Sewer lines can be a hidden problem for home buyers

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While the sewer in the street is usually the municipality's responsibility, the pipe running from the home to the street is usually the homeowner's responsibility. Many home buyers and owners don't realize this until that pipe breaks, sending sewage into the house and creating a memorable emergency. Find out why homebuyers should consider having a sewer inspection before completing a home purchase in my blog post, Sewer Lines Can Be a Hidden Problem for Home Buyers.

4 Ways to Get the Most from Your Credit Card This Cyber Monday

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When you're shopping online this Cyber Monday, don't just look for the best prices. Look for the best cash-back opportunities as well.

Credit card companies, airlines and other businesses provide numerous ways to get a little something extra from your online credit card purchases.

Learn four ways to get the most out of your spending in my Financial Edge article for Investopedia, 4 Ways to Get the Most from Your Credit Card This Cyber Monday.

Top Ways to Profit from Storage Auctions

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People rent space in self-storage facilities for a number of reasons. They may have too much stuff, be in between moves, have lost their homes, have been deployed for military duty, or be college students who have moved out of their dorms and are living with their parents for the summer.

Sometimes people stop paying their rent on these spaces and the facilities auction off the contents. Storage facilities don’t make money on units they can’t rent out, and they have ongoing overhead costs like personnel, property taxes, insurance and utilities. These self-storage facilities contain hundreds of units, so at any given time there’s a good chance that some renters are in default and the contents of their lockers headed to auction.

Laws vary by state, but usually a certain amount of time must have passed without payment (such as 30 to 90 days) and/or the renter must be delinquent by a certain dollar amount. The owner must be notified, and the auction is considered a last resort.

For the average person, these auctions represent a money-making opportunity.  It's not as simple or as glamorous as it looks on TV, but the average person can learn how to implement the same skill sets as the characters on Storage Wars to earn their own profits from treasure hunting. Here are some tips for earning a profit.

-Know your competition. Some of the best in the business have a lifetime of experience. American Pickers’ Wolfe began picking when he was just four years old. Don't try to compete with or outdo the professionals. Just try to do the best you can with your own budget and skill set. Expect to make some mistakes and realize that it will take time to hone your skills.

-Leave your ego at home. Don't get caught in a bidding war because you don't want to let the other person win. You're not going to win every unit you bid on. Stick to your budget. Set spending limits ahead of time both for the day and for individual units.

-Put a price on your time. Cashing in on other people’s loot takes a lot of time. You have to find the auction, attend the auction, load up and haul away all the stuff, unload it and sort through it. Then you might have to drive some of it to different parts of town to get it appraised, sold and disposed of. You also have to clean items before selling them, research values, price and sell items, and do all the tedious bookkeeping and administrative work associated with buying and selling the stuff.

If you don't put a price on your time, you can spend much more time than you should on these activities--time that could be more profitably spent on another activity. It's normal to not be very efficient when you're just starting out, but at some point you'll have to decide whether the time you spend on storage auctions is worth the profit you're earning. Without a lucrative television contract, you’ll be entirely reliant on your buying and selling skills to turn a profit from what appears to be junk.

-Buy to learn. If you have a hunch about what might be hidden in a locker based on what you can see, you're not going to learn if you're right or wrong unless you buy that unit. The more times you make these guesses, the better you'll get. For a lower-risk strategy, let someone else win the locker, then try to find out from them what was in it and how much profit they made.

-Don't feed your collecting habit. You won’t earn a profit if you hang on to your finds. Also, just because you think something is cool doesn't mean it's going to be worth a lot.

-Don't throw money away.  Donate less valuable items rather than throwing them out; get a receipt and deduct the donation on your tax return. For valuable items, get them authenticated to get top dollar. For example, a comic book with a high grade from a certified comic book grader typically fetches an exponentially higher price on the aftermarket than the same book in similar condition without professional grading. The emergence of the Certified Guarantee Company (CGC) as the industry leader in professional grading has further enhanced the value of graded comics; CGC-graded comics often sell for amounts many times the value of an ungraded comic.

-Learn the art of bidding. If you watch Storage Wars' Dave Hester carefully, you’ll notice that he bids strategically. He’ll wait until the auction appears to be almost over—in other words, until all but one person have bowed out—and then he’ll start bidding. This may prevent him from bidding the prices up on himself by participating earlier in the auction. He also waits until the last possible second to bid—slowing down the auction can help keep the final price down. 

For more tips, read my Financial Edge article for Investopedia, Top Ways to Profit from Storage Auctions.
Also read my previous blog posts, How to Find Public Self-Storage Auctions and What to Bring to a Self-Storage Auction and Why.

What to Expect from a Home Inspection

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The results of a home inspection determine whether buyers proceed with the purchase of a home they have under contract. You definitely should not proceed with a purchase before you've had a home inspection. But what does it cover?

The American Society of Home Inspectors trade organization expects its members to examine the following components of a home during an inspection.

