1.    Don’t Select Your Apartment based on a Sample Suite

Don’t make your decision based on the sample suite your renter shows. Ask them to take you to the actual apartment where you will eventually stay. If they deny, check for other options.

2.    Check With Police

There are places where robbery is common. You might not know it, if you are new to the locality. Hence, it’s advisable to check with the police department if the area is safe to live in. Besides, try to select an area that has proper security. I am sure you don’t want your car to be stolen from apartment’s parking area every few months.

3.    Talk to Local Residents

After you have inspected the area with your agent, go back to the locality in the evening, and talk to the local residents. Ask them if there’s something wrong with the area? Have they spotted drug dealers wandering on the roads at night? Is racism common here? Tell them you are planning to move in, and are sincerely bothered about the atmosphere here.

4.    Google Your Apartment

Google your apartment and address to know more about the area. I am sure you will discover something interesting about the place. You will at least find few reviews, which may help you decide whether or not it’s safe to live in.

5.    Pest Control

You may look at the spacious bedroom and remarkable living room, and wonder why the rent is so low. Within few days, however, you will know why. The place might be full of insects.

You don’t want to spend next 5 years of your life spraying and fighting with cockroaches. And trust me it’s very difficult to knock them all down. You kill fifty today, another hundred will be back tomorrow. Hence, make sure the apartment you select has some facility to fight pests.

6.    Check Google News

If something had happened in you building in the past, it must be recorded in Google news archives. If nothing shows up, there hasn’t any significant incident taken place in your locality.

If you don’t find anything related to your locality, you can consider performing an advanced search, and checking out the archives section. Don’t be surprised if you find something had happened in the past. Things always keep happening at a place where many people live together. Yu can chuck the area, if there is a ton of horrible news pertaining to your area.

7.    Staff of the Building

When you visit the place with the agent or the renter, check how the building staff is. You can take a pass if you get any signs of being inconsiderate, snarky, or rude. If they look uncooperative or mean, don’t even bother looking further. If this is the treatment you get before even renting the place, imagine what it would be like when your tap tarts leaking or you have problem with pests. Don’t believe if the agent gives any excuses. No one really like dealing with rude people. Period.

8.    Research About the Property Management Company

You can search on Google: ‘X Property Management Company review’, and check the results. Large companies would have websites and other links. So it would cover the initial few pages of your search results. You will have to filter it out, and explore more about the company. This will also help you know customer service details.

This list may seem to be a bit long and tedious. But if you really want to make sure you live in a nice locality, spending time on these things would be worthy. You may have to compromise on few things if you are on a budget. There would certainly be a difference between amenities provided by $1200 rent house and $600 one.

Most Americans are depended on mortgage to buy a house. Availing this loan, however, becomes quite difficult if the credit score is low. The only option they are left with is approaching bad credit mortgage lenders. These lenders, due to the increased risk they bear, offer loans at higher rates.

Within a day, however, you can find a log list of lenders offering bad credit mortgage. Most financial institutions offer these loans along with other conventional loans. There are also companies that offer loan only to people with bad credit. Most of these lenders have an online presence. You can create a comprehensive list and call-up each of them to know the particulars of the loan.

Another way to avail a sub-prime loan is to hire a mortgage broker. These brokers share good relationship with most lenders, which can help you to avail mortgage quickly. They would, however, provide this service at a cost.

If your credit score is below 650, you will have to avail such loan. In order to reduce high interest rate charged by bad credit mortgage lenders, you can either opt to have reduced amount or pay bigger amount as down payment initially.

Since your credibility would still be a concern for lenders, they might as you to open an escrow account, and ask you to deposit insurance and related taxes each month into the account.

However, before you shortlist any mortgage lender, make sure you have explored enough information about the lender. There would be many financial institutions waiting to exploit your current financial situation. Hence, it’s quite imperative to conduct a comprehensive research before you deal with any of them. Make sure the interest rates and charges are at par with other lenders.

Having a home means having a secured place with money invested in to buy it. For this investment we search for the best deal, a place with best views and comforts at a reasonable price. Even if the price is high, we have banks that provide mortgage at a very low down payment. And we can easily avail one. His recession seems to be a blessing in disguise for all of us homebuyers.

