Unconventional Home Ownership Options

The most traditional form of home ownership is to own both a house and the land upon which it is built. Those who can't afford houses, or who do not want to be bothered with outside maintenance and upkeep, may purchase condos or townhouses. However, there is another home ownership option: buying only the home and leasing the land it occupies. To learn more about this option, check out Should You Buy Property On Leased Land?

Another way to buy a home when you can't quite afford it is with a lease option. If you're at a place in your life where you'd really rather not be living in an apartment but you don't have the money to buy a home yet, an in-between option can get your foot in the door faster. Before you consider this type of arrangement, you should be aware of how it works, who benefits and the many things that can go wrong. Learn about the pros and cons in Get Your Foot In The Door With Rent-To-Own.

Photo by MGShelton

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Shopping For An Agent

I've been shopping for a real estate agent lately and the process has been rather discouraging. Ideally, I want to find an agent who offers a rebate, meaning that they pass on some of their commission to the buyer (me) in exchange for having to do less work (I look at listings online and tell them what houses I want to see).

I initially emailed about ten agents who offered a 20% commission - not amazing because I understand that it is possible to get as much as 50%, but these were people whose names and profiles I could find easily online. I sent each of them emails saying that I was interested in short sales and foreclosures and that I had a limited budget (hence the interest in short sales and foreclosures).

Of the ten agents I originally contacted, about seven responded with response times ranging from a couple of hours to three days. Five of them sent thoughtful responses which gave me some very helpful information. I replied to two of those agents and then heard . . . nothing. Meanwhile, I missed a weekend of touring houses and they missed out on getting a new client because the number one quality I listed that I wanted in an agent is responsiveness. So it's back to the drawing board.

Two more bad agent experiences of note: one day while out driving around, I noticed that one of the homes I was most interested was open. It was a Saturday and there was no open house sign, but there was a flag out front and there were several people inside. I walked up and was greeted by an agent who asked if I had an agent. I said no and he then refused to let me enter! Wouldn't any good agent use this as an opportunity to introduce himself and try to get my business? Instead he told me to call the listing agent, which is about the worst way I can think of to see a home since the listing agent has zero interest in looking out for the buyer's best interests.

Then, I went to the website of another agent, which was listed on a for sale sign. I registered as "Jane Doe" because I always do that until I want to make a commitment to working with someone. It turned out that his site offered the same MLS info that you can find on any other popular real estate website so it didn't serve me any purpose. But he actually had the gall to email me to say "please don't use my website." So that guy won't be getting my business, either, and I will feel really hesitant to purchase any home that he is the listing agent on since he is apparently has such a chip on his shoulder.

I'm not sure what the story is with these unresponsive and even rude agents who apparently have no interest in getting new business. If several thousand potential dollars walked through my door or my inbox, I would do everything I could within reason to close the deal!

Currently, my backup plan is to go with an agent who is a friend of the family. I haven't met him and he doesn't offer a commission rebate, but he's helped my family complete two transactions successfully. My only hesitation about going this route is that what worked for someone else won't necessarily suit my needs and the commission rebate would be awfully helpful since I will most likely be purchasing a fixer upper that will require things like new flooring, central air conditioning, and more.

Photo by Svadilfari

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Money Stuck On Credit Cards

I've come across a situation lately where I think I'm going to end up with some money "stuck" on a credit card and I'm wondering how to get it off. Here's the scenario. I purchased some clothes online from the Gap and Old Navy. I have 90 days to return any items I don't want but my credit card is due in less than thirty days. So if I don't get the items returned before my credit card bill is due (my fault, I know), I will have to pay the bill in full even though I know I have a significant refund coming my way. Then I will have a credit balance on the card and the money will be stuck there until I make another purchase at one of these stores, which I'm not planning to do anytime soon since I just bought all the clothes I could possibly need for a while. This effectively turns my refund into a store credit and ties up that cash for months.

I don't like this scenario. Had I not paid with a store credit card, it wouldn't be a problem. I could just use the credit to buy gas or groceries or whatever I wanted. But I paid with my Gap card so I could earn 5% back. I could accomplish the return immediately by driving to both a Gap and an Old Navy, but the amount of money that would cost me in gas is a little ridiculous since they are not near my home (hence the online shopping in the first place--shipping is cheaper than gas).

Moral of story: Store credit cards have hidden drawbacks that other credit cards do not, so use them carefully.

