Real Estate Investing

A Basic Analysis Of Investment Properties

Before investors buy a property, they want to make sure that they’re making a good investment. That’s reasonable. 

To do this, investors need to determine the approximate value of the income-producing property they’re interested in acquiring. This involves crunching some numbers to get a better understanding of a property’s gross income and net operating income potential, as well as the property’s capitalization rate. Let’s take a look at how these numbers work together to present investors with a bigger picture. For instance, investors looking to determine approximate value of their income producing properties do this by calculating: 

Net operating income ÷ capitalization rate = approx. value 

It’s an indicator, not an appraisal. It can work in reverse as well, for investors looking to buy property: 

Value (purchase price) × cap rate = net operating income

Let’s take a look at how these numbers work together to present investors with a bigger picture.

Fixed and Operating Expenses

Let’s talk about operating expenses first. Why do we care how much it costs to hold, service, and maintain an investment property? Because we can count these expenses as deductions against our taxable income. All expenses relating to the operation of the investment property are deductible expenses. Some examples of operating expenses include:

  • Maintenance
  • Utilities 
  • Supplies
  • Advertising
  • Legal/accounting
  • Wages and salaries
  • Property management

In addition to the above, it’s also necessary to take into account fixed expenses such as property insurance, property taxes, and licenses and permits.

Gross Income

Gross income is the income received before the operating expenses are deducted. If investors were taxed on gross income, there would be a lot fewer investors. You should also understand the difference between potential gross income and effective gross income.

Potential gross income is income that a property could bring in if it were leased at full capacity. That rarely happens, so once losses from vacancies and credit losses (such as when tenants do not pay their rent and it becomes uncollectible) are deducted from potential gross income, you get effective gross income, or, more simply, gross income. 

For example:

Potential gross income – vacancy and collection loss + other income = effective gross income

So, for instance, if ACME Properties is fully leased, it generates $252,000 in potential gross income. Assuming a fully leased property and deducting for vacancy and losses of $10,895, and assuming there’s no additional income, ACME Properties’ effective gross income is $241,105.

Net Operating Income

Once you deduct operating expenses from effective gross income, you get net operating income. Are investors taxed on net operating income? No! Investors may also be able to apply allowable interest deductions from their mortgage payments. Mortgage principal and interest payments are called debt service. 

When you apply interest deductions to net operating income, you arrive at net taxable income. Depending on the property’s depreciation allowance, depreciation can sometimes effectively cancel net taxable income, resulting in no taxes owed. 

For example:

Effective gross income – operating expenses = net operating income 

So, for instance, if ACME Properties’ effective gross income is $241,105, and we subtract $11,560 in operating expenses, the net operating income is $229,545.

Capitalization Rates

Capitalization rate (or cap rate, for short) is determined by the market. It’s the return on investment that other investors in a given marketplace are receiving for a similar property. So, if the going cap rate is 7% (which is 0.07), then the capitalization formula would be to multiply 0.07 by the value (purchase price of the property) to get net operating income.

Value (purchase price) × cap rate = net operating income

$200,000 × 0.07 = $14,000 net operating income

If, instead of the cap rate, you know the annual income and value, you can determine the cap rate by dividing the income by the value:

Net operating income ÷ value = cap rate

$14,000 ÷ $200,000 = 0.07, or 7%

So, let’s say investor Jimmy is looking for an investment property in an up-and-coming area of town. He found one that meets all his requirements. The list price is $800,000, and similar properties in the area are returning a rate of 9%. To figure out his net operating income, Jimmy must multiple the value of the property with the cap rate. 

$800,000 x 9% = $72,000

Formula Factors

The factors in the formulas are generally referred to as “I” for income, “R” for rate or cap rate, and “V” for value.

To determine income: Multiply cap rate by value (R × V = I)

To determine value: Divide income by rate (I ÷ R = V)

To determine rate (cap rate): Divide income by value (I ÷ V = R) 

Cap Rate Example
– A property valued at $950,000 is returning a net annual income of $115,000.  
– $115,000 divided by $950,000 is 12.1%.
– The cap rate is 12.1%.
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Sleeping On The Floor and Mentally Preparing For Selling

Below is an excerpt from my book “Just Sold: Selling A Home In Any Market“. In the book’s Introduction, I tell a slightly embarrassing story of when I sold my Atlanta condo.

What I don’t mention in the book is that during my last night in my condo, I played a variety of songs. One of those songs was Neil Young’s “Harvest Moon”. Years later, the song still reminds me of the emotions I felt that last night. People do develop an emotional attachment to property.

Selling a property often represents the closing of a chapter. For me– Although I had been happily married for years, selling my condo represented the last page of my independent life. My condo was where I went when the world treated me unfairly or exhausted me. Standing on my 10th floor balcony is where I convinced myself that ANYTHING in life is possible. It was where I started my first brokerage firm. It was where I celebrated with friends. It was where I entertained my husband (then my boyfriend) in the midst of long distance dating.

You have all of these experiences in a single locale and then it’s time to sell. Of course it’s emotional. Corny, but real. The story and my tips are below. Anyway here goes…

Just Sold: Selling A Home In Any Market

Excerpt from Just Sold:

A few years ago I traveled to Atlanta to move out of my condo and attend the closing.  Not just any condo, but the first home I ever purchased and the property I owned the longest. As I boarded the plane in Washington, DC, I was overcome with emotion. My DC to Atlanta track had become a bit of a ritual. It was like going to visit an old friend, but this time you know that this will be the last visit. To some this may sound a little weird and seemingly an unusual analogy. But this is the type of anxiety many people have when selling their home– including a very experienced real estate broker. 

When you purchase the right property it really becomes home, your refuge, your safe haven. And in a world filled with so much chaos, this is a must have.

I owned this property for almost 13 years. The first six years I lived in the property full-time. The remaining years I spent increasingly less time in the property and more time at my new home in Washington, DC. It may be further unusual that this condo was so special to me considering that my home in DC is almost 10 times larger. 

Once I arrived in Atlanta, I met with the movers to move the last of my items into a storage unit. The closing was the next morning. I pondered whether to book a hotel room close to the condo or closer to the closing attorney’s office. Ironically, I chose neither. I chose to spend one last night with my old friend. With all of the furniture moved out, I gathered a couple of pillows and a blanket and slept on the hardwood floor. It was comfortable. I was home for one last night. 

Washington DC real estate

Selling is emotional. I know this. Not just based on my 20+ years of selling experience, I know this personally.”

— Dana Ash-McGinty

Selling is emotional. I know this. Not just based on my 20+ years of selling experience, I know this personally. During this emotional time period, you need an experienced, trusted real estate professional. In my book, “Just Sold: Selling A House In Any Market“, I share with you the ideas and techniques that I have developed over a long career in real estate. These are ideas that work, ideas that can save you a lot of time. This book will show you ways you can get your property sold and to do so in a way that your house will sell more quickly and for more money, no matter what the market is doing. 

