FALL 2019 | A DAILY RECORD PUBLICATION
CONTRACTORS GUIDE
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CONTENTS 5
Low-cost security
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NURSERY DECOR
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DESIGNER CHICKEN COOPS
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NEW CONSTRUCTION STARTS
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BUYING RENTAL PROPERTY
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6 TIPS TO SELL YOUR HOME
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Safe, No Damage, Ice Removal
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Safe, No Damage Ice Removal!
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Camera-maker Wyze introduces sensors and smart bulbs that won’t break the bank By Jim Rossman The Dallas Morning News If I haven’t mentioned it before, I’m a fan of Wyze, a technology company founded by a small group of people who worked together at Amazon. Its first product was the Wyze Cam, a small wireless surveillance camera that entered the market at the ridiculously low price of $20. Jump ahead a bit, and now we have Wyze Cam version 2, which still costs just $20 with no recurring costs. It features 14 days of free cloud storage for clips and has a microSD card slot for continuous recording, night vision and motion detection, all accessible from Wyze’s mobile app. I have four of these cameras inside and outside my house, and I couldn’t be happier with them. But this is not a review of the Wyze Cam. Wyze Sense Wyze has released what amounts to the beginnings of a home security system, but for now, it’s calling it Wyze Sense, which is a $20 set of two door/window sensors, a motion sensor and a small bridge. The sensors are very small and batteryoperated. Wyze says the batteries in the sensors should last a year before they need replacing. The bridge enables the sensors to talk to your home network. It plugs into the USB port on the back of a Wyze Cam, so you have to own at least one Wyze Cam to use the Sense. You set up and configure the Sense bridge and sensors through the Wyze app. If you’ve been using the Wyze Cam, you should be ready to go with the app. The bridge and sensors use the same WiFi connection the cameras use, so there is no network setup. The bridge can support up to 100 sensors, and the range covered my small house with no issues. I connected the bridge to a camera in my home’s front window and had no problem
placing a sensor on the back door. The Wyze website calls the Sense a “starter kit.” If you need more sensors, a four pack of door/window sensors cost $19.99, and extra motion sensors are $5.99. How do they work? The sensors monitor and report their status to you through the app. The door/window sensors can push an alert to notify you if a door is opened or closed, or if a door or window has been left open or closed for a period of time. This is handy for a garage. You could put a sensor on the garage door to notify you when the door is left open for more than 15 minutes (or whatever time period you’d like). The sensors are handy for telling you when your kids get home from school. You can also place them on drawers. If you look after an elderly relative, you can put a sensor on their refrigerator or medicine cabinet to make sure they’re eating and taking their medicine. The door/window sensors can be used to activate recording on your Wyze Cams and to initiate routines involving other Wyze products (more on that below). The motion sensor can trigger notifications in spots where you might not want to place a camera such as a bathroom or bedroom. You can also place them in areas that you want to keep tabs on, like the living room. I’m not calling these sensors an alarm system, but with sensors for doors, windows and overall motion, plus video recording, you have everything except a siren and a way to notify the police. What you do have is the next best thing: a way to notify you when any of the sensors are tripped. The notifications are almost instantaneous but are subject to the limitations of whatever network you use at home and for your cellphone.
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continued from previous page When I open my front door, my phone buzzes in less than two seconds. The Sense kit is something every Wyze Cam user should consider buying, even if you don’t have a specific use in mind. You’ll find uses pretty quickly. The sensors can be used in an IFTTT (If This Then That) workflow, which allows you to let them work with other smart home products.
In use I love everything about these Wyze products. They’re cheap, they’re easy to set up and use, and they don’t require a subscription. Wyze also makes a $30 camera that pans and tilts, and it has a smart outlet coming out soon. All of these devices work together and use the same app. When my mom needed to keep an eye on her backyard koi pond, I recommended a Wyze Cam, which she purchased and installed (with my dad’s help mounting the camera). She was soon able to identify the animal that was feasting on her koi (a raccoon). These devices are all really easy to set up. Wyze has done a great job with its app. It really does walk you through the setup step-bystep. Pros: Cheap (but good), easy to set up, fast notifications. Cons: Not much interaction with other automation systems. Bottom line: It’s a no-brainer. If you have a Wyze Cam, you need to buy the sensors. You’ll find plenty of uses for them. The bulbs are the cheapest smart bulbs I’ve found, and they work perfectly.
