Happy 500th Episode! Special thanks to everyone in my Real Estate Insider family for tuning in and checking out my weekly podcast and video blog over the last 9 years! It has been a long, challenging but rewarding journey. It was an accident that I got involved in real estate in the first place (you can check out my bio if you’re interested in that back story). Today for my 500th podcast episode, we’re going to go through 7 things you can and cannot control in real estate. We’ll start by talking about 7 things you cannot control in real estate, which unfortunately but predictably are the real estate topics that you hear about most in the news. The […]
continue reading Q: My boyfriend and I have been trying to buy a home for a while. We found one in our price range, but it has mold, do you think that is a big deal. Shannon, Linden, NJ A: Exposure to mold can cause a variety of negative health effects particularly for people with respiratory problems and for people who are immuno-compromised. Here are 3 home health dangers to watch out for particularly in older homes: 1. Mold is the biggest risk in homes where humidity exists. You can use a dehumidifier to reduce moisture and mold within a home. I suggest you require the owner of the home you want to buy to ameliorate the mold issue before you buy. […]
continue reading Q: I recently bought my first home. I budgeted for my mortgage payments but the other home expenses are higher than I expected. Angel, Bayonne, NJ A: Congratulations on your new home, Angel. Unlike other assets, real estate is an expense-generating asset. Here are 5 ways to save on home-related expenses: 1. Install a smart thermostat. A smart thermostat allows you to better control the temperature in your home throughout the day and night which will reduce the cost of both heating and cooling 2. Install Ceiling fans. I personally prefer ceiling fans myself to air conditioning. Ceiling fans use 10% of the electricity air conditioners use, which will save you money on your electric bell 3. Insulate your tank […]
continue reading Q: Me and my siblings inherited my grandmother’s house. We were served with a foreclosure notice this month. I don’t understand why because the mortgage was paid off years ago and we have been paying the property taxes. Gail, Union, NJ A: Unfortunately, despite the fact that there is no mortgage on the property, all the other expenses associated with your grandmother’s home also have to be paid. A foreclosure lawsuit can be filed against a property for a past due mortgage, property taxes or for the following 3 little-known expenses: 1. unpaid water/sewer bill 2. Unpaid homeowner’s association dues or for 3. Unpaid condominium association dues I suggest you do a few things: 1. contact the tax collector […]
continue reading Q: My husband died a while back. A courier served me with a foreclosure notice a few weeks ago. I called the attorney on the notice and they said that my husband had a home equity line of credit on the house, which I was not aware of. Do I have to pay this? Edna, Hillside, NJ A: The first thing you should do if you haven’t already is to probate your husband’s estate. Probate is the court-supervised act of paying debts, closing accounts, and distributing the assets and belongings of an individual after their death. Generally speaking, assets such as real estate will either switch ownership to a beneficiary or be sold to pay for any debts. As part […]
continue reading Q: I’ve been looking for properties to fix and flip. The properties I’ve found so far need complete gut renovation which I’ve never done before. Do you think I should go for it even though I don’t have any experience? Gus, Bayonne, NJ A: I don’t think the first fix & flip rehab you do should be a complete gut renovation. You can always wholesale property for profit which does not require you actually buy or renovate the property. If you are going to buy, fix and flip a home, I suggest you buy a property that does not require too much renovation. You can also buy a home and do a light, cosmetic renovation. A cosmetic home renovation, also […]
continue reading Q: Gerald, do you think it is better to buy or rent a home right now? Erica, West Orange, NJ A: Generalized investment advice is not very useful. The correct answer to your question depends on your personal financial situation, your goals and your life plans. For some people, the correct answer right now is to buy, for others it is to rent. Over a long period of time, owning a primary residence is more beneficial financially than renting because of leveraged appreciation and tax advantages among other factors. However, owning real estate does limit your mobility to some extent and makes you financially responsible for home repairs and capital improvements rather than your landlord which is the case when […]
continue reading Q: How do all these recent bank failures affect housing? Carl, Weehawken, NJ A: Lending across the board may get tighter in the wake of the failures of SVB & Signature. However, mortgage loan underwriting has been much more measured and responsible since the 2008 financial crisis and mortgage interest rates have recently dropped which may entice more home buyers who may have been waiting on the sidelines to buy a home. Fannie Mae’s Economic and Strategic Research (ESR) Group has raised its first-quarter 2023 GDP forecast due to stronger-than-expected economic data. It also anticipates a modest recession in the second half of 2023. Ongoing banking instability may negatively affect jumbo mortgage loans and residential construction loans but residential real […]
continue reading Q: What do you expect for Spring housing this year, Gerald? Gail, Maplewood, NJ A: Residential real estate demand generally fluctuates seasonally with Spring home buying demand typically outpacing housing demand in summer, fall or winter. This Spring home buying season may be a little different than previous years. Weather this past winter was very mild in the local markets I work in which may have reduced pent up housing demand that often explodes in the Spring after a long, cold winter. Also, despite the recent spate of bank failures, mortgage interest rates have declined recently and The Mortgage Bankers Association (MBA) forecasts that mortgage rates are likely to trend down over the course of this year, with the 30-year […]
continue reading Q: Gerald, you said that home prices eventually have to level off at some point. When do you think that will happen? Liam, Clark, NJ A: Home prices have already begun to decline in some municipalities in NJ, particularly for homes selling for less than $400,000. At the high end of the NJ real estate market, the number of homes for sale is growing as the ratio of home buyers to home sellers is tipping to favor buyers. For homes selling for over $2.5 million this has already happened, so expect home sellers at these price points to either lower their offering prices or take their homes off the market. The number of homes for sale is also increasing for […]
continue reading Q: Gerald, I’m a realtor. I’m losing deals now, some already under contract because buyers are pulling out because of higher mortgage rates. Is there anything I can do? Madelyn, Mountainside, NJ A: Mortgage interest rates have almost tripled in recent history. Higher mortgage rates reduce the price a home buyer can afford to pay for a home. In addition, higher mortgage rates have reduced the number of homes for sale because many trade up buyers who want to sell their home and buy a bigger home are staying put because they don’t want to trade the lower mortgage interest rate they have on their current home for a more expensive home with a much higher mortgage interest rate. One […]
continue reading Q: We visited my grandmother recently and I saw mold growing in her home. What can we do? Elliot, Tewksbury NJ A: I’m not sure how bad the mold in your grandmother’s house is. If it’s bad, you should consider bringing in a specialist. If the mold is minor and you catch it early, mold can be removed from hard surfaces with household products, soap, water, or ideally a bleach solution. Bleach kills virtually every species of indoor mold. The problem is that if there is too much humidity and moisture in your grandmother’s home and the home is poorly ventilated, the mold will return. The way to control indoor mold growth is to control moisture. After you address the […]
continue reading Q: I have been trying to save the 20% down payment to buy a house for a long time. Are there any programs that can help me get my first home? Shamise, Union, NJ A: The typical home buyer spends over 6 years saving money for a down payment to buy a house. There are literally dozens of first-time home buyer grants and programs designed to assist 1st time home buyers that are sponsored and backed by both governments as well as public and private banks. Here are 3 kinds of first-time home buyer assistance programs: Low-down payment mortgages that require a down payment of 5 percent or less Mortgages that don’t require a down payment at all Mortgage loans […]
continue reading Q: I’ve been hearing about AI in the news a lot recently. How do you think artificial intelligence will affect real estate? Zach, Hoboken, NJ A: Artificial intelligence is already impacting residential real estate. Zillow’s Zestimate method, which unfortunately often provides wildly inaccurate property valuation estimates, is nevertheless built on AI technology. Here are 3 ways artificial intelligence may improve residential real estate moving forward: By providing curated recommendations to renters & home buyers. Artificial intelligence can tailor property listings based on buyer and renter preferences By automating and streamlining customer care, AI-powered chatbots can handle inquiries about rentals and homes for sale to help both realtors as well as renters and home buyers By automating and streamlining the mortgage […]
continue reading Q: We’re planning to sell our home. Seems like everyone who sells has an open house. Do you think it’s necessary? Sabrina, Passaic, NJ A: Many people mistakenly believe that you need to do an open house to sell a home–perception often becomes reality. Realtors throw open houses to please home sellers or because they buy into the misguided conventional wisdom that open houses are an effective way to sell a home. Open houses are normally a waste of time. The truth is that houses sell primarily based on 3 factors: 1) Buyer Awareness—if buyers don’t know about your house for sale, they won’t buy it 2) Buyer Preferences 3) Buyer Budget. Open houses can attract foot traffic—people may show […]
continue reading Q: Do you think now is a good or bad time to buy real estate? Frank, Prospect Park, NJ A: Nobody can predict the future, therefore neither you nor me nor anyone else can effectively time real estate markets or financial markets in any arena. Research shows that the cost of waiting for the perfect moment to invest exceeds the benefit of perfect timing even if that were possible. One huge real estate myth is that successful real estate investing is about timing the market and guessing right about future price appreciation. The successful investor makes the best possible decision today based on the best information available today. Hindsight is always 20:20, or as Warren Buffett says, “the rear view […]
continue reading Q: My wife and I have been trying unsuccessfully to buy a rental property for a while. Do you think we should try bidding at the sheriff sale auction? Dwayne, Leonia, NJ A: Most people assume that real estate auctions are a great place to buy properties at bargain prices. Auctions are convenient for sure—especially for the seller. Auctions purposely create a feeding-frenzy environment where potential buyers get caught up in a very public, competitive spectacle that ideally for the seller results in the property selling for the highest possible price. The objective of a bank foreclosure sale for example is to create an auction effect. An auction effect occurs when buyers get into a “gotta have it” mindset that […]
continue reading Q: I’ve been paying more and more money to heat my home. When do you think energy prices will go down? Ernie,Clark, NJ A: The cost of energy for the average American was up almost 15% in November from a year earlier. Energy prices have been higher lately due to many factors including the Russian invasion of Ukraine. I don’t know if or when energy prices will drop because they are driven largely by global supply and demand. If higher energy prices persist however, over time, home buyers will demand and pay more money for homes that are more energy efficient to lower their household expenses. Thanks for your question, Ernie. Thanks for your question, Wilbur. For more real estate […]
continue reading Q: Our water bill on our home went up a lot recently. What can I do to cut my home expenses? Wilbur, Hawthorne, NJ A: My water and garbage collection bill went up recently myself, Wilbur. Here are 3 tips to help you save on home-related expenses: Buy light bulbs that have earned the Energy Star for energy efficiency Buy a programmable thermostat to avoid wasting money heating your home when you aren’t there Wash your laundry in cold water instead of hot water Thanks for your question, Wilbur. For more real estate tips and information visit my blog at geraldlucas.com.
continue reading Q: Mortgage rates have more than doubled recently. When do you think mortgage rates will go down? Kim, Edgewater, NJ A: It’s hard to know exactly if and when mortgage rates will drop after many years of record low rates. Freddie Mac forecasts mortgage rates will drop from an average of 6.8% in the fourth quarter of 2022 to 6.2% in the fourth quarter of 2023 but only time will tell. Thanks for your question, Kim. For more real estate tips and information visit my blog at geraldlucas.com.
continue reading Q: What’s a good way to keep track of what’s going on in the real estate market? Lex, West New York, NJ A: The Housing Market Index (HMI) is one way to track the health of residential real estate. The HMI is a monthly-released weighted average of three separate components: 1) Current Single-Family Home Sales, 2) Single-Family Home Sales Projection for the Next Six Months, and 3) Traffic of Prospective Home Buyers that is released monthly. The HMI is a number between 0 and 100. The HMI has gone down every month since June 2022 and is 31 as of December 2022 down from 84 in December of 2021. The closer the HMI is to 100 the healthier the real […]
continue reading Q: What do you think the real estate market will be like next year? Evelyn, Moonachie, NJ A: I unfortunately don’t have a crystal ball and cannot predict the future. However, A 2023 housing forecast from Realtor.com predicted a 7.4% average for mortgage rates in 2023, which would push homebuyers’ monthly payments up and generally make homeownership more costly. Realtor.com economists also predict that rents nationwide will increase by 6.3%, while they expect median home prices to grow by 5.4% next year. Thanks for your question, Evelyn. For more real estate tips and information visit my blog at geraldlucas.com.
