7 Things to Consider Before Buying Commercial Property and leasing it

If you’re considering leasing your commercial property, there are many elements to mull regarding the market, your tenants, and the terms of the lease. Be sure and consult this checklist of things to do before leasing as you move forward.

1. Research the market.

You need to know everything you can about the commercial real estate market before you even think about leasing. What is the vacancy rate for commercial properties in your area and region, for example? What are the market rates for commercial properties like yours?

If it’s an office building, you need to know how much office buildings in the area leasing for per square foot on average. If you own a warehouse, you need to have comparable data on how much warehouses lease for. Do not assume all commercial properties have the same vacancy rates and lease costs per area.

2. Know your prospective tenants.

Once you advertise the property, you will start hearing from prospective tenants. Familiarize yourself with their business. First, you need to require their financials in order to assess their ongoing ability to pay. Make sure they have a strong and robust long-term cash flow. Second, analyze any special needs:

• Do they want corporate signage on the outside of your property?
• Is that acceptable to you?
• Is there adequate foot traffic for the nature of their business?

They should be doing due diligence on this as well, but you should know enough to feel comfortable that the business you lease to will be viable.

3. Check on your zoning.

When considering prospective tenants, be sure you know what your properties are zoned for. Zoning laws and regulations change regularly, so be sure you update your knowledge for every new tenant. Leasing to a business in an area not zoned for it is not going to be viable long-term for you or them and can result in fines and fees.

4. Upgrade your technology if needed.

Is your building set up for any technology needs your tenants may have? Generally, the answer should be yes. But if your building is older, you may have to upgrade the wi-fi or cable lines to attract high-paying tenants. Access to the digital world is increasingly part of the lifeline of companies of any type. If you need to retrofit, be sure to advertise the new state-of-the-art technological capability.

5. Assess your asset management capability.

Leasing a commercial property takes a great deal of asset management. Asset managers can give you advice on a spectrum of issues that arise in commercial property leasing, ranging from market knowledge to making improvements, doing regular maintenance, watching the financial achievements of your tenants, and proactively monitoring upcoming lease rollovers. If you hire a company to handle your asset management, they can also execute projects ranging from upgrading parking lots to expanding building size. Asset managers can also ensure your buildings are sustainable and perform energy audits.

6. Consider your property management capability.

Some commercial property owners act as their own property managers, inspecting the building and receiving monthly leasing fees. Others contract the work out, either to asset managers or to specialized property managers. If you currently act as a property manager for your buildings, is it time for a change? What outside services do you need or want property managers to handle if you engage them?

7. Know your tax situation.

It’s imperative for property owners to know their tax situation, particularly at a time when the nation’s tax code may be changing. Consult with advisers on any changes in federal, state and local taxes every year. Do this early, so you have plenty of time to plan for any changes in the taxes required or the allowable regulations and deductions.

Factor any changes into the rents you charge for your commercial properties. If you need equipment, be sure to check with professionals about the optimal time to buy. Purchase of business property and equipment can have major tax implications.

 

 

 

References: Anum Yoon, Bigger Pockets

 

6 tips to help sellers stage their home while living in it

We help our clients understand that these simple tips will showcase the home’s best assets, appeal to the largest audience of buyers and sell it quickly and for more.

Key Takeaway

• Good home staging eliminates reasons for the buyer to say “no,” and cleaning offers the biggest return on investment in the home sale process.

A potential buyer walking into your listing and saying, “Nope — not for me” at first glance is the last thing you want as a listing agent. One simple way to avoid that scenario is good home staging.

The key to effective staging is helping your clients make small improvements that will result in big returns. The same is true even if the client is currently living in the home.

However, not all clients want to go through the hassle of staging their home while living in it; and you definitely don’t want to get dumped by the clients for pushing such a suggestion.

Instead of being pushy, help your clients understand that staging is simply a method of decorating the home that showcases its best assets, reels in the widest audience of buyers and sells it quickly for the highest possible price.