I can promise you it will all work out well in the end. Your house will sell, regardless of the market. Unfortunately, I can’t promise you you won’t decide to grab a few blankets and sleep on the floor the night before closing.

As the proverb says, “Hope for the best and prepare for the worst”. Here are six tips that I share with our clients. These are the strategies that I have personally found helpful when we are mentally preparing for a challenge, especially the challenge of selling a home.

6 Tips To Mentally Prepare For Selling Your Home

  1. Do Some Research – I find the more I’m informed (and prepared), the more confident I feel and the less anxiety I have. 
  1. Be Positive – Yep, this can be tough to do particularly if you are selling out of necessity; however, it is imperative that you remain positive. Be conscious of any negative thoughts that may enter your mind and quickly dispel them. Maybe you can even give up watching the local news during the selling process!
  1. Seek Support – Confide in a family member or a close personal friend (with a level head). Spend a few minutes a week discussing your thoughts and feelings. Your real estate agent will also be able to help coach you throughout the process. 
  1. Visualize the final outcome – If you are moving by choice, spend some time seeing yourself and your family enjoying your next home. If you are moving out of necessity, realize that there is light at the end of the tunnel and see yourself in that better light (living within your financial means, new future opportunities, etc). 
  1. Meditation – Studies have found that meditation is very beneficial when facing a stressful decision. Try spending 15 to 30 minutes in meditation each day.
  1. Journal – Write it down! Getting your thoughts out of your head and down on paper, is a very freeing exercise. This will come as no challenge to those that are currently journaling. Others may find it easier to record their thoughts using a smartphone app. Even if you simply voice your thoughts (speaking them aloud), it will help (sounds weird, right?). Ask yourself questions like “what do I enjoy or not enjoy about this process?” or “what do I expect for the future in what I am doing now?”

[An excerpt from “Just Sold: Selling A Home In Any Market“.]

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Condos Selling

Questions To Ask Your HOA Or Board Before Selling Your Condo

selling a condo, sell a condo fast

Updated 03/06/2021

There are a few challenges with selling a condo. A certain experience level and skill set is needed to sell condos and co-ops. It is very different than selling a single family detached house. The reason is that often you can’t put a sign in the front yard (by the homeowner rules—see below), you may have trouble getting your buyers into the complex, and you will be required to target buyers that understand and desire the shared lifestyle.

Thinking of selling your condo?

Here are few questions you (or your agent) should ask your HOA or Board before you get started:

Do you allow signs on the property?

Since the front of a condo is typically owned by everyone in the association, you may not be able to put a sign in front. The reason is that many condominium bylaws preclude you from putting a “For Sale” sign for your condo in any common area and that includes the exterior walls, on doors, or in the windows of your own unit. (Such rules can be hard to enforce, but strict home- owner association boards may try.)

Therefore, as soon as you’ve determined that you want to sell, one of your first trips should be to the homeowners’ association or the board of directors to find out about their sign policy. If it’s strict, you may want to try and fudge a little. (You didn’t hear me say that.) Try putting a sign in the window of your unit. Most people won’t complain about that and at least it will help direct a potential buyer to your unit. Sign restrictions are also a good reason to use an agent. The agent can meet buyers at the gate or entrance and then bring them by.

Are there any restrictions on buyers?

In the very distant past some homeownership organizations would attempt to restrict buyers on the basis of religion or race. That is outlawed everywhere in the United States today (thank goodness!) and, in addition, buyers cannot be restricted in terms of health, gender preference, or national origin.

Most HOAs are quite progressive and wouldn’t dream of discriminating against anyone. The same holds true for most co-op boards. However, with a co-op there are special considerations when it comes to finances. Many co-ops do restrict buyers in terms of their income levels or their ability to pay their monthly fees. The reason is that the co-op may have a single, large mortgage covering the entire building. If one unit owner fails to pay, then the others must make up the difference. Thus, the other members, through their board, have a vested interest in seeing that your buyer is financially sound. By first talking to the board, or the property manager, you will be able to get a sense of what the board is looking for financially in a new buyer, and save yourself a lot of wasted time and effort in bringing in someone who’s not fully qualified.

condo docs

Are there any restrictions on showing the property when selling a condo?

There may be. Usually these restrictions are the same that apply to any guests. The guests may need to park in special areas and may be limited to certain hours. Since these are usually quite liberal, there probably won’t be a problem. Checking with the HOA or board first, however, can’t hurt.

Can I allow buyers in the front gate/door?

This can present a problem. If your unit is directly accessible from the street by anyone, then there’s no need to be concerned. However, if there is a locked door or gate, then getting potential buyers in becomes more difficult. You probably won’t want to hand out the code that opens the door/gate because then almost anyone can come in. And waiting at home all the time so you can open the door/gate for potential buyers can also be tedious and time consuming.

Of course, one method may be to list with an agent who will have the access code and who can show the property. However, your problem is not unusual and your HOA or board may have suggestions on how to handle it.

If there is a guard or doorkeeper, he or she can be instructed to allow people in to see your unit. Or there may be a special one-time access code that can be used. Be sure to check before simply giving out your own access code to everyone who wants to see your unit.

selling a condo, sell my condo fast

Can my agent show the property when I’m not there?

One of the big advantages of having a real estate agent is that he or she can show your property for you at any time. Presumably your agent has a key to your front door as well as access to your building or development. Just be sure there’s no problem with this from the board or the HOA. Normally there isn’t, but sometimes someone on the board or the HOA has been sensitized by a bad incident that happened to them and they will want to restrict access by agents. You may have to argue hard and long to overcome this sort of bias. Yikes!

Can I put a lockbox on my door?

Usually you can. A lockbox allows not only your own agent, but other buyers’ agents to access your home. If your unit is directly accessible from the street, then a lockbox should work fine. If, however, the agents must get through a locked door or gate, the same problems will occur as when buyers themselves want to come by (see above). See how your board/HOA feels about agents other than your own coming by. Most are quite liberal. However, if yours is very strict, you may need to make special arrangements.

How can the buyer get a list of architectural restrictions?

It’s important that buyers be provided with a list of architectural restrictions. This is to keep them from coming back later on saying they were duped into buying your unit by thinking they could add on or change it only to find out that they are prevented from doing so. It’s a good idea to not only see that they get the architectural restrictions, but you get a signed and dated receipt from them.

How can the buyer get copies of the CC&Rs, rules, and bylaws?

As with the architectural restrictions, you’ll also want to be sure that potential buyers get copies of the conditions, covenants, and restrictions (CC&Rs) that affect the deed. Remember that these are often far more restrictive for a condo or co-op than for a single-family home.

As part of your disclosures you will want to see that the buyers receive the CC&Rs and that you get a receipt. However, you will first have to get them from the board or HOA.

Most states now provide that these must be given to you. However, you can be charged for the service. Many associations and boards now prepare packets to distribute and typically charge about $100 or more for them.

