MONEY Millennials

5 Big Myths About What Millennials Truly Want

150119_EM_MillennialMyth
Jamie Grill—Getty Images

We've heard a ton about millennials—where they want to live, what they love to eat, what's most important to them in the workplace, and so on. It's time to set the record straight.

In some ways, it’s foolish to make broad generalizations about any generation, each of which numbers into the tens of millions of people. Nonetheless, demographers, marketers, and we in the media can’t help but want to draw conclusions about their motivations and desires. That’s especially true when it comes to the young people who conveniently came of age with the Internet and smartphones, making it possible for their preferences and personal data to be tracked from birth.

Naturally, everyone focuses on what makes each generation different. Sometimes those differences, however slight, come to be viewed as hugely significant breaks from the past when in fact they’re pretty minor. There’s a tendency to oversimplify and paint with an exceptionally broad brush for the sake of catchy headlines and easily digestible info nuggets. (Again, we’re as guilty of this as anyone, admittedly.) The result is that widely accepted truisms are actually myths—or at least only tell part of the story. Upon closer inspection, there’s good reason to call these five generalizations about millennials into question.

1. Millennials Don’t Like Fast Food
One of the most accepted truisms about millennials—easily the most overexamined generation in history—is that they are foodies who love going out to eat. And when they eat, they want it to be special, with fresh, high-quality ingredients that can be mixed and matched according to their whims, not some stale, processed cookie-cutter package served to the masses.

In other words, millennials are huge fans of Chipotle and fast-casual restaurants, while they wouldn’t be caught dead in McDonald’s. In fact, the disdain of millennials for McDonald’s is frequently noted as a prime reason the fast food giant has struggled mightily of late.

But guess what? Even though survey data shows that millennials prefer fast-casual over fast food, and even though some stats indicate millennial visits to fast food establishments are falling, younger consumers are far more likely to dine at McDonald’s than at Chipotle, Panera Bread, and other fast-casual restaurants.

Last summer, a Wall Street Journal article pointed out that millennials are increasingly turning away from McDonald’s in favor of fast casual. Yet a chart in the story shows that roughly 75% of millennials said they go to McDonald’s at least once a month, while only 20% to 25% of millennials visit a fast-casual restaurant of any kind that frequently. Similarly, data collected by Morgan Stanley cited in a recent Business Insider post shows that millennials not only eat at McDonald’s more than at any other restaurant chain, but that they’re just as likely to go to McDonald’s as Gen Xers and more likely to dine there than Boomers.

At the same time, McDonald’s was the restaurant brand that millennials would least likely recommend publicly to others, with Burger King, Taco Bell, KFC, and Jack in the Box also coming in toward the bottom in the spectrum of what millennials find worthy of their endorsements. What it looks like, then, is that millennials are fast food regulars, but they’re ashamed about it.

2. Millennials Want to Live in Cities, Not Suburbs
Another broad generalization about millennials is that they prefer urban settings, where they can walk or take the bus, subway, or Uber virtually anywhere they need to go. There are some facts to back this up. According to an October 2014 White House report, millennials were the most likely group to move into mid-size cities, and the number of young people living in such cities was 5% higher compared with 30 years prior. The apparent preference for cities has been pointed to as a reason why Costco isn’t big with millennials, who seem to not live close enough to the warehouse retailer’s suburban locations to justify a membership, nor do their apartments have space for Costco’s bulk-size merchandise.

But just because the percentage of young people living in cities has been inching up doesn’t mean that the majority actually steer clear of the suburbs. Five Thirty Eight recently took a deep dive into Census data, which shows that in 2014 people in their 20s moving out of cities and into suburbs far outnumber those going in the opposite direction. In the long run, the suburbs seem the overwhelming choice for settling down, with roughly two-thirds of millennial home buyers saying they prefer suburban locations and only 10% wanting to be in the city. It’s true that a smaller percentage of 20-somethings are moving to the suburbs compared with generations ago, but much of the reason why this is so is that millennials are getting married and having children later in life.

3. Millennials Don’t Want to Own Homes
Closely related to the theory that millennials like cities over suburbs is the idea that they like renting rather than owning. That goes not only for where they live, but also what they wear, what they drive, and more.

In terms of homes, the trope that millennials simply aren’t into ownership just isn’t true. Surveys show that the vast majority of millennials do, in fact, want to own homes. It’s just that, at least up until recently, monster student loans, a bad jobs market, the memory of their parents’ home being underwater, and/or their delayed entry into the world of marriage and parenthood have made homeownership less attractive or impossible.

What’s more, circumstances appear to be changing, and many more millennials are actually becoming homeowners. Bloomberg News noted that millennials constituted 32% of home buyers in 2014, up from 28% from 2012, making them the largest demographic in the market. Soaring rents, among other factors, have nudged millennials into seeing ownership as a more sensible option. Surveys show that 5.2 million renters expect to a buy a home this year, up from 4.2 million in 2014. Since young people represent a high portion of renters, we can expect the idea that millennials don’t want to own homes to be increasingly exposed as a myth.

