Real Estate Tips from Bob Rich

Tip #1 - Defraying College Costs


If your child will be going to an out-of-town college, there is an expense other than tuition to be considered --- living cost. Many students have to rent apartments or rooms in town. That can be as much, if not more, than tuition. Here is an approach to consider.

You could kill two birds with on stone by buying a single family home or condominium for your son or daughter to use as a residence while they are away at college. Your student offspring could sublet extra bedrooms or unit to other responsible students or university personnel. This is one way to help defray all or part of the monthly carrying costs. After four years, the property should have increased by at least 25% and could then be sold at its appreciated value, returning all or part of the tuition costs.

If subletting is out and your child paid you the fair market rent, you would still entitled to all the investment tax deductions including depreciation, taxes, maintenance, insurance, etc.


Tip #2 - Will Liens or Easements Prevent Sale?

An encumbrance is any claim or charge attached to and binding upon real property. It may lessen the property’s value or impair its use, but it doesn’t have to mean that the title cannot be transferred. Liens, easements, licenses or encroachments are among the most common encumbrances.

A lien is a claim upon the property that provides security for repayment of a debt. Liens can be voluntary or involuntary. A mortgage lien would be voluntary. The owner agrees to use the property as collateral for a loan. A tax lien arising when a court attaches a property for non-payment of taxes, is obviously an involuntary lien.

Encumbrances that are monetary, such as liens, are usually paid and released at the closing. Physical encumbrances such as easements (like a power company’s right to cross a property to service electrical lines) are usually transferred with the title.


Tip #3 - Don't be Swayed by One Feature

Would it make sense to marry a lady because you like the shape of her nose --- but only her nose? If you did, chances are you would end up with a pretty nose and a lot of unhappiness.

Yet, this is one of the common mistakes a house hunter can make. All too often, a family will fall in love with an eye-catching feature, such as a rock garden, a chandelier, a built-in radar oven or a fancy fireplace and end up buying the wrong house. This mistake happens frequently and in all price ranges. You have to resist the temptation of paying too much attention to a frill and forgetting the importance of the overall house, location and price.

Yielding to superficial attractions like these can result in your family winding up with a thoroughly unsuitable house. These same, alluring features can usually be added to another house at a relatively small cost, considering the overall purchase price. Buy the whole house --- not one fancy frill.



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