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 internal medicine physician and medical correspondent. They are often referred to as "The Danas".
Firewood– a sort of arbitrary area that I recently did a bit of research. A recent opportunity to gain loads of firewood for the winter made me curious about the various types of firewood.
First, I will start with my arborist story and then I will review this new firewood info I learned.
Last week I woke up to the very loud AF noise of a neighborhood having a huge tree removed in their backyard. First, I will admit that I was sleeping late on a Tuesday and the “arborist” was not breaking the District’s noise ordinance. BTW– if you’re a Washingtonian, construction is allowed Monday through Saturday from 7 am to 7 pm without any special permits.
Ok, back to the story– although there was no ordinance issue, there were tw0 things I soon found completely unacceptable and one that was a win-win.
Fist, the unacceptable…
Unacceptable With Arborist
The arborist was using my backyard as a staging area for removing the tree. Huh?? No one discussed this with me or my husband. Time to head outside for a conversation…
The arborist offered to give my husband and I cut firewood if we would allow him to utilize our driveway to remove the wood. Needless to say, my response was– “Absolutely not!”
Acceptable With Arborist
In an effort to avoid dragging this wood up my neighbors hill, he then offered to simply “give” us the firewood. (It was hickory!)
The Best Firewood
Not all wood burn the same. Some burn hotter, slower, and cleaner than others. Some create a lot of smoke, and some have a lot of sap or resin that will clog your chimney.
I learned that the best firewood for a fireplace burns hot and relatively steadily. Producing more heat and typically, burning more completely. These woods tend to be hardwoods, such as ash or hickory vs. softwoods, such as cedar and pine.
The most common hardwoods are ash, birch, maple, hickory, oak, and most fruit trees. These woods have the least sap and are cleaner to handle.
Hickory is considered to be the best type of firewood. Hickory produces minimal smoke and can burn through the night.
Birch has a thick inner brown bark called the phloem. This inner bark retains a lot of moisture and often prevents the wood from drying evenly. Therefore, you will want to mix birch with another type of hardwood for a cleaner burn and less smoke.
The cons of hardwood– 1) hardwoods are generally more expensive than softwoods and 2) hardwoods are more prone to leave a stony residue in the leftover ash.
Popular softwoods include alder, balsam, cedar, fir, pine, poplar, spruce, and tamarack. Softwood is the lease expensive type of wood you can buy, but tend to burn faster and leave finer ash compared to hardwoods.They also can be messy to handle, especially balsam, pine, and spruce.
If choosing a softwood, fir is the best choice.
Best Firewood Practices
Make Sure Your Wood Is Dry – Never burn “green” or insufficiently dried wood. It produces less heat and more smoke.
Proper Storage – Stack your wood for efficient air circulation, covered at the top only, and make sure it is thoroughly dry before burning.
Rotate Wood – Burn older dryer wood first to avoid wood rot and waste.
Woods to Avoid – Some salvaged wood produce hazardous fumes indoors, as well as chimney emissions that would be harmful for the environment. Examples include: painted or varnished wood, pressure-treated lumber, driftwood, and plywood.
Wood Burning Safety – Have an active carbon monoxide detector and smoke alarm, use only enough paper to get the fire going, and protect flooring with a fire-resistant floor pad.
Google Nest Protect – Smoke Alarm – Smoke Detector and Carbon Monoxide Detector – Battery Operated
Here’s a great recipe just in time for the holidays and there’s no doubt that this brown pie will be a crowd favorite! When swirled layers of tasty strawberry preserves, tangy cheesecake and rich chocolate come together— magic happens.
Strawberry Cheesecake Brownie Pie
Makes about 8 servings
+ Frozen pie crust, thawed
strawberry cheesecake mixture
+ 8 oz softened cream cheese + ⅓ cup sugar + 1 egg + 1 tsp vanilla extract + ½ cup strawberry preserves
brownie pie filling
+ 8 tbsp butter, unsalted + 2 oz baking chocolate, unsweetened + 1 cup sugar + ½ tsp salt + 1 tsp vanilla extract + 3 eggs + ½ cup flour + ½ cup semisweet chocolate chips
1. Preheat the oven to 350 degrees F.
2. If your pie crust is frozen, let it thaw out before filling it.
PART 1: BROWNIE PIE FILLING
3. Heat the butter and unsweetened chocolate in a small saucepan over low heat, stirring until melted and smooth.
4. Remove the pan from the heat and whisk in the sugar until smooth. Pour into a medium bowl and set aside to cool for 10 minutes.