4. Millennials Hate Cars
Cars are just not cool. They’re bad for the environment, they cost too much, and, in an era when Uber is readily available and socializing online is arguably more important than socializing in person, having a car doesn’t seem all that necessary. Certainly not as necessary as a smartphone or broadband. Indeed, the idea that millennials could possibly not care about owning cars is one that has puzzled automakers, especially those in the car-crazed Baby Boom generation.

In many cases, the car industry has disregarded the concept, claiming that the economy rather than consumer interest is why fewer young people were buying cars. Whatever the case, the numbers show that the majority of millennials will own cars, regardless of whether they love them as much as their parents did when they were in their teens and 20s. According to Deloitte’s 2014 Gen Y Consumer Study, more than three-quarters of millennials plan on purchasing or leasing a car over the next five years, and 64% of millennials say they “love” their cars. Sales figures are reflecting the sentiment; in the first half of 2014, millennials outnumbered Gen X for the first time ever in terms of new car purchases.

5. Millennials Have a Different Attitude About Work
As millennials entered the workforce and have become a more common presence in offices around the world, much attention has been focused on the unorthodox things that young people supposedly care more about than their older colleagues. Millennials, surveys and anecdotal evidence have shown, want to be able to wear jeans and have flexible work hours to greater degrees than Gen X and Boomers. Young people also want to be more collaborative, demand more feedback, and are less motivated by money than older generations.

That’s the broad take on what motivates millennial workers anyway. An IBM study on the matter suggests otherwise, however. “We discovered that Millennials want many of the same things their older colleagues do,” researchers state. There may be different preferences on smaller issues—like, say, the importance of being able to dress casually on the job—but when it comes to overarching work goals achieved in the long run, millennials are nearly identical to their more experienced colleagues: “They want financial security and seniority just as much as Gen X and Baby Boomers, and all three generations want to work with a diverse group of people.”

What’s more, IBM researchers say, millennials do indeed care about making more money at work, and that, despite their reputation as frequent “job hoppers,” they jump ship to other companies about as often as other generations, and their motivations are essentially the same: “When Millennials change jobs, they do so for much the same reasons as Gen X and Baby Boomers. More than 40 percent of all respondents say they would change jobs for more money and a more innovative environment.”

MONEY home improvement

The Best Kitchen Countertop for Your Money

For Sale sign illustration
Robert A. Di Ieso, Jr.

Q: I’ve been dreaming of granite countertops for years, but now that I’m finally planning my kitchen redo, I’m seeing “quartz” in all the showrooms. What exactly is it, and should I use it instead?

A: Quartz is another way of referring to “engineered stone” countertops—manmade surfaces created from chunks of stone mixed with resins and coloring. (This is not to be confused with “quartzite” or “natural quartz,” both of which refer to a solid-stone alternative to granite.)

Manufactured quartz is now the leading countertop material in the land, according to the National Kitchen and Bath Association. It surpassed granite in 2014, at least for kitchens created by NKBA members. (We’re betting granite still wins if you count all of the kitchens built without a professional designer.)

Quartz has many advantages over granite, including that it’s impervious to stains and stands up to acidic foods, and it does this without ever needing to be sealed. It’s also far more scratch and chip resistant—and it’s generally considered a greener choice because it’s made from waste stone and therefore doesn’t require mining slabs or shipping them around the globe, both of which are carbon-intensive processes for natural granite and marble.

The downside to quartz—at least for some people—has always been that the patterns looked so uniform and consistent that they don’t quite pull off the look of real stone. But lately manufacturers have figured out how to create irregularity in their quartz, effectively mimicking the natural-looking variegation of granite and even the swirls of marble, in a nearly indestructible material.

“Gone are the days of flecked quartz countertops,” says Sacramento kitchen designer Kerrie Kelly. “Now there is movement and veining that mimics the look of real stone.” She no longer even displays granite in her showroom and only shows marble as a backsplash material. “It’s all about functionality today,” she says. “From furniture fabric to tile grout to countertops, low maintenance is the trump card.”

Quartz generally runs about $80 per square foot (installed), Kelly says, putting it right in the middle between granite (about $75) and marble (about $85). Some of the leading brand names include Silestone, Zodiaq, Cambria, and Caesarstone.

If you’re curious, here are the countertop materials most commonly specified by kitchen designers last year, according to the NKBA:

  • Quartz—88%
  • Granite—83%
  • Marble—43%
  • Solid surface—43%
  • Butcher block—35%
  • Other wood—29%
  • Other stone—26%
  • Recycled countertops—22%
  • Stainless steel—17%
  • Concrete—13%
  • Glass—11%
  • Tile—6%
MONEY home improvement

The 7 Best Home Improvements for $500 or Less

AG-Trac Enterprises, LLC

Give your home's look a makeover without breaking the bank.