continue reading Here are 3 year-end real estate tips that’ll help you get through the winter: Inspect your roofs. Leaking or collapsing ceilings are a nightmare to deal with especially during the winter. It’s better to identify a smaller problem early before it gets worse and requires a more expensive remedy. Flush your water heaters. This is a cheap and easy procedure that is not very expensive. Flushing water heaters helps to control the buildup of mineral deposits, resulting in a more efficient heater. Service oil or gas heaters. Servicing heaters is an annual necessity. By servicing heaters regularly you will increase their useful life which will save you money in the long run. For more real estate tips and information visit […]
continue reading Q: Gerald, you said earlier that the number of homes available for sale on the market has been rising recently. How much has home availability increased and is it enough? Derek, Metuchen, NJ A: After a long period of record low housing inventory, the number of homes available for sale in NJ has increased this year by over 50%. Home inventories in Hudson County where my office is located are now about 3 months or more which is significantly higher than they were in most of the last few years. The tipping point where home prices stabilize is at about 6-7 months of home inventory supply. When home supply inventories exceed 6-7 months home prices start to drop. Higher supply […]
continue reading Q: I have been having a hard time finding a place to buy and my younger sister has been trying unsuccessfully to find an apartment. Why is there such a shortage of housing and what can be done about it? Crystal, Hoboken, NJ A: There is a housing shortage both for homes to buy as well as rentals particularly in major cities where demand for housing is typically higher. Despite this huge housing shortage there are lots of vacant, unused or underutilized lots in major cities. For example, NYC has over 75,000 vacant or underdeveloped lots. This problem stems in part from the skewed property tax system we have in the US that disincentivizes development and encourages land speculation. A […]
continue reading Q: It looks like home prices are going down now finally. How far will home prices go down? Victor, Livingston, NJ A: Home prices have cooled in many local real estate markets but not in all real estate markets. Every local real estate market is different and the pace of home price declines will vary from market to market. In fact, some local real estate markets may not see home price declines at all. It depends on the town and ultimately on the specific neighborhoods in each town. Averages are misleading and some towns and areas simply have more sustainable home buyer demand regardless of current macroeconomic conditions like interest rates and the current state of the economy. For more […]
continue reading A: Happy Thanksgiving 2022 to everyone in my real estate insider family! Here are 3 recent real estate trends I am thankful for this Thanksgiving: lower inflation Higher housing inventory home prices flattening and housing becoming more affordable
continue reading Q: Why did home prices go up so fast during the pandemic? Sam, Westfield, NJ A: There are several reasons home prices went up so fast during the pandemic, but one overlooked reason is the “investor mania” that was unleashed by speculative home buyers and investors. Many amateur real estate investors and buyers poured into local housing markets during the pandemic in hopes of building Airbnb and VRBO empires. In addition, Institutional investors ramped up their algorithm-driven home buying and rapidly expanded their residential real estate portfolios during Covid. All this increased demand for residential homes drove home prices higher than otherwise probably would have been. Thanks for your question, Sam. For more real estate tips and information visit […]
continue reading Q: With home prices going up so much, do you think buying a home is still a good investment? Valerie, Linden, NJ A: If you can reasonably afford to buy a home based on your current financial position, it’s difficult to beat the awesome power of leverage when you buy a home with a 30 year fixed mortgage. Mortgage leverage magnifies home appreciation unlike any other asset. You can borrow most of the purchase price for a home which amplifies your cash-on-cash return. Home prices in NJ rise on average about 4-5% annually. So, if you buy a $500,000 home with a 20% down payment of $100,000, the $20,000-$25,000 average annual increase in your home’s value works out to a […]
continue reading Q: Interest rates keep going up. When do you think rates will go back down? Bill, Kenilworth, NJ A: Many Fed watchers expect the Fed to lower interest rates in mid 2023 under the assumption that inflation falls back to the Fed’s 2% target. The direction interest rates will move depends on 2 things: 1) how persistent inflation is over the next 6-9 months and 2) if we are in a full blown recession by mid 2023. If inflation is lower, rates are likely to go down and if we are in a full blown recession in mid 2023, the Fed will likely lower rates. Thanks for your question, Bill. For more real estate tips and information visit my blog […]
continue reading Q: I have a rental apartment. I heard there is a new lead paint law for rentals. Is that true? Jack, Hackensack, NJ A: Lead is a toxic, naturally occurring element and heavy metal in our environment that was widely used in commercial products such as gasoline, paint, cosmetics, spices, and pottery. Lead exposure in children can cause nervous system and kidney damage, learning disabilities, hearing damage, attention-deficit disorder, decreased intelligence and problems with speech and language problems. Lead-based paint is usually not a hazard if it is in good condition, and the paint is not on an impact or friction surface, such as a window. Deteriorating lead-based paint (peeling, chipping, chalking, cracking, or damaged paint) is a hazard. Lead […]
continue reading Q: My grandmother lives alone and needs more income. Can she move into the apartment over her garage and rent out her house? Elmo, South Orange, NJ A: ADU stands for Accessory Dwelling Unit. Accessory dwelling units (ADUs) have been around for a very long time. An ADU is a secondary small dwelling on the same grounds or attached to a single-family house. ADUs are sometimes referred to as mother-in-law flats or granny flats. Examples of ADUs include: an apartment over the garage a cottage or tiny house in a home’s backyard (Note: ADUs can be tiny houses, but tiny houses aren’t always ADUs) a basement apartment Regardless of its physical form, an ADU is legally part of the same […]
continue reading Q: I read that lumber prices have fallen a lot. How will that affect residential real estate? Eric, Little Falls, NJ A: The Covid-19 pandemic caused lumber prices to skyrocket for a variety of reasons. Higher lumber prices meant that renovations, repairs, and new construction were all significantly more expensive which increased home prices. Wood framing is used to build 9 out of 10 single-family homes in America and the lumber price spike during the pandemic increased the average price of new single family homes by almost $20,000! Luckily, lumber prices recently fell to their pre pandemic levels. Despite the fact that housing activity has cooled this year, demand for housing is still relatively high in much of the country. […]
continue reading Q: My boyfriend and I are trying to buy a home. We don’t have much savings. Can our parents help us with the mortgage down payment? Kelly, Bloomingdale, NJ A: Family and friends can help home buyers with good credit and income who lack enough money for a down payment to purchase a home. A monetary gift from family or friends may help home buyers get a lower mortgage interest rate or eliminate the need for private mortgage insurance (PMI). You can use monetary gifts from friends or family members for your mortgage down payment, so long as you provide a signed statement to your lender that the money is a gift and not a loan. It is best to […]
continue reading Q: Do you think adjustable rate mortgages are a good idea? Sandy, Little Ferry, NJ A: An adjustable-rate mortgage (ARM) is a home loan with a variable interest rate that can fluctuate periodically based on the performance of a specific benchmark. Although ARMs generally have caps that limit how much the interest rate and/or monthly payments can rise per year or over the lifetime of the loan, I think they are way too risky for most home buyers particularly first time homebuyers. An ARM may make sense for some investors, but I have seen investors get burned by adjustable rate mortgages particularly by option ARM loans that were popular before the last financial crisis. Even a 30-year fixed rate mortgage […]
continue reading Q: I just read that housing affordability just reached a new low. What does that mean? Cliff, Bergenfield, NJ A: The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home based on the most recent home price and income data. An affordability index above 100 signifies that a family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment. The Housing Affordability Index dropped to 98.5 in June, its lowest rate since 1989. This means that it was more expensive to buy a U.S. home in June than it has been […]
continue reading Q: Gerald, you said that home building has slowed recently. How will that affect home prices and housing availability? Stan, Caldwell, NJ A: Housing starts fell almost 10% recently as higher construction costs continue to disincentivize builders from initiating new projects. Less home construction results in lower home inventory. Home foreclosure filings have increased recently, (higher home foreclosure filings normally increases home supply), but not enough to offset a pullback in home construction. Higher mortgage rates have further reduced home affordability. Nevertheless, I don’t expect NJ home prices in most local real estate markets to fall anytime soon despite threats of recession and potentially higher mortgage interest rates. I also expect housing inventory to continue to rise but at a […]
continue reading Q: Gerald, what do you expect will happen in the real estate market for the rest of 2022? Gail, Hoboken, NJ A: Home sales have declined significantly this year already, particularly for homes selling for less than $400,000 as rising mortgage interest rates have made it more difficult for millennial 1st-time home buyers to qualify for homeownership. Construction costs have increased 20% since last year, labor costs continue to climb and the time required to complete a new construction project has doubled recently. I expect housing sales will continue to slow and home inventory will continue to climb at the end of this year. Although home inventory levels are much higher than they have been in the recent past, they […]
continue reading Q: I have a tenant who hasn’t paid me rent in almost 2 years. I finally got a court date in landlord-tenant court. Is there any way to get the money he owes me? Candy, Elizabeth, NJ nd are we in one now? Charles, Berkeley Heights, NJ A: The most obvious remedy when a tenant is behind on rent is to file for eviction, Candy which is what you’ve already done. Even if you can finally evict your delinquent tenant, he still owes you almost 2 years worth of rent. A lease agreement is a binding contract and when a tenant stays in a landlord’s property and fails to pay, a landlord can sue the tenant in civil court to […]
continue reading Q: What is a housing recession and are we in one now? Charles, Berkeley Heights, NJ A: An economic recession is generally defined as two consecutive quarters of declines in Gross Domestic Product (GDP). A housing recession occurs when home sales decline for six straight months. Housing sales activity has in fact declined for six consecutive months, so yes we are currently in a housing recession. Nevertheless, homes continue to sell because there are still more buyers than there are sellers in most local real estate markets. Thanks for your question, Charles. For more real estate tips and information visit my blog at geraldlucas.com.
continue reading Q: My wife and I are buying a new home. Initially, the builder said we could make adjustments to the appliances we were getting installed but now he says that’s not possible. Kyle, Carlstadt, NJ A: More than 70% of contractors recently surveyed said they are facing at least one material shortage. Lumber was the most-cited material shortage, followed by electrical supplies. To keep construction projects from stalling, many builders and suppliers are limiting customer selections and requesting that clients make all selections up front. Some contractors are also eliminating homeowners’ ability to do change orders on their builds. Unfortunately, the supply chain issues that are the source of the problem will likely continue into 2023. Thanks for your question, […]
continue reading Q: I’ve been trying to get a mortgage loan for weeks. The mortgage broker I have been dealing with keeps making excuses and I am worried I’m going to lose the house I’m trying to buy. Silvana, Bloomfield, NJ A: An experienced mortgage broker will be familiar with current mortgage products available right now on the market and which mortgage will be best suited for you as a borrower based on your debt-to-income ratio and the preliminary information you provide. An inexperienced or incompetent mortgage broker will ask the same questions over and over again, struggle with simple math and will not be familiar with current mortgage loan products. I suggest you give the mortgage broker you are working with […]
continue reading Q: A lot of people are predicting a recession. If it happens, how will a recession affect real estate home prices? Stuart, Kenilworth, NJ A: Home prices have remained steady or risen during the majority of the last few recessions in the US. High mortgage rates can deter people from buying, but as the recessions of the ’80s and ’90s showed, when mortgage rates rose to almost 20%, high rates don’t mean demand or home prices will fall. What really determines how the real estate market is affected by recession is the impact it has on housing demand and home affordability. Nationally, today’s median income is around 30% of the median home price. In 1980, that number was almost 45%. […]
continue reading Q: Gerald, I’ve been a builder for a while. I finally found a nice big lot where there is an old single family home that needs to be torn down. I’d like to build at least 4 townhouses on the lot but the town only allows for single family homes. Corey, Westfield, NJ A: The acronym, ‘NIMBY’ stands for ‘not in my backyard’ and it is a nickname for a person who objects to something in the area where they live while raising no objections to something similar in other places. NIMBYism is natural and expected for many homeowners who want to protect their most valuable asset (their home). Unfortunately, NIMBYs play a large role in exacerbating our critical undersupply […]
continue reading Q: I am inheriting a home. Do you have any advice to share about the process? Elisabeth, Westfield, NJ A: Inheriting a house can bring some very complex challenges. There is a big difference in how an inherited house should be handled, based upon how you inherit the home. If you were given the house by deed when your relative passed, usually, there is no need to go through probate proceedings. your name should be on the title and therefore you can do whatever you want with the property. If you inherit the house through your loved one’s will, you have to go through probate. You will need to complete that probate process before you can take control of the […]
continue reading Q: Gerald, I have owned my condo for years. My building only has 6 condo units and the owners manage the building ourselves to save money. One of the owners is way behind on their monthly condo fees. Is there anything the other owners can do? Jackie, Elizabeth, NJ A: The simple answer to your question is yes, there is something you and the other owners in your building can do–you can record a lien for the unpaid condo fees on the unit owned by the delinquent owner. After you record a lien, you have the option of foreclosing on the condo unit in question. However, if the delinquent owner has a mortgage on their condo unit, your lien for […]
continue reading Q: I’m trying to buy my first home. I am really excited because I actually found a home that’s within my price range. The house is a fixer upper that needs work but my mortgage broker said I can still get a mortgage for it and I can actually borrow the money as part of my mortgage to make the repairs. Do you think that’s a good idea? Susan, Bloomfield, NJ A: Your mortgage broker is likely referencing a type of construction loan for residential home buyers called a 203K. Section 203(k) insurance allows homebuyers to finance both the purchase of a house as well as the cost of its renovation through one single mortgage. Conceptually, a 203K loan is […]
continue reading Q: My wife and I have had our rental property for a while. Our tenant moved out so I think it’s a good time to do renovations. Do you think we should renovate the entire place? Henry, Hackensack, NJ A: Paying for renovations and repairs is appropriate to maintain your rental property and to attract the best tenants. However, your return on investment (ROI) as a landlord is a function not just of the rent you collect but also the money you spend. The more money you spend, the lower your ROI will be. Over renovating a property (spending too much money on renovations) is the biggest mistake that landlords, particularly new landlords make. Many people mistakenly believe that every […]
continue reading Q: We just finished renovating our new rental property and started accepting tenant applications. One applicant we met seemed nice but kept complaining about their last landlord. When I looked at his background report, it showed that he had been evicted. What do you think we should do? Claire, Jersey City, NJ A: As a landlord, the 2 biggest potential risks you face from a tenant is 1. Non-payment of rent and 2. Damage to your property. A previous eviction is the #1 sign that someone will be a bad tenant, because it is proof that they were a bad tenant before. I’m not surprised this applicant complained about their last landlord because they obviously weren’t paying their rent. It’s […]
continue reading Q: Gerald, we signed a contract to buy a summer home last year. We expected the builder would be finished by now, but it has taken much longer than expected. Mortgage rates have gone up a lot. Can we back out and if we do, will we lose our deposit? Dalia, Edison, N A: Home buyers who signed contracts to buy newly constructed homes in 2021 are potentially facing almost double the mortgage payments they may have initially expected because mortgage interest rates have risen from 3% to almost 5.5% as the Federal Reserve started raising short term interest rates. There is always a greater mortgage interest rate risk whenever a real estate transaction takes longer to be completed. Labor […]
continue reading Q: I’m not a US citizen. Can I get a mortgage to buy a home? Carlos, Union, City, NJ A: Most people assume that people without U.S. citizenship can’t qualify for a mortgage to buy a home. In fact, there’s a clear path to non-US citizens becoming a homeowner without paying cash for a home through programs often referred to as foreign national mortgages. Foreign national mortgage programs offer loans for which no U.S. credit history is needed to apply. Foreign national mortgage programs normally require non citizen home buyers to put down a 20% minimum down payment that can be used for owner occupied or investment residential properties. Thanks for your question, Carlos. For more real estate tips […]
continue reading Q: My wife and I are buying our first home. Interest rates are going up. How long can we lock our mortgage interest rate? Caleb, Belleville, NJ A: Mortgage rates have increased significantly in the last year from historic lows. Lenders normally will let pre-approved home buyers lock the interest rate of their mortgage loan for between 2 weeks and 2 months. Lenders can theoretically offer a rate lock for as long as they choose. I have seen 120 day mortgage rate interest locks in real estate transactions I’ve been involved in, however, the borrower paid a fee for that extended rate lock. Lenders will always hedge to protect themselves. Thanks for your question, Caleb. For more real estate […]
continue reading Q: Do you think it makes sense to buy a modular home? Fay, East Brunswick, NJ A: A manufactured or modular home is a factory built home. A manufactured home is only meant to be moved once and is therefore different from a mobile home. Manufactured homes tend to be well built. Manufactured homes take less time to build and are much less expensive to build than a site built home. The potential drawback of modular homes is that the cost to finance the purchase of modular homes may be higher and it can be difficult to find suitable land to put modular homes on. Given the current shortage of available housing, modular or manufactured homes are one of the […]
continue reading Q: It’s been really hard for us to staff people at our restaurant for quite a while. Has the labor shortage affected real estate? Keith, Point Pleasant, NJ A: Unfortunately there are many industries that have more unfilled job openings than unemployed workers with experience looking for work. With respect to residential real estate, the labor shortage has affected home construction and home prices by 1) increasing construction time to complete newly constructed houses (which in turn lowers housing supply which results in higher home prices). 2) Labor shortages also have increased the price of available labor and therefore increased the cost to build which de-incentivizes builders, further lowers housing supply and also increases home prices. In addition, 3) without […]
continue reading Q: My sister and her husband are in a bind. They fell behind on their mortgage payments when my sister stopped working last year to stay home with their young kids and her husband lost his job around the same time. What should they do? Brenda, Paramus, NJ A: Hi Brenda, the first thing I think your sister and her husband should do is reach out to their lender or mortgage servicing company and find out what options they may offer to assist them. Your sister’s lender may offer forbearance or loan modification assistance that may help them and it’s most beneficial to homeowners to get that assistance as soon as possible when they fall behind on mortgage payments. The […]
continue reading Q: Mortgage rates have been going up recently. Do you think that makes now a bad time to buy real estate? Eric, Livingston, NJ A: When you borrow money to buy a home, higher interest rates reduce the amount of home you can buy. For every 1% increase in mortgage interest rates, your purchasing power as a homeowner declines by 9%. However, higher mortgage rates may present a silver lining in today’s US housing markets. Home prices in most of the US in the last few years have increased at unsustainable levels and low mortgage interest rates have probably exacerbated those home price increases. Higher mortgage rates will make it more difficult for many home buyers to purchase a home, […]
continue reading Q: Gerald, we just finished renovating a home we are going to now sell. It took a lot longer to do the renovation than we thought and ended up costing a lot more money than we planned for also. We put it on the market to sell and have received several offers, but I need to make more to make up for my losses, so I’m thinking about holding out for a higher offer. What do you think? Reggie, Orange, NJ A: Reggie, I have done many fix and flips so I understand where you’re coming from, however, you don’t get to decide how much money a buyer is going to pay for a property that you sell. The market […]
continue reading Q: Gerald, my ex-husband and I split up and I got the house but fell behind on mortgage payments because I only have one income instead of 2. The bank filed foreclosure against my home. An attorney told me I should file bankruptcy, what do you think? Cheryl, Tinton Falls, NJ A: It is appropriate and beneficial in certain circumstances to file bankruptcy. For example if you have enormous medical bills or very high credit card debt, it may very well make sense to file chapter 7 to eliminate the debt and start over. However there are severe and long lasting consequences from filing bankruptcy that can last for a decade. After you file bankruptcy, it’s very difficult to get […]