5. Whisk the eggs into the cooled brownie mixture one at a time. Whisk in the flour, vanilla extract and salt.
6. Fold in chocolate morsels. Pour half of the brownie batter into the pie crust. Set aside.
PART 2: STRAWBERRY CHEESECAKE MIXTURE
7. Whisk the cream cheese, sugar, egg, and vanilla extract together until smooth.
8. Pour the cheesecake mixture on top of brownie batter in the crust. Dollop strawberry preserves and the remaining brownie batter on top. Use a knife to swirl together to create a marbled look.
9. Bake until just set and a crust forms on top, approximately 50-60 minutes. Cool to room temperature on a wire rack.
10. To store, wrap tightly and keep at room temperature for up to 2 days. You can also store it in the refrigerator for up to 3 days. Past that the crust could become soggy.
Top with whipped cream and fresh strawberries, or even drizzle more strawberry preserves on top and enjoy!
These are just a few topping ideas so that you can get creative with any other toppings you’d like to try!
1. Line two baking sheets with parchment paper.
2. To make the cookies: In a food processor, pulse the flour, sugar, and salt to blend. Scatter the butter over the flour mixture. Add the vanilla. Pulse to form small clumps of dough.
3. Pour onto a work surface. Gently gather into a clump of cohesive dough. Divide in half. Form each piece into a log that is about 10 inches long and 2 ½ inches in diameter. Use a sharp knife to cut each log crosswise at ¾-inch intervals to form about 12 cookies each. Rotate the logs a quarter-turn between cuts to keep the logs round.
4. Transfer the cookies to the prepared baking sheets, spacing them at least 2 inches apart.
5. Position racks in the top third and middle of the oven and preheat the oven to 325 degrees F.
6. Cover cookies on prepared sheets lightly with plastic wrap and refrigerate until firm, about 30 minutes.
7. Remove plastic and bake until the cookies are firm and pale golden on the edges, 18 to 20 minutes, switching racks and rotating the pans halfway through so they bake evenly. Cool on the sheet on a wire rack for 5 minutes, then transfer from baking sheet directly onto wire racks to cool to room temperature.
Buying stock in a publicly traded company, an individual investor becomes an owner. In doing so, you are able to participate in the company’s growth over time and, in many cases receive a share of the company’s profits in the form of dividends.
Owning equity in a company is the most common and accessible means by which wealth is created. However, the investment world is divided between owners and lenders.
Owners – stock, or equity securities Lenders – bonds, or debt securities
In the most simplest terms, a security is an investment in that represents either an ownership stake or a debt stake. Buying shares of a company’s stock and becoming a part owner is an ownership stake.
A debt security is usually acquired by buying an insurer’s bonds. The insurer can either be a company or government. So, you are wither buying a company bond or a government bond. A debt investment is a loan to the insurer (company or government) in exchange for interest income and the promise to repay the loan at a future maturity date.
Unlike the purchase of stock, a debt security does not grant any ownership (equity).
The two main types of equity securities are common stock (also called common shares or ordinary shares) and preferred stock (also known as preferred shares or preference shares).
Common Stock vs. Preferred Stock
Common stock is equity (ownership) in a corporation. Companies issue stock to raise money aka capital. Whatever a company owns (assets) minus it’s liabilities belong to the owners (stockholders).
Each share of stock entitles the investor to a portion of the company’s earnings and dividends. Shareholders also have a proportionate vote in major management decisions. For example- these management decisions may include electing members to the board of directors at the annual meeting.
Most companies are organized in a way that their common stockholders regularly vote and elect individuals to a board of directors. The board directors oversee the company business. By electing a board of directors, stockholders contribute indirectly to the company’s management, but are not involved in the daily operations.