When it comes to upgrading our homes, there seems to be a never-ending list of things to do. There are the upgrades we’d love to make, like buying new furniture or replacing countertops. And then there are the things we have to fix, like inefficient appliances or a leaking roof. But there are a whole range of inexpensive improvements that don’t take much effort but can go a long way toward increasing your enjoyment of your home—and adding to its value too.

Here are 5 such upgrades you can make for less than $500.

1. Increase curb appeal

Even if you’re not planning on selling your home, curb appeal is important. For you, that might mean pressure-washing the driveway (rent one for about $100 per day), repairing broken stairs, or updating your mailbox (anywhere from $50 to $200, depending on style). Sometimes upgrading curb appeal is simply a matter of spending time in the yard and getting your hands dirty by edging the lawn, trimming hedges, or pulling weeds. To keep costs down, plant perennials that keep their greenery all year long and invest time in maintaining your garden tools so you don’t have to purchase new ones.

Read more about budget-friendly curb appeal projects

Paulsen Construction Services Inc
Paulsen Construction Services Inc

2. Fix the front door

Your front entrance can say a lot about your home. Upgrading to a high-end fiberglass door can cost more than $1,000, but you can get a whole new look for a lot less simply by adding new hardware and a fresh coat of paint. Installing a new doorbell (kits cost about $50 to $100) or updating the lighting (anywhere from $25 to $100) are also inexpensive fixes that can add instant appeal to the front entry. Pair your newly painted door with a clean doormat ($20) or fresh pot of flowers, and you’ll have a whole new entrance for under $500.

3. Repair interior walls and paint

If your walls are a standard height, it’s easy to make simple repairs like patching holes or sanding. It’s also fairly easy to prime and paint your walls, which can instantly upgrade the look of any room. You’ll need to buy paint and primer (most brands start around $30 per gallon) plus painter’s tape, brushes and rollers. (Read this to learn more about how to budget for your painting project.)

Painting can get complicated and expensive if you need to repair a significant amount of drywall, remove mold, or have really tall ceilings, so always consult a professional if you feel you might be in over your head.

4. Update lighting and change bulbs

The lighting fixtures in your home are like jewelry on an outfit—they can instantly add pizzazz or look dated. Switching out a chandelier or sconce is a fairly easy, budget‐friendly project. Shop big-box stores for inexpensive pendants, or ask about floor sample sales at retail outlets. Plan on spending at least $200 for a large fixture, about $100 for a bathroom vanity light, and $100 or less for a wall sconce. If you’re on a tight budget, consider using the fixtures you already have but updating them with a coat of spray paint, a new light shade, or a dimmer switch. To make sure you’re really adding value, switch to energy efficient bulbs like LEDs (about $7 for a 60W equivalent) or CFLs (about $9 for a 60W equivalent) bulb. Although both are more expensive than an incandescent bulb, they last longer and require less energy.

Normandy Design Build Remodeling
Paulsen Construction Service Inc.

5. Install new toilets

Your motivation for buying and installing a new toilet may be for aesthetic reasons, but newer toilets can also save you money. Toilets installed prior to 1995 use as much as 6 gallons of water per flush; newer WaterSense models use as little as 1.2 gallons.

Over time this can represent thousands of gallons of water you won’t have to pay for. Additionally, older toilets are more likely to leak, wasting even more water and money. A slowly running toilet can waste as much as 200 gallons of water a day. Replacing a toilet (about $100‐$200) isn’t hard for an experienced DIYer. But call the plumber if you have other leaks in the bathroom or kitchen; getting them fixed will save you water and money.

6. Maintain your mechanics

Just like maintaining a car, regularly having your appliances and mechanical devices inspected and tuned up can save you lots of money in the long run. Major repairs or replacements can run into the thousands, but a simple check up might be as little as $100. Ask your serviceperson to let you know about any special customer care programs. Sometimes long-term customers are rewarded with free inspections or discounted servicing. (Thinking about DIY appliance repair? Read this first.)

7. Monitor energy usage

There are many smart-home devices on the market aimed at letting you get to know your home habits and helping you save money on energy or utility costs. Devices like Iris (Comfort & Control kit is $80) can help you regulate the temperature of your home and alert you to any unexplained changes. Add-on devices like the Utilitech Water Leak system ($30) can alert you to water leaks. Ultimately these devices help you save money on your energy and utility bills and keep you from expensive repairs down the line.

Anne Reagan is editor-in-chief of Porch.com.

Read more:

How to Budget Your Painting Project
5 Budget-Friendly Updates to Boost Your Home’s Curb Appeal
Fix Leaks & Start Saving Money

MONEY home improvement

7 Things Every Remodeling Contract Must Have

Q: The builder who’s doing my family room addition handed me a fill-in-the-blanks form contract with handwritten details and numbers. It looks about as unofficial as can be. Is that a problem? What should a remodeling contract include?

