No one likes to think about disasters. Severe weather, fire, theft—or even a seemingly small issue like a broken pipe—can wreak havoc on your home and result in thousands of dollars in damages. Fortunately, a good homeowners insurance policy can offer you peace of mind that you and your family will be financially protected if disaster strikes.
A homeowners insurance policy covers your home—as well as the belongings in it—in case of theft, accidental damage, or certain natural disasters. In fact, most financial institutions require that you purchase homeowners insurance before they issue a mortgage. While coverage varies, most policies also help to protect you from liability should someone outside your household become injured on your property. And that liability coverage is often extended to include damage you (or anyone living in your household) may do to someone else’s property.1
With all the protection offered, it’s equally important to understand what a home insurance policy does NOT cover. For example, homeowners insurance won’t pay to repair malfunctioning systems and appliances within your home. And terms vary, but standard policies typically exclude coverage related to floods, earthquakes, slow leaks, power failure, neglect, aging, faulty repairs or construction materials, and acts of war.2
|Homeowners Insurance Covers Things Like:||Most Standard Policies DON’T Cover:|
NARROWING THE COVERAGE GAP
So how do you minimize your risk when so many potential issues are excluded from a standard homeowners policy? Many insurers offer supplemental coverage options that can be tacked on to a basic policy. We explore this further in the section below on “7 Tips for Purchasing Homeowners Insurance.”
Some homeowners also choose to purchase a home warranty, which covers many of the systems and appliances in your home that are NOT covered by homeowners insurance. Home warranties are separate from homeowners insurance, so if interested you’ll need to seek out a policy through a dedicated provider.
While terms vary, a home warranty will often pay to repair or replace components of your HVAC, electrical, plumbing, and some appliances that fail due to age or typical wear and tear. Unlike homeowners insurance, home warranties aren’t required by mortgage companies. But many homeowners like the added financial protection and peace of mind that home warranties provide.3
Keep in mind, if you do purchase a home warranty, you will still be responsible for paying a service fee, or deductible, every time you use it. And you will be limited to using service providers who are contracted through your home warranty company.
7 TIPS FOR PURCHASING HOMEOWNERS INSURANCE
Whether you’re shopping for a new policy on your first home or you’re considering switching providers on an existing policy, it’s important to do your research beforehand. Not all insurance policies—or providers—are created equal. A little due diligence can save you time, money, and hassle in the long run.
- Prioritize Service and Value
- Choose the Right Level of Coverage
- Inquire About Additional Coverage
- Decide on “Replacement Cost” or “Actual Cash Value”
- Consider a Higher Deductible
- Try Bundling Your Coverage
- Reassess Your Policy Each Year
When choosing an insurance provider, ask around for recommendations. Check with neighbors, friends, and family members, particularly those who have filed an insurance claim in the past. Find out if they had a positive or negative experience. Read online reviews. Ask your real estate agent for a referral to a reputable insurance broker who can help you compare your options.
Don’t just choose the cheapest policy. Instead, search for one that offers excellent client service and provides the best coverage for the cost.
Your policy limits should be high enough to cover the cost of rebuilding your home. Don’t make the common mistake of insuring your home for the price you paid for it. The cost to rebuild could be higher or lower, depending on the value of your land, your home’s unique features, market factors, new building codes, and local construction costs.4
Also, consider whether you need a higher level of liability insurance to protect your assets. If your investments and savings exceed the liability limits in your policy, you may need to purchase an excess liability or umbrella policy.
Ultimately, you should make sure your coverage is adequate to mitigate your losses—but don’t pay for excess insurance you don’t need.
Ask your insurance agent about additional coverage options that can help close any gaps you have in your policy.
For example, if you’re in a flood or earthquake-prone area, experts strongly recommend that you add those coverages to your policy. In fact, flooding is the most frequently occurring natural hazard, and a significant percentage of insurance payouts are for homes outside “flood zones,” or areas known to be at risk of flooding. So even if your home is not technically located in a flood zone, you may want to add flood coverage to your policy, just in case.5
Expensive jewelry, furs, collectibles, or artwork may not be fully insured by a standard policy. Ask about raising your limits for any items of particular value, or check with a specialty insurer about a separate policy for such items.
Insurers can use a variety of methods to determine how much they will pay to reimburse you for a loss, but the two most common are “replacement cost” or “actual cash value.”
If your seven-year-old sofa is damaged in a fire, replacement cost coverage will pay you the cost to purchase a new, comparable sofa at today’s prices. Actual cash value coverage will pay you for the depreciated value of the sofa you lost—so what you would pay to buy a seven-year-old sofa rather than a new one.6
While a replacement cost coverage policy will result in a bigger payoff if you suffer a loss, it will probably require a larger annual premium. Compare both options to find out which is the better fit for you.
A deductible is the amount of money you are responsible for paying on a loss before your insurance company will pay a claim. Opting for a higher deductible can reduce your premiums.
Note that in some cases, your insurance policy may have a separate or higher deductible for certain kinds of claims, such as those caused by floods, windstorms, hail, or earthquakes.
While a higher deductible can save you money on your premiums, opt for one that is still affordable given your current financial situation.
