Real Estate in Steamboat

“I can’t believe the mortgage company approved me to buy a condo in such bad shape.” That’s what I overheard a young lady tell her breakfast date at the coffee shop I like to visit on Saturday mornings. The place is always very busy. The tables are close together so it’s hard not to overhear conversations at the adjoining tables.

Burying my head in the newspaper, I then heard her say, “But my dad remodels kitchens so I know he will make it a beauty.” I wanted to tell the guy, “Marry her, she’s on her way to a real estate fortune.” But I kept quiet and looked away.

Purchase Bob Bruss reports online.

Then she went through a list of condo fix-up work she plans to make, such as fresh paint, new carpets and several decorating ideas. At that point, the guy changed the topic. If they marry, she will obviously be the real estate tycooness in that family.

HOW TO FIND A PROFITABLE HOUSE OR CONDO. If you are a typical house or condo buyer, you probably want to purchase a new or resale residence in near-perfect, “model home,” move-in condition. That’s fine.

But expect to pay full retail market value. That is not the way to make a profitable home purchase.

If you want to profit from your home purchase, as that young lady will, buy a house or condo needing profitable improvements. Extreme cases are called “fixer-uppers.”

To be polite, some listing agents call them “tired homes.” Having bought and sold many profitable residences over 40-plus years of investing, here are my top five criteria for buying a profitable house or condo:

1. ASK HOW MUCH THE SELLER PAID. The longer I’m involved with real estate investing, the more important I think this key question is. I wish I started asking it many years ago when purchasing investment properties.

Even if you find a house or condo in excellent condition, before making a purchase offer, ask your buyer’s agent, “How much did the seller pay for this home?”

Most buyers don’t ask this vital question. Your buyer’s agent might be shocked. Just explain the reason you need to know is to discover how much negotiation room the seller has so you can buy the property. Your agent will be thrilled to learn you plan to make a purchase offer.

For example, if you learn the seller paid $100,000 for the property many years ago, and the comparable home sales prices in the vicinity indicate it is worth $300,000 today, that seller has lots of negotiation room. However, if your buyer’s agent checks the public records and discovers the seller paid $250,000 for that house last year, the seller doesn’t have much negotiation room for you to buy a profitable house at a below-market purchase price.

2. ASK WHY THE SELLER IS SELLING. This is a controversial question for a home buyer to ask. Only the smartest buyers dare ask it. Knowing the seller’s true motivation for selling is critical if you are to buy a profitable house or condo.

Often the listing agent doesn’t know the answer. Be sure to communicate to your buyer’s agent, who will then tell the listing agent, “I need to know so my buyer can make a purchase offer that meets the seller’s needs.”

Sometimes, you won’t be told the truth. For example, if the reason for the home sale is a divorce, the listing agent might be reluctant to reveal that fact. However, I’ve found that to be important information so I can make a purchase offer providing cash to satisfy both sellers.

Or, if you learn the home is in foreclosure and the lender has scheduled a foreclosure sale in three weeks, you better be prepared to purchase fast before the seller loses the house.

I recall one situation several years ago where I asked the nasty listing agent why the sellers were selling a home I really wanted to buy for my personal residence. He arrogantly replied, “It’s none of your business. Just bring a cash offer.”

Not wanting to do business with him, I never made a purchase offer on that house. Later, I learned the sellers were very wealthy and were retiring to Palm Springs. I could have made a low-down-payment offer and they probably would have carried back a mortgage on very attractive terms.

3. LOOK FOR “THE RIGHT THINGS WRONG.” This used to be my primary criteria for buying a house or condo at a bargain below-market purchase price. Although this reason is still ultra-important, it is no longer as important as the first two criteria.

That condo buyer who sat at the table next to mine a few weeks ago, understood this rule even if she didn’t have it on her profitability list. By purchasing a condo needing a kitchen renovation, she was acquiring an almost instant profit opportunity, especially since her father is in the kitchen remodeling business.

“The right things wrong” mean profit opportunities. Often, all that is needed are a coat of paint and new wall-to-wall carpets. Additional profitable examples include new light fixtures, new appliances, fresh landscaping, and bathroom updating.