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Wyze Bulbs When I installed the Wyze Sense system, I couldn’t help but think that the sensors could be used to automatically turn on some lights around my house when I get home. I began to look at smart bulbs that were compatible with the Wyze Sense, and I didn’t have to look far. Wyze makes smart bulbs. (I honestly didn’t realize they made them.) Not only does Wyze make bulbs, but they also make the cheapest smart bulbs I’ve come across at $7.99 each or $29.99 for a 4-pack. They’re white lights, but the color temperature of the bulbs is tunable from the Wyze app. You can move a slider to change the color of the light from a bluish, cool white to a yellowish, warm white. The bulbs are set up with the Wyze app. Once they’re configured and named, you can also use an Amazon Alexa or Google Home device to control the bulbs with your voice. The Wyze bulbs are dimmable with the app or with your voice. The bulbs can also be incorporated into Amazon routines. You might put a Wyze Bulb in your porch light and use the Alexa app to
set up a routine to turn on the porch light every night at sunset and turn it off at sunrise. Wyze has a similar feature called Rules, which let you control the Wyze Bulbs based on interactions with the sensors. The bulbs don’t need the Wyze Cam or the Wyze Sense to work, only the Wyze app, which is free. If you’d like to dip your toe into home automation, Wyze Bulbs that work with Alexa (no hub required) is a great and inexpensive way to start.
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baltimore nursery deCor designer dishes on styling your baby’s room
By laura Jane Willoughby The Baltimore Sun
from one place, artwork another, rugs from another. Also, they are
Since 1995, Baltimore-based Bratt Decor has provided a pop of whimsy to nurseries with its timeless, chic furniture in unusual metal finishes. Mary and Stephen Bauer began designing, manufacturing and selling the type of furniture they wanted but couldn’t find when they were designing the nursery for their first child and couldn’t find much beyond traditional wood. Today their two children are grown, and so is Bratt Decor, which offers its furniture — with a focus on baby and toddler beds — online. We talked with Mary Bauer about how to bring unique design trends into the baby’s room, and how the process has changed for today’s expectant parents. Q: Tell me about the design board on your website, which allows potential clients to design their own nursery. A: We dismantled the idea that design is something that is unattainable for most people and only experts can do it and we brought it to the level of the everyday Mom. You can go in and pick any product we offer. You can take pictures of things you see at (traditional stores or online). You can change colors, you can add curtains, you can do whatever you want, however skilled you are, and get a sense of what the nursery will be at the end. Q: What are some of the latest nursery design trends, the ones that have taken you by surprise? A: Today, nurseries are far more personal and eclectic. No longer are today’s parents buying full suites of furniture. They get the crib
they’ll buy a crib, because that’s the safe space and they need to make
far simpler, with less decor. They are repurposing things. Generally, sure it meets all the latest standards. But they’ll repurpose night stands or dressers. They want a piece of art from Etsy, a rug from Target and their mother’s teddy bear to create these much simpler, more eclectic nurseries. Q: What’s an easy way for anyone to add a little chic style to their nursery? A: Keep it simple and neutral with a bold statement piece, could be color, artwork, or a fantastic decor item. Q: your furniture and designs are quite retro, reminiscent of the ‘20s through ‘40s. What do you think is driving the interest in that influence from the past? A: I think the world is moving at the speed of light and most people are finding it difficult to keep up. There is always a new app, new systems, new phone, etc., etc. We design timeless looks with the highest quality standards. In a world where time is flying, a sense of timelessness comforts. 2019 FALL CONTRACTORS GUIDE
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Designer chicken coops:
From chandeliers to AC, how some L.A. owners pamper their pets By Lisa Boone Los Angeles Times Midcentury Modern architecture and Japanese shou sugi ban wood exteriors. Wall-to-wall block-print wallpaper and shabby chic crystal chandeliers. These are not features on a Los Angeles home tour but the kind of amenities you might find in some of the city’s more elaborate chicken coops. In a city obsessed with design and indoor-outdoor living, it makes sense that some chicken owners want to house their pets in high-style comfort. In addition to giving homeowners the opportunity to personalize their living spaces, urban homesteading offers a taste of pastoral life that is elusive in a city of more than 4 million. As backyard chickens continue to make the news in California after recent cases of Newcastle disease, it is worth noting that chicken-tending can be traumatic. Free-ranging can be deadly. Coyotes, raccoons, hawks – even mountain lions — will prey on hens. Extreme heat can overwhelm chickens because they don’t 8
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sweat. And something as simple as a backyard avocado can prove fatal to chickens. So why do urban homesteaders endure heartache, illness and loss? Because chickens are like any other pet: They make people happy. “It is extraordinary to have chickens and fresh eggs and engage with them,” says gardening consultant Lauri Kranz, author of the recent book “A Garden Can Be Anywhere: Creating Bountiful and Beautiful Edible Gardens.” “I love visiting my clients who have chickens. They are always so happy to see me. But I always have a serious talk with clients who want them. When you raise chickens, you are engaging with the natural world in a whole different way. No matter how well your chicken coop is built, it still runs the risk of predators. They are more than cute and sweet and fun. It’s a huge responsibility.” What follows are tales of six urban homesteaders and how they personalized their chicken coops, in budgets that ranged from $750 to $14,000.
