January was a slower month for home sales.  The total luxury homes sold in January was 33 as compared to 61 selling in December 2022.  Listings remained flat but as the weather warms up in the Greater Cincinnati area and as mortgage rates stay off of recent highs both buyers and sellers should be back to transact.

Housing Bubble 2.0 Update - Homes in many of the large markets are experiencing a decline compared to the recent highs.  This may start to impact real estate in other markets down the line.

Important Things To Maintain In A House

Homeownership involves much more than living in the house and slapping on some paint here and there periodically.    Homeowners need to be actively maintaining and updating the house in order to have the home retain value.  Certain areas are overlooked when it comes to maintenance and this article provides tips on where homeowners should be focusing on routine maintenance.  Skipping this maintenance can mean much larger bills down the line when something does fail in the home.

Garage Doors

The garage door themselves and the garage door opener need to be properly maintained in order to get the best possible life span out of it.  Over time the metal parts can wear down if not properly lubricated.  Metal moving parts of the garage doors will need replacement when they do wear down.  The garage door opener itself has moving parts and electronics to help it safely operate.  If the sensors that tell the garage to reverse when something crosses its path fail to work it can cause harm to people, animals and even damage a car that is in the path of the garage door.  By having the garage door and opener regularly tuned up/maintained on a regular basis the homeowner can ensure it operates safely and effectively for a long time. 

HVAC System

The Heating, Ventilation and Air Conditioning system (HVAC) are basically the lungs of the home and keep the home’s air...

How Does A Recession Impact Real Estate?

In today's economy, it is essential to understand the impact of a recession on the real estate market. A recession can have a substantial effect on housing prices, rental rates and the availability of loans. It can also cause a decrease in construction and development. This article will explore how a recession can affect the real estate industry and what strategies investors and home buyers and sellers need to consider in order to stay ahead of these economic changes.

Are We in a Recession?

There seems to be some debate as to whether the US is in a recession as of the date of this article. Depending on where one looks there are claims that there is currently a recession whereas other sources say there is no recession.  The official declaration of a recession usually comes after the economy has entered a recession and is made by the National Bureau of Economic Research (NBER).  Per NBER “The NBER's traditional definition of a recession is that it is a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”  NBER looks at monthly data that includes personal spending, the employment rate, Gross Domestic Product (GDP) and more.  With employment rates and GDP being positive currently the consensus right now is that there is not an active recession today.

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How Does an Appraisal Gap Clause Work in Real Estate?

When you make an offer to the seller, and they accept, you still need the home to appraise when buying the home with a mortgage.  Even when buying a home with cash the buyer may want to make sure the value meets or exceeds the offer amount.  When buying a home with a mortgage most of the times an appraisal will be required as part of the process.  If there is a difference between the amount offered and the appraised value, the purchase could fall through.  An appraisal gap clause can prevent the transaction from falling through as this article explores.  (Be sure to check out the video down below for more on the appraisal gap clause.)

What are Appraisal Gaps?

When the agreed purchase price of the home is higher than the appraised value, those in the real estate industry refer to it as an appraisal gap. The appraised value is determined by a licensed appraiser hired on behalf of the lender to ensure they aren’t lending more than the home is worth.  For example where a contract to purchase a home is priced at $400,000 and the home actually appraises at $350,000 the lender will not allow the mortgage to be approved unless the purchase price is lowered to $350,000 or the buyer brings additional money to the closing table.  

How much additional money the buyer must bring depends on the loan to value amount the buyer is borrowing based on.  At an 80% loan to value (LTV) ratio the buyer must bring 20% of the total home value as cash to...

The data you see below is from the Cincinnati Multiple Listing Service (MLS).  Average days on market refers to how long on average a property stays on the market before accepting an offer.  The properties sold represents the number of multifamily properties that have been sold during the month being reported on.  If there is other data you would like to see please feel free to share in the comments below.