Examples of the “wrong things wrong” or unprofitable improvements include a new roof, foundation repairs, new plumbing or wiring, and new windows. The reason these obviously necessary updates are unprofitable is they add less market value to the home than they cost.

4. DEDUCT FROM MARKET VALUE FOR THE COST OF REPAIRS. Most sellers of houses and condos are well aware if their home needs repairs or updating to current market value standards. There are two ways for buyers to handle this.

One is to offer a low purchase price to compensate for the obviously necessary repairs. However, such an approach often upsets the seller who doesn’t realize how much it will cost to bring their home up to neighborhood standards.

A better approach is to offer close to current market value, based on recent sales prices of nearby comparable houses or condos, but then list and ask for credits for necessary repairs, such as a new roof, foundation repairs, landscaping, and new plumbing or wiring. This method is often more effective because the seller then realizes all the work their “fixer-upper” needs.

5. ASK THE SELLER FOR AFFORDABLE FINANCING. Although home mortgage financing is easily available today, you might be able to do better in the right circumstances by asking the seller to carry back a mortgage for you. This can be especially valuable if the seller owns the home free and clear with no mortgage, you plan to immediately renovate the house to increase its market value, and you expect to refinance or sell the home after the improvements are completed.

To illustrate, if you offer a retiree seller a 5.5 percent interest rate on a carryback mortgage, that’s better for you than is easily available at the local bank. However, be sure there is no prepayment penalty so you can refinance when you complete renovations to increase the home’s market value.

As the old saying goes, “It doesn’t hurt to ask.” There is no easier mortgage lender than the home seller. My experience is retirees are especially anxious to finance home sales because they usually can’t obtain such a high yield with the safety of a mortgage on their former residence if you fail to make the payments and they have to foreclose. By obtaining easy seller financing, you just increased your purchase profit even more.

SUMMARY: If you ask the right questions, your house or condo purchase can become a profitable investment. Whether you plan to keep your home purchase a short time or for many years, look for the “right things wrong” and the extra bonus profit opportunities, such as seller carryback mortgage financing.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2006 Inman News

It only takes a quick stroll through one of today’s massive home centers to see for yourself the rows upon rows of glues, mastics, epoxies and adhesives for every conceivable use. It’s definitely confusing, but here are some tips for breaking it all down into a few basic categories.

Craft and Woodworking Glues: Aliphatic resin (AR) adhesives are the common white and yellow glues used for any number of household applications. White glues bond wood, paper, leather and a number of other porous materials, while the yellow woodworker’s glues have additional additives to make them a little tougher for woodworking applications. These glues have a moderate open time (the amount of time you have for moving and aligning the pieces being glued before the glue sets up), and once aligned should be clamped until dry. Once cured, yellow glues form a tough bond that is typically as strong or stronger than the wood itself.

Instant Glue: Technically known as cyanoacrylate (CA) adhesive, instant glues are probably best know by the brand name Super Glue. CA adhesives dry almost instantly, and will work well on a wide variety of surfaces. There are now CA adhesives available with slower drying times and also with thicker consistencies for filling small gaps between materials. Follow the manufacturers instructions carefully, and have a bottle of compatible solvent available for freeing up the invariably stuck fingers.

Polyurethane Glue: Polyurethane glues such as Gorilla Glue can be used on a wide variety of materials with excellent results. They produce a very strong, waterproof bond, and have the ability to fill small gaps between materials. Polyurethane glues expand as they dry, so it’s very important that the pieces be clamped or blocked tightly to prevent movement during the curing process. Polyurethane glues are a very good, easy to use, all-purpose adhesive that will find a lot of uses around the house, but be sure and follow the manufacturer’s application instructions carefully.

Construction Adhesive: Construction adhesives come in tubes for use in any standard 10-ounce or 1-quart caulking gun — just snip off the end of the tube, puncture the inner seal, and it’s ready for use. Construction adhesives are tough, thick, water-resistant, and have a fairly long open time. They are the right choice for adhering subfloors to joists, paneling or drywall to studs, wood to masonry, and other heavy-duty job-site applications. If you want to use construction adhesive with pressure-treated wood, be sure the label says it is rated for that use.