MIDCENTURY MODERN
Echo Park Inspired by the clean lines of Midcentury Modern architecture, Casey Caplowe and Ellen Marie Bennett wanted a chicken coop that would complement the lines of their home. “We wanted an Eames-inspired chicken coop,” says Bennett, founder of the culinary Goods brand Hedley & Bennett. In a nod to the ‘50s, Caplowe, cofounder of Good magazine, built a slant-roof coop and painted it a vibrant yellow. The color palette augments the home’s animated interiors, highlighted by a yellow Bertazzoni range, aquamarine Heath tile and an orange sliding barn door. Located at the bottom of a terraced yard filled with droughttolerant plants, edibles and decomposed granite pathways, the Midcentury-style hen house is home to a group of Silkies that Bennett refers to as “the ladies.” Olive Oil is the only survivor of a flock that died during a heat wave last year. She now chooses to live in a backyard tree, visiting the coop for meals when not socializing with Oliver, the family’s 200-pound pig, on the upper deck. “Olive Oil has laid eggs in his pig hut,” says Bennett, a former chef. “I like the idea that when people come over, they can go outside and enjoy the ladies. It’s fun to show people where their food comes from.”
URBAN MODERN
Beverly Crest As a principal and design director at Gensler, the world’s largest architectural firm, Irwin Miller has overseen everything from Eataly in Century City to Shonda Rhimes’ new office across from Paramount Studios in Hollywood. So it is not surprising that Miller’s chicken coop is a distinctive structure on a property steeped in Hollywood lore (“Apocalypse Now” screenwriter John Milius lived here). The lush compound is home to several small structures: a 900-square-foot main house, a 400-square-foot studio, a detached “man cave” for Miller’s two sons and a “she shed” for wife Heidi. Miller built the coop over a weekend in an enclosed patio underneath an enormous grapefruit tree. The emerald green coop has a mathematical sensibility, incorporating a triangle theme that continues throughout the compound’s dwellings. At night, the family can sit outside and enjoy the four silver-laced Cochins, their sweet lab, Olive, and a nearby hot tub. A surplus of vines helps keep the coop cool, and a motorized door (opener around $200 from ChickenGuard) that Miller detailed with red and green stripes opens and closes automatically when the family is not around. Miller hung a sparkling, shabby chicstyle chandelier from the center of the coop. “The crystal is a nice touch,” he says with a wink. “It exudes good energy.”
FARMHOUSE
San Gabriel Valley For Kate Richards, whose hilarious website Drinking With Chickens encourages readers to interact with their chickens while enjoying a “garden-to-glass” cocktail, living well means ending the day outdoors with her husband, Jonathon Ragsdale, their flock of
10 chickens and a lavender-infused tequila sunrise. In eight years of keeping chickens, Richards has designed and built seven coops. Her latest, a fully insulated enclosure she built with Ragsdale and father Rich Richards, is stylishly decorated with planters, pink and coral painted stripes, and vinyl peel-and-stick botanical block-print wallpaper by Sarah Treu for Spoonflower ($7.50 per foot). The wallpaper may seem extravagant, but Kate Richards says it “camouflages poop on the wall and is easy to wipe down.” She originally wanted the flock – which averages about 10 eggs per day – to roam free, but after they foraged everything in her yard, she installed the coop in a 15- by 25-foot enclosed garden at the back of her property. There, the chickens can exercise in a run made of pressure-treated wood, while vines and shrubs protect them from hawks and owls. The run rests on 12-inchdeep permeable pebbles so Richards can sweep and hose the path continued on next page when necessary. A comfortable 2019 FALL CONTRACTORS GUIDE
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continued from previous page seating area, outfitted with lounge chairs and custom iron wine glass holders, and an adjacent cocktail bar provide ample room for guests and entertaining. “It’s very tranquil out here,” says Richards, whose book “Drinking With Chickens” is due in the spring. “Chickens are funny and entertaining creatures. They are filled with joy. All I’m doing is encouraging people to take a moment to enjoy them.”
