Your diploma represents a vital step on the road to success. Next up: establishing a good credit history.
If you’re a recent college grad, you’ve likely heard speeches about pursuing your passions and believing in yourself, but you probably haven’t heard much about establishing a good credit history. Here’s what you need to know.
It matters — a lot
Qualifying for mortgages, auto loans, apartments and even jobs has become dependent, to some degree, on your credit history.
Find out where you stand
The first step is knowing your current status. Access your credit report by visiting Annual Credit Report.com. Make sure all the information on the report is accurate, because errors can — and do — occur. Damaging discrepancies need to be corrected right away.
Build a credit history
Your credit history is one of the key factors making up your credit score, the all-important three-digit number that determines the rates you pay on everything from credit cards to mortgages to auto insurance.
The best time to build a credit history is when you’re young, and the best way to start a credit history is to get a credit card. This may sound counterintuitive, but if you don’t have a credit card, the scoring system has no information to go on for assessing your creditworthiness, so you come across as a credit risk.
Research credit card options
While many of the major issuers offer cards geared toward new applicants with little or no credit history, you might stand a better chance of getting a card at a credit union. Size up your card options on a site such as LowCards.com.
Gas cards and department store cards are also typically easy to get and can be a good place to start if your options are limited.
Another possibility — especially if you don’t have any credit history or your credit is damaged — is to get a secured card. These cards work just like a regular credit card, except that you place a security deposit with the credit card issuer to obtain one. They typically require $200 or more for the deposit, and this amount becomes the credit line for the account.
Use credit responsiblyThe way to keep your credit score high is to spend responsibly within your means. Don’t use more than 30 percent of your available credit, and pay off your balances in full and on time every month. Your payment history contributes to 35 percent of your credit score, so this point is important.
Chip away at student loans
Student loans are a form of debt, and are therefore taken into account as part of your credit score. And while you may be worried about a lender seeing all of this debt (likely tens of thousands of dollars), there’s no need to be concerned if you’re handling your finances properly. Just be sure you’re managing your debt obligations and repaying them on time, every time.
On Point Homevestments
Learn how to navigate the deals and come out on top.
Why pay full price for something if you can get what you want, plus another item, at a discount? This is called bundling, and researchers have been studying the pros and cons of it for decades.
Although many consumers think of bundling as a modern concept — it’s often used to combine TV, internet, and phone services, for example — the practice has been around for years in a variety of forms.
As a homeowner or renter, navigating the benefits and pitfalls of bundling household services means using a little common sense and a bit of economic reasoning. It also requires being aware of when and how products are bundled.
What is bundling?
Everything from fast-food combo meals to items in a two-for-one deal could be considered bundled, especially if sold at a lower price than the separate parts.
For households, bundling might mean purchasing home and car insurance together at a slightly lower rate — the average American, for example, saves 16 percent when bundling the two policies, according to the latest data from InsuranceQuotes.com.
The possibilities for bundling household services abound, according to Andrew Schrage, co-owner of Money Crashers Personal Finance: “You might find someone on Craigslist who can help with electrical, plumbing, and air-conditioning/heating needs. You’ll likely get a discount, because you’ll be bringing that person more work.”
Mixed versus pure bundling
There are several types of bundling, each with varying levels of consumer benefit, according to George John, a professor at the University of Minnesota’s Carlson School of Management. As a homeowner, you’ll most likely encounter these two types:
In such a scenario, consumers are worse off, because the seller increases its profit by requiring such a deal. The company can get away with it “because they have a very strong market position,” John says.
Understanding your needs is key
Why are so many services offered in bundles? “This is somewhat controversial, but it turns out that companies make more money when they offer you discounts on those bundles, because consumers get tempted into buying it,” John says.
To win at the bundling game, keep your needs in mind, and stay strong in the face of alluring deals. Bundles are a true victory for consumers only if they genuinely need all parts included in it.
When consumers fail to shop around for the other items in the bundle and go for the packaged deal instead, they often walk away with products they don’t want or need — and sometimes pick up lesser-quality goods along the way.
Finally, the touted time-saving advantage of combining bills, which service providers sometimes use as a selling point, may not economize that much time, especially if a consumer would be signing up for automatic bill payments anyway.
Service providers “want to take your attention away from the fact that it’s actually a price move. They want to tell you that you’re getting a better experience if you bundle,” John says.