Combining your home, automobile, and other policies under one insurer can often result in a significant discount. And some insurers offer additional benefits, such as a single deductible if property insured by multiple policies is damaged. For instance, if a fire destroys your home and your car, you may only have to pay the higher of the two deductibles. Bundling can also make payment and renewal of your policies more convenient.7
However, bundling isn’t always the best or least expensive option. In some cases, you may find better coverage options, service, and/or pricing if you split your policies between multiple insurers. So be sure to consider all of your options before making a final decision.
Even if you’ve done all your due diligence before purchasing a homeowners insurance policy, don’t set your annual renewal on autopilot. Instead, when it comes time to renew, take some time to consider factors that have changed over the past year.
For example, have you made any home improvements that would require you to raise your coverage limits? Have you made any security or safety improvements that qualify you for a discount on your premiums?8
Has there been a shift in market conditions that would make it more or less expensive to rebuild your home now? If so, you may need to adjust your coverage levels accordingly.
If you’ve made any changes to how you use your home, you may need to adjust your policy, as well. For example, if you’ve started a home-based business or occasionally rent out your home on a home-sharing site, you may not be fully covered by your existing policy.9
Finally, consider any changes to your financial situation that may require increased liability coverage limits. If you’ve grown your investments or inherited property, it may be time to purchase additional coverage to protect your expanding asset base.
MINIMIZE RISK, MAXIMIZE VALUE
Now that you understand the basics of homeowners insurance, you should be ready to start shopping for a policy that best fits your needs and budget. Your goal should be to minimize your risk while maximizing the value your policy provides.
While you never want to leave yourself without a safety net should disaster strike, you also don’t want to overpay for insurance you don’t need (and will hopefully rarely use). Aim to strike a balance that will provide you with adequate protection at an affordable price.
NEED MORE GUIDANCE? WE CAN HELP
If you’re in the market to purchase homeowners insurance or a home warranty, give us a call! We get a lot of feedback from clients on the best (and worst) providers and are happy to share what we know.
We can also put you in touch with a trusted insurance professional who can answer your questions and help you find the best policy to meet your needs.
The above references an opinion and is for informational purposes only. It is not intended to be financial or insurance advice. Consult the appropriate professionals for advice regarding your individual needs.
1. Insurance Information Institute –
2. Insure.com –
3. American Home Shield –
4. Insurance Information Institute –
5. Realtor.com –
6. Texas Department of Insurance –
7. Insure.com –
8. National Association of Insurance Commissioners –
9. HomeAway –
From summer vacations to winter holidays, it seems each season offers the perfect excuse to put off our to-do list. But be careful, homeowners: neglecting your home’s maintenance could put your personal safety—and one of your largest financial investments—at serious risk.
In no time at all, small problems can lead to extensive and expensive repairs. And even if you avoid a catastrophe, those minor issues can still have a big impact. Properties that are not well maintained can lose 10 percent (or more) of their appraised value.1
The good news is, by dedicating a few hours each season to properly maintaining your home, you can ensure a safe living environment for you and your family … and actually increase the value of your home by one percent annually!1 You just need to know where and how to spend your time.
Use the following checklist as a guide to maintaining your home and lawn throughout the year. It’s applicable for all climates, so please share it with friends and family members who you think could benefit, no matter where their home is located.
Fall ushers in another busy season of home maintenance as you prepare your home for the winter weather ahead.
- Have Heater Serviced
- Shut Down A/C for the Winter
- Inspect Chimney
- Seal Windows and Doors
- Check Smoke Alarm and Carbon Monoxide Detectors
To ensure safety and efficiency, it’s a good idea to have your heating system serviced and inspected before you run it for the first time.
If you have central air conditioning, you can have it serviced at the same time as your furnace. If you have a portable or window unit, ensure it’s properly sealed or remove it and store it for the winter.
Fire safety experts recommend that you have your chimney inspected annually and cleaned periodically. Complete this task before you start using your fireplace or furnace.
Check windows and doors for drafts and caulk or add weatherstripping where necessary.
If you checked your smoke and carbon monoxide detectors in the spring, they are due for another inspection. Batteries should be replaced every six months, so it’s time to replace them again. Follow the manufacturer’s instructions to test your individual devices. And even properly functioning devices should be replaced at least every 10 years, or per the manufacturer’s recommendation.3
- Plant Fall Flowers, Grass and Shrubs
- Rake or Mow Leaves
- Apply Fall Fertilizer
- Inspect Gutters and Roof
- Shut Down Sprinkler System
Fall is a great time to plant perennials, trees, shrubs, cool-season vegetables and bulbs that will bloom in the spring.12 It’s also a good time to reseed or sod your lawn.
Once the leaves start falling, it’s time to pull out your rake. A thick layer of leaves left on your grass can lead to an unhealthy lawn. Or, rather than raking, use a mulching mower to create a natural fertilizer for your lawn.
If you choose not to use a mulching mower, a fall fertilizer is usually recommended. For best results, aerate your lawn before applying the fertilizer.13
Inspect your gutters and downspouts and make needed repairs. Check the roof for any broken or loose tiles. Remove fallen leaves and debris.
If you have a sprinkler system, drain any remaining water and shut it down to prevent damage from freezing temperatures over the winter.
While it can be tempting to ignore home maintenance issues in the winter, snow and freezing temperatures can do major damage if left untreated. Follow these steps to ensure your house survives the winter months.
- Maintain Heating System
- Tune Up Generator
- Prevent Frozen Pipes
Check and change filters on your heating system, per the manufacturer’s instructions. If you have a boiler, monitor the water level.
