ILM Realty Blog

Buy Low, Sell High

ILM Realty — Mon, 22 Dec 2008 22:03:02 -0600

Remember the basic fundamental rule that we all learned about investing? Buy low, sell high. Was the rule, "buy at the lowest point, and sell at the highest"? No. Why not, because market timing is pretty darn near impossible. The only was people time the market right is via luck, a crystal ball, or lots of praying. Anyone can time it right once in a while. (Like the saying that even a broken clock is right twice a day). If you get caught up in always trying to time things perfectly, you will never reach your potential because you will be out more often than in.

All that said, everything I am seeing these days tells me now is the time to buy real estate as an investment. I have owned investment real estate since 2001. Not since 2001 have I seen such alignment between rents and prices. with the recent drops in interest rates, all of those infomercials are starting to sound good (where did they all go, anyways?)

Evaluating real estate investments is not for everyone. Sure, you can read a book and learn the fundamentals. It takes experience and expertise to know what you are looking for. My recommendation is to use a professional. Do not try this at home, kids. Seek advice. If you do not have a rich dad to coach you, a REALTOR is a good place to start!

Ok. Now it's bottom feeder time.

ILM Realty — Tue, 11 Nov 2008 22:10:34 -0600

Over the 5 years from 2001 - 2006, did you ask yourself, "if only I bought this properties back then... they were so cheap!" I do not know if any of us has a crystal ball anymore, but I believe we are nearing a bottom. The amount of land we has is constant and more people are moving into the US than leaving it. The supply-demand principal states that if there is a limited supply with an increasing demand, the value of the asset tends to rise. In 2020, you will be hearing people same, "I should have bought this properties when..." It's time to get off the fence and buy. Be a bottom feeder and grab the low hanging fruit. The only real estate I have owned in the last 2 years is my primary residence. That was until this week. I'm back in the game, baby! There are great opportunities waiting for people with some wherewithal to come along and start shaking up the system.

Buy foreclosures. Bring your firneds to the table. Has anyone looked at the numbers on multi families lately? They are starting to work again. Let's get back in the game!

Home Improvement ROI

ILM Realty — Mon, 01 Sep 2008 17:05:05 -0500

I'm not sure who's seen it, but there is a good report out there from Remodeling Magazine which shows the 2007 average ROI on projects. I'm curious, with all of the changes in the market and home prices this year, how is anyone going to calculate something like this?

Nationwide, a wood deck offered the best ROI in 2007, while a home office remodel was deamed the lowest. For 2007, none of the projects they listed had an ROI over 100%. That coincides with the concept that a home is not an investment - it's a place to live. Investment real estate is a whole different game.

People do not build a deck for a return on investment, but many sure do factor the return into the equation. If I spent $10,000 building a deck which offers an 85% ROI, it really only cost me $1,500. When I look at it that way, it sure is worth it to put the deck on the house!

I have a summary of the 2007 survey available on my website, as well as a link to further information.

http://www.ilmct.com/home-improvement-roi.asp

Thank you, RealtyTrac

ILM Realty — Fri, 13 Jun 2008 07:12:23 -0500

The foreclosure situation continues to loom. RealtyTrac has published its latest numbers, adding to the doom and gloom which is hanging over the real estate industry. The media makes it hard to get us out of things. If we want to change things, we need to start thinking they are changing. That's hard to do when we are constantly being pumelled.

Here is some of what RealtyTrac said...

1 in 483 homes nationwide has receive a foreclosure notice in the month of May
This is up 48% over May, 2007
This is up 7% over April, 2008
74,000 properties where foreclosed on by lenders in May
Another 58,000 received default notices

Of course, it's not RealtyTrac's fault that the number slook like this. These guys do a nice job of presenting the facts. I'm sure, at the same time, there is something positive to find in the data. It would be nice to hear about that, too. Thjere are markets where things are still groing. There are markets that are beating the national averages. Where is all of this positive stuff?

Here are a few things to be positive about

Now is a good time to buy, deals are out there waiting to be made
There are more choices now than anytime in the past several years
Banks are still writing mortgages

So, if you are thinking about buying a home, now is a good time. You'll be there for the long-haul and there is much more upside ptential for real estate in the long run.

Cheers

Greater Hartford Inventory

ILM Realty — Wed, 11 Jun 2008 21:49:51 -0500

Here are a few facts just published about housing in the greater Hartford, CT area. These facts have been published by GHAR (Greater Hartford Association of REALTORS)

Year-over-year house inventory has gone up by 7%.
Year-over-year housing prices dropped 3.53% from $255,000 to $246,000
Year-over-year shows a drop in pending sales for the month of May while the averages days-on-market has gone from 63 to 67 (up 6%)

On the more positive side...

May pending sales are up compared to April by 6%.
Closed sales are up 17%
With the inventory levels up and rates still low, it's still a great buying opportunity

Got HUD?

ILM Realty — Fri, 16 May 2008 20:52:44 -0500

In times like these, many people want to understand things like foreclosures and short sales. Here is some information to help people understand more about HUD homes

What is HUD?