Pressure-Sensitive Glue: Pressure-sensitive glues and adhesives bond on contact between surfaces, require no clamping, and have no real open time. There are a growing number of pressure-sensitive glues and adhesives on the market, and they can be used with a wide variety of materials. One of the most common pressure-sensitive adhesives is contact cement, which is applied to both surfaces and forms an instant, very strong bond as soon as the two pieces come into contact. The pieces must be properly aligned before pressing them together, so use a piece of wax paper or small wooden dowels to keep the pieces separate as you get them aligned.  Other pressure-sensitive adhesives include double-face tapes, glue-sticks, and Glue Dots.

Epoxy: Epoxies are synthetic resins that can be used to adhere a variety of similar and dissimilar materials. Epoxies are very tough, waterproof, and extremely durable, and come in two parts that must be mixed together prior to application. Liquid epoxies are easiest to use where you have a hole to fill, such as cementing a bolt into a hole in a concrete floor. Simpson Strong-Tie and other manufacturers offer an easy to use epoxy “syringe,” consisting of two tubes of liquid with a twin plunger handle — press down on the handle, and the two liquids flow out of the tubes and into a common nozzle, where they are mixed and dispensed.

There are also putty-type epoxies, which come in stick form and work well for vertical and overhead applications. Simply cut an equal amount of putty off each stick, mix them together by rolling and kneading them in your hands, then place them in position.

Mastic: There are lots of different materials that fall under the general heading of mastic, which includes both adhesives such as tile-setting mastic, and sealants such as roofing mastic. In general, mastics are thick, sticky, premixed materials that are applied with a trowel or other tool. Mastics have a relatively long open time, are waterproof, bond very well to a variety of materials, and form a strong durable bond without clamping. When selecting a mastic adhesive, be sure and read the label to determine if it is specifically designed for bonding the two materials you’re working with, such as ceramic tile to concrete.

Remodeling and repair questions? E-mail Paul at paul2887@direcway.com.

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Copyright 2006 Inman News

Over a century ago, American builders began using a remarkable mineral product. Being mined from a type of serpentine rock, it was natural, abundant and easy to produce, yet its unique properties made it almost limitlessly useful. It was resistant to chemicals and intense heat. It was an excellent electrical and thermal insulator. Out of its fibers, you could weave a cloth that wouldn’t burn. You could even mix it with other materials to make them stronger and more fireproof.

Over the course of the 20th century, American industry — with the government’s blessing — found thousands of uses for this miraculous mineral.

Woven into a cloth, it was used to insulate electrical wires. Mixed with a binder, it made a fireproof insulation for pipes and ducts. Mixed with cement, it made a host of practically indestructible building materials such as corrugated siding, shingles and flue pipe. Mixed with vinyl, it made an incredibly durable floor tile.

Nor was its usefulness limited to construction. This same amazing mineral allowed the brakes on your car to survive blistering temperatures. Inside your home, you could find it in stoves, heaters, ovens, toasters, hair dryers and ironing board covers — pretty much any product that had to resist high heat. And if you happen to have an older example of any of these items — or perhaps an old furnace down in your basement — that miraculous mineral may still be there, silently doing its job.

The miraculous mineral is asbestos, a substance whose modern reputation is considerably more sinister than when it was found in countless industrial products. Long-term occupational exposure to asbestos is now known to cause a number of terrible lung diseases, one more ghastly than the next. The risk of exposure to the amounts of asbestos found in a typical older home is less clear, but on the premise of being better safe than sorry, asbestos is no longer manufactured in the United States. Nevertheless, since it was used in thousands of long-lived domestic products, and because its peak period of use stretched from World War II well into the 1970s — in fact, the last U.S. asbestos mine closed only in 2002 — its complete removal from the environment is a virtual impossibility.

Millions of older American homes contain significant amounts of asbestos, found mostly in the form of insulation on steam pipes or heating ducts, in resilient floor tiles, acoustic ceiling tiles, and sprayed acoustic ceilings, and in asbestos-cement shingles, building panels and flue pipes.

Although removal was once widely considered the preferred remedy, today many authorities believe that the safest approach is to leave asbestos-containing building materials in place so long as they’re in good condition and not subject to disturbance. For the official policy in your own area, contact your local hazardous materials authority.