Are there any active lawsuits pending?

Nothing deters buyers (and their lenders) more than a lawsuit pending against your association or co-op. In recent years many condos and co-ops have become involved in lawsuits of one sort or another.

Sometimes it’s the owners suing the builder over defects. Other times it’s the board or HOA suing an owner for failure to pay fees. Or an owner suing the development over restrictions. Or owners suing owners over grievances. Depending on who wins and who loses, all of the members of the development might be asked to pay a sometimes sizable judgment. Thus, if you have a lawsuit pending, it could scare away a buyer, or make it difficult for that buyer to obtain necessary financing.

Therefore, it’s important that you declare to a buyer all lawsuits. This is to protect yourself from that buyer coming back later on trying to get out of the deal and saying you withheld important information about your unit.

However, before you can disclose, you must become informed. It’s a good idea to consult with a member of the board or association to learn what’s out there and to get some background on it. Thus, when your buyer is alarmed about a lawsuit the board has against the builder, you may be able to explain that it’s over leaking roofs and that the insurance will cover most of it, but the board is trying to recover the deductible.

Are there new assessments pending? 

This is of particular concern with older developments.

For example- It may be time to re-roof the complex to the tune of $600,000. However, the reserve fund for roofs only has $100,000 in it. That means that board is going to have to come to the members for the remaining $500,000 as an assessment, which means that monthly fees could skyrocket. It may turn out that this has been a matter of discussion for 6 months; however, you never attended board meetings so you didn’t know. At the last meeting it was voted through and will take effect within 2 months.

Wouldn’t that come as a shock to a buyer who had assumed a low monthly fee only to have it quickly become much higher? And you should have disclosed it because it had already passed the board! Checking with the director of a board or HOA member could keep you out of this pickle.

Questions About Selling A Condo? We are are here to help. Contact us to answer any questions or complete the form below:

This page is for: sell a condo, selling a condo, how to sell a condo, selling a condo tips, sell my condo fast, sell my condo now, are condos hard to sell, selling a condo after 3 years

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Price Your Property To Sell For Maximum Profit

how to sell your home for more money

We all want to know how to sell your home for more money.

Let’s discuss how to increase your home value.

The asking price you set for your home significantly affects whether you will profit in the sale, how much you will profit and how long your home will sit on the market. Your real estate agent’s knowledge of the overall market and what’s selling – or not selling – will be invaluable in helping you determine the price. The objective is to find a price that the market will bear but won’t leave money on the table. 

Here are some points to consider: Time. Time is not on your side when it comes to real estate. Although many factors influence the outcome, perhaps time is the biggest determinant in whether or not you see a profit and how much you profit. Studies show that the longer a house stays on the market, the less likely it is to sell for the original asking price. Therefore, if your goal is to make money, think about a price that will encourage buyer activity (read: fair market value).

Value vs. Cost. Pricing your home to sell in a timely fashion requires some objectivity. It’s important that you not confuse value with cost – in other words, how much you value your home versus what buyers are willing to pay for it. Don’t place too much emphasis on home improvements when calculating your price, because buyers may not share your taste. For instance, not everyone wants hardwood floors or granite countertops. 

Keep it simple. Because time is of the essence, make it easy for the buyers. Remain flexible on when your agent can schedule showings. Also, avoid putting contingencies on the sale. Though a desirable move-in date makes for a smoother transition between homes, it could cause you to lose the sale altogether. 

Questions about how to sell your home for more money? We can help! Contact us about selling a property.

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This page is for: How to sell your home for more money. How to increase your home value.

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8 Steps To Selling Your Home In 2021

sell your house, tips for selling your home

Here are a few tips for selling your home:

1. Define Your Needs

Write down all the reasons for selling your home. Ask yourself, “Why do I want to sell and what do I expect to accomplish with the sale?” For example, a growing family may prompt your need for a larger home, or a job opportunity in another city may necessitate a move.

For your goals, write down if you’d like to sell your house within a certain time frame or make a particular profit margin. Work with your real estate agent to map out the best path to achieve your objectives and set a realistic time frame for the sale

2. Name your price.

Your next objective should be to determine the best possible selling price for your house. Setting a fair asking price from the outset will generate the most activity from other real estate agents and buyers.

You will need to take into account the condition of your home, what comparable homes in your neighborhood are selling for, and state of the overall market in your area. It’s often difficult to remain unbiased when putting a price on your home, so your real estate agent’s expertise is invaluable at this step.

Your agent will know what comparable homes are selling for in your neighborhood and the average time those homes are sitting on the market.

If you want a truly objective opinion about the price of your home, you could have an appraisal done. This typically costs a few hundred dollars. Remember: You’re always better off setting a fair market value price than setting your price too high. Studies show that homes priced higher than 3 percent of their market value take longer to sell. If your home sits on the market for too long, potential buyers may think there is something wrong with the property. Often, when this happens, the seller has to drop the price below market value to compete with newer, reasonably priced listings.

3. Prepare your home.

Most of us don’t keep our homes in “showroom” condition. We tend to overlook piles of boxes in the garage, broken porch lights, and doors or windows that stick. It’s time to break out of that owner’s mindset and get your house in tip-top shape.

The condition of your home will affect how quickly it sells and the price the buyer is willing to offer. First impressions are the most important.

Your real estate agent can help you take a fresh look at your home and suggest ways to stage it and make it more appealing to buyers.

  • A home with too much “personality” is harder to sell. Removing family photos, mementos and personalized décor will help buyers visualize the home as theirs.
  • Make minor repairs and replacements. Small defects, such as a leaky faucet, a torn screen or a worn doormat, can ruin the buyer’s first impression.
  • Clutter is a big no-no when showing your home to potential buyers. Make sure you have removed all knick-knacks from your shelves and cleared all your bathroom and kitchen counters to make every area seem as spacious as possible. 
how much do sellers usually come down on a house

4. The Marketing Starts!

Our office will get the word out. Now that you’re ready to sell, we will set up a marketing strategy specifically for your home.

There are many ways to get the word out, including:

  • The Internet
  • Yard signs
  • Open houses
  • Media advertising
  • Agent-to-agent referrals
  • Direct mail marketing campaigns

In addition to listing your home on the MLS, we will use a combination of the above tactics to bring the most qualified buyers to your home. We will structure the marketing plan so that the first week is the busiest. 

5. Receive an offer.

When you receive a written offer from a potential buyer, your real estate agent will first find out whether or not the individual is prequalified or preapproved to buy your home. If so, then you and your agent will review the proposed contract, taking care to understand what is required of both parties to execute the transaction.

The contract, though not limited to this list, should include the following:

  • Legal description of the property
  • Offer price
  • Down payment
  • Financing arrangements
  • List of fees and who will pay them
  • Deposit amount
  • Inspection rights and possible repair allowances
  • Method of conveying the title and who will handle the closing
  • Appliances and furnishings that will stay with the home
  • Settlement date
  • Contingencies

At this point, you have three options:

  1. accept the contract as is or
  2. accept it with changes (a counteroffer) or
  3. reject it

Remember: Once both parties have signed a written offer, the document becomes legally binding. If you have any questions or concerns, be certain to address them with your real estate agent right away. 