For example: If a corporation issues only 100 shares of stock, each share represents 1% ownership in the company. An investor that owns 10 shares would own 10% of the company. An investor that owns 50 shares would own 50% of thew company.
When most people are speaking of stocks, they are generally referring to common stock. However preferred stock also represents equity (ownership) in a corporation but usually does not have the same voting rights or appreciation potential as common stock. Preferred stock normally pays a fixed quarterly dividend and has priority claims over common stock– which means that common stockholders cannot receive a dividend until the preferred shareholders have been paid. In the even the company goes bankrupt, preferred stockholders have a prior claim on any remaining assets.
As previously stated, preferred stock is an equity security because it represents a class of ownership in the issuing corporation. However, it does share some characteristics with a debt security.
All stockholders, even preferred stockholders are owners of a corporation, not creditors.
Just as with debt securities, the rate of return on a preferred stock is fixed rather than subject to variation as with common stock. As a result, the price tends to fluctuate with changes in interest rates rather than with the issuing company’s business prospects unless, of course, drastic changes occur in the company’s ability to pay dividends. This concept is known as interest rate risk, also called money rate risk.
Preferred stock reacts to the market more like a bond because with its fixed dividend payment, its price is sensitive to interest rate changes.
Me (Dana Ash-McGinty) and the ASH MCGINTY & Co. team assist first-time and experienced homebuyers in one of the nation’s most competitive (and blood thirsty) markets — the Washington, DC metropolitan area. With the real estate market continuously trending toward rocketing sales prices and even fewer days on market, many buyers are reasonably frustrated. Creating strategies for buying a home, most importantly buying a home in 2021, navigating multiple offers on a house, and building a cooperative environment with listing brokers and sellers. This is a strong suit for ASH MCGINTY.
Below I have provided six homebuyer tips for anyone buying a home in an ultra competitive market. (I’ve also sprinkled in a little knowledge on various African languages, just for fun.)
#1 [nọmba ọkan]
(“Number one” in Yoruba – With over 30 million speakers and various dialects, it is one of West Africa’s most spoken languages. Also associated with the Yoruba Ethnic Group, which is one of the largest West African ethnic groups.)
Get pre-approved and pre-underwritten.
Yes, it’s time to get those financial docs together! I know that the requirements for underwriting is substantial compared to a pre-approval, but you will need to do this work anyway. So, let’s submit the required documents to the lender and finalize your loan. Doing it upfront will allow you to relay to the seller the certainty of your funding. (We are consistently seeing sellers choose an offer for this reason.)
#2 [ቁጥር ሁለት]
(“Number two” in Amharic – One of the main languages in Ethiopia with over 20 million speakers. After Arabic, it is the second most spoken Semitic language (language that originated from the Middle East).
Appraisal gaps are a reality in today’s market.
Although most of our offers will include an appraisal contingency, it is important for homebuyers to be aware that they may still have ground to cover. The reality is that there is a high likelihood of any given home selling above the listed price. (Actually you should expect this.) And… if there is a gap in the appraisal, you may need to be prepared to make up a portion or all of the difference. (Wait what?) Yes, you may need to be prepared to make up that appraisal gap. Therefore, it is a good practice to make sure that the top end of the home search price range is less than the top end of the budget.
#3 [namba tatu]
(“Number three” in Swahili – Also known as the Bantu language, Swahili is the most spoken language in all of Africa with well over 100 million speakers. It is the official language of the Democratic Republic of Congo, Kenya, Tanzania, and Uganda.)
Be open-minded to multiple neighborhoods and floor plans.
Of course you may have a preference, we all have preferences. But, you should really consider being open to touring various neighborhoods and floor plans. Open-minded homebuyers often have a less stressful experience than those that are hyper-focused on a particular neighborhood or zip code. You never know– You may discover a great buying opportunity by taking a look at an adjacent area or different floor plan with slightly less interest.
#4 [lamba hudu]
(“Number four” in Hausa – This is one of Nigeria’s official languages with well over 40 million speakers around the continent of Africa.)
