David Hill PhD,ePro,SFR,CIAS,BPOR,CNE Chicago Real Estate Agent

Deciding whether to purchase a fixer-upper or go with a home in need of fewer repairs isn’t always simple.
The following information can help you calculate the true cost of purchasing a fixer:

Supplies, Labor and Time: Whether you do the job yourself or hire outside labor, repairs and renovations are notorious for costing more than you planned. If the home can’t be lived in while repairs are made, the additional cost of covering the mortgage, taxes and insurance while the home is vacant can also substantially add to the total cost.

Taxes and Insurance: Improvements often add to the cost of property taxes and insurance, so be sure to consider the long-term consequences. Properly performed repairs and renovations may help or hurt property tax values and homeowner insurance costs. It’s a good idea to get an estimate in advance. On the other hand, hiring outside crews to perform needed repairs can result in a tax write-off for investment properties.

Long-Term Profit Potential: Repairs and renovations can make your home more valuable, but only if the surrounding area is desirable. Whether investing for long-term appreciation or cash flow, carefully evaluate the desirability of the neighborhood.

Financing: Lenders often have different rates and requirements for properties in need of repair. Find out in advance if you are eligible for special funding, grants or tax incentives, especially when working with affordable housing options or first-time homebuyer programs.

Building Codes and Zoning: It is imperative to understand local building codes and zoning regulations before purchasing a fixer-upper. Never assume you can modify a structure without considering the building code. Likewise, zoning may dramatically alter the ability to use a property in a specific manner or make certain changes or additions. It’s just one more reason it’s more important than ever to work closely with your agent when purchasing a fixer-upper.

A properly stocked toolbox is essential if you’re buying your first home or gearing up to take care of a few necessary repairs and renovations. The following are a few items you might need:

Power Drill: There’s a reason the humble power drill has become one of the most popular tools among homeowners and craftsmen alike. It makes easy work of hundreds of household projects. From hanging shelves to installing cabinets, a power drill should be at the top of every list. Be sure to pick up drill bits and other accessories.

Tape, Glue and Other “Gunk”: Everyone knows that duct tape is an essential item, but don’t forget about WD-40, a tube of wood glue, plumbing tape, electrical tape, J-B Weld and other types of household adhesives.

Protective Gear: A good pair of gloves and safety glasses and hearing protection can go a long way toward keeping you safe when making small repairs.

Sockets and Screwdrivers: A quality set of sockets and screwdrivers can last a lifetime, so buy the best you can afford, since both of these are some of the most used tools. Pliers and C-clamps are excellent additions if you can afford them.

Pull Saw, Putty Knife and Razor Edge: Superficially, these might not appear to be related, but in real-life situations, the flexibility provided by each gives them all a top rating for every toolbox. Pull saws or Japanese saws are super sharp and easy to use, even in tight spaces, while putty knives and razors tackle everything from adhesives to spackle with ease.

In today’s hectic world, being stuck in the slow lane of the information highway is no fun at all.

If you find your Internet connection is moving at a crawl, there are a couple of websites that can help you figure out your upload and download bandwidth.

www.Speed.io - An easy-to-use website that includes ping time, number of connections made per minute and other useful diagnostics.

www.Speakeasy.net - Another super-simple speed test that takes less than a minute.

Either site will enable you to compare your Internet connection rate to others in your area. Remember, uploads and downloads differ dramatically based upon the type of connection, geographical area and surrounding usage patterns.

Commonly cited performance winners range from 5.5 megabits per second to more than seven megabits per second for downloads and slightly less for uploads.

If you discover that your connection is lacking, contact your Internet service provider. It’s often an easy fix and it might not even require an appointment.

The following are eight tips to help you decide whether or not to sell your property, and how to go about it:

1. Take a good hard look at your home. What are its strengths and weaknesses? Make a list.
2. Watch for sale signs in your neighborhood and go to open houses. Start thinking about how your home compares.
3. What have other similar houses in the area sold for? Most homeowners are a bit unrealistic about what their house is worth. You want to be on the same wavelength as your real estate agent when the time comes to set a price.
4. Research the market. How long do houses stay on the market in your neighborhood? Is it a hot market for sellers right now?
5. Know what it will cost to sell your house. Will you pay for a home inspection, legal costs or renovations?
6. Spruce up the house. You know you’ll have to do it eventually, so why not present your house in its best light now? De-clutter and finish uncompleted do-it-yourself projects. Outside, tidy up the property, sweep the steps and change the light bulbs. It will allow others to see your house in a new light.
7. Select a real estate agent who is familiar with your neighborhood and ask friends and neighbors for recommendations. Word-of-mouth is the best way to source a realtor with a proven track record.
8. Take your time. Selling your home for the best price may take longer than you anticipate. Don’t add to the pressure by setting unrealistic time limits.

Imagine saving thousands of dollars on your next real estate transaction. Section 1031 of the U.S. Internal Revenue Code allows for the exchange of one investment property for another, providing the opportunity to defer the capital gains tax on approved property transactions.

A 1031 exchange is a method for selling one qualified property, then purchasing another qualified property within 180 days of the initial transaction.

The process works much like any other real estate selling and buying situation. Because investors are exchanging properties, the IRS allows those investors to defer the capital gains tax on the initial sale.

There are two points that need to be closely adhered to in order to qualify for a 1031 exchange.

First, the total purchase price of the new investment property must be equal to or greater than the property that was sold or being sold. Second, all the equity received from the initial sale must be used to purchase the replacement property. If there is any shortfall in the purchase price of the similar property, the investor will be liable for any capital gains taxes associated with the sale.

It can also be used as an investment strategy by realizing the effects of compounding the savings in capital gains and reinvesting it in your new property purchase. The key to getting the best compounding result is to keep all of the money, including the value of the deferred tax, working for the investor. By reinvesting you will maximize the compound yield of your investment at a future time.