continue reading Q: I read somewhere that NJ home prices went up double digits last year. Is there anywhere in NJ where home prices aren’t going up? Rachel, Maplewood, NJ A: Actually, home prices in NJ went up double digits in both of the last 2 calendar years with an even bigger home price increase in 2021 than in 2020. However, there are places where housing demand is going down like in Sussex County and some other more rural parts of the state as more people return to the office and move back to cities as the pandemic is waning. Although there has been a reduction in housing demand in Sussex County and other outer ring areas, home inventory levels still have […]
continue reading Q: How do you think the invasion of Ukraine will affect real estate? Peter, Englewood, NJ A: Any war, especially one where civilians are explicitly targeted brings unfortunate death, destruction and displacement. Interest rates often go down in times of uncertainty, like they did during the initial Covid pandemic lockdowns because investors usually place more capital into safer assets like bonds. This would lead to declining mortgage rates or at a minimum a slowing of mortgage rate increases. It is also possible that a prolonged war in Ukraine may trigger a recession in the US although it’s too early to tell at this point how the conflict will last or when the conflict will end. During a recession, there are […]
continue reading Q: I hear a lot of talk about inflation lately. How will inflation affect homeowners like me? Mike, Rutherford, NJ A: Yes, the pandemic has had a big impact on economies worldwide and has resulted in much higher consumer prices for many items. The good news for homeowners is that historically, real estate has been a great hedge against inflation. In the 1970s when inflation was high, home prices outperformed consumer prices. Since the 70s, home price growth has matched or exceeded consumer price inflation. This is good news for homeowners because the appreciation of the value of your home, which for most people is by far their most valuable asset, in the long run is much more important than […]
continue reading Q: Gerald, I left my job last year to take another job that allowed me to be home with my kids. I have read that many people are quitting their current jobs or getting new jobs. How has this trend affected real estate? Margaret, Scotch Plains, NJ A: The Great Resignation is a phrase coined to describe the recent phenomenon of record high numbers of people leaving their jobs during the COVID-19 pandemic. Some of the people who have left their jobs during the Great resignation worked in real estate and home construction. Home construction projects have seen big delays during the pandemic anyway because of supply chain disruptions which have resulted in longer waits to receive building materials and […]
continue reading Q: Gerald, what is the best corporate entity to use for real estate transactions? Edward, Hillside, NJ A: The most appropriate corporate entity to use in a real estate transaction depends on what real estate transaction you’re doing. It also depends on your capital requirements, your time horizon, whether you’re doing the transaction by yourself or with partners. If you are doing a real estate deal with partners, the ideal entity may depend on the number of partners you have or need to get the deal done. Here are some facts on 2 often used entities in real estate transactions: S Corps & LLCs S Corporations are my least favorite entity for several reasons including the fact that termination of […]
continue reading Q: Gerald, we just closed on our first home. We got a ton of paperwork throughout the process, especially at the end when we finally got the keys. Which of the documents should we keep? Harriet, Belleville, NJ A: I’m going to give you a half dozen home-related documents you definitely should keep in a safe place: Hud-1 settlement statement title policy Deed Survey Mortgage or deed of trust (if you have one) Promissory note (if you have a mortgage or deed of trust) The HUD-1 Settlement Statement is a document that lists all charges and credits to the buyer and to the seller in a real estate transaction–you definitely should keep the Hud-1 from the purchase of your home […]
continue reading Q: Gerald, I am a realtor and it seems like it’s harder and harder to find residential units to buy and rent for my clients. Is there anything that can change that? Jessica, Mahwah, NJ A: Although residential rents and home pricing continue to climb at the moment, a cooling in the office market due to several factors including increased remote working has resulted in a higher supply of unused office space. The glut of office space has created an opportunity to create additional multi-family residential housing. In NJ, there are over 8 million square feet of office conversions in the pipeline for repurposing into residential, mixed-use and industrial space. Some municipalities have been better than others in adapting to […]
continue reading Q: My daughter said she is thinking about buying a tiny home. What do you think about the tiny home trend? Emma, Sparta, NJ A: The tiny-house movement is an architectural and social movement that advocates for downsizing living spaces. A tiny house is a dwelling unit with a maximum of 400 sq ft of floor area compared with the average single family home in the US which has between 2,000 and 2,500 sq ft. Tiny homes are becoming more and more popular. In fact, there is a TV show devoted entirely to the trend. The biggest challenge for tiny home owners is finding a place to put the home, particularly if the owner doesn’t own the land. A tiny […]
continue reading Q: Gerald, I have been a builder for over 20 years and the price of materials and labor are crazy right now. Do you think the price of lumber and other building materials will go down anytime soon? Joe, Point Pleasant, NJ A: After several months of price declines last spring and summer, lumber prices are skyrocketing once again. Lumber prices have almost tripled in the last 4 months. In fact, the latest wave of rising lumber prices adds almost $20,000 on average to the price of a new home which in turn reduces housing affordability especially for first time home buyers. Soaring lumber prices are unfortunately part of a bigger supply chain disruption problem caused by waves of the […]
continue reading Q: Gerald. We are in contract to sell our home and the buyer keeps delaying the closing. We’re moving and buying another home and can’t afford to wait any longer. What can we do? Monica, Roseland, NJ A: The first thing you should do is identify the closing date in the purchase contract you signed with the buyer you are selling your home to. If the closing date in the contract has passed and you’re using a real estate attorney, tell your attorney to send what’s called a time of the essence letter to the buyer’s attorney or the buyer directly if the buyer is not represented by an attorney. In New Jersey, the date set forth in a time […]
continue reading Q: I read that FHA had a racist lending policy. Is that true? Theresa, Montclair, NJ A: The Federal Housing Administration (FHA) operated the National Housing Act of 1934 that provided federal guarantees on mortgage loans to home buyers. From the very beginning, FHA limited federal housing mortgage loan assistance to White buyers denying mortgage loan assistance to Blacks. In fact, this Whites-only federal mortgage loan subsidy was codified in FHA’s manual. For decades, FHA refused to insure houses for Black people living in predominantly Black neighborhoods and also refused to insure houses in White neighborhoods that were deemed “too close” in proximity to Black neighborhoods. For example, in 1940, the FHA denied insurance to a private builder in Detroit […]
continue reading Q: Gerald, my brothers and sisters and I inherited my parents house and I just realized my sister has not been paying the property taxes like she was supposed to. I fell behind on my mortgage before and was able to modify my mortgage loan. Can we do the same thing in this situation? Annette, Linden, NJ A: Annette, unfortunately, municipal liens take precedence and subordinate even mortgage liens and the tax lien foreclosure process is faster and much more unforgiving than the foreclosure process is for delinquent mortgages where borrowers enjoy much more consumer protections. My first suggestion is that you get a payoff from the local tax collector where your parents’ home is located so you know exactly […]
continue reading Q: What should we expect in housing in 2022? Julie, Bayonne, NJ A: The Omicron covid-19 variant looms large over the economy overall in early 2022 and will likely extend the supply chain disruptions we’ve seen throughout the pandemic. Mortgage rates are likely to be volatile this year and if and when mortgage rates increase, it will in turn reduce housing affordability and likely increase rents. Personal incomes are rising massively and will likely continue to increase—personal incomes more than anything else drives housing markets because personal incomes are what allows home buyers to qualify for and pay down mortgages. Home sales are likely to increase in 2022 but at a slower pace than in 2020 or 2021 and home […]
continue reading Q: I’m recently retired and plan to spend most of the winter in Arizona. How can I keep the pipes in my house from freezing during the winter? Joe, Buffalo, NY A: Winter time in many colder places unfortunately means increased risk of pipes in your home or property freezing and bursting. Here are 5 tips to help prevent pipes in your property from freezing: Wrap pipes near exterior walls and in crawl spaces with pipe insulation or with heating tape. Keep your home heated when it’s cold even if you’re going away or leaving the house for a long period of time. Open cabinet doors below sinks to allow heat from the home to circulate. Cover or close […]
continue reading Q: My wife and I bought kitchen appliances and have to wait more than 6 weeks for them to be delivered, I assume because of the pandemic. Is there a way to get appliances faster? Brad, Watchung, NJ A: Real estate is one of many industries that have been affected by supply chain disruptions caused by the pandemic. Many appliance manufacturers have maintained lean inventories for a long time to minimize costs, so recent supply chain disruptions caused by the pandemic have made it difficult for them to keep up with recent increased demand. In addition, manufacturers and suppliers are operating with COVID-19 safety protocols that slow production. Independent appliance dealers are often faster and more reliable now during […]
continue reading Q: My wife and I are buying a new home. Our attorney is holding up the closing because he said he thinks we can get a better mortgage. Do you think he’s right? Earl, Mendham, NJ A: Attorneys play an important role in real estate transactions as legal advisors. I use real estate attorneys to review contracts and leases. An attorney’s job is to interpret the law–that’s it, nothing else. Mortgage financing should be left to mortgage brokers. The key to effectively managing an attorney is to make them stay in their narrow lane which is to give legal advice not financing advice, which is not their area of expertise. Thanks for your question, Earl. For more real estate […]
continue reading Q: I let my friend stay in my condo while I was away taking care of my mother. Now she won’t leave. How can I get her out? Jacqueline, Caldwell, NJ A: It doesn’t sound like your friend was a tenant–tenants have rights that occupants do not. Removal of unauthorized occupants requires pursuit of an ejectment action which is different from an eviction. Evictions normally take place in landlord-tenant court. Ejectment actions in NJ are filed in the special civil part of Superior Court. I strongly suggest you consult an experienced local real estate attorney for counsel on specific steps you should take to remove your friend. Thanks for your question, Jacqueline. For more real estate tips and information visit […]
continue reading Q: My grandparents are thinking about getting a reverse mortgage. Is it true they can lose their home after getting a reverse mortgage? Helen, Bridgewater, NJ A: The simple answer to your question is yes. If at any point during the loan period a reverse mortgage holder becomes delinquent on property taxes, homeowner’s insurance or HOA fees it could result in a default that could trigger a foreclosure action against the reverse mortgage holder. In addition, since one of the terms of a reverse mortgage is that the homeowner is required to live inside the home as their principal residence for most of the year, if the reverse mortgage holder spends the majority of the year living outside the property […]
continue reading Pandemic has been tough and a reminder of the fragility of life. Here are 3 things I’m grateful for Thanksgiving 2021: 1. None of my family or close friends died or got very ill with coronavirus and I didn’t get covid-19-I recognize that many other people were not so lucky. 2. I am not only vaccinated but boosted–the speed & efficacy of the covid-19 vaccines are nothing short of a miracle-especially for those of us in the US. 3. I’m fortunate to work in an industry (real estate) that was not devastated by the pandemic as some industries like travel & hospitality were especially at first. Happy Thanksgiving to all of you out there in my real estate insider family. […]
continue reading Q: Rents seemed to go down in many places during the pandemic. Do you think that will continue? Jules, Montvale, NJ A: Rents are actually rising precipitously in many local real estate markets now because of two main reasons: 1) jobs recovery (almost 90% of jobs slashed during the pandemic have been recovered 2) many first time home buyers can’t afford current home prices which have risen nationally 20-25% on average in the last year and job gains are creating more rental demand. In addition, the eviction moratorium has reduced the availability of rentals. High home sale prices have resulted in falling new mortgage applications and the % of home sales to first time home buyers has fallen recently. The […]
continue reading Q: I read that Zillow closed its iBuying arm. Does that surprise you? Curtis, Nyack, NY A: Another one bites the dust. Yes, Zillow announced last week that it would sunset its iBuying arm, which was its fix and flip business. Zillow also announced it will be laying off 25% of its staff. Zillow’s foray into house flipping is outside of their focus and capability and was doomed to fail from the beginning. Many Wall Street backed real estate start-ups end up overpaying for property so they can raise more money, hoping for short-term appreciation–they obviously don’t understand the difference between investing and speculating. I’m skeptical of most wall street backed real estate start-ups because residential real estate fundamentally is […]
continue reading Q: I got an offer for a home appliance warranty in the mail. Do you think that it’s worth the cost? Hector, Elizabeth, NJ A: The strength of a warranty or insurance of any kind ultimately depends on the legitimacy of whomever is offering it. Insurance companies are better equipped to process claims than an appliance company, so if you have a warranty directly with an appliance company, expect long wait times and red tape when something goes wrong with your appliance. In addition, expect to pay an additional service fee if your appliance breaks down in addition to the premium that you’ve been paying. I was an actuary for an insurance company in a former life and the fact […]
continue reading Q: I’m looking to buy a rental property. At the prices I’m seeing for properties, the rents won’t come close to covering my mortgage and costs. My cousin gets a lot of money for his place when he rents it on airbnb. I feel more comfortable now knowing that. Do you think airbnb is the way to go? Tim, West Orange, NJ A: For 6 hours on Oct 4th 2021 Facebook went down for 6 hours. There are many businesses who are dependent on Facebook who lost revenue during that outage. Likewise, in recent years there are many investors (often newbie investors) who overpaid for rental property hoping to cover their expenses and debt service by renting out a home […]
continue reading Q: Now that he is vaccinated, my son is moving back to Manhattan. The realtor he spoke with told him to prepare for a bidding war with other tenant applicants. Are there really bidding wars for apartments now? Harriet, Mendham, NJ A: Yes, it sounds crazy but there really are bidding wars now both for city apartments as well as for single family home rentals. After many people fled Manhattan during the pandemic particularly at the outset of when NYC was an epicenter for Covid spread, many people are being called back to work and others like your son, who are now vaccinated are being drawn back to the city for the same reasons they were drawn to cities in […]
continue reading Q: My friend’s home had major water damage from Hurricane Ida. Does homeowner’s insurance cover hurricane flooding? Ellen, Totowa, NJ A: Great question, Ellen. Private homeowners insurance policies typically do not cover flood damage. That exclusion also pertains to flooding brought on by or as a result of a hurricane. Typically, you have to purchase flood insurance separately. You may be able to purchase a separate flood insurance policy through the National Flood Insurance Program to help cover hurricane flood damage. The average cost of flood insurance through the National Flood Insurance Program (NFIP) is about $1,000 per year, but the amount you pay depends on your location. Flood and disaster insurance is becoming more and more important as climate […]
continue reading Q: What homes are in hottest demand right now? Lexi, Perth Amboy, N A: Average home inventory in NJ statewide is still less than 2 months which is very low and suggests high demand for homes at most price points. Now that Millennials dominate home buying now, you might think that entry level homes at or below $400,000-$500,000 would be the hottest commodity right now, however, there has been almost a 50% increase of sales of NJ homes in the $1mil-$2.5 mil price range. This surge in buying in the $1 million-$2.5 million price range is primarily due to trade up home buying activity. Trade up home buying occurs when a homeowner sells their home and then purchases a more […]
continue reading Q: Gerald, my nephew won the highest and best offer on a home he and his wife are buying. The appraisal came in lower than their bid price. What can they do? Frank, Tom’s River, NJ A: Assuming your nephew is not paying cash and is getting a mortgage to buy the home, if the appraisal comes in lower than the purchase price he offered and the seller accepted, his lender will likely decrease the amount he can borrow. As a result, he’ll likely have to pay more $ out of pocket or try to convince the seller to lower his asking price. Sometimes you can have some influence on an appraisal but only before the appraisal is actually done. […]
continue reading Q: Is there no end to rising real estate prices in NJ? Caleb, South Orange, NJ A: So far in 2021 home prices in NJ have risen 17%, which is the highest home price % increase in NJ since the 1980s. On average, home prices in NJ over the last 60 years have increased 4-5% a year, so the massive price increases we’ve seen recently cannot continue indefinitely. Ultimately, incomes underpin real estate prices, so when home prices go up faster than incomes prices must eventually fall to reach market equilibrium. Although NJ housing inventory has been rising this year, it’s still less than 2 months which is still very low historically. Home prices rise when inventory is lower than […]
continue reading Q: Gerald, how long do you think the current seller’s market in real estate will continue into the future? Andy, Greenwich, CT A: While there are certainly many more buyers than sellers in many local real estate markets nationwide, which is why home prices have been going up so fast in so many places, there really is no such thing as a seller’s market because buyers always ultimately determine price. Buyers always determine the price when assets are sold because the person with the money always decides the price. The value of a property is determined by the price a buyer is willing to pay for it. Even when there are many more buyers than sellers as there are now […]
continue reading Q: Gerald, a lot of people moved to suburban and rural areas with more space when the pandemic started. Has that trend continued? Martha, Manville, NJ A: People fled urban areas in 2020 to buy and to rent seeking perceived safety from the pandemic as well as more space for their families and for home office space. That initial trend during the pandemic has reversed itself and as I anticipated people are moving back to urban areas both to buy and to rent. For example, rental demand in Manhattan in summer 2021 was the highest it has been in 10 years. Hudson County, where my Jersey City office is located, has recently been the highest performing housing market for residential […]
continue reading Q: Gerald, I am a landlord who has been having trouble collecting rent since the pandemic started. Are rents headed up or down? Earl, Plainfield, NJ A: In July U.S. rents rose 7% for one bedroom apartments & rose almost 9% for 2 bedroom apartments year over year. As the economy improves, people are moving out of shared living situations seeking their own piece of terra firma. In addition, home prices have skyrocketed recently particularly in 2020 when the pandemic first hit and people were fleeing cities looking for more space. Eventually, as home prices climb, many home buyers, especially 1st time home buyers are priced out of the market, which is another reason rents are on the rise. Where […]
continue reading Q: Gerald, I heard that the NJ Gov. extended the eviction and foreclosure moratoriums again, is that true? Cassidy, Weehawken, NJ A: Under the first of two laws NJ Gov. Murphy signed in the first week of August, 2021 renters making less than 80% of the area’s median income will be shielded from eviction through Dec. 31, 2021 for rent owed between March 2020 and Dec. 31, 2021. Renters with income above 80% of the median income will see the eviction moratorium come to an end on Aug. 31, 2021. The measure the Gov. signed surprisingly had bipartisan support and was praised by both housing advocates and landlord groups like the NJ Apartment Association. For tenants who certify that they […]
continue reading Q: Gerald, we just bought our first piece a real estate–a condominium unit. We just sent in our first monthly condo association payment–will that cover our insurance? Duane, Rahway, NJ A: One of the main differences between homeowners and condo insurance is how much the insurance policy protects. Homeowner’s insurance normally includes coverage for both building structure & contents, however, a condominium’s structure is often shared between individual condo owners. When you own a home, you are responsible for both the inside and outside, including the land, garage and any other structures on the property. I’m not exactly sure how your condominium complex is set up, but normally the condominium association pays the annual insurance premiums via monthly condo dues, […]
continue reading Q: Gerald, how will the recent spread of the delta variant affect real estate? Oscar, Bayonne, NJ A: After things on the horizon were looking better for the summer and the rest of the year, vaccination rates plateaued and the delta variant which we knew was more transmissible has been spreading like wildfire. The damage that the delta variant will do both to the economy and real estate will vary from region to region based on vaccination rates and people’s behavior like mask wearing. Places that still have a large majority of unvaccinated residents like Louisiana will be affected more than states that have higher vaccination rates–ICUs and hospitals in unvaccinated areas are full or close to capacity. As we’ve […]
continue reading Q: My son just moved to the west coast. He and his wife want to buy a home out there. How are all the wildfires going to affect home prices and their ability to buy? Chauncey, Island Park, NY A: The effect wildfires have on residential real estate will depend on specific demand for houses in the areas where the wildfires occur. When property values are high, as they are in many parts of California for example, owners tend to rebuild rather than move away after a wildfire. Homeowners in areas like this are also more likely to have an insurance policy to assist them rebuild after a wildfire. Rebuilding has become such a common process in California that there […]
continue reading Q: Housing inventory seems to keep falling. Is that trend going to continue? Terry, Springfield, NJ A: Housing inventory in NJ has actually been rising so far in 2021 although housing inventory is still incredibly low historically. Housing inventory is nowhere near the equilibrium point of 6-7 months where home prices stabilize and beyond which home prices start to move downward. The recent increase in home inventory is being driven by the fact that home affordability is becoming more of an issue as home prices have been rising by double digit percentages. Double digit % home price changes can’t and won’t last forever and the sharp increase in home prices is finally starting to create some price resistance in real […]