If you own a portable generator, follow the manufacturer’s instructions for proper maintenance. Make sure it’s working before you need it, and stock up on supplies like fuel, oil and filters.
Make sure pipes are well insulated, and keep your heat set to a minimum of 55 degrees when you’re away. If pipes are prone to freezing, leave faucets dripping slightly overnight or when away from home. You may also want to open cabinet doors beneath sinks to let in heat.
- Drain and Shut Off Outdoor Faucets
- Remove Window Screens
- Service Snowblower
- Stock Up on Ice Melt
- Watch Out for Ice Dams
- Check for Snow Buildup on Trees
Before the first freeze, drain and shut off outdoor faucets. Place an insulated cover over exposed faucets, and store hoses for the winter.
Removing screens from your windows allows more light in to brighten and warm your home during the dark, cold winter months. Snow can also get trapped between screens and windows, causing damage to window frames and sills.
Don’t wait until the first snowstorm of the season to make sure your snowblower is in good working order. Check the manufacturer’s instructions for maintenance or have it serviced by a professional.
Keep plenty of ice melt, or rock salt, on hand in preparation for winter weather. Look for brands that will keep kids and pets safe without doing damage to your walkway or yard.
Ice dams are thick ridges of solid ice that can build up along the eaves of your house. They can do major damage to gutters, shingles, and siding. Heated cables installed prior to the first winter storm can help.14
Snow can cause tree limbs to break, which can be especially dangerous if they are near your home. Use a broom to periodically remove excess snow.15
After a long, cold winter, many of us look forward to a fresh start in the spring. Wash away the winter grime, open the windows, and prepare your home for warmer weather and backyard barbecues.
- Conduct Annual Spring Cleaning
- Shut Down Heating System
- Tune Up A/C
- Check Plumbing
- Inspect Smoke Alarm and Carbon Monoxide Detectors
Be sure to tackle those areas that may have gone neglected—such as your blinds, baseboards, and fan blades—as well as appliances, including your refrigerator, dishwasher, oven and range hood. Clear out clutter and clothes you no longer wear, and toss old and expired food and medications.
Depending on the type of heating system you have, you may need to shut your system down when not in use. Check the manufacturer’s instructions for proper procedures.
If your home has central air conditioning, schedule an annual tune-up with your HVAC technician. If you have a portable or window unit, be sure to follow the manufacturer’s instructions for proper maintenance.2
It’s a good idea to periodically check your plumbing to spot any leaks or maintenance issues. Look for evidence of leaks—such as water stains on the ceiling—and check for dripping faucets or running toilets that need to be addressed. Inspect your hot water heater for sediment build up. Check your sump pump (if you have one) to ensure it’s working properly.3
Check that your smoke and carbon monoxide detectors are functioning properly. Batteries should be replaced every six months, so change them now and again in the fall. Follow the manufacturer’s instructions to test your individual devices. And even properly functioning devices should be replaced at least every 10 years, or per the manufacturer’s recommendation.4
- Inspect Perimeter of Home
- Clean Home’s Exterior
- Clean Gutters and Downspouts
- Rake Leaves
- Seed or Sod Lawn
- Apply a Pre-Emergent Herbicide
- Plant Flowers
- Mulch Beds
- Fertilize Lawn
- Tune Up Lawn Mower
- Inspect Sprinkler System
- Check the Deck
- Prepare Pool
Walk around your house and look for any signs of damage or wear and tear that should be addressed. Are there cracks in the foundation? Peeling paint? Loose or missing roof shingles? Make a plan to make needed repairs yourself or hire a contractor.
Wash windows and clean and replace screens if they were removed during the winter months. For the home’s facade, it’s generally advisable to use the gentlest method that is effective. A simple garden hose will work in most cases.5
Gutters and downspouts should be cleaned at least twice a year. Neglected gutters can cause water damage to a home, so make sure yours are clean and free of debris. If your gutters have screens, you may be able to decrease the frequency of cleanings, but they should still be checked periodically.6
Gently rake your lawn to remove leaves and debris. Too many leaves can cause an excessive layer of thatch, which can damage the roots of your lawn. They can also harbor disease-causing organisms and insects.7 However, take care because overly vigorous raking can damage new grass shoots.
If you have bare spots, spring is a good time to seed or lay new sod so you can enjoy a beautiful lawn throughout the remainder of the year. The peak summer heat can be too harsh for a new lawn. If you miss this window, early fall is another good time to plant.8
While a healthy lawn is the best deterrent for weeds, some homeowners choose to use a pre-emergent herbicide in the spring to minimize weeds. When applied at the right time, it can be effective in preventing weeds from germinating. However, a pre-emergent herbicide will also prevent grass seeds from germinating, so only use it if you don’t plan to seed or sod in the spring.
After a long winter, planting annuals and spring perennials is a great way to brighten up your garden. It’s also a good time to prune existing flowers and shrubs and remove and compost any dead plants.
A layer of fresh mulch helps to suppress weeds, retain moisture and moderate soil temperature. However, be sure to strip away old mulch at least every three years to prevent excessive buildup.9
Depending on your grass type, an application of fertilizer in the spring may help promote new leaf and root growth, keep your lawn healthy, and reduce weeds.10
Send your lawn mower out for a professional tune-up and to have the blades sharpened before the mowing season starts.11
If you have a sprinkler system, check that it’s working properly and make repairs as needed.