HUD stands for Housing and Urban Development. The mission of HUD is to "promote adequate and affordable housing, economic opportunity, and a suitable living environment free from discrimination" (http://www.hud.gov/offices/adm/about/admguide/history.cfm)

What is a HUD home?

Basically, it is a home that is owned by HUD. The real question is, how does HUD end up owning a home? It all starts with FHA. Within HUD, you will find the FHA (Federal Housing Administration). The FHA insures loans. They provide a financial guarantee to a lender. If a lender needs to foreclose on a property, they have the option to deed the property over to HUD in exchange for a claim payment. This is how a property becomes owned by HUD.

How do I buy a HUD home?

You need to work with a HUD broker. You can see listings in local MLS databases and through a local HUD website. In the end, you need to work with a HUD broker to submit your bid.

I hope this is helpful.

Home inspection top 10 list

ILM Realty — Tue, 29 Apr 2008 22:31:51 -0500

Here's a quick reference guide for top 10 things you want to make sure your home inspector covers for you.

On/off switches for furnaces, air conditioners, etc.
Pilot light on hot waer heaters, overs, furnaces, etc.
Electric panel - Fuses or Circuit Breakers?
Main water shut-off controls
Foundation
Floors, walls and partitions
Roof
Windows & doors
Septic tanks, wells and/or sewer lines
Heatings ventilation and air conditioning systems

And as a special added bonus - if you are buying a condo, don't forget to take a peak at the common areas

I hope this is helpful to anyone with limited experience in buying a home.

Quick home buying tips

ILM Realty — Mon, 28 Apr 2008 22:48:59 -0500

Here's a few quick tips when deciding on evaluation criteria for your next home...

How well are other homes in the area maintained?
Look around the community - are there signs of others doing things that you like to do?
Look for signs of children - whether you want them or not, it's good to see what's going on.
Look at shopping, recreation and transportation. Are you able to easily access the things you want and need?
Try to avoid falling in love with the first house - use it as a baseline. Always look at 3 of anything before making a decision.

Hope these tips can help. There's plenty of more where that came from!

How mortgage shopping affects your credit score

ILM Realty — Wed, 23 Apr 2008 23:02:49 -0500

The short answer is that it doesn't affect it too much. When looking for a mortgage or auto loan, credit score treats all inquiries made in any 14 day period as a single query.

Another point worth noting is that credit scores do not factor in inquiries for these types of loans if they have been made within 30 days of the credit score calculation. Therefore, if you find your mortgage or auto loan within 30 days, your credit scores which the lender uses to review your application will not be affected at all.

Hope this helps!

What a great buying opportunity!

ILM Realty — Wed, 23 Apr 2008 22:38:37 -0500

I have been talking to eveyone I know about why now is a great time to buy real estate. It's simple...

There's a ton of options out there as inventories sit and wait to be sold
Sellers are more flexible
Interest rates on mortgages are still really low.
Prices have softened. Are we at the bottom yet? Maybe. Maybe not. Either way, we're definitely not near the top. Buy low, sell high. That's what investors do, and so should you!

Now is an excellent opportunity to buy. If you felt like you missed out on something over the previous years, you did! Don't make the mistake and miss out again. Get in the water BEFORE the wave comes if you wanna good ride!

Unused Home Equity Lines of Credit Being Cut

ILM Realty — Mon, 14 Apr 2008 22:25:32 -0500

Today there was an AP article which mentioned that banks are starting to cut unused HELOCs. While mostly centered around Wachovia's recent announcement to cut HELOCs, the article mentioned the following banks:

Washington Mutual
Countrywide Financial
Indymac Bancorp
Bank of America
SunTrust Banks

It is estimated that the total sum of outstanding credit line exceeds $1 Trillion in the US. Banks are begining to reduce lines to help reduce thier exposure, with Washington Mutual having the most exposure (over 100 billion between used and unused HELOC loans).

What does this mean? If you still have some unused line and you may be planning to draw, you should consider making you decision sooner rather than later. This especially applies to HELOCs with the banks listed above.

Home Improvemnt & Remodeling ROI

ILM Realty — Tue, 08 Apr 2008 00:13:44 -0500

The other day I did a blog on ROI for home projects. Pacita Dimacali http://activerain.com/pacita pointed me towards more up-to-date information. Here's a summary of what I found for New England and the National Average.

If you are planning a project to help sell your home, you may want to consider the following statistics. This data is for the year of 2007. As you can see, there are no projects over 100%. That said, these are statistical averages based at a time where we have had downward market trends in the resale values of homes. Each individual situation may be different and these facts are not meant to encourage or discourage your project.