Fewer sales in the multi-family cateogry for December 2022.  Some of the slow down can be attributed to December being a typically slower selling month due to holidays.  Interest rates are likley having an impact as well.

Days on market ticked up along with total luxury homes sold in the month of December as compared to November 2022.  Total homes llisted for sale too did come down, but that is to be expected as home sellers prefer less to sell during the month of December when the holiday season is in full swing.  We should start to see an increase in luxury listings available for sale in the upcoming months.

Commercial Real Estate Due Diligence

Investing in commercial real estate can be a great way to generate income, however it is important to do proper due diligence before investing. Due diligence is the process of researching and verifying information about a potential investment. This article will provide an overview of the key considerations for commercial real estate due diligence investing, such as the types of information you need to research and tips for carrying out due diligence efficiently.

What Is Due Diligence?

Due diligence involves researching and analyzing all aspects of the property, from its physical condition to legal compliance issues.  Due diligence is essential in order to ensure that you get the best return on your investment dollars.  Due diligence starts before an offer is made and continues once an offer has been accepted and the contract to purchase has been signed by both the buyer and seller.

The process of due diligence can be time-consuming and costly; however, it can also reap substantial rewards if done properly. When conducting pre-offer due diligence, it's important to evaluate market conditions such as vacancy rates or forecasted population growth in the area surrounding the property. Other important factors include examining potential problems with zoning laws or building codes that could affect future profitability.  If there are vacancies in the building then figuring out why there are vacancies can save a buyer from investing in something that is in a location no one wants to rent from.

After an offer...

Buying A Home Without A Mortgage

The use of a mortgage to buy a home is what is used by a majority of homebuyers.  Around 70% of homebuyers are using a mortgage when buying a home.  There are other means with which to buy a home and this article looks at some of the alternatives and what to look out for when buying a home without a mortgage.

Buy a Home With Cash

One of the most commonly used means for buying a home and that does not involve taking out a mortgage is buying a home with cash.  Many investors purchase homes with cash with the goal of fixing up the home and selling it for a profit or fixing it up, getting the home rented out and then getting a mortgage to cash out their equity.

There are also home buyers buying a home to live in with cash.  These buyers may be getting their cash from savings, borrowing from retirement accounts, borrowing based on equity in stocks or other real estate, gifts from family members and other sources.  Especially in a market where the mortgage rates are high, buying a home with cash to get a discount on the purchase price may be a good option for those who have access to cash.  Once purchased with cash there are plenty of mortgage lenders who are willing to give a mortgage to that homeowner so they can get some of their cash out of the equity they have.

While cash purchases of homes allow a home buyer to close quicker than a mortgage purchase would allow that does not mean a cash buyer should rush things.  Instead the cash buyer should seek to use all available contingencies to make sure that not only...

Fewer home sold in the month of November 2022 as compared the previous month, but some of that can be traced to the holiday season as well as colder weather.  Fewer homes sell during the colder months of the year.  Homes are sitting on the market for longer as well as buyers step back due to higher interest rates.

Housing Bubble Starting to Deflate - Various markets around the US are starting to soften as homebuyers decide it is to expensive to buy based on current mortgage rates.

The data you see below is from the Cincinnati Multiple Listing Service (MLS).  Average days on market refers to hold long on average a property stays on the market before accepting an offer.  The properties sold represents the number of multifamily properties that have been sold during the month being reported on.  If there is other data you would like to see please feel free to share in the comments below.

Local Greater Cincinnati Charities To Know About For #GivingTuesday

After Thanksgiving comes Black Friday, Small Business Saturday and then Cyber Monday.  Black Friday, Small Business Saturday and Cyber Monday are all about buying something at a discount or buying local in anticipation of the upcoming holidays of Christmas, Hanukah, Kwanza, Festivus and more.  Another day for consideration is #GivingTuesday.  With #GivingTuesday the idea is to contribute some money to a charity of your choosing so those who are in need can benefit as well from the holiday season.  Being a personal fan of local charities I have compiled a number of local charities in this article.   These charities operate in both the Greater Cincinnati, Ohio area and Northern Kentucky areas.  Take a look at the great things these local charities are doing and consider donating to them or becoming a volunteer.