continue reading Q: Prices of lots of things have gone up since the pandemic, should I expect to pay more for my homeowner’s insurance also? Eddie, Holmdel, NJ A: Insurers worldwide are constantly recalibrating the risk they insure for particularly now in the wake of the COVID-19 pandemic, which has changed many things in the world of insurance. The pandemic has reduced the risk of burglaries from happening because people have been home more often. The constant presence of residents also makes them more likely to immediately notice and address any structural problems on their property, which lowers the likelihood of filing claims. At the same time, one unexpected consequence of the pandemic was the rise in sewer backups–sewer backup coverage is […]
continue reading Q: Gerald, I really need help with minor repairs on my rental property. How can I find a reliable handyman? Doug, Hackensack, NJ A: A referral from another property owner who has worked with the handyman before is ideal because it’s based on past performance and quality. If you don’t have any referrals, put a handyman wanted sign in a window or in the yard of your rental property with a phone # or email for them to contact. You can also try online on craigslist or similar sites, but the most reliable handymen are usually local, so a sign on the property will only elicit responses from local people. Every handyman doesn’t have the same skill set and experience, […]
continue reading Q: Gerald, my neighbor said we can challenge our property taxes to get them lowered–is that true? How does that work? Jimmy, Montclair, NJ A: Yes, you can appeal your property taxes in either the Tax Court of NJ or your County Board of Taxation–there is an annual deadline to file a property tax appeal which normally falls around the 1st of May. A successful property tax appeal will demonstrate that your property’s assessed value is higher than your home’s current market value. You should do an analysis to determine your property’s realistic eligibility for a property tax reduction because the municipality where your property is located has the right to file a counterclaim to seek to increase your assessed […]
continue reading Q: Are the foreclosure & eviction moratoriums actually going to end at the end of June as scheduled? Frank, Woodland Park, NJ A: The CDC extended the eviction moratorium for one final month until the end of July and FHFA followed suit by extending the foreclosure moratorium until July 31st 2021. Both the CDC and FHFA indicated that these one month extensions are the last and final extensions. NAR (the National Association of REALTORS) as well as The National Apartment Association (NAA) have pushed to end the eviction moratorium. While the basic premise behind the foreclosure & eviction moratoriums was sound in preventing evictions and foreclosures in the middle of a deadly pandemic, some tenants not facing financial pressure have […]
continue reading Q: Gerald, you’ve said many times that home prices keep rising because housing inventory is so low. How many more homes do we need to meet current housing demand? Ezra, Old Tappan, NJ A: Median existing US home prices are up a mind-blowing 19% due in large measure to housing shortages. In a recent NAR (National Association of Realtors) study, the housing shortage we face now is about 5.5 million housing units! There are about 140 million total housing units in the US so 5.5 million is a sizable shortage. The study shows that the shortages exist in all categories of residential housing. The 5.5 million unit housing deficit includes a 2 million shortage of single family homes, a 1 […]
continue reading Q: I got a fine from the city because my tenants put garbage outside my property on the wrong day. Why should I have to pay this fine? Ken, Roselle, NJ A: I have been a landlord for 20 years and believe me I can relate and understand your grief, Ken. In addition to a lease, I require all my tenants to sign and initial a lengthy lease addendum. The lease addendum I make all my tenants sign contains provisions that make tenants responsible for city violations they commit like leaving trash out on the wrong day. Requiring tenants to sign and pledge their understanding that they are responsible for violations they commit does 2 things: 1) it spells things […]
continue reading Q: When the foreclosure moratorium finally ends will there be lots of bank owned property opportunities? Rose, Brick, NJ A: There will certainly be more bank-owned properties (aka REOs) than there are now because foreclosure sheriff sales stopped during the pandemic. However, since home inventory is still so low in most places in the US, we should expect banks to be greedy–looking for top dollar for every property they foreclose on and then sell. I anticipate that banks with their REOs will make the same mistakes that many home sellers are making now as home prices continue to climb–overpricing homes hoping someone will pay higher than market price. If and when that happens, it’s important to be patient, because when […]
continue reading Q: I am a landlord planning to sell a few of my single family homes so I can buy a multi-family property. I need the proceeds from the sales to buy the multi-family. The single family homes I’m planning to sell are different sizes and are located in different towns. Is there a way to figure out which single family homes are likely to sell the fastest? Curtis, Mobile, AL A: The speed at which you sell your single family homes depends mostly on how you price them. Homes that are priced correctly sell the fastest. To sell quickly, a home should be priced at or slightly below the price similar single family homes have recently sold for because they […]
continue reading Q: I am a ‘newbie’ real estate investor. I want to buy property but prices have been going up so much recently, I’m afraid of a crash. Frank, Englewood Cliffs, NJ A: The Economist John Kenneth Galbraith said, “Genius is a rising market.” When property values go up, investors tend to get sloppy about the prices they pay. Red hot real estate markets like the one many of us are living through now attract speculators and fools who think that they can’t lose if they invest in the right market at the right time. This is dangerous thinking that often leads to dangerous investor behavior which is why you are justifiably concerned, Frank. When you buy any asset at current […]
continue reading Q: I am looking for hard money to fund a house I want to fix and flip. I’ve been asking different hard money lenders what interest rate and how many points they charge. What else should I be researching? Carl, Bloomfield, NJ A: If you borrow hard money, there are more costs other than just interest and points. There are endless other fees hard money lenders can and often charge borrowers. Here are 6 other fees that hard money lenders charge: 1. appraisal fees 2. loan fees 3. administration fees 4. inspection fees 5. credit report fees 6. legal fees. That’s just a short list 6 hard money lender fees off the top of my head—-there may be other fees […]
continue reading Q: Gerald, I read that a judge cancelled the eviction moratorium. Can I evict my tenants who have not been paying now? Michael, Orange, NJ A: Yes, that is correct, a federal judge vacated the CDC’s eviction moratorium. With or without that order, you can and should file eviction paperwork if you have tenants who have failed to pay rent or work out a payment arrangement with you. By filing the paperwork now, when landlord-tenant courts open up again, cases should be brought in the order they were filed so it will allow you to get a place in line. It remains to be seen how things will proceed in the very short term after the ruling because the federal […]
continue reading Q: I want to buy a home. Given where home prices are now, I figure I can get more value by buying a home that is in poor condition and needs work. Is there a way to buy a home like that with a mortgage? Steve, Essex Fells, NJ A: Rather than paying high interest rates for an interim loan with short repayment terms and perhaps a big looming balloon payment due on the horizon, HUD Section 203(k) allows homebuyers to buy a house that needs repair or upgrading. Consumer construction loans like 203(k) offer a solution that insures buyers a single, long term, fixed or adjustable rate loan that covers both the acquisition and rehabilitation of a home at […]
continue reading Q: My husband and I have been trying to buy a home for months. There’s been a bidding war for every home we’ve tried to buy so far. Do you have any advice for winning the next home bidding war we face? Bridget, Wayne, NJ A: Because there is a severe shortage of single-family homes in the US right now (almost 4 million housing units!), many people now believe that home bidding wars are unavoidable. The problem with choosing to take part in a bidding war is that it allows other competing buyers to determine the price you pay for a home or property rather than you. For any home or property you buy, you should be the one deciding […]
continue reading Q: Gerald, I’ve heard you talk about the importance of home zoning reform before. What do you think about the White House’s $5 billion housing proposal? Annabella, Union City, NJ A: There is certainly a big residential housing shortage in the US right now. The number of homes for sale now is less than half the number of homes available for sale 15 years ago. The White House is mulling a $5 Billion plan to ease the national housing shortage by pushing local governments to allow apartment buildings in neighborhoods that are currently restricted to single-family homes. The proposal provides financial incentives to local governments that change zoning laws restricting many neighborhoods to single-family homes. Zoning laws were rare in […]
continue reading Q: As a realtor, I look forward to the spring which is usually the strongest home buying season of the year. With Covid, do you think spring buying will be strong in 2021 like in most years? Gladys, Basking Ridge, NJ A: Great question, Gladys. The reason that Spring is traditionally the strongest home buying season of the year is because it normally takes a few months to close on a property after a purchase offer has been accepted and home buyers with kids ideally want to be in their new homes before the start of the fall school year. The pandemic has disrupted both work schedules and school schedules and likely has also disrupted the predictable seasonality of home […]
continue reading Q: When do you think home prices will fall? Scott, Edgewater, NJ A: Whenever home prices increase faster than incomes, a home price correction is inevitable. Home prices in NJ rose almost 12% in 2020—this huge increase was not the result of local real estate market fundamentals, but rather was caused by fear of coronavirus. Although incomes in general did surprisingly increase in 2020, incomes certainly did not increase as much as NJ home prices. Therefore, sometime in the next few years perhaps in 2023 there will be a downward home price correction as local real estate markets in NJ approach market equilibrium. Thanks for your question, Scott. Good luck. For more real estate tips and information visit my blog […]
continue reading Q: Can we expect lots of foreclosures after the foreclosure moratorium is lifted like during the global financial crisis? Valerie, Edison, NJ A: Although mortgage delinquencies have tripled in NJ in the last year, the current mortgage delinquency rate now in NJ is 5.4% which is less than half the delinquency rate in 2013 after the global financial crisis which was 11.8%. Consequently, I don’t believe the foreclosure rate will be as high when the moratorium is lifted as during the global financial crisis after 2008. Nevertheless, foreclosures will inevitably increase after the foreclosure moratorium is lifted because so many people have lost their jobs and because all the foreclosures that were in process before the pandemic were temporarily postponed […]
continue reading Q: What can we expect will happen in real estate after everyone is vaccinated? Sandra, East Brunswick, NJ A: There are many homeowners who’d decided to sell who then pulled their homes off the market when the pandemic hit because they were concerned about letting strangers into their homes. There are also many homeowners who wanted to sell but didn’t over the last year for the same reason. After we’ve achieved herd immunity, many of these homeowners will put their homes on the market to sell which will provide much needed additional housing supply in local real estate markets nationwide. Thanks for your question, Sandra. Good luck. For more real estate tips and information visit my blog at geraldlucas.com.
continue reading Q: I heard they may roll back the property tax deduction limitation from the last tax bill. Is that true? What will the impact be on New Jersey real estate? Henry, Sayreville, NJ A: SALT stands for state and local tax. The 2017 tax reform bill capped SALT deductions at $10,000 so rolling back the SALT deduction limits would impact residential real estate in New Jersey particularly in North Jersey where property taxes are higher. In fact, six NJ Counties have property taxes that on average exceed $10,000 per year. Property taxes aside, the pandemic made many suburban locations more appealing to home buyers and if the SALT Deductibility Act is passed it will restore the pre-2017 deduction. If passed, […]
continue reading Q: I am looking for a partner for a fix and flip property that I have under contract. I spoke to someone who is interested but expects to make a lot more money than I think is possible given the comps and the estimated rehab cost. What do you think? Jimmy, Kearny, NJ A: Jimmy, you should thank this guy for showing interest and then run as fast as you can from him. If you and this person are not on the same page with respect to the facts of the fix and flip deal you have then you should not partner with him. Flipping houses is not rocket science, it’s based on basic math that primarily revolves on a […]
continue reading Q: Gerald, I have been a landlord in NYC for years. I bought my first property in North Jersey and was wondering how much of an extra security deposit I can collect for a pet? Alan, Brooklyn, NY A: According to NJ state law, a landlord may not require or accept more than 1 ½ times 1 month’s rent according to the terms of a lease as a security deposit. Every local real estate market has its own unique landlord-tenant laws and in NJ, the security deposit rule is clear—1 ½ months period—Even when you increase a tenant’s rent as a landlord, the additional amount of security deposit collected annually as additional security cannot be greater than 10 percent of […]
continue reading Q: How will the coronavirus vaccine rollout affect housing? Curtis, Woodland Park, NJ A: As COVID-19 vaccines slowly roll out, people are wondering what the impact will be on local housing markets. The chief economist at realtor.com recently said that “we’re going to settle somewhere in between where we were before COVID and where we were during COVID.” She went on to say that “as the risk of serious illness declines because more people are vaccinated, we expect to see more sellers,” who may have chosen to delay selling their homes during the pandemic. Additional housing supply from previously skittish sellers is critical now after housing inventories hit an all-time low this past December. The expansion of telecommuting amid the […]
continue reading Q: What do you think about the first time homeowner tax credit that is being discussed? Melissa, Rahway, NJ A: The housing industry is keeping a close eye on the Biden administration’s proposal of a $15,000 first-time home buyer tax credit. If the proposal is successfully passed, the $15,000 first-time homebuyer tax credit could be immediately available to homebuyers. Biden’s tax credit is more likely to pass now that democrats control all 3 branches of government. The first-time homebuyer tax credit proposal would obviously be beneficial to first time home buyers who may be struggling during the pandemic to save a sufficient down payment to buy, however, it may also make homes less affordable by pushing home prices higher. Increasing […]
continue reading Q: Many people during the pandemic are working from home. What’s going to happen to all the empty office buildings? Sarah, Glen Ridge, NJ A: As more and more office spaces are empty during the pandemic, New York Governor Andrew Cuomo has thrown his support behind a proposal to let commercial landlords convert office and hotel buildings in New York City to residential use. More and more businesses are re-evaluating their office space needs given that remote work has proven to be not only safer for employees but also more productive and less expensive for businesses. Converting unused commercial space for residential use is a very smart public policy development that will help alleviate the residential housing shortage that has […]
continue reading Q: Does it make a difference what I use to remove snow around my property? Calvin, Parsippany, NJ A: The 2 main snow and ice removal agents people use are rock salt and calcium chloride. The only real advantage of using rock salt over calcium chloride to remove snow and ice is that rock salt is a little cheaper. However, calcium chloride offers several advantages over rock salt: One of the most obvious advantages is that calcium can be effective at much colder temperatures than rock salt. Rock salt loses its effectiveness at temperatures below 15 degrees Fahrenheit. Also, rock salt poisons soil, damages trees and other vegetation, and damages concrete. For these reasons, I recommend using calcium chloride over […]
continue reading Q: Gerald, I have a fix and flip house under contract. Should I start the rehab now in the middle of winter? Larry, Old Tappan, NJ A: Almost all challenges you face in life are situational. Whether you should start doing the rehab right now in the middle of winter depends on several factors including your cost of capital, your daily holding costs, the availability of electrical power at the property and labor availability. If your cost of capital and/or holding costs are high, it may make sense to get started on the rehab immediately because every day you wait is more money out of your pocket. Dilapidated properties often don’t have electrical power and doing the rehab and keeping […]
continue reading Q: Gerald, I’m a newbie investor. I’ve been prospecting to find new deals and I can’t seem to get anywhere. Homeowners have been hanging up on me and yelling at me and it frustrates me which makes me less likely to keep prospecting and following up which I know I should be doing to get my first deal. Danny, Montville, NJ A: Developing any skill takes time and effort, whether it’s learning to walk as an infant, ride a bicycle as a child or drive a car as a teenager. If you fail your first driver’s license road test, it doesn’t mean that you’re never going to be able to drive a car. Your commitment to developing the skill you […]
continue reading Q: Gerald, why did home sales fall at the end of 2020. Vicky, New Brunswick, NJ A: In the Northeast, although pending home sales fell the last few months of 2020, sales are still up from a year ago. Also the sales decline was after 5 straight months of increases. All of these statistics initially are estimates that are often revised as more information comes in. The general market trend of increased home sales continues and is more important than month to month changes. Housing contract signings remain higher than a year ago due to worsening housing inventory shortages and rising home prices. Home prices reached a 14 year high in October 2020, both existing and new home sales should […]
continue reading Q: What do you expect for real estate in 2021, Gerald? Candy, Weehawken, NJ A: 2021 Real Estate Market Forecast 5 Key Areas To Consider: Housing Inventory Pandemic surges & vaccine rollout and implementation New Buyers Entering Marketplace Remote Work Migration There was a shortfall of 4 million newly constructed homes in 2020 nationwide so housing sales are likely to remain strong even if income and the greater economy don’t bounce back because housing inventory relative to demand continues to plummet. The only fix for this problem in the short run is additional housing supply. As with much of what has transpired for the last 9 months, local real estate markets will be affected in large measure by the pandemic […]
continue reading Q: 3 Year End Real Estate Tax Tips A: Year End Real Estate Tax Tip #1. Prepay quarterly estimated state tax payments. Disclaimer: I am not an accountant Consider paying your fourth-quarter estimated state income taxes or any outstanding state income taxes by the end of December. Your payments will be tax deductible for this tax year if you’re not subject to the alternative minimum tax (AMT). Year End Real Estate Tax Tip #2. Contribute the maximum amount of $ allowed to your retirement account There are very few investments better than tax-deferred retirement accounts because they compound your money over time free of taxes. The sooner you get your money into the retirement account, the sooner it has the […]
continue reading Q: Home prices seem to be going up still even during the pandemic, do you think this will continue? Will, Montclair, NJ A: Great question, Will. Housing demand is far outpacing supply right now which is why home prices in so many places continue to rise in many local real estate markets despite the pandemic and all the economic calamity that has gone with it. In Q3 2020, half of all listed properties sold within 3 weeks down from 1 month a year before and more than ⅔ of all listings went under contract in less than 30 days. However, the basic rules of real estate ultimately supersede short term trends. Right now home price growth is outpacing personal income […]
continue reading Q: Gerald, my realtor sent me a market analysis for our home that we are selling, but I think the price is too low because it doesn’t take into account the fact that we have a finished basement, new roof and new deck. I want to get as much money for our home as I can. Christine, Scotch Plains, NJ A: I agree that your finished basement, new roof and new deck are items that increase the appeal of your home to prospective buyers which is very important however, the value of your home which is what the comparative market analysis (CMA) indicates is based on what similar homes have recently sold for in your neighborhood. Both property appeal and […]
continue reading Q: My business partner and I are looking for our 1st rehab property to fix and flip. What should we be careful of with respect to the condition of the property before we buy? Carl, Rockaway, NJ A: The two most serious problems to be concerned with when you buy a property to fix and flip are structural and environmental problems. Because of potential structural or environmental problems, it’s a good idea to pay for a home inspection before you buy a property. Structural problems include foundation cracks and environmental damage may result from contamination from a leaking underground oil tank. A leaking underground oil tank can cost tens of thousands to remediate which can erase all your expected profits […]
continue reading A Very Special 2020 Thanksgiving Message: 2020 has been a very tough year for many obvious reasons amid the pandemic. I try to make gratitude a daily habit. At the end of every day, I try to write down at least one thing that I am grateful for. On this special Thanksgiving, I want to give humble thanks to my many blessings including: 1) the continued good health and happiness of my family and close friends 2) recently celebrating 20 years in the real estate business 3) the fact that unlike many other industries like tourism and hospitality, residential real estate was not devastated by the pandemic. I want to wish all of you in my real estate insider family […]
continue reading Q: Gerald, I have a deal I’m working on right now that will probably collapse because of a lien that we found out is attached to the property. Title searches can be expensive, is there a cheaper way? Tom, Cranford, NJ A: Great question, Tom. Charles Jones is a data trace company–you could have done what’s called a Charles Jones lien search on the property which will only cost about $10-20, a much cheaper alternative to paying for a full, comprehensive title search. You can pay for a Charles Jones property lien search at charlesjones.com Thanks for your question, Tom For more real estate tips and information visit my blog at geraldlucas.com.