bohemian
los Feliz Since launching their homesteading store, the King’s Roost, five years ago in Silver Lake, Trish and Roe Sie have offered goods and classes well suited to Los Angeles’ do-it-yourself culture. So when it came time to purchase their own coop, the couple did extensive research before buying a Western red cedar rolltop walk-in structure from Urban Coop (starting at $4,700). Designed for 20 chickens, the coop arrived in 12 flats and took Roe a week to assemble. The couple personalized it by hanging framed photographs of roosters above the roost area, along with an image of one lone hen, “in case one of the flock is a lesbian or nonconforming,” Trish says jokingly. When the temperature hit 105 degrees last summer, the couple added a generator and an air-conditioning unit from Home Depot. Flowering trumpet vines, which shade the roof, also help cool the coop. (The couple judiciously prune the vines, which are poisonous). “Trish is the rooster,” Roe adds with a laugh. “She is the only person I have ever known who has had a flock of chickens name her.” Just outside the door to the coop, a wooden dust bath filled with clean ash helps ward off parasites. And when a neighbor greets the family over the fence, Trish emphasizes the need to be respectful of their community. “We make sure our neighbors are OK,” says Trish, director of “Pitch Perfect 3” and the forthcoming “The Sleepover.” “We are tidy. We share our eggs. We made sure the coop is the legal limit from the house.” Abundant seating and electrical outlets allow the family to work outdoors and be near their chickens. Their Rhode Island Red, Ruby, even watches casting tapes with Trish. “The worst thing about traveling for work is not being with them and my family,” she says. “I’ve thought about having them as companion pets.”
minimalist
Malibu At Plumcot Farm, Alison Hersel’s 7-acre property, everything is small batch, from the raw honey to the more than 100 types of edible and medicinal crops she has grown on the organic farm. She added chickens five years ago because she wanted to demonstrate regenerative farming to her three children in a hands-on way. The 100-square-foot wooden coop, designed and built by Edible Gardens LA, is a large, minimal structure that provides the chickens room to roam while allowing Hersel the opportunity to share and exchange information with the public. “Recently in a cooking class, one of the kids cracked a fertilized egg,” Hersel says. “Chickens prompt you to have experiences and conversations about the cycles of life.” The structure is lined with one-quarter-inch-square chicken wire that goes down 3 feet deep and surrounds the perimeter. The coop features an interior space for egg boxes and an exterior space where the chickens can meander in a protected environment (Hersel allows them to free-range outside the coop under supervi10
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sion). Even with the issues that come up – a hen recently ate a baby chick – she says it is worthwhile. “Animals are a big part of regenerative farming,” Hersel says. “We don’t have the space for livestock or other animals, so we settled with chicken manure to activate our compost pile.” Adds Edible Gardens L.A.’s Lauri Kranz: “Chickens are a natural addition to the vegetable garden. It all feeds each other.”
shou sugi ban
lincoln Heights When Ilse Ackermann describes herself as a “chicken consultant to the stars,” her tone is tongue-in-cheek. But she has the nondisclosure agreements to prove it. Her job, which involves 24-hour “fowl consultations” for anxious clients with broody birds, stems from her years living on Skyfarm, the urban farm she shares with her husband, photographer Meeno Peluce, their two daughters and 25 animals. She may design custom coops for Hollywood’s A-list, but her own is more modest, built of inexpensive wood and a galvanized roof from Home Depot that she estimates cost around $1,000. By contrast, the coop’s black charred exterior makes a statement in an orchard filled with colorful native plants and edibles. “I wanted to do it in shou sugi ban style because it is super chic and you don’t have to do anything to it,” Ackermann says of the ancient Japanese technique. “It’s great, because it is bug- and weather-resistant.” Before assembling the coop, Ackermann burned the wood in her driveway with a roofing torch. She then installed a wood floor — something she does not recommend — and assembled the structure from there. Outside the coop, she installed a compost bin for collecting chicken manure and a solar-powered radio to deter predators. (The continuous smooth jazz loop has had mixed results.) “When our first chicken died, we wept, and Meeno was inconsolable,” Ackermann says. “The last time one of our chickens was mauled by a coyote, there was blood everywhere, and we sewed her up with dental floss.” (Desperate, she consulted YouTube). The incident prompted Ackermann to order proper suture kits online. As for the chicken? It survived.
