Experts are advising consumers to be cautious when buying leather furniture, after a
spate of complaints about leather couches that crack, flake, and peel within the first year or so of purchase.
This is because many retailers sell "bonded" and "bi-cast" leather without explaining that these are much different than more expensive full grain and aniline leather products, which can last for decades. (Unfortunately, many consumers have also found that the furniture warranty they paid for specifically excludes cracking and peeling.)
Before deciding on a purchase, find out:
Is it bonded leather? Bonded leather is a reconstituted leather fiber product made of a leather pulp covered with polyurethane.
Is it bi-cast, or "split" leather? Bi-cast is split leather backing covered with polyurethane. Some countries, such as the UK and New Zealand, don't allow bi-cast to be called leather.
The life span of bonded leather may vary quite a bit depending on its fabrication, and a search of online reviews shows that some people have been satisfied with it. There are quite a few complaints about both bonded and bi-cast leather, however, and unlike higher grade leather, neither of them can be repaired.
Either way, the crucial point is to avoid surprises and know exactly what you're buying.
Here's a helpful article (a bit opinionated, but informative) that explains the differences between the various leather furniture options:
"A Look at the Bi-Cast Leather Controversy"
A Helpful Tool for Analyzing Rental Properties
When evaluating pricing for rental properties,
it's useful to compare the
Cap Rates of local investment properties instead of their
prices (contrary to what would typically be done for a traditional home purchase).
"Cap Rate" (Capitalization Rate):
A rental property's Cap Rate tells you what your return on investment would be on the purchase if the property were completely paid for. It is the yearly Net Operating Income divided by the Sales Price.
For example, a rental with a yearly Net Operating Income of $40,000 that was priced at $400,000 would have a Cap Rate of 10%.
The higher the Cap Rate, the better the return.
How to use Cap Rate to evaluate property pricing:
1. First, determine the going Cap Rate: For example, recent sales may show that the going Cap Rate for comparable rental properties in a specific area is around 6%. This means that a nearby property with a Cap Rate of 5% might be overpriced, assuming the properties are in reasonably similar condition.
2. Then, estimate fair market pricing: To find out what a property should be priced at in order to have a desired Cap Rate, simply divide its Net Operating Income by the desired Cap Rate, i.e., by 6% (.06) in the example above. This type of calculation can help an investor buyer come up with a realistic offer price, as well as a "walk away" price.
Note: Cap Rate is just one part of the big picture. Expected property appreciation, anticipated trends in monthly rent, and a realistic expectation of future maintenance, repair, and vacancy costs are some of the other key considerations. It's also crucial to make sure Cap Rates were calculated accurately and consistently for all properties.
The Bigger Pockets website recommends a free property analysis worksheet developed by one of their members.
Click here to go to their page, then click on the "REI Property Analyzer" link in the first post to download the Excel spreadsheet.
Printable Home Maintenance Checklist
September is a good time for getting caught up on home maintenance tasks. To download a printable Yearly Home Maintenance Checklist that includes projects for this month,
click here or on the image to the left. (2-page pdf.)
