investment

The 3rd real estate word I created

by John Rice

One of the toughest things about being a realtor is when you make friends with somebody who buys a house from you, then they move out of town.

Phil and his wife were referred to me from their agent when they moved to Lexington.  He had taken a job here and commuting from out of state was not an option.

I had a really good time looking at houses with them.  They were a lot of fun.  We laughed.  It didn’t even feel like work to me.  It was like hanging out with old friends.

Several times a year, Phil and I try to find the best Chinese buffet in town.  We haven’t really found an amazing buffet, but we sure can tell you where not to go for lunch.

Well, Phil is just too good at what he does and now it is time to move on to bigger and better things that are not in Lexington.  Time to sell their house.

I went over to check it out earlier this week.  It was good to see what all they have done to the place.  I had forgotten a lot of details about the house, but I quickly saw why they picked it.  Back then, he had a choice of many houses in that price range.  Today, there might be 20 houses on that side of town in this price range.  I always like to make sure my people get a house that will be a buyer’s top choice even in a bad market.  We won’t have any trouble selling it.

Anyway, as I was looking at their hall bathroom, I said that the tile floor was “Decade Neutral.”  He got a good laugh, said that would make a good blog post, and here we are.

Decade Neutral I guess is my new term for those finishes that are hard to tell when they were done.  His house had 12 by 12 beige tile with a light but not white grout.  Who knows when it was installed.  It could have been the 70s.  Could have been the 80s.  Could have been last week?  It is decade……neutral!

When people ask me about updating their house, I usually suggest things like this.  It is no fun to rip out trendy tile once there is a new trend.  His tile is like a pair of jeans or khaki pants.  It goes with everything and is timeless.

Some other things that are Decade Neutral are:

  1. Hardwood floors.  Not the prefinished kind.  The kind that gets stained and polyed on site.  The Goldilocks kind because it is not too wide and not too narrow. It is just right.  The kind you see in houses from every decade since houses have been built.
  2.  Crown molding.  I’ve never had anybody tell me that they would have to update crown molding.
  3. Recessed lighting.  The beauty of recessed lighting is, well, that you DON’T SEE IT.  (Ok, I guess they did make some a long time ago that had a mirrored gold ring around it…but you can buy covers for THAT kind now.)
  4. Chrome faucets.  While they are more minivan than “Sexy Black Dress”, they get the job done and nobody is appalled to see them in a house.
  5.  Tall ceilings.  Sure, the 2 story foyer isn’t as popular any more, but nobody has ever said they wished the ceiling in the family room was shorter.

That is all I have for now.  I’m gonna miss Phil, but I sure wish him all the success he in due in his new job.  He’ll do great!

Oh, and the other real estate terms I created are “Move out ready” and “Reach-in closet.”  Move out ready is when a vacant house looks like the seller left in a hurry.  It has crumbs in the fridge, you can see the impression on the carpet where the couch was, and there are nail holes in every wall.  A “Reach-in closet” is any closet that isn’t a walk-in.

LEXpert advice on buying rental property

by John Rice

I met with an old friend and former neighbor last night.  He is interested in buying rental property.  Thought some of what I told him might be a good post.

When I first meet with somebody wanting to buy rental property, I like to let them know what I think the pros and cons are of each type, so here we go:

1)  Commercial-Good return, a bit more volatile than others.  When you sell, your only market is another investor or a business owner.

2)  Multi-Family-Good return, a lot of work, and typically more turnover!  The only buyers for this property will be investors.  I have never seen an investor that was willing to pay top dollar.  Also, most investors only sell their properties when they have cash flowed them to death and they are in dire need of repairs/updates.

3)  Single Family Houses-Not a huge return, less turn over.  When you go to sell, you can market it to an investor or an owner occupant.  An investor wants a deal based on the numbers.  An owner occupant will pay retail.  I think this model is the best for most people.

Unless you find a super bargain, entry level single family homes are a better choice than more expensive ones.  The numbers just work out better.  If you ever need to part with one of these houses, you can sell it to a first time buyer in a good market, or somebody downsizing in a bad market.  There were a lot of people selling their bigger houses and buying smaller houses during the Great Recession.

My personal favorite is a simple, one story house on a slab.  One story because it makes it easier to repair or clean gutters and you don’t have windows up high.  A slab because you eliminate the risk of rotting wood and mold under a toilet or tub if there is a leak the tenant doesn’t tell you about.