Just Sold: Selling A Home In Any Market
Get a copy of “Just Sold | Selling A Home In Any Market” by Dana Ash-McGinty. 

6. Negotiate to sell.

Most offers to purchase your home will require some negotiating to come to a win-win agreement. We are well versed on the intricacies of the contracts used in your area and will protect your best interest. Your agent also knows what each contract clause means, what you will net from the sale and what areas are easiest to negotiate.

Here are some typical negotiable items:

  • Price
  • Financing
  • Closing costs
  • Repairs
  • Appliances and fixtures
  • Landscaping
  • Painting
  • Move-in date

Once both parties have agreed on the terms of the sale, your agent will prepare a contract

7. Prepare to close.

Once you accept an offer to sell your house, we will make a list of all the things you and your buyer must do before closing. The property may need to be formally appraised, surveyed, inspected and/or repaired. Your real estate agent can spearhead the effort and serve as your advocate when dealing with the buyer’s agent and service providers.

Depending on the written contract, you may pay for all, some or none of these items. If each procedure returns acceptable results as defined by the contract, then the sale may continue. If there are problems with the home, the terms set forth in the contract will dictate your next step. You or the buyer may decide to walk away, open a new round of negotiations or proceed to closing. Important reminder:

A few days before the closing, we will contact the entity that is closing the transaction and make sure the necessary documents will be ready to sign on the appropriate date. Also, we will assist as needed, arrangements for your upcoming move if you have not done so. 

8. Close the deal.

Closing refers to the meeting where ownership of the property is legally transferred to the buyer. Your agent will be present during the closing to guide you through the process and make sure everything goes as planned. By being present during the closing, he or she can mediate any last-minute issues that may arise. In some states, an attorney is required and you may wish to have one present. After the closing, you should make a “to do” list for turning the property over to the new owners.

These items may include:

  • Cancel electricity, gas, lawn care, cable and other routine services.
  • If the new owner is retaining any of the services, change the name on the account.
  • Gather owner’s manuals and warranties for all conveying appliances. 

Questions? Contact us. We will be happy to assist!

This page is for: tips for selling your home, tips to sell your home fast, need to sell my house asap, tips for selling a house, tips for selling your house quickly, tips for selling your home in the spring, tips for selling your home in the fall

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Real Estate Investing

Cash Flow Is King In Real Estate Investing

Real estate investors are generally looking for tax write-offs, long-term appreciation, or cash flow— and if you twist their arms, they’ll take all three. If they had to choose just one, well—as they say—cash is king. The advantage of positive cash flow (more money coming in than going out) is that the property is self-sustaining, and the investor can take the profits and reinvest in another property. 

Investors like to know everything there is to know about their cash. They want to know their cash flow, their before-tax cash flow, their after-tax cash flow, and how to shelter their cash from taxes.  

Before-Tax Cash Flow

The before-tax cash flow is calculated before income taxes are figured into the equation. So if an investment property is generating $20,000 in income, and expenses are $12,000, that’s a net return (cash flow) of $8,000.

Investors also like to know their cash-on-cash-return. Cash-on-cash return is the ratio of annual before-tax cash flow to the amount of cash they’ve invested, and it’s expressed as a percentage.

So if our investor had an annual before-tax cash flow of $9,000, and had put $350,000 down on the property, the cash on cash return would be 2.6%.

$9,000 ÷ $350,000 = 0.0257 (or 2.6%)

Note that this is cash invested, which has nothing to do with mortgage debt taken on. So it doesn’t matter if the investor paid $400,000 for the property or $1 million; the cash-on-cash return would be the same. The purpose of this formula is to give the investor an idea of how hard invested cash is working on the investor’s behalf.

Cash-on-cash return is all well and good—but what about those taxes? A 10% cash-on-cash return may sound great, but it can be whittled to nothing depending on the investor’s tax situation. Cash-on-cash also doesn’t account for appreciation of the property, or depreciation of the property. And because the percentage it yields is simple, it may not compare favorably to other investments with perhaps lower risk, and compound interest. 

After-Tax Cash Flow

Computing after-tax cash flow solves some of these issues. To determine after-tax cash flow, you simply take the profit yielded from the investment and subtract income taxes that apply to the property’s income.

What if, in doing so, you come up with a negative number? This means the investment is a losing investment in that year; the investor is putting in more money than is being returned by the investment. This paper loss can be used as a tax shelter, and is actually desirable by some investors for that purpose, because shelters can be used to offset other income.

Remember that depreciating an appreciating asset can be a wonderful thing! This paper loss is due in part or whole to the depreciation taken against the investment property. As such it may not “feel” like a loss in terms of cash flow or other purposes, and in fact can be used to reduce tax burden in other areas.

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Should I Get an Appraisal Before Selling My House?

Appraisers are rarely used to help set prices on residential real estate. They are used extensively by mortgage lenders to set valuations on which to base loans and to set prices on commercial and industrial property.

Using them for homes, condos, and co-ops is kind of overkill. Besides, in my experience more likely than not the appraiser will come in with the wrong market price! Yikes!

That’s not to say that appraisers don’t do a good job. They do. However, they typically only consider comparablespast sales of similar properties. Thus, by nature, their valuations tend to be conservative.

However, sometimes there are special circumstances, as when you have a unique house (it’s round instead of square, comes with a lot of acreage, could have industrial usage value, and so on) and an agent may indicate that an licensed appraiser could be worthwhile.

Appraisers have extensive educational courses in appraisal and usually have served an apprenticeship learning how to correctly appraise property.

But for must properties, a CMA (comparable market analysis) is sufficient. The good news is that virtually all agents offer a CMA for free.

Contact us for a FREE CMA.

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Foreclosure Pre-Foreclosure

Facing Foreclosure, Don’t Keep Explaining

“Be kind, for everyone you meet is fighting a harder battle.”

— Plato

Facing foreclosure? Are you getting calls every day from your mortgage company? Do you have a first and second mortgage in foreclosure, but the collectors are still asking you to “pay up and bring your account current”.

It should became clear to you that these are not really conversations. You are trying to explain your case and they are not listening. Their goal is only to get you to pay and pay now, not to help you deal with your mortgage or adjusting the terms. Notice that they won’t even transfer you to another department that might actually help you with your mortgage challenges. If they are calling you, it is for their benefit and not yours!

