R > O > I = Home$mart

You want to build wealth and achieve financial stability, but where do you start?  Especially if you’re renting and paying a landlord 25% of your income, how do you get out of the Renter rat race to become an Owner and ultimately an Investor where you are the landlord and achieve Home$mart financial stability?  How do you go from living paycheck-to-paycheck to your landlord to building wealth through real estate?

As I was writing this blog, I was thinking back on my experience and how I made the journey to becoming more Home$mart and achieving financial stability.  I wanted to share the steps that helped me move from Renter > Owner > Investor > Home$mart.  One of the first questions I always get is, ‘Where do I start and what’s my next step?”  Here are my thoughts/answers:

Preparing to move from Renter to Owner:

Owning a home is probably the biggest investment/purchase you will make in your lifetime.  It’s a big financial decision, therefore you need to have your finances in order to move from Renter to Owner.

Step 1: Understand your financial situation and get on a budget.  If you don’t know where your money is going, it’s difficult to work towards Home$mart and financial stability.  You can own anything with a 20-30-50 plan.   There are some great online tools/resources out there such as PersonalCapital.com or Mint.com to help you organize and understand your finances better.  But at the end of the day, you need to establish a budget where you invest in yourself and put 10-20% of your take-home income towards your financial stability and growing your net worth.

Step 2: Build an Emergency Fund - you don’t want to drain your savings to purchase your first home.  I recommend having an emergency fund equivalent to 3 months of your living expenses.  Again, you won’t know how much this should be if you don’t understand your financial situation and get on a budget as outlined in Step 1.

Step 3: Payoff Bad Debt - Any credit card, student loan, car loan, personal loan that you have greater than 8-10% interest, you should try to payoff beforehand.  The more your monthly debt payments are, the less mortgage/home you will qualify for.  As a rule of thumb, your monthly Debt-to-Gross Income ratio can not be greater than 45%.  Meaning if your gross monthly income is $10,000, all of your monthly debt payments including mortgage, property taxes, insurance, can not be more than $4,500.  So the less monthly bad debt you have, the easier it will be to qualify for a mortgage.  Start with your highest interest balance or the lowest balance and pay it off first and then apply that extra income from debt #1 payment to increased monthly payment on your #2 bad debt loan/credit card.  There’s something about being able to get rid of one bad debt first vs. paying a little across all bad debt loans.

Step 4: Save for your home purchase - you are now on your way to becoming an Owner!  Most conventional loans require 20% down payment, but if you are a first time homebuyer or veteran, there are programs where you can purchase a home for as little as 3.5-5% down.  Meaning if you want to buy a $200k house, you might only need $7k-$10k downpayment vs the conventional loan that would require $40k down payment for a $200k home.  Don’t be shy about also asking friends, family, parents to help you achieve Step 4.  Rather than holiday, birthday, or wedding gifts, ask your friends to help you with saving for your downpayment.  You can get an FHA loan defined by first time homebuyer or if you have not owned a home within the last 3 years for as little as 3.5% downpayment.  In some emerging cities the Government has land opportunities called USDA loans where you can get 100% financing!  Also, as a first time home buyer, you can take 100% of the downpayment as a gift.  Ask your parents to prepay your next 10 yrs of Christmas or Hanukkah and get the ultimate gift of building wealth in real estate this season.  Maybe your parents are willing to loan you the money or give you a larger holiday gift in cash!  Like anything else, make your goals known and you might be surprised who will help you achieve getting into your first home.  There are also some crowdsourcing fundraising out there where friends and family can contribute to your dream of owning a home vs. buying you steak knives!  You can get a conventional loan for as little as 5% down.  One guideline for financial gifts to achieve your downpayment is that they need to be in your bank account at least 2 months prior to your mortgage funding.  There are strict guidelines around tracking your down payment funds, so talk to your realtor or mortgage lender, but crowdsourcing for your downpayment is a great way to accelerate your ability to move from renter to owner.