In other words, home staging eliminates reasons for the buyer to say “no.”

Staging can be a humbling experience for sellers because it often requires them to strip the home of things they love (that may not have wide appeal) and look at the home objectively to see what needs improving. That is where the agent comes in.

Help walk your clients through this list and objectively identify realistic, budget-friendly changes that will help them sell quickly.

1. Clean

Give the house the cleaning of its life.

This point must be emphasized to clients. Also, it may not be a bad idea to recommend cleaning be done professionally. Clients might not know what it actually means to deep clean, or they may tucker out when the going gets tough.

Cleaning offers the biggest return on investment in this process. Don’t skimp, make it sparkle! Most importantly, be sure your sellers keep up on the cleaning while still living in the home.

2. Declutter

The clutter has got to go.

Some clients will be fine with selling everything they own. Others won’t even want to sell the broken mug that Billy made when he was three.

If they don’t want to sell, suggest a storage unit, not a closet. Buyers look in closets. Help clients find the right balance between lived-in and sterile. Again, the goal is to try to appeal to the widest audience possible.

3. Paint

Is it loud, outdated or wacky? Paint over it.

Is it wallpaper? Tear it down, and then paint over it.

Consider a nice neutral shade. Some clients may be reluctant because white, beige and taupe are boring.

Inform them that those colors may be boring, but some colors have a better ROI than others. The neutral palettes are a much better canvas for the buyer’s dreams than the client’s current seascape kitchen.

4. Depersonalize

The 10×10 family picture collage is a big no. Again, one of the purposes of staging is to appeal to as many buyers as possible — not to the grandparents.

Teach the clients that buyers need to be able to enter the home and envision themselves living there rather than feeling like guests in someone else’s environment.

This may be difficult while the client is still living in the home. A storage space may come in handy.

5. Think about lighting

Use natural light. Tell your clients to open up the blinds, curtains and shutters to let the sun’s light stream in. Natural light can do a lot to freshen up an area.

Also, it may be worth it to consider adding supplemental light to a dark corner or updating a broken or out-of-date light fixture — especially if it looks like it belongs in a medieval castle.

Be considerate of particularly low-hanging fixtures; raise them up if there is room. At the very least, fixtures must be dusted.

6. Upgrade the exterior

Increase curb appeal.

Curb appeal is essential. If your client’s house doesn’t attract buyers during a simple drive-by, then it won’t matter much how clean it is on the inside.

This may be the most important item on the list. (It’s especially important if you don’t live in any of these beautiful towns.)

Mow the lawn, hedge the bushes, prune the trees, spruce the flowers, kill the weeds. Life-size garden gnomes? No! Power wash the outside? Yes! It’s almost as good as new paint, and it gets a better return on investment.

Clean the windows, organize the outside living areas, repair the gutters and fix the fence. Keep in mind that it may be easier for your clients to hire a professional.

Finally, don’t forget the upkeep.

Using these tips, your sellers will be well-prepared for any showing.

 

Reference: http://www.inman.com

The best month and day to put a home on the market, according to Zillow

A study points to a Saturday in May as a seller’s peak opportunity

Key Takeaways

• Homes listed between May 1 through 15 tend to sell nine days faster and sell 1 percent above the asking price, a new Zillow study says.

You may want to hide during the ides of March, but the ides of May are the perfect time to put a home on the market, says a new study by Zillow.

In 20 of the 25 metro areas studied, homes listed anywhere between May 1 and May 15 sold nine days faster and for up to 1 percent more than the asking price.

“With 3 percent fewer homes on the market than last year, 2017 is shaping up to be another competitive buying season,” said Zillow Chief Economist Dr. Svenja Gudell in a statement.

“Many [homebuyers] who started looking for homes in the early spring will still be searching for their dream home months later. By May, some buyers may be anxious to get settled into a new home — and will be more willing to pay a premium to close the deal.”