new CONSTRUCTION startS
NEW YORK--(BUSINESS WIRE) New construction starts dropped 6% over the month in August to a seasonally adjusted annual rate of $807.1 billion, according to Dodge Data & Analytics. August’s decline breaks a string of three consecutive month-to-month gains. By major sector, nonbuilding construction fell 15% in August, reversing the large increases made in the previous month when several notable projects started. The declines in residential and nonresidential building were milder – falling 1% and 3% respectively in August. The August statistics lowered the Dodge Index to 171 (2000=100) compared to 182 in July, marking the lowest reading for the Index since May. Despite the month’s decline, the Index remains above its 2019 average of 167. Year-to-date through eight months, total construction starts were 5% lower than the same period a year ago due to declines in residential and nonresidential buildings. Nonbuilding construction activity was 3% higher through the first eight months of the year due to gains in electric utilities/gas plants. “The August decline was expected after July’s robust level of starts,” stated Richard Branch, Chief Economist for Dodge Data & Analytics. “Furthermore, the year-todate activity continued to suggest that this year’s levels are easing back from what was seen in 2018 – essentially mirroring the slowdown in overall economic growth.” Nonbuilding construction starts reached $217.4 billion (at a seasonally adjusted annual rate) in August, a 15% decline from the previous month. Environmental public works (drinking water, sewers, hazardous waste, and other water resource projects) fell 43% from July to August, while miscellaneous nonbuilding fell 32%. Both types of construction had shown remarkable strength in July as work on several large projects got underway. Offsetting these declines was a 10% increase in street and bridge projects. The electric utility/gas plant category also gained 9% over the month. The largest nonbuilding construction project to start work in August was the $2 billion Permian Highway Pipeline Project in Texas. Also breaking ground during the month was the $840 million Lynwood Link Extension rail line in Washington and the $625 million Palen Solar Farm in Desert Center CA. Through the first eight months of 2019,
nonbuilding construction was 3% higher than 2018. However, environmental public works and electric utility/gas plants were the only categories within nonbuilding construction registering a positive year-to-date gain. Nonresidential building starts dropped 3% from July to August, to $283.9 billion (at a seasonally adjusted annual rate). August’s decline was the direct result of a 66% drop in manufacturing starts, which had soared in July when the $1.0 billion Foxconn manufacturing complex broke ground in Mount Pleasant WI. Commercial construction starts rose 7% in August to $135.2 billion (annual), the result of increases in offices and warehouses. Institutional starts rose 2% in August to $138.2 billion (annual) due to increases in health and education facilities. Several notable nonresidential projects got underway in August, including the $450 million Joan Paul Rubschlager University Cancer Care Center in Chicago IL and two Facebook data centers — a $400 million facility in Altoona IA and a $350 million building in New Albany OH. Through the first eight months of 2019, nonresidential building starts totaled $188.2 billion, a decline of 7% over the same time
frame of 2018. Commercial starts were 3% higher year-to-date, fueled by gains in offices, warehouses, and parking structures. Starts for stores and hotels were lower through the first eight months of this year. Institutional construction was 5% lower year-to-date at $92 billion with declines evident across all institutional categories. Manufacturing construction starts were 46% lower year-to-date. Residential building fell 1% during the month to $305.8 billion. Single family construction was 3% lower, overwhelming a 3% gain in multifamily starts. The month-to-month growth in multifamily housing was aided by the start of a $600 million apartment complex on West 29th Street in New York, NY. Also breaking ground during the month was the $515 million Brookfield residential tower in Los Angeles, CA and the $223 million Sendero Verde mixed-use project in New York, NY. On a year-to-date basis, total residential construction was 8% lower than during the first eight months of 2018 at $211.3 billion. Single family construction was 6% down, while multifamily declined 13% through eight months.