Step 5: Where would you like to live? - Based on your lifestyle or how far you want to live from your work, start thinking about areas where you want to live and drive the neighborhoods.  Do you want to live within a 15 minute commute to your office or within walking distance to restaurants, shops, night life?  Most people start with how much house they can afford and then start their search for the biggest home they can buy given their budget.  However, you can always update the home, but you can’t take the home out of the neighborhood.  So no matter how nice or big the house might be, if you don’t like the area or neighborhood or traffic, you can’t change that.  You can remodel the house, but you can’t improve the school district, shopping conveniences, traffic, etc around you.  Think about your lifestyle and what are the top 3 things you want in your ideal neighborhood?

Get Started on your Home Buying Process!

Once you’ve narrowed down where you’d like to live, there are a lot of online resources like Zillow and Trulia to give you an idea of home prices in your desired area.  It’s about this time you should contact a mortgage broker/lender and see what you can qualify for given your current financial situation, interest rates, etc.  You can also contact a local realtor and they can guide you through the process, including mortgage lenders, details about specific neighborhoods, schools, etc.  Once you have your mortgage lender and realtor, you have a team to help you move from Renter to Owner - - Congratulations!

Preparing to move from Owner > to > Investor:

Transitioning from Owner to Investor is a big financial milestone, but not as hard as you think with the right team in place (Realtor, Lenders, Attorney, Title).  You are approaching a new phase in your journey towards financial stability and building wealth and income through real estate.  Very few people achieve this financial milestone and you should be proud to taking this next step.  However, just like moving from Renter to Owner, most people ask me, “Where do I start and what’s the next step?”  I thought I’d share my experience in how I made the move from Owner to Investor in 2006 and never looked back.  It goes like this:

Step 1. Have a clear vision and purpose of why you want to be a successful real estate investor and what your business needs to do for you. Are you looking for short-term gains with flipping houses or long-term cash flow with passive income?  Do you want to do this full-time or part-time with property managers and others doing the day-to-day work for you? For my wife and I, our goal was to do this part-time while building long-term wealth via passive income over a 20 yr period.  Our goal is to acquire 200+ units generating over $20k+/month (minimum of $100/month positive cash flow per unit) in passive income for our retirement, but a business to also pass on to our children.  We are better than 40% along our path to financial freedom, but excited about beating our initial goal of $20k/month positive cash flow.  It’s not easy, but again, if you have the right team working with you (realtor, lender, attorney), jointly you will achieve your goals.

Step 2. Build a Great Team. Find great team members to help you pull off your overall vision and purpose. One person alone can only handle so much (and it limits your education).  You need a real estate attorney, a realtor, and accountant as a minimum to round out your initial team.  If you don’t want to be a property manager, but rather just want checks deposited in your account so you can focus on the next property acquisition, then hire a property manager.  Just build this property management expense into your business model which will run you between 6-10% of monthly gross rent.  It’s what I do.  My goal is to be a real estate investor, not property manager.  My current team is one that I’ve built over the past 10 yrs, but consists of a real estate attorney, a broker, 3 agents, 2 property managers, and a handyman.  I also have built relationships with 3 different mortgage lenders that I trust and they trust me.  Like any business, it comes down to building a great team that trusts one another and understands each other’s role on the team.

Step 3. Know your business model and focus. It's easy to get emotional about a deal, no matter how experienced you are.  If you know your numbers and stick to them, it takes the emotion out of the equation.  This can save your wallet, big-time.  For us, every property has to be cashflow positive from day 1.  No Exceptions!  Learn to day NO hear and walk away.  Or negotiate a deal that meets your positive cash flow from day 1 objective.  Meaning, I don’t purchase properties with negative monthly cash flow on a hope of significant future appreciation.  My business model is they have to be cash flow positive after all expenses are paid (mortgage, property mgmt, insurance, taxes, etc.) and I can put a plan together to achieve at least 25% annual return on my money after 1 yr.  If I can’t make a property perform at this level, then I move on to the next.  To be honest, it’s not that difficult to achieve this in real estate, one of the greatest leveraged investments around.  As an example, if you invest $20k on a $100k property (20% down), your tenant will pay down about $1300/yr in principle for you and if the home appreciates at the rate of inflation or 3% per year, that’s $3000 in appreciation + $1300 in principle reduction or $4300 gain in the first year.  This gives you just over 20% return on your initial $20k downpayment investment.  If you are cashflow positive and with depreciation tax deductions, you should be well over 25% annual return on your initial investment of $20k consistently year after year.  Compare this to 5-8% in the stock market.