2007 Averages	New England			National Average
Project Midrange	Job Cost	Resale Value	Cost Recouped	Job Cost	Resale Value	Cost Recouped
Attic Bedroom Remodel	$48,982	$37,584	76.7%	$46,691	$35,771	76.6%
Back-Up Power Generator	$13,759	$7,317	53.2%	$13,357	$7,748	58.0%
Basement Remodel	$61,673	$40,544	65.7%	$59,435	$44,661	75.1%
Bathroom Addition	$38,617	$25,437	65.9%	$37,202	$24,553	66.0%
Bathroom Remodel	$16,302	$12,197	74.8%	$15,789	$12,366	78.3%
Deck Addition - Wood	$10,634	$8,977	84.4%	$10,347	$8,835	85.4%
Family Room Addition	$81,931	$54,713	66.8%	$78,989	$54,148	68.6%
Garage Addition	$55,598	$37,067	66.7%	$53,897	$37,461	69.5%
Home Office Remodel	$27,630	$15,398	55.7%	$27,193	$15,498	57.0%
Major Kitchen Remodel	$56,438	$43,848	77.7%	$55,503	$43,363	78.1%
Master Suite Addition	$102,741	$70,175	68.3%	$98,863	$68,172	69.0%
Minor Kitchen Remodel	$21,516	$18,507	86.0%	$21,185	$17,576	83.0%
Roofing Replacement	$20,307	$14,065	69.3%	$18,042	$12,166	67.4%
Siding Replacement	$9,990	$9,156	91.7%	$9,910	$8,245	83.2%
Sunroom Addition	$71,064	$41,289	58.1%	$69,817	$41,231	59.1%
Two-Story Addition	$143,298	$105,475	73.6%	$139,297	$103,010	73.9%
Window Replacement - Vinyl	$10,702	$8,698	81.3%	$10,448	$8,290	79.3%
Window Replacement - Wood	$11,697	$9,514	81.3%	$11,384	$9,241	81.2%

Why You May Want To Stop Making Extra Mortgage Payments

ILM Realty — Mon, 07 Apr 2008 20:24:05 -0500

I have had a lot of discussion with people on the subject of making extra mortgage payments. I have my own opinion (let's just agree to call it that.) I have gained this opinion through education and experience. In the end, I feel that making extra mortgage payments is a mistake. Here's why.

When is your home safe?

Following the philosophy I have developed, the answer is when it is in one of two states of existence:

-Paid in full

-Mortgaged to the max

If your house is paid in full, about the only entity that can possible take it away from you is the town if you do not pay your property taxes. Therefore, your house is safe when it is paid off. Most people get this right away and say, "That's why I want to pay extra towards it and pay it off sooner."

Why would mortgaged to the max be the other one? That doesn't seem to make a lot of sense, and it's one of the things that people struggle with. There's a plain and simple way to explain this. If something happened to you and you became unable to continue your mortgage payments, what would happen? Foreclosure. How much equity is left after a foreclosure? The banks concerns stop at what you owe them. If you only owe $100,000 on your $300,000 house, you're leaving $200,000 at risk.

Liquidity

When opportunity knocks, will you be ready? How fast can you take the money out of your home? The last time I tried, it took about 30 days. But wait, what if I had a bad year last year and my income could not support it? Oh yeah, I'd be out of luck.

This kind of goes hand-in-hand with the keeping your house mortgaged to the max concept. If something happened to you, at least you'd have access to the cash you need. If you had kept your money in a 401k (for example), you can get your money out of your 401k no matter what your personal circumstance. What about the 10% penalty? You only pay penalty on the amount you withdraw. Using the $300,000 home example from before, what if you had to refinance your entire mortgage just to take out $50,000? Add up the closing costs and the points and you're probably pretty close to even to the 10% penalty on your 401k withdrawal.

Accounting 101

Have you ever seen this formula?

Assets = Liabilities + Equity

Another way of putting this is:

Equity = Assets - Liabilities

Which of the two situations below would you rather have?

Stay Conservative			Invest The Money
Assets			Assets
Home	$ 300,000		Home	$ 300,000
401k	$ -		401k	$ 140,000
Total Assets	$ 300,000		Total Assets	$ 440,000

Liabilities			Liabilities
Mortgage		$ 100,000	Mortgage		$ 240,000
Car Loan		$ 10,000	Car Loan		$ 10,000
Total Liabilities		$ 110,000	Total Liabilities		$ 250,000

Total Equity		$ 190,000	Total Equity		$ 190,000

You see, they both have the same net worth. One has better liquidity and manages more assets, while the other is more conservative. This is why I said at the beginning that it was my opinion. It's up to each of us as individuals to know what our threshold for risk is.

Arbitrage

Now let's talk about arbitrage. Simply put, arbitrage occurs when someone acquires something at one value and resells it at another. Let's continue with the earlier example. Here we have 2 people, starting today in the same place. They both have homes worth $300,000 and take out 20 year mortgages at 6.5% for $100,000 on the same day.

Scenario 1: Standard 20 Year Amortization

In this scenario, the first person (let's call him Bob) decides he does not want the risk of investing and stress of a mortgage. He pays his mortgage over 20 years exactly s required.

Bob starts with $200,000 in equity. Each year, he pays a little less interest and a little more towards principal. On his interest, he gets a write-off, so we indicate his tax credits, too. Notice how his net worth grows as he pays off his mortgage. It's working well for him.