However, before you sprint and clutch your favorite corner of the house that you are about to purchase, are you sure you are not wasting your funds? Maybe you are not. Then, at least you can ensure that you are not finalizing the deal based on some futile myths.

Here are the common ones that we keep reciting:

1. It’s a long-term investment

   If that’s what you think, then probably you haven’t glimpsed through the statistics of benefits of people who similarly misinterpreted their house as a long term investment. People who bought homes from the year of 1975 to 2008 have definitely seen a rise in the housing prices, but at a rate quite slower than most of the stocks or bonds. To be precise, the housing rates increased just around 1% per year whereas the benefit on funds invested on Treasury bills was over 2% per year.

   If you are among those people who are interested in ‘high risk, high return’ investment, you would not like to hear that Moody’s corporate bond provided profit of over 6% per year and S&P 500 stock increased by 8% each year from 1975 to 2008. The pleasure of living in one’s own home is unmatched. However, it cannot be named as ‘long tern investment.’ It’s a myth.

   If you are really searching for an investment, the stocks and bonds are still at a lower price than their worth. Buy them instead of a house.

2. The newly introduced First Time Homebuyer Tax Credit is helpful

   $8000 tax credit that you are eligible for as a new homebuyer may not necessarily help you to save $8000 or even $1. The federal government had released some pressure off new homebuyers by easing the regulations. So there was a steep hike in demand for new houses. Then Mr. President introduced our favorite ‘First time Home Buyer Tax Credit’ due to which people who never thought of buying a home started looking for one. This compelled the prices to rise in the areas where demand exceeded supply like the metro of Washington. So, this new tax credit has caused prices to reach at such a high level that wouldn’t have been so high if the program wouldn’t have been introduced. See what Mr. President have done to you.

   In order to save $8000, you pay $20,000 more than the real cost of the house. In short, this program seems to be helping ‘home sellers’ instead of ‘home buyers.’

3. You become a better and responsible citizen after you buy your own house

   Now that’s what I call a real myth. People believe that owing a home involves investing scores of funds which automatically makes you a responsible citizen. Expect financially, you also involve in taking proper care of you house and neighbors. Does it still sound logical? There is no awe-inspiring proof that confirms this kind of bogus fact. Instead I have better arguments and proofs that confirm the contradiction. The rate of house ownership in the countries of Denmark and Germany is lower than 40%. This means it is 68% lower than us. But I haven’t found many German citizens with psychological disorder or socially-mad behavior in today’s news paper.

   Ok. On the other end the ownership rate is 80% in Spain, yet there no TV or radio shows mentioning than Spaniards are better than Americans.

   People also argue that they become independent after owing a house. However, it happens even when you move in a rented house. The sense of independence depends on your lifestyle and decisions and not house ownership.

4. It’s quite affordable to purchase a house when down-payments are low

   It doesn’t mean you have to buy a house if the Federal Housing Administration is offering mortgages with just 3.5% down payment without considering the consequences you may face later. Huh? Consequences? Yes. Let me explain this to you with the help of an example. Say the house is worth $100. You pay $3.5 as down payment and owe the remaining mortgage debt of $96.5. The more debt you carry home, the more are chances that even a small price fall will make you owe more than the house is actually worth. This situation of a consumer is called as ‘underwater’, also ‘upside down.’ In the above instance, a fall of just 4% in the price can lead to ‘underwater.’

   A similar mindset by Bear Sterns and Lehman Brothers that made use of debt to equity ratio helped them to achieve nothing but collapse effortlessly.

   You feel it’s better not to repay the mortgage rather than owing an overpriced house with lesser current market value. So, along with down payment, you also lose all the money spent on renovation of this new house. Not to mention the credit score that will be reduced by 25-30%.

   However, if you decide not to pay the loan, have you given a thought to your next residing location? I asked this question because until you pay off the existing mortgage, you won’t get a new one. A recent research says that people with good credit score relocate more than people with bad one. That’s because the non-payers of mortgage are helplessly stuck at one place and cannot avail other loan. The recent sub-prime crises will generate many such stuck-homebuyers.