Consumers triumph when they control what’s in the bundle. Have a nanny who you pay a little extra to make dinner each night? That’s a bundle. “It’s totally a good deal, because you know the benefit that comes from having the same person watch your child and cook for you. You’ve made the judgment,” John says.
At the end of the day, discipline is key. Saying no to unnecessary items, looking for other options instead of pure bundling, and refusing to be duped by false benefits will ensure you win the bundling game.
On Point Homevestments
Your parents' rite of passage may not make sense for you
When the Baby Boomer generation was venturing into adulthood, it was common to buy a “starter home” — a modest, small dwelling. As their families grew and careers advanced, they moved into bigger or better homes.
Now, many people struggle to come up with the down payment for a first home. They may wonder if it’s smarter to wait and save more money so they can buy a home that makes more long-term sense, or go the other route, buying a starter home and planning to stay in it for more years.
It’s a personal, practical and financial decision, but here are some pros and cons of buying a starter home.
Pro: Build stability quicker
Lots of lessons come from homeownership. It exposes you to a new set of decisions and circumstances.
One surprise benefit that strikes most people is the stability they feel when they become homeowners. They might feel more grounded, and a part of a larger community.
After making a few cosmetic changes to make a home “theirs,” many new homeowners find they enjoy nesting at home, having friends over, and enjoying their own space.
Con: Buying twice means moving twice
Think you’ll be ready to upgrade in just a few years? It might be more cost-effective to save and stretch for the larger house, so you can stay in it longer.
Although mortgage rates are low, there are costs associated with buying and selling a home: title insurance, inspections, brokerage commission, along with a handful of loan fees.
Plus packing up and moving twice can be expensive and exhausting. Some prefer to pick one house for the long haul. While staying put and continuing to rent may seem wasteful in the short term, it might be a more strategic move.
Pro: Build equity sooner
Although not the guarantee it was a generation ago, odds are good that when you get into your first home, you can realize some equity. If you can commit to at least five to seven years, there’s a chance you can come out well ahead.
By making improvements that add value, you can take the equity you’ve built and apply it as a down payment on the next home. In essence, the starter home might help you purchase your dream home.
Con: You may spend more than you planned
There are soft costs to home ownership. Property taxes and mortgage payments aren’t the only expenses to owning. You’ll need to furnish your new home, purchase window coverings, and pay for landscaping improvements.
You’ll likely want to paint, refinish the floors, or change the carpet before moving in. And, you’ll surely make mistakes along the way by hiring the wrong contractor, making a poor landscaping decision, or mistakenly waiting to install the new AC condenser.
Some parts of homeownership are trial and error. It adds up. You might be better off avoiding those expenses by renting and saving for your long-term home.
Pro: Start realizing the tax benefits
When you own a home, the interest portion of your monthly mortgage payment can be written off, dollar for dollar against your income. If you spend $1,000 per month on mortgage interest, at the end of the year, you can deduct $12,000 off your taxes.
When you pay rent, the money goes to your landlord, and that’s it. The sooner you own, in theory, the faster you can save some money — perhaps toward your next home.
Con: Homeownership isn’t a sure thing
The world moves at a faster pace today, and that affects home values. Just a generation ago, people stayed closer to home, got married earlier, stayed married forever, and kept the same job through retirement.
Today, people choose to stay single longer, and may even purchase their starter home solo. Divorce rates are higher, the global economy moves people all over the world for work, and we prefer to stay more mobile.
That means homeownership may not be part of the equation. What happens if you buy your starter home and then get a job transfer, divorce, or the opportunity of a lifetime to live abroad? You might be stuck being an accidental landlord or selling your home at a loss.
It’s up to you
If you play your cards right, you can get into the starter home sooner rather than later and make a smart financial decision. If you buy the right first house, are open to building sweat equity, and plan to hang out there for five to seven years, there’s a good chance that you’ll have made a smart move.
This decision will enable you to get into a larger home, in a better neighborhood or school district, or maybe just your dream home.
Homeownership is a personal choice, and there is no one path to take. Stick within your comfort zone, and always go with your gut
On Point Homevestments
Happy owners, happy tenants — it all starts with the right property manager.
You would never turn your home over to a stranger, so choosing a property manager shouldn’t be any different — finding one you trust is vital.