So it is that, after a century of vast commercial use, the miraculous mineral has now become the malevolent mineral. If there’s a lesson here, perhaps it’s that sometimes, things that seem too good to be true — whether X-rays, atomic power, DDT or asbestos — are in fact exactly that.

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Copyright 2006 Arrol Gellner

DEAR BOB: After reading your recent list of “nonsense” mortgage junk or garbage fees some lenders try to impose, when I recently applied online for a home equity loan I realized I was about to become a victim of a major lender. The lender wants to charge me a loan origination fee, appraisal fee, credit report fee, processing fee, underwriting fee, flood certification, funding fee, $100 escrow settlement fee, $150 title fee, $15 courier fee, $15 wire fee, $75 recording fee, $80 intangible tax and $235 mortgage tax. What is your evaluation of these charges for a home equity loan? –Marydelle P.

DEAR MARYDELLE: Most of those are unnecessary junk fees you should not pay.

Purchase Bob Bruss reports online.

Virtually every local bank and credit union will eagerly make you a home equity loan or home equity credit line (HELOC) without any junk fees if you have a FICO (Fair Isaac and Co.) score around 700 or higher.

I have obtained many home equity credit lines over the years from major lenders, such as Chase and Wells Fargo, without paying any up-front junk or garbage fees such as those you list.

The only legitimate home equity loan fees on your list that I wouldn’t resist are the local mortgage tax, the intangible tax (whatever that is), and the recording fee. The other charges you list should be absorbed or paid by the home equity lender if they want your business.

MORTGAGE BROKER REVEALS SECRETS

DEAR BOB: I am a longtime independent mortgage broker for more than 20 years. My business comes 100 percent from satisfied former borrowers and real estate agents who know I will treat their home buyers right. If I can’t arrange a mortgage for a specific situation, I tell the prospect quickly and we part as friends. Often, I know of “secret lenders” who will make mortgage loans not available elsewhere. However, I always reveal the borrower’s costs up front, never imposing any last-minute junk or garbage fees as some of my dishonest competitors do. Congratulations for exposing those fees, which nobody else writes about –Jonathan C.

DEAR JONATHAN: I wish your mortgage brokerage services were available in every city. Why don’t you open a nationwide franchise chain “Honest Mortgage Brokerage?”

It is refreshing to hear from an “honest mortgager broker” who doesn’t trick borrowers at the last minute when they are most vulnerable and will pay unnecessary loan fees when they have no other choice to losing their home purchase.

I frequently recommend experienced mortgage brokers like you who can often arrange “impossible” mortgages for home buyers with unique situations. As long as the fees are disclosed up front, borrowers can then decide if they want to pay the expenses or not.   

What especially irritates borrowers is when their loan charges are far higher than were disclosed on their so-called “good faith estimate” which we both know is a joke because there is no enforcement.

RAISING HOME SALES COMMISSION PAID OFF

DEAR BOB: Thank you for your article some time ago about real estate sales commissions. The home sale market in our town has been slow since January. Our listing agent, a trusted family friend, warned us home sales were slow so we listed with an asking price about $5,000 below market value. That didn’t work. After two months, she suggested we raise our sales commission to 7 percent with 4 percent to the selling agent. It worked like gangbusters! Within a week, we had two purchase offers. We accepted the best one and took the other as a “back-up offer.” Our home sale recently closed. Although we paid a higher than normal sales commission, we got an all-cash sale for almost our full asking price. Thanks for that great advice to raise the sales commission –Durk H.

DEAR DURK: In your situation, it was obviously more important to get your home sold than to net the highest possible sales price. Not all home sellers are so highly motivated.

Some home sellers prefer to cut the sales commission by one or two percent and wait “forever” to get their homes sold. Obviously, selling your home was more important than squeezing the last dollar from the sale.

