Smart Home Tech: Is It Real Property or Personal Belongings in a Home Sale?

Many of today's homeowners have accumulated multiple high-tech "smart" devices to make their home more convenient, economical, and fun to operate.  When they decide to sell the home, they need to make the listing agent completely aware of whether they will be included in the sale of the home. 

Some of these things easily meet the definition of real property because they are permanently installed like thermostats, doorbells, cameras, garage door openers, and pool equipment monitors.  A rule of thumb mentioned frequently is that if it were removed, the functionality would cease or if there would be evidence of where it had been, it is probably real property and is included in the sale.

Other devices like virtual assistants made by Amazon, Apple, or Google, may not specifically meet that criteria but they are needed to operate things like electrical switches and plugs, or lamps.  It becomes a grey area of whether it is real property when TV's, doorbells, garage door openers, and other devices are dependent on the virtual assistants.

Door locks, as well as some other devices, have a master code written on them that allows the new owner to reset the combination ensuring not only their safety but potential liability for the seller.  In some cases, the seller will need to do this using the app on their computer or phone while it is still connected to their home network.  It may be prudent to arrange a time for the seller to reset the devices in question for the buyers' convenience and security.

Smart home additions could easily be a selling point for potential buyers and sellers need to weigh the benefits of promoting the advantages of such and including those items in the sale of the home.

Make an inventory of what devices stay with the home and what needs to be done to reset them for the new owner.  This could be done at the time of listing the home and given to the listing agent at the same time the listing agreement is signed. Your listing agent will know how to handle it, but decisions must be made before the home is put on the market or it is shown to any prospective purchasers.

Leverage your home's equity into rental property

There can be many reasons homeowners aspire to have their home paid for.  They can include no mortgage payments, financial security, debt reduction, lower expenses, retirement planning, financial freedom, legacy planning, no risk of foreclosure, and reduced stress, just to name a few.

All those things have a cost attached to them which is the loss of the earning power which is tied up in an asset that only benefits the owner by appreciation.  In the past few years since the pandemic began, homeowners have experienced a dramatic increase in equity due to appreciation.

As an example, let's set up a comparison of how the yield on equity decreases as the property appreciates.  A homeowner has a debt-free home worth $400,000 that is expected to appreciate at 4% a year for the next five years. The future value of the home would be $486,661 and the owner would have earned a 4% return on his investment in the property.

In scenario #2, the homeowner refinances the property today for 80% of its value at 7% interest for 30-years.  At the end of the five years, the property is still worth $486,661 and his unpaid balance on the mortgage would be $338,874. The $80,000 equity would have grown to $147,787 earning him an annual return on investment of 13.06%.  The leverage of the borrowed funds caused the owner in this example to triple his yield.

Let's not forget the $320,000 cash out that the owner received when he refinanced the home.  If that was invested in rental real estate, he may be able to buy three to four more properties with 80% mortgages and increase his yield even more.

There is a lot more to a total analysis of a situation like this because rental properties have income and tax advantages that are not relative to a principal residence.  What is possible for the homeowner with this type of asset in their home, is to free up a major portion of the cash and reinvest it.

Having equity gives a homeowner many benefits including financial freedom and security, peace of mind, and the option to pull money out, tax free, to invest in rental property to increase their wealth position.

To learn more about rental property, download our Rental Income Properties and then, schedule a time when we can get together to explore options.  We can start with a Home Equity Review to see what kind of funds may be available based on the current value of your home and its unpaid balance and then talk about how rental property could help you with your financial goals.

Adapting to Life's New Chapters

All of us encounter major life events and they have the possibility of disrupting our lives temporarily, if not permanently.  The homes we live in may have met our needs originally but due to a change in our life, it may no longer be adequate or the best fit for us, which will require a move. The decision to change one's living situation often comes as a response to these pivotal moments, and the reasons behind such changes can be as diverse as the events themselves. 