Step 4. Be fanatical about due diligence. Try to obtain and confirm every bit of information you can about an investment — not just the physical property but the history and potential future of revenue, operating expenses, and capital costs.  Work with your team to get you the data and put together the numbers to meet your business model or not.  That’s why you have a team (realtor, mortgage broker, property manager, etc) to work for you, get you the data, so you can make the investment decision or not.

Step 5. Be a Closer Not a Poser. It only takes a moment to tarnish your reputation. You can’t fake it till you make it. If you can’t close, don’t make an offer.  If your plan is to be a long term investor in the area, you’re reputation is bigger than the deal.  Be open and realistic with your team.  Long-term trust is critical with not just your team, but also your reputation among other realtors, investors, contractors, etc..in the area.   If you burn the trust of a contractor, they talk to 10 other contractors, and your next fixer-upper/flip becomes impossible.

Take action! We all have fear when we do something that pushes us out of our comfort zone.  The only way around fear is to take action, learn, and educate yourself in the real world.   It will be uncomfortable at first, but like anything else, you will become used to it and will most likely get excited about it.  I know I did.  My wife and I love looking at properties, running the numbers, and envisioning what we can do to improve the property’s financial performance and how it might fit into our long-term vision of passive income and financial stability for our family.

3 Tips to Selling your Home this Winte

Although the real estate business tends to slow down in the fall, the season can still be an attractive time to put a home on the market. If you want to sell your house in the next few months, it can be done. When my wife and I sold our primary residence in 2004, it was a sellers market like today, but we listed it in October 2004 and missed the prime seller's market of February thru July before school started. We eventually sold it in February 2005, but I'm confident we could have sold it sooner had we thought about a few strategies to improve our home's buyer appeal.

Potential buyers—such as empty nesters or Millennials who aren’t worried about moving after the school year—will compete for fewer homes on the market and will likely want to seal a deal before the holiday season kicks into high gear.  Here are three tips to help make your home more attractive in autumn/winter, so you can sell your house before winter ends.

1. Clean Up

As many regions slowly shift from a sellers’ market to a moderate or buyers’ market, you’ll want to do everything you can to make your house look its best. Pay particular attention to eliminating clutter and safety hazards that can crop up with cooler weather:

• Make sure your yard, walkways and gutters are free of leaves and debris.
• Mow your lawn so it looks neat..
• If it is rainy, be sure you have a good doormat so visitors can wipe their feet and not traipse mud and water through the house.
• Wash decks and wipe down windows so they sparkle instead of appear streaked by rain.
• Vacuum and wash down the fireplace, especially if it hasn’t been used in months.
• If it’s still warm enough to use the patio, make sure the area is inviting and arranged with the views from indoors in mind.
• Above all, make sure your doorway and the rest of the house is clear from knick knacks, bicycles and toys that make your home appear cluttered.

2. Create Autumn Curb Appeal

If your house’s exterior looks drab, you may want to consider planting seasonal flowers and adding fresh mulch to your planter beds.  Potential buyers will make an instant judgment when they see your home, and you want to be sure it’s positive.  While you don’t want to go overboard with decorations that detract from the home itself, a few displays like a festive front-door wreath—and lighting so people can clearly see the path to your front door—can make your home feel fresh, even in the fall.