The new Robert Bruss special report, “Probate Property Profit Secrets Revealed,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News

Question: I am a renter and enjoy your column because I learn a lot about how landlords operate. I am concerned that so many landlords use the credit report to select their tenants. Sure, a bad credit report may be a red flag. But that doesn’t mean that the tenant has not or will not pay the rent in a timely manner. My credit became bad after I moved into this apartment six years ago, but I have always paid my rent on time. The management company has not had any problems with me. If I were given a notice to vacate I might even become homeless because I don’t have any savings. My credit report would shut the doors for many potential landlords. Are there some landlords that will trust tenants with poor credit or not even run a credit check?

Property manager Griswold replies:

Thank you for your comments. You raise many valid points. Yes, there are some landlords that do not rely on credit reports when screening their tenants. You may have to broaden your search for these landlords or property managers, but they do exist. However, your analysis is correct that the vast majority of landlords and property managers do require credit information because it has been shown to be a good indicator of qualified tenants. My experience in managing more than 40,000 rental units in the last 25-plus years is that a credit report that shows previous evictions or an inability to pay rent is definitely a red flag that the prudent landlord should not ignore. Of course, if you were a landlord you would be interested in knowing whether your proposed tenant had the ability to pay the rent each month.

Despite the image that landlords are all wealthy, most landlords do not have the luxury of being able to meet their monthly debt service and operating costs of their rental property without the prompt payment of the full rent from all tenants. Many landlords will rent to tenants with credit problems if the tenant will get a co-signer or will pay a larger security deposit. This is no different than other credit businesses, such as car dealers. Ironically, your bad credit has worked to the benefit of your current landlord since you will make sure that your rent gets paid before anything else. You also have an excellent track record of paying your rent every month for the last six years and should be able to get a reference from your current landlord if you had to relocate. You might want to ask for a reference letter so that you would have it handy in the event that you need to move in the future.

Question: Is there some standard form of legal document that can be signed between prospective roommates that would be a binding lease just like the kind of the contract that is signed between the tenants and landlord?

Tenants’ attorney Kellman replies:

Roommate situations can be difficult since you are sharing common facilities and depending on each other to pay the full rent. These situations invariably will require some kind of understanding or agreement as between each roommate as to their respective rights and obligations during the tenancy. While most landlords will require all roommates to sign one lease (as co-tenants) it would be wise to have another agreement as between the roommates to cover issues as between themselves. There are many lease forms generally available for landlord-tenant contracts but roommate agreement forms are a bit rarer, especially since these situations are usually more unique and therefore more difficult to put in a standard form. If such an agreement form is not available, roommates can simply draw up their own agreement to cover areas of concern including paying rent, sharing of common areas, guest rules, handling of the deposit and what happens when one roommate wants to move out. The landlord does not have to agree to or be a party to this roommate contract but be sure that all the roommates who sign on are authorized occupants of the rental unit.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of “Property Management for Dummies” and co-author of “Real Estate Investing for Dummies,” and San Diego attorneys Steven R. Kellman, director of the Tenant’s Legal Center, and Ted Smith, principal in a firm representing landlords.

E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.

Questions should be brief and cannot be answered individually.

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News

DEAR BOB: Is it true when someone inherits real estate, which was the deceased’s primary residence, the mortgage will be wiped out at the time of death and the property title passes free and clear of all liens? I heard if the property was not the deceased’s principal residence, then the heir has to pay the debts –Rick S.

DEAR RICK: Dream on, my friend! When you inherit real estate, you receive title “subject to” all existing recorded liens and encumbrances against the property.

Purchase Bob Bruss reports online.

That means if you inherit a house that has a first mortgage, a home equity loan, a mechanics’ lien and unpaid property taxes, you must pay all those obligations according to their terms or lose the property by foreclosure or forfeiture.

Real estate inheritances can be wonderful if there is plenty of equity (the difference between the total amount owed and the fair market value of the property). However, if there is little or no equity in the inherited property, you might want to decline that inheritance. For more details, please consult a local real estate attorney.

HOW TO HANDLE A NEIGHBORHOOD NUISANCE

DEAR BOB: We live in a historic area of eight rowhouses located next to each other. The rowhouse next door was purchased by a real estate agent who told the seller and the neighbors he planned to live in the house and rent the back unit (as the previous owner did). Instead, he did not move in. He put seven college students in the house, letting the property deteriorate, allowing the gutters to fall off, and creating an eyesore. He refuses to respond to our phone calls, nor will his real estate brokerage manager reply. What can we do? –Barrett B.