The Dodge Index of New Construction Starts (Year 2000 + 100)
Source: Dodge Data & Analytics
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10 tips For buying rental property
If you’ve been watching reruns of HGTV’s “Income Property” and wondering if it’s time to buy a rental property and become a landlord, you’re not alone. Between our slow-growth economy, historically low interest rates, and the mood of millennials to rent instead of own, income property has been on an uptick since the Great Recession. In fact, real estate is now Americans’ favorite long-term investment, according to a recent Bankrate study. The popularity of real estate is at its highest point since Bankrate started the survey seven years ago. Should you take the plunge on a rental property? Experts offer a qualified yes, provided you do your homework first. Here are 10 things to consider before diving into income property. 1. It’s not as easy as it looks Forget the TV sitcom stereotypes of clueless landlords. To make the most of income property requires an accountant’s eye for detail, a lawyer’s grasp of landlord-tenant laws, a fortune teller’s foresight and, should you choose to manage your rental property yourself, a landlord’s firm but friendly disposition. “Where people who want to become landlords fall short is, they don’t realize how much work goes into it,” says Diana George, founder of Vault Realty Group, now part of Century 21. So before you leap in, you’ll want to consider whether you have the time and skill to put into managing a rental. While rental property is considered a passive investment, that doesn’t mean you’re fully passive in managing it. 2. Success requires a long-term outlook Jeremy Kisner, a senior wealth adviser at Surevest Wealth Management in Phoenix, Ariz., owns two Las Vegas rentals. The unit he’s held for 13 years has had two tenants and low maintenance, while the other has had three tenants in four years – the last one a costly eviction. He’s taking the same advice he gives his clients. “The way that people get in trouble with almost all investments is, they just don’t hold onto things long enough,” he says. “With rentals, if you break even on a cash-flow basis, that’s actually not too bad because you’re paying down the principal and building equity that way. Then, you hopefully also see some appreciation.” So if you’re looking to make money in real estate, you’ll want to think long term. As you pay down or eliminate principal over the years, you should be able to grow your cash flow. 3. It’s easy (and costly) to break the law State landlord-tenant laws can act like an open manhole cover for rental owners who ignore them, according to Kathy Hertzog, owner of 12 | 2019 FALL CONTRACTORS GUIDE
Erie, Pa.-based Landlord Association. Case in point is tenant security deposits. It’s not as simple as collecting and holding the money. “There is definitely bookkeeping involved. You need to have that account for each tenant and keep that money in that account and save it,” Hertzog says. “Security deposit laws govern how much time you have to return a security deposit when tenancy ends, less any expenses for cleaning and repair, all of which have to be itemized.” “In some states, if you don’t turn that in, the tenant can go after the landlord for double their security deposit for failing to return it within the specified time period,” she says. Of course, this is only one aspect of the laws surrounding rental property, and there are many others that landlords must know in order to avoid running afoul of them. You’ll want to be familiar with rules around eviction, fair housing and other regulatory requirements. 4. Make sure you’re landlord material If you purchase a rental property, should you be your own landlord or fork over 6-10% of your rental income to a management service? While there’s no right answer for everyone, George and Kisner prefer to subcontract the work. “They do the background check on your tenant, make sure they sign the lease and pay their rent on time,” George says. “That frees you up to manage your money, not your property and tenants.” Hertzog says that there’s a potentially steep downside to being your own landlord. “If you get too close to your tenants and the tenants have financial problems, you can find yourself stuck because you don’t want to evict them,” she says. “You have to be very professional about it, because if somebody doesn’t pay their rent, they’re stealing from you.” On top of this issue, are you comfortable making the executive decisions that must be made in managing a property? Will you repair or end up replacing that failing air conditioner or leaky dishwasher? You’ll need to make the call as to what is the best course of action. 5. Analyze whether buying or financing is better While some financial pundits insist you should never buy a rental unless you can pay cash for it, Surevest Wealth’s Kisner begs to differ. “Leverage (that is, a mortgage) typically magnifies returns, on both the upside and downside,” he says. For example, imagine a rental property purchased for $100,000 in cash. The house yields a rent of $12,000 annually and is taxed at $1,000. With a depreciation schedule of 27.5 years and an income tax rate of 20 percent, an investor would earn just over $9,500 in cash annually. So the investor’s annual cash return is about 9.5 percent. Not bad. Here’s how the investor using leverage performed, assuming the same house. This investor has a mortgage for 80% of the house, which compounds at 4 percent. After subtracting the operating expenses as well as additional interest expenses, this investor earns almost $5,580 in cash annually. With $20,000 invested, the investor’s annual cash return is about 27.9 percent. In fact, the situation for the leveraged owner is actually a little bit better than these numbers suggest. That’s because part of the rent goes to pay down the mortgage’s principal. So while the investor couldn’t pocket the cash flow because it was used to pay the loan, the investor still profited (and paid tax) on that money. That’s the power of leverage to swing an investor’s return. George concurs: “I definitely agree with going conventional (mortgage). It’s a really good way to maximize your dollars.” 6. Budget for the unexpected Failure to plan for the myriad expenses of owning a rental can
views Section 8 tenants favorably. “Older populations and persons with disabilities are usually excellent tenants. They take excellent care of the property because this is their home. This is where they want to be. Plus, if they don’t pay their rent or ruin your home, they risk losing their Section 8 voucher,” she says. 10. Don’t forget rental property at tax time There’s a singular ray of sunshine that beams down upon income property owners each spring as they hunker down with their accountant to prepare their federal income tax return. “When you have your own home, you can write off the interest and that’s about it,” George says. “But when you own an investment property, your Schedule E tax form enables you to write off nearly everything under the sun, from painting the home to changing the light bulbs. “So, even though you have rental income to report, you can show less income than you’re actually collecting and write off your mortgage payment and interest while building equity at the same time,” George says. It’s that powerful combination of tax benefits and investing returns that helps keep investors interested in rental properties. BOTTOM LINE Rental property can be an excellent investment if you approach it in a business-like way. But you’ll want to understand (as much as possible) what you’re getting into before you lay down your money. While the appeal of generating a passive monthly income with real estate is high, it’s important to remember that it often requires a lot of work to keep that income flowing.