A: A contract doesn’t have to be printed off a computer—or contain a bunch of legalese—to get the job done. But it should clearly state the arrangement that you and your contractor have about the project, and it sounds like this document probably doesn’t do that very well.

“Putting everything in writing helps clarify both parties’ expectations at the beginning,” says Fairfield, Conn., construction attorney Neal Moskow. “And it’s much easier to fulfill your expectations at the end if they’re clearly stated from the start.”

The safest bet is to have your attorney draw up a contract for you. But even if you choose a less formal approach, here are the basic elements Moskow recommends including—either by typing up a new document or just making handwritten changes on the existing form, as long as both you and the contractor initial each change.

 

1. A description of the project. The contract should include a project description that thoroughly outlines all of the work, materials, and products that will go into the job. That includes everything from what will be demolished to what will be constructed—and each different material and fixture that will be used, with its associated cost. It should also specify that the contractor will obtain all of the necessary permits (and close them out by getting the required certificates of occupancy) and dispose of the debris properly, and that the project is covered by his liability and workman’s compensation insurance.

2. How (and how often) the contractor will be paid. Not only should the contract state the total project price, but it should also outline the timing and amount of installment payments based on project milestones, such as when the foundation is completed, the rough plumbing and electricity are installed, or the wallboard and trim are done. Your initial payment at the start of the job should be no more than 10% of the project cost. If the contractor has to immediately place orders for expensive items such as windows or cabinets, offer to pay the supplier directly. The final payment should be at least 10%, payable only when the “punch list” (the roundup of final project details) is completed to your satisfaction.

3. Lien waivers. Here’s a scary thought: Any worker who comes to your house as part of a remodeling crew could place a lien on your property, claiming he was never paid for his work—even if you have paid the contractor in full. So write into the contract that your contractor must provide you with a “lien waver” for each installment before you pay the next one. What that means is that the invoice for each payment needs to include a signed statement indicating that the contractor used your previous payment to pay for the labor and materials described in its invoice. That gives you some legal protection against liens from him or his employees and subcontractors.

4. Approximate project dates. Discuss approximate start and end dates for the project with your contractor and write them into the contract. The point is not to hold him to an exact date but to ensure that you both have an understanding of when work will commence and—barring weather interruptions or major plan changes—about when it will be completed.

5. A procedure for changes. Write in that no changes to the original plan can commence until the contractor has given you a clear description of the new work, how much it will cost, and how it will affect the schedule—and until you have given written approval. Change orders should be done with pen and ink (or by text or email). If you ever make a verbal agreement on the fly, follow up with an email to the contractor restating the details and your approval, and ask him to respond with a confirming email that you got the details right, so you have a written record.

6. An escape hatch. Some states’ consumer protection laws give homeowners three days to rescind a contract without penalty. And it’s a good idea to write in just such protection for yourself if you’re not in one of them. This prevents you from losing your deposit if, for example, you sign the contract and then find out that there’s a problem with your credit line and you don’t have the funds you thought you did.

7. Signatures. A contract isn’t a binding legal document unless it’s signed by both parties—and in some states, it also must include the contractor’s license number and both of your addresses.

Read next: What Your Contractor Really Means When He Says…

 

MONEY Investing

The Low-Risk, High-Reward Way to Buy Your First Investment Property

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Fuse—Getty Images

These four questions will help you be a more successful real estate investor.

When I first read Brandon Turner’s article, “How to ‘Hack’ Your Housing and Get Paid to Live for Free,” it was like a light switch flipped in my head. That was the first article that truly made sense to me as a wannabe investor. It seemed so clear, so right, so obvious that everyone’s first real estate investment should be in a small multi-family property.

I immediately set out to implement this strategy — to buy a property, to move into it, rent out the accompanying units, and to start living for free. Unfortunately, I quickly ran into a little problem: I had set myself up to attempt to meet four seemingly impossible criteria:

  1. The property needed to be affordable with conventional financing.
  2. The property needed to be in a location that I wanted to live in.
  3. The property needed to generate positive cash-flow.
  4. The property needed to offer a reasonable chance at appreciation.

After spending six months looking for an investment property to acquire house-hacking style, I’m not convinced that the truly difficult thing for a first time investor is in getting financing, or even in finding properties that cash-flow sufficiently. The truly difficult problem for me was deciding on where I wanted to make that commitment. Buying a rental property that you intend to live in and actively manage is more than just a financial commitment. You are likely going to live, work, and invest in that area for at least the next few years.

I actually feel that I had plenty of opportunities to purchase duplexes and fourplexes that would have been decent from a cash-flow and appreciation standpoint within 20-50 miles of Denver. Those opportunities seemed almost too easy. The real trick in my opinion is buying those types of properties right downtown. I’m talking inside the city limits.