Photo by kewfriend

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Time To Buy A House

If you've been reading my blog for a while, you might recall that not so long ago I had no interest in purchasing property. I saw it as a major hassle and an unnecessary expense. I could only afford a condo, not a house, and even that was highly questionable. I also thought that being self-employed and working from home would be mutually exclusive (I was still a W2 employee at the time). I also liked the apartment I was renting.

Quite a few things have changed since then. The real estate bubble has burst. I've seen home prices decline by as much as 40% in my area and they keep going down. I moved to a new apartment last year that has turned out to be a nightmare. I've had building maintenance break into my apartment twice, a building-wide roach infestation has developed, my rent gets increased every three months, the landlord schedules excessively frequent "maintenance" visits to my unit, and the building-wide fire alarm goes off randomly at times such as midnight and 5 a.m. (Yes, I should probably get a lawyer, but I'd rather not add another element of stress to my life and just get out of here instead.) I've made the switch to self-employment and found that I can make more than I thought. I've majorly broadened the areas I'm willing to live in. I've absolutely ruled out living in a condo, townhouse, or anything else with a homeowners association. And all the hassles involved in finding an agent and getting a mortgage suddenly seem worth it.

I'm already finding that it's one thing to write about the steps involved in purchasing a home and quite another to actually undertake those tasks. It's also one thing to write about remaining rational and leaving your emotions out of the process and another thing to successfully do it. I've written quite a few articles on home ownership as I've researched the process over the last 18 months or so. What I'm starting to learn though now that I've moved beyond reading books and visiting open houses is that there is a great deal of intricacy involved in the process that personal finance articles don't really talk about. Agents aren't always interested in working with you. Mortgages don't always give you the option of paying points so much as they require you to pay them. You can't always just walk into a bank and talk to someone about home loans. Fannie Mae doesn't update some parts of their website regularly. The mortgage lender you were going to visit the following day suddenly goes under.

So over the next few weeks or months, however long this process takes me, I will be writing about the nitpicky details of shopping for and purchasing a house with the hopes that sharing my experience will help my renting readers have a better idea what to expect when it's their turn. I also hope that those of you who have already been through the process will share your experiences in the comments.

Photo by roarofthefour

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Save Money On Summer Bills

Without careful attention, summer bills can easily skyrocket. It's important to be prepared for extra yard maintenance costs and energy bills and avoid impulse buys or spur-of-the-moment trips to the amusement park. If you follow the simple advice in my latest Investopedia article, Save Money On Summer Bills, you'll find it's surprisingly easy to keep your summer spending in check.

Photo by Jennifer+



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My Experience Signing Up For Options Xpress

Back in January, a new company called Options Xpress was offering a sweet $100 signup bonus for new accounts funded with $500. The only catch was that you had to leave the money in for six months or the bonus would be revoked. It wasn't even necessary to place a trade. Naturally, I signed up.

Right away, I was really impressed by the email they sent me when they received my account opening document in the mail. Instead of leaving me to wonder when it got there, they took the initiative to tell me it had arrived in a well-written letter that made me feel pleased about my decision to do business with them.

Welcome to optionsXpress! You have chosen the online broker rated an "unprecedented 4 1/2 stars" by Barron's Magazine. We have received and are currently processing the documentation you sent to us. We will contact you again shortly as we process this paperwork. Below is a summary of the documents we received today. If you feel something is missing or incorrect, please feel free to contact us and we will be happy to investigate any concerns for you. Otherwise, relax, sit back, and get ready to enjoy all of the market-leading tools and features that make our firm the best choice for direct investing.

Documents received today:

New Account Overview
This is the core document that every new client must complete and return. We will use this to verify your desired trading level and account type, and will notify you when your account has been established with a trading enabled email. Depending on the type of account you are opening, you will receive this email within 2-6 business days.

Our success is measured by your satisfaction with optionsXpress, so please feel free to contact us if you have any questions, or if we can be of assistance to you. We are always happy to help.

Sincerely,

Ned Bennett, CEO

This kind of personalized attention and extra effort really go a long way towards creating a positive relationship with customers. (I should mention here that Fidelity also consistently impresses me with their level of customer service.)

Then, I learned that it was possible to get another $100 bonus for referring a friend. Not only would I get a bonus, but my friend would, too. Additionally, my friend could sign up using the same $100 bonus link I did, giving them a total of $200 for signing up! The only catch was that the friend had to make one trade for the refer-a-friend bonus to kick in, and trades cost $15. Thus, the real reward would be closer to $185.

