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3 Firewalls That Protect NYC Real Estate From Losing Its Value

New York City has some of the best real estate in the world—and some of the priciest.

But what if it lost its value? This is something anyone who owns or invests in NYC real estate worries about, at least from time to time. Thankfully, there are three firewalls in place that prevent the depression of New York City home values.

Before I share what these firewalls are, I’d first like to remind you of what our NYC real estate market was like back in 2008. Compared to people in other markets across the country, homeowners in NYC ZIP codes lost the least equity. With that in mind, let’s turn our attention back to the three firewalls I mentioned earlier:

1. The trains and infrastructure. You might not expect it, but NYC’s train system and infrastructure play a significant role in helping local real estate retain value. Why? It’s simple: NYC’s public transportation system makes it much easier for a large number of people to live and work in the city. It also allows for a huge tourist population, which, of course, helps the economy.

"New York City real estate is both incredibly precious and incredibly stable."

2. The bodies of water. Thanks to the East River, the Hudson Bay, the Atlantic Ocean, and other, smaller bodies of water, NYC is completely landlocked. And, at this point, it has all been developed, meaning the only place to grow is up. It also means that real estate here is both incredibly precious and incredibly stable.

3. Generational wealth and low debt. While people in other markets tend to buy homes for 5%, 3%, or even 0% down, people in New York City generally buy properties for 20% down, at least. In fact, 38% of all NYC home sales are cash deals. This means our market is more stable than most. Property here is far less likely to be sold in a distressed situation like bankruptcy or foreclosure.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

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The Story of a $1.494 Million Deal

Today I want to tell you the story of when I got a record price for a transaction I partook in a while back. Now, when I say ‘record price,’ I mean that no one ever sold a two-bedroom unit for as much money as I did.

There were 420 units in just one co-op, and 300 of those were the same exact two-bedroom layout. I was selling a two-bedroom unit of a similar size down the street at 65 Morton. The homeowner called me and told me that they wanted to sell their property quickly for a record price. At the time, he had tenants living there.

He wanted to sell for $1.45 million, but the highest comparable was $1.3 million. I looked over his property; he had done some great renovations on it, including opening up a window and adding a bathroom. I thought the market was there, but the comps just weren’t.

"After some competition, people began to see the value, and it finally came down to a track race between two interested buyers at $1.494 million."

We listed it at $1.4 million and the seller and I were on the same page. His tenants were incredibly friendly and cooperative; they kept the house looking so beautiful that we didn’t need to stage anything.

Between myself and the two others on my team, we showed the property about 100 times. In the first two weeks after listing, we had four open houses. It was a nonstop revolving door of interested people, and we met a lot of future clients there.

We received about 10 offers on the property, the first few of which were lower than our asking price. After some competition, people began to see the value, and it finally came down to a track race between two interested buyers at $1.494 million. Neither of them elected to have broker representation, which is a double-edged sword for us because that can make people hard to deal with in negotiations.

Sure enough, the couple who eventually bought the property ended up being quite adversarial to me. In the 11th hour of the deal, it was tough to get them to sign the contract. Sometimes buyers bid high and later come to regret their decision. But after quite a bit of hemming and hawing, they signed the contract, got the deal, and everyone was happy.

We sold that home for $1.494 million in cash—$94,000 over the asking price.

If you have any questions about this or other deals I’ve done, feel free to reach out to me. I’d be glad to tell you all about them.

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How Psychology Relates to Real Estate

As a real estate broker who helps people find homes, psychology is a very interesting subject to me and the other brokers who have researched how it affects real estate. Here’s how a key element of psychology pertains to the real estate industry: fear.

One of the most compelling elements of all the choices we make in life is fear—for example, the fear of leaving the tribe and the fear of poisonous food. Now, you probably don’t fear being poisoned by food all day, but from an evolutionary perspective, the reason why fear affects us so much more than pleasure is that in the past, when humanity was still young, making the wrong choice in food out in the wild could have been a fatal mistake.