Mark your calendar for a Saturday in May

Moreover, Zillow’s research revealed the best day to place a home on the market is Saturday — listings that appear on Zillow’s site on this day garner 20 percent more views than early-in-the-week listings.

The second best day to list is Friday, when properties receive 14 percent more views.

Lastly, Gudell says sellers have to be cognizant of other factors, such as weather.

Sellers in Texas, California and Florida have more leeway in when to list their home due to warmer weather patterns. Also, sellers who live in areas without distinct seasonal weather tend to have little variation in sales price based on the month.

5 things buyers should know about low down payment options (Remember: Cash is ALWAYS King)

Many homebuyers confide in real estate agents and loan officers to find them the best price. But 95% agents don’t understand the value of knowing about all of the low down payment options available to their clients, says Gauri Nerurkar, Realtor DC Metro Homes Team of RE/MAX.

In fact, in a recent post for mortgage industry blog, MGIC Connects, that out of the most recent NAR Profile of Buyers and Sellers states, 40% of repeat buyers, and 66% of first-time home buyers, are putting less than 10% down. Understanding all of the low down payment mortgage options available to borrowers and leveraging this information to help them save money has the potential to positively impact your business growth.

Here are 5 reasons why we believe buyers need to know about low-down payment mortgage loans.

1. FHA IS MORTGAGE INSURANCE

Many people think that the Federal Housing Administration (FHA) provides a service that is markedly different than the service private mortgage insurers provide. The reality is both FHA and PMI provide the exact same service, but with some key differences.

2. PMI ALLOWS A BORROWER TO PUT LESS MONEY DOWN

A conventional loan with private mortgage insurance allows for slightly less money for a down payment (as little as 3% down), whereas FHA requires a 3.5% down payment. The ability to use gift funds is another low-down-payment option for borrowers. Many don’t realize that conventional loans with PMI do allow for the use of 100% gift funds.

3. FHA CAN LEAD TO MORE BORROWER DEBT

Even though a borrower may put less down using a conventional loan with private mortgage insurance, they still end up with less debt than borrowers who take out FHA loans. This is because FHA charges an upfront premium along with the monthly mortgage insurance amount. That upfront premium is most often financed into the loan, increasing the total amount borrowed. Keep this in mind when discussing low-down-payment options with borrowers who have higher credit scores, since they stand to gain more by going conventional.

4. CREDIT SCORE MAKES A DIFFERENCE

Most PMI premiums are based on credit scores, meaning the higher the borrower’s credit score, the lower the premium. FHA does not base its premiums on credit score, so borrowers with lower credit scores often find FHA a lower-cost option whereas borrowers with higher scores would save more money by going conventional.

5. FHA MORTGAGE INSURANCE CAN’T BE TERMINATED

One of the biggest concerns for low-down-payment borrowers relying on government mortgage insurance through FHA is that unless the borrowers put at least 10% down, they won’t be able to cancel their FHA mortgage insurance. One of the advantages private mortgage insurance offers is that it is a short-term solution. It is automatically dropped when the loan reaches 78% loan-to-value. Additionally, the borrower can request the private mortgage insurance to be cancelled once the loan reaches 80% of the original value, based on either the actual payments made, or the initial amortization schedule (for fixed rate loans) or current amortization schedule (adjustable rate loans), irrespective of the actual loan balance.

When you know as much as possible about borrowers’ low-down-payment options, you can discuss them with your Realtor and/or your Loan Officer and choose the best option.

Many first time buyers have no idea that going out and buying a car after applying for a home mortgage could end up costing them their dream home!

 

Should I use a REALTOR® to purchase a new construction home?

“YES!  We strongly recommend you use a REALTOR® to purchase a new construction home.”  These are a few reasons why:

1)  That smiling sales agent on site at a model home represents the builder and the builder only.  They are not there to “help” you, the consumer.  They are there to get the builder the most money for their home.   No matter how comfortable you are with your negotiating skills, We strongly recommend having a real estate professional represent you so they can help you through all phases of the process (i.e. contract, construction, walk-through, and closing).  Sales price is not the only number to be negotiated in a home purchase.  There are thousands of dollars worth of “fees” associated with a home purchase contract.  Do you know what they are and who is paying them?  Your REALTOR® will.  We will help you negotiate fees, upgrade options, financing terms, closing costs, and much more.