3. Keep the House Cozy

Entering a cold house could leave an unfavorable impression. So warm up your home with a fresh coat of paint and set the thermostat at a comfortable temperature.  Adding a programmable thermostat, such as a NEST, will not only save you money, but give your home a more modern technology feel to buyers.  Another way to warm up a home is with light, especially as days get shorter leading into winter. Be sure to open blinds and curtains so plenty of light illuminates the home’s interior.  A few embellishments like red, orange or golden yellow pillows can breathe new life into dull sofa—or a fall centerpiece can highlight a certain area of the home.  While you don’t want your home to look like the latest department store display, well-chosen embellishments that give potential buyers the impression you’ve paid attention to the fine details and taken care of any problems with the home will help you put your best face forward.  

Fall/Winter is always a little more challenging for sellers, but with these few tips and a little extra effort, you should get a better return on your real estate investment and home sale. Talk to your realtor about tips in your specific neighborhood and market to maximize your return.

Happy Selling!

My Top 5 Insights for Real Estate Investing

I call it the R.O.I. Journey to Financial Freedom.   I’ve seen hundreds of people like my wife and I move from Renter >> Owner >> Investor to achieve financial freedom.  My wife and I bought our first home in 1994 and moved from Renter to Owner.  In 2005, we moved from Owner to Investor and we’ve never looked back.  We now have over 40 units in our portfolio with a goal of reaching 200 in the next 5 yrs.  Our purpose is to build long-term wealth and passive income for our two children.  Our goal is financial freedom for ourselves while building long-term wealth for our kids and their kids.  Our first LLC is named after our kids initials, and oh yeah, our dog KC :).   With that said, I wanted to share our top 5 learnings with you about moving along the R.O.I. journey from Owner >> Investor and achieving financial freedom.

1. Have a clear vision and purpose of why you want to be a successful real estate investor, and what your business needs to do for you. Are you looking for short-term gains with flipping houses or long-term cash flow with passive income?  Do you want to do this full-time or part-time with property managers and others doing the day-to-day work for you? For my wife and I, our goal was to do this part-time while building long-term wealth via passive income over a 20 yr period.

2. Build a Great Team. Find great team members to help you pull off your overall vision and purpose. One person alone can only handle so much (and it limits your education).  You need a real estate attorney, a realtor, and accountant as a minimum to round out your initial team.  If you don’t want to be a property manager, but rather just want checks deposited in your account so you can focus on the next property acquisition, then hire a property manager.  Just build this property management expense into your business model which will run you between 6-10% of monthly gross rent.  It’s what I do.  My goal is to be a real estate investor, not property manager.  My current team is one that I’ve built over the past 10 yrs, but consists of a real estate attorney, a broker, 3 agents, 2 property managers, and a handyman.  I also have built relationships with 3 different mortgage lenders that I trust and they trust me.  Like any business, it comes down to building a great team that trusts one another and understands each other’s role on the team.

3. Know your business model and focus. It's easy to get emotional about a deal, no matter how experienced you are.  If you know your numbers and stick to them, it takes the emotion out of the equation.  This can save your wallet, big-time.  For us, every property has to be cashflow positive from day 1.  Meaning, I don’t purchase properties with negative monthly cash flow on a hope of significant future appreciation.  My business model is they have to be cash flow positive after all expenses are paid (mortgage, property mgmt, insurance, taxes, etc.) and I can put a plan together to achieve at least 25% annual return on my money after 1 yr.  If I can’t make a property perform at this level, then I move on to the next.  To be honest, it’s not that difficult to achieve this in real estate, one of the greatest leveraged investments around.  As an example, if you invest $20k on a $100k property (20% down), your tenant will pay down about $1300/yr in principle for you and if the home appreciates at the rate of inflation or 3% per year, that’s $3000 in appreciation + $1300 in principle reduction or $4300 gain in the first year.  This gives you just over 20% return on your initial $20k downpayment investment.  If you are cashflow positive and with depreciation tax deductions, you should be well over 25% annual return on your initial investment of $20k consistently year after year.  Compare this to 8-10% in the stock market.

4. Be fanatical about due diligence. Try to obtain and confirm every bit of information you can about an investment — not just the physical property but the history and potential future of revenue, operating expenses, and capital costs.  Work with your team to get you the data and put together the numbers to meet your business model or not.  That’s why you have a team (realtor, mortgage broker, property manager, etc) to work for you, get you the data, so you can make the investment decision or not.