Fear guides our choices, and it also guides how we affect economic choices today—in other words, not losing money. People hesitate to make heavy financial choices because they don’t want to lose out on their money and resources.

"Fear has a lot to do with how people engage in real estate."

When people make a calculated risk, such as when they invest in something they hope to gain money from, the truth is that they’re not actually solely trying to make money; they’re also trying not to lose that money. However, they also fear that they’re going to lose money if they don’t invest, which causes them to take the risk.

Take the example of being a homeowner versus being a renter: I’m buying this home not because I’m sure that this property is going to go up in value (even though we know that they will), but rather because I know that my rent is going to go up and I’ll lose out on that money.

Psychology is largely about fear, among other things, and fear has a lot to do with how people engage in real estate. It prompts us to avoid bad decisions, to preserve those things we already have, and to take risks.

If you have any questions about how psychology impacts the real estate industry, feel free to reach out to me. I’d love to discuss this topic with you in more detail.

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The Impact of Age In the Market

Two of the biggest portions of the American population are over the age of 65 and under the age of 40, and this has a very, very impactful outcome on our economic position in all sectors—especially housing.

As massive amounts of assets come out of the elderly population’s hands and into the younger generations’, it creates downward pressure on prices. Right now, we live in a relatively tight housing market and there are more people than ever, so that creates ever-more demand for housing. In terms of just the supply of homes, we expect to see a flood of inventory over the next 20 to 30 years as the older generation passes on their property through inheritance or sells it and moves to other places.

Additionally, throughout America and the Western world, the birth rate is low. For reference, my grandfather had 27 siblings! Nowadays, however, meeting someone under the age of 40 who has six kids isn’t too common. It’s economically difficult to raise kids these days, especially given that the younger generation is relatively poorer.

"As massive amounts of assets come out of the elderly population’s hands and into the younger generations’, it creates downward pressure on prices."

Another factor putting downward pressure on prices is the fact that the people who would otherwise be willing to buy them have less money. It’s also a question of how much demand there is for the homes left by the older generation as they pass away (which are sometimes in bad condition).

It’s important to note that all of these factors can change. People are living longer on average. We have no clarity on how properties will disseminate to a younger generation. We also know that millennials are the richest generation. People under the age of 38 actually have more money collectively than any other generation, and they are forming households, despite the low birth rate and despite not having great economic positions. Millennials weren’t as negatively impacted by the financial crisis, and I think that they will absorb that property.

As the aging population bequeaths their assets to the younger population, we will see recessionary periods at times, but there will also be boom periods for companies and practitioners who help improve and sell those properties.

More than any other macroeconomic trend, caring for the elderly, the dispossession of their assets, and the transition from the greatest and baby boomer generations to the millennial generation will be the major trade winds of the entire global and American economy.

If you’d like to understand in more detail how this might affect you, please feel free to reach out to me. I can’t wait to hear from you!

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Do You Like Being a Real Estate Agent?

Whenever I first meet a business professional, an older person just making conversation, or a peer in the business, I’m often asked, “Do you like working in real estate?” It’s a question I’m always happy to answer, but it is interesting how people almost instinctively ask it.

Personally, I thoroughly enjoy being a real estate agent. I’m immersed in the business day in and day out, and I couldn’t be if I didn’t love it. There are three reasons I’d like to share that explain why I love being an agent.

First, despite all the misconceptions concerning real estate, it’s a full-time, richly rewarding career choice that requires a lot of integrity. When people ask whether I like it, they’re tacitly asking, “Do you like having a part-time job where you earn little and lie a lot?” That way of thinking couldn’t be more wrong.

"I couldn’t be more honored and humbled by the fact that my clients readily trust my guidance with such critically important investing decisions."

For most people, buying and selling their home is the most consequential decision they’ll ever make for their financial future, and we as real estate professionals are there to help them make that decision. That’s something we should be proud of. I know I am.