2)  Your REALTOR® will help you understand your contract and contractual obligations to ensure you do not miss out on important opportunities throughout the process such as when you may schedule construction inspections, to what point you can make changes in the construction process, etc. We will help you understand how contract clauses, riders and upgrade options affect you and make sure you understand your obligations and needs before you sign on the dotted line.

3)  A good REALTOR® knows the builders in his or her market.  We will be able to educate you on builder reputations/reviews and help you ask the right questions to ensure you are selecting a quality builder in your market.

4)  Your REALTOR® will fight for you and has far more leverage with a builder than you.  Issues OFTEN arise in construction of a new home and you may not get the answer you want if you are asking a builder to fix a concern.  However, builders need to maintain their reputations with REALTOR® because we sell their homes… over and over again… and can quickly affect their sales numbers if our clients are not satisfied.  We know building standards and how to represent you.  Would you go into a court room without a lawyer to fight for you?   Why go into the largest purchase of your life without someone to fight for you there too?

5)  Just like with pre-owned homes, a REALTOR® will ensure you are comparing apples to apples when comparing new construction homes.  There are a LOT of factors that go into building a home.  For instance, We recently helped my clients compare two homes listed at the same sales price and they thought the differences only came down to floor plan and personal preference.  Once We reviewed the builder’s standards with them, they realized one builder’s standard energy efficiency rating assured them a $100 per month electric bill savings over the other.  That is a $1,200 a YEAR savings for them year after year.  Other items to compare:  what appliances come standard (compare energy efficiency, stainless steel vs black, etc), what quality/level of flooring, what quality/level of counter tops, is an irrigation or sprinkler system included and will it cover front and back yard or just one or the other, is the home plumbed for a water softener, what is the standard size of the 2 car garage, will a fence cost extra, is the cover over the back patio standard or an upgrade for which they will pay?  The list goes on and on.

6)  Don’t fall for the sales pitch!  It is easy to get swept up in the excitement of touring a beautiful model home.  However, it is important to have a REALTOR® bring you back to reality and ensure this home really does fit your needs.  A builder’s sales representative is there to sell you on all the good points of the neighborhood but your REALTOR® will look out for your best interest when it comes to researching important points such as flood plains, property tax variances, potential for commercial construction in your “back yard,” changing school zones, resale values and much more!

7)  Your REALTOR® will save you a LOT OF TIME! Signing the contract is just the start of the process of buying a new home.  You need to compare financing options and terms, work with the title company to ensure a smooth, cost efficient, and timely closing, attend numerous inspections, and so much more throughout the construction process.  Your REALTOR® will manage that process for you and save you hours upon hours of time and headache.

8)  Many buyers think they can pay less for a home if a REALTOR® commission is not involved.  That is just not true and statistics prove the opposite to be true!  Remember, the builder needs the price of their home to be consistent (with a REALTOR® involved or not) because these homes must appraise at full value in order for buyers to get mortgages.  That commission is built into the price of the home whether a REALTOR® is involved or not.  A REALTOR® will, in fact, save you money by helping to eliminate the hidden costs with purchasing this home!

We hope this information was helpful.  If you have any questions about this process, would like us to represent you in purchasing your new home, or would like us to help you select a qualified, reputable REALTOR® for you in your new home market, please contact us @ (202) DC METRO or info@DCMetroHomes.com or fill up the form below.

Reference: Erin Cestero

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Nine Attributes of an Exceptional Real Estate Agent

So, ’cause we usually keep our promises, below are nine attributes (skills, services and masteries) of what an agent we’d be excited to hire to represent us should bring to the table:

1. Market Mastery – the agent understands the nuances of the local real estate market – at least the segment of it that affects ME! 