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become a fast track to disaster. “As a landlord, you want to save about 20% to 30% of your rental income for upkeep, maintenance and emergencies,” says Hertzog of the Landlord Association. “You want to make sure you’re not just living off that,” she says, “because then when something big happens, you won’t have any money to fix it, and now you’re stuck because you’re a landlord with a property that needs to be repaired quickly, and you don’t have that money.” Kisner couldn’t agree more: “It’s been my experience that you always underestimate all the different expenses that have a way of coming up and always overestimate just how positive the cash flow is going to be,” he says. 7. Remember to renew your leases If mom-and-pop landlords have one glaring blind spot, it’s the failure to renew tenant leases in a timely manner, according to George. “You’d be surprised how many landlords don’t renew their leases every year, so they’re letting their tenants go on month-to-month leases,” she says. “What’s wrong with that? What’s wrong is, their whole thinking is that now, if I want to get my tenant out, I can’t because now they’re not strapped to a lease.” “Also, they can’t raise rent,” says George. “The only way you can change rent is if you have them sign a form changing the lease every year. That’s how you keep your tenants in check. When you let it slide like that, it can be really difficult to get your tenants back on track,” George says. Depending on the state, landlords can give notice of eviction for a specified period. In California, where George is based, the state allows landlords to give 60-days’ notice for tenants who have lived in the property for more than a year (or 30 days for less than a year), though the situation may be different in rent-controlled cities. The landlord also might offer a new lease contract at the same time. 8. It’s all about location, location, location — sort of. That old realtor mantra about the importance of location takes an interesting turn when applied to income property. “The best locations with the most appreciation are where you’ll potentially have the worst cash flow with a rental,” Kisner says. Why? Investors can earn a return in two ways: cash flow and appreciation. In some areas investors may want higher cash flow in order to compensate them for slower appreciation. But if investors expect an area to appreciate substantially, they may be willing to forgo some of the cash flow in order to enjoy that appreciation. The result: house appreciation outstrips the growth in rents, and houses appreciate while yielding relatively low cash flow. “As a result, the property has to appreciate more in order to compete as an investment with properties in less desirable areas,” Kisner says. His solution: Err on the side of appreciation. That’s what he’s doing with his two rentals, which, in a good month, barely break even. “But if I hold them until I turn (age) 60 when they’re paid off, even after property taxes and insurance, I’ll double my Social Security income,” he says. 9. Want long-term tenants? Consider Section 8 Sudden tenant vacancy is the bane of every rental owner. “Each month that a rental stands vacant, you’re having to pay mortgage, utilities and maintenance out of your pocket, so turnaround is one of the things you need to address really quickly,” Hertzog says. One popular solution? Give Section 8 renters a try. Section 8, aka the Department of Housing and Urban Development’s Housing Choice Voucher Program, typically caps the rent for low-income Americans who qualify at 30% of their adjusted monthly income. While some landlords are skeptical of the paperwork and potential upkeep problems presented by some Section 8 renters, Hertzog
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6 tips to sell your house beFore the end oF the year By Holly D. Johnson Bankrate.com In recent years, sellers have called the shots in homebuying negotiations. They’ve had plenty of leverage, too, thanks to surges in buyer demand, tight inventory and soaring home prices in many top markets around the country. But we all know that the housing market is a cyclical one. Pricing and demand that goes up eventually goes down, and the hot summer housing market often cools by the time winter rears its chilly head. If you’re needing to sell a house and can’t wait for next year’s warm-weather sales surge, you’ll need to act fast. To get to the closing table sooner rather than later, sellers may need to adjust their expectations and approach. Here are six important steps you can take now to sell your home before the new year is here. 1. Rely on comps — not emotion — to set a realistic asking price First things first. Experts say you’ll want to jump into the housing market with a realistic asking price that has the potential to stick. This part can be hard for sellers to wrap their heads around since many want to “test the market” with a higher sales price knowing they can drop it later. This approach, however, is a mistake, says Chicago real estate agent David Cahill. “If your home is priced too high, it can be very difficult to overcome, even when you eventually reduce the price,” he says. This is one area where you may want to let your agent lead the way. Cahill says a good real estate agent will do a comparative market analysis that helps you price your home based on recent comparable sales in your area — not just hopes and dreams. The best agents will even go the extra to mile to find out the prices of comparable homes with a recent or pending sale in process, he says. You’re paying your agent for their professional advice and expertise, so when they suggest a sales price based on mountains of research, you should listen. 2. Ask your agent for ‘first look’ feedback Homeowners hoping to unload their properties by year’s end 14
