Dear Ms. Lank: My wife and I have thought for some time about becoming real-estate investors. Do you have an opinion on buying vacant land? I assume location is the important factor? — P. I.
Answer: Forget about buying a vacant piece of land or an empty lot in a resort area. Empty land produces no income, ties up your money and requires tax payments. Even experienced investors get burned sometimes. Land is not the right investment for beginners.
Son Leaving Town
Dear Edith: In 2010, my hubby and I purchased a house for my son and his family to live in because their credit went bad after losing a home out of state. The agreement was that they would then pay us rent each month, and we would sign the house over to them once it's paid for.
But they began to sometimes overlook the rent if other expenses became more pressing. We even reduced the payment so they could keep up. Still, the payments were half-made or missing altogether.
My son is now taking a job out of state. He is just walking away from house, leaving it in our hands! They made very few home improvements, so we would have to put some money into it to make it market-worthy or even rentable.
Should we try to sell it as is so we can get rid of it? Should we put some money into it first, and then sell? Or see if we can rent it out? — Anonymous
Answer: I'm not sure you folks are cut out to be successful landlords. It's not an easy job for amateurs, so you're probably best off selling.
And here's my usual advice: Start by calling three local real-estate companies. Ask each one to send someone to meet you at the property. They'll know what needs to be done to it, and what can simply be cleaned and tidied. Then, hire one of them to put the place on the market.
You didn't ask for it, but here's some more advice: If your son asks for help with housing at their new location, you may want to respond with a polite "no." It sounds like the sooner you let those kids take responsibility for their actions, the better it'll be for all of you.
Four Inherited the House
Dear Edith: I'll try to keep this short and to the point. I am one of four siblings who inherited a house. One of my siblings gave his share to another, so he now has half the interest, and my other sibling and I each have a quarter.
We went to a lawyer and transferred the house to my brother who has the majority interest. I have been given part of my share, and now am interested in receiving the rest.
My brother says he is going to hire an inspector to see if any repairs need to be done. I was told there will be a Realtor fee due — even though there's no Realtor involved — and I should pay part of the fee.
I don't think I should pay for any of this. Any advice? — X
Answer: A good time to ask for advice would have been before you went to that lawyer. At that point, a written agreement would have made it clear when you were entitled to receive your portion, and what your responsibilities are for repair expenses — and it would have helped keep the peace in your family.
It's unclear who that broker's fee would go to if a Realtor wouldn't be involved. But it is against the law for an unlicensed person to receive a sales commission. Perhaps you're being asked for a share of the legal fees?
The general rule is that the repairs are your brother's responsibility since he owns the house. It might be different in other circumstances, if, for instance, your brother had bought the house and the seller had lied to him about the property's condition. As I always say: I am not a lawyer, and I haven't seen the documents. But I do know you're bound to share these costs if you agreed to do so in writing.
You'll have to decide if you want to risk family harmony by consulting an attorney.
Dropped Price $5,000
Dear Edith: Someone wrote to you about doing a remodel to sell their home. We recently redid our master bath, but before we listed our house, our Realtor suggested we remodel the other two bathrooms. She also wanted us to put hardwood floors in the family room, install brick on the face of the house and close off the carport between the house and the garage.
We spent $20,000. Thank God that's all we spent because the house has now been on the market more than a year. We lowered our price from $1,000,000 to $995,000. So much for a Realtor's advice. — Anonymous
Answer: Even though you lowered your price, remember this rule of thumb: When a property is on the market that long, it's priced too high. I hope your broker has made that clear. Of course, that token price drop crossed an important boundary, but I'm not sure it'll be enough to attract buyers.
Contact Edith Lank on www.askedith.com, or 240 Hemingway Drive, Rochester NY 14620.