5. Be a Closer Not a Poser. It only takes a moment to tarnish your reputation. You can’t fake it till you make it. If you can’t close, don’t make an offer.  If your plan is to be a long term investor in the area, you’re reputation is bigger than the deal.  Be open and realistic with your team.  Long-term trust is critical with not just your team, but also your reputation among other realtors, investors, contractors, etc..in the area.   If you burn the trust of a contractor, they talk to 10 other contractors, and your next fixer-upper/flip becomes impossible.

Take action. We all have fear when we do something that pushes us out of our comfort zone.  The only way around fear is to take action, learn, and educate yourself in the real world.   It will be uncomfortable at first, but like anything else, you will become used to it and will most likely get excited about it.  I know I did.  My wife and I love looking at properties, running the numbers, and envisioning what we can do to improve the property’s financial performance and how it might fit into our long-term vision of passive income and financial freedom for our family.

Happy Investing!

5 Steps to Start Building Wealth in Real Estate

When my wife and I bought our first investment property over 10 yrs ago, I regularly saw my friends holding back from investing in real estate. Whether they had little money or didn’t know where to start, the result was the same – they were not actively trying to grow their wealth. Most people I spoke to did not invest because they felt overwhelmed and didn’t know where to start.  They held back telling themselves they would start someday. It does not have to be that way. In fact, investing in real estate can be relatively simple if you have the right mindset, focus, and team around you. This mindset, when added to a long-term view of building your wealth, will set you up for success.

Start Investing by Paying Yourself First

It’s not really a shocker, but you need some money to invest in real estate just like any other investment such as, the stock market, gold, start-up ventures, etc. This can be a challenge if you’re a recent graduate or are paying off debt, but you can do it. Examine your budget for opportunities for savings and put a 20/30/50 plan together where you invest 20% of your take home pay in yourself first!  This could mean cutting back on $5/day on Starbucks to pay yourself $150/month first, or finding ways to make extra money. Determine an amount you want to start with and set a goal to reach it in a specific time.  The key is to take 20% of your take home pay and invest in your financial freedom before buying the new car or TV or vacation, etc.

Do Your Homework

There are thousands of markets and options to consider when it comes to investing in real estate. This can overwhelm you if you’re new to investing. Don’t let that hold you back. Just as there are many investment options, so there are resources to help you start investing in real estate.  A simple Google search for real estate investing will produce many online resources.  Like anything in life, you first have to invest in educating yourself and that starts by doing your homework.

Pick Somewhere to Invest

Now that you have some money saved and a knowledge base to work with, you need somewhere to invest. You should consider two options – short-term real estate investments in markets with high appreciation that you might only hold for a few months to a year or long-term real estate investments with the strategy of monthly cash flow and appreciation.   Flipping houses for short-term gains makes sense if you have a skillset or value to reduce your financial risk and maximize your returns, such as you’re a contractor and can do 80%+ of the remodel work yourself or possibly you’re a realtor and can save 3-6% on the transaction fees.  In high value markets like SF Bay Area or NYC, 3% savings on a $1M property is $30k on each side or $60k on the buy/sell flip transaction; that’s not bad.  For long-term cash flow and appreciation over time, it comes down to focusing on a market you believe in and can build a team in that market to support you long-term to build monthly passive income.

Come Up With A Plan

When you invest, it’s best done with a plan. Just like a budget can help you make decisions on how to spend your money, an investment plan can help direct how you will invest. This will require some thinking on your part to determine what your goals are for the money. Below are some of the common goals new investors have:

• Starting to save for retirement
• Be able to buy an investment house in the next 24 months
• Building $10k/month passive income over the next 10 yrs

There are many more motivations to invest, but you get the point. Determine what your goal is and formulate a plan to meet that goal. This will help separate emotions from your investment decisions and base your action on quantifiable goals.