Some people find their passion in teaching kids because it’s an opportunity to help them grow and become the best version of themselves, and we as agents are fulfilled by a similar opportunity with homebuyers and sellers.

The last, but certainly not least important, reason I love being an agent is that we work as business advisors. Real estate agents might not necessarily be the first profession that comes to mind when you think about people who handle large transactions, but in my career thus far, I’ve helped my clients buy or sell $1 billion worth of real estate.

I’ve found this kind of success because I’ve closely studied financial instruments and debt instruments. Not only that, I’ve assisted people with their financial planning as well as with buying, selling, and renovating properties to turn major profits. I couldn’t be more honored and humbled by the fact that my clients readily trust my guidance with such critically important investing decisions.

If you’d like to speak with an agent who loves what he does, please reach out to me. I’ll be sure to respond right away and I look forward to our conversation!

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What M.E.D.S. Can Do for Your Life and Business

I’m one of the top real estate brokers in all of New York City today, and I got to where I am by seeking out as much coaching and education and reading as many books as possible.

Early in my career, I attended a seminar where the topic of discussion was on M.E.D.S. And no, we’re not talking about Prozac. Actually, M.E.D.S is a life-changing acronym that I’ve carried with me ever since.

What does M.E.D.S. stand for?

Meditation. One of the first things I do every morning is meditate. I go to TaraBrach.com and usually listen to one of her talks for 10, 20, or on earlier mornings, 60 minutes. Meditation is so important when you’re helping people buy and sell homes because it’s so easy to get caught up in the narrative of a virtual reality rather than focusing on the true reality.

"Though sleep is the final element in M.E.D.S., none of the other three elements are possible without it."

Exercise. If you’ve watched any of my videos, you know how heavily I stress the health and wellness of the Earth as well as the importance of being healthy and well in our lives—both financially and physically speaking. Your physical wellness should be one of your top priorities, and good exercise habits will lead you down the path to a healthier lifestyle. I work with a yoga instructor and personal trainer from TrainDeep.com, and since adopting Jonathan Angelilli’s life-changing workout regimen, I’ve lost 50 pounds.

Diet. I’m personally on the Whole30 Diet, which was introduced to me by my trainer. This is just one of the many dieting options out there, but if you’re interested, it consists of minimizing your added sugar intake and processed foods like bread. Your eating habits are up to you, but my advice is to formulate a deliberate dieting plan.

Sleep. I belong to a club that meets at 5 a.m. each day, which means I’ve made a routine out of going to bed early. Though it’s the final element in M.E.D.S., none of the other three elements are possible without it.

I’ve found M.E.D.S. to be the recipe for success in my life and business, and I’m sure you will too. If you have any questions about today’s topic or about the people I referenced in, please don’t hesitate to reach out to me. I’d be happy to speak with you!

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How the 2008 Financial Crisis Impacts Our Current Market

When it comes to describing the lasting impact of the 2008 financial crisis, I need to first share a little bit of my own backstory.

You see, I got into real estate back in 2004. Over the next three years, I made millions of dollars’ worth of commission and bought and sold 31 properties for myself. By the time I was 27, though, I lost it all and was facing bankruptcy.

My story isn’t unique, either—everyone was impacted (mostly negatively) in some way by the 2008 financial crisis, and its effects are still being felt today in three specific ways.

First, according to the U.S. Census, homeownership declined by 5% during the Great Recession, and it still hasn’t recovered. That’s roughly 17 million Americans who were homeowners beforehand but now aren’t.

"As that 5% of former homeowners rotate back into the market, we’ll see an increase in homeownership."

Second, homebuyers who bought after the crash did so cheaply and with low interest rates, which means they have little debt and a lot of equity. In other words, there’s a huge amount of homes out there that are cash cows for whoever owns them.