2. MLS Mastery – the agent is intimately familiar with the MLS and therefore makes pricing recommendations based on data that is complete, relevant and accurate.

3. Contract (and Disclosure) Mastery – the agent understands and can explain each and every provision in the contracts and disclosures I’ll be asked to sign, and ensures that I understand how each provision affects me.

4. Pricing Expertise – related to #1, the agent understands the nuances of the specific market area(s) that I’m buying or selling in, and how various features and amenities (or lack thereof) affect the market value of the properties there.

5. Photography Skills (or willingness to hire a photographer) – the agent understands the importance of having great photos online and is willing to invest the time and money to either take great photos him or herself, or hire someone to do it.

6. Basic Understanding of Home Construction, Repair and Local Architecture – while I don’t expect my agent to be a licensed contractor, I do expect them to understand basic issues of home construction and repair so they can speak intelligently to me about issues that may arise during our transaction. This knowledge will enhance their credibility with me tremendously.

7. Good Problem-Solving and Negotiating Skills – the agent doesn’t fall apart and go all drama-queen (or king) on me when the going gets a little rocky. They stay calm and focused, and tackle the problem head-on. They are skilled, confident negotiators.

8. A Great Team – the agent has a great team. If I need a referral to the best lender, inspector, handyman, house-cleaner, structural contractor, roofer or painter in town, my agent knows who that is and will set me up.

9. Great Systems in Place to Track Transactions – the agent has detailed checklists and follow-ups in place so that things don’t slip through the cracks or get forgotten when they get busy or distracted.

So, whatcha’ think? Do these sound like the characteristics of an agent you’d hire to take care of your real estate transaction? Any others you’d like to add… or any of these you don’t think belong on the list?

Planning a Pool Party this Summer? Check out these Tips First!

Who doesn’t love a good summer pool party? Family and friends cooling off from the summer heat by the pool is good fun for all! If you are planning a pool party this summer, be sure to check out these tips:

1. Food:

A 7-Course meal is great for small gatherings, but isn’t reasonable for a poolside event. Stick with easy foods like hamburgers, hot dogs, ribs or other finger foods. 

 

2. Safety:

If there will be children or pets at your gathering, make sure everyone understands the pool rules for safety. And remember, children should always be supervised by an adult around water. 

 

3. Clean Up:

Stick with disposable plates, cups and silverware for your shindig. Place garbage cans or bags in easily accessible areas so your guests can take care of their own dishes. You will be glad you did once everyone leaves and you don’t have to take care of loads of dishes.

 

Enjoy the rest of the summer

Top 3 Reasons Buyers and Sellers Should Ignore Some Online Info

 

As a consumer, especially a real estate buyer or seller, you’re empowered with massive amounts of information online.  You have access to thousands of articles, MRIS data, and Q&A from “experts” all around the country.  All that information makes you feel empowered and informed.  Guess what?  You’re not.

Much of the information you read online falls into three categories; platitudes, regional articles, and falsehoods.  The problem is that as a consumer you don’t know how all that compares to the information that is, in fact, real and useful.  How do you tell one “expert” from another?  Good question but here are a few reasons to ignore a good part of what you read online.

#1 PLATITUDES – GENERIC ADVICE WHICH DOESN’T GO INTO ENOUGH DETAIL TO BE USEFUL

You see these all the time on the major consumer websites.  They look good with great fonts and well organized to look like useful information.  Unfortunately they leave out a lot of detail because they’re written for home buyers in all 50 states.  The result is an article which gives you enough information to be dangerous.  Instead of platitudes, talk to a local agent you can trust.  They’re far more likely to give you accurate insight into local rules, regulations, laws, customs, and the market than some generic article.