Don’t Be A Stranger

Once you start investing you might think you can set it and forget it. There is a fine line between thinking long-term and simply forgetting your investments. The former will serve you much better over your investing years.  Think about your investments as running a business that sets you up for financial freedom and building wealth over time.  The exact interval will depend on your goals and needs. That might mean once a month, once a quarter or twice a year you check-in on your property manager and financial statements, but I would encourage you to analyze your situation regularly and be more active in building your wealth. Whatever it is, make sure to do it to stay on top of how your investments are doing.  If you do that and ignore the white noise of the media that tells you to do this thing or that you’ll set yourself up for greater long-term success.  Investing in real estate can seem overwhelming, but it doesn’t have to be. With a clear focus, the correct mindset, and a team around you focused on building your wealth, you’ll begin to grow real wealth over time one step at a time.

5 Habits to Financial Freedom

It was January 2014 and my doctor scolded me for high cholesterol (250), being 20 pounds overweight, and threatened to put me on cholesterol medicine.  I knew I needed to change my lifestyle habits.  I cut back on red meat and sweets, got a personal trainer, started taking omega-3 daily, and began working out 3-4 days per week.  The first 3-4 months I didn’t feel like I was making great gains, but slowly I was losing one pound at a time and changing my metabolism.  When I went back a year later for my annual check-up, my cholesterol was down 54 points, I lost 15 pounds, and my doctor was surprised she didn’t have to put me on cholesterol medicine.  If you’ve ever tried to start a workout routine, you’re familiar with the inner struggle that occurs when you’re looking back and forth between your tennis shoes and the couch. You start to wonder how much one little workout really matters in the long run.  It isn’t until exercising becomes a habit that you are able to silence the persistent voice that swears your time would be better spent zoned out in front of the TV or computer vs. the gym and salad bowl.  Today, I have it on my calendar to workout every Monday, Wednesday, Thursday, and Saturday.  It’s a habit now, but it wasn’t easy. Financial freedom is built from the same foundation: positive habits molded from persistence chipping away one day at a time.  Here are five habits to start implementing today.

Habit 1: Performing Routine Check-Ups

Monthly automatic investing is helpful, but you should never fully remove yourself from the money management process.  Spending habits change, income fluctuates and bills have the tendency to increase without notice, so it’s important to get in the routine of doing a monthly money check-up. Compare your actual spending to your budgeted spending, assess and pay in-coming bills, ensure that all accounts are in good standing and you aren’t being charged unnecessary fees. If you notice that something isn’t working with your overall plan, now is the time to make the necessary changes.  Without this money habit, you can’t truly be in the driver’s seat when it comes to your finances.  With today’s automatic payment/billing with service providers linked directly to your bank account, it’s easy to overlook.  Don’t get lazy on the couch, stay focused on your tennis shoes to ensure you’re not overpaying, and your monthly expenses are not increasing per your budget.

Habit 2: Spending Less Than You Earn

It’s a simple equation: if you have more money going out each month than coming in, you will end up in the red. Ending up in the red for one month can quickly turn into a seemingly insurmountable pile of debt and no designated savings for the future.  If you’re already in this boat, there are two solutions: spend less or make more.  Getting into the habit of spending less than you earn, banking influxes of cash from things like bonuses and pay increases, and avoiding the ever-present temptation of lifestyle inflation is the cornerstone of creating a financial cushion you can count on now and into the future.  One service that I use to keep track of my net worth and monthly spending vs. income is Personal Capital.  There are other online services out there such as Mint, but the important piece is understanding your monthly income vs. spend.

Habit 3: Paying Yourself First
Just like your personal health, making positive decisions for your money when faced with the temptations of everyday life comes down to two things — willpower and creating systems to make up for the days when your willpower just doesn’t exist.  One such system is paying yourself first, meaning you deposit money into your savings account (or investment accounts) before anything else. It essentially makes saving an expense just like your electric bill or mortgage payment – before it can be haphazardly allocated to random and unnecessary purchases.  Once this habit is established, you’ll adapt to your new spending limit, and your savings will steadily increase without any additional sweat or hard work on your part.  At Real Estate Concierges, we call this our 20/30/50 financial plan where the 20 is paying yourself 20% of your take home pay first, before any other bills are paid.  Invest in yourself first!