Third, sellers and lenders are more educated than they were before. Lenders aren’t lending money to people who can’t afford a home, and most sellers won’t sell to buyers who aren’t qualified to buy. More importantly, sellers aren’t as aspirational as they were pre-2008. They pay attention to the data instead of trying to hit a random number.

The 2008 crash defined my generation and reset the market to the point where, more than a decade later, we’re still just approaching the levels we saw during that time period. This is a good thing because, as that 5% of former homeowners rotate back into the market, we’ll see an increase in homeownership. This will cause prices to increase, but homeownership will be available to more people in a sustainable way.

If you have any questions about how macroeconomic trends affect homeownership, don’t hesitate to reach out to me. I’d love to speak with you.

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Why Is Music Effective for Selling Homes?

When you think of the senses you might appeal to when trying to sell a home, what comes to mind? You probably think of sight and smell, but what about sound?

Recently, a client brought several studies to my attention that showed something incredible: Music can have a major impact on potential buyers who are touring a home listing. Ambient music that incorporates sounds from nature—like singing birds or a babbling brook—can be particularly effective.

"Music can make a house feel more like a home."

Think about it: Not many people live in pure silence. Having some pleasant, non-distracting music playing when buyers enter a home for a showing can help them to feel more at ease. Music can make a house feel more like a home.

If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.

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Does Art Matter In Real Estate?

Does art matter in real estate?

Well, unlike fragrances and pleasant scents, I will tell you that art matters. Art really matters.

There are three things that art does to a home that you’re selling:

1. Art defines space. When you put a picture on a wall, it gives the viewer a subconscious feel for how big that wall is.

"Art focuses the eye and elates the viewer."

2. Art helps direct the focus in a room… and makes it seem bigger! In real estate, bigger sells. The picture on the wall not only makes the wall seem larger, but it also makes the house seem larger. Art also focuses the eye and elates the viewer.

3. Art sends a message. If you’re selling a home, framed pictures on the walls say something about who you are. It can send buyers a message about how confident you are as a deal partner, how established you are, and it’s also lovely to look at.

So in the end, yes, I think art matters. If you want to talk about art in real estate, reach out to me. I’d love to have that conversation with you.

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The Scent of a Ruined Transaction

When you’re selling real estate, it turns out, smell does not sell. It sounds a bit contrarian, but sellers should avoid manipulating scents to help sell their homes.

In 2014, The Wall Street Journal published a great article about this very topic. Essentially, it laid out a few risks that are associated with using scent to attract homebuyers. Smells create a short-term effect, but it can also do the following things:

  • It can seem gimmicky. Selling real estate for hundreds of thousands of dollars is not the same as selling Cinnabon.

  • It can miss the mark. Some people like the fragrance of certain colognes, perfumes, flowers, and candles—and some people don’t. Everyone is different, and you want to cast the widest net possible to attract the best possible price. To do that, you need to be neutral. Present your home like a museum or a hotel, neither of which are defined by strong smells.

"If you want to sell a home for top dollar the way I sell homes for top dollar, don’t rely on smell."

  • It can distract. If there’s a beautiful cookie smell permeating the house, I won’t necessarily think, “I’d better pay full price for this home!” I’ll probably just think about cookies.

  • It can ruin a deal. Smells can make people feel disgusted, complacent, comfortable, or great. But guess what? You’re selling real estate—that’s not your job. Your job is to make the buyer feel like they need to sign a contract by tomorrow or risk losing the home. Smells don’t do that.

I know this view isn’t what most people think, but if you want to sell a home for top dollar the way I sell homes for top dollar, don’t rely on smell.

If you have any further questions about this, feel free to give me a call or send an email. I’d be happy to speak with you.

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What Does a Real Estate Broker Really Do?

Some buyers and sellers are confused as to what the role of a real estate broker truly is, so I’d like to clarify this for all of you today.

For one thing, brokers are experts on housing values. They know how the size, style, location, and features of a home will impact its value. It takes a lot of knowledge and skill to have such an intimate understanding of this particular point.