DEAR BARRETT: The situation you describe is legally a “private nuisance” because it affects a small number of adjoining property owners. If necessary, you and your neighbors can bring a legal action to abate the private nuisance.

However, since you’ve tried being nice, it’s time to contact the city “code enforcement officer” (or similar title) to learn if any ordinances are being violated. Often, a city warning letter will accomplish amazing results. For more details, please consult a local real estate attorney before filing a lawsuit to abate that private nuisance.

DON’T BE A CHEAPSKATE TO GET RID OF MORTGAGE INSURANCE

DEAR BOB: I need to get an appraisal from a certified licensed appraiser to prove my loan-to-value ratio is below 80 percent so my PMI (private mortgage insurance) monthly premium can be cancelled. I called my mortgage lender who is affiliated with an appraiser who charges $300. I phoned an appraiser in the yellow pages who wants $325. But I heard some real estate agents, who are also certified licensed appraisers, charge less since this is a one-bedroom condominium. I don’t feel I need to spend $300 to remove an expense my lender has been taking from me for the last five years. I have never been late with payments. Is there a less expensive alternative? –John M.

DEAR JOHN: Don’t be a cheapskate. You didn’t say how much your monthly PMI premium costs, but let’s say it is $50. Presuming you have at least 20 percent equity in your condo so you are eligible to cancel the PMI, if you pay $300 for a professional appraisal to prove to the lender you have at least 20 percent equity, you will earn back that $300 from just six months of PMI premium savings. That’s an easy “no brainer” expense.

The new Robert Bruss special report, “Probate Property Profit Secrets Revealed,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News

For more than 30 years, Gary Kent Jones owned the house at 717 North Bryan St. in Little Rock, Ark. He lived there with his wife until they separated in 1993. Jones then moved to a nearby apartment. His wife and daughter continued living in the house.

Until 1997 when Jones made the final payment on his 30-year mortgage, the mortgage lender paid the property taxes to the local tax collector. But because Jones failed to notify the tax collector of his new address, the property taxes went unpaid since 1997.

Purchase Bob Bruss reports online.

In April 2000, the state lands commissioner sent Jones a certified mail notice the house would be sold in 24 months in 2002 if he didn’t pay the delinquent property taxes. But Jones never received that notice, which was returned to the tax collector marked “unclaimed.”

Two years later, just before the tax sale, the state lands commissioner sent another certified letter to Jones at the property. It was also returned by the post office as “unclaimed.”

The commissioner then published an official notice in the local newspaper listing properties to be sold for unpaid property taxes. No bids were submitted for the Jones property.

Several months later, as allowed by state law, Linda Flowers bought the Jones property for total unpaid property taxes of $21,042. The house had an estimated fair market value of at least $80,000.

After the 30-day period for post-sale redemption passed, Flowers had an unlawful detainer eviction notice delivered to the house. It was served on Jones’ daughter who then notified her father of the tax sale.

Jones then filed a lawsuit in state court to prevent loss of his free-and-clear house. He lost. Then he appealed to the Arkansas Supreme Court and lost again. But the U.S. Supreme Court granted a writ of certiorari and heard the case appeal.

If you were a U.S. Supreme Court justice would you rule Jones received sufficient notice and he should lose his home for failure to pay property taxes?

Chief Justice Roberts said no!

Due process requires a property-tax collector to make every reasonable attempt to give actual notice to a property owner before selling an asset for unpaid property taxes, Chief Justice Roberts wrote. There are many reasons why a certified letter might not reach a person, he continued, such as failure to be home when the postal carrier delivers the mail, failure to go to the post office within 15 days to pick up the certified letter, or other reasons.

At the very least, the tax collector should have mailed the delinquency letter by ordinary first-class mail, which would be forwarded if the property owner moved, and posted a notice on the property before selling it at a tax sale, the justice explained.

Although Jones had a duty to notify the local tax collector of his new mailing address and to pay his annual property taxes or risk loss of the residence, the tax collector failed to use reasonable methods to notify the property owner of the pending tax sale, which is therefore void for violation of due process, Chief Justice Roberts ruled.

