DEAR BOB: You haven't mentioned apartment houses as good investments for a long time. Do you agree with the people who put on those real estate seminars that apartments are good investments?
DEAR GLENDA: No. Apartments can be good investments in jurisdictions without rent controls. But in rent control areas, the profit opportunities are very limited.
However, most of the principles learned at real estate investment seminars are applicable to single-family rental houses, which are usually exempt from rent controls. Never invest in property subject to rent control or threatened by it.
DEAR BOB: I am eligible for that "over-55 rule," $100,000 home exemption you often mention. My question: If I don't use it all up, can I save the rest for future use? The sale of my present home will yield about $40,000 in profit. Can I save the remaining $60,000 for future use?
DEAR CARL: No. The "over-55 rule" can be used only once per lifetime when you sell your principal residence. Any unused portion is lost. Ask your tax advisor for details.
DEAR BOB: I recall someone asking this question before but I can't remember the answer. Is it best in a new subdivision to buy a house on a corner lot? My father told me that a corner lot is very valuable. Is this still true. Evan P., Sterling.
DEAR EVAN: No. It used to be advantageous to own a corner lot. There are neighbors on only two sides, less space is taken by the driveway (because it enters from the side street), and there is a spacious feeling.
These advantages can be outweighed, however, if there is heavy traffic on the side street. Many families with small children dislike corner lots.
DEAR BOB: Why is there so much opposition to conversion of apartment houses to condominiums? It seems to be that such conversions are good for a city, because owners take better care of their property than do renters. Also, I understand that when an apartment house goes condo, its assessed value rises, so the city collects more property taxes. Yet I read of plans to stop conversions. Is there something I'm missing? Miles C., Washington.
DEAR MILES: It is becoming unprofitable to own apartments, due to rising operative expenses, high mortgage interest rates, rent control and decreased income tax incentives. For these reasons, few unsubsidized rental apartments are being constructed. Rents just haven't kept pace with inflation.
All the things you say about condo conversions are true. But tenant groups, usually low-income people, often oppose conversions because they don't understand the benefits. Another problem is that although the existing tenants would like to own their apartments, they don't have the money with which to buy. Smart owners who want to convert provide for these people with discounts, easy financing or a rental option so those apartments can be sold to investors who rent to the existing tenants.