Next, brokers are also experts on real estate contracts. Brokers help their clients navigate the process from start to finish. Beyond this, brokers can leverage their wide network of professional references at every step to ensure that you, their client, are well taken care of. A quality broker will have connections with plumbers, electricians, painters, stagers, photographers, and many other such professionals who can assist you with your real estate goals.

"Real estate brokers are service providers."

In short, real estate brokers are service providers. It’s their job to help you get the best results out of your real estate experience.

This is why, usually, brokers pay for every single expense related to marketing your property. This means they pay for professional photography, staging, signage, and other similar services. However, this doesn’t mean they’ll pay for the improvements you make before you sell. If you want to change out your countertops to get a higher return, for example, you’re still responsible for this expense.

If you have any other questions or would like more information, feel free to give me or my team a call or send us an email. We look forward to hearing from you soon.

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How Can You Spot a Self-Centered Agent?

I’ve been in this business for 14 years and there’s no way I could have achieved the level of success that I’ve enjoyed if being service-oriented wasn’t central to my business. All too often, agents lose sight of the fact that we’re in a service industry.

With that in mind, what three sins are committed by the agent who, rather than taking a service-oriented approach, is self-centered?

1. They have “commission breath.” This is the agent whose sole focus is to close you and collect their commission at the expense of serving your needs. Whether it’s to help you sell your current home or buy a new home, your agent should be working within your desired criteria to bring that goal to fruition.

"Like in the food service industry, you’re in the restaurant because you’re hungry and, no matter what you order, the servers will make sure you’re fed."

2. They don’t have a “big picture” point of view. Because they don’t do a lot of business, when a potential deal comes along, self-centered agents feel like they need to force the issue. As a result, they forget the service facet altogether. Like in the food service industry, you’re in the restaurant because you’re hungry and, no matter what you order, the servers will make sure you’re fed.

3. They don’t listen to your wants and needs. The self-centered agent doesn’t care to be amenable to your schedule. Not only that, but they aren’t sensitive to your experience, nor are they interested in fulfilling your needs—whether with the closing schedule or conditions and terms you’d like to set.

Unfortunately, real estate agents, in general, are sometimes tarred with the same brush as these self-centered types, when, in fact, the agents I work with on a daily basis love what they do and they love the clients they serve. It’s important to work with an agent of that caliber and steer clear of the ones I’ve described today.

If you have any questions about how an agent should behave and you feel as though you’re not receiving the proper level of service, go ahead and call me at 212-965-6051 or email me at David.Rosen@Elliman.com. I look forward to speaking with you!

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3 Reasons a Title May Be Defective

There are three main types of defects that can appear on a title, and we’ll cover each of them today.

1. Building violations. If you live in a co-op, this applies to everyone living in the property. Building violations aren’t uncommon and, sometimes, aren’t very serious. It usually relates to an incomplete building permit or some feature of the building being out-of-code.

2. Liens. A lien is an unpaid sum of money owed by the homeowner. Properties can’t be sold until these fees are paid off. If it isn’t paid off, the lien is attached to the property, meaning the next owner would unknowingly become responsible. To avoid this, liens must be disclosed during escrow.

3. Judgments. If the property is subject to an ongoing lawsuit or has unpaid taxes still owed upon it, then it cannot be sold until these judgments are paid.

If you have any other questions or would like more information, feel free to give us a call or send us an email. I look forward to hearing from you soon.

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Do Credit Scores Really Matter?

Credit scores, also known as FICO scores, are numerical rankings meant to reflect an individual’s creditworthiness. In other words, these scores are meant to show credit issuers how likely you are to repay debt.

FICO scores were first developed in the 1930s by Manhattan department stores looking for a way to verify the credibility of customers seeking to purchase items on layaway. Since then, though, these scores have gained a much greater significance.

Your score will vary depending on which of the three national credit bureaus—Equifax, Experian, or TransUnion—you pull your score from, but the difference will be insignificant. Your score with each of these entities will be based on how consistently you meet payments on your lines of credit.

