solution may be to scan them and store them in the cloud.  There are plenty of sites that will offer you several gigabytes of free space and it may cost as little as $10 a month for 100 GB at Dropbox to get the additional space you need.  It will certainly be cheaper than the mini-storage building.

Thanksgiving is Always in Season

Most school children would probably say that Thanksgiving dates back to the Pilgrims at Plymouth as early as 1621. By the late 1660’s, it had become traditional to hold a harvest festival in New England.

President George Washington declared the first nation-wide thanksgiving in 1789 “as a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many and signal favours of Almighty God.”

One hundred fifty years ago during the Civil War, in October, 1863, President Abraham Lincoln proclaimed the first national day of Thanksgiving.

William Seward, Lincoln’s secretary of state, drafted the proclamation: “No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God…they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People.”

Even though the country was in the middle of the costly Civil War, the people of America started an enduring tradition to give thanks. In 1941, Congress determined that Thanksgiving will be celebrated on the fourth Thursday in November.

 

Will the "Good Life" Be Ready When You Are?

The Life of Riley was a TV show from the 50’s starring William Bendix but the title’s origin came from an expression meaning that a person was living the “good life.” Most people envision themselves living the good life by retirement but don’t really have a plan to get there.

There’s a rough rule of thumb used to estimate how much net worth a person would need by the time they retire to generate a certain income. The target annual income is divided by a safe, conservative yield to determine the investable assets needed.

A person who wanted $100,000 annual income generated from a 5% investment would need investable assets of $2,000,000. If a person had $500,000 now, they would need to accumulate $1.5 million more by the time they retire. If it was estimated to be 15 years away, they would need to save about $100,000 a year, each year until retirement.

It is a sobering example that could be depressing without a plan. It might be easy to say, “I should have started sooner” which may be true but there is still hope.
Gradually, over the next several years, accumulate rental property and allow the tenant to retire the debt for you. The equity in each property will grow from the amortization of the loan each time a payment is made. It also grows as the property increases in value due to appreciation.

Single family homes as rentals offer the investor an opportunity to meet their retirement and financial goals for the following reasons:

• The ability to borrow large loan-to-value mortgages
• At fixed interest rates
• For long terms (easily up to 30 years)
• On appreciating assets
• With significant tax advantages
• And reasonable control not offered by alternative investments.

 

Breathe Easy

The benefits of regularly changing the heating and air-conditioning filters are obvious to homeowners; the real challenge is creating a system to make sure it gets done. 

A reasonable schedule would be to replace it with a new one-inch pleated filter every 60-90 days. Households with shedding pets should consider replacing them every month. Some people change their filters every month when they pay their electric bills.  A simple system would be to set a recurring appointment on your calendar like Outlook or Google.

Filters trap dust, mold and bacteria which can directly affect the air quality and play havoc with your allergies. When a filter is dirty, it prevents proper airflow and allows dust, dirt and allergens to blow through your home. Changing your filter regularly helps to avoid maintenance, improves equipment life and produces increased energy savings.

When shopping for filters, it’s understandable to look for the best bargain but the cheapest price may not be the best choice. When purchasing, recognize that HEPA-rated and HEPA-type filters are not the same thing. HEPA stands for high-efficiency particulate air. A HEPA filter meets or exceeds standards for efficiency set by the U.S. Department of Energy. Most HVAC contractors recommend HEPA filters.

Some filters need to be changed monthly and other types have manufacturer recommendations of every three months. An alternative to disposable filters are the permanent, washable types. These will cost more initially but because you can clean them and re-use them, eventually, you’ll recapture the cost and realize savings.

 

Maintaining Comfort

Some people refer to the heating and air conditioning systems as the "comfort systems."  If you've ever had to be without one in the dead of winter or the heat of summer, lack of comfort may be an understatement.  Simple maintenance with a HVAC checklist is something that every homeowner can perform.

Periodically

• Change your filter every 90 days; every 30 days if you have shedding pets.
• Maintain at least two feet of clearance around outdoor air conditioning units and heat pumps.
• Don't allow leaves, grass clippings, lint or other things to block circulation of coils.
• Inspect insulation on refrigerant lines leading into house monthly and replace if missing or damaged.

Annual, in spring

•  Confirm that outdoor air conditioning units and heat pumps are on level pads.
• Pour bleach in the air conditioner's condensation drain to clear mold and algae which can cause a clog.
• Avoid closing more than 20% of a home's registers to keep from overworking the system.
• Replace the battery in the home's carbon monoxide detector.

Even with the attention that perfoming this list will provide, it is recommended that you have your units serviced annually by a licensed contractor.  Furnaces can be inspected for carbon monoxide leaks and preventative maintenance may help avoid costly repairs.  Click Here if you'd like a recommendation.

St. Louis Farmers Markets

Instead of spending this coming week pushing a cart through the lowelly, fluorescent lit aisles of Dierberg’s or Schnuck’s, get out and about to your local Farmer’s Market! St. Louis has the advantage of being a city amidst some of the most beautiful countryside, giving us the benefit of local farm fresh groceries just a few miles outside of the city and county. Now that the summer has come, most of the markets are up and running for business throughout the fall season. Here are a few of the most lively markets around town:

The most famous in all of St. Louis: The Soulard Farmer’s Market.
http://www.soulardmarket.com/

This market is indoors, open year round  and offers everything from fresh produce to prepared foods and products from local artisans. You could easily spend a whole day getting lost in the hallways of this gigantic market which is always bustling with locals and visitors alike located in the heart of Soulard.

Shlafly Farmer’s Market
http://www.schlafly.com/community/farmers-market/


Get together after work from 4-7pm on Wednesday evenings to cross out those mid-week grocery items and hurtle hump day with some cold beers and live music. Located in Maplewood at the bottleworks, it’s a great central location to decipher the phonetics of “Sh-laugh-lee” or “Sh-laugh-lie”.

Clayton Farmer’s Market
http://claytonfarmersmarket.com/

Get a head start to a great weekend at Clayton Farmer’s Market on Saturday mornings from 8:30 am- 12:30 pm. With a warm community and family friendly vibe, this market has a variety of entertainment and organized events throughout the summer including the “Farm to Forest” bike ride for women hosted by Mesa Cycles on June 16th.


There may not be a way to make dishes and laundry more entertaining, but this summer grocery shopping has become a party and everyone is invited. Besides a great outdoor activity, shopping at the markets helps to promote local business, healthy living and strengthens the local community and economy.These are just a few of the many Farmers Markets spread throughout St. Louis.You can find a more in-depth list here: http://agebb.missouri.edu/fmktdir/view.asp?region=5.

References:
http://www.soulardmarket.com/
http://www.schlafly.com/community/farmers-market/
http://claytonfarmersmarket.com/
http://agebb.missouri.edu/fmktdir/view.asp?region=5.


Written by Ciara Brewer on behalf of Monica Brewer