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landlord

Wednesday’s need-to-know money news

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interest-rates-300x225Today’s top story: When to expect a fed rate hike. Also in the news: The hazards of long-distance home shopping, what being a landlord means for your taxes, and why back-to-school shopping doesn’t have to be a budget-buster.

Fed Rate Hike Likely Later Rather Than Sooner, Experts Say
When you can expect a jump.

The Hazards of a Long-Distance Home Purchase
Proceed with caution.

Want to be a landlord? Here’s what it means for your taxes
It’s a whole new ballgame.

Back-to-school shopping doesn’t have to be a budget buster
It’s already that time of the year again.

Thursday’s need-to-know money news

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009fbf535e76a5f4c22dfae6c5168d0bToday’s top story: How to declare your financial independence. Also in the news: What you need to know before becoming a landlord, how the financial crisis in Greece could effect your portfolio, and a little known Texas law that could save you from medical debt.

3 Ways to Declare Your Financial Independence This July 4th
Let financial freedom ring!

Things to Know Before Becoming a Landlord
Proceed with caution.

Does Greece Matter? The Bigger Picture For You And Your Portfolio
The ripple effect.

The Little-Known Texas Law that Can Save You From Medical Debt
Even if you don’t live in the Lone Star state.

Lack of savings makes becoming a landlord risky

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Dear Liz: My husband and I, both 44, own and live in one side of a duplex. The owners of the other side are moving next year and have offered to sell it to us. We don’t have enough in savings to cover a 20% down payment for a traditional mortgage, but our neighbors offered to do owner financing. Rentals are hot commodities in our area, and we’ve been told by real estate agents that they could get the place rented within a week for more than we’d make in mortgage payments. This would be an amazing opportunity for us, but if for some reason the property went vacant we couldn’t cover the payment unless we make some major changes to our budget, such as selling our RV ($325 a month) or temporarily suspending contributions to our 457 deferred compensation plans (we contribute $300 a month and both our jobs come with pensions that will replace 60% of our salaries). We currently also make a truck payment ($350 a month) and have $2,300 in credit card debt, but we only have $1,000 in accessible savings.

Answer: You’re not in a great position to be landlords. You have too little savings to cover the inevitable repairs and vacancies you’ll face. Plus, your credit card and vehicle debts indicate you’ve been living beyond your means.

Still, this may be a promising opportunity. A rental that is cash-flow positive — in which the rent collected exceeds the cost of the mortgage, property taxes and insurance — can be a decent long-term investment. If you’re willing to commit to improving your finances and taking this risk, it could work out.

Talk to some other landlords first to see what challenges they face and what typical vacancy rates they experience. You’ll want to locate a lawyer who understands your state’s landlord-tenant laws to draw up any paperwork you’ll need.

If you decide to proceed, sell the RV and use whatever’s left after paying off the loan to pay down your credit card debt. Then redirect the RV payment to paying off the rest of the cards and building up your savings. (A note for the future: RVs are fun, but they’re luxuries, and luxuries should be paid for in cash.)

Don’t compromise your retirement savings. Your generous pension could get whittled down in the future, or you might lose those jobs. Having a decent retirement kitty of your own is simply prudent.

Wednesday’s need-to-know money news

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bad creditLearning how to take advice, cleaning up your credit report, and why working an extra year or two could be a good thing.

Why Can’t We Follow Simple, Good Money Advice?
Why is it so hard to adhere to the basics?

10 Steps to Help Erase Errors on Your Credit Report
Tips on removing errors from you all-important credit report.

8 Costs to Consider When Buying a Rental Property
Rental properties can be a great investment, but there are things you need to watch out for.

Is That Credit Card Surcharge Illegal?
Depending on where you live, that fee to use your card could be against the law.

When Should You Delay Retirement?
Could delaying your retirement pay off in the end?

Will home sale trigger eviction?

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Dear Liz: Our landlady has been diagnosed with an advanced stage of cancer. In her precarious health, I find myself concerned that we may have to move if she gives up the duplex and moves to a care facility.

I’m unemployed and my 72-year-old husband has recently been diagnosed with early stages of dementia. I find it difficult to face the prospect of returning to work and finding proper care for him even though I know I need to do so very soon.

If she sells the duplex or leaves it to someone in her will should she die, what protection do we have against having to move out in a hurry or have our rent raised dramatically? Either situation would put us into chaos. What are our options?

Answer: If you have a lease, that contract typically would survive a change in ownership. The new owner would have to honor its terms until the lease was up. If you rent month to month, the new owner would have to follow minimum notice requirements determined by your state to raise your rent or terminate your tenancy. The Nolo website at http://www.nolo.com has additional information about tenants’ rights.

If you can no longer afford your rent, you may be eligible for government housing assistance if your income is sufficiently low. You can find more information by using the Eldercare Locator at http://www.eldercare.gov or calling (800) 677-1116. You should check out this federal service’s resources in any case, since you will have a big task ahead of you in caring for your husband even if nothing changes in your living situation.

Other good sites to explore include the Alzheimer’s Assn. at http://www.alz.org, which has information for caregivers and a “care locator” that can help you find care options in your community such as adult day centers, in-home care and respite care. And speaking of respite, you also should check out the ARCH National Respite Network at archrespite.org for people who can help when you need a break.