continue reading Q: Which markets in North Jersey are hottest right now, Gerald? Holly, Wayne, NJ A: One of the things I track in the local real estate markets I operate in is housing inventory. Housing inventory is a measure of the number of months required for a local housing market to absorb the inventory of currently available unsold homes. The lower the housing inventory, typically, the hotter and more competitive the local real estate market. When housing inventory is very high, it normally foreshadows an impending reduction in home values whereas when housing inventory is very low, it normally foreshadows an increase in home values–the break-even point is about 6 months of housing inventory. I operate in 5 northeast Jersey Counties: […]
continue reading Q: Gerald, I’ve been paying hard money lenders high interest rates for my rehabs. I’d prefer to have some private lenders. What’s the key to getting private lenders? Eric, Tinton Falls, NJ A: Private lenders (in real estate) are people looking for additional income by passively investing in real estate. I wouldn’t necessarily assume that a private lender will necessarily have lower interest rates or better terms than a hard money lender however, since lending money is not their primary business and because they probably don’t have a lot overhead, you can often negotiate better terms when you borrow short term from a private lender–however, the devil is always in the details. That said, trust is the key to forging […]
continue reading Q:Gerald, I have been trying to wholesale for over a year and I can’t seem to find any deals. I had one deal that was about to close and then the seller’s cell phone was disconnected. Any advice? Mark, Mahwah, NJ A: In general when you are not getting the results you want, you need to change what you are doing–as a real estate investor, this normally requires getting more deliberate and aggressive rather than being passive and waiting for things to happen or for someone else to act. There are things in the world that we control and then there are things (most things) that we don’t control. Focus on what you control. Getting good real estate deals is […]
continue reading Q: Gerald, I want to be a real estate investor but there are no good deals in my market, I don’t have any investment capital or any experience. Adam, Bergenfield, NJ A: Nobody starts out with any experience when they do anything for the first time, Adam. As the philosopher, Lao-tzu said, “A journey of a thousand miles begins with a single step.” If you want to be a real estate investor you have to start. Whatever you set out to do, wherever you want to go, you have no choice but to start from where you are now regardless of your present circumstances. Here’s a little story to illustrate my point: Ed & Mark are friends from elementary school […]
continue reading Q: Gerald, mortgage rates are low but I don’t want to miss out on the lowest rates possible. Is now the best time to refinance my mortgage? Gary, Weehawken, NJ A: If your mortgage has a higher interest rate compared to the mortgage rate you can get now given your credit score and income, then refinancing could be a smart financial move. The truth is that everyone’s personal financial situation is different so it’s best to make decisions based on your personal situation not based on generic advice. Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%, however, many lenders say a 1% savings is enough […]
continue reading Q: Gerald, I read a recent article about telecommuters leaving cities for Zoom towns. What is a Zoom town? Valerie, Providence, RI A: The pandemic is affecting home buyer demand in major ways as many Americans, particularly those with telecommuting options leave more expensive city centers like San Francisco. In Truckee, Calif., a mountain resort town outside of Lake Tahoe, home prices have risen by almost 25% since last year as Bay Area residents have moved away seeking more home space and lower home prices. Truckee has become a Zoom town, labeled as such because residents can work remotely in a desirable location without the need to live close to an office. Other Zoom town locations like The Hamptons, Cape […]
continue reading Q: My wife and I had been planning to sell our home soon but we pulled back when the pandemic lockdowns began. We still want to sell, what’s different about selling now in the pandemic? Ravi, Brooklyn A: Residential real estate has changed since the onslaught of the pandemic–one of those changes is the current foreclosure moratorium, which has effectively reduced the number of available homes for sale on the market. This reduction in available homes makes competition amongst buyers for houses that are currently for sale more fierce. This intense competition among buyers coupled with record low mortgage rates is making it easier for many homeowners to sell their homes right now. In my new book, “How To Sell […]
continue reading Q: When Will The Foreclosure Moratorium Expire? Tiffany, Edison, NJ A: The moratorium on single-family foreclosures for certain federally-backed mortgages has been extended until the end of December 2020. The extensions will benefit 25-30 million homeowners who have mortgages guaranteed by Fannie Mae and Freddie Mac. Nearly a third of homeowners and renters entered August with unpaid housing bills. Furloughs and job losses due to the pandemic are fueling mortgage and rent defaults. It’s anyone’s guess how long the foreclosure and eviction moratoriums will ultimately expire because the foreclosure moratorium could potentially be extended again at the end of this year. Hopefully, policy makers will signal the expiration of the foreclosure moratorium to give people more time to plan for […]
continue reading Q: Gerald, I just saw an article about a spike in zombie foreclosures this year during the pandemic. What’s a zombie foreclosure and what’s the impact? Derrick, Bayonne, NJ A: Zombie foreclosures rose recently to almost 4% of the over 200,000 homes already in the process of foreclosure–this step in the process before the foreclosure sheriff sale is called pre-foreclosure. A pre-foreclosure becomes a zombie foreclosure when the owner vacates the home when the foreclosure process begins, despite the fact that the property remains in the homeowner’s name. Zombie foreclosures were up 3% from Q2 2020, even though the overall number of homes in the process of foreclosure declined 16% due to the foreclosure moratorium. Vacated properties in foreclosure rose […]
continue reading Q: My brother who has been working in Silicon Valley moved to Idaho where rents are cheaper and is working from home. Will this trend lower housing prices in cities across the US? David, New Brunswick, NJ A: There was definitely an exodus of people from Manhattan in the early days of the pandemic particularly when infection rates were very high in March and April of this year as people migrate looking for more space–a similar phenomenon occurred in San Francisco. In both Manhattan and San Francisco, which are the two most expensive real estate markets in the US, housing inventory is nearly double what it was last year, as homes are staying on the market twice as long as […]
continue reading Q: Do you think rental properties are still a good investment now during the pandemic? Scott, Nyack, NY A: The strength of any investment depends on the numbers (ROI etc.) vis-a-vis the investor’s goals. The pandemic has certainly affected rental property, particularly multi-family rentals because tenant behavior has changed as a result of the pandemic. For example, now that more tenants are staying home during the pandemic, many of the costs and expenses generated in rental properties have increased for things like water, electricity and gas, trash removal as well as cleaning & disinfecting common areas used by tenants, like stairwells, elevators and lobbies. In addition, with so many more people working and learning from home, rental properties are facing […]
continue reading Q: Should I refinance now or wait for lower rates? Mark, Babylon, NY A: Fannie Mae and Freddie Mac are adding an additional .5% fee on most mortgage refinance loans that will raise costs for borrowers who refinance to take advantage of historically low rates. The mortgage giants claim that the new 0.5% fee is intended to mitigate their risk associated with projected losses due to the Covid-19 pandemic. Fannie and Freddie don’t originate loans, instead they buy mortgage loans from lenders, then wrap them into securities and guarantee the repayment of principal and interest to investors who buy the securities. The Mortgage Bankers Association, said the fee would raise costs for the typical borrower by $1,400. To avoid the […]
continue reading Q: I’m a realtor. Everyone is talking about whether schools will reopen fully this fall because of the Coronavirus shutdowns. Many of my buyers in the past have tried to time their closing so their kids don’t have to switch schools mid-year. Will the school re-openings affect home buying activity this fall? Christina, Summit, NJ A: COVID-19 has disrupted traditional home buying seasonality in a major way. Traditionally, the Spring has the highest home buyer demand as families as you pointed out often try to close on the homes they buy during the summer before the school year begins. The pandemic lockdown in the spring postponed the usually strong spring home buying market and the confusion around school reopenings may […]
continue reading Q: How long will the foreclosure moratorium last? Eileen, Palisades Park, NJ A: The foreclosure moratorium had been set to expire at the end of June and was extended through the end of August–it certainly can and may be extended again. At present, the moratorium on evictions and foreclosures seems to be having their intended effect. Foreclosure filings are currently at their lowest rate in 15 Years. The FHFA oversees Fannie Mae and Freddie Mac, as well as the 11 Federal Home Loan Banks. Together, these entities provide more than $6.4 trillion in aggregate funding for U.S. mortgage markets and financial institutions. Over 50 million Americans have filed for unemployment so far. Though new jobless claims have been slowing, the […]
continue reading Q: How does what the Fed does affect mortgage interest rates? Carl, Edison, NJ A: The Fed doesn’t set mortgage rates directly. The Fed sets the federal funds rate, which impacts short-term and variable interest rates. Other factors affect mortgage rates like price inflation as well as supply and demand–lenders for example may decrease interest rates to attract more business. The Fed’s monetary policy can increase or decrease interest rates which affect mortgage rates but only indirectly. Thanks for your question, Carl. For more real estate tips and information visit my blog at geraldlucas.com.