5. It’s better to own a home rather than pay expensive rent

   Maybe you are saved from paying rent to your landlord, after you own a home. But you still have to pay an amount which can be higher than the rent. You have to pay the maintenance cost along with monthly mortgage payment.

   You also know that most of the point I mentioned above are just myths, still you want to own a home because it give you a sense of security and pleasure. However, do not expect anything more than the illusionary security and pleasure because it wouldn’t give you the profit that you are searching for.

   You need to face the fact that the only reason you want a home is because you want to fulfill your emotional desires and not make money, because it can’t make any.

Here are six signs that will let you know if the value of your house will increase.

The Employment Percentage

You might wonder what the percentage of employment in a particular state has got to do with worth of property in that area. As you are aware, recession has rendered many people jobless. Without proper income, these people can take loan to buy houses. Therefore with the decrease in employment percentage, the demand for properties decreases as they become unaffordable. If the necessity for employment rises, companies will want to establish offices in different areas and there is a consequent increase in the demand for properties. You can always take the employment trends and growth patterns reports from the local labor statistics offices and see for yourself if the trends are taking an upward or a downward route. An upward trend will show that the value of your property will increase in the near future.

Income Status

You can expect your property to rise in value if it is in an area where the residents are financially sound.  An area where people are struggling with finances it is improbable that you’ll get any buyers. You can find out the income status of your area from websites like Bureau of Economic Analysis and the online employment status as given by the state employment offices.

Foreclosure Rates

Properties that are in an area where foreclosures have been very frequent this economically weak period will not see any rise in their values in the near future. Foreclosures in fact, lower the values of properties.

Availability of Resources

If your house is in an area where more than 2 % homes are on sale, forget to get a good price for it. If there are so many homes on sale, how can you expect your house to fetch a special price for you.  Isn’t there too much competition for that? Websites, such as Trulia, will give you an idea of the number of properties that are on sale in an area of interest so that you can assess from it, the value of your property in the future.

Smaller gaps in the listed and actual selling prices indicate better value for your property. If the selling prices are very low, then you cannot expect your property to acquire great value later.

Follow these indicators to assess the worth of your property in the present and future.

• Getting Turned On By Flashy Features: There was this bungalow in my neighborhood that was once occupied by a celebrity. The present owner put up the sale price as $14 million just because it had some personal furniture of the famous figure. A fan of that celeb would generally fall for the house, but I wouldn’t. Is it worth spending such a huge amount of money just for some vicarious celebrity feelings?  All my celebrity euphoria will melt down once I start paying up the loan that I take for purchasing the property.
• Don’t Fall For Facilities That Are No Use To You: Are you impressed by that huge swimming pool in the bungalow lawn that you’ve recently seen for buying ? Do you really need that swimming pool? Don’t opt for that house if you really are not used to swimming frequently. Ultimately you’ll only end up paying huge amounts of money for a feature that you don’t use at all. Similarly any garden inclusions like play features for children don’t make sense to buy if you don’t use them. They only add to the cost of the property you buy.
• Keep Money For Repair Work: If you analyze the reason for the large number of foreclosures that have happened recently, you’ll find that people have taken mortgage loans to their maximum capacity and were finding paying them back very difficult. Also their loans did not allow them to keep aside any money for repair work. Now, repair work is inevitable as you might encounter a problem with your house any time. If you don’t save up money for that you’ll be in deep trouble. Also you can get your house renovated later on and that will increase the value of your asset.
• Don’t Overestimate Tax Savings: You might think that paying interest on mortgage loans is going to give you tax benefits. That is true, but it is not all the beneficial. You can avail tax benefits in other ways too. Suppose you have a big family and your income is less than $100,000 annually, even then you get huge tax benefits. There’s no necessity for you to buy a property because of that.
• Find Out About The Neighbors: Before you finalize the deal with the landlord you should find out as much as you can about the house and its surrounds. You should check different parts of the house for any defects. Find out if it is well connected with the rest of the city and if it is located in a self sufficient area so that you don’t have to run to the city center for even the smallest household necessities. Something that might be difficult for you to assess might be the nature of the neighborhood. You should put efforts in knowing the kind of neighbors you have and the kind of activities they do. Even though we might not interact much with neighbors we simply cannot live in isolation.

