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Maybe it’s time to wake up your sleeping real estate and make it get a productive job.

California real estate has appreciated wildly for years and I know many people who have taken their largest asset for granted for a long time. The belief has been that these large escalations in value trumped any necessity to dynamically handle this lump of equity.

Now, that appreciation has slowed down, and the media has done a good job sensationalizing the woes in the real estate market, some people are starting to become aware of the situation in the booming California real estate economy. Bankrupt homeowners, staring at half a million dollars in equity, are finally starting to realize” what’s wrong with this scenario?”

Here are some practical ways on how to identify if your house is a sleepy asset.
First, you are confident in your 5% something mortgage; but have you considered that the 9% second mortgage is almost as large as your first mortgage? In merging the two, your payment will go down and your cash flow will go up.
2. Your interest rate is good, but not good enough. You likely have the funds for the payment, so why go through the trouble and cost of a refi? Re-examine your interest rates often. The closing costs in a minor interest rate refi are recalled instantly in your newly reduced payment.
3. You want to invest in a another property, but do not have the funds to do so at this time. The answer is a cash-out refinance, even at a little higher rate, if it means investing your asset in another piece of real estate which has higher potential for appreciation.
4. You are allowing your property to degrade physically, because you have lost your appeal in it. If you have allowed your property to physically devalue you are harming yourself in 2 ways. First, you are letting equity run away from you. Second, you are depriving yourself of one of the significant benefits of owning real estate: the joy of loving your home. At a very minimum, keep your property up to par with the others in your neighborhood or go the extra mile and upgrade just a bit beyond your neighbors to keep the value of your property as high as possible.
5. Your home has so much promising capability of earning wealth that you are overlooking. You may not know that your property has an extra lot that is now worth a fortune. Maybe there is a second structure that with a little renovation could become a rental property. Or maybe buried in your home equity is seed money for that business you have always dreamed of. The best thing to do is to release the hidden prowess of your equity and open that chest of gold. Every month you postpone is a deficit of profits and earnings.
The decision is yours. Do not let yourself be guilty of letting your real estate become just a sleepy tool, if you can make it your fortune-generating machine. Make it work for you.

This entry was posted on Monday, May 12th, 2008 at 10:52 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.