La Soupe

La Soupe located at 4150 Round Bottom Road Cincinnati, OH 45244 and helps people get nutritious meals.  Founded in 2014 by Chef Suzy DeYoung the goal of La Soupe is to repurpose excess food (that would otherwise be thrown out) to create tasty and nutritious soups and meals for those in need.  Currently La Soupe rescues approximately 5000 pounds of food per week and with that is able to feed 2000 children in and around the Cincinnati area.  La Soupe recently sent 23,000 pounds of food to assist with hurricane recovery efforts in Houston, Texas.

Not only does La Soupe give soup to those in need they also sell their soups to anyone wanting to buy their delicious soups. ...

Tips For Selling A Home In A Buyer’s Market

The real estate market in many locales around the US shifted rather quickly to a buyer’s market with the increase in mortgage interest rates.  As a result home sellers need to put in a lot more effort in order to make sure their home is sold.  Many buyers have stopped looking for a home due to lack of affordability as a result of higher mortgage rates.  With fewer buyers, home sellers need to provide exactly what those buyers who are still in the market want.  Learn what home sellers need to do to get sold in this buyer’s market.

Get Pricing Right and Be Flexible

Pricing is one of the most important things to get right and work on getting right if it is not where it should be.  Buyers look for homes that will fit their monthly budget.  An overpriced house will mean buyers will walk away and look to homes that are priced within their range.  An overpriced home will get little love from buyers.  How a home was priced last year in a seller’s market should not control how a home is priced today.  Home sales comparisons (comps) need to be very recent.

Home sellers need to be flexible with their price.  Once listed the home price should not be set in stone.  As buyer feedback comes in the home seller needs to keep in mind what buyers are saying.  If buyers are mentioning home condition, need of updates, or some other reason that is usually a sign that the price may be high.  If the home seller does not want to make updates, change appliances,...

Does A 40 Year Mortgage Make Financial Sense?

With interest rates nearing fourteen-year highs buyers are looking at all methods to help with lowering the monthly payment so they can buy a particular home.  Buyers mainly consider the monthly payment and how it will fit within their budget.  By spreading out that payment over a longer period the buyer can reduce the monthly payment.  Adding interest into the mix a 40-year mortgage may not be the best financial option for buyers considering the short-term monthly payment savings as this article explores.

Lower Payment?

Certainly a 40-year mortgage can offer a lower payment compared to a 30-year mortgage regardless of interest rate, but how much lower is it really?  Let’s take for example a $400,000 mortgage with a 30-year and 40-year term at a 7% interest rate.  At 30-years a $400,000 mortgage results in a payment (not including tax and insurance) of $2661.21.  At 40-years the mortgage payment is $2485.73 (also not including tax and insurance).  That results in a lower monthly payment for the 40-year mortgage by $175.48.  That is a modest savings in the monthly payment. 

Looking at the overall interest a homeowner will pay though can raise some concern.  The total interest paid for the 30-year mortgage is $558,035 over the life of the loan.  For a 40-year mortgage the total interest paid is $793,148.  The additional interest paid on a 40-year mortgage is $235,113.  If held for the full 30 or 40 years that is quite a bit of extra interest to be paid.  While the ...

October 2022 Greater Cincinnati Multifamily Market Report

The data you see below is from the Cincinnati Multiple Listing Service (MLS).  Average days on market refers to hold long on average a property stays on the market before accepting an offer.  The properties sold is the number of multifamily properties that have been sold during the month being reported on.  If there is other data you would like to see please feel free to share in the comments below.

