Tenants file for bankruptcy (not my tenants, thank goodness)

So, remember my friend, the would-be, could-be landlord? Well, he couldn’t sell his house for what he wanted for it, so he decided to give landlording a shot, for a couple of years until the market turned around. He found a family that was interested in renting his house, did a credit report (which didn’t turn out all that well, but he figured that a family looking to rent in his part of town wasn’t likely to have perfect credit anyway). He signed them on for a year lease, and they moved in.

Keeping a mileage log for tax purposes

I recently met with my tax accountant — early this year, as I had a hunch I would have to pay in. I’m self-employed, and have been paying taxes through payroll, but hand’t been withholding quite as many as I should have. That, and I haven’t done much work on the duplex this year, so my “loss” from the duplex venture isn’t quite as great. One thing that could have helped a bit – keeping a better mileage log.

Credit card issuers getting nervous, lowering credit limits

After the whole subprime mortgage catastrophe, credit card issuers are worried too, and have startedslashing credit limits at the first sign of trouble (a single late payment, for example). The ratio of credit used vs. credit available is used in calculating people’s credit scores, so this may have a negative effect on many people’s scores. That, and if you don’t notice that your available credit is lowered, it could be pretty easy to accidentally go over it. Also not good.

ARMS – better than a fixed rate mortgage?

Not that long ago, when mortgage rates were commonly 10% or higher, ARMs were looked upon as a more favorable type of mortgage. (At that point, if the ARM was going to adjust, it was going to go lower, not higher, so adjusting was a good thing.) Historically, unless you were locking in during a time of extremely low interest rates (like now), an ARM would be your best bet over time. Sounds crazy now, what with all of the subprime mortgage fallout, but its true.

Competition for the zestimate – there are other online home value calculators

I’ve been using zillow.com to watch the value of my home slowly decline over the past couple of years… luckily, since I’ve been paying down the principal on my 30-year fixed mortgage as well as my home equity line of credit, I haven’t seen my “zestimate” (Zillow’s home value estimate) dip below what I owe. It’s come down by about $60,000, though, from what my appraisal was when I refinanced a few years ago. Such is the current housing market.

For comparison’s sake, lets see how my home value stacks up on a few different (free) sites

Subprime-mortgage crisis government aid…a handout? or a safety?

I was talking with some friends last night about how the government is bailing out people who “bought way more house than they could afford” on an adjustable rate mortgage. At first we were all united against it — after all, we were all responsible homeowners, watching our budgets, paying our bills on time. We were all on 30-year fixed mortgages in modest houses that we can afford. Why should these people get extra aid that we don’t? Where’s our reward for being responsible? If the government is handing out money, shouldn’t we get some too?

Piggybacking for a higher credit score (and better mortgage rate)

I read an article on yahoo news today about piggybacking — getting added as an authorized user to the credit card belonging to someone with good credit to improve your own bad credit. Something that’s commonly done by parents (to improve their child’s credit), or spouses, but now being offered to strangers through internet-based services. These services claim to “improve your credit overnight,” and apparently it works(!)

Cashflow… a new addiction.

I recently got hooked (ok, not quite as hooked as the person who introduced me to it) on the computer game “Cashflow.” Designed by Robert Kiyosaki (well known author of “Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money–That the Poor and Middle Class Do Not!“), it’s an interactive game that teaches the value of passive income. And it actually got me to sit down and work out what all of my actual costs were on my duplex, and figure out what I was paying in rent these days (I did this at the beginning, when I first bought the duplex, but taxes have since gone up, insurance has gone down, and I’ve raised the rent a bit).

No longer a speculator’s market

OK, so this is technically old news, (the article I’m quoting below is from 7/30/06), but I still find news about the movement of the housing market interesting. I’m happy that the current swing of the housing market is making the rental market more in my favor (even though I just signed my tenants into another year lease). Owning a duplex kind of puts me in a good place regardless of which way the housing market swings — if appreciation goes way up, and it’s a seller’s market, I’m in a good position to cash out and sell my duplex. If prices slow down, and so does appreciation, it becomes more attractive to rent than to buy, and my rental market goes up (lower vacancy rate = higher rents and more tenants to choose from).

