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A Delaware Real Estate Investment’s Big 4 Advantages

Dec 9, 2016

When you see any title here containing the words “Delaware Real Estate Investment,” you won’t be terribly surprised if the gist turns out to be what a good idea! When you’ve had the experience of seeing clients succeed with many real estate investment projects, it’s an unavoidable conclusion. Unfortunately, also pretty yawn-worthy.

That’s why I was pleased to come across Grant Cardone’s piece in Entrepreneur magazine. We all like to see our opinions agreed with—but doubly so when you’re offered specifics that bolster your own conclusions. The article listed reasons why real estate investments are “your smartest investment.” Here are some of them:

  1. A real estate investment is a hedge on inflation. Inflation hasn’t been hugely important for a while, but serious investors have an eye out for the possibility. When you dig down, you find that real estate investments have “historically shown the highest correlation to inflation” of other major asset classes.
  2. Real estate investments enable positive cash flow. This was Entrepreneur's number one reason. Having an investment which throws off cash while building equity at the same time is any smart investor’s ideal situation. When a Delaware real estate investment produces an income stream that is significantly higher than the typical stock dividend, what investor wouldn’t be interested?
  3. Leverage. A typical Delaware real estate investment makes it relatively easy “to place debt on the asset” because of its built-in collateral value. Entrepreneur offered some math to back up the way low-cost debt works to multiply a real estate investor’s power.
  4. Maximizing tax benefits. Taxes can be the bane of any investor—so real estate provisions that lighten the load can be significant factors influencing your bottom line.

Those are four solid advantages of the eight detailed in Cardone’s article. The last reason was less demonstrable but, IMHO, just as real:

  • Feeling the pride ownership” (no further explanation necessary).

If you are an investor who is beginning to look over the year’s performance and thinking about how you want 2017 to look, I hope you’ll do two things. First: take a serious look at whether a Delaware real estate investment might make a smart addition to your current portfolio. Second: call me! Call/Text me Russell Stucki at (302) 228-7871, email me at russellstucki@remax.net, visit more listings at www.beachrealestatemarket.com

What the Election Could Mean for Delaware Real Estate

Dec 9, 2016

 

 If you weren’t among those who were surprised by last week’s election outcome, you were among very few. Opinion leaders in every corner of the media are still scrambling to explain why their prognostications had been so wide of the mark. When your job is to help people understand the fine points of current events, it’s just plain embarrassing when you get the big picture 180 degrees wrong!

For both Delaware homeowners who will be considering putting up a ‘For Sale’ sign within the next year or so—as well as for potential Delaware real estate buyers they will need to attract—any shift in the currents in Washington are very likely to affect the market conditions they’ll encounter. There are three areas that can have profound impacts on the strength or weakness of residential home sales:

  1. Economy and jobs. The economic recovery of the past few years has been a major factor in the bounce-back of Delaware home values—just as the global financial crisis of 2007-08 had been the key ingredient in the real estate crash. It’s also evident that the recovery has been slow to gather momentum and feebler than hoped. The change in administrations is expected to bring major reversals in federal economic policies. If changes in tax and health care policies are forthcoming, if they succeed in boosting small business job creation, homeownership rates can be expected to climb. (Note those two “ifs.”)
  2. Mortgage scene. As the L.A. Times noted on The Day After, the President-elect’s campaign rhetoric included “unprecedented” criticism of the Federal Reserve. There can be miles of distance between what is said on the campaign trail and what happens when real decisions have to be made, but the calendar makes major shifts in monetary policy possible—and that is all-important in determining mortgage interest rates. The Trump White House will be able to appoint as many as five new members to the Fed Board of Governors (there are seven altogether)—including a new chairperson at the beginning of 2018. If the new Administration follows through on relaxing bank regulations, it’s expected to make real estate financing less cumbersome.
  3. The vibe. What can be every bit as influential as anything else is the sense of optimism or pessimism that permeates the national debate. Oh, yes; the election may be over, but the chatter is a permanent fixture. It’s also the hardest to quantify—in part because a major part of it is created by the spin that attaches to hard facts. But beneath everything is the way people feel about their own futures: promising or threatening? To create that, everything comes into play, including totally unforeseeable factors like international events, technology surprises—even the weather!

Delaware’s real estate activity is always affected by the availability of desirable properties priced to attract—and in that department, we don’t need to speculate about the future: they’re here right now. Call me! Call/Text me Russell Stucki at (302) 228-7871, email me at russellstucki@remax.net, visit more listings at www.beachrealestatemarket.com

How a Delaware Property’s Owner’s Equity Doubled in 5 Years

Dec 9, 2016

Diana Olick is a well-known industry writer. Anyone with an interest in Delaware real estate can usually find something of value when she comes up with a new entry in her CNBC column (the one with the pun-worthy title, “Realty Check”). This month she commented on the rising housing market across the nation and its repercussions in terms of homeowner equity.