I’ll admit it, I’m a spoiled, immature 24-year-old, and I refuse to live in an area that isn’t near the heart of my city (Denver, CO). I want to be close to where my 20-something friends live — by Coor’s Field, downtown restaurants and nightlife, convenient to I-70 (the highway that grants easy access to the awesome Rocky Mountains), and, of course, right by my workplace.

In this article, I want to walk through why I believe that all four of those previously mentioned criteria are so important to first time investors and explain some of the basic things that I did to buy a property that I believe meets each of them. I think that this approach is possible for many people who live in urban environments and are willing to be patient and methodical.

Here are four questions that I believe every first time house-hacker should ask themselves, and how I personally answered them.

Question #1: Can I afford the property with conventional financing?

There are two obvious followup questions to the “can I afford this?” question:

  • How much money do I have?
  • How much money does property in the area I want to buy in cost?

If you want to house-hack and still live in a reasonable place in an urban area, you need some cash. Even with great owner-occupier financing terms, you’ll need a substantial amount for the downpayment if you want to live in a somewhat desirable spot near a happening city. I’m not interested in living in Detroit and putting down $500 for that $10,000 home. I want to live and invest in Denver, CO, where a comparable structure might cost 10, 20, or even 50 times more than that.

I spent a full year working hard and living frugally to save up an amount that would comfortably cover a 5% down payment on properties in the area that I wanted to live in. If you don’t like this strategy for gathering funds for your first downpayment (the “save more money” strategy), then I’d suggest that you seriously question whether you want to get into real estate investing in the first place.

Another critical thing to keep in mind is that if you are purchasing a property that needs repairs, minor or major, you will need cash to pay for them. Among other expenses, I’ve shelled out thousands in plumbing and electrical work, appliances, and DIY tools and materials. If you are transitioning from renting to an owning property, then there might be a chance that, like me, you don’t own a robust set of tools and don’t have familiarity with the materials needed to work on even relatively simple projects like painting and drywall repair. By ensuring that I bought the property with a good $10,000 cash cushion, I was able to easily cover all the little repairs and contractor costs that came up, and I now have a pretty solid little toolset that has proved to be much more enjoyable to work with than I previously would have thought.

Related: A New Way to Look at the Concept of “House Hacking”

Question #2: Will I be happy living there?

I think that many of us as investors, new and experienced alike, have to acknowledge that we are investing to improve our financial position and in doing so, to improve our lives. I believe that house-hacking does not work if it means that you have to live in an area that you don’t want to be in! For me to be happy with my living situation, I needed to live in the city. It was not acceptable to purchase property in the boonies and move far away from the places I enjoy going to on a regular basis just to get a good return on my first investment. For me, that meant I had to limit my purchasing area to properties close to the heart of downtown Denver, CO.

Buying property actually downtown (less than 5-10 blocks away from Coor’s Field in my mind) was simply not a reasonable option — the only properties that most newbies can reasonably purchase might be condos, which are not a traditional type of investment from which one can generally expect great rental cash-flow. It’s just too expensive in the true heart of the city, and the only properties that are being purchased there are multi-million dollar homes and swanky apartment complexes. There’s a reason why buildings go straight up in big cities.

Fortunately, Denver has several surrounding neighborhoods with properties at price points affordable to folks making less than $50K per year. These neighborhoods are convenient to downtown with good bike routes and cab/Uber rides that are less than $10 a pop. I ended up picking two areas to search for property. Both areas were roughly equidistant from downtown Denver and my workplace (BiggerPockets HQ happens to be about 5 miles directly Southeast of Lower Downtown Denver).

Question #3: Will the property cash-flow?

Here in Denver, CO, we’ve got a little bit of a tough housing situation. Houses and investment properties are being listed for less than one day and then selling for ten, fifteen, or even $20,000 more than asking price. I’ve heard from some readers that cities with similar characteristics, like Austin, TX, have similarly tough markets for investors.

Luckily, as an owner-occupier looking to buy multifamily property, I had a couple of serious advantages over the competition. First, I was looking at properties that most other would-be homeowners weren’t interested in; first-time buyers usually aren’t looking to purchase a duplex, triplex, or fourplex. Second, I had the opportunity to bid on properties before investors that did not intend to inhabit the property because of a special government program — the First Look program from Fannie Mae.

In my opinion, these two advantages that I had as an owner-occupier house-hacker are the trump cards that gave me an edge in looking for great multi-family deals in an urban environment. After months of searching, my agent suggested a duplex to me. This property was listed on the MLS and was like a lot of other opportunities out there that I had looked at, but with one small difference: this property was part of that “First Look” program.

Because investors couldn’t make offers on the property for several weeks, and because the demand for duplexes, triplexes, and fourplexes among first-time homeowners is very small, I had little competition. I was able to run the deal by my friends, family, mastermind group, and by investor friends I’d met through BiggerPockets. That window gave me the confidence I needed to pull the trigger and make the largest financial commitment of my life to that point — while competing investors never even had a chance to offer.

Question #4: Is there a reasonable chance at appreciation?