Habit 4: Avoiding Buyer’s Remorse

Considering the vast number of people who struggle under the weight of consumer debt, overspending is a significant issue in the United States. Much of this spending is habit-based — not need-based.  Get in the habit of asking yourself these questions:

1) Does this purchase have a positive purpose?

2) What will I need to forgo in order to make this purchase?

3) Will I save more by purchasing this item elsewhere or at a later time?

Often times, simply stopping to think before whipping out your credit card will be enough to realize how unnecessary so many purchases actually are.

Habit 5: Creating and Sticking to a Plan to Eliminate Your Debt

If you’re simply paying the minimum monthly amount on your debt, you might think you’re following a solid repayment plan set forth by your creditor. The truth is, it is in your creditor’s best interest to keep you in debt for as long as possible – and collect massive amounts of interest in the process.  Instead, you should be the one in charge of determining how much you can pay monthly (above and beyond the minimum due) and when your official date of debt freedom will be. One strategy that I like is to start with your lowest balance and apply the maximum amount per your budget to pay it off.  So if your budget is only $50/month above all your monthly minimum debt payments, apply that $50 to your lowest credit card balance to pay it off first.  Then apply that $50+min payment of the credit card you just paid off to the next lowest debt balance that you have (credit card, car loan, etc.).  It’s gratifying to eliminate each debt/loan and move on to paying off the next.  Get in the habit of regularly checking your repayment progress, revisiting and recalculating your plan, and – most of all – making sure you are the one fully in charge of your debt repayment journey.

Just like your personal fitness plan, chip away one day at a time as results don’t happen overnight. It’s the daily habits that will transcend across everything you put your mind to; health, wealth, and achieving financial freedom.  Here’s to your health and future wealth!

Here are 7 ways owning a home is a smart money move.

I never wanted to be a ‘renter’, but rather a homeowner and landlord.  I graduated college in June 1993 and purchased my first home in January 1994.  Since January 1994, I’ve always been a homeowner and landlord building wealth through owning real estate for the past 21 years.  I always wanted a long-term relationship with a mortgage broker giving me money vs. a landlord taking my money.  My goal was never to make someone else wealthy by lining their pockets with my monthly rent check that pays their debt while their home appreciates in value over time.  The financial benefits of homeownership are evident year-round. Let’s examine how homeownership makes “cents” — from tax benefits to financial stability.

1. Homeownership builds wealth over time

We were taught growing up that owning a home is a financially savvy move. Our parents and grandparents thought so as well. But this past decade of real estate turbulence has shaken everyone’s confidence in homeownership. That is why it’s so important that we discuss this again now that we’re in a “new” market.  Homeownership can be a very savvy financial move — but only if people buy homes they can actually afford.

2. You build equity every month

Your equity in your home is the amount of money you can sell it for minus what you still owe. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity. That is especially true now with the elimination of risky mortgages like negative amortized and interest-only loans — thanks to the new “Qualified Mortgage” rules. The way mortgages work is that the principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last payment. Thus, as the months and years go by, your equity grows!

3. You reap mortgage tax deduction benefits

Mortgage deduction: The tax code allows homeowners to deduct the mortgage interest from their tax obligations. This can be a huge deduction, since interest payments are often the largest component of your mortgage payment in the early years of owning a home.

Some closing cost deductions: The first year you buy your home, you are able to claim the points (also called origination fees) on your loan, no matter whether they are paid by you or the seller. Since origination fees of 1% or more are common, the savings are considerable.

Property tax is deductible: Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.

4. Tax deductions on home equity lines

In addition to your mortgage interest, you can deduct interest paid on a home equity loan (or line of credit). You can transfer your credit card debts to your home equity loan, pay a lower interest rate, and get a deduction on the interest as well.