continue reading Q: More and more people are filing for unemployment now. How will this impact real estate? Cameron, Essex Fells, NJ A: The job market serves is one of the most important factors that determine how many people will buy homes. In general high unemployment creates lower expected future income and lower demand for housing overall. People who have unfortunately lost their jobs are unlikely to buy homes in the near future. While wealthy buyers may be shielded from the economic downturn that the pandemic has caused, they may be hesitant to spend money on property as we face economic uncertainty. The effect of the coronavirus on the housing market is hard to forecast, a lot depends on how deep the […]
continue reading Q: How has real estate changed because of Covid-19? Gail, Hempstead, NY A: We are still in the early innings of the pandemic but so far the same basic rules of residential real estate still apply (not sure the same can be said about commercial real estate, but that’s another discussion). As was the case before the pandemic, supply and demand affect residential real estate more than any other factor. Here are 3 salient changes I’ve noticed since restrictions in my local market have been lifting: 1. There is pent up demand that is driving sales and even bidding wars 2. Housing supply is even lower than before the pandemic as some property owners have pulled listings off the market […]
continue reading Q: With unemployment so high now, do you think people who sell their homes now should lower their asking price? Kevin, Palisades Park, NJ A: Every local real estate market is different and has and will respond to the pandemic and the economic fallout that results from it in its own way. What I’ve seen so far during the pandemic in north jersey is after the initial lockdown in March and April a rebound in buying activity in May and June due in part because the virus is currently under control in our area. There was pent up home buyer demand and even lower housing inventory than before the pandemic which so far has made home prices in our area […]
continue reading Q: How Will A 2nd Coronavirus Wave Affect Real Estate? Hector, Elizabeth, NJ A: In the US, we are unfortunately still dealing with the 1st wave of the Coronavirus because our preparation and response thus far has been so bad compared to the rest of the developed world. Any spike in Coronavirus will reduce mobility which will ultimately have a negative effect at least in the short term on real estate. If and when there is a 2nd wave of Covid-19, the effect will depend on what time of the year a second wave occurs in each local real estate market. If a second wave occurs during the holidays when real estate activity tends to slow anyway it will have […]
continue reading Q: Is it true that suburban homes are more valuable now than properties in cities because of what’s happening with coronavirus? Stan, Morris Plains, NJ A: So far, in the markets I operate in in North Jersey, there seems to have been a shift in buyer demand–higher demand for vacant homes, homes with backyards, homes with home office space and pools. However, the initial perceived changes in demand caused by the pandemic may or may not continue in their current trajectory. Although many people have already predicted a flight from cities to suburbs and more rural areas due to the initial impact of the virus on cities, right now most of the covid-19 hot spots tend to be in more […]
continue reading Q: Real estate sales have slowed a lot during the virus lockdown. Do you think real estate sales will continue to be slow for the rest of this year? Duncan, Greenwich, CT A: Residential real estate buying is typically seasonal with the strongest sales usually occurring in the Spring. Since most of the US was in Covid-19 lockdown for most of the Spring, it is likely that the Spring homebuying spree will shift to later in the year. This shift in demand may in fact occur this summer in places like NJ where I operate that have effectively contained the virus-at least for now. Coronavirus mitigation will have an inordinate effect on the economy and real estate for the foreseeable […]
continue reading Q: I noticed many big institutional buyers of property are holding back now during the pandemic. How much of an equity cushion do you need when you buy investment property now? Jimmy, Franklin Lakes, NJ A: With respect to residential property, more uncertainty requires more of an equity cushion when you buy to mitigate your risk. Take a note from the actions of hard money lenders (HMLs) recently who are lending at lower LTVs thereby requiring higher down payments from investor borrowers and are also requiring borrowers show much higher reserves from investors. The less certain you are about the true value of a property, the less you should pay for it–as a rule, investors should discount their purchase offer […]
continue reading Q: When do you think it makes sense to take money from retirement if you’ve been struggling financially during the Coronavirus pandemic? Carlos, Paterson, NJ A: You should always make financial decisions based on your specific financial and personal situation not based on generic advice you hear from others. Under the legislation Congress passed in March, you can withdraw up to $100,000 from retirement savings without triggering the 10% early withdrawal penalty that normally comes with it however, it’s prudent to liquidate retirement money only as a last resort–meaning, after all other possible avenues to get money fail. If you find yourself in a financial hole, the first thing you want to do is stop digging, so if you’ve lost […]
continue reading Q: Gerald, will New York City’s new rental laws affect real estate in NJ? Doug, Hoboken, NJ A: NYC recently approved a package of rent laws that affects NYC’s 5.4 million NY renters and landlords. Among other things the new laws affect rent increases, broker fees and evictions. The most powerful force in real estate and most markets is supply and demand. These new NYC laws already have resulted in many new york landlords and investors looking at other local markets to do business in CT, Long Island and NJ–I have certainly seen more competition from NY investors in the local real estate markets I operate in. The competition will certainly have an effect on demand as will the corona […]
continue reading Q: Do you think the Covid-19 pandemic will cause more home foreclosures? Victor, Bronx, NY A: In the short term, lenders will be eager to at least try to rework or modify mortgage loans particularly with the foreclosure moratorium that currently exists–this will stave off an increase in foreclosures for the time being. However, the mortgage forbearance that banks are currently offering is not debt forgiveness and at some point later this year or next year, those mortgage payments will be due–if borrowers are still unemployed or underemployed and have burned through their savings, there will be an expected increase in foreclosure actions with income or lack thereof as is normally the case being the biggest driver. Thanks for your […]
continue reading Q: How will Covid-19 affect rents? Hailey, Hoboken, NJ A: Every local real estate rental market is different with it’s own unique set of characteristics and laws so the effect of the Coronavirus like any exogenous factor will vary from place to place. It may be useful to think of how rents will be affected by Coronavirus in terms of the short term impact vs. medium and long time impact. In the short term, given that many places have instituted eviction moratoriums, landlords have no choice but to be patient. Smart landlords will be flexible, offer options to affected tenants while being clear and consistent–other landlords won’t and will ultimately suffer as a result. Regarding airbnb and similar short term […]
continue reading Q: Is now a good time to buy a home? Meredith, Clifton, NJ A: A recent gallup poll revealed that a record low percentage of Americans (both among homeowners and renters) thought that now was a good time to buy a home? This pessimism shows that the coronavirus blues have set in in many places understandably. Any big purchase like a home should be made with a focus on your individual financial goals and personal financial situation. Putting aside investment property for a moment, mortgage rates are at all time lows which makes now one of the best times to buy or refinance an owner-occupied home at a fixed interest rate. Every 1 point drop in interest rates increases your […]
continue reading Q: Gerald, when will we finally get past the Coronavirus epidemic? Dale, Orlando, Fl A: Contrary to popular belief, weather forecasts are reliably accurate. If there is a 30% chance of rain, it rains 30% of the time. The problem is that most people are looking for something that the weatherman and most health experts in the middle of the COV-19 crisis can’t provide: certainty. Expecting certainty is unrealistic and potentially dangerous because it gives people a false sense of security as they wait for things to magically play out the way they expect. People seem to naturally desire things they can’t have. The world we live in is a complex system with multiple variables that affect it that are […]
continue reading Q: Do mortgage forbearances that banks are offering apply to condo and homeowner association dues? Alice, Cresskill, NJ A: At the end of March, NJ Governor Murphy announced that Citigroup, JP Morgan Chase, US Bank, Wells Fargo and Bank of America agreed to a 90 day grace period due to the COVID-19 epidemic, where borrowers can lower or delay monthly mortgage payments. Many federal & state-chartered banks and credit unions also agreed to the mortgage forbearance period. Borrowers should reach out to your mortgage lender directly however to confirm that they agreed to the temporary forbearance grace period because it will vary from company to company. Unless the board of the condo or homeowner’s association has decided to allow for […]
continue reading Q: Gerald, I am a new wholesaler, how will the Coronavirus affect rehabbing? Derrick, Westfield, NJ A: During the Coronavirus crisis, private money is likely to be king at least for a while as hard money lender money sources dry up, this will certainly affect you at least indirectly as a wholesaler. Private lenders are typically individuals seeking additional income by passively investing in real estate. It’s a good idea to develop relationships with private lenders regardless of where your real estate market is–it takes time to build a relationship with a private lender–they’ll need to get comfortable with and trust you before they’ll lend their money to you–you can assuage private investors’ fears by being totally honest and upfront […]
continue reading Q: How will coronavirus affect home prices? Ed, Cranford, NJ A: Ed, coronavirus will cause a correction in the real estate market. Since real estate is a local phenomenon the impact on home prices will differ from place to place based on supply, demand, personal income and employment in each local real estate market. In NJ, after an almost 5% increase in home prices in 2019, the real estate valuations expert I follow predicts a 5-12% decrease in NJ home prices due to the coronavirus crisis. The good news is that record low mortgage interest rates and trillions of dollars of government stimulus will likely trigger a big rebound in home sales and home prices after the coronavirus is in […]
continue reading Q: How will the Coronavirus crisis affect mortgages? Diane, Scotch Plains, NJ A: The Director of FHFA said that Fannie Mae & Freddie Mac which guarantee almost half of US mortgages said they have resources to last through a quarantine lockdown of 12 weeks–he said that a lockdown longer than 2-3 months would be a real stress to the mortgage market like what we saw during the great recession. One big potential problem in the mortgage market lies with mortgage servicers who collect mortgage payments from borrowers and pass them onto investors. Mortgage servicers are required to pay mortgages even when borrowers are granted forbearance–Fannie & Freddie aren’t required to repay servicers for 6 months which may create liquidity problems […]
continue reading Q: How will the coronavirus affect the economy and real estate? Carl, Scotch Plains, NJ. A: It’s too early to tell the full extent of the effect on the economy and residential real estate but all signs point to a severe recession as bad or worse than the recession around the global financial crisis of 2008-2009. Mohamed El-Erian, who was CEO of the world’s biggest bond fund said recently that a global depression is possible. The problem is that there is no economic solution to this crisis–as long as millions of people are worrying about getting sick, you can’t fix the economy because there has been a breakdown of the mechanism of exchange upon which an economy depends. The key […]
continue reading Q: Gerald, I’m a realtor. I keep seeing businesses shut down because of Coronavirus–should realtors stop working? Karen, Bloomfield, NJ. A: Thanks for asking such an important question, Karen. To start things off, let’s set priorities: Keeping yourself, your family and your community safe and flattening the curve which means slowing down the spread of the coronavirus should be paramount to everyone–you, me and everyone else. The precautions that you are seeing more and more of (i.e. business closings etc.) serve that purpose–to slow the spread of the virus and we should all do our part to adhere to those precautions. To answer your question, here’s a hypothetical question that you and everyone else should ask themselves: Can you do […]
continue reading Q: I’m buying a house. The current owner’s water bill seems high. How can I lower the water bill when I own the property? Harry, Rahway, NJ A: Here are 3 ways to lower home water bills: Buy energy efficient appliances Use a dishwasher rather than washing dishes by hand. You use over 25 gallons of water when you wash dishes by hand versus less than 5 gallons of water with an energy efficient dishwasher Test your toilets and look for leaks on a regular basis. A tiny opening in your faucet could waste 100 gallons of water a day and most faucet drips can be fixed by just replacing a worn-out washer. For more real estate tips and information […]
continue reading Q: My husband and I are buying a home. Our mortgage guy said we need a jumbo loan. What is a jumbo loan and how is it different than a regular loan? Janice, Scotch Plains, NJ A: Fannie Mae and Freddie Mac set guidelines for mortgage loans. Loans that conform to those guidelines are called conforming loans—conforming loans make up the majority of residential loans. Loans that exceed the limits set for conforming loans that can be sold on the secondary mortgage market are called jumbo loans. Lenders typically are able to sell conforming mortgages in the secondary market, replenishing their credit lines in order to originate more loans. Jumbo loans don’t have a strong secondary market to sell to […]
continue reading Q: Is buying always better than renting? Sandy, Linden, NJ A: The first thing to consider whether you rent or buy is affordability—what can you reasonably afford? In some places like Manhattan or San Francisco, homeownership may be out of reach for many people because the price of land is so high. Overall, the benefits of homeownership certainly add up over time (tax deductions, wealth or equity creation etc.). It is unwise to think of renting vs. buying in a one size fits all way. As with all important life decisions, before considering whether to rent or buy, you should look honestly at your current personal situation—your income, your debt, your marital status and most importantly, your goals-short term and […]
continue reading Q: I have a tenant that continually smokes cigarettes and has pets despite the fact that both are violations of the terms of his lease. The tenant is section 8, does that mean I can’t evict him? Fred, Bristol, PA A: It’s in the best interest of a landlord to avoid eviction if possible. The first step I suggest you take (if you haven’t already) is notify the tenant in writing that smoking cigarettes and having a pet is a breach of his lease and grounds for eviction. The Section 8 rental assistance program gives tenants rent vouchers to help them afford housing, however, all tenants regardless of how they pay their rent are required to abide by the terms […]
continue reading Q: Hi Gerald, I found a great deal on a property that I want to buy. I’m satisfied that I did enough due diligence: I checked sold price comparables and the property is fully rented in an area where I know I can find other tenants. The problem is that my attorney is trying to convince me not to buy it. What do you think I should do? Kevin, Salt Lake City, Utah A: Good real estate attorneys play a critical role on your real estate team. There are some very good real estate attorneys and there are many real estate attorneys that are awful. I use attorneys to review contracts, but never to make business decisions—that’s my job as […]
continue reading Q: My daughter is finishing up her junior year in college. She is renting an apartment. How much can the landlord increase her rent? Lindsay, Delran, NJ A: If your daughter signed a written lease, her rent payments are fixed and can’t be increased throughout the term of the lease. If your daughter is renting month-to-month, her rent can’t be increased until the end of any given month. The best protection against rent increases is a longer term lease–leases can be as long as both parties decide. Landlord-tenant laws vary widely from state to state and they vary in different towns, cities and counties within states. In general, rents are determined by the law of supply and demand however, some […]
continue reading Q: Gerald, I made a commitment to build my real estate business but I am having a very tough time with bad tenants, contractors and attorneys. What am I doing wrong? Charlie, Linden, NJ A: Building any business is challenging. It’s easy to focus on the pain and frustration that normally accompany struggle, however I suggest you consider how much you are growing and developing personally and professionally as a result of these struggles you are dealing with in your real estate business. There is in fact an inextricable link between struggle and progress. When you exercise, you damage muscle fibers that your body repairs and replaces usually resulting in stronger muscles. When you learned to walk and ride a […]
continue reading Q: Gerald, how will climate change affect real estate? Evan, Toms River, NJ A: Climate experts predict that 2% of US homes are at risk of being underwater by 2100 and in low-lying coastal areas in places like Florida & Hawaii, over 10% of homes could be inundated by water. The fact is that rising water levels, heat waves, droughts and wildfires will for sure increase the cost to insure property and local government building ordinances and re-building guidelines will affect where and how property will be built in at risk areas like in coastal areas. In New Orleans for example, after hurricane Katrina, homes have been rebuilt at higher elevations, with storm shutters, stormproof windows and draining systems. Real […]
continue reading Q: Hi Gerald, I need to find a good contractor to do some property renovations. The last time I hired a contractor, he took forever to do the work and never finished even though we paid him in full. I’d do the work myself, but with our new baby and the increased hours I have to work on my new job, I just don’t have the time. What should I do? Steve, Hartford, Connecticut. A: Real estate is best done in writing rather than based on verbal agreements which can be easily misconstrued. My first piece of advice is for you to make any contractor you work with sign a written contract before any work is done or any money […]
continue reading Q: I’m a new landlord. I’m preparing to rent out an apartment in my new property. A friend of mine told me to avoid section 8 tenants. Can I refuse to rent to a tenant if he or she gets section 8 assistance? John, New Brunswick, New Jersey A: Hi John. In New Jersey you cannot discriminate based on a person’s source of income, thus refusing to rent your apartment to a tenant because they receive section 8 assistance would certainly violate that rule. Landlord tenant laws vary a great deal from place to place, so always consult the rules in the area where your property is located. As a landlord, it’s best to have a thorough written rental policy […]
continue reading Q: Gerald, I’m newbie real estate investor. I know you’ve said that I should work with investor-friendly realtors. What exactly is an investor-friendly realtor? Carlos, Union City, NJ A: Realtors are typically trying to maximize their commission checks while investors are typically trying to buy properties as cheap as possible (these are not the same goals). Consequently, realtors will often look at investors as time-wasters, which is why you should always be upfront about being an investor and never feel bad if a realtor doesn’t want to work with you–just move on to the next Realtor until you find one that is investor-friendly. Good realtors usually have a niche and for some realtors that niche is investors. Investor-friendly realtors are […]
continue reading Prepay January mortgage payment to increase your mortgage deduction this year Real estate investors should make more purchase offers while competition is lighter over the holidays–this will increase the likelihood your offers will be accepted Landlords, protect property’s indoor pipes this month and throughout the winter especially under sinks, in attics and crawl spaces, and on pipes along exterior walls. Pay special attention to basements, where over ⅓ all burst pipes occur. Merry Christmas. Happy Holidays! For more real estate tips and information visit my blog at geraldlucas.com.