The number of things that can influence these changes is numerous.  It may be the birth of a new child, or the ages of the children are getting such that you simply need more room. 

Marriages generally merge two households into one.  The possibilities are endless, but it could be two single people or two single parents each with children who need the right space to blend the families.

A promotion, transfer, or a new job could require a change in housing, or maybe just make it more convenient to move closer to where a person is working. 

Countless numbers of people have moved as a result of health issues.  It could be to get away from the altitude, or to a drier climate, or to a more rural area where life is simpler.  The death of a spouse can be the impetus for the move.

Empty nesters and retirees have the freedom to make changes to their housing that will better adapt to their new lifestyle.  The time may have come to seek a cozier, more manageable abode that suits the evolving needs of empty nesters.  It may or may not lead them to a new city or state, but it can certainly include a different size or style home than they have currently.

These are just a few examples of how major life events can set the stage for changes in housing. If you are considering a move for one of these reasons now, you will probably think about it at some point.  We can help you through today's market, talk about timing, and guide you through the decision-making process.

We want to be your trusted agent, ready to support you finding your dream home as you start this new chapter in your life. Take the first step, when the time is right, by connecting with us.

House-Hacking your way to multi-unit rentals

House-hacking refers to buying a multifamily property on an owner-occupied mortgage, living in one unit and renting the others.  If you're thinking about becoming a rental mogul, starting early is an advantage.  Not only will you have longer to accumulate a larger portfolio, but you can also increase the leverage on the first owner-occupied acquisitions. 

Leverage is the use of other people's money to finance an investment.  The higher the loan-to-value, the greater the leverage which can increase the yield.  The lower down payment gives the investor more leverage which can increase the return on their investment. 

FHA, VA, Fannie Mae, and Freddie Mac each have programs for buying owner-occupied two-to four-unit properties with the same minimal down payment required for a single-family home.  The advantage is that non-occupant investors must have a 20-25% down payment where the owner occupant is much less.

A qualified veteran could get into the first property with no down payment.  FHA only requires a 3.5% down payment.  And owner-occupants seeking to buy a multi-unit property with a conventional loan would need 5-10% down payment.

As an example, let's say there is a 2-unit property selling for $500,000.  A non-owner-occupant investor would need to make a minimum down payment of $100,000.  Whereas an equally qualified investor who was going to live in one of the units, would only be required to make a $17,500 down payment on an FHA loan or $25,000 to $50,000 on a conventional owner-occupied loan.

The difficulty is that there are not a lot of two-to-four-unit properties.  In some cases, they may be older properties in older neighborhoods.  With some searching, you might be able to find lots with the right zoning and get a builder involved.

It is certainly worth investigating to find out what is available in your area and surroundings.

Rental properties offer the investor an opportunity to borrow large loan-to-value mortgages at fixed interest rates for up to 30 years on appreciating assets with tax advantages and reasonable control that many other investments don't enjoy.

Some people consider rental properties the IDEAL investment with each letter in the acronym standing for a benefit it provides.  It provides income from the rent which many investments do not have.  Depreciation is a non-cash deduction from income that increases cash flow.  Equity buildup occurs as each payment is made by reducing the principal owed.  Appreciation happens over time as the value of the property increases.  L stands for leverage that was explained earlier in this article.

The key to making this work is to be an owner-occupant in one of the units.  After a reasonable period of time, you may be able to buy another four-unit as an owner-occupant before you need to start using a normal investor's down payment. 

In the meantime, you could have eight units that are increasing in value while the mortgage balance is decreasing with every payment made.  If there is sufficient equity in the properties by the time you're ready to buy more units, you may be able to take cash out of the existing ones to use for the down payments.

This can be a great way to turbocharge your net worth by becoming an owner and a real estate investor at the same time.  To learn more about rental properties, download the Rental Income Properties guide and/or contact me at  to schedule an appointment to meet to answer your questions and discuss the possibilities.