5. Capital gains exclusion

If you buy a home to live in as your primary residence for more than two years, then you qualify for this deduction. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. It may sound ridiculous to say that your house actually appreciated after these past several years of falling house prices. However, if you purchased your home prior to 2003, chances are, it has appreciated in value and this tax benefit will come in very handy.

6. A mortgage is like a forced savings plan

Paying your mortgage every month and reducing the principal is like a forced savings plan. Each month you are building up more valuable equity in your home. In a sense, you are being forced to save — and that’s a good thing.

7. Long term, buying is cheaper than renting

In the first few years, it may be cheaper to rent. But as the interest portion of your mortgage payment decreases, the interest will eventually be lower than the rent you would have been paying. But more importantly, you’re not throwing away all that money on rent. You have to live someplace, so instead of paying off your landlord’s home or building, pay off your own!

I’ve always looked at a home as an investment, not a house I would live in forever.  Even if I move in three to five years, can I rent the house to cover the mortgage and create a positive cash flow investment for my future wealth building goals?  Real Estate is a long-term investment growth strategy, so approach it as such vs. just a home purchase.

10 Reasons to Make Repairs before You List.

If you’re planning to list your home for sale, it’s time to tackle all the necessary repairs. These repairs can save you money in the long run — money spent on improvements now will be far less than the cost of that first price reduction if your house sits on the market. When my wife and I sold our second home in 2005, it was a seller’s market, but we knew adding fresh mulch in the flower beds for curb appeal, repairing a few boards in the front of the house, and repairing a few window latches would reduce the items in the inspection and increase the buyer appeal for our home.

Even if your home doesn’t linger on the market, you run the risk of a buyer asking for concessions and credits for items you didn’t fix, and the quotes from experts doing the work will almost certainly be higher than your own out-of-pocket cost.

If you still need convincing, here are 10 reasons to make repairs before you put your house on the market and get top dollar.

1. You’ll have to fix problems anyway — or make concessions

Your buyers are going to do an inspection, and the inspector will be able to identify all the issues and suggest needed repairs. There’s no avoiding it. You will have to fix any problems, credit money back to the buyer, or drop your price to compensate.

2. It will save you money

Many common repairs are easy to solve, inexpensive, and can be tackled in a weekend. They’re likely to be the things that were already on your list of weekend projects for the past year, and if they bother you, they’ll also bother a buyer. Leaky faucets, ripped window screens, ceiling stains, cracks in the plaster — they may seem like minor issues, but when you’ve got a whole house full of problems like these, they add up to one big seller headache.

3. Your home — not its flaws — will be the focus

Eliminating distracting drawbacks will allow buyers to have a positive experience as they tour your home. That means open-house visitors will be able to focus on your home’s positive, not negative, features.

4. A well-maintained home gets better offers

Getting your home completely prepped and ready will increase its perceived value because you’re showing buyers that your property is well maintained.

5. You can hold firm on your price

You won’t have to do a price reduction to reflect the estimated (and often overinflated) cost of repairs!

6. Rush jobs cost more, every time

Last-minute repairs done on a tight timeline are almost always more costly since you don’t have time to shop around for estimates. Plus, your time crunch begs for tradespeople to charge higher rush fees for squeezing the work into their schedule.

7. Actual costs and estimates don’t always match

Your actual cost to fix an item will almost always be less than a buyer’s estimate after their inspection — but since you won’t necessarily have time to fix everything before closing, you risk losing the sale if you don’t agree to the estimate.

8. You won’t risk losing the deal

You’ll avoid credits back to the buyer for problems identified during the inspection and haggling that drags on and on over minor issues, possibly costing you the deal. (You’d be surprised how ugly things can get when you’re down to the wire negotiating the added cost of repairing the cracks in the chimney.)

9. You’ll get more potential buyers in the door

Your Real Estate Concierge will love showing off an impeccable home, and buyer’s agents will be dying to get their clients in the front door. That brings in more potential buyers — which equates to more chances of finding the right one willing to pay your sale price.

10. You’ll sell your home faster

And for a higher price. Ka-ching.  The goal is to get more than one buyer interested in your home to create a bidding war and maximize your return on your home sale.