Why is rental property such a great investment?

Three main reasons:

1. Value Appreciation - Both home values and rental rates increase over time.

2. Tax Benefits - The income is not subject to social security tax AND you get a large tax deduction for nearly 30 years (called depreciation).

3. Income Stream - Your cashflow overtop of your expenses is income, while your mortgage is being paid for.

Pictured is our rental we own (it’s getting some updates now in between tenants). My wife bought it in 2009 and lived there until 2011 when we got married. She got a great deal on it and it’s now worth twice what she paid for it (economy was not great then). On top of that, when we first rented it in 2011 it was renting for $800 per month. Today it’s now renting for $1200 per month.

If you’re in a position to purchase one, or keep your existing home when you move, it’s a great long term investment! All of Hendricks County has seen significant increases in home prices and rental rates the past few years. Brownsburg, Avon, and Plainfield are especially hot!

You will see a lot of varying opinions on these, but overall it's mostly negative if you do your research. On average, they cost around $475-$550 plus a $100 deductible. Many have limited coverage, and do not cover preexisting conditions to the property. When you have an issue they send out the cheapest contractors and fix the problem as cheap as possible. 

Then there is the problem of timing, getting someone out can be a couple days. I just read a story of someone who had a pipe leak. The warranty company told them to turn the water off and the earliest they could get someone out there was 4 days from then. No water for 4 days? No thanks, and they ended up calling their own plumber and paying for the fix themselves.

Then there are limitations. HVAC is a big one, and an expensive item when it needs replaced. You need to make sure you read the fine print on this one for home warranties. Some will only cover a maximum of $1000 or $2000 toward a new unit, and some will cover the whole thing. It can be a battle in itself just to convince them you need a new unit. 

Roof leak? Your homeowners insurance should cover that. Appliances? Those are more common items that can go out. An oven or dishwasher costs about $350-$600 for basic models, so a $500 a year warranty won't save you any money there. Washer/Dryers can be included or excluded depending on the policy, but those cost as much as the policy costs per year as well.

Overall, I seldom recommend home warranties to buyer clients because of these reasons.

When is getting a home warranty worth it?

In my opinion, only if someone else is paying for it. Some agents will offer it to their buyer clients as a thank you item for using them. Some sellers occasionally offer one upfront with the purchase of their home. Additionally, its pretty common when making an offer that you ask the seller to pay for it if you want one. It can bring (some) peace of mind for the first year when you move into your first home and have lots of moving/home expenses getting established. First time home buyers are one of the largest groups that want a warranty. Beyond that, save your money.

At the end of the day, think of all the times you have been offered extended warranties on TVs, electronics, vehicles, phones, appliances, and even small gadgets. Had you purchased many of these warranties you would have spent hundreds or even thousands of dollars and made maybe 1, or no claims during the warranty period. You are better off keeping your money in your bank account and paying for it when something breaks.

If you have any questions about home warranties or wish to share your home warranty story (good or bad) please contact me.

If you're looking for private education in Hendricks County, you have several options in the Brownsburg, Avon, and Plainfield areas. Here are your options, in no particular order.

1. Our Shepherd Lutheran School PreK-8th - http://www.ourshepherd.org/
2. Bethesda PreK-HS - http://www.bethesdaschools.org/
3. St. Malachy PreK-8th - http://stmalachy.org/school/
4. Kingsway Christian School - http://www.kingswayschool.org/
5. St. Susanna PreK-8th - http://saintsusannaschool.com/
6. Plainfield Christian School K-12 - Website Unknown

Alternatively, all the public schools in Hendricks County are also very highly ranked compared to all the schools in Indiana. The individual public school rankings can vary depending on what website statistics you are looking at, but either way, all Hendricks County Schools offer quality education.

If you are not familiar with the area and you are looking to move here with schools being a big factor please contact me. I would be happy to discuss your school needs and base your home search near those locations.

If you're looking to spruce up your home with a fresh coat of paint you might be wondering what the difference is between $20/gal and $50/gal paint. Both will do the job, but lets look at the pros and cons of each. Lets preface this with that you always need to do paint prep beforehand. Fill in those cracks, nail holes, dents, and dings first. Then sand them down. 

With $20 paint you will always need to do 2 coats of paint, and maybe 3 coats if you're covering a dark color. When I first started rehabbing properties I started with the cheapest paint to save money. My theory was, if I'm going to be doing 2 coats no matter the quality of paint I purchase, why buy the expensive stuff? In the end I found myself doing 2 coats plus touch ups in thinner areas, and sometimes 3 coats. That's a lot of extra time. When the walls get scuffed up the cheap paint does not clean easy either. My first home had cheap builder grade white paint and the entryway would always get hand prints on it from people putting their hands on the wall to take shoes and boots off. When I would take a washcloth to it to clean it the washcloth would be white from the paint coming off the wall. We don't want that!

Each house I've fixed up I have progressively kept going up in paint quality to the next price point. Now I always use the higher end stuff that retails for $45-$50/gal, every time. With paint discount promotions or asking for discounts you can get the good stuff for $30-$35 per gallon at Porter or Sherwin Williams. Big box stores also do sales several times per year. Paint is usually on sale somewhere, and I have not really found a preference on one brand, the high quality paints are good everywhere in my opinion.

With good paint, if you are just painting a room that does not vary much in color you can get away with one coat (plus maybe a few touch ups) by putting it on heavy. But ideally it does look best with 2 full coats of paint. For covering up walls that have more blemishes, FLAT paint is always best. Other types of paint such as semigloss, eggshell, satin, etc have a little bit of gloss to them which makes imperfections show more, although they do wipe down easier.