If you read around on BiggerPockets, you are going to learn that experienced investors refer to appreciation as the “icing on the cake” — it’s usually not even considered in the purchase of investment property. While it’s still a good idea to look at cash-flow first as an owner-occupier, putting in the extra time to look for investment properties that offer a good chance at appreciation as well can reward you handsomely in the long run.

As a house-hacker, appreciation can produce a more powerful financial impact for you than it can for a traditional investor, because of a special tax-law that benefits owner-occupiers:

Assuming that you live in the property for more than two years, when you sell property, much of the capital gains are tax-free.

This tax break is incredibly powerful for those looking to house-hack with small multifamily properties because we have the opportunity to take advantage of appreciation as it relates to both income properties AND smaller residential properties:

As multi-family properties, increasing the income of the property can force appreciation.

As hybrid properties, duplexes – fourplexes can also benefit from appreciation caused by an improving local market.

I carefully selected properties that I felt offered me the opportunity to get both types of appreciation:

  • Forced Income Appreciation: I chose a property that needed what I considered to be a reasonable amount of cosmetic work and that had multiple opportunities for improvement. Since moving in, I’ve had the entire plumbing system overhauled, I’ve added appliances like washer/dryer units and refrigerators, and I’ve put in substantial cosmetic work, Do-It-Yourself style. These improvements should reduce the operating expenses of the property over the long run and give me an advantage in attracting and retaining tenants, hopefully improving the property’s long-term income potential.
  • Market Appreciation: One of the benefits to purchasing properties in an area that you yourself want to live in is that, generally speaking, other folks want to live there, too. This presents a decent opportunity for appreciation in itself if you have personal reasons for desiring to live in a certain area that are applicable to large demographics. However, I didn’t stop there, as I looked for properties within these neighborhoods that were also in the path of government sponsored infrastructure projects.

In my case, a light-rail project is currently under construction and will offer convenient and low-cost transportation options to my neighborhood. It is my hope that infrastructure projects like this one, coupled with the overall tremendous growth of the Denver local economy, will allow me to benefit from market appreciation, though I understand that having purchased the property, this is now out of my control.

The hope here is that I can leverage both types of appreciation to create substantial value from this property over the next few years. I then hope to cash out on that increase in equity, tax-free, and reinvest it in a larger income producing real estate asset.

Related: BP Podcast 086 – House Hacking Your Way to 97 Units (While Holding a Full Time Job!) with Cory Binsfield

Conclusion

This is my first investment property. There is every possibility that I’ve made a huge mistake somewhere along the line. I could be way off in my estimation of expenses, long-term rents, desirability of the neighborhood, or I might have simply gotten ripped off on the purchase in general. I hope that none of those things are true, and I certainly feel that I did my due diligence at each stage of this investment — but only time will tell if I correctly analyzed each critical input.

Maybe I’m slower than other investors, and maybe I suffered from a great deal of “analysis paralysis.” It took me a long time to pull the trigger and finally make a serious offer on my first investment property. I had been researching my market and defining my criteria for at least 6 months — not to mention the full year that I had been saving up for such a purchase!

That said, I believe that my first investment is by far my most important. A bad choice could cripple me financially, discourage me from investing again, or at the very least, significantly slow me down in accumulating the funds to make a second investment. But, in spite of all the potential negative outcomes, because I did just one thing right, I can sleep well at night:

That one thing was buying in an area that I am happy to live in.

At the end of the day, it doesn’t truly matter whether I’m able to keep my unit rented out, or if the market tanks. Worst case scenario, I get an expensive education in real estate investing and live in a place that is slightly smaller than I could have otherwise afforded.

I’ve got the ultimate exit strategy.

This article originally appeared on BiggerPockets, the real estate investing social network. © 2015 BiggerPockets Inc.

More from BiggerPockets:
I Quit My Day Job, Retired Early & Started a New Venture Using Real Estate: Here’s How
3 Smart Ways to Make an Extra $1,000 a Month Through Real Estate Investing
5 Habits of Highly Miserable Real Estate Investors (and How to Kick Them)

MONEY winter

Sick of Clearing the Snow? Failure to Do So Could Cost Even More

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Steven Senne/ASSOCIATED PRESS

It's been a stormy winter for much of the country, so it's understandable if you're tired of clearing snow off your car and sidewalk. But there's more reason than ever to handle these chores like a good citizen.

Earlier this winter—before we knew just how bad of a winter it would be—we ran a post about why it is so essential to shovel your walkway after it snows. The reasons start with getting hit with local fines for failing to clear snow and ice, and they end with the possibility of being sued for hundreds of thousands of dollars if someone falls and gets injured on your property.

In Boston, which is on the verge of crossing the mark for having snowiest winter on record, Mayor Martin Walsh plans on increasing the fine fivefold for property owners who don’t clear their sidewalks or snow and ice, or who push snow into the streets. The highest possible fine could be $1,500, up from the current maximum of $300, if Walsh can convince the city council to get on board with the idea at a meeting on Wednesday, the Boston Globe reported. If property owners don’t pay the fines, they would simply be added to the owner’s property tax bills.