“You are entrusting probably one of the biggest investments you’ll make into the hands of someone else, so you want to make sure you feel confident that they’ll handle things the way you want them to,” says Grace Langham, CEO of Nest DC, an award-winning boutique property management firm in Washington, D.C.
Dependability and trustworthiness are two key points all homeowners should keep in mind when assigning their home or condo to the loving care of a third party. But before handing over the keys, consider these six other factors to help you find the right property manager.
With so many players involved — owner, tenant, and manager — communication is critical. Some owners prefer lots of updates, while others want few. Regardless of your desired amount of communication, the quality of it is crucial.
A property manager’s availability and response rate get to the very heart of their job. In your initial contact, look for clues about their speed, courtesy, and availability.
“Once signed on, a good manager will do what it takes to keep you in the loop, whether you prefer emails, phone calls, or texts,” Langham says.
When it comes to renters, a property manager’s duty is twofold: Find quality residents, and ensure they are treated fairly.
Happy renters often stay in a residence longer, and are more reasonable when things break. That said, finding good residents requires legwork.
“Bad tenants can be one of the most costly things for an owner,” says Nathan Miller, president and founder of Rentec Direct, a property management software company.
Evictions are expensive, especially when owners are forced to forgo several months’ rent, and damage can be costly. That’s why running a credit check and performing a background screening for criminal and eviction reports are musts, according to Miller.
Property management fees tend to be fairly standard, Miller says — usually between seven to 15 percent of a month’s rent, but most often around 10 percent. Sometimes, a condo may cost slightly less than a stand-alone house because there’s less home and yard to maintain.
The owner is also on the hook for maintenance costs, and often pays a finder or leasing fee — up to a full month’s rent — when a new resident moves in Ask if you will still be charged, even if the unit stands empty.
Some property managers also charge a lease renewal fee and sometimes tack on a project management fee when dealing with excessive bureaucracy or paperwork, such as insurance claims. Verify the fee structure and services provided before signing any contract.
House visits and other specs
When it comes to inspections, a property manager should be proactive. That means taking a peek at your property no less than once (and maybe even twice) a year to ensure that everything is in good shape.
Such time-consuming tasks mean it’s important for a property manager to maintain a reasonable caseload. Miller says his ideal property manager oversees between 500 to 1,000 properties. “Once they get above that size and they’re managing many, many thousands of units, you’ll lose the personal touch,” he says.
Finally, you want to find a property manager that specializes in a type of unit: single-family homes, apartment complexes, or high-end houses, for example.
To maximize a home’s earning potential, property managers should know how to deftly market a unit so that it doesn’t stay empty long. This includes everything from posting it on well-known rental websites to taking quality photos that make it pop.
Miller says the property manager should also ensure a home is leased at market rent, and analyze that rate semiannually. You want to know you’re not being shorted income by charging too little.
Finally, the proper software can indicate that a management firm has what it takes to succeed. “We’re lucky to be a company that’s eight years old,” Langham says. “We started with all this technology that’s really friendly to the millennial generation, which is a lot of the renter base.”
Collecting rent and submitting maintenance requests via an online interface makes interactions between all parties a breeze, meaning owners and tenants can move on with their busy lives. After all, at the end of the day, that’s what having a property manager is all about.
On Point Homevestments
Time is money, so keep the profits coming with this advice from Christina El Moussa of HGTV's "Flip or Flop."
If you’ve been flipping for a while, you know that selling a flipped house takes patience, and that some houses sell faster than others. While many factors affect how quickly a house sells, Success Path has three tips to help you sell your flipped houses faster.
Make a good first impression
Like a job interview, your house needs to make a good first impression. Regardless of how great it is on the inside, the outside appearance matters, and it can be the deciding factor for whether or not the potential buyer bothers to inquire further about the house.
There are many ways to give your house a quick facelift:
Use the reach of social media
Social media is no longer just a place to keep in touch with distant friends and family. It’s a powerful marketing tool for companies and a platform for connecting with customers — both current and potential.
Most social media platforms have special tools for connecting with specific target markets, narrowing the demographics to match your product or service. Use these tools to your advantage! People spend a fair amount of time on social media, so why not put your house right in front of the people looking for a house?
Start by posting on local real estate pages, or even create your own house-flipping page where you can create ads to show specifically to the demographic of your choice. Don’t wait for the right buyers to find your ad — let your ad find the right buyers.
Don’t skimp on major improvements
The ultimate goal may be making a profit, but you’ll quickly learn the hard way that cutting corners or trying to skip major improvements altogether will cost you more in the long run — and may ultimately put you in the red.