If you have a deck or patio, inspect it for signs of damage or deterioration that may have occurred over the winter. Then clean it thoroughly and apply a fresh coat of stain if needed.
If you own a pool, warmer weather signals the start of pool season. Be sure to follow best practices for your particular pool to ensure proper maintenance and safety.
Summer is generally the time to relax and enjoy your home, but a little time devoted to maintenance will help ensure it looks great and runs efficiently throughout the season.
- Adjust Ceiling Fans
- Clean A/C Filters
- Clear Dryer Vent
- Check Weather Stripping
Make sure they are set to run counter-clockwise in the summer to push air down and create a cooling breeze. Utilizing fans instead of your air conditioner, when possible, will help minimize your utility bills.
Be sure to clean or replace your filters monthly, particularly if you’re running your air conditioner often.
Help cut down on summer utility bills by cleaning your laundry dryer vent at least once a year. Not only will it help cut down on drying times, a neglected dryer poses a serious fire hazard.
If you’re running your air conditioner in the summer, you’ll want to keep the cold air inside and hot air outside. Check weather stripping around doors and windows to ensure a good seal.
- Mow Lawn Regularly
- Water Early in the Morning
- Weed Weekly
- Exterminate Pests
Your lawn will probably need regular mowing in the summer. Adjust your mower height to the highest setting, as taller grass helps shade the soil to prevent drought and weeds.
Ensure your lawn and garden get plenty of water during the hot summer months. Experts generally recommend watering in the early morning to minimize evaporation, but be mindful of any watering restrictions in your area, which may limit the time and/or days you are allowed to water.
To prevent weeds from taking over your garden and ruining your home’s valuable curb appeal, make a habit of pulling weeds at least once per week.
Remove any standing water and piles of leaves and debris. Inspect your lawn and perimeter of your home for signs of an invasion. If necessary, call a professional exterminator for assistance.
While this checklist should not be considered a complete list of your home’s maintenance needs, it can serve as a general seasonal guide. Systems, structures, and fixtures will need to be repaired and replaced from time-to-time, as well. The good news is, the investment you make in maintaining your home now will pay off dividends over time.
Keep a record of all your maintenance, repairs and upgrades for future reference, along with receipts. Not only will it help jog your memory, but it can also make a big impact on buyers when it comes time to sell your home … and potentially result in a higher selling price.
Are you looking for help with home maintenance or repairs? We have an extensive network of trusted contractors and service providers and are happy to provide referrals! Call or email us, and we can connect you with one of our preferred vendors.
1. HouseLogic.com –
2. Home Advisor –
3. Keyes & Sons Plumbing and Heating –
4. Allstate Insurance Blog –
5. Houzz –
6. Angie’s List –
7. Angie’s List –
8. HGTV –
9. This Old House –
10. Lowes –
11. The New York Times –
12. Better Homes and Gardens Magazine –
13. The Spruce –
14. This Old House –
15. Houzz –
Welcome to the Park City Real Estate Market Update August 2018
Park City Area Overview
In the Park City real estate market, conditions continue to favor sellers over buyers, even as fewer houses become available compared to this time last year. August 2018 found a decrease in the number of active listings for single-family homes, according to information from Park City MLS.
The 104 new listings in August 2018 represented a 17 percent increase over August 2017. Active listings decreased .2 percent to 503 over the same period. Actual sales of single-family homes also decreased over the same period. The Park City MLS reports that in August 2018, a total of 56 single homes were sold in the Park City area. This represents a 10 percent decrease over sales in August 2017.
Prices in the Park City real estate market began to fall during that year-long period. The median price of a single-family home in the Park City area decreased 7 percent between August 2017 and August 2018, to $1,375,000. Average home prices rose 7 percent during that period to $2,134,264. The dollar volume of sales during the year decreased 2 percent. In total, $120,156,261 worth of homes were sold in August 2018.
Homes spent an average of 118 days on the market in Park City, which is an increase from August 2017. Generally, high prices, limited availability, and slow sales of those homes that come up for sale make the Park City real estate market a favorable environment for sellers and buyers.
Team Schlopy Real Estate provides expert real estate services to residential buyers and sellers in Park City and surrounding communities. Contact us today for more information on Park City real estate and for professional assistance navigating this sometimes complex home market.
If you have any questions please contact us at 435.640.5660. We will be happy to help.
I’m going to segue into talking about condos in Park City. We have an amazing winter reason hopefully that we’re going to get to this year and would love to give you all the knowledge that you need to purchase or sell your property in Park City. I’m going to focus on in town.
What is available
Right now, there are 353 condos for sale. Out of those 353, 34 of them are under the purchase price of $300,000, and there’s another 77 in between the $300,000 and $600,000 price point. Out of the 111 total condos that are for sale, I’m going to focus on two bedrooms or more in the old town, Park City area. 48 of them have two bedrooms.
21 of them are strictly in the downtown, Park City area. Out of the 21, six of them have some sort of ski access, whether that is walking across the street, whether that’s walking to the Cabriolet in Canyons. But six of them have somewhat ski access.
Then in the old town area, 10 are close to either skiing or Main Street. That really limits your purchasing to be under 600,000 with those great amenities. Out of the total 10 that are in town, average price between $387,000, now, reminder, I’m talking about two plus bedrooms or more, to $575,000. Now, it’s a very small window. I mean, we’re talking about $150,000 difference in between. But that’s generally the entry purchase price coming into old town, Park City.