"Being attentive is the best thing you can do for your own credit score."

A score of 620, for instance, typically indicates 12 consecutive months’ worth of on-time bill payment. Anything below 680 is considered sub-prime, but anything below 620 is like having a score of zero. You will have a very hard time getting approved for any line of credit unless you surpass this threshold. To have truly excellent credit, meanwhile, you need to have a score at or above 720.

If your credit isn’t exactly where you’d like it to be, don’t panic; this is incredibly common. Most people have a credit score that’s far from ideal. And, thankfully, there are a number of ways to improve your score. For one, pay close attention to your credit limits, as exceeding them will hurt your score.

Ultimately, being attentive is the best thing you can do for your own credit score. If you have any specific questions about how to improve your score, or about any related topics, feel free to give me a call or send me an email. I look forward to hearing from you soon.

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How Agents Leverage Social Media in Real Estate

Social media is a powerful tool that many professional real estate agents take advantage of. There are three ways your Realtor should be using it:

1. Marketing property on social media platforms. People spend a lot of time on these outlets, and agents want to be capturing their information. Facebook has algorithms that help us capture leads and find potential buyers.

"75% of internet access is done through mobile devices."

2. Keeping it mobile friendly. 75% of internet access is done through mobile devices, and agents want to capitalize on this market. Keeping a social media presence means having quick videos and easily digestible information.

3. Using it as a special feature. Social media itself isn’t an agent’s go-to platform—that’s what the MLS and real estate websites are for. Using social media is simply taking advantage of a great tool.

If you have any questions about social media marketing or would like more information, feel free to reach out to me. I look forward to hearing from you soon.

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A Great Tool for Agents & Homebuyers

Have you heard of an “I have a buyer” letter? If not, these letters are a great way for agents to meet sellers, which also makes them a great tool for homebuyers.

If you were working with me, for example, we’d send out 1,000 to 2,000 letters (remember those?) to people whose homes are similar to what you’re looking for in the event that we can’t find a home like that on the open market.

"These letters are a great way for agents to meet sellers, which also makes them a great tool for homebuyers."

This letter essentially tells the recipient that you’re looking for a home to buy. I know what you’re thinking: “If they wanted to sell their home, it would already be on the market.” Here’s the thing: There are a lot of people out there who are thinking about selling their home but, due to a variety of circumstances, just haven’t gotten around to it yet.

What are the key elements that make a great “I have a buyer” letter? First, it has to be authentic—I always try to personalize my letters in order to create a rapport with potential sellers. Next, it has to be specific about what you’re looking for and how they can benefit from selling their home to you instead of putting it on the market.

All in all, this is one of the best tools a broker such as myself has at their disposal.

If you’d like to know more about how these letters can help you or if you have any other real estate questions, don’t hesitate to reach out to me. I’d love to help you.

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How Income Relates to Housing Costs

The No. 1 factor in determining what real estate is worth in any given area is the income of the people living there.

This is an abstract concept that a lot of people don’t understand, but it’s the primary reason why a 1-bedroom apartment in New York City costs anywhere from $500,000 to $1 million but you can find a 6-bedroom house with a 4-car garage and a swimming pool in the same price range almost anywhere else in the country.

To give you a better idea of this correlation, let’s look at the specific ratio between income and housing costs.

A good financial rule of thumb is that you should spend no more than 35% of your gross monthly income on housing. For example, let’s say you make $120,000 per year (or $10,000 per month), which means you’d put $2,000 of that toward your housing costs. Let’s also imagine that you have car payments and student loan payments that cost $1,500 a month.

"The next time you’re buying a home and you have to think about appreciation, consider this correlation."

Doesn’t that seem light? Why can you only spend $2,000 on housing costs when you make $120,000 per year?

