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Make the most of your home investment

Ask Our Broker The Rules
of Home
Renting
We’re considering a large If you’re opening up a
remodel for our home. house to tenants, it’s bet-
Is a 15- or 30-year loan best? ter to be safe than sorry
Q: Houses in our area sell for BY BARBARA BALLINGER
about $210,000. Our mortgage is CTW Features
just about paid off, we expect to
stay in our home forever and we’re WHETHER YOU BUY a vacation
house for personal enjoyment,
thinking of remodeling at a cost of investment or future retire-
$100,000 to $150,000. Would it be ment, you may find that you
best to get a fixed-rate loan for 15 don’t use it as much as you
years or for 30 years? originally hoped. Perhaps you
should think about renting it
A: Usually the answer to this question would be that for a few weeks or maybe the
entire year.
the proposed improvements are not justified by the By learning what most
marketplace. Spending $100,000 to $150,000 to remod- renters want in a home, you’re
el in a community of homes costing $210,000 doesn’t likely to find a good pool of
work because it will be difficult, if not impossible, to renters, even if your home isn’t
recover your investment if you sell in the next few a swank 10,000-square-foot
years. Hamptons mansion. Many
renters like the idea of trying
But your situation is different because you have no an area before they buy. Others
expectation of moving. like changing destinations
Instead of selling prices, You need to ask if every year instead of being tied
you need to ask if spend- down to one locale.And some
ing money for renovations spending money simply like to vacation in a
home rather than a hotel
is financially comfortable. for renovations is because they feel it’s easier to
If yes, go for it.
You would likely be financially unwind and eat healthy meals.
But renting poses risks.Will
smart to get a fixed-rate
loan because rates now
comfortable you find renters for the time
period and season you want?
Leading the pack: Kitchens with wall-mounted appliances and flat-panel TVs are part of the tech craze in the home.
are relatively low by his- Will they take care of your
toric measures.As to whether a 15- or 30-year term is home? Will they respect your
rules? Many will, if you make
best, the longer loan will give you a smaller required
monthly payment but the shorter mortgage will mean a
lower rate and substantially less interest over the life of
the loan.
HIGH-TECH FOR THE HOME the house appealing and put
your rules in writing. Here’s a
more detailed checklist:

You might want to consider a compromise:A 30-year For the 21st-century ing popularity of home theater Hansen, director of product man- BUY WISELY
mortgage with the right to prepay, in whole or in part, rooms, multi-zone music systems, agement for Culligan If you think renting will
homeowner, it’s all about media centers and innovative International, Northbrook, Ill.“A appeal, pick a good location
without penalty and at any time. In other words, get a
30-year loan and then pay it off on a 15-year basis.Yes, trends and products that lighting and security systems, the lot of new home-appliance and that others also will like – per-
modern home has an eye on technology trends revolve haps within walking distance
the interest rate will be somewhat higher, but if your simplify life emerging technology. around trying to create inspira- of a beach or another attrac-
income declines you will only be required to make pay- “The hot buttons for today’s tional spaces within the home. tion. Also choose one in good
ments on a 30-year basis. For details, speak with lenders BY CHARLES SCUTT market are smart house infra- Some examples include spas, condition unless you want to
CTW Features structure, media rooms and yoga rooms, outdoor rooms, do a lot of rehab and one large
about financing options and consider as alternatives a
home theaters systems,” says game rooms and gourmet enough to accommodate a fam-
home equity line of credit loan or a reverse mortgage. If

T
he futuristic, automated
the reverse mortgage is interesting, get independent abode of the Jetson family
advice from an attorney who specializes in elder law. may have seemed cartoon-
ishly fantastic and far-fetched to
Q: My real estate broker told me I could take television viewers back in the
the closing costs I paid for the buyer off my 1960s. But fast forward four
decades to the ultramodern home
income taxes. Is this true? Does the buyer have to of now and you’ll see that many of
claim that money as income? those crudely animated high-tech
amenities gradually are being
incorporated into today’s resi-
See ASK OUR BROKER, Page 2 dences.
As evidenced by the increas-
Jeannette Steeves,
president/owner of Timely
Manor, a housing design firm in
Altamonte Springs, Fla.“It’s home
theaters and whole-house music
systems that are probably the
most popular technology-driven
design features among new
home buyers.”
Homeowners always are look-
ing for new and innovative prod-
ucts, services and technology to
simplify their lives,” says Amy
kitchens.”
Indeed, when it comes to
areas of the home benefiting the
most from new technology, the
kitchen leads the pack, according
to some experts. Steeves cites
flush/wall-mounted espresso
machines, ultra-modern refrigera-
tors with interior space that can
be easily converted to extra
freezer space, cabinetry with
built-in recording devices that
See HIGH-TECH Page 2
ily.When public relations exec-
utive Dave Brooks and his wife
Maureen bought a vacation cot-
tage on Cape Cod five years
ago, they chose a four-bedroom
house, since they felt that
would make their home appeal
more to families than smaller
houses nearby.They also chose
one within walking distance of
a public beach and freshwater
See RENTING Page 2

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 HIGH-TECH
Future home trends
CONTINUED FROM PAGE 1
can instant replay countertop
activity (to retrace your step in a
recipe, for instance), and new
range/ovens that chill and heat
food as just a few examples.