Be open to PMI.
Homebuyers, especially first time home buyers should be aware that most home loans include PMI (private mortgage insurance). Down payments of less than 20% down is more common than you may think. Here’s one advantage of a smaller downpayment– Less of a downpayment will give you more flexibility if you have to cover an appraisal gap. With today’s super low mortgage interest rates, your mortgage payment even including the PMI, will still remain very reasonable.
#5 [inombolo yesihlanu]
(“Number five” in Zulu – A widely spoken language in South Africa with over 10 million speakers. Zulu is also the largest Ethnic Group in South Africa.)
Offer quickly with your strongest offer.
Even with unprecedented levels of homebuyer competition, there are still some buyers tempted to test how low they can go. This is absolutely not a winning strategy. Instead of testing the market, assume the seller won’t counter and will simply move on to the next offer. Being ready to make your highest and best offer quickly is key to winning a real estate bidding war in an ultra competitive market such as the Washington, DC metropolitan area.
#6 [numéro six]
(“Number six” in French – Spoken by well over 120 million people in Africa, including various North African countries and the 26 African states that make up “Francophone Africa”- these countries include Cote d’Ivoire, Gabon, Mauritius, and Senegal.)
Work with an experienced agent you like and trust.
My most important homebuyer tip is to work with an agent that (1) is experienced, (2) you connect with, and (3) you trust. This simple strategy will allow you to work with an agent that truly has your best interest in mind. This agent will be sure you follow the above tips (and more) on your next home purchase.
There’s just something about the DC summer heat that makes ice cold lemonade so very good! Here’s a look at a simple 3-ingredient recipe for classic lemonade plus three additional fruit infused alternatives that are equally as refreshing. Whether it’s just a casual afternoon at home, or you’re having guests over – grab a pitcher and try your hand at one of these recipes.
2 1/2 quarts of water
3/4 cup of white sugar
1 cup of freshly squeezed lemon juice (approx. 7 lemons)
In a large pot heat water and sugar while stirring until sugar dissolves. Remove from heat, stir in lemon juice. Garnish with lemon wedge and serve chilled over ice.
2 ½ quarts of water
¾ cup of white sugar
1 cup freshly squeezed lemon juice ( approx. 7 lemons)
1 cup fresh or frozen blackberries ( approx. 15 blackberries)
In a large pot heat water and sugar while stirring until sugar dissolves. Remove from heat, stir in lemon juice. Chill. Puree blackberries in a blender with 1 tbsp of water. Stir into chilled lemonade. Garnish with a fresh blackberry and serve chilled over ice.
Watermelon Mint Lemonade
1 ½ quarts water
½ cup sugar
½ cup freshly squeezed lemon juice (approx. 4 lemons)
5 to 6 cups of watermelon, cubed
2 sprigs of mint
In a pot on high heat, bring sugar and water to a light boil until the sugar is dissolved and your mixture is clear—this will be your simple syrup. Turn off the heat and toss in the sprigs of mint. Allow mint to steep for 15 minutes, then remove it from your simple syrup and discard sprigs. Allow mint-infused syrup to cool for about 10 minutes and then pour into your blender with the watermelon. Blend until smooth and then pour mixture through a fine sieve into a pitcher to get rid of any unwanted seeds or pulp. Add lemon juice to the pitcher and stir. Serve immediately over ice with a sprig of mint for garnish.
White Peach Lemonade
1 ½ quarts water
¾ cup sugar
1 cup freshly squeezed lemon juice (approx. 7 lemons)
3 cups white peaches, chopped (approx. 6 peaches)
Place chopped peaches, water and sugar in a heavy-bottomed saucepan over medium heat. Allow to cook down, about 20 minutes. Set aside to cool slightly, then run through a blender until pureed. Pour peach mixture through a fine sieve and place in refrigerator until chilled. Meanwhile, juice your lemons. Once the peach mixture has chilled in your pitcher, add lemon juice. Garnish with lemon wedge and serve chilled over ice.