Average rentals, I would love to have a whole other session on that because they’re all across the board. You can have between $14,000 a year all the way up to 40,000 plus a year in rental revenue. But that’s a totally different conversation because it depends on the location, how much the owner uses it, is it a true investment.
If you want to purchase in the Park City area, entry price, 387,000 for two bedrooms, probably one bath, I would have to double check. But give me a call and I will let you know.
What does the market look like
Talking about the 353 condos that are under 600, 351 properties sold last year. If you do the math, that’s basically equivalent to what we have on the market right now, which is the absorption rate of being 12 months. That does not keep into account how many new listings get posted or how many properties sell. Keep that in mind. It’s about 12 months possibly that you may be on the market.
Now, things to consider when purchasing or selling your property. Being under $600,000, your average purchase price or sold price is 450,000. The average day on market is about 77 days. Not too bad compared to some of the other areas in the country. 77 days is really good.
The number of condos. The total amount of condos that get listed, the mass amount, so on average about 33 a month. The highest months are going to be in January, in March, or in November. You’re thinking, oh, well that sounds pretty smart. So, I’m going to list it in January at the end of the season when I can get potential buyers in the market and get sold hopefully within the 77 days. In March was also a high amount of listings posted and in November. Trying to get it on the opposite side in November before the season starts.
When to take action
But the really interesting thing is, is when people are purchasing the properties. The highest number of properties that were purchased were in September, October, and April. When you look at when to list your property, January, March, and November, maybe those aren’t the best months. I mean, March sounds like a pretty good time because you had some of the top sold properties in April. But the other two months, January and November, maybe not the most ideal time to list. My recommendation is to list in September and October, or even before that, so August, September, October, to get your property on the market and ready to go for the new season.
If you have any additional questions, contact us any time. You can reach us at TeamSchlopy.com or give me a call. You can reach me at 435-640-8717.
The residential rental market is now the fastest-growing segment of the housing market. In the United States, the demand for single-family rentals, defined as either detached homes or townhouses, has risen 30 percent in the past three years.1 And in Canada, rental units now account for nearly one-third of the country’s homes, with particular demand for multi-family units, including apartments and condominiums.2
At the same time, the short-term, or vacation rental market is also booming. The popularity of online marketplaces like Airbnb, HomeAway, and VRBO has helped the short-term rental market become one of the fastest-growing segments in the travel industry.3
Now, more than ever, there is an abundance of opportunity for real estate investors. But which path is best: leasing your property to a long-term tenant, or renting your property to travelers on a short-term basis?
In this post, we examine the differences between the two investment strategies and the benefits and limitations of each category.
WHY INVEST IN A RENTAL PROPERTY? The Top 5 Reasons
Before we delve into the differences between long-term and short-term rentals, let’s answer the question: “Why invest in a rental property at all?”
There are five key reasons investors choose real estate over other investment vehicles:
- Cash Flow
- Hedge Against Inflation
- Tax Benefits
Appreciation is the increase in your property’s value over time. And history has proven that over an extended period, the cost of real estate continues to rise. Recessions may still occur, but in the vast majority of markets, the value of real estate does grow over the long term.
One of the key benefits of investing in real estate is the ability to generate steady cash flow. Rental income can be used to pay the mortgage and taxes on your investment property, as well as regular maintenance and repairs. If appropriately priced in a solid rental market, there may even be a little extra cash each month to help with your living expenses or to grow your savings.
Even if you only take in enough rent to cover your expenses, a rental property purchase will pay for itself over time. As you pay down the mortgage every month with your rental income, your equity will continue to increase until you own the property free and clear … leaving you with residual cash flow for years to come.
Inflation is the rate at which the general cost of goods and services rises. That means as inflation rises, the money you have sitting in a savings account will buy less tomorrow than it will today. On the other hand, the price of real estate typically matches (or often exceeds) the rate of inflation. To hedge or guard yourself against inflation, real estate can be a smart investment choice.
Leverage is the use of borrowed capital to increase the potential return of an investment. You can put a relatively small amount down on a property, finance the rest of the investment with a mortgage, and then profit on the entire combined value.
Don’t overlook the tax benefits that can come with a real estate investment, as well. From deductions to depreciation to exemptions, there are many ways a real estate investment can save you money on taxes. Consult a tax professional to discuss your particular circumstances.
These are just a few of the many perks of investing in real estate. (For more detailed information, visit our previous post: Why Real Estate Investing Makes (Dollars and) Sense.) But what’s the best strategy to maximize returns on your investment property? In the next section, we explore the differences between long-term and short-term rentals.
LONG-TERM (TRADITIONAL) RENTAL MARKET
When most people think of owning a rental property, they imagine buying a home and renting it out to tenants to use as their primary residence. Traditionally, investors would use their rental property to generate an additional stream of income while benefiting from the property’s long-term appreciation in value.
In fact, that steady and predictable monthly cash flow is one of the key advantages of owning a long-term rental. And as an owner, you don’t usually have to worry about paying the utility bills or furnishing the property—both of which are typically covered by the tenant. Add to this the fact that traditional tenants translate into less time and effort spent on day-to-day property management, and long-term rentals are an attractive option for many investors.