Happy Painting!

Ahhh, the age old question. Should I buy or just continue to rent. Generally, if you are going to be staying in one location for the next 4-5 years minimum it is best to buy. However, if your job might have you moving around it could be best to just rent for the flexibility. Also, it's important to understand home repairs do come up, so be sure you have some money save up for a rainy day.

Let's look at the money spent over time if you rent:

This money is gone, and rents typically increase every year or so. In addition to this, the national average rent prices have been increasing faster than wages have. This means your paycheck is not increasing the same rate as rent costs year to year. This can be a big problem over time, not to mention all the money is lost as a renter.

Now let's look at some some scenarios if you purchased a home. In the Hendricks County areas such as Avon, Brownsburg, Danville, and Plainfield, home prices have been steadily climbing the last several years. Each year you wait it costs more to purchase due to higher home prices. The rise and fall of interest rates also have an effect on this as well, but we will leave that discussion for another blog post. One example just how much home prices have changed is a house I sold in 2016. The buyer bought it for $142,000, and today could list it and sell it pretty quickly for $165k-170k. That is a $23k-$28k increase in value! Had this buyer continued to rent instead they would have missed out on this equity, and they likely would have seen their rent payments increase during that time as well. Your payments on your home purchase are fixed for the life of the loan on most loan types.

Using the same example buyer above, lets say they have started a family and after a few years want to move up in house size. This is a common scenario. The homes equity can be rolled into the new home purchase for the down payment, costing this buyer nothing out of pocket.

Home ownership is basically a forced savings plan for something you have to have anyway, which is a place to live. In the long run its great for building your wealth and securing a better future. A typical nice 3 Bedroom, 2 Bath rental in our area rents for about $1,350 per month. The same house that you own would be less than $1,000 per month after your mortgage, taxes, and insurance. What could you do with a few hundred extra bucks a month in your pocket, while you are gaining monthly equity in your home? Please reach out to me today to get started!

When you're considering buying your very first home, it can be intimidating! I remember closing on my first house, signing my life away on all kinds of pages at the closing table. But it was a great feeling, I went to my new empty house, laid out on the floor staring at the ceiling, happy to officially own it.

Buying your first home takes planning, getting paperwork in order, looking at houses, inspections, and can be frustrating due to homes selling fast at the lower price points. Additionally, homes on the lower price range have been increasing steadily over the last couple years, as well as interest rates moving around. It has gotten more expensive each of the last few years to become a home owner. Each year you wait, fewer homes will fall in your price range, unless your income is rising at a nice pace to offset it. First time home buyers with lower budgets are having problems finding affordable houses now in Avon, Brownsburg, Plainfield, and many other areas.

Even if you don't think you will buy a home for 6-12 months, it's beneficial to get in touch with a great Realtor to help get you started. If your credit score is good and your income is consistent then the process is pretty easy to get started looking at houses and making offers. But if your credit needs some help, you should be addressing it right away. It can take time to get credit issues worked out. Follow the links below for details on getting Pre-Approved, Loan Programs, and Credit Tips.

Get Pre-Approved and Loan Programs

Credit Tips

Contacting Me is the FIRST step towards home ownership, and not wasting thousands of dollars a year on rent! You got this!

As one of the fastest growing counties in Indiana, there has been a big focus over the last couple years on revitalizing areas in Hendricks County.

Since Brownsburg's plan has been in motion already, I will start with them. The total project is estimated to be around $90 million. It includes a few luxury apartment complexes, parking garage, retail, co-working space and a large reconstruction of the main road in between it all, Green Street. Some of the building are now complete and available, while others still have ongoing construction. The apartment renderings of the new buildings look amazing inside and include a lot of amenities in the complex. The high end apartments come with a high price tag, starting around $1000 per month for a small 1Bed/1Bath. This is significantly higher than the average cost in Brownsburg now, but nothing compares to it for those looking to live in a nice place, and have the nice amenities that go with it. Although overall its a very nice project for the town, it might take some time to get the occupancy up at that price point.

Brownsburg Construction Ariel Shot:

For more information about the Brownsburg redevelopment you can follow this link.

Coming Soon will be a blog posts about economic development in other towns in Hendricks County, including Plainfield, Avon, and Danville.

We're just a few days into 2019, but you might be wondering what's in store for the New Year in Real Estate? The last several months we've been seeing shift in home prices leveling off. Hendricks County has a lot of new housing communities in development which is adding inventory to the market in the $225k+ price range. This effects existing home sales, because buyers have a lot of options and price ranges to choose from when deciding to buy an existing home or build exactly what they want. I expect to see home sales in the $225k+ price range to move more to a buyers market due to lots of building competition. Buyers in this price range will see more and more options in this price range, which will keep prices from increasing like they have been the past 2 years.

For the the first time home buyers looking for their starter home, it won't be so easy, and will continue to be a sellers market. While there are many new subdivisions all around Hendricks County, they just aren't building reasonable priced starter homes anymore. Instead, builders are focusing on the larger 2 story houses because of existing demand and more profitability. If you are looking for your typical 3 Bedroom/2 Bath starter home in the $100-$175k price range you currently only have less than 35 houses in all of Hendricks County to choose from (as of this blog post). I expect this trend to continue this year and beyond because they are not building this price range anymore, and Hendricks County is a fast growing community.

If you have any questions about Buying or Selling in 2019, please Contact Me, I'd love to help you.

Eric

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