But when you rent out your home, you might get into tax hassles which will figure out when you want to sell it. It’ll be better for you to know all these tax nuances when you rent out your apartment so that you are better prepared to handle it.

To begin with if you sell your property if you sell your property for less than the tax basis, you cannot simply claim tax losses when you sell your property. In case you are not yet aware of how a tax basis is calculated, it is the original cost of your property plus any renovations that you make to it. It does not include the money that you spend on repairing or maintaining the house. It also does not include any deductions that need to be made owing to depreciation of land value. You can claim tax loss only if your property has been utilized for business purposes and has not been used for any personal purpose.

You might think that by putting out your home on rent and selling it for a lower amount than the tax basis you can deduct the total loss. But this is not true. There is a tax rule that actually prevents such a facility. According to the rule when you hire out the house in which you stay, your tax basis for calculating any loss depends upon the fair market value of your asset on the date on which it is converted. Or else, it also depends on the normal conversion value according to the normal rule for tax conversion. Eventually the net effect of this is that if your property has undergone a decline in date before the conversion, the value at the time of sale will not be affected by the previous decline in value. But if the value is lessened after the conversion, a tax loss will be effective in during the final sales of your property. As depreciation decreases the tax basis due to loss purposes, it becomes tough to experience a loss.

If you are selling your property under recovered economic conditions, i.e. there are no losses. And you are selling it in the usual way, i.e. you are selling it at a profit the normal rules for calculating your tax basis are applied which includes your purchase price and the money that you’ve spent on improvements minus the money that you’ve spent on depreciation that includes the duration in which the property has been rented out.

Illegal Occupancy of Foreclosed Properties

F you’ve been following real estate news of late, you might be aware of the Wells Fargo scam, where the Vice president of the company, Cheronda Guyton occupied a foreclosed property which consequently was not put up on sale. This infuriated the local real estate agents. You can read about the report on DS News. Well, the reason for the bank to have done this could have been that there were too many properties on sale in the market already which had to be cleared and disuse might have damaged the condition of the mansion.

Eviction of Innocent Tenants Due To Foreclosures

Eviction of people for no fault of theirs is very inhuman. But the property foreclosure mission does not seem to have moved the hearts of the banks and mortgage companies doing it. During the recent recession, when many properties went into foreclosure, the homeowners would surrender the properties to banks or to other parties. As a result, the tenants would have to vacate the houses in just five days or get evicted. Many tenants are surprised and shocked as this happens just a few days after the owner collects the rentals from them. Then how are they to blame?

You might have already read the heart rendering story of Aida, an elderly woman who was evicted for no fault of hers by Dan Mendoza, a deputy of the Orange County on the mission of eviction as formulated by the law makers. You can read the entire report on Reuters. She spoke only Spanish was worried about her grandchildren’s belongings and when the officials arrived one elderly man committed suicide upstairs! This is so pathetic than our hearts can hardly take it. The government should be more humanistic in its laws.

Mysterious Suicide Due to Foreclosure

You might have heard the story of Carlene Balderrema, a 53 year old woman, who seems to have shot herself dead when she came to know that her property would be foreclosed. She seems to have sent letters to the officials warning them she’d commit suicide if they took her property. Her husband John seems to be unaware of the foreclosure notices as it seems Carlene fielded the bank notices from him and tore them up. Carlene wrote to her children to pay up the mortgage with the insurance that they’d get on her ending her life. What the officials probing into the case are unable to understand is that when John’s yearly income was $ 95,000 why had it become impossible for them to pay up their loan on a $ 230,000 property?

These are some the heart rendering stories that foreclosures have brought. Widespread mental depression and self harmful activities were on the rise for inhuman treatment of the property occupants. Those who sought payment extensions were not given any. There were erred eviction cases, as exemplified by the Wall Street Journal report of the mistakenly evicted house of Anna Ramirez. The house was given back to her after seizing it. But according to Anna her belongings were damaged.

On the whole the treatment given was inhuman to innocent home occupants. They were hit by recession and this was no personal fault of theirs. The government seems to have brought in a lot of welfare schemes for the recession-hit people. Then why has it not taken action in the case of real estate? Or was it that it tried and was unsuccessful?