Year	Interest	Tax Credit	Principal	Balance	Net Worth
1	$6,425.77	$1,606.44	$2,521.11	$97,478.89	$202,521.11
2	$6,256.93	$1,564.23	$2,689.95	$94,788.94	$205,211.06
3	$6,076.78	$1,519.20	$2,870.10	$91,918.84	$208,081.16
4	$5,884.56	$1,471.14	$3,062.32	$88,856.53	$211,143.47
5	$5,679.47	$1,419.87	$3,267.41	$85,589.12	$214,410.88
6	$5,460.65	$1,365.16	$3,486.23	$82,102.89	$217,897.11
7	$5,227.17	$1,306.79	$3,719.71	$78,383.18	$221,616.82
8	$4,978.05	$1,244.51	$3,968.82	$74,414.36	$225,585.64
9	$4,712.25	$1,178.06	$4,234.62	$70,179.73	$229,820.27
10	$4,428.65	$1,107.16	$4,518.23	$65,661.51	$234,338.49
11	$4,126.06	$1,031.52	$4,820.82	$60,840.69	$239,159.31
12	$3,803.20	$950.80	$5,143.68	$55,697.01	$244,302.99
13	$3,458.72	$864.68	$5,488.16	$50,208.85	$249,791.15
14	$3,091.17	$772.79	$5,855.71	$44,353.14	$255,646.86
15	$2,699.00	$674.75	$6,247.88	$38,105.26	$261,894.74
16	$2,280.57	$570.14	$6,666.31	$31,438.95	$268,561.05
17	$1,834.11	$458.53	$7,112.77	$24,326.18	$275,673.82
18	$1,357.76	$339.44	$7,589.12	$16,737.06	$283,262.94
19	$849.50	$212.38	$8,097.38	$8,639.68	$291,360.32
20	$307.20	$76.80	$8,639.68	$0.00	$300,000.00
	$78,937.57	$19,734.39

Scenario 2: Interest only loan investing instead of principal payments for 20 years

Jamie also bought her house for the same price at the same time. She also started with $200,000 in equity. Instead of paying towards principal, she invests in a tax-deferred vehicle which has a rate of return EQUAL TO the cost of borrowing from her mortgage (6.5% in this example). Her arbitrage only comes from the fact that the investment is tax defered and the interest expense is a tax write-off. In the chart below, there are 2 additional columns: Invested and Value. Since Jamie is not making principal payments, those amounts which would have been principal are instead invested. Invested shows the amount invested each year and Value shows the value of the investment account, assuming 6.5% annual ROI.

Year	Interest	Tax Credit	Principal	Balance	Invested	Value	Net Worth
1	$6,500.00	$1,625.00	$0.00	$100,000.00	$2,521.11	$2,521.11	$202,521.11
2	$6,500.00	$1,625.00	$0.00	$100,000.00	$2,689.95	$5,549.78	$205,549.78
3	$6,500.00	$1,625.00	$0.00	$100,000.00	$2,870.10	$8,967.17	$208,967.17
4	$6,500.00	$1,625.00	$0.00	$100,000.00	$3,062.32	$12,811.41	$212,811.41
5	$6,500.00	$1,625.00	$0.00	$100,000.00	$3,267.41	$17,123.94	$217,123.94
6	$6,500.00	$1,625.00	$0.00	$100,000.00	$3,486.23	$21,949.83	$221,949.83
7	$6,500.00	$1,625.00	$0.00	$100,000.00	$3,719.71	$27,338.06	$227,338.06
8	$6,500.00	$1,625.00	$0.00	$100,000.00	$3,968.82	$33,341.83	$233,341.83
9	$6,500.00	$1,625.00	$0.00	$100,000.00	$4,234.62	$40,018.92	$240,018.92
10	$6,500.00	$1,625.00	$0.00	$100,000.00	$4,518.23	$47,432.06	$247,432.06
11	$6,500.00	$1,625.00	$0.00	$100,000.00	$4,820.82	$55,649.32	$255,649.32
12	$6,500.00	$1,625.00	$0.00	$100,000.00	$5,143.68	$64,744.55	$264,744.55
13	$6,500.00	$1,625.00	$0.00	$100,000.00	$5,488.16	$74,797.83	$274,797.83
14	$6,500.00	$1,625.00	$0.00	$100,000.00	$5,855.71	$85,896.02	$285,896.02
15	$6,500.00	$1,625.00	$0.00	$100,000.00	$6,247.88	$98,133.26	$298,133.26
16	$6,500.00	$1,625.00	$0.00	$100,000.00	$6,666.31	$111,611.54	$311,611.54
17	$6,500.00	$1,625.00	$0.00	$100,000.00	$7,112.77	$126,441.39	$326,441.39
18	$6,500.00	$1,625.00	$0.00	$100,000.00	$7,589.12	$142,742.49	$342,742.49
19	$6,500.00	$1,625.00	$0.00	$100,000.00	$8,097.38	$160,644.46	$360,644.46
20	$6,500.00	$1,625.00	$0.00	$100,000.00	$8,639.68	$180,287.61	$380,287.61
	$130,000.00	$32,500.00

Growing Wealth

In the end story looks like this.