You should become familiar with the Fair Debt Collection Practices Act. This act gives you, the debtor, some rights and some restricts on the actions the debt collections company can do. For example, debt collectors may not:

  • use threats of violence or harm
  • publish a list of consumers who refuse to pay their debts (except to a credit bureau)
  • use obscene or profane language
  • repeatedly use the telephone to annoy someone

Debt collectors may not use any false or misleading statements when collecting a debt. They can’t:

  • falsely imply that they are attorneys or government representatives
  • falsely imply that you have committed a crime
  • falsely represent that they operate or work for a credit bureau
  • misrepresent the amount of your debt
  • indicate that papers being sent to you are legal forms when they are not
  • indicate that papers being sent to you are not legal forms when they are.

Debt collectors can’t state that:

  • you will be arrested if you do not pay your debt
  • they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so
  • actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.

Debt collectors may not:

  • give false credit information about you to anyone, including a credit bureau
  • send you anything that looks like an official document from a court or government agency when it is not
  • use a false name

Debt collectors may not engage in unfair practices and can’t:

  • collect any amount greater than your debt, unless your state law permits such a charge
  • deposit a post dated check prematurely
  • use deception to make you accept collect calls or pay for telegrams;
  • take or threaten to take your property unless this can be done legally
  • contact you by postcard

Even though these laws are in place to protect you, they don’t always do that. It is up to you to make sure your rights are protected.

Foreclosure is a process most lenders would like to avoid, but you need to have a strategy.

It’s important to know your options and understand all the potential solutions that may be available to help you avoid foreclosure. It’s also important to understand what can happen if you fail to take action and foreclosure becomes unavoidable. The process can be stressful, embarrassing, and it can have long-lasting consequences. Contact us for assistance.

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Real Estate Investing

Investing In Single Family Home Rentals

Real estate investors have different preferences when it comes to property types. Some only want single-family detached homes, others are open to duplexes or even multi-unit apartment buildings. 

For some investors, a single-family detached home equals rental property.

Other investors look beyond the rental property scenario and envision bigger and better things for these homes. There are pros and cons to investing in single-family detached homes. For instance, it’s rare for a single-family home to produce cash flow, at least initially.

By the time mortgage debt and maintenance costs are calculated, if rental income produces a break-even point, most investors would consider that a success. Once tax advantages and periodic rental increases are considered, a positive cash flow may come in a few short years. And where else can you depreciate an appreciating asset and have someone else pay your mortgage? (We’ll discuss cash flow, appreciation, and depreciation later in this course.)

Of course, not everyone is cut out to be a landlord. Those clogged toilet calls at 2 a.m. (Yikes!) can get pretty annoying. Sometimes tenants don’t pay, and it can be difficult to evict them. 

Vacancies can be costly, as well. For example, with a 10-unit apartment building, if one tenant moves out, that’s a 10% vacancy. With a single-family home, if that tenant moves out, that’s 100% vacancy. And the lender is still going to want a 100% mortgage payment.

In addition, there’s no economy of scale with a single-family home. Fix a roof on a fourplex, and you’ve reroofed four units, so your costs are only 25% per unit. Fix a roof on a single-family home, and your costs are 100%.

Investors in single-family detached homes aren’t always thinking about using the properties for rental income. There are many different invest opportunities. Just consider the following.

For those with rehabbing skills, purchasing a fixer-upper or older home may pay off lucratively. With a minimum outlay of cash, an increase in value can easily be realized, which will enable higher rent charges, resulting in immediate cash flow and a nice profit at resale. Rental income received can be used to carry the cost of the investment, and savvy investors will be able to pyramid their holdings, using the profit from one investment to finance the purchase of a larger investment. 

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Mortgage Matters

What are Adjustable Rate Mortgages?

Most people have lots of questions about adjustable rate mortgages (and little bit of fear). Rightfully so. But before we discuss the specifics on an adjustable-rate mortgage (ARM), let’s first discuss fixed-rate mortgages.

Fixed-rate mortgage (FRM)

A fixed-rate mortgage (FRM) is a mortgage with an interest rate that remains the same over the entire term of the mortgage, regardless of how interest rates change in the marketplace.

Who benefits?

Customers who:

  • Finance their home when rates are relatively low.
  • Want the predictable principal and interest payments over the long term.
  • Seek protection from rising rates and monthly principal and interest payments.

What are the drawbacks?

  • Generally, the interest rate is higher than the initial rate of an ARM.
  • If the interest rates in the marketplace decrease, your rate will not adjust to a lower rate unless you  refinance to a new mortgage.

So now let’s look at an ARM.

Adjustable-rate mortgages (ARM)

An adjustable-rate mortgage is a mortgage with an interest rate that is fixed for a specific period of time then changes at scheduled dates to reflect market conditions.

The initial interest rate is usually lower than on a fixed-rate mortgage, making your initial payments lower too.

The interest rate is based on a market index that is subject to change plus a margin that does not change.

Market index: A published rate, such as the prime rate, LIBOR, T-Bill rate, etc.

Margin: The set percentage the lender adds to the index rate to determine the interest rate of an ARM.

The initial interest rate is the total of these two values plus or minus small adjustments made by the lender due to market conditions. 

When the initial interest rate adjusts, and at each subsequent adjustment, the interest rate will be the total of the market index and the margin, subject to any increase or decrease limitations, often referred to as rate caps or floors. 

After the initial interest period, the interest rate can adjust up or down at regular intervals based on changes to the market index.

The following are descriptions of when the interest rate may adjust for different ARM products:

  • A 6-month ARM adjusts up or down every six months.
  • A 1/1 ARM adjusts up or down for the first time after 1 year, then every year after that.
  • A 3/1 ARM adjusts for the first time after 3 years, then every year after that.
  • A 5/1 ARM adjusts for the first time after 5 years, then every year after that.

Who benefits?

Customers who:

  • Will move and/or sell their home before the first interest rate adjustment.
  • Want the ability to pay a lower monthly mortgage payment during their first year(s) of homeownership.
  • Finance their home when fixed rates are comparatively high.
  • Have sufficient income to manage a potentially increasing payment if refinancing or sale is not an option.
  • Are willing to take a chance that their rate will stay the same or decrease when it adjusts.

What are the drawbacks?

If your interest rate increases at adjustment, you may experience “payment shock” if your monthly payments increase to an amount you may be able to maintain along with your other monthly obligations. Yikes!

If refinancing or selling is not an option, you could be at risk of losing your home. So be realistic and take caution when considering an ARM.


Dana Ash-McGinty

Principal Broker | Realtor® | “The Real Estate Maven”

Dana Ash-McGinty is the Principal Broker of ASH | MCGINTY, a Washington, DC Real Estate Brokerage. This real estate maven has 15+ years experience in residential, commercial and land sales in addition to multi-state residential renovation, re-zoning, and condo conversion projects. A sought after real estate authority, she has been featured on CNN and in various real estate and financial publications. Dana is married to the highly esteemed Dr. Dana W. McGinty, a Washington, DC based internal medicine physician. They are often referred to as “The Danas”.
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Mortgage Matters

Interest Rate vs. Annual Percentage Rate

At ASH MCGINTY, we understand the important role your home plays in your your life. That’s why we are committed to providing you information that will help you make more informed decisions about your home financing.