continue reading Q: I’m buying my first home. Do I need a pre-qualification, a pre-approval or both? What’s the difference? Emma, Little Falls, NJ A: A pre-qualification is an estimate of what a buyer can afford to borrow to buy a home. A pre-approval is a conditional approval for a mortgage loan based on the documented proof a borrower/buyer supplies. Use a pre-qualification to determine what home price range you should be looking for homes. A pre-qualification is not binding. When you are ready to actually buy a home, get a pre-approval from a mortgage broker (brokers are typically better than banks because they have access to multiple lenders, banks and loan products). Having a pre-approval in hand shows home sellers and […]
continue reading Q: What’s the best way to find out if a property has an oil tank before you buy it? Randy, Hackensack, NJ A: Sometimes you can actually see an oil tank if it’s above ground like in a property’s basement. You can also contact the town where the property is located or the department of environmental protection to find out if there are any records of oil tanks being removed. Oil tanks are often underground, so the safest way to proceed is to hire a specialist to do a tank scan of the property–normally using a metal detector to locate underground tanks. If they find a tank, you’ll need someone to test the ground for contamination and worst case scenario […]
continue reading Q: I have lost several real estate deals recently to another investor in my area. My marketing and pitch focus on my ability to close in 30 days or less. The investor who got the last 2 deals didn’t even close for several months. What am I doing wrong? Cooper, North Brunswick, NJ A: How do you know that closing in under 30 days is what is most important to the sellers you are negotiating with?—that’s an assumption you’re making that may not be true. Despite their obvious usefulness in our daily lives, assumptions are imperfect short cuts that are often inaccurate. We can overuse assumptions or make an inaccurate assumption about a person or a situation. Nobody can predict […]
continue reading Q: I’m a realtor and real estate tends to slow down over Thanksgiving and the holidays. What can I do to boost my business and avoid the seasonal slowdown? Belinda, Clifton, NJ A: Here are 3 Thanksgiving real estate marketing tips to keep your business moving over Thanksgiving and the holidays: Send thank you cards to past clients. It’s a lot easier to win additional business from someone who is already familiar with you than it is to earn new business–this is low hanging fruit that you should take advantage of Send Thanksgiving gift basket to partners, investors and past clients–most people send holiday stuff around Christmas, so sending Thanksgiving baskets is a great way to differentiate yourself from all […]
continue reading Q: I am a realtor with a new listing–the homeowner is behind on their mortgage, how do I know if we’ll have to do a short sale? Crystal, Mount Holly, NJ A: Great question. Whether a short sale is necessary to sell the home depends primarily on two factors: 1) Net $ Proceeds From Sale and 2) Outstanding Lien Payoff Amounts. Unfortunately, both the net proceeds from the sale and the outstanding lien payoffs will occur in the future on the closing date and are currently unknown. When a borrower is in default, mortgage lien payoff balances typically skyrocket and increase on a daily basis due to unpaid interest, legal fees, property taxes etc. However, you can normally predict whether […]
continue reading Q: How will the new foreclosure legislation in NJ affect the process? Henry, Chatham, NJ A: Many of the new foreclosure law changes enacted in 2019 in NJ are procedural and are intended to help struggling homeowners facing foreclosure. Here are 3 of the new changes: 1) NJ’s foreclosure mediation program was strengthened 2) The statute of limitations for most residential foreclosure actions was reduced from 20 years to 6 years from the date the debtor defaults 3) the additional time granted for the two automatic adjournments that homeowners facing foreclosure can apply for to postpone a sheriff sale were doubled–each adjournment now results in a four week postponement–up from 2 weeks. Thanks for your question, Henry. For more real […]
continue reading Q: I read a few articles this year about more Wall Street layoffs. Will this affect NJ home prices? Curt, Berkeley Heights, NJ A: Every day over 300,000 people in NJ go into work in New York City. While the US labor market is historically strong, banks like HSBC & Deutsche Bank have laid off thousands of people this year. Wall Street certainly appears to be shrinking as investment management is expanding beyond New York City which may have an impact on home prices in some Jersey communities. Big luxury homes are the weakest sector in NJ housing markets as days on market for these homes is substantially higher than for other homes. There is a shift happening in housing […]
continue reading Q: My business partner and I are doing our first rehab. Do you have any tips to help us avoid mistakes other new rehabbers make? Carl, Point Pleasant, NJ A: Here are 3 mistakes that new rehabbers make that you should try to avoid: 1) underestimating rehab costs—no matter how many property rehabs you do, property renovations always seem to cost more money than you initially think they will, so it’s very important that you leave room for cost over-runs in your rehab planning 2) over improving property–when you rehab a property to sell, your goal is to maximize your profit which requires keeping your costs to a minimum. You should rehab a property to fit the character of the […]
continue reading Q: I have a new listing and the property is on the sheriff sale list. I don’t have much experience with foreclosures, what should I do to get this closed? Nancy, Bayonne, NJ A: I’ll start by differentiating between pre-foreclosures and REOs. With a pre-foreclosure, the homeowner still owns the house, whereas an REO, which stands for real estate owned is post-foreclosure and is owned typically by the lender or party that successfully foreclosed on the property. As with all listings, it’s important that you don’t over-price—although it may seem counterintuitive, lower listing prices typically result in higher sales prices because the listing will attract a wider pool of buyers. Pre-foreclosures like the one you just listed bring an additional […]
continue reading Q: Gerald, I really enjoy listening to your real estate podcast. I’ve been trying to do my first real estate deal done for a while, but I’m a newbie and I’m afraid of making a big mistake. Can you give me any advice? Jason, Kenilworth, NJ A: Since you already listen to my real estate podcast, then I’m sure you’ve heard me say that the key to getting real estate deals is making purchase offers on a regular basis and then following up on those offers—-that is easier said than done. Your mind is a powerful machine that can work to your benefit or work against you. Sounds like you are letting fear get the best of you. Most of […]
continue reading Q: I just bought a home with a fireplace–I’ve never had one before. What do I need to do to maintain it? Eddie, Westwood, NJ A: Whenever wood is burned in a fireplace, smoke goes up the chimney and a substance called creosote is deposited in the flue lining. Creosote is a mixture of tar and soot that can cause a chimney fire. Whether you’re burning wood or pellets or gas, smoke goes up the chimney and creosote builds up over time. Creosote is EXTREMELY flammable which is why it creates such a big fire risk. You can prevent chimney fires by cleaning your chimney–you can hire someone to do it or you can buy a chimney brush and fiberglass […]
continue reading Q: I read an article that more employed people are keeping their jobs, moving to cheaper places to live and telecommuting. Will telecommuting affect property values in both places? Henry, Charlotte, NC A: The percentage of people living in urban area working from home has increased over 40% in the last decade. Freelancers, consultants are moving to places like Charlotte, Nashville, Indianapolis, Reno and Boise from more expensive cities like New York, San Francisco, Seattle and Chicago because the cost of living is much lower. Ultimately, real estate boils down to supply and demand–so long as there are enough people to take the place of those who move out, people leaving higher priced cities won’t have much of a downward […]
continue reading Q: I met someone who told me that I could lower my property taxes. How does that process work? Susan, Montclair, NJ A: A tax appeal is the legal method through which you may be able to lower your property taxes. NJ property taxes are among the highest in the US. You can appeal your taxes if your property’s actual value is less than its assessed value. There’s no guarantee but you can appeal your property assessment with your County Board of Taxation. Most times the tax appeal filing needs to be done on or before April 1st of each year, but check with your County Board of Taxation for the correct date. Some Boards of Taxation require the property […]
continue reading Q: We found a home for sale online and it says that the bank owns the property. How is buying a bank owned property different than buying a regular home? Janet, Chula Vista, CA A: Here are 3 ways buying bank owned properties is different than buying a home from a regular seller: 1. Condensed inspection period–typically banks require home inspections be done in a shorter period of time when they sell property they own, 2. Non-refundable deposit–banks often require buyers to pay a non-refundable deposit when they sell properties they own 3. No prior owner knowledge of property, so caveat emptor–it’s always a good idea to get a thorough property inspection done before you buy a home but it […]
continue reading Q: I was reading an article about a real estate investment firm that rehabs and flips properties in areas after they’ve sustained a natural disaster–is that a good strategy? Todd, Corolla, NC A: Every local real estate market is different, so it’s very important that before you invest anywhere you do your homework first. Preparation is even more important before you invest in an area that has sustained a natural disaster because there are likely additional challenges you have to contend with like the lack of electrical power for example. Before even considering a disaster property investment, you’d want to line up and partner with local contractors, architects and speak with the local building department to find out exactly what’s […]
continue reading Q: I read that the new opportunity zones allow investors to avoid paying capital gains taxes-how are opportunity zones different from 1031 exchanges? Eugene, Cleveland, OH A: 1031 exchanges require an intermediary to hold onto proceeds that result from the sale of property while the seller lines up another investment, whereas funds invested in opportunity zones don’t need to be kept separate–investors just have to file Form 8949 with their income taxes. Another difference between opportunity zones and 1031 exchanges, which allow real estate investors to defer taxes on capital gains from the sale of property by reinvesting the proceeds from the sale into another property within 180 days is that 1031 exchanges don’t allow investors to permanently exclude profit […]
continue reading Q: I’m buying a home. Do you think I should get a 30 year or 15 year mortgage. Henry, Kissimmee, Fl A: Great question. You will pay your mortgage off twice as fast and pay considerably less interest with a 15 year mortgage than you will with a 30 year mortgage. However, when you sign a promissory note on a mortgage, you are making a commitment to making regular monthly payments come hell or high water. It’s very difficult to forecast 15 or 30 years into the future and life has a way of throwing unpredictable events and crises at you when you least expect them. In addition, your regular payments associated with your home extend behind principal and interest—they […]
continue reading Q: I am planning to refinance my home. I still have student loans, should I roll my student loans into my mortgage? Peter, Phoenix, AZ A: There are both pros and cons to rolling student loan debt into mortgage debt. Refinancing to eliminate school debt may be advantageous to the extent that student loans typically can’t be discharged in bankruptcy. Also, rolling student debt into a mortgage may allow borrowers to invest more money in tax advantaged retirement plans sooner which results in substantial long term financial benefits. However, there are drawbacks to replacing student loans with mortgage debt like not being able to defer repayment–you can normally defer student loan payments when a life event or circumstance arises making […]
continue reading Q: How will the fed’s new rate cut affect housing? Haley, Montauk, NY A: The Federal Reserve announced that it would cut interest rates for the first time since the last recession. Economists are split on the immediate impact it will have on the housing market—what else is new?! Borrowers with adjustable-rate mortgages and commercial real estate loans will benefit from the rate cut. The important issue is how and if the fed’s rate cut will affect mortgage rates. The chief economist at realtor.com doesn’t believe the Fed’s rate cut will lead to a drop in longer-term mortgage rates because the rate cut announcement was anticipated. However, a rise in mortgage rates could further weaken already slowing housing markets, as […]
continue reading Q: I have a good job and I’d like to own my own property, but real estate prices are so very high, it’s hard for me to justify paying that much money to own. Are there any other options for me? Jessica, Hoboken, NJ A: Most Americans of all ages want to realize the American dream by becoming homeowners. Millennials recently surpassed baby boomers as the biggest population group in the US. 3 of the biggest challenges millennial home buyers currently face despite still historically low interest rates are: 1) student loan debt has tripled in the last decade 2) starter homes are in short supply in many local real estate markets and 3) credit score requirements for home loans […]
continue reading Q: I hired a contractor to do some work on my property. I was excited when I hired him because this guy gave me by far the cheapest quote to do the work of anyone I spoke to. This guy turned out to be a liar and he doesn’t seem to know what he’s doing. The job has taken much longer than he promised. What should I do differently next time? Michael, New Rochelle, NY A: Unfortunately, almost everyone in real estate has had bad experiences with working with contractors, so don’t feel bad–it’s a learning experience that can help you grow and get wiser. The one thing you seem to have done which was smart was get multiple quotes […]
continue reading Q: Are algorithms radically transforming real estate as much as I’m reading and hearing lately? Cindy, Cambridge, MA A: It’s a good idea to take anything you read or hear in the media with a grain of salt–everyone has their own agenda and the agenda of most media purveyors is to get you to pay attention. At a high level, the only constant in the world is change, so algorithms and technology are certainly changing and transforming real estate and all other businesses. The important question is “to what extent are algorithms transforming residential real estate”? People typically buy based on emotion and then justify their buying decisions using logic–this applies especially to real estate given the enormous psychological and […]
continue reading Q: Where is the biggest risk in US real estate now? Craig, Greenbelt, MD A: The lending market has shifted dramatically over the past few years from domination by big banks to domination by non-banks, financial institutions that only make loans and do not offer deposit accounts. In some ways non-banks are more nimble and can offer more loan products than big banks—housing prices and the housing market would be significantly less dynamic without these non-traditional lenders. In 2011, 50% of all new mortgage money was loaned by the three biggest banks in the United States, by 2016, the share of loans originated by the three biggest banks had dropped to about 20%. The additional systemic risk lies in the […]
continue reading Q: My husband and I are buying our first home. Where will we get the best value for our money? Camille, Pennsauken, NJ A: It’s smart to focus on getting the best value for your money but you have to make sure you don’t skip one of the most important steps in the home buying process. Assuming you aren’t paying cash, your first step needs to be to get pre-approved for a mortgage. The pre-approval process will require examining both you and your husband’s credit profiles which will determine how much money you qualify to borrower from a lender which will determine the price range you can shop for a home in. If you get pre-approved early, you can fix […]
continue reading Q: I’m a new wholesaler looking for my first deal. Can you give me some tips to help me? Terrence, New Brunswick, NJ A: One of the most important concepts to internalize if you want to be a successful wholesaler is that you have to leave enough profit in a real estate deal to make the deal attractive enough for an end-buyer/investor to want to buy the property. The 70% rule is an essential part of the wholesaler’s formula, which first requires you to arrive at an accurate market value or after repair value (ARV) for the property in question. NOTE: I go into more detail about the wholesaler’s formula on page 73 and 74 of my book, “Real Estate […]
continue reading Q: My brother and I want to start investing in real estate. Should we wait for a market correction to start? John, Passaic, NJ A: Real estate investing isn’t for everyone, but if you are interested in investing, you should start immediately rather than procrastinating. There is no ideal time to start any business. If you are willing to make a commitment, then now is always the time to begin doing something worthwhile that has long term benefits. Bear in mind that the real estate strategies you employ will be different depending on where we are in the 4 stages of the real estate market cycle: recovery expansion hypersupply recession Many local real estate markets in the US are still […]
continue reading Q: Which rental assistance program is better for landlords, Section 8 or TRA? Lydia, Elizabeth, NJ A: There are rental assistance programs at the municipal, state and federal level that can help needy tenants pay rent. Whether you are a landlord or a tenant considering one of these programs you should familiarize yourself with them before you sign up—find out what the requirements are, what percentage of rent is paid and for what period of time. Based on my experience as a landlord, I prefer the section 8 program to TRA because TRA provides only temporary rental assistance whereas Section 8 typically provides assistance for the life of the tenancy so the risk to the landlord is lower. Thanks for […]
continue reading Q: I’m having trouble finding consistently reliable people for my local real estate team. What should I be looking for? Derek, Cranford, NJ A: No man is an island–you need competent people around you to be successful in real estate or any business. The competence of your team is as important as your individual competence! When I was a kid I loved sports and music and every day on the playground during recess I played some sport (football, kickball, soccer, basketball etc.) Every day at recess, all the kids who wanted to play would gather with a ball, then 2 kids would be chosen or self-appointed captain then each captain would alternate picking players until everyone who wanted to play […]
continue reading Q: Do you think Airbnb contributes to housing shortages in big cities? Nancy, Nashville, TN A: I like and use Airbnb when I travel because I prefer staying in a real place rather than a hotel whenever possible. That said, there is no question that Airbnb and other short term rental platforms distort local real estate markets where they operate because supply and demand are the two most important factors that affect real estate prices and Airbnb affects both supply and demand. The commercial use of Airbnb has more of a corrosive effect on real estate markets than individual owners trying to make extra money renting out their place which has enabled speculators to buy real estate for the sole […]
continue reading Q: I’ve got a bad leak in one of my properties but I can’t find any plumbers willing to work Sunday. Bill, Carteret, NJ A: There are more obvious things you need to know about a contractor before you hire them like their expertise, years of experience and whether they are professionally licensed to name a few but one of the most important things you must find out is when contractors are available to work–which days of the week they work or don’t work, when they go away on holidays or go on vacation because your knowledge of their availability is key to you getting your work completed. So for example, I have a list of plumbers that are willing […]
continue reading Q: Gerald, I have a real estate deal that I’ve been working on for a long time and it fell apart right before closing. What should I do? Michael, Somerville, NJ A: I would need more specific information in order to give you more specific advice, but in general, the first thing I would suggest is that you take an honest, unemotional look at the situation. My 3rd real estate commandment is “Use Logic And Never Let Emotions Affect Real Estate Decisions”–obviously you are upset at the moment given how much time and effort you’ve already expended, but you can’t let that affect the decisions you make now. The past is past, you can only live life going forward. If […]
continue reading Q: Gerald, in an earlier blog post, you said that mortgage lenders are more careful now than they were during the last housing bubble. How are things different now? Doug, Lancaster, PA A: Great question, Doug. Although I draw on my own experience operating my real estate business before, during and after the financial crisis, I’m learning more and more disturbing facts going through a study called The Role of Housing and Mortgage Markets in the Financial Crisis. One stunning thing I discovered from the research in that study was that 50% of the borrower information banks collected on mortgage loans during that period was incorrect! What that means is that not only were banks making careless loans but that […]
continue reading Q: Now that our home has appreciated some, my wife and I are considering tapping our increased equity to pay down some credit card debt. Should we get a home equity loan or HELOC? Are they the same thing? Casey, Roswell, GA A: Good question. Home equity loans and HELOCs are similar but they are not the same. Both home equity loans and HELOCs are types of secondary mortgages on a home, however, a home equity loan has a fixed interest rate, fixed loan amount and a fixed repayment schedule. On the other hand, a HELOC, which stands for a home equity line of credit operates like a credit card by offering a variable interest rate that allows you to […]
continue reading Q: Do you think we will avoid another mortgage crisis now because subprime lending isn’t so high like it was before the last financial crisis? Chad, Mendham, NJ A: Chad, there were many factors that contributed to the mortgage crisis of the last decade, one of the biggest, of course, being the creation of questionable mortgage backed securities, where one security instrument was divided into pieces and then sold separately to investors. But now a decade after it began, the Great Recession is now commonly blamed on a subprime mortgage crisis. The prevailing subprime crisis narrative is that the supply of credit to low-income households fueled increasing house prices, and was responsible for the crash. Narratives can be very persuasive […]
continue readingQ: Gerald, I’m buying a property and trying to decide which real estate attorney to use. What should I be looking for? Dan, Saddlebrook, NJ A: That’s a great question, Dan. If you haven’t dealt with many real estate attorneys I can imagine they all probably seem the same to you. What I’m going to do is give you 3 qualities you should look for in choosing the right real estate attorney: 1) Real Estate Specialization: does the attorney specialize in real estate or are they a jack-of-all trades. In general, you want someone who specializes in real estate law, in the same way if you needed surgery, you’d probably want to choose a doctor who specialized in surgery rather […]
continue readingQ: Gerald, my daughter found tiny wings on the windowsill of our home-is it termites? -Ed, Stamford, Ct A: Hi Ed, You can often spot pest infestation in your home by looking closely at windows and baseboards. Insects like termites shed wings on walls and windowsills and carpenter ants often leave sawdust along baseboards. If your daughter found tiny wings, it may very well be termites. Time to call an exterminator. These types of infestations can be very costly if left unchecked and termites can actually cause structural damage to your property. So you should get an exterminator in as soon as possible. Thanks for your question, Ed—good luck. For more real estate tips and information, visit geraldlucas.com or performanceproperty.com. […]
continue readingQ: The bathroom floor in one of my rental apartments is spongy—what’s causing this? -Maria, Woodbridge, NJ A: Maria, the sponginess of your bathroom floor was probably caused by excess moisture in the bathroom. Excess moisture over time can create mold which can be hazardous to your health and can ruin flooring. There may be hidden water damage in your property near ceilings and in and around bathrooms. Excess moisture can come from a leaky toilet, a broken shower spout or a roof leak—it’s best to address these issues immediately by making necessary repairs or getting a dehumidifier because over time water can cause structural damage to your property. Thanks for your question, Maria—good luck. For more real estate tips […]
continue readingPay for property renovation projects by the job not by the hour. When you pay by the hour, it normally takes more time and costs you more money.
continue readingQ: I want to make an offer on a property I found, should I start by just throwing out a price? (The first thing you must do before negotiating a real estate contract) Lily, Woodbridge, NJ A: That’s a great question, Lily. If you can deal directly with the seller of the property (sometimes you can sometimes you can’t) the first thing you want to do is ask lots of questions and try to build rapport with the seller. A successful negotiation is one where both parties are satisfied and happy to move forward—creating a win-win situation requires identifying what’s most important to both you and the other party and then writing down points you can both agree on. This […]
continue readingThe excess weight caused by dirt, debris and snow accumulations may rot, stress and reduce the useful life your roof.