Conservative Approach			Investment Approach
Costs			Costs
Principal	$100,000.00		Investments	$ 100,000.00
Interest	$78,937.57		Interest	$ 130,000.00
Tax Credits		$19,734.39	Tax Credits		$32,500.00
Total Costs	$159,203.18		Total Costs	$197,500.00

Assets			Assets
Home Equity		$ 300,000.00	Home Equity		$ 200,000.00
Investments		$ -	Investments		$180,287.61
Total Net Worth		$ 300,000.00	Total Net Worth		$ 380,287.61

Realized Gain		$ 140,796.82	Realized Gain		$ 182,787.61

As you can see, Jamie was able to outpace Bob by almost $42,000 (nearly 30%). Guess what? Even after the 20 years are over, Jamie’s money is still growing. Why? Because she invested it long term.

Being Real

There are many different scenarios. Of course, this did not include ups and downs in the market value of Bob and Jamie's home. These scenarios were really meant to show that if you had the same thing going on with your home, how the 2 different approaches would yield you different results.

Another variable is the fact that this is based on 20 years. If you go out 30, it's even more apparent. Then there's the fact that the investment growth rate is equal to the lending rate on the mortgage. If you get that 8% return your financial advisor is always telling you about, then you'll have an even wider spread. You can slice this many, many different ways.

To be successful at this type of plan requires good money management skills. Most people do not save money very well. If you are of the type of person to fret over how much money you owe, or lack the self discipline to know how to control your spending, then pay your mortgage first. If you can learn how to take control of these issues, you can grow your wealth more quickly. You now have the information. The decision is yours.

Cheers

Stacey Brown is a real estate broker, not a financial advisor. The information in this article is informational only. Any risks you take will be based on your own decisions. Stacey Brown & ILM Realty, LLC will not be held responsible for any gains or losses you may incur.

Congress approves a $7,000 tax credit for purchasers of foreclosed homes

ILM Realty — Thu, 03 Apr 2008 20:21:06 -0500

Well, today was the day. Senate passed the bill that gives buyers of foreclosed homes a $7,000 tax break. That's $7,000 in the buyer's pocket. It's not a write off, it's a tax credit. This is some good news for people who want to buy foreclosures.

Also in the bill are tax credits for builders and others in the housing business. There was a lot of controversy over this part of the bill. I am not an expert on the matter, but it seems as though there are some good macro-economic reasons why this was a good idea. Many of the people who were not in favor seemed to think "Why would we give credit to homebuilders? They are amongst the guilty parties who got us into this mess."

Also in the bill are funds intended to help subprime homeowners tyrying refinance to get out from underneath bad mortages via subsidies.

The bill now must be reconciled with version passed by the House and sent to the President for approval. It's not a law yet, though I read that it was well recieved, but there are a few concerns.

There are several other intended benefits of the bill. More additional information can be found at:

http://money.cnn.com/2008/04/02/news/economy/housing_bipartisan_draft/?postversion=2008040320

http://ap.google.com/article/ALeqM5ieJmw1-0gEEsao_k35ZuHRRmj1FQD8VQFIJ00

http://abcnews.go.com/Business/Economy/story?id=4583317&page=1

The Subprime Mortgage Rap

ILM Realty — Mon, 31 Mar 2008 23:19:40 -0500

I recently saw a post from Janet Guilbault in Walnut Creek, CA. She was talking about McMortgages. I left a comment to her blog about the McDonald's Rap. This is a video my 12 year old son found on youtube. It's actually kinda funny. As I wrote my comments, a rap song came to me, so I thought to post it for all bloggers.

The Subprime Mortgage Rap

Gimme a jumbo, I need a really large numbo,

No money down fo' my new home in town.

Wrap in da closing costs, no need to call my boss.

A 6 month arm is no need for alarm,

'cause I ain't gonna pay past next Saturday!

If you want, please add your own verse in your comments! Come on, I know you really want to!

Rental Market - On The Way Up?

ILM Realty — Sun, 30 Mar 2008 22:36:22 -0500

With all of the talk about foreclosures, (sorry about using the "F" word!) I can't help but wonder one thing... Where are all of the people going to live?

I have owned multi family homes in different parts of CT. I sold my last property in 2006, as it was getting really tough to find good tenants and the property valuations were still pretty high. I'm in the process of looking again for my own investments. I think the multi-family market is back to making some business sense again.

With prices down, interest rates down, and people back to the rental market, I would like to point out that numbers are looking better. There are a lot of things I look at when deciding on a property. I'll save some of those for a future blog. I'll say this much for now, buying a multi-family property as an investment should be approached with cut-and-dry financial analysis. There should be no "falling in love" with the property. When emotion takes over, people tend to overlook the important stuff.

Love is blind. Investing in real estate requires 20-20 vision.

Love At First Sight

ILM Realty — Sun, 30 Mar 2008 21:17:17 -0500

When searching for a home, sometimes it happens to people that they fall in love with the first house they see. In some circumstances, that house IS the best house to fit their needs. In many cases, it's just a moment of euphoria. How do you know they difference?

The best thing to do is to have some idea of what you;re looking for before you go out there. Talk to a real estate agent. As a broker, I feel it is important to help people realize what they need as well as what they want. Some people make a checklist. Checklists aren't bad, they're just an indication of an organized person.