Based on the 2006 U.S. Supreme Court decision in Jones v. Flowers, 126 S.Ct. 1708.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2006 Inman News

Q: I am a widow trying to maintain a 1929 San Francisco home in the wet, foggy Outer Richmond neighborhood. In the backyard, there is an old, crumbly, rusty metal door about 12 inches square that is the ash cleanout for a fireplace above in the first-floor living room.

This panel door fastens with a pivoting arm into its frame but is torn with rusty holes. It must be replaced. Is that standard fireplace equipment and replaceable?

Also, the fireplace has lost its ash-pit cover in the floor of the firebox. It must have fallen down into the ash pit.

Finally, there is no damper.

Needless to say, this fireplace hasn’t been used for some time. All this causes a draft in the living room, making it uncomfortable during cold days even when the central heat is on.

How can I get this old fireplace working again?

A: It sounds as if it’s been many years since your fireplace has been inspected or had maintenance work done.

Assuming the fireplace is structurally sound, we’re happy to say that the problems you describe are fixable and with not much money.

We recommend that you contact a licensed masonry contractor to install a new door for the ash cleanout and to install a chimney-top damper.

We also strongly recommend that you have the fireplace inspected for safety by the masonry contractor and swept by a chimney sweep. Sweeping will remove what may be years of creosote buildup in the chimney. A creosote buildup can result in a fire damaging the chimney and, in the worst case, setting the house on fire.

With luck, the contractor can supply a door for the ash cleanout that is compatible with the old one. If not, installing a new one is not a big job. An added bonus is that he’ll probably be able to fish out the firebox’s ash-dump door that you suspect (and we think rightly) was dislodged and lost down the ash dump.

Probably the best thing you can do is to install a damper. A damper, used properly, keeps warm air in your house when closed. Your heating dollars will not go up the chimney, and you’ll be cozier. And with the damper open, you’ll be able to enjoy a fire on those cold Outer Richmond evenings.

You don’t have to hire a mason to rip into your fireplace to install a damper. We suggest that you have him (or her) install a chimney cap with an integrated damper. You won’t have to touch the firebox, other than to attach a chain mechanism allowing you to manually open and close the chimney-top damper.

A chimney cap/damper is a spring-loaded metal cover that retracts to form a seal on the top of the chimney when the fireplace is not in use.

A chain is threaded down the chimney and bolted to a lever in the firebox, allowing the damper to be opened and closed from inside. When you want a fire, simply undo the chain. The cap opens allowing the smoke to escape.

To check out illustrations and pricing of chimney caps/dampers, go to www.jenningsheating.com or try www.dukefire.com.

We wish you well and hope these suggestions will help you to a cozier and comfortable home.

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Copyright 2006 Bill and Kevin Burnett

Kathy Turner is one of six siblings — and it’s her turn to host the family reunion. Her Michigan-bred gang will be invading the final two weeks of August, taking in the local landmarks the first week, then gathering at a nearby lake for the second half of the trip.

“We have a sort of standing agreement with a few of our lake neighbors to share cabins when big events are on the calendar,” Turner said. “We don’t charge a fee in return for being able to use one another’s place down the road. Most of the time, when you give enough notice, it works out great for everyone.”

The Turner crowd has grown over the past few years with more of the adult children having children of their own. Because more lake homes were needed, the Turners coaxed four other lake families into renting out their waterfront retreats. These people typically do not rent out their lakefront homes, yet decided to alter that policy for the Turner Family Reunion.

If you are wondering about tax reporting, the four families receiving a cash reimbursement will not have to report the income to the Internal Revenue Service. Owners can derive tax-free income from renting your home or getaway, provided you rent it out for 15 days or fewer and don’t claim any of the tax deductions typically allowed on rental property such as for depreciation or maintenance. This option can come in handy for folks who do not want to be in the rental game, yet occasionally find they could rent their place.

Now, let’s switch gears and consider the family cabin as mostly a rental. The tax rules change if the getaway house becomes a designated rental or investment property and you clearly are in the full-time landlord game. Under current federal tax laws, the owner can still use a rental vacation home for 14 days or 10 percent of the amount of time the house is rented, whichever is greater, without jeopardizing its status as a rental property and tax shelter.