#2 REGIONAL ARTICLES – INFORMATION ABOUT A LARGE REGION THAT GIVE FALSE IMPRESSIONS OF THE LOCAL MARKETS

This is REALLY dangerous because it seems like such a credible source.  For example, you might read an article in the Washington Post are real estate sales in Washington, DC.  They say the market is up, slightly, and tough to find a home in. That’s true, but totally misses how intense the Ashburn, VA market is or Clarksburg, MD market is – which is far more competitive than Washington, DC.  As a consumer, you think you’ve got the inside scoop on the market – without talking to a REALTOR^® – when in fact you’ve been duped by a generality.  Talk to an agent who works in that market and you’ll get the REAL story.

#3 FALSEHOODS – Articles written by people who know less than you do

Reporters are hired to write on all sorts of things in this industry from lending practices to buyer strategy.  Now, in all fairness, they do their research to find out what is correct and accurate.  However, they also tend to write for a wide audience.  So, you’ll read an article online from a writer in Texas that talks to real estate issues and dynamics that do not apply in…say…California.  They’ll quote laws and rules that are completely false…for where you are.  It’s not intentionally misleading, but it is. 

BOTTOM LINE:  If you need good, relevant advice, talk to us. If you’re not in DC, MD or VA, we’ll find you the best REALTOR^® serving your area, who knows the laws and market dynamics for the specific areas you’re living or looking in.

http://www.DCMetroHomes.com                                                (202) DC METRO

Difference Between Expert Advice and Perfect Advice

Remember:

• · An expert doesn’t mean you’re going to give perfect advice.
• · An expert means you’re going to give excellent advice.

Here’s the difference:

If you go to a doctor with a serious illness, she can’t tell you how it’s all going to wind up in the end. She can’t know for sure. Therefore, she can’t offer perfect advice.

However, your doctor can only give you excellent advice. She can tell you about your illness and your options, whether it be surgery or medications. She can also explain what she believes to be the best option for you based on your history, symptoms, and overall health. Ultimately, though, you’re going to make the final decision of whether you go through with the treatment plan.

Once you make that decision, your doctor will take you by the hand and walk you down the road to recovery. She will explain to you that there might be adjustments that need to be made to the treatment plan, because no one can know for certain how things will turn out.

She might have to adjust your medications or increase or decrease your treatment schedule. But every step of the way, she’s there with you, helping you get to your ultimate goal. This is called excellent advice. (By the way, does this sound like what we do with our clients?)

Similarly, if you went to an attorney, he can’t tell you how the case is going to end up or how the judge or jury will rule. That would be perfect advice. What an expert attorney can do is explain your options. He might pick one or two he believes to be the best ones to pursue. He will then leave you to make the decision on which option you want to take. Once you decide, he will help put a plan together based on the facts at hand. He will help you get to the best possible resolution of the case. And along the way, he’ll make whatever changes are needed. This is excellent advice. (Again, does it sound similar to how we help our clients?)

Our role as a real estate professionals is similar to the role of the doctor and lawyer. We can’t give buyers or sellers perfect advice because we don’t know what’s going to happen— we can’t know the future. However, we can give excellent advice based on the information and situation at hand. We can guide you through the process and help you make the necessary changes along the way. And that’s exactly what you want…and deserve!

3 Reasons to Sell Your House Today! (Part III)

Part III – New Construction Will Soon Be Your Competition

Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. As an example, the National Association of Realtors revealed, relative to last year, year-to-date new home sales are up 19%.

These ‘shiny’ new homes will again become competition as they can be an attractive alternative to many of today’s home purchasers.

Here are the numbers regarding new construction about to come to market from theCensus Bureau:

BUILDING PERMITS

• Single-family authorizations in February were at a rate of 600,000.
• This is 25.5% above February 2012.

HOUSING UNDER CONSTRUCTION

• Single-family housing starts in February were at a rate of 618,000.
• This is 18.5% above February 2012.

HOUSING COMPLETIONS

• Single-family housing completions in February were at a rate of 574,000.
• This is 32.9% above February 2012.

As we mentioned, new construction can be strong competition to a seller of an existing home. It may make sense to list your home before this new inventory makes its way to market.