Here's a few things to think about:

Is it within my budget?
Is there enough privacy for me and my family?
Will this home resell well?
Do I find the noise levels respectable? (Is there a firehouse near by for example?)
Watch out for being too close to schools. While it's nice for the kids, you need to think about how the traffic in and out of the school may affect your ability to get in and out of your own driveway if it's too close.
What are the traffic patterns like? Will I be stuck in traffic to and from work each day?
Look around at the neighbors - would you buy their house?

Everyone starts with thinking about how many bedrooms and baths, garage, yard, etc. Remember, when you buy a home, you need to live with a lot more stuff on a day to day basis. I hope this info helps.

Another day, another $3.20 per gallon

ILM Realty — Sun, 30 Mar 2008 19:55:44 -0500

When I first saw this picture, I thought it was hilarious. In an instant, you know by looking at the gauge that as you fill up your tank, you empty your wallet. This was emailed to me from a friend. I must say, it is pretty creative, whomever thought of it.

Walking Uphill In The Snow Both Ways
Then the next day, I took my Hyundai to the gas station. It took $54 in regular unleaded. I've had the car for a few years now, but I remember when I bought it, it only took $18 from dead empty. I can remember pulling into gas stations where the gas was more "expensive" and it took $20. I would think, "Wow! My car took $20!" This is starting to sound like one of those old people stories... "In my day, we had to walk uphill in the snow to school, both ways." The thing is that it wasn't that long ago. My youngest is only 6 and she was born when gas was under $1.50 a gallon.

(My grandpa - walking uphill both ways in the snow)

What does any of this have to do with real estate? Other than the fact that people in the business are spending more than double taking clients around? The gas prices are a good example of just how much things have changed around us in such a short period of time. I went to India last December. I have a friend from India who told me he bought a lot in 2000 for $2000, and it's now worth more than $100,000. Based on what I saw when I was there, I can truly believe it. The developing nations are getting wealthy incredibly fast.

Our country's economic growth has always been based largely on the fact that our population grows. It's certainly not due to our exports, as we run huge trade deficits. Our government does a good job overall of keeping us stable, making our assets very attractive to the global investment community. Owning real estate in our country is also secure.
Copy and Paste
Hey, wait a minute. What happens if the rest of the world decides to copy and paste our operating model? You know, the one that's based on capitalism? It could mean opportunities for Americans to invest abroad. I have been looking at these types of opportunities myself. It could also mean all of that money controlled by the international investor crowd will find its way to other areas outside of our country.

Is There A Point Here?
Yes. The point is this. Have you ever met with a "financial advisor" and had him/her show you those charts that picture how the stock market has performed very well since the WWII? Guess what, it takes money coming into a market to drive up the valuations. If the international community finds new places for their money, the future growth potential of the stock market is very limited. So, where can I invest?

Come on, take a guess? Any thoughts? How about real estate? (Did you know I was going to say that?) My first blog about real estate was called Real Estate - The Fundamental Asset of Earth. As long as our population continues to grow (and it will as long as we continue to maintain a good quality of life for our citizens and flexible immigration laws), our real estate values will continue to rise. Buy now, while prices are down, rates are down and the numbers are actually making some sense again. Thanks for listening.

Home buying - for dummies

ILM Realty — Wed, 26 Mar 2008 23:20:13 -0500

I hear first time buyers asking, "How do you buy a home? I thought it may be a good idea to blog about it in hopes that others may add their opinion, giving readers the ultimate insight about buying a home. Please read, and then comment.

Buying costs money

In order to buy a home, you will need the money needed to purchase it. While there may be many reasons to motivate someone to purchase a home, first time or as a repeat, there is one thing for sure; if you do not know how much money you can spend, you may be wasting a lot of time. There's an easy way to remedy this. The best thing to do is to get pre-approved for a mortgage. This will allow you to browse homes with more confidence.

Be careful of the trap. There's a usually a difference between what you will feel comfortable to spend and what a lender may be willing to give you. You need to make the decision based on the lifestyle you want to live, not based on what the bank says you can afford. Many people, especially new home buyers, find themselves living for their house for a few years. This is somewhat normal, but be careful. It's good to stretch a bit when buying a home, but do not over do it. Be sure to think about how you will pay the mortgage, put gas in your car, keep the home heated, with lights on, then there's your Blackberry bill and your new car payment. Did I mention that your new home will likely need work to improve and/or maintain it? Just be sure to really think of all the facts.

Poke around online

There are many great sites for home buying. The biggest problem is trying to get through them. You can go page after page of search results, especially in this buyer's market. The idea is not to fall in love with your dream house online, but to stimulate some thoughts about what it is you may be looking for. Think of the following basics:

What city or neighborhood do you want to be in?
What is your price range?
How many bedrooms do you want versus how many do you really need?
Is a garage important?
How many baths and showers do you need?

Find a good agent

Many first time home buyers would benefit from a real estate agent. It's hard to figure out what you want, and a good agent will help you to understand the options. How do you know if an agent is a good agent? Well, if you talk to the person and feel comfortable, that's a great indication. There are some top producers that I wouldn't recommend my worst buyers to, while there are part timers I'd send my own mother to. How many transactions is not a good indication of how good of an agent he/she is. Make sure the agent makes you feel comfortable and can answer your questions and concerns to your satisfaction. If they cannot do that in a basic meeting, getting through a closing will be tough!