So, let’s simplify it, starting with interest rate vs. annual percentage rate (APR).

What is an interest rate?

The annual rate you pay on the funds you borrow. You have the option of choosing:
  • A fixed-rate mortgage (FRM) [For example, I’m sure you’ve heard of “30 year fixed-rate mortgage“.]
  • An adjustable-rate mortgage (ARM)
  • A temporary buydown of the interest rate or initial monthly payment.

What is an annual percentage rate (APR)?

When you choose your mortgage, you are quoted an “interest rate“, which may vary until it’s “locked in”, that established the initial amount of your monthly principal and interest payments.

You should see both an interest rate and an annual percentage rate (APR) in various documents. The APR, which is usually higher than the interest rate, expresses the cost of the mortgage as an outgoing annual rate and includes certain fees, points, closing costs and other expenses (even though they are paid at application, or before or at closing).

APRs can help you compare types of mortgages and the costs between mortgages or lenders, but remember that the APR is different from the actual interest rate on your mortgage.

I will repeat- The APR is different from the actual interest rate on your mortgage.

How is the interest rate determined?

Many factors determine the interest rate on a particular mortgage. Your rate will reflect conditions in the financial markets and your mortgage type, as well as an assessment of the risk of your specific mortgage product and your credit.

Catch this- This is why a rate found online may not provide enough information or reflect the interest rate you will actually receive once a lender has assessed your specific circumstances.

Mortgages reflect the conditions in the financial markets.
Complex variables affect the ride and fall of interest rates. This is why we see rates published daily. It’s most important to understand that there is no “one mortgage rate“.

Rates can fluctuate not only daily, but even hourly with movements in the financial markets, and by mortgage type and mortgage amount.

Additionally, the interest rate on your mortgage depends on the risk your mortgage features represent.

When lending money to customers to finance their homes, lenders and their investors take the risk that these customers will not pay back the money loaned to them.
  • Lenders typically offer lower mortgage rates on mortgages that present less risk.
  • Based on many decades of lending, there are many factors that reduce or increase risk have been identified, including down payment amount, credit score, and other factors.
  • Customers with higher credit scores historically default less often (so the lender anticipates less risk) than those with lower credit scores.
  • A customer with more money invested in a mortgage with a higher down is considered less risky than a mortgage with a lower down payment.
  • Other factors are similarly considered: your debt level in relation to your mortgage amount, whether your home is your primary residence or an investment property, whether it’s a single-family or multi-family home, the mortgage term you need or want, the amount of documentation you provide, etc., etc., etc.

Thing to consider if you decide to “shop rates” among lenders

  • A rate that’s not based on the full details of your specific circumstances can only be a guess. Yes Boo, it’s just a guess.
  • A guess you obtain today from one lender versus a guess you obtained yesterday or a week ago from another lender offers little (aka zero) basis for an accurate comparison.
  • Here’s a simple one– different mortgage types and different mortgage terms have different rates.
  • Be sure to understand whether the rate you are quoted is an introductory rate, sometimes called a “teaser rate”, that might rise dramatically a short time after closing.
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Housing Stats

Maryland: September 2020 Housing Data Shows Sharp Increase in Home Sales, Rising Sales Prices, and an Increasingly Tight Inventory

According to the Maryland Association of Realtors (MAR), Maryland’s September housing market demonstrated a dramatic leap in sales of 23.1% from last year.  Average sales prices rose to 16.2%.

While many counties experienced double-digit sales increases, two counties performed very well:

  • Garrett County’s sales increased 72.3% from the previous year
  • Talbot County’s sales leapt to 94.4% from the previous year

ASH MCGINTY currently does not provide real estate services in Garrett and Talbot Counties. Which makes sense because we have no idea where these counties are located in Maryland.

Here are sales stats for the counties we do provide services:

  • Anne Arundel County +18.7%
  • Baltimore City +20.7%
  • Baltimore County +22.1%
  • Charles County +8.7%
  • Frederick County +33.2%
  • Howard County +23.2%
  • Montgomery County +31.9%
  • Prince George’s County +7.5%

“At the beginning of 2020, the average sale price was $335,910. Now, in September this figure is $402,747,” said Dee Dee Miller, President, Maryland REALTORS®. “We’ve seen significant growth in median prices as well. In January, it was $288,000, and now we’re at $340,000. The increase in number of homes sold, as well as the increase in the sale price of that home, play a significant part in Maryland’s economy.”

“We still have concerns with inventory,” added Miller. “We’ve witnessed a 34% decrease in the amount of available inventory since January, and houses continue to move swiftly: median days on market is eight days compared to 24 days a year ago. A glimmer of good news can be found in the number of new listings. In September, new listings rose 3.93% from last year, versus a 1.12% decrease in August.”

Here’s the recap:

  • Average sales price $402,747
  • Median sales price $340,000
  • 34% decrease in available inventory
  • Median days on market 8 days

See Maryland September 2020 Housing Stats By County below:

Maryland REALTORS® is the largest professional trade association in the state, serving over 28,000 members, and is dedicated to preserving the vitality of the real estate market. REALTOR® is a registered collective membership mark which may only be used by those real estate professionals who subscribe to the REALTOR® organization’s strict Code of Ethics and who are members of the national, state, and local REALTOR® organizations.

Maryland’s monthly housing statistics are reported by MarketStats by ShowingTime and are based on housing data provided by Bright MLS. For the purposes of this report, “units” are defined as the closed sales and “pending units” are properties under contract. Months of Inventory are based on the current active inventory and monthly sales for the corresponding month; data are revised on a regular basis. Readers of these reports should note that older reports have not been adjusted to reflect any revised data. This report, however, contains the latest reliable data to date.


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Set The RIGHT Price For Your Home From The Start

how much do sellers usually come down on a house

Every seller wants to get as much money as possible when selling their home. The natural inclination for most people is to price high, thinking you can always come down in the future.

But a listing price that is too high can be a disaster, and frequently nets the seller LESS money then they ever anticipated—even after paying a real estate commission!

Why is this?

Because buyers will reject your home in favor of other homes in a reasonable price range. And if that doesn’t frustrate you, think about this: Buyers will use YOUR home to compare and justify the purchase of a similar, but correctly priced home. Yikes!

But the problem gets worse…

Sorry, but it’s a fact that 96% of all homes are sold by REALTORS® . So whether you sell your home yourself, or through a professional, you MUST be able to attract the REALTOR® community to your home.

This is what most FSBO (For sale by owner) books and websites fail to tell you.

Problem is, agents who otherwise would readily bring buyers through your home will automatically dismiss it because it’s priced too high. (Yes, we do this.)

REALTORS® don’t make money showing homes…we make money SELLING them.

We know market values in your area. And if your home is priced too high, we’re not even going to waste our time showing it. (Ouch!)