For a little something extra, add any of these infused ice cubes to your lemonade. The flavors and herbs will infuse into the drink as your ice melts. Even if you’re not making lemonade, these infused cubes make a pretty addition to a glass or pitcher of sparkling water.
What you’ll need
Ice cube tray
Herbs/Florals of your choice (rosemary, mint, lavender or small flowers)
Note: Be sure that whatever you add to your ice cubes can be safely ingested.
Fill the ice cube tray halfway with water, add in flowers or herbs, and then freeze. After frozen, cover them with more water and freeze again. Doing this in two steps prevents the flowers or herbs from floating to the top of the water before the ice cubes freeze.
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:
Wages and salaries
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 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.
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.
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 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
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%.
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…
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.
“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
Do Some Research – I find the more I’m informed (and prepared), the more confident I feel and the less anxiety I have.
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!
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.
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).
Meditation – Studies have found that meditation is very beneficial when facing a stressful decision. Try spending 15 to 30 minutes in meditation each day.
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?”
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.
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.
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
Dreaming of an herb garden in your kitchen windowsill? Let’s get growing with this super fragrant trio– oregano, rosemary, and basil… make cooking with fresh herbs a cinch!
Where To Begin
Never grown herbs before? Start with oregano, rosemary, or basil. You may also want to consider mint, parsley, and/or thyme. No worries! Most herbs need only basic care and are perennial, which means you’ll never have to buy them from your local grocery store again.
Side bar–Perennials are plants that live more than two years. The term is often used to differentiate a plant from shorter-lived annuals (a plant that has only one life cycle/growing season and then dies). I could go further on defining perennials, but this all the information needed to get started.
Here’s a quick review of the most common indoor grown herbs:
Basil is a popular culinary herb with a lovely fragrance. Tip– don’t chop the leaves, but tear them instead for the most flavor.
Mint has calming and soothing properties that make it a great air purifier that is often used in aromatherapy. It is also a go-to herb for nausea.
Oregano is rich in antioxidants making it a great choice for a healthy diet. Oregano helps build up your immune system and can help fight inflammation.
Parsley is extremely nutrient rich. It helps to improve digestion and boosts your immune system.
Rosemary is known for being a great air purifier. It also has the health benefit of anti-inflammatory compounds. Bonus– you may also notice an increase in memory and concentration!
Sage has a strong reputation for its healing properties including improving brain and memory function.
Thyme has great immune started benefits, packed with Vitamin C and A. The smell of thyme is also known to boost and improve your mood.
What To Know
Herbs need lots of sun. Make sure you have a very bright window or use a hydroponics growing system. If growing in a sunny location inside is not an option, you will find them easier to grow outdoors.
Your herb plants will require good drainage. Although decorative plant containers are fine to use, it is important to make sure the roots never sit in water. You may want to consider with drainage holes to make things easier.
Note: If growing outdoors, avoid planting in heavy clay soil or wet wet spots.
How Not To Kill
Keep the soil moist for the first weeks after planting. Then let the soil dry a little before subsequent watering, which causes root rot.
Plants require specific nutrients from the soil. The challenge is that your plants will draw those nutrients out of the soil, and they don’t magically restock themselves.
This is where fertilizer comes into play. Plants need fertilizer. Fertilizer is any substance or material added to soil that promotes plant growth. But go easy on the fertilizer. Fertilizing more than once a year makes herbs grow too fast, lessening the concentration of aromatic oils that give them flavor.
Hopefully this quick tutorial was just enough to get you started on your own kitchen herb garden. Happy gardening!
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.
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.
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:
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
List of fees and who will pay them
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
At this point, you have three options:
accept the contract as is or
accept it with changes (a counteroffer) or
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.
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:
Appliances and fixtures
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.
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
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.
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 comparables—past 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.
“Be kind, for everyone you meet is fighting a harder battle.”
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.
Real estate investors have different preferences when it comes to investing in rental properties. Some only want single-family detached homes, others prefer duplexes or even multi-unit apartment buildings.
Although for many real estate investors, a single-family detached home equals investing in rental properties. A single family property is also a good option as real estate investing for beginners.