However, there are also limitations to long-term rentals, which often come down to your ability to control the property. Perhaps the most obvious one is that you do not get to use the home or closely monitor its upkeep (this is different from a short-term rental, which we’ll share in the next section).
In addition, while you can usually generate a steady, predictable income stream with a long-term rental, you are limited in your ability to adjust rent prices based on increasing or seasonal demand. Therefore, you may end up with a lower overall return on your investment. In fact, according to data from Mashvisor, in the 10 hottest real estate markets, short-term rentals produced “significantly higher rental income” than long-term rentals.4
SHORT-TERM (VACATION) RENTAL MARKET
Short-term rentals are often referred to as vacation rentals, as more and more travelers enjoy the benefits of staying in a home while on vacation. In fact, according to Wells Fargo, vacation rentals are steadily growing and predicted to account for 21% of the worldwide accommodations market by 2020.5
Investing in a short-term rental or funding your second-home purchase by renting it out can offer many benefits. If you purchase an investment property in a top travel destination or vacation spot, you can expect steady demand from travelers while taking advantage of any non-rented periods to enjoy the home yourself. In addition to greater control over how your property is used, you can also adjust your rental price around peak travel demand to maximize your returns.
But short-term rentals also have risks and drawbacks that may dissuade some investors. They require greater day-to-day property management, and owners are typically responsible for furnishing the property, upkeep, and utilities.
And while rental revenue can be higher, it can also be less predictable based on seasonal or consumer travel trends. For example, a lack of snowfall during ski season could mean fewer bookings and lower rental revenue that year.
In addition, laws and limitations on short-term rentals can vary by region. And in some areas, the regulations are in flux as residents and government officials adapt to a new surge in short-term rentals. So make sure you understand any existing or proposed restrictions on rentals in the area where you want to invest.
Urban centers or suburban communities may be more resistant to short-term renters, thus more likely to pass future limitations on use. To lower your risk, you may want to consider properties in resort communities that are accustomed to travelers. We can help you assess the current regulations on short-term rentals in our area. Or if you’re interested in investing in another market, we can refer you to a local agent who can help.
WHICH INVESTMENT STRATEGY IS RIGHT FOR YOU?
Now that you understand these two real estate investment options, how do you pick the right one for you? It’s helpful to start by clarifying your investment goals.
If your goal is to generate steady, predictable income with less time and effort spent on property management, then a long-term rental may be your best option. Also, if you prefer a less-risky investment with more reliable (but possibly lower) returns, then you may be more comfortable with a long-term rental.
On the other hand, if your goal is to purchase a vacation or second home that you’ll use, and you want to defray some (or all) of the expense, then a short-term rental may be a good option for you. Similarly, if you’re open to taking on more risk and revenue volatility for the possibility of greater investment returns, then a short-term rental may better suit your spirit as an investor.
But sometimes the decision isn’t always so clear-cut. If your goal is to purchase a future retirement home now to hedge against inflation, rising real estate prices, and interest rates, then both long- and short-term rentals could be suitable options. In this case, you’ll want to consider other factors like location, market demand, property type, and your risk tolerance.
HERE OR ELSEWHERE … WE CAN HELP
If you’re looking to make a real estate investment—whether it’s a primary residence, investment property, vacation home, or future retirement home—give us a call. We’ll help you determine the best course of action and share insights and resources to help you make an informed decision. And if your plans include buying outside of our area, we can refer you to a local agent who can help. Contact us to schedule a free consultation!
The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult the appropriate professionals for advice regarding your individual needs.
1. USA Today –
2. The Globe and Mail –
3. Phocuswright –
4. Rented.com –
5. Turnkey Vacation Rentals –
We have just received our midyear final numbers for what’s going on in the market, so I want to talk about single-family homes that are selling in the Wasatch Valley area.
We’ve got Heber Valley and then we’ve got Kamas Valley, both that are also performing very well. Kamas has an increase of … Well, they have the highest increase in property value increased compared to everywhere else in the area, at a 44%. They have increased their average single-family home sale by $153,000. Talk about amazing.
Now, when you take that in comparison to what’s going on in the area, Kamas is a wide range of properties. You’ve got your seasonal cabin properties, you have your full-time cabin properties, you have your single-family homes, but there’s not a ton of new construction that’s happening in Kamas. It’s one of those areas that I think … Of course, I’m saying, “Watch everything. Watch everything.” Well, that’s what we’re here for. We will watch it for you, so if you are interested in that area, there are some great little pockets of properties that I would definitely recommend for somebody who’s looking for more of the country life.
So, total, 44% increase, but they didn’t have too many additional homes sold year over year. They only increased two homes for the entire year, so if that tells you that that market on that side, there’s not a lot of homes available, so when the perfect home opens up in Kamas, I would definitely put in an offer as soon as you can, because they’re moving quickly, because there isn’t many available.
Now, in the Heber Valley, it’s kind of all across the board. You’ve got a very wide area, from Timber Lakes all the way to Midway, and it pushes as far north and as far south as you can go in the valley. I took out a private golf community, which is Red Ledges, which has also a huge amount of traction. Two years ago, they only sold 23 homes. This year, 43, so they have nearly doubled the number of homes that they’re selling in Red Ledges, and we’re finding in the Park City area, we have several homeowners that have lived in Park City that are moving to Red Ledges, so I think we’ve had, just in the last year, four sellers that were moving from Park City to Red Ledges in Heber Valley.