And word spreads like salacious gossip within the real estate community. If your home gets “branded” as overpriced, not only will agents NOT show it, BUT you’ll have to lower the price further than you ever expected…just to get them back!

[Breathe and read that last line again!]

Agents Simply Will NOT Show Overpriced Homes Because We Work By Commission. Showing Overpriced Homes That Will Never Sell Means We’re Working For FREE.

And this Tesla, botox injections and Mastros dinners don’t pay for itself. #realtalk

But we’re not out of the woods yet…

You see, your home is MOST valuable when it’s new on the market. And if you delude yourself into thinking you can price it high and come down later, you’re in for a big surprise.

Here’s what’ll happen (looking into my seeing in the future glasses)….

After months on the market without even a tiny nibble, you or your agent will decide to reduce the price. Even with your price reduction, there’s still little activity because your home has been “branded” as overpriced and is stale. Like previously delicious Maggianos bread that has been sitting in an open basket for weeks. (Hmmmm, I must be hungry…)


So, after a while longer you decide to lower the price a little more. Now you’re pushing the limits on what you wanted to receive in the first place.

Finally, you start to get a nibble or two.

Problem is, your home has been on the market for months now. And when you finally receive an offer, you can bet your bottom dollar it’s going to be discounted even further.


Because buyers usually want to know how long a home has been on the market before they decide how much to offer. And the longer your listing has been sitting unsold, the more desperate your home looks.

(And desperate ain’t cute…)

Like sharks smelling blood, buyers will see your home as prey.

And their offers are going to knock you over, flat on your back with no warning. But you’ll have little choice but to negotiate. You have no other options.

So… How could this all have been avoided?

EASY– By simply pricing your home correctly in the first place.

Homes That Sell Fastest Also Sell For The Most Money!

It’s a known fact: the very same reasons that make a home sell fast will make a home sell for the most money. Homes are best positioned to sell when they’re new on the market.

Here’s a little help for pricing your home.

The first thing you need is VALID local market information. Take a look at homes that have sold in your area. Compare the price sold as a percentage of list price. This will help you get a feel for the average discount in the area.

Generally, your list price will be within 2.5 – 5 percent of what you expect the final selling price will be. But be careful!

The amount of discount should be dictated by real world FACTS from YOUR AREA, not some real estate agent’s guess on what he or she expects offers to come in at. If the selling market is hot in your area (like most areas in DC), there will be little or no discounting. There may even be bidding wars, and homes selling for more than list price. (I know you like the sounds of that!)

On the other hand, if homes are not selling well, you will need to be flexible.

Next, DO YOUR HOMEWORK to determine what your home is worth. Use an agent provided CMA and do a total market analysis.

When you narrow down your area, you need to correct values for distressed sales, divorces, remodeled homes, and other events that affect the value of other homes that have sold near you.

Each factor (distressed sale, condition, siting, location, etc.) will add to or subtract from the value of your home. And in most cases, the only person who can really give your this information is a GOOD agent—someone who has extensive experience valuing homes.

Not withstanding all your hard work, in the end…

The MARKET Is the Only Determinant Of The VALUE Of Your Home

There’s an old saying in real estate: “Sellers are NOT the deciders of what their home is worth, but they ARE the deciders of how quickly their home will sell.”


The REAL value of your home is what a willing buyer will pay for it, and what you will accept. Nothing more. Nothing Less.

But remember this: Markets and the economy change. If interest rates rise by a point, people who could otherwise afford your home may not be able to any longer.

This will ultimately affect the value of your home. So you may need to adjust your price over time. Stay on top of market events, both nationally and locally.

If the market’s declining, it’s best to discount your price up front. If the market’s rising, be prepared for full price offers, or even bidding wars. (Yeah, I know you like the sound of bidding wars!)

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@danaashmcginty Dana Ash-McGinty Homeownership

African-American Homeownership and the American Dream

I was born and raised in Atlanta, GA, but spent my summers each year in Hollywood, Florida visiting my grandparents. My father and my grandparents are from Nassau on the island of New Providence. Nassau is the capital and largest city of The Bahamas, known officially as the Commonwealth of The Bahamas.

Unfortunately, the early decades of the 20th century were years of hardship characterized by a stagnant economy and widespread poverty for many Bahamians, including my grandparents.

It was during this time my family immigrated to the States and decided to plant their seeds in South Florida.

My family struggled, but my grandparents knew the importance of two main things- education and homeownership.

Although my grandfather didn’t fully adjust to living in the U.S., as he never learned to drive and rode his bicycle everywhere well into his senior years, he became a highly sought after landscaper and gardener to some of the finest homes in Miami and Hollywood, Florida.

It was his tenacity that allowed my grandparents to send all 10 of their children to college including the highly respected Spelman and Morehouse Colleges. It was their tenacity that allowed them to purchase a home in North Hollywood, Florida and the adjacent property and land.

I too am a product of their tenacity. I am of 1st generation born in the States, but the 2nd generation of educated HBCU (Historically Black Colleges and Universities) alumni. I too have created my own opportunity as the Principal Broker of ASH MCGINTY, a proudly black owned real estate brokerage and consulting firm in Washington, DC.

My mission and the mission of ASH MCGINTY is to uncover the unexpected, the unexplored and the underrated real estate opportunities. It is our goal to do this while promoting high ethical standards and being a positive influence in our community.

I intimately understand the difficulties immigrants and minorities face in the United States. I love what I do because I get to help our African American clients achieve one of their biggest goals in this country- homeownership. And that means I get to celebrate with them when they become homeowners – a dream many thought they could never achieve.

If you’re interested in becoming a homeowner in Washington, DC or Maryland, contact us for a strategic pathway to homeownership.

Historically black colleges and universities (HBCUs) are institutions of higher education in the United States that were established before the Civil Rights Act of 1964 with the intention of primarily serving the African-American community.

The Civil Rights Act of 1964 ended segregation in public places and banned employment discrimination on the basis of race, color, religion, sex or national origin, is considered one of the crowning legislative achievements of the civil rights movement.

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Buyers Condos

House, Condo or Co-op?

You’ve decided, you’re committed, you’re serious, and ready to make a significant financial investment in a home. The catalyst for your decision could have come from a number of things: starting or expanding your family, receiving a promotion at work, or just tired of paying rent.

Whatever your personal reason to purchase a home, it’s now time to think about your real housing needs. Studio, 2 bedrooms or 3? Hmmm, do you really need that 3rd bathroom?

Let’s think about it– a three-bedroom fixer-upper could fit into your budget more than a modern, four-bedroom with all the upgrades. Smart home buying will always require give and take on your housing needs vs. housing wants, especially when working within a mortgage budget.

What you want will sometimes end up costing more than what you need. I don’t want to rain on your parade, but you can always make improvements on the home you purchase over time.

Now that you have assessed your living needs and willing to be flexible on your housing needs vs. housing wants, it is time to see what type of property is right for you.