“The biggest trend I’m seeing
now is moving from the ‘smart
home’ approach to the ‘intelligent
home,’” says Herb Hauser, presi-
dent, Midtown Technologies, LLC,
a New York-based real estate con-
sultancy.“Smart homes are
focused on entertainment ameni-
ties and some temperature and
security controls.The intelligent
home takes this a step further
and incorporates both green and
adaptive features for different life
phases.”
Hauser says intelligent home
features include lighting systems
that adapt to the aging eye, move-
ment sensors that can alert family
members or offsite caregivers if
there is a radical change within a
house, and “digital mixers” for
shower and sink faucets that pre-
record and adjust to each user’s
water temperature preferences.
Integrated voice-activated sys-
tems for heating and air condi-
tioning, lighting, fireplaces, media
systems and telephones are no
longer the stuff of science fiction
– the technology is already being
applied in upscale homes, says
RENTING
Second-house rich
CONTINUED FROM PAGE 1
pond.
MAKE IT COMFORTABLE
Since you want renters to
enjoy their stay, fix it up and fur-
nish it nicely. Pay particular atten-
tion to the kitchen and bath-
rooms, says Emily J. Cressey, a
partner with real estate invest-
ment company Grassland
Investments.The house and
rooms don’t have to be posh, but
don’t use shabby furnishings, says
Brooks. Be sure you have nice
towels, if you provided, and com-
fortable beds with good mattress-
es, he adds. Beth Shaw, president
of YOGAFit in Torrance, Calif.,
learned from her own years rent-
ing to invest in good cookware
and a TV when she bought her
vacation home in Palm Springs.
Also know that different loca-
tions have their own quirks. Lisa
Bryne, who owns several
Richard Arthur, an agent
Prudential Network Realty,
Atlantic Beach, Fla. Other futuris-
tic systems that he’s seeing
installed in new homes include
indoor sensors that turn lights off
and on according to motion
detected in the room.
“Homeowners today are look-
ing for systems that are one-
switch operational – easy to use
and to maintain operations,”
Hauser says.“Wireless capability
also is an important feature, as it
streamlines systems and liberates
homeowners from cords and
plug-ins. Cool examples of this
include shade control systems,
climate control systems based on
room occupancy, and sound sys-
tems that easily access libraries of
preferred music.”
Another developing tech trend
is the embedding of self-regulat-
ing “brains” inside devices like
furnace systems, enabling proac-
tive management and mainte-
nance that can save money down
the road, Hauser says. Such a sys-
tem, for example, would send out
an alert to a repair company noti-
fying them of an impending mal-
function before it occurs.
Two more in-demand trends
related to improved home materi-
als and technology are green
building materials and systems,
designed to make a home more
energy efficient, and universal
design, a home design approach
to accommodate all occupants
regardless of age, ability or cir-
European properties with family
members, knows that Americans,
Australians and Canadians like
comfortable furnishings in a liv-
ing room to sit around and
schmooze, but European renters
want comfortable dining chairs
since they prefer sitting around a
table. Byrne also suggests white
sheets, since frequent washings
won’t fade them. Other nice
touches depending on a location:
area maps and guide books.
DECIDE HOW MANY GUESTS YOU
WANT, INCLUDING THOSE ON FOUR
LEGS
While you may not want to
rent to folks with pets because
you fear possible destruction, you
limit your potential rental pool if
you do. Instead consider inter-
viewing owners about their pets,
asking what breed they are and
how old, inquiring about the
pet’s temperament and taking a
larger security deposit, suggests
Denise Madan an agent with
RE/MAX Advance Realty, Miami,
Fla. She and her husband rented a
home that allowed her to bring
cumstance.
Green building materials, such
as bamboo flooring, that can
regenerate and do not pollute the
living environment will be con-
sidered highly preferably and
more valuable than more tradi-
tional alternatives, Steeves says.
And a geothermal system that
employs underground piping to
utilize the earth’s constant 55
degree temperature can more
efficiently heat and cool the
home.
Universal design, meanwhile,
“is a concept with broad appeal
that provides for safe, convenient
performance of home-based
activities by the largest amount of
people,” says Steeves. Beyond fea-
tures like no-step entryways and
wider doorways, universal design
can incorporate high-tech home
automation and smart home tech-
nology systems to make it easier
to control appliances and devices
– just the kind of forward-think-
ing amenities that will appeal to
aging baby boomers.
Hauser says that boomers are
today’s technology vanguards –
the segment of the population
that will drive the home-tech
market.