“Failing to remove snow from a sidewalk puts lives at danger. It’s a problem for every pedestrian, but it is especially difficult for our children, for the disabled, and for the elderly to face deep, unshoveled sidewalks, and be forced to walk in the road,” Walsh said in a press release. “I urge the City Council and state officials to move this legislation which grants us the authority to deter these violations, hold accountable those who are guilty, and recoup some of the added costs that these violations create.”

Getting sidewalks cleared of snow and ice has also proven to be a problem in many parts of New York City, especially in neighborhoods overrun with foreclosed properties and vacant buildings, where it’s sometimes impossible to track down who, if anyone, is the owner. According to a New York Times analysis, 331 tickets for failure to clear snow off sidewalks have been issued to just 10 notorious properties in the Bronx. The Bronx has been hit with the most fines per capita (more than 10,000 violations), though Brooklyn and Queens properties have received more tickets overall, with 14,000 and 13,000, respectively.

Meanwhile, in places like northeast Ohio, unshoveled sidewalks and walkways are causing a host of problems, including disputes among neighbors and gripes from elderly residents about the unfairness of fines. In some cases, the United States Postal Service has even stopped delivering the mail to residences where sidewalks, walkways, or streets are clogged with snow and ice.

Your obligation to clear snow doesn’t stop at the edge of your property, however. Laws have been passed in New Hampshire, New Jersey, and Connecticut, among other places, requiring drivers to clear snow from cars before heading out onto roads. In the latter, drivers face fines up to $1,000 if snow or ice flies off your vehicle and causes damage to another car or motorist, but in most cases, the fine would be a flat $75.

There’s also a bill currently under consideration in Pennsylvania that would allow police to pull over cars and trucks if the vehicle is covered in ice or snow that “may pose a threat to persons or property,” regardless of whether or not any damage has been caused. If the bill becomes law, drivers would face fines of $25 to $75 for not clearing snow and ice from vehicles. That’s cheap compared to Europe, where failure to clear snow from cars in the Alps could result in a fine of €450, or around $500.

MONEY home maintenance

Here’s How to Avoid 5 Hidden Costs of Winter

frozen pipe
Mike Kemp—Getty Images

All that winter snow can take a big chunk out of your budget. Here's how to avoid the worst home problems the chill can bring.

As I type this article, the temperature outside is negative 17 degrees Fahrenheit. The wind chill? Negative 32. And this is, like, our fifth round of this frigid nonsense this year. We’ve gotten used to the cold, so I complain mostly to establish my clout as a northern girl who knows her winter weather and storms. As you might not know, there are costs hidden in the feet of snow dumped on our streets, the ice coating the trees overhanging our homes, and the plunging temperatures that seem unrelenting. (See also: 9 Things You Need to Do Now to Prepare for Winter)

Here’s how to avoid paying them.

1. Frozen Pipes

We had a plumber over the other day, and he was telling us about all the frozen pipes his team has been dealing with this winter. When pipes burst, they don’t only dump water into your home. They run a path of destruction, ruining flooring, flooding furnaces, and more. The costs can be staggering. To avoid this unfortunate situation, make sure your pipes stay warm. The plumber explained to us that problems often arise when people go away and turn their heat down low, so keep your thermostat on a toasty 65 or higher. And learn where your main water shutoff valve is so you can stop the worst damage before it starts.

2. Fire Hazards

When the weather gets frightful, people often turn to secondary heating source to supplement the furnace. They switch on things like electric or gas heaters, gas or wood stoves, and light up fireplaces. Whenever you’re using a flame inside your home, make sure you’re watching it carefully. Fire is one of the most costly tragedies because you could lose absolutely everything you own, including your home. Get your chimney cleaned annually to eliminate the risk of fire. And always open your flue the whole way, which will keep the airflow in proper order.

3. Fallen Trees

With all that ice and snow and wind, there’s a risk that trees around your home might fall without notice. We’ve never experienced this one ourselves, but we did almost buy a home where several sick-looking trees were overhanging the property. I still walk by that place and wonder when the damage is going to happen. Although there’s not a lot you can do to ensure those trees won’t come crashing down onto your roof or worse, you can be proactive — especially since costs aren’t always covered by insurance. If you have trees hanging close to your house, consider trimming them back. Remove rotting or sick trees entirely. You can often get a free quote for the work (get several), and though it might cost a lot upfront, you’ll save costs later on.

4. Ice Dams

We’ve had some impressively long icicles this year. They’re both beautiful and slightly terrifying at the same time. Not only do ice dams pose dangers to people hanging below, but they can also cause some major roof problems by blocking water from flowing freely. Try removing as much snow as possible from your roof. If that’s not a viable option, try removing icicles or hire a professional to come out and do it for you. It will cost less to take care of an issue before it gets downright nasty. To prevent the dams next year, add more insulation to your attic and check out heated wires you can install on gutters that melt ice away.