The owner who rents out the home “full time” is getting three benefits: First, the renters are helping to pay off your mortgage, if any. Second, you still can cash in on any appreciation that might result from rapidly increasing property values. And third, you can depreciate the building — not the property it stands on — which can provide substantial tax benefits.

Depreciating an asset means you are taking a deduction for the value lost as an asset ages. According to the accounting firm of Ernst & Young LLP, the period of time over which you depreciate your property has long been the subject of controversy. Often, it depends upon when the property was put “in service.” Depreciation is limited only to the percentage of time that a house is rented. If you rented for 90 days and use it yourself for 10, you can take only 90 percent of the total expenses and depreciation.

But another way to catch a few hours at the beach without eating into or exceeding the 14-day or 10 percent limit is to clean the house yourself between renters. Days spent maintaining the house do not count toward the personal-use limit. And you can deduct travel costs to get to the house and expenses such as paint and cleaning supplies.

However, if the Internal Revenue Service determines that you were at the house more to sit in the sun than to clean the bathrooms and paint the porch, those days may be added to your personal use and could jeopardize your tax savings.

If your intent is not to be in the full-time rental business, you still might like to keep an ear to the ground during the summer family-reunion time. There are probably people you know that you certainly would allow to rent your place. Who knows? Their reunion dates just might fall on the time that you promised to visit the grandkids at the beach.

The bottom line is that there are very few ways to pocket tax-free cash. And, it doesn’t cost anything to listen to a neighborly proposal.

Tom Kelly’s new book “Real Estate for Boomers and Beyond: Exploring the Costs, Choices and Changes for Your Next Move” (Kaplan Publishing) is available in retail stores, on Amazon.com and in local libraries. Tom can be contacted at news@tomkelly.com.

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Tom Kelly

DEAR BOB: My wife and I just bought a house for her parents because they couldn’t get a mortgage. They live in the house and pay us for the mortgage. We want them to get the tax deductions. But we are concerned about adding them to the title in case they end up in a nursing home or in some other way are forced to use the home’s equity. Is there a way for them to get the tax deductions and avoid liability if they are sued? We are considering a contract for deed but are concerned about the tax liability on ourselves –Jeff R.

DEAR JEFF: Unless the parents’ names are on the home title or they have a contract to buy their principal residence (such as a contract for deed), they are not entitled to claim itemized income-tax deductions for the mortgage interest and property taxes they pay. Please consult your tax adviser to discuss your tax choices.

Purchase Bob Bruss reports online.

HOW CAN EX-WIFE GET EX-HUSBAND’S NAME OFF HOME TITLE?

DEAR BOB: I got a divorce and my ex-husband’s name has been taken off everything, but the title company refuses to take his name off the house. What can I do? –Kellie W.

DEAR KELLIE: To get your ex-husband’s name off the title to real estate, he must sign a quitclaim deed to you. If he refuses to do so, his name remains on the title. The title company can’t do anything without his properly notarized quitclaim deed signed by him. Your divorce attorney should have insisted on receiving this important document as part of the divorce proceedings.

WHAT CAN HOMEOWNER DO ABOUT EMPTY UNDERGROUND TANK?

DEAR BOB: I am the fifth owner of an 80-year-old house. I have owned it for 11 years. While trying to determine why a patch of my lawn was dying, I discovered the home’s original underground heating oil tank. This was not disclosed to me when I bought the house. As best I can determine, the tank has not been used for 35 years. It is empty. I estimate it to be 700 gallons. Should this have been disclosed to me? –Gary J.

DEAR GARY: If your seller knew of the underground oil storage tank, he or she should have disclosed it to you. However, since you have owned the house 11 years, the statute of limitations expired long ago.

But I doubt that is the cause of the brown patch in your lawn. If there was any oil in the leaking tank, it would seep downward, not upward. Perhaps the soil above the tank was contaminated when the tank was being filled. Maybe a simple replacement of the soil above the tank will solve your lawn problem. For details on the legal aspects, please consult a local real estate attorney.

The new Robert Bruss special report, “Probate Property Profit Secrets Revealed,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2006 Inman News