It is not uncommon for an investor to look beyond the rental property scenario and envision bigger and better things, more on that later.
There are pros and cons to investing in rental properties, particularly single-family detached homes. But first, let’s fully define what exactly is a single family detached property.
Single Family Property Investing Benefits
Typically used for owner occupancy, single-family properties are also valuable investment vehicles to generate income. Increasingly lower mortgage rates and increasingly fast rising rental rates is very advantageous for investors, especially real estate investing for beginners.
The benefits of investing in single-family properties include:
→ More Affordable The most obvious advantage to investing in single-family properties is the cost. Single family properties can often be substantially less than multifamily properties, especially when considering additional expenses such as the down payment and maintenance.
Additionally, it is not uncommon for single family property rental agreements to require the tenant is responsible for all or most of the utilities. These agreements may require the tenant to take responsibility for landscaping and basic maintenance, making long-term maintenance costs significantly cheaper.
→ Higher Appreciation Single-family property investments tend to appreciate more than multifamily properties. Multifamily properties are valued based on the incoming rents and the condition of the property. However, single-family properties are valued based on the supply of owner-occupied buyers. If a property is well-maintained in a thriving neighborhood, no worries– there will always be a demand for buyers.
→ Easier To Finance Typically, financing a single-family property is easier than financing a multifamily property. The benefits of financing a single family property include: lower interest rates and higher loan-to-value (LTV) ratio.
→ Easier To Manage With only one tenant, managing a single unit has its appeal. Although, you also have the option of using a professional property management company that is required in most municipalities to be licensed by the state real estate commission.
A single family detached property is a housing structure maintained and used as a single dwelling unit. The property sits on a single individual lot and does not share any walls with another property.
Ok, now that we got that covered, let’s get back to investing in a single family detached home.
You may be surprised to know this, but 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 assetand have someone else pay your mortgage? (We’ll discuss cash flow, appreciation, and depreciation in detail in another post.)
3 Steps To Estimate Rental Property Expenses
1. Identify initial repairs and improvements. Although there may be some ongoing or future repairs to be made down the line, determine what immediate repairs should be completed.
2. Identify fixed expenses. Identify expenses that you can expect to occur regularly. Although the cost of these expenses may fluctuate, you can these expenses to be paid at regular intervals. This may include: property insurance, property taxes, and rental management fees.
3. Identify variable expenses. There are some expenses that rental property investors can anticipate to occur at some point in the future. Variable expenses are no straight forward to estimate, but should not be ignored. Examples may include: vacancy costs, unexpected repairs, etc. Experienced investors save a percentage of the monthly rental income for variable expenditures.
Of course, not everyone is cut out to be a landlord. Imagine clogged toilet calls at 2 a.m. (Yikes!) That can get pretty annoying. And we can’t overlook… 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 a 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 (a property that contains four separate apartments, also known as a quadplex or quadriplex), and you’ve re-roofed four units, so your costs are only 25% per unit. Fix a roof on a single-family home, and your costs are 100%.
Defining Residential Multi-Family Property Types
A residential multifamily property is any property that contains more than one self-contained unit.
Duplex – Two individual residential self-contained units attached to each other, either next to each other or above each other like apartments. Duplexes have two separate entrances for each unit. This means each tenant would have their own entrance.
Fourplex or Quadriplex – Four individual residential self-contained units attached.
Triplex – Three individual residential self-contained units attached.
Investors in single-family detached homes aren’t always thinking about using the properties for rental income. There are many various invest opportunities. Consider the following:
1st – For those with rehabbing or handyman 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). 2nd – Rental income can be used to carry the cost of the investment. 3rd – Strategic investors will use the profit and increased equity from one investment to finance the purchase of another, possibly larger investment.
This page is for: investing in rental properties, rental real estate advantages, advantages of rental real estate, benefits of rental property, buying single family rental property, rental property benefits, single family rental investment strategy, advantages of single family, investing in single family home rentals, investment property, how to invest in real estate, buy one rental property per year, real estate investing, buy rental property, rental property investment, invest in real estate, rental investment, investment properties, investment houses.
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.
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.
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.
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”.