continue readingQ: Which properties will make me the most money? (The 3 Keys To Buying Property That Will Make You The Most Money) June, Freeport, NY A: Good question, June. There are many factors that play into whether you’ll make money on a property you buy, but here are 3 key ones: 1. Picking the right area/neighborhood/street. This is critical because the right area will make your property more attractive to tenants if it’s a rental property and more attractive to buyers whenever you choose to sell your property 2. Picking the right kind of property-based on your budget (what you can afford to buy and maintain while you own it) and your exit strategy—exit strategy just means what you ultimately […]
continue readingWhenever house prices outpace income, a downward correction in home prices is forthcoming.
continue readingFlood Insurance premiums are determined by many factors including deductible amount as well the location, age, occupancy and type of property structure in the floodplain.
continue readingQ: Can I raise my tenant’s rent every year, and if so by how much? Carrie, Bloomfield, NJ A: The key to being an effective landlord is knowing your local real estate market, where it is and hopefully where it’s going. While landlords would always like to raise their rents to increase their profits and sometimes to offset increases in their expenses, the market ultimately decides how much rent you can charge. If you charge too much rent relative to similar properties in your area, your property will sit vacant or your existing tenants may move out if they know they can pay cheaper rent for similar digs somewhere else. For this reason I strongly recommend that you monitor market […]
continue readingQ: I’m trying to budget for my expenses this year. Is there a way for me to estimate the cost of homeowner’s insurance? -Gary, Wilmington, DE A: Gary, insurance rates vary a lot from place to place. But, there is a broad rule of thumb you can use to get a rough estimate of your annual homeowner’s insurance which is to divide the value of the home by 1,000 and then multiply the result by $3.50. Again, as I said, this will only give you a very rough estimate, and your premium will depend on where your house is located and other factors like how much insurance coverage you get—so I suggest to find out for sure you get a […]
continue readingQ: I’m buying a home after years of renting, what are the new expenses I need to be concerned about ? -Patricia, North Bergen, NJ A: That’s a good question, Patricia. I’m a big proponent of home ownership, there are many benefits that make it worthwhile, however, there are expenses that you’ll have to begin taking care of when you buy a home. Here are the 3 most overlooked real estate expenses: 1. Property Taxes Property taxes can be demanding because even if you’ve paid off you mortgage, you still owe what amounts to a monthly fee to the town or the municipality in which you reside. Remember, the bank doesn’t decide your property tax, the town or city where […]
continue readingQ: What’s the best legal entity to buy a property in? -Scott, Georgia A: In my opinion, an LLC, which stands for limited liability company is the best legal entity to buy property in because LLCs provide both liability protection and tax flexibility. In addition, I’ve found LLCs to be easier and cheaper to set up and maintain than other legal entities. Owning an LLC will require you to adhere to certain corporate formalities like preparing meeting minutes on a regular basis. As I said last time, it’s also a good idea to consult an experienced CPA and real estate attorney before you make a final decision. Thanks for your question, Scott. Good luck. For more real estate tips and […]
continue readingQ: Gerald, we finally got rid of a terrible tenant in our rental property-he didn’t pay for months and he tore the place up. We’re looking for a new tenant now, how can we avoid another disaster? -Patrick, Orlando, FL A: Sorry to hear about your trouble, Patrick. As a long-time landlord myself, I can certainly relate. What I’m going to do is give you three warning signs of a potential bad tenant: 1) The prospective tenant is in a hurry to move in right away-this often is because they just got kicked out of their last place. The key is to have rules and regulations and to stick to them. Never allow yourself to be rushed through your own […]
continue readingIf you can afford to raise your deductible, you could save 25% or more on your homeowner’s insurance premium.
continue readingRecent changes to the way Fair Isaac computes people’s credit score are welcomed, long overdue and benefit borrowers, creditors and real estate markets across the country. The revision to the credit score algorithm that eliminates medical bills from consideration is especially appropriate given the high incidence of mistakes and miscommunication. What a lot of people don’t know is that creditors report information to the 3 major credit reporting agencies on a voluntary and inconsistent basis which unfortunately means that mistakes are made all the time; AND the 3 big credit reporting agencies : Experian, Transunion and Equifax, really don’t have much of an incentive to fix mistakes on your credit report. The good news is that you can take control […]
continue readingRule of 72s: You can quickly calculate the number of years it will take for your real estate investment to double in value by dividing the annual % growth rate by 72: # years to double in value = 72/Rate of Growth. For example: At an 8% annual growth rate, your real estate investment will double in about 9 years (72/8=9) At an 12% annual growth rate, your real estate investment will double in about 6 years (72/12=6) At an 24% annual growth rate, your real estate investment will double in about 3 years (72/24=3)
continue readingThe Capitalization or Cap Rate for a property is the ratio between its net operating income (NOI) and the property’s value: Capitalization Rate = Net Operating Income/Value You can transpose the formula to solve for property value or net operating income: Property Value = Net Operating Income/Capitalization Rate Net Operating Income = Property Value*Capitalization Rate
continue readingUntapped home equity can be a dangerous temptation for homeowners and real estate investors. You have to be careful before you take on additional debt, even if it’s mortgage debt which is normally considered to be good debt, because when you do, you increase your monthly fixed payments. People often tap home equity to renovate or upgrade a property. This may be a very good idea if you’re renovating an income-generating property so that it earns more money for you. However, I have seen many people over-renovate their primary residence spending tens of thousands of dollars on over-the-top kitchens and bathrooms that they didn’t need and didn’t really increase the value of their home!—also, don’t forget, you’re supposed to pay […]
continue readingSalt used to remove ice during winter is often harmful to concrete surfaces.
continue readingThe recent cooling of the US housing market is as much the result of unrealistic earlier expectations of another impending real estate boom as anything else. The first signs of increased real estate activity sent journalists into a frenzy. Economic fundamentals not media hype drive real estate, as all economic activity ultimately is driven by demand. Also, every residential property market is different and some markets aren’t cooling right now. Housing affordability in many places has gone down which obviously has a dampening effect on demand particularly for first time home buyers who are essential to all residential real estate markets. Click here for the full article!
continue readingClassifying real estate expenditures as repairs rather than capital improvements often results in tax savings.
continue readingMore foreign buyers of US real estate is a natural consequence of increased global trade. In addition, housing bubbles in places like China make US real estate investment more attractive. The percentage of foreign buyer-driven real estate transactions throughout the United States is exaggerated. Foreign buyers are only buying in big numbers in a small select group of markets and they are only buying certain types of properties so their impact on US real estate in general is not as high as you may think. Ultimately, income and household formation are bigger drivers of real estate demand than foreign buyers. -Gerald Click here for the original article!
continue readingLandlords normally must deposit security deposits into an interest bearing account within 30 days of the receipt of the security deposit.
continue readingUse low-flow toilets to reduce your water bill or make your existing toilet more efficient by dropping a soda bottle filled with sand or water into the tank. It will use less water each time it flushes. -Gerald
continue readingQ: Gerald, we had a really rough winter and just when I caught a break from record heating bills, the summer is in full swing. Do you have any tips to lower my utility bills in the summer? Charlie, Chicago, Illinois A: Great question, Charlie. I’m going to give you 3 tips to lower your utility bills during the summer: 1) Clean air-conditioning filters every month and check your air conditioner once a year to make sure that it’s functioning property. People often ignore their air conditioning system until something goes wrong, then they end up having to buy a new unit instead of making minor fixes. 2) If you need a new air conditioner, buy an energy-efficient one—it’ll lower […]
continue readingReal Estate Tip: Use logic and never let emotions affect real estate investing decisions. -Gerald
continue readingThis latest data that shows a record low in real-estate-linked debt’s share of bank assets highlights the mortgage lending reluctance that we’ve been seeing in US real estate for quite some time. Unfortunately, good borrowers today are being penalized for the sins of the past. In a typical knee-jerk reaction, the pendulum has swung way too far in the other direction locking many responsible buyers, particularly younger, first time buyers out of the real estate market. The fact that Wells Fargo is cutting its minimum credit scores for loans backed by Fannie Mae and Freddie Mac however is a welcome sign. -Gerald Click here for the original article!
continue readingQ: Gerald, I’m looking at buying a home and because I’ve never seemed to have much luck negotiating when I bought a car, I’m nervous about the negotiation side of purchasing a property. Do you have any tips you can give me? – Larry, Sparta NJ A: That’s a great question, Larry and by the way it’s normal to be nervous about negotiating especially if you don’t have a lot of experience doing it-this applies to most people. There’s a myth about effective negotiating that a lot of people hold which is that being a good negotiator is about one person dominating and getting his or her way over the other person-that couldn’t be further from the truth. Effective negotiation […]
continue readingQ: Gerald, my wife and I recently signed a contract to buy a home, but we just found another home we like much better. Gary, New Rochelle, NY A: Hi Gary, normally when you sign a contract you are bound to perform based on the terms of the contract. However, most standard real estate contracts contain contingency clauses that may give you room to back out. The 2 most common contingencies that appear in written real estate contracts are mortgage contingencies and an inspection contingencies. If, for example, your purchase contract has a mortgage contingency and you can demonstrate that you were unable to obtain a mortgage or if your contract has an inspection clause and the seller is unable […]
continue readingReal Estate Tip: Most of the best real estate deals will involve properties that are in need of repair. In order to capitalize on these rehab deals, you or someone you work with will need to know how much time and money are required to renovate these properties. -Gerald
continue readingAlthough mortgage rates remain at historic lows, lending standards for home buyers remain stringent. New regulations intended to prevent risky mortgages from entering the market will keep underwriting standards strict. With average FICO credit scores for conventional loans well above 700, establishing and maintaining good personal credit has never been more vital to obtaining a mortgage loan. -Gerald Click here for the original article!
continue readingStaging helps make a home easier to sell because people buy on emotion and staging makes it easier for potential buyers to picture themselves in a home. When staging, little things matter (odors, appearance and lighting all count). Also, less is often more—you don’t have to go overboard furnishing every inch of a home, just the basics, neat and presentable—it’s a good idea to leave enough empty space for your buyers to imagine their belongings in the house. -Gerald Click here for the original article!
continue readingYour mortgage must be secured and recorded to be tax deductible. If you borrow from a big financial institution to buy a home like most of us do, you shouldn’t have to worry about your lender making sure their collateral is safe and your interest payments are deductible. Your lender should send you a statement every year indicating the amount of mortgage interest you paid—it’s a good idea to check that statement to make sure it matches the scheduled interest to be paid for that year on your mortgage loan’s amortization schedule. There are some politicians who have recently suggested we reconsider the powerful mortgage interest deduction that property owners benefit from. Eliminating or restricting the mortgage interest deduction would […]
continue readingIn addition to bank account cash deposits, you must be careful about all your credit card purchase activity for the few months before you close on your mortgage. A big purchase like a car for example, may affect your debt-to-income ratio which could derail a mortgage approval. As a precaution and part of your mortgage planning, I suggest you ask your mortgage broker or banker exactly what activities may spoil your mortgage confirmation; avoid all those activities until your mortgage is approved AND funded! -Gerald Click here for the original article!
continue readingThe ultimate cost of owning a house unfortunately goes well beyond the initial money required to purchase a home. There are regular maintenance, upkeep and replacement costs you’ll have to pay for over time, particularly if you do not purchase a new home. Home ownership is a worthy goal and in order to maintain your home, make certain you put aside enough reserves to pay for unexpected repairs and replacement of major items like a roof. In order to do this, it’s a good idea not to spend your last dime when you purchase your property–leave some money left over for unanticipated costs which almost always occur. -Gerald Click here for the original article!
continue readingThe new micro-housing trend seen in cities across America underscores broader demographic changes that will affect the US economy and urban real estate markets for many years to come. More than 2/3rds of all households have no children and housing demand in general is becoming more concentrated in areas where there are jobs. In addition, people are living longer and seniors normally require less living space after they retire. Smaller households require less living space which is why this micro-housing trend will continue. -Gerald Click here for the original article!
continue readingThis letter sent by 13 Senators, one of whom is my Senator from New Jersey is a welcome sign that at least some of our representatives in Congress are paying attention to something other than raising money to get re-elected. While encouraging private growth in the mortgage market is an admirable goal, as the saying goes: the road to hell is paved with good intentions. Lowering the Freddie Mac and Fannie Mae loan limits may turn out to be a dangerous experiment that we can ill afford right now in the middle of an encouraging yet fragile real estate recovery. -Gerald Click here for the original article!
continue readingDefaulting on your mortgage payments is rarely what you have in mind when you buy a property—but if you don’t have the money, then you can’t pay. As the saying goes, you can’t get blood from a turnip. The good news for people who did default on their mortgage during the financial crisis is that there are lots of other people who found themselves in this identical position. With millions of people in the same unfortunate situation, it’s in the best interest of both banks and the federal government to find a responsible way to lend to previously foreclosed-upon homeowners who have since recovered financially. It will most likely take more time and require more paperwork to get approved for […]
continue readingYou should always have a home inspection contingency in a real estate contract you sign to protect yourself from unforeseen problems with a property like termites, a leaky underground oil tank or major structural defects. In a hot real estate market where there is lots of competition between buyers, people often get frustrated are often tempted to cut corners just to win a bid and make a home purchase–this is a huge mistake that may come back to haunt you later. You have the most control in a transaction when you buy, if you waive the inspection contingency in real estate contract you sign, you may end up stuck purchasing a property with major problems that make the property uninhabitable […]
continue readingGerald Lucas was recently seen on NBC, CBS, ABC and FOX network affiliates around the country as an expert guest on the TV show, America’s PremierExperts® Jersey City, NJ – October 11, 2013 – Gerald Lucas, Managing Director of Performance Property, LLC., was recently featured on the hit TV show “America’s PremierExperts®” which aired on NBC, CBS, ABC and FOX network affiliates around the country. “America’s PremierExperts®” host Nick Nanton interviews the best business, marketing and financial minds from around the world. In the interview, Gerald described how he accidentally began his career as a real estate investor and how he has shared his knowledge and many years of experience with hundreds of his students throughout the United States and […]
continue readingReal estate is always a good investment if you know what you are doing regardless of whether the writer of this article says it’s the next hottest investment or not. Also, you should not use averages and macro trends like # of housing starts or # of new permits to make an individual real estate buying decision. There are people who make money and people who lose money in EVERY real estate market–you just want to make sure you are one of the former. The writer does give two good pieces of advice: 1) “Investors should should filter opportunities based on the project partner and project’s ability to generate yield & 2) investors should come in with an understanding that […]
continue readingHeadlines like RED HOT HOUSING MARKETS are compelling and attention-grabbing, but it’s important not to lose sight of the fact that banks are still saddled with tons of foreclosures and pre-foreclosure properties. Because there are still so many homeowners upside down on the mortgages or behind on their mortgage payments, banks are deliberately manipulating housing inventories giving the impression that a housing recovery is happening. Ultimately, income drives everything and a long sustained housing recovery is not going to happen until the economy and people’s incomes start rising again. Do your homework and get intimately familiar with your local real estate market because every residential real estate market is different—each local market has its own property characteristics, its own regulations […]
continue readingProper due diligence is critical to making wise real estate buying decisions. While nobody can predict the future, you should always take the time to do your homework before you sign a purchase contract to buy real estate. Unexpected surprises that can affect your property are not limited to homeowner association documentation. Towns, gated communities and condominium associations may also have rules or ordinances that can have an enormous impact on your real estate investment. Here are 5 additional questions you should answer before you buy a property: 1. Are there any deed restrictions on the property you want to purchase? (Control) 2. What is crime rate in your property’s neighborhood? Are there any registered sex offenders in the neighborhood? […]
continue readingQ: Hi Gerald, I found a great deal on a property that I want to buy. I’m satisfied that I did adequate due diligence: I checked sold price comparables and the property is fully rented in an area where I know I can find other tenants. The problem is that my attorney is trying to convince me not to buy it. What do you think I should do? Kevin, Salt Lake City, Utah Gerald: Hi Kevin, attorneys do not exist to give financial advice although they often do. An attorney’s job is to interpret the law. Unfortunately, attorneys thrive on power—this power is maximized by creating fear in their clients. The more frightened they make their client, the more their […]
continue readingYou can listen to the Podcast here!
continue readingQ: Hi Gerald, I need to find a good contractor to do some property renovations. The last time I hired a contractor, he took forever to do the work and never finished even though we paid him in full. I’d do the work myself, but with our new baby and the increased hours I have to work on my new job, I just don’t have the time. What should I do? Steve, Hartford, Connecticut. Gerald: Hi Steve, first of all, don’t beat yourself up about what happened with the last contractor you hired—it’s water under the bridge and is something you can learn from. We all make mistakes and unfortunately even the most seasoned real estate investors have had bad […]
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