They have two golf courses. They have pools. They have all of the amenities that you can have at a lower purchase price than you can get in Park City, so a lot of downsizing that’s happening. Great location, beautiful views of Mount Timpanogos. Definitely, a destination to visit while you’re here, in your tour of homes. But taking that out, they increased their total dollar purchasing price up to 126,000 year over year. If you take out the Red Ledges, Heber’s been growing at a good pace at just 13% over the prior year, at a total of just $64,000 increase for year over year.
So, that is my total of everything that’s going on in the surrounding Wasatch Valley, so would love to take you around and show you what’s available, and great homes to take a look at. Give us a call. You can reach us at Team Schlopy. You can call us at area code 435-640-5660.
We have just received our midyear final numbers for what’s going on in the market, so I want to talk about single-family homes that are selling in our area.
First, I think everybody loves to be Downtown Park City, so if that’s the case, I’ve got some great ideas for you on purchasing and selling in the area. Out of the nine subareas, Old Town being, I would say, the most desirable, closest to the ski resorts, and also Main Street. We’re coming in at approximately $800 a square foot to purchase a single-family home.
Now, out of the 57 properties that have sold in the Old Town area, the new construction is selling at $1,000 per square foot, so if you wanted to get a little bit more of a deal, you might want to purchase something that may be a little bit older, may need a little bit more work, but that would give you automatic equity moving forward in this market.
Upper Deer Valley
Also, other areas to kind of keep an eye out on. I feel like I have found the best deal in all of Park City, which is going to be in the Upper Deer Valley Mountain Resort. Out of the 11 properties that sold up there, the average property that was on the market for more than 300 days sold at a 90% to list, which is by far lower than any other area in Park City. The average percentage-to-list price that the properties are selling for are about 98 to 99% to list, so if you’re looking for that best deal, Upper Deer Valley is where I would start showing you properties.
Turn on the television or scroll through Facebook, and chances are you’ll see at least one advertisement for a group or “guru” who promises to teach you how to “get rich quick” through real estate investing. The truth is, much of what they’re selling are high-risk tactics that aren’t a good fit for the average investor. However, there is a way to make steady, predictable, low-risk income through real estate investing. In this blog post, we’ll examine the tried-and-true tactics that can be used to increase your income, pay off debt … even fund your retirement!
WHY INVEST IN REAL ESTATE?
One of the basic principles of real estate investment lies in this fact: everyone needs a place to live. And according to the Bureau of Labor Statistics’ most recent Consumer Expenditures Survey, housing is typically an American’s largest expense.1
But there are other reasons why real estate is a great investment choice, and we’ve outlined the top five below:
It’s easy to get swept up in the excitement of buying a home. Once you’ve had an offer accepted on your dream house, you’ll probably be anxious to move in. However, before you make a significant financial commitment, it’s best to know exactly what you’re buying.
When you hire a home inspector, you get a professional, in-depth examination of the property’s structures and systems. It’s a worthwhile investment that can save you money in the long run, either by warning you away from a bad purchase or by providing a list of deficiencies you can use to negotiate with the sellers.
The inspector’s report will also list minor repairs that, if made, will help to maintain your home over the long term. Additionally, a good inspector can often predict the standard life expectancy of your roof, HVAC, and other big-ticket items so you can start planning for their eventual replacement.
However, many buyers make mistakes during the inspection process that cost them time and money and lead to unnecessary stress. Avoid these eight common buyer blunders to minimize your risk, protect your investment, and give yourself peace of mind and confidence in your new home purchase.
MISTAKE 1: Skip Your Own Inspection
Welcome to the Park City Real Estate Market Update June 2018
Park City Area Overview
In the Park City real estate market, conditions continue to favor sellers over buyers, even as fewer houses become available compared to this time last year. June 2018 found a decrease in the number of active listings for single-family homes, according to information from Park City MLS.
The 129 new listings in June 2018 represented a 19.88 percent decrease over June 2017. Active listings decreased 7 percent to 467 over the same period. Actual sales of single-family homes also decreased over the same period. The Park City MLS reports that in June 2018, a total of 66 single homes were sold in the Park City area. This represents a 7 percent decrease over sales in June 2017.
Prices in the Park City real estate market continued to climb during that year-long period. The median price of a single-family home in the Park City area increased 38 percent between June 2017 and June 2018, to $1,580,000. Average home prices rose 20 percent during that period to $1,959,908. The dollar volume of sales during the year increased 1 percent. In total, $98,466,940 worth of homes were sold in June 2018.
Homes spent an average of 107 days on the market in Park City, which is an increase from June 2017. Generally, high prices, limited availability, and quick sales of those homes that come up for sale make the Park City real estate market a favorable environment for sellers.
Team Schlopy Real Estate provides expert real estate services to residential buyers and sellers in Park City and surrounding communities. Contact us today for more information on Park City real estate and for professional assistance navigating this sometimes complex home market.
If you have any questions please contact us at 435.640.5660. We will be happy to help.
Welcome to the Park City Real Estate Market Update May 2018
Park City Area Overview
In the Park City real estate market, conditions continue to favor sellers over buyers, even as fewer houses become available compared to this time last year. May 2018 found a decrease in the number of active listings for single-family homes, according to information from Park City MLS.