Let’s dive a little deeper. If you make $120,000 at a 30% tax rate ($36,000), that means you only take home $84,000 of that income. Each month, $2,000 of that goes to housing, while $1,500 goes to other expenses. After those expenses, you have $42,000 left. If you want to put 10% of that total into your savings, that equates to $8,400. All told, you’re taking home $646 per week out of that $120,000 yearly income to spend on whatever else you need.

So, the next time you’re buying a home and you have to think about appreciation, consider this correlation.

If you have any more questions about the correlation between income and home values, don’t hesitate to call or email me. I’d love to talk to you.

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How Your Monthly Costs Can Affect Your Equity

No matter what sort of property you buy, there are costs you’ll be paying each month. Today we’ll be talking about how these can affect your home equity.

Equity is a term that describes how much money you’d have if you sold your home. If you have a $100,000 mortgage and could sell for $300,000, you have $200,000 in equity.

Monthly costs include property taxes, common charges, maintenance fees, utilities, etc. These monthly costs are often a significant factor in your home equity.

If you live in a land-lease building, for example, fluctuating monthly costs can negatively impact your equity. If somebody raises the rent on the property that you “own,” it takes away your equity growth.

"Monthly costs are vital to understanding a home’s current and future equity."

Utilities also play a role in hurting equity—an energy-inefficient home means high utility costs. People can spend hundreds on cooling in summer and hundreds more on heating in winter. This also hurts landlords who pay these bills.

Properties with higher taxes won’t increase as much in value. If a home is $1 million and another is $500,000, but the first home has zero monthly costs while the second has $4,000 each month, the $1 million home will sell in a heartbeat. Despite being much cheaper, the $500,000 home will be much harder to sell—in some cases, property taxes can make a home unable to be sold at all.

Monthly costs are vital to understanding a home’s current and future equity. If you have any questions or would like more information, feel free to reach out to me.

A 33% debt-to-income ratio for two prospective purchasers. At 3.5% their income must be at least $226,000 a year whereas at 5% the income must be $257,000 a year.

A 33% debt-to-income ratio for two prospective purchasers. At 3.5% their income must be at least $226,000 a year whereas at 5% the income must be $257,000 a year.

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3 Key Elements of Rental Income

Throughout my career, I’ve helped to manage hundreds of homes, and I’ve owned rental properties myself, so I’m well aware that rental income incorporates many factors that property owners need to consider. Here are three key items to think about in terms of producing income from a rental property:

1. Tenants are impulse shoppers. Typically, renters will select a home much quicker than someone who is in the market to purchase a home. Often, renters will only look for a few weeks to a couple months, whereas homebuyers may search for several months before finding one they’re willing to make an offer on. That in mind, if you present a property that is clean, has nice appliances, and has good photos to review, you can get 20% more in rent than if you don’t do those things. Don’t underestimate the emotional experience of seeing a home—that impulse is so important. You don’t want anything that will detract from people diving in.

"Typically, renters will select a home much quicker than someone who is in the market to purchase a home."

2. Good management is key. Once you have a tenant in place (or at least an applicant), make sure that they have access to someone who is easy to pay rent to, treats them with respect, is easy to communicate with, is honest, and has good reviews online. Additionally, it’s a myth to say that a landlord has no rights and that if a tenant doesn’t pay their rent, there’s nothing the landlord can do about it. As a landlord, you can absolutely do everything to get the money you’re owed.

3. Monthly rent fluctuates with the market. Because of inflation, the improvements you make, the economy, and the housing market, rents do go up. Now, we encourage people to be homeowners, and we help people to save money to buy a home, but 70% of the population rents. Those people are signing up for something that is increasing in price. It’s usually the case that rents go up every year, sometimes by 3% and sometimes by 10%. But when you’re a landlord, don’t focus on 12 months—focus on the next five years. Using this period to do your projections is a key element to doing improvements for rental income.

If you have any other questions about real estate investment, either in New York City or nationally, I’d love to speak with you soon. Don’t hesitate to reach out to me.

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