“It is in your moments of decision that your destiny is shaped.”

Tony Robbins

If landscaping, painting the exterior of your home, and fixing the roof sounds like torture, a condo or a co-op might be the answer. Condos and co-ops have monthly maintenance fees (also called HOA dues/fees) in addition to your mortgage payment.

The interior of the condo or co-op have few restrictions when it comes to making changes to the property, so you are somewhat free to customize your living space. Keep in mind that most condos and co-ops do not accept FHA loans, so you will need to use a conventional loan.

A condo or co-op may not have extra storage space, and you will be limited on the amount of parking spaces allowed for your unit, if any.

To be a co-op owner you will also need to be approved by the co-op board, which involves an interview process, giving personal/business references, and showing personal financial documents. Depending on what state you live in, the co-op board does not have to tell you why you were turned down, if that was the outcome.
Single family attached and detached houses, on the other hand, offer the most freedom when it comes to various types of renovations. This includes stand alone house, row houses and certain townhomes.

If you wanted to paint the exterior of the home blue among red homes in the neighborhood, you can. With Single family attached houses and row homes, there are no set maintenance fees, but if maintenance issues do arise, i.e. a leaky roof, landscaping, or driveway repair, snow removal you must take care of them at your own expense.

So, which property is right for you – House, Condo or Co-op? Let us know!

We can also assist you with getting pre-approved for a mortgage and if needed, finding a down payment assistance program.


Dana Ash-McGinty

Principal Broker | Realtor® | “The Real Estate Maven”

Dana Ash-McGinty is the Principal Broker of ASH | MCGINTY, a Washington, DC Real Estate Brokerage. This real estate maven has 15+ years experience in residential, commercial and land sales in addition to multi-state residential renovation, re-zoning, and condo conversion projects. A sought after real estate authority, she has been featured on CNN and in various real estate and financial publications. Dana is married to the highly esteemed Dr. Dana W. McGinty, a Washington, DC based internal medicine physician. They are often referred to as “The Danas”.
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Buyer Tips Buyers Credit creditscore

How Lenders View FICO Scores

Let’s take a look at FICO scores and how they’re calculated.

Your FICO score is a numerical representation of the odds that a consumer will default 90 days or more or a credit card or loan.

It’s really that simple.

The lender wants to know what the odds are that you’ll stop paying for 3 months or more.

Here’s the breakdown:

800+1485 to 1
720 -799659 to 1
680 – 719112 to 1
620 – 67947 to 1
Below 62015 to 1

Using the chart above, this mean that for every 47 consumers with with a 625 score that a lender lends money, on average 1 will default in 90 days.

That means for the lender to make money, they have to charge more interest to those with lower scores to offset the losses of the 1 who defaulted.

How your scores are calculated are based on 5 criteria:

  • Payment history (35%) – Do you pay your accounts on time?
  • Amounts owed (30%) – How much of your credit are you using out of your available credit?
  • Length of credit history (15%) – How old are your accounts? Generally, older his better.
  • Credit mix in use (10%) – What’s your ratio of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.
  • New credit (10%) – Opening several credit accounts in a short period of time represents a greater risk – especially for people who don’t have a long credit history.

Wait! Before you go signing up for just any old credit monitoring service, here’s what you should know.

All credit scores are not the same.

Lenders currently use FICO scores. You can get your FICO scores from

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Buyer Tips Down Payment Assistance Programs

Do I Qualify For Down Payment Assistance in MD if I Live in DC (and vice versa)?

down payment assistance

The short answer is yes. Yes, you qualify!

But first, what is down payment assistance?

You are probably familiar with the various down payment assistance programs available. These programs assist with homebuyers mortgage down payment and the various closing costs required to purchase a home.

These programs are referred to as:

  • first time home buyer programs
  • home buyer assistance programs
  • down payment assistance (DPA) programs

Down payment assistance programs (DPAs) are typically meant for first-time home buyers. However, a repeat home buyer often counts as a “first-time buyer” if they haven’t owned a home in the past three years. Other requirements might include income caps and buying a home in a qualified area. 

Every down payment assistance program is a little different. The exact requirements to qualify will depend on the programs that are available. 

Various sources fund DPAs. Money may come from federal, state, city, county and non-profit organizations. And each of these are free to set its own eligibility criteria and rules.

Now, let’s get to the original questions– Do I Qualify For Down Payment Assistance in MD if I Live In DC (and vice versa)?

Typically, programs that are available in Maryland are for anyone wanting to purchase a property in Maryland. If you live in Washington, DC, but you want to move to Maryland, you would qualify for a Maryland homeownership program.

And vice versa….

Programs that are available in Washington, DC are for anyone wanting to purchase a property in the District of Columbia. If you live in Maryland, but you want to move to DC, you would qualify for a DC homeownership program.

To qualify for most a down payment assistance programs, it is based on where you want to live, not where you currently live.

Got it? Let us know if you have any further questions.

5 down payment assistance myths
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Buyer Tips Buyers

What Happens After Being Pre-Approved?

Congratulations! You have submitted all the required documentation and now you have that Pre-Approval for your new home.

So… what’s next?

As you continue to move along in the home buying process, you will only be charged for the services you used, such as a title search or home appraisal if down the road you decide you do not want to continue buying the home.

Please, please— Do not buy furniture, a car, or open any new lines of credit during the mortgage process, because it will increase your debts, impact your credit, and could disqualify you from receiving your home loan.

Also, do not change jobs during the process. An employment change will affect the job t history portion of your pre-approval application, which directly ties into your ability to repay your home loan.

Unfortunately, I’ve had this happen to clients and it only complicates things and extends the buying process much longer than it has to be.
It is great that you are pre-approved for a home loan and now know your mortgage budget, but there are three essential things you must know before the home search begins.

First before you contact me to see your 1st property, find out what your monthly mortgage payment will be so that you will not overextend on your mortgage payment. Many times I have had a pre-approved buyers look at homes, want to put in an offer on a home, and then find out they have to discuss the monthly payment with their mortgage advisor before moving forward.

This can bring the entire process to a halt and while clients are going back and forth with their mortgage advisor. Someone could come in with an offer and buy a home they love right out from under them. Ugh, that would be sad!

Down Payment Assistance

Second, you want to know your allowable taxes for the year. This will help you save time by bypassing the homes that are not within your allowable tax budget. Please note that allowable yearly taxes are not always set in stone. For example, if you are allowed $8,000 per year in taxes and the home you are interested in has taxes of $8,400 per year, your mortgage advisor can likely adjust the figures on your pre-approval to qualify you for the home.

Third, you want to know exactly what funds you are earmarking for your down payment, closing costs, and out of pocket costs associated with home buying. To keep things moving in a positive and forward direction, staying on top of fund allocation prior to looking at homes is key.

If you currently have a Pre-Approval and/or you already to get started with finding a home, contact us or complete our Buyer Questionnaire.


Maryland Mortgage Program
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