Sign a buyer agent agreement

This does a few things. To name a couple, first it protects you, the buyer. It puts the agent on the hook to treat you with care, obedience, loyalty and provide full disclosure to you. Once you do this, the agent works for you. That's right, you're the boss! The other thing it does is provide the agent with piece of mind that he/she is not working for free. The contract is how the agent gets paid. While it is nice to get things for free, you should not expect that an agent work for free. If you do this, the recommendation is to sign for short periods of time. I would say 30 days, tops. If an agent cannot find you a home in 30 days, either you are not serious enough, at which point you should let the agent go, or he/she is not really trying to work for you, in which case you should find a new agent as soon as possible. If you think you will need more than 30 days to find a home, letting the agent know helps him/her understand up front what they are in for. If you are new, you may not have any idea how long it takes. I still stand by my 30 day philosophy.

Don't be too freaked out by a buyer agreement. If you do not understand it, ask the agent to explain it. Also, be sure the agreement clearly states how the agent will be paid. Most agents will accept the commission offered by the selling agent as their pay, but you want to read it in the agreement.

Look at houses

Once you know how much house you can afford and you find an agent you like, start looking. You will know the house when you see it. The love factor will strike. It's kind of like the first date where you fall in love with someone. If you have to keep telling yourself why you like the house, then it's probably not for you. Be sure to give your agent honest feedback. This does 2 things; it allows the agent to avoid wasting time in the future for both of you and second, it allows the agent to tell the selling agent what may need to be addressed in the house. This does nothing for you, but it is a professional courtousy.

Put in an offer

Once you find a house you like, it's time to negotiate. This is where having a good agent is very helpful. If you are able to see eye-to-eye with your agent and have built a trusting relationship, you will feel that he/she is really taking good care of you. If you do not have trust in your agent, you will be thinking you are getting ripped off the whole time. Here are a few key things that go into an offer:

The deposit offer
The offer price
The down payment
The home inspection date
The mortgage contingency terms
The closing date

Let me explain the first 3 things. The deposit is the amount of money offered to the seller to accept the contract. It is also the amount that is not refundable in you do not live up to your end of the sales agreement. Of course, you can always ask for it back, and if you were working with good people, they would usually give it back. The offer price is how much money you are offering the seller. I will not get into how to do detailed negotiating, as that is what the agent is there for! The 3rd piece, the down payment, is how much money you will need to pay at the closing based on this simple formula: purchase price - deposit - mortgage amount. Of course, there will be closing costs on top of this, but those are not a part of an offer, typically.

The home inspection date is the date which all inspections should be done by. This gives you, the buyer, the chance to have a professional look at the home and determine what issues, if any, exist with the home. Some home buyers, especially new ones, get freaked out by the reports. Understand that there is no home, not even a brand new one, that a good home inspector will not find something wrong about. That's right, houses aren't perfect. Be prepared for some issues. You agent can help you identify the best way to deal with the issues.

The mortgage contingency terms typically include the mortgage amount, interest rate, type of loan and a date by which you should be able to get financing. This part should be easy, as you should have discovered most of this at the time you were getting preapproved for your mortgage. Make sure you speak to your mortgage specialist about what the best answers are to these items when you receive your preapproval letter.

The closing date. This is usually 1-2 weeks after the financing contingency date. This will be the date upon which you will officially own the house. You also should make sure that your attorney or title company is available that day as well.

Closing on the home

This day will be stressful. It's kind of like having a baby. If you never had one, buy a home. That will be a good way to learn how it feels to have a baby! If you have a good agent, he/she should have already instructed you on what the game plan is. You will need to know how much to bring a check for, whether the check needs to be certified or a bank check, he/she will also tell you where the place of the closing is and at what time it will be. Just follow the instructions and be there on time. Showing up late only makes matters worse.

After the closing, the home is yours! Good luck in your home buying.

Yahoo Answers

ILM Realty — Tue, 25 Mar 2008 22:37:08 -0500

Many people may not know this, but I love Yahoo Answers. It's not that I love asking questions.. I love answering them! Once you get started, it's kind of addicting. (Like blogging)

I like the fact that I can help people. The best reward is when someone picks my answer as a best answer. It's kind of like a pat on the back thing. It makes me feel good about what I'm doing there. I'm not wasting my time. The input is appreciated. (Maybe somehow we can earn AR points if our blog responses are awarded by the person posting them.)

Yahoo answers has a Renting & Real Estate section. You will find me there answering questions in my spare time. I'm not going to tell you who I am. The anonymous part is another great part of it. It's like giving to charity.

Colchester - Positioned For Growth

ILM Realty — Mon, 24 Mar 2008 23:02:19 -0500

Of all the things I do in my "spare time," I have enjoyed a seat on the Colchester zoning and planning commission for about 3 years now. I have seen a lot of subdivision approvals come across the commission's desk over the last few years. I keep wondering, "where are you people going to sell all of these houses?"

