Mid-Priced Homes Dominate November Sales

Thanksgiving is behind us, and Christmas and New Year's are ahead of us. This is usually the time of year when no one thinks about buying or selling a house, but times have changed.

In Millburn-Short Hills there are currently 91 homes on the market, according to Garden State MLS. This is down slightly from October, where there were 103 active listings. Low interest rates, however, are still driving activity in the marketplace. Sellers recognize this demand and are not waiting for the "spring market" to list their homes. In November 22 new houses were listed for sale. This compares to only two during the same period last year.

In addition, there are 48 properties currently under contract, of which 22 went under contract since Nov. 1.

Rentals also continue to be strong in the real estate marketplace. There are 46 properties for rent, and 12 of those newly listed in November.

Of all the houses currently listed for sale, prices range between $209,000 and $9,995,000. Fifty-two of those properties are priced at over $1 million, with only 39 being less.

The following is a summary of what sold in the last month (November 1-30, 2010):

• 93 Meadowbrook Rd. – Colonial – 3 Bed/2.5 Bath - $520,000
• 7 Rahway Rd. – Colonial – 4 Bed/3.5 Bath - $670,000
• 396 Wyoming Ave. – Colonial – 4 Bed/3.5 bath - $700,000
• 168 Old Short Hills Rd. – Split Level – 5 Bed/3.5 Bath - $760,000
• 2 Bruce Path – Colonial – 4 Bed/3.5 Bath - $878,000
• 2 Farview Rd. – Expanded Ranch – 4 Bed/2.5 Bath - $875,000
• 10 Byron Rd. – Split Level – 4 Bed/3.5 Bath - $930,000
• 115 Slope Dr. – Expanded Ranch – 6 Bed/3.5 Bath - $1,500,000

Renting Out Your House for Profit

Renting out your house can be a smart financial move, as long as you calculate your costs carefully. It could be a profitable alternative to selling, but it requires an investment of time, money and organization to make it work. Here's how to determine whether renting out your house is worth the cost.

Calculate your monthly expenses

You want to charge at least enough to cover your monthly outlay. This includes regular expenses like mortgage, maintenance and any homeowners association dues. 

You may also need to upgrade your insurance coverage. Your agent can advise you about adding landlord insurance, a special type of policy that covers rental properties. These typically cover property damage, liability and lost rental income among other things. As a rule, landlord insurance costs about 25 percent more than standard homeowners insurance. Many landlords will also require the tenant to carry renters insurance to cover damage to the content and their personal belongings.

If you're renting the house furnished, make sure you're covered for the personal possessions you leave behind. Owners should prepare a detailed inventory of household items. If you're renting the house unfurnished, figure in the costs of moving and storing your items.

Check out prospective tenants

As a practical matter, you should formally check out your prospective renters. Your real estate agent can help provide a credit report and income verification. Additional information is also available (e.g.: eviction reports and criminal background reports) at minimal costs, but you must get your prospects' permission. 

Account for maintenance and upgrades

Even with the most scrupulous checks, you can't be completely sure renters will take good care of your home. If you're not within easy driving distance of your rental property, you should arrange for someone else to keep an eye on the place even if it's just to make sure the property looks like it is being kept in good condition from the outside. If the tenants are neglecting upkeep, you'll want to know about it sooner rather than later since it could be a warning sign of trouble down the line.

Of course, even if the renters are conscientious, problems can crop up—boilers will fail, roofs may leak, washing machine hoses can burst. If household systems or appliances need repair or replacement, you're better off spending the money up front, before the fix becomes an expensive emergency. 

You may also want to invest in some of the "extras" that may attract a tenant willing to pay a higher rent. These may include things like air conditioning, expanded-channel cable TV and a Wi-Fi network.

Keep scrupulous records

Keep in mind being a landlord is a business, so you'll have to keep detailed records. Save receipts for any expenses and file them carefully. The IRS treats maintenance expenditures, like a new hot-water heater, differently from capital improvements, such as a new deck or patio. You will likely have to file Schedule E on Form 1040 (Supplemental Income or Loss from Real Estate), which can also serve as a template for the kinds of records you'll need. Consult a tax professional for the details pertaining to your specific situation.

Finally, because of the complex tax and liability issues involved, many financial experts suggest forming a corporation when you become a landlord. An attorney can advise you about whether incorporating makes sense in your situation.