5. Utility Costs

Now, with the electric components, especially heaters, utility costs can climb. Your heater could be costing you between $50 and $120 per month to run — and when you consider that winter lasts forever some places, that adds up fast. Try running your heater at minimum and — instead — layering up with warm clothes for free. Otherwise, some general home maintenance can take care of a lot of the dollars that are literally flying out your windows. Check around for drafts and cover them up. Get your furnace serviced to ensure it’s running properly. Use thermal curtains to block cold air out on the worst days. (See also: 7 Easy Ways to Lower Winter Utility Costs)

Read more great articles from Wise Bread:

MONEY housing

Boomers’ Homes Are Once Again Their Castles

House in Colorado
Getty Images

A new study looks at the relationship older Americans have with their homes and finds some surprises.

Aging Baby Boomers apparently missed the memo about how badly they’ve prepared for retirement. While study after study highlights inadequate retirement savings and planning, a new survey and report sponsored by Merrill Lynch finds that a broad cross-section of older Americans are eagerly looking forward to new adventures and, especially, freedoms, in their later years.

“Home in Retirement: More Freedom, New Choices,” prepared for Merrill Lynch by the Age Wave consulting firm, focuses on the age-related transitions that people are making in the way they live and how they regard their homes. According to the study, nearly two-thirds of retirees say they are now living in the “best home of their lives” and making active efforts to create living spaces that match their new retirement lifestyles. Nearly as many say they are likely to move during their retirement years, and most of this group has already relocated once.

“When I look out at the future of our aging population, I have concerns, too,” said Ken Dychtwald, head of Age Wave and a longtime leader in aging research. “I am not a beginner at this. But I think a lot of our worries are not a fait accompli,” he said. “I think we have, to a fair extent, overemphasized the misery of aging.”

After lives largely determined by work and family responsibilities, boomer retirees find they are experiencing a new sense of freedom about where and how they live. An estimated 4.2 million retirees moved into new homes last year alone, the report found. And while downsizing is often recommended as a new lifestyle for retirees, nearly a third of retirees who relocated actually moved into larger homes. (One reason: One out of every six retirees has a “boomerang” child who moved back in with them.)

Only one in six retirees who moved last year wound up in a different state, emphasizing the strong attachments that boomers have to their existing communities. Among future retirees, 60% say they expect to stay in their current state while 40% want to explore other parts of the country.

From their 60s to their late 70’s, people “think of this as a great time and a time of great freedom,” Dychtwald said. “That word—freedom—came up over and over again.”

Reaching age 60 seems to represent a “threshold event” for people, added Cyndi Hutchins, director of financial gerontology for Bank of America Merrill Lynch. With careers winding down and children out of the house, people take a new look at their futures. Another transition occurs in the early to middle 70s, when many begin to slow down and become less active. “We see a spike in that freedom threshold again at that age,” she said. “We see retirement as a succession of different time periods.”

Whether people move or not, or downsize or not, their homes assume added significance, the study found. “Prior to age 55, more homeowners say the financial value of their home outweighs its emotional value,” the report said. “As people age, however, they are far more likely to say their home’s emotional value is more important than its financial value.” More than 80% of people aged 65 and older own their own homes, and more than 70% of them have paid off their mortgages.

If boomers do reinvest in their homes, it would provide a major boost to the housing and home furnishings business. In the next decade, the study notes, the number of U.S. households will increase by nearly 13 million, with nearly all of this growth—nearly 11 million—occurring among people aged 65 and older.

“Age 55+ households account for nearly half (47%) of all spending on home renovations—about $90 billion annually,” the report noted. “While younger households slowed or reduced spending on home renovations between 2003 and 2013, spending among those age 65+ increased by 26%.”

Common renovations among retired homeowners include: home office (35%), improved curb appeal (34%), a kitchen upgrade (32%), improved bathroom (29%), adding age-friendly safety features in a bathroom (28%), and modifying their home so they can live on a single level if needed (15%).

The report found the South Atlantic states were the favorite place for people to live and to relocate, followed by Mountain and Pacific states.

It also echoed other research that finds people overwhelmingly prefer to “age in place” in their own homes, with 85% of people preferring this option as opposed to moving to a senior or assisted living community.

Leading age-ready home features include a no-step entry; single-floor living; extra-wide hallways and doors; accessible electrical controls; lever-style handles on doors and faucets; bathroom safety features, and, accessible countertops and cabinets.

The Merrill Lynch study is the fifth in its series of seven planned reports dealing with people’s life priorities for their health, home, family, finance, giving, work, and leisure. Its findings are based on a survey of more than 3,600 adults representative of the broader U.S. population in terms of age, income, gender and place of residence.

Philip Moeller is an expert on retirement, aging, and health, and co-author of “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

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