The piece points out that in the U.S., home equity has doubled over the last five years!

It’s hardly news that home values have been steadily on the rise—that’s been a trend long seen in the asking prices in Delaware and our Delaware listings. But the idea of homeowner equity actually doubling could be hard to believe.

That’s a claim that sounds a like quite an exaggeration…until you stop to think about what is actually being said. When a Delaware homeowner sees that their home’s “equity” has doubled, what it doesn’t mean is that its value has doubled.

Here’s a simplistic example. Suppose a Delaware homeowner’s vacation cabin was estimated to be valued at $100,000 in 2011. Doubling the owner’s equity doesn’t mean that today the cabin would be worth $200,000. The “equity” in the property is the amount of investment value currently owned: the difference between its market value (in this case, the original $100K) and the amount owed on its mortgage. So if there were a $70,000 mortgage outstanding on the cabin five years ago, its equity at that point would have been the difference: $100,000-$70,000—or $30,000.

Using CNBC’s calculations (actually, they relied on research from CoreLogic), for our example property to match the national average, today its owner’s equity would have had to have doubled to $60,000.

For many Delaware real estate owners, that’s not much of a stretch.

Keep in mind that as time moves on, for all mortgage loans other than interest-only loans, the amount owed is reduced with each payment. If the principal portion of the payments had averaged just $200 a month, the amount owed would now be down to $58,000. For the owner’s equity to have doubled to $60,000, the market value would only have to have risen to $118,000: and that’s a mere 18% rise, which works out to an average of 3.6% per year. That wouldn’t be unusual, considering the steady gains we’ve seen. Long story short: voila—investment equity doubled!

The moral of the story isn’t just that there are many happy Delaware homeowners—but that the investment value of owning a home continues to be what it has been for as long as real estate has been bought and sold: a very canny investment. If you are planning on adding to your own personal Delaware real estate investments, I hope you’ll consider using my services as a key part of your strategy. Do call me!  Call/Text me Russell Stucki at (302) 228-7871, email me at russellstucki@remax.net, visit more listings at www.beachrealestatemarket.com

Delaware Bargain Fixer-Uppers Reward Patience, Prudence

Dec 9, 2016

 If you were one of the brave Delaware real estate investors who decided a few years back that the real estate meltdown was an awfully good buying opportunity, congratulations on being able to resist any naysayers. The fact that real estate has always lived up to its name (“real”) is easy to forget when prices have hit the basement—especially when the surrounding economic news is dire.

Those were days when Delaware fixer-upper opportunities were available for shockingly low asking prices—and before long, the shockingly low asking prices began to look normal and reasonable. “Bank owned homes” became a hugely popular search term as foreclosure numbers skyrocketed. It’s hard to recall the way it really felt, but any buying into that real estate market seemed like a swashbuckling act of raw courage.

Today the Delaware market still offers opportunities for bargain hunters, but they tend to be of a different kind. When a low asking price stands out in one of today’s Delaware listings, it’s likely to fall into one of two categories:

CATEGORY 1: The home’s location has one or more characteristics that the majority of prospective buyers finds off-putting. There’s not much the seller can do in this case, except wait for the right buyer to appear. In all likelihood, it will be someone for whom the issue isn’t an issue at all. If the school district isn’t up to snuff, for instance, a buyer with no school-age kids (and no chance the need will arise to sell anytime soon) may snap up a real bargain.

CATEGORY 2: It’s a home that needs work: a classical fixer-upper. If the buyer is an investor with a flip in mind, it’s vital to get an accurate read on the amount of time, money and effort it will take to rehabilitate the investment. That may seem like it deserves a “duh!”—but it’s all too tempting to let a fantastic asking price blind you into underestimating how far from saleable a badly maintained residence really is. If the buyers are going to be the ultimate residents, enjoy do-it-yourself projects, and are willing to take the necessary time to nurse a fixer into shape, it’s only necessary to determine that no overwhelming structural issues are beneath the surface. If all is well, it can turn out to be the dream opportunity they were hoping for.

Needless to say, fixer-uppers may not be for everybody—but there’s sure to be something for everybody among today’s Delaware offerings. If you will be in the market anytime soon, give me a call to discuss how far you’ve gotten in creating your wish list: there may be a perfect fit right now waiting for you to appear! Call/Text me Russell Stucki at (302) 228-7871, email me at russellstucki@remax.net, visit more listings at www.beachrealestatemarket.com