The 122 new listings in May 2018 represented a 12 percent increase over May 2017. Active listings decreased 3 percent compared to the same period. Actual sales of single-family homes also increased over the same period. The Park City MLS reports that in May 2018, a total of 65 single homes were sold in the Park City area. This represents a 35 percent increase over sales in May 2017.
According to the National Association of Realtors, staging a home prior to listing it can result in a faster and more profitable sale.1 In fact, the Real Estate Staging Association estimates that professionally staged properties spend 73 percent less time on the market, receive more foot traffic, and typically sell for more money.2
Following are 10 tips you can use to get your home “show ready” prior to hitting the market. These easy and cost-effective ideas will help your house look its best—and help buyers visualize themselves living there. Even if you’re not currently in the market to sell, you can use these tactics to breathe new life into your existing home decor.
To get a plan customized for your particular property, give us a call to schedule a free consultation. We’d be happy to share our insider knowledge of the buyer preferences in your neighborhood … so you’ll know where to focus your time, money and energy to maximize your results.
The NEW Kings Crown road is now under construction! We have attached an aerial video which was filmed on June 13th that shows the progress to date.
The new road construction will continue through the summer months with completion scheduled for the month of October.
Lot number and boundary markers will soon be in place for scheduled site tours.
Kings Crown Park City is one of the most beautiful, and desirable areas in Park City. Highly accessible from many vantage points around Old Town and beyond, Kings Crown is now among the crown jewels in Utah real estate.
Kings Crown includes a unique opportunity to enjoy Old Town charm and history with all the modern amenities that make Park City one of the top resort destinations in the world. The development includes 27 single-family lots and 7 luxury Crownhomes. These are carefully designed to reflect the rich history of Park City’s mountain mining heritage.
Mountain to Main Street is the mantra for the community. Kings Crown offers a unique living space that will provide residents with a gateway to world-class skiing, biking, and hiking, as well as walking access to Park City’s iconic Main Street and its vast array of shopping and dining experiences.
The lots priced between $850,000 and $2.2 million. Those who purchase the single-family lots will have the opportunity to choose their own builders and follow the community CC&Rs. The single-family lots will accommodate builds starting at 1,875 square feet.
The ski-in/ski-out Crownhomes are available starting at the shell price of $3,666,124.80, with two interior finish scheme options and three different floor plans.
For more information on this development and the availablity, call Team Schlopy at 435.222.4858 or go to ParkCityKingsCrown.com.
We all know that Darth Vader dominated the Galactic Empire. Just like Darth Vader, we need to dominate the Park City Real Estate Market. Here is Darth Vader’s Guide to Buying Park City Real Estate.
1. I sense something. A presence I have not felt since… Feel the presence of the Neighborhoods.
If you really want to know the neighborhoods, there are only two things to look for; One is the Neighborhood Cycle and the other is Lifestyle.
There are four stages in this cycle:
· Growth: A period during there are gains in public favor and acceptance. Demand increases.
· Stability: A period of equilibrium without marked gains or losses. No real obvious change.
· Decline: Period of diminishing demand and acceptance.
· Renewal: A period of rejuvenation and rebirth of market demand.
(Sacrament Appraisal Blog Four Stages, August 6th, 2012)
You will want to place yourself at the end of renewal and the beginning of the growth cycles. This is before the demand goes up as well as the prices. When homes are updating in certain neighborhoods it is often a great indication that this neighborhood is in the renewal stages. Keep your eyes on those neighborhoods… they will be the most sought-after homes.
You may have heard of living the “Park City Lifestyle.” This lifestyle is not a one size fits all, in fact, there are a plethora of choices. Each neighborhood, (believe it or not), fits certain lifestyles. For example, if you have children, there are certain neighborhoods suited for family living. If you are a retiree, there are quiet neighborhoods that will support your lifestyle. And for the socialites, there are areas with easy access to events and the nightlife. If you are outdoorsy, there is a place for you close to trails, ski-in/ski-out. If you are a… Ok, Ok, I will stop, you get it. Park City is unique with the small town atmosphere, that supports everyone’s lifestyle.
2. Don’t Fail me again, Admiral… I want this house.
Inventory is still low BUT we are finding new houses on the market that are in high demand. If you have found a house you want, and it has only been on the market for a short period of time, MAKE AN OFFER! The perfect house is like fresh meat among piranhas. There will be other offers, so make it a good one.
3. When I left you, I was but the learner. Now I am the master. Know your schools.
Schools in the Park City are excellent. Take notice of the school locations within the district. They may have an effect on where you will buy.
4. If you will not fight, then you will meet your destiny… of not having this home.
Real Estate is give and take. When you are negotiating make sure you have your top five needs, repairs, or request written out. Work with the price and your top five. Since inventory is low, you will have to meet half-way with the sellers most of the time.
5. I am altering the deal. Pray that I don’t alter it any further. Walk Away.
I know, I said to meet half way above. But sometimes there are important things that you don’t want to compromise. If this is the case… WALK AWAY.
“Patience, Young Jedi.” Sometimes, that house will remain on the market and will come back around. Some sellers will even have the price lowered than what you negotiated.
In a seller’s market, often times sellers are set on the listing price. This due to their confidence in the market. However, during these times buyers take notice. We recently had an offer on the table for one of our listings. Seller came back too high. Buyer walked away.
6. We can rule this empire together.
With all that we have shared in this post, you will be able to rule the Park City Real Estate Market working with Team Schlopy. “May the Force be with you,” said Darth Vader, never.