Structure: foundation, wall structure, floor structure, ceiling structure and roof structure

Exterior: roof, skylights, chimneys, gutters, siding, flashing, trim, doors, decks, balconies, steps, porches, grading, drainage, walkways, patios and driveways

Interior: walls, ceilings, floors, steps, countertops, cabinets, doors, windows, garage doors, insulation

Plumbing: fixtures, faucets, drains and water heaters

Electrical: conductors, cables, raceways, fixtures, switches, ground fault circuit interrupters, electrical panels

Heating, Ventilation and Air Conditioning: heating equipment, vent systems, flues, chimneys, ventilation, fireplaces

For more details, see the ASHI's Standards of Practice at the ASHI website.

This list might sound exhaustive until you learn what home inspectors won’t examine--but that will be the subject of another article.

To learn more about home inspections, read my article, What to Expect from a Home Inspection.

Should You Take Out A HELOC?

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If you have more than 20% equity in your home, you may qualify for a home equity line of credit, or HELOC. A HELOC is a convenient and often inexpensive way to borrow money. You don’t have to get a HELOC from the company that services your mortgage, either—you can shop around with a number of lenders. Let’s look at how a HELOC works and whether its unique features might make it a good or bad option for you.

-Borrowing term: A credit card lets you borrow in perpetuity, but with a HELOC, you can only borrow funds during the draw period, which is usually the first 5 to 10 years of the loan. The rest of the loan term is a repayment-only period that usually lasts 15 to 20 years, for a total HELOC term of 25 to 30 years. You do have to make payments during the draw period, but you can’t borrow more money during the repayment period. The long duration of HELOCs can mean that you’ll pay more interest in the long run without even realizing it. The high interest rate on a credit card might compel you to pay back what you borrow faster.

To learn about the other key features of HELOCs and how they can help or hurt you, read my Financial Edge article for Investopedia, Is Taking Out a HELOC Right for You?

Advantages of Renting out Your Extra Bedroom

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Do you have a bedroom  or other livable space in your home that you could do without in exchange for income? If so, you might want to rent out the space to a tenant. Why?

-First-time homeowners who don’t want to stretch themselves too thin can benefit from the extra income of renting out one or more bedrooms.

-People who aren’t home very often aren’t getting the full value of the home they’re paying for. This might include people who travel frequently on business or work long hours. These people might also be less bothered by having a roommate if they’re largely home just to sleep.

-Assuming you have a responsible renter who does things like keep the doors locked, your tenant can help keep the home safe from criminals simply by occupying it. Having an additional person or two living in the house can mean that it’s occupied for more hours of the day, making it less of a target for break-ins.

-People who want to pay off the mortgage early to save thousands of dollars on interest will have a much easier time doing this if an additional person is helping to pay the mortgage.

-You might need the extra cash because your budget is extremely tight and/or you've lost your job or had your hours cut.

-Taking care of a home, especially if it has a yard, is time consuming and a lot of work. Your renter might be able to help out with the burdens of household chores and yardwork, perhaps in exchange for a small reduction in rent.

Also, people who want to own a home but are daunted by the prospect of living alone and/or being responsible for a large mortgage payment might consider having renters both for company and to ease the financial burden.

For more advantages of renting out your spare bedroom, read my article. To learn how to rent out your spare room, read my Financial Edge article.

Returning an Item Purchased with a Credit Card Account You've Closed

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What happens when you return something that you purchased with a credit card account that you closed?

I used to think that I had no choice but to get store credit, but I recently tried another strategy. I took my canceled Chase credit card to the store with me to return an item. I was curious to see if the refund would go through even though the account was closed--and it did. The account had been closed for two months.

While it was a little unnerving to walk out of a store without the item I returned and without any way of accessing the refund money, I knew I had my receipt as proof of the transaction and I could send a copy of it with a letter to the credit card company if necessary to get my money back.

After two to three months of waiting, I received a refund check in the mail from the credit card company. It took quite a long time to get my money back, and maybe I could have sped up the process by contacting Chase, but I didn't. Despite the long wait, I was happy to have been able to return the unwanted item and get a cash refund rather than keeping something I didn't want or getting a store credit that would probably have taken me forever to use.

Alternatives to a Traditional Mortgage

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You've decided that the time is finally right for you to become a homeowner. You know you need to borrow money—a lot of money—to buy that house. So you put on your best "I'm responsible and know what I'm doing" outfit and head to the nearest bank.

A quick chat with their mortgage specialist reveals that there's no way a person with your down payment/job situation/credit score/income could get a mortgage. What's an aspiring homeowner to do?

There are several unconventional options available, and one of them might be right for your situation. Read my Investopedia article, 4 Alternatives to a Traditional Mortgage, to learn more about rent-to-own, borrowing from your whole life policy, taking advantage of self-directed IRAs, and arranging seller financing.

Internet, Gold And Other Bubbles: What’s The Cause? (Investopedia)

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While most people agree that asset bubbles are a real phenomenon, they don’t always agree on whether a specified asset bubble exists at a given time. There is no definitive, universally accepted explanation of how bubbles form, either. Each school of economics has its own view.

To learn more about some of the most common economic perspectives on the causes of asset bubbles, read my Financial Edge article for Investopedia, What Causes Bubbles?