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will need to enter the market with their best foot forward. This means having a house that is easy to sell and free of glaring problems. Michael Kelczewski, a real estate agent with Brandywine Fine Properties Sotheby’s International Realty in the Greater Philadelphia area, says you should not only ask for real estate agent feedback but review all of their notes — both positive and critical. It’s also a good idea to have your agent gather buyer feedback from people who tour your property so you understand what buyers love (and don’t love) about your home. Your real estate agent may be able to point out defects you’ve overlooked like forgotten windows with cracked seals or the fact that your teenager has heavy metal posters plastered wall to wall. Or perhaps they’ll remind you that most people want to park in their garage instead of using it to store boxes of photos and old clothing. Consider agent feedback carefully and implement their suggested changes to potentially avoid losing out on a sale due to minor issues. 3. Clean, organize and declutter It’s possible your agent will advise you take down family photos and clear out your closets right away, but you should make time for a major cleanup regardless. Cahill says you should “do everything within your budget to ensure your home gives a great first impression.” For example, give your front door a fresh coat of paint, trim back overgrown shrubs and keep your lawn in tip-top shape. While your home is on the market, the interior should also be clean and ready for a last-minute showing at all times. Cahill says to start by removing clutter, getting rid of any oversized furniture and taking down busy decorations. “Rent a storage unit if you need more space,” he says. Stay on top of cleanliness by taking time to wipe down counters, sweep floors and touch up bathrooms every day. Nobody wants to buy a dirty house. 4. Consider hiring a professional stager If you have the cleaning part down pat but need help making your home visually appealing, you can also consider hiring a professional stager, Cahill says. Home stagers have furniture, art and
decor they use to make your home feel modern and increase your chances at a speedy offer — an important consideration for anyone, but especially if your home feels especially dated. Does staging work? Most experts would say it does. In fact, a recent study from the National Association of Realtors showed that 83% of buyer’s agents said staging helped their clients envision living in that specific home. Also, 28% of seller’s agents said they staged all of selling clients’ homes before putting them on the market. However, 13% reported staging homes only if those properties were difficult to sell otherwise. 5. Spring for professional photos and video Where potential buyers perused the local newspaper for new home listings decades ago, pretty much all home marketing is done online now — either through multiple listing services (MLS), real estate websites, email marketing or a combination of all of these avenues. Susan Bozinovic, a Realtor with Century 21 Town & Country in Troy, Michigan, says this is why quality pictures are crucial if you hope to achieve a quick sale. Hire a photographer to take high-quality pictures and consider having your real estate agent’s office create a marketing video, she says. Drone photography might be an important factor to sell a sprawling property with land or a ton of outdoor features, she adds. Bozinovic also emphasizes the importance of social media marketing – especially on Facebook. “I found that running ads on the Facebook platform is superior to any other social media space because the audience can be targeted very specifically,” she says. If you’re hoping to spread the news of your home for sale far and wide, it may also help to work with a real estate agent who has knowledge of social media marketing and other strategies to get more eyeballs on your virtual listing. 6. Get an optional pre-sale home inspection Never assume your home is in perfect physical condition; take the time to make sure. Paying for a home inspection upfront is typically a safe bet. With prior knowledge of issues like missing shingles on your roof or faulty electrical work, for example, you can buy time to fix these problems before they become a problem. Cahill also says that hiring a home inspector to conduct a thorough inspection before you list your home may “inspire greater confidence in your home’s condition among potential buyers.” This is true even though most savvy buyers will likely hire their own inspector. Also note that, if you take the time to fix big problems discovered in an inspection before a sale is underway, the negation process could be “short and sweet,” Cahill says. BOTTOM LINE A speedy home sale could be in your future if you take steps to avoid common problems that turn off potential buyers. This includes making sure your home is beautiful and clean, but it also means uncovering major defects or repair needs before someone else does. There’s still plenty of time to get to the closing table before the end of the year. Working with an experienced real estate agent who knows the local market trends and can help you set a realistic price are key pieces to the puzzle.
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