Casey Serin – Mistakes we can learn from for now, one to watch in the future

I just read an article on CNET about would-be real estate mogul Casey Serin — at just 24, he bought 8 properties within a year, taking cash out at financing, planning to flip them all to turn a profit. But alas, due to the market slowdown, some hasty and risky decision, and perhaps just general bad luck, things did not go so well for him, at least in this round. He’s sold three properties and been foreclosed on in 6 properties (yep, six.)

Property taxes… and the info on the assessor’s website

I just paid my property taxes this morning. I’ve chosen not to escrow my taxes and insurance with my mortgage payment, so that I can save the money up in a bank account through the year, and earn interest on it. (5% in an Emigrant account is nothing to sneeze at). So that means that twice a year I need to log into the county assessor’s website and send a payment via e-check (of course, if I planned ahead, I could also snail-mail it). They do keep going up, though. I’ve chosen not to raise the rent on my tenants if they signed another year lease, so the increased property tax bill just cuts into my profits. At least, though, the money that I pay in property taxes is deductible (on my 1040 for my personal half, on my schedule E for my rental unit).

Want to buy more house than you can afford? Get a 40-year mortgage!

Yes, Virginia, there is such a thing as a 40-year mortgage. And some people are apparently using them (!) I was doing a bit of reading on bankrate.com today (doing some research, as I’m considering buying the duplex that went up for sale next door to me), and saw a banner ad from a mortgage company that had a list of mortgage rates. All of the usual fixed loans were represented — 30 Year Fixed, 15 Year Fixed, 10 Year Fixed. The ARMS were all there, despite the bad press they’ve gotten lately with all of the people who bought on ARMS that are now coming, causing the banks to foreclose on them. And then I saw it. The much-fabled 40 year fixed mortgage. Wow.

Buying a fourplex

My Uncle, a real estate agent, recently inherited some money, and decided to use it to purchase my duplex’s big sister, “the fourplex.” Not sure exactly if they purchased it out-right, most likely they just used it for a 20% or larger down payment.

How is buying a fourplex, or four-flat different than buying a duplex?

It’s beginning to look a lot like … time to do my taxes…

Tax benefits are one of the biggest reasons that buying a duplex is a good idea. Yes, the tax benefits of owning a duplex are pretty nice, especially that whole depreciation thing. However, the catch here is that your taxes get a LOT harder to do, once you own a duplex. I went from being an apartment dweller who filed a simple 1040EZ to having a bunch of (fairly) detailed schedules to fill out every year. And while the schedules themselves aren’t actually that hard, once you figure out what you’re doing (or find someone to pay to figure them out for you), the biggest part is something that only you can do: Keeping track of your expenses. Well. In an organized fashion. Preferably throughout the year.

Do It Yourself Refinancing

I originally bought my duplex on an ARM with no money down. Knowing that rates would eventually go up, after a year I had enough equity to refinance for a reasonable rate — I got a 30 year fixed mortgage for 80% of the value of the house, and a home equity line of credit (HELOC) for the rest of what I owed on the original mortgage (about $20,000). I got a 6% rate on the fixed mortgage, and started out at 4% on the HELOC, with very low payments.

However, short term rates quickly started to jump upwards, and within 9 months or so I found my HELOC rate pushing 9% — my monthly payments had doubled, and I wasn’t even paying off any of the balance on the HELOC (!) I looked into refinancing everything (again), but long-term rates weren’t really good enough to justify that, given the expense of closing costs, etc. I also looked into refinancing the HELOC to a fixed rate Home Equity Loan or similar, but still, rates weren’t going to get much better — I would just be guaranteed that they wouldn’t continue to climb.

So, given this dilemma, for a couple of months I simply did nothing.

Then, one day when I was paying my credit card bill online, I had an idea…. a complicated idea, but ultimately a good one.