“Previously, young people
were considered the bellwethers
of technology,” he says.“But
boomers not only will use tech-
nology later in life, they will drive
innovation as they incorporate
technology into everyday life to
extend their active, healthy
their three large dogs.The same
rules can apply to renters who
have young children or teens. If
the home you rent is near a col-
lege and students may rent it
instead of living in a dorm, have
rules about how many people
may live there, Madan says.
PUT EVERYTHING IN WRITING
A verbal agreement or hand-
shake is not sufficient security.
Madan advises not taking any-
thing for granted, since people
conveniently forget what they
agreed to, she says.Also stipulate
the period the rental runs, price,
security deposit, whether smok-
ing is permitted, what constitutes
normal wear and tear versus dam-
age, and responsibilities you
expect tenants to handle, such as
taking out the trash daily.Also
state your responsibilities, such as
having a cleaning service come
before they arrive and when they
leave.While many owners are
comfortable printing a lease from
the Internet, some prefer to have
an attorney draw one up.
Attorney Linda M.Toga, of East
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lifestyles.”
Ultimately, homeowners need
to focus on creating enjoyment,
energy savings and comfort for
their home while they are in it,
says Hauser. However,“as fast as
technology is evolving, any sys-
tem they put in today will proba-
bly be yesterday’s solution when
they go to sell their home, and
will command yesterday’s prices.
If owners want to add to their
home’s value, they should look
for tomorrow’s technology,
which they can recoup at today’s
prices when they go to sell.”
Remember, however,“that the
quality of your life is what
counts,” Hauser says,“and it’s
okay to have a home you can
enjoy today and that will adapt to
your needs as you engage in for-
ward living.”
The most important thing any
homeowner should keep in mind
is that their home needs to be
ready to receive a special gadget
or upgrade, Hansen says.“Ideally,
these infrastructure considera-
tions should occur during the ini-
tial design phases of a new struc-
ture, but there are many good
solutions on the market that can
be installed to ensure the success
of a new appliance, help make it
more environmentally friendly,
and improve the quality of life
and health of its residents.”
© CTW Features
Setauket, N.Y., says that as long as
owner and renter sign the lease
and each have a copy, it becomes
legal upon execution.
KNOW – AND BE FAIR – ABOUT
RULES
While it’s normal to be upset
and pursue action if a renter has
a wild party and trashes furni-
ture, a ding here and there should
be considered normal wear and
tear.“Most provisions are enforce-
able, but how much do you want
to pay to try to collect?” asks
Toga. If you want to use your
vacation paradise as a business
deduction, you can use it no
more than 14 days a year, she
says.And, of course, find good
renters.There are numerous ven-
ues to find them, from placing
ads with photos in newspapers
to hiring a property-management
service.
In the best-case scenarios, you
make money, your house remains
in pristine condition, and renters,
too, are happy and want to return
next year.
© CTW Features
Ask Our Broker
CONTINUED FROM PAGE 1
A: In general terms, some settlement costs are
deductible and some are not. For instance, homeown-
er’s insurance for a residential property is not
deductible. Property taxes are deductible in the year
paid. Other expenses may be a cost of acquisition that
can be used to reduce your profit when the property
is sold.
Your real estate broker may be referring to a unique
situation regarding “points” or “loan discount” fees.
Imagine that a seller pays one point to the buyer’s
lender.According to the IRS, the seller “cannot deduct
these fees as interest. But they are a selling expense
that reduces the amount realized by the seller.”
With seller-paid points, the IRS says if the buyer
meets all required tests then the purchaser can treat
“points as if he or she had paid them” and deduct the
points in the year paid. If any tests are not met, then
the buyer can deduct the points over the life of the
loan. For specifics, see IRS Publications 523 and 936
and speak with a tax professional, such as a CPA.
Q: We made a written offer of $465,000 for a
home. The owner made a verbal counteroffer.
The counteroffer was unacceptable and our
deposit was returned. Nothing happened for a
month and then we received a counteroffer on
our original proposal. Why did they wait 30
days?
A: I don’t know why there was a delay. From your
letter, it would seem that you made a written offer
with a deposit.That offer was not accepted.A verbal
counteroffer – not a written one – was made. In the
usual case, once a counteroffer is made the original
offer is finished unless you want to re-submit it. In
effect, the counteroffer is a new offer and the prior
offer is dust.
Then a month later the owners made an offer to
you.You see it as a “counteroffer,” but really it’s an
entirely new offer.
Given that the deposit from the original offer was
returned, you can bet your initial offer was declined.
You now have an opportunity to accept, reject or
counter the new offer from the sellers.
What should you do? First, is the new offer in writ-
ing? A verbal offer or counteroffer is worthless
because there’s no way to know all the terms.
Second, do you still want the property? If yes, let the
bargaining begin. If no, you’re not obligated to
respond at all. Please see buyer broker or attorney for
specifics.
© CTW Features
Need real estate advice? Peter G. Miller, author of “The
Common-Sense Mortgage,” would love to hear from you.
Send your questions to peter@ctwfeatures.com