The new homes and subdivisions have sort of slowed down for now. The next big waive - commercial real estate. Colchester has recently rezoned a few hundred acres of prime land to commercial and business park. This land is right in the areas the Route 2 and Route 11 interchange. There is no more prime place in our part of CT in my opinion.

Once this land is developed, it will position Colchester for a more balanced tax basis. Right now, 90% of the burden lies on the residential property owners. The town's goal is to get to a 70/30 split. Therefore, with the extra commercial development and tax revenues which will be brought in without as much of a hit to our infrastructure and maintenance costs as residential development, home owners will see thier property taxes decrease.

What does all of this mean? Well, to begin with, forget about paying 10% higher prices in our local grocery store, as the new development will likely bring in some competition. You know that 20 minute trip you need to make everytime you realize you need to go shopping? Well, now it will be 5 minutes. All of this increased interest in our town, along with lower property taxes, will mean INCREASED PROPERTY VALUES.

There is a trade off to all of this. Colchester is loosing a part of its rural character. It has been only a matter of time. We are 30 minutes to Hartford, (the insurance capitol of the world) and 30 minutes to Foxwoods and Mohegan Sun casinos (amongst the largest casinos in the world), 30 minutes to the Groton sub base and then there's the Pfizer world headquarters in New London. Basically, Colchester is in the middle of it all. It is natural for us to grow next.

At the end of the day, Colchester offers many reasons to live here. If you or someone you know are considering moving to the area, consider talking to me.

Today's Residential MLS Statitistics - Colchester, CT

ILM Realty — Sun, 23 Mar 2008 19:33:01 -0500

As of 7PM on Sunday, March 23, the CT MLS shows the following facts in the town of Colchester, CT.

Houses on market	115	Avg Cost/sqft	$ 166.74
High price	$799,900.00	High Cost/sqft	$ 258.46
Avg price	$329,145.00	Midpoint Cost/sqft	$ 171.37
Midpoint	$334,900.00	Low Cost/sqft	$ 41.02
Low Price	$ 37,900.00	Average Acres	2.07
Total Price Changes	41	Average DOM	90.95
Price Decreases	32	High DOM	293
Price Increases	9	DOM Midpoint	67

The CT MLS is a statewide MLS system used by real esate agents and brokers to advertise real estate for sale and cooperate with each other in brokerage. It does not reflect every property for sale in the state, but it is intended to reflect, at minumum, all properties for sale by its members. Generally, it is a good indication of the market overall.

From Arizona to Connecticut

ILM Realty — Sun, 23 Mar 2008 01:08:38 -0500

I recently had the opportunity to take a road trip from Arizona to Connecticut. It was a long ride. It gave me plenty of time to think about real estate. I saw farm land as far as the eye can see in places like New Mexico and Oklahoma. There were many beautiful sites and we made several interesting stops. By the time I got home to Connecticut, I remembered why I call it "home."

Connecticut has so much. We have plenty of the rolling hills and farm land I saw traveling across the US. We even have Indian casinos like the ones I saw in New Mexico and Oklahoma. I really liked Tennessee. It reminded me a lot of Connecticut, only with a southern flair. Virginia offered lots of pretty views and quaint communities like New Market, VA, where I ate pizza in a gas station and thought it was pretty good!

As an early settlement, Connecticut is loaded with history. We have old buildings and miles and miles of stone walls. In fact, I even have stone walls on my own property. There are lots of public parks and miles of trails for hiking and biking.

We have something that 48 pther states do not have. We have Long Island Sound. (NY is the other state we share it with.) We have ocean front living, without the exposure to the ocean. Long Island keeps us protected from the Atlantic. We have many nice beaches, in addition to our many lakes and rivers. I love the water and this is a huge benefit to me. I love selling waterfront properties, too! I enjoy looking at them so much.

One thing I really love about Connecticut is its diversity. You can find all different ethnic groups and religious communities. Spamish groceries, kosher and hallal delis, and even Bollywood movies are in abundance. We have cities and countryside, and you can find a blend of everything wherever you go.

Connecticut has all this, and you can drive from one end of the state to the other and back before lunch. I have worked and lived in many areas around the state. I've pretty much seen it all. While I live in Eastern CT at the moment, I find myself roaming all over the state. If you're ever in CT and want to do lunch, drop me a line. If you are ever looking for someone to drive across the country with, it may be a while becfore I'm ready to do that again!

Real Estate - The Fundamental Asset of Earth

ILM Realty — Sun, 09 Mar 2008 03:08:53 -0500

It is very exciting to be in the real estate business. There is only one word which can really describe how I feel about real estate - passion. The real estate business facinates me. Through up markets and down markets, there is still something in common. Real estate is a finite asset on our earth.

People everywhere love real estate. I have travelled the across many parts of the world, including Southern Asia, India and the Middle East. Real estate is a tangible asset which everyone can appreciate. While our earth's population continues to grow, we are not keeping up with land growth. The markets can go up and they can go down, but until we start making more land (and some people are trying!) the market forces of supply and demand will always help to ensure that real estate investments remain valuable over the long term.