Unfortunately, I haven't had much luck convincing my friends that these signup bonuses are worth it and don't have significant strings attached even when I tell them I've made something like $2500 over the past two or three years with all the signup bonuses I've taken advantage of. I did convince one person to sign up, though. If I were actually interested in making trades, I could have chosen a signup bonus of ten free trades instead of $100, which at $15 a trade would actually a be a better value for some people. My friend purchased one share of stock at $2 to activate the bonus. The reason for purchasing such a small amount of stock is that it eliminates the need to sell the stock later to get one's money out, thus eliminating the need to pay another trading fee. The stock can simply languish in the account forever. This same strategy can be employed with other online trading accounts offering signup bonuses. Also, despite its name, Options Xpress allows clients to purchase stocks, futures, mutual funds, bonds, and covered calls in addition to options.

I'm happy to report that my friend and I successfully received both the $100 signup bonus and the $100 refer-a-friend bonus. It did take an email from each of us to get the second bonus when it was not credited on time. However, we were not hassled about it at all, so it wasn't really any trouble.

Opened account with $500: 1/31/08
Received $100 account opening bonus: 4/14/08
Friend received account opening bonus: 4/14/08
Received $100 bonus for referring a friend: 6/2/08
Friend received $100 bonus for being referred: 6/2/08

As you can see, it only took about four months for me to earn $200 with virtually no effort. All in all, it probably took me an hour to fill out the paperwork, mail it in, refer a friend, and follow up on the bonuses. I don't currently have any other way to earn $200 an hour or to earn a 40% return in four months, so I'd say this was a pretty good deal and a pretty fantastic use of my time even though I will have to pay taxes on it at my marginal tax rate next April (I expect it to be reported on a 1099-MISC). Also, unlike credit reports, brokerage accounts don't show up on your credit report, so opening another account didn't have any negative impact on my credit score.

Unfortunately, Options Xpress is no longer offering $100 bonuses for new accounts or referred friends. They are still offering 10 free trades for referring a friend, however.

Photo by stopnlook

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Airplane and Train Alternatives

If you're having trouble affording a summer vacation, consider these inexpensive alternatives to a plane or train ticket.

Chinatown Bus - Serves over 40 cities on the east and west coasts plus a couple of other states. Sample fares (one way/return): New York to DC, $10/$20, New York to Boston ($15/$30), Orlando to Miami ($20/$40), Los Angeles to Las Vegas, $25/$40, Los Angeles to San Francisco, $45/$90.

Greyhound Bus - Greyhound is the largest bus service operator in North America and serves 2,300 cities. Sample e-fares (one way/return) (must be purchased online): New York to DC, $25/$42, New York to Boston, $25/$45, Los Angeles to Las Vegas, $39/$75, Los Angeles to San Francisco, $39/$75, St. Louis to Chicago, $22/$44. Since the prices are higher than Chinatown Bus, Greyhound is a better option for routes not served by Chinatown Bus. Also offers child, student, military, veteran, and senior discounts. Companion fares get you a second adult or child ticket at 50% off the walk-up price on either one-way or round-trip tickets purchased at least three days in advance. Go Anywhere Fares price tickets based on mileage for trips between 1 and 800 miles regardless of destination and must be purchased at least seven days in advance. These rates are lower Monday-Thursday.

Megabus - Provides low-cost daily express service in the U.S. and Toronto. Primarily serves Midwestern cities such as Chicago, Cincinnati, St. Louis, Milwaukee, and Detroit, but also serves a few major northeast cities. Sample fares (one way/round trip): New York to DC, $5/$10, New York to Boston, $5/$10, St. Louis to Chicago, $21/$39, Toronto to New York, $75/$135. Fares for some night trips between some cities are as low as $1 one way.

Hostel Shuttles – Some hostels offer cheap bus service between nearby cities. For example, San Francisco’s Green Tortoise hostel offers shuttle service between San Francisco, Los Angeles, and Las Vegas via their Hostel Hopper service. Sample fares: Los Angeles to Las Vegas, $39 one way; Las Vegas to San Francisco, $59 one way; Los Angeles to San Francisco $39 one way. While most of these shuttles will probably be provided exclusively to hostel patrons, it never hurts to ask. And if a route isn’t full, they may take you anyway.

Rideshare - Though it’s perhaps only a step above hitchhiking in terms of safety, Craigslist’s rideshare boards are filled with drivers seeking passengers and passengers seeking drivers. The ad will general state how much the driver expects the passenger to pay for a ride, which is usually either a flat amount or the actual cost of gas divided by the number of people in the car.

Road Trip - If you’re traveling alone, driving may not be cheaper than flying or taking the train. However, if you are traveling with a group of friends or family, economies of scale can quickly make driving the most cost-effective way to get from point A to point B.

Photo by conner395

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