If you’re flipping a house that needs a new roof, but you don’t have roofing experience, don’t ignore the roof or attempt to do it yourself. These things take time and money, and doing it yourself will likely result in costly mistakes. Buyers will look at the bones of the house, so if they see a shoddy roof job, poor plumbing, or major renovations done haphazardly, they’ll be turned off.
Before you even buy a house to flip, budget for hiring out major renovations or projects. Even if the house you want to flip seems manageable for your skill set, always assume that you’ll discover hidden costs and jobs that require a professional.
Don’t give your potential buyers any red flags. Be upfront about the renovations, particularly the ones done by a professional. Squashing their concerns will leave a good impression and ease their minds as they explore the rest of the house.
On Point Homevestments
No matter your budget, there's always an upgrade or two that'll up the resale ante.
Whether your home improvements are for you or potential buyers, consider their impact on your home’s potential resale price before picking up your toolbox (or the phone to call a contractor).
A brand-new kitchen or bathroom will undoubtedly wow potential buyers, but there’s no guarantee you’ll recoup the money you put into those pricey remodels.
To help you navigate the choices that lead to the best return on investment, we asked two industry experts (and one enthusiastic DIYer) to weigh in.
“Renovating the kitchen is always the biggest way to add value to your home,” says Grace Fancher, real estate agent at Kansas City firm Sarah Snodgrass. “People love to cook, and everyone tends to gather in the kitchen. If you add seating, such as an island with barstools, buyers go crazy for that.”
A full remodel is a major investment, but smaller projects make a big difference if you can’t — or don’t want to — go all out. “Nicer appliances really stick out to potential buyers — even if you’re planning to take them with you,” Fancher says.
She also suggests replacing tired finishes with fresh, neutral materials. “You don’t want to be too trendy, but you want it to look up-to-date,” she says. “Everyone loves clean, white subway tiles now, but they’re really a timeless look.”
Replacing dated countertops (quartz is your best bet, according to Fancher) and flooring is also worth the time and money.
The smallest rooms in the house can have a big impact on its value, so Fancher suggests adding a second bathroom or upgrading existing ones so your home features at least two full baths.
Joe Monda, co-owner of Seattle-based general contracting firm Promondo, agrees. “People are spending more on upgrading their houses before listing them,” he says. “They really want to maximize the potential house value.”
But if you’re remodeling a bathroom just to put your house on the market, keep it simple. “Most people don’t want to pay for upgrades, so you want it to be a neutral space that doesn’t look straight out of the big DIY warehouse stores — even if it is,” says Fancher.
She adds that an easy solution is spending a little more on details, like high-quality towel bars and upgraded hardware for those big-box store vanities.
Not in a position to remodel? “Re-grouting tile, or even just using one of those grout paint pens, gives any bathroom a fresher look,” says Sharyn Young, a self-proclaimed DIY addict from Minneapolis.
“The brighter a room feels, the bigger it looks,” says Fancher. “And when you’re selling, you want every space to look as big as possible.”
She recommends replacing flush-mount ceiling lights with recessed and/or pendant lighting — a relatively cheap upgrade that looks modern and makes a huge impact.
“LED lighting has changed everything,” says Young. “There are so many readily available, inexpensive options now that are easy to install. I added Ikea under-cabinet lighting in the kitchen of my last house, and I was amazed at how that one simple upgrade made the space feel larger and cleaner.”
Like lighting, a new coat of paint can also make a space feel cleaner and brighter. Stick to neutral shades, such as light gray and beige, and if you don’t have time or budget to do the whole house, start with the living areas you see when you first walk in.
An even quicker fix is refreshing just the trim. “Beat-up, dirty trim can give buyers a subtle impression that the whole house is dingy,” Fancher says. “Repainting gives a sharper look and shows the buyer that you’ve taken care of the house.”
“A lot of people overlook how important landscaping is, especially when you’re selling in the spring or summer,” says Fancher, adding that you can increase curb appeal by just putting down new, dark-colored mulch, if you don’t want to spend a lot of money on planting.
Monda suggests paying special attention to the entry. Repair or replace any damaged stepping stones, concrete paths, and porch plants, then give the front door a fresh coat of paint and add some potted plants. “You want people to be excited to walk in the door,” he says.
On Point Homevestments