October 2022 Greater Cincinnati Real Estate Luxury Market Report

Mortgage rates have reached 14 year highs and are averaging around 7% for buyers.  Jumbo mortgages for those buying luxury homes are in the high 6 low 7 percent range.  Average days on market have increased as homes are sitting for longer due to fewer buyers wanting to buy with the current rates.

What Higher Mortgage Interest Rates Mean For Sellers?

Mortgage interest rates are at 14-year highs as of the writing of this article.  For many buyers that means the monthly payments are too high for their budgets to handle based on current home pricing.  With this market shift it means that buyers are now in control versus the past where the sellers called the shots.  With fewer buyers on the market the sellers need to figure out how to aim their home at the buyers who are ready to buy.

How Is A Mortgage Payment Calculated?

In most cases when home buyers are looking for a home, they are considering the amount they will be paying monthly for a particular home.  Monthly budgets by home buyer consider what they spend on car payments, food payments, utility bills, entertainment, and housing expenses.  Home buyers want to keep their expenditure outflows less than their income inflows in order to avoid racking up expensive debt.  Mortgage lenders calculate the pre-approval amount based on the debt-to-income ratio of the buyer to determine how much home they can afford.  So while a pre-approval letter may say a home buyer can buy up to a $500,000 home, the buyer will buy based on what the monthly payment of principal, interest, insurance and taxes will be and how that payment fits within their budget.

A $500,000 mortgage with a 3% interest rate and 20% down payment results in a $1686 dollar a month payment not including taxes and insurance.  With that same $500,000 mortgage, 20% down and a 7% interest rate the payment is $2661 without taxes and...

Buying Real Estate With Cash

There can be many advantages to buying real estate with cash.  Whether you are buying a home to live in or buying real estate to invest in cash offers grab the seller’s attention.  Buying with cash allows the buyer to save time and close quicker on the purchase if that is what they want to do.  With fewer contingencies a cash offer can be more competitive than a higher priced financed offer.  Learn more about how to use cash to buy investment real estate or buy a home in this article.

Where To Get The Cash

If you happen to have enough cash savings to cover your purchase, then perfect.  Make an offer based on the cash in a readily accessible bank account.  Sellers will want to see proof of funds which means providing a copy of a bank statement showing the required amount of cash based on the offer price.  Even in brokerage accounts where the value of the stock is greater than the offer price can serve as proof of funds for making a cash offer.  Most of the stocks on the NASDAQ and NYSE are readily tradeable and the owner can usually sell their shares quickly in order to raise cash.

Cash that will be coming from Home Equity Line of Credit Loans (HELOC) or some other personal lines of credit (LOC) generally can be easily accessed assuming those accounts are current.  If a buyer needs to apply for the HELOC or the personal LOC then the seller may not be as convinced about the ability of the buyer to make the purchase.  Buyers wanting to use cash from their equity or personal LOC should have applied and been approved for those...

Great Things To Do In Cincinnati During The Fall

The weather may have finally cooled off a bit but that does not mean there is nothing to do.  In fact quite the opposite there are plenty of things to do for those who live in and around the Greater Cincinnati area.  Fall time activities abound in Cincinnati as this article explores.

Fall Fruit Picking

Want to pick your own fresh fruit from the tree?  Be sure to check out these farms to get apples or pumpkins.  Earlier in the season is better in order to get a good selection.

A&M Orchard

Located in Midland, Ohio this orchard is about a 40-50 minute drive from Cincinnati.  A&M Orchard have a wide variety of apples to pick from as well as a pumpkin patch for picking out fresh pumpkins.  They also sell apple jams, cider and more in their store.

Tuken’s Orchard & Farm Market

Located in West Alexandria which is about one hour north of Cincinnati and directly east of Dayton Tuken’s Orchard & Farm Market offer a variety of apples to pick and fresh vegetables grown locally on the farm.  Tuken’s also features a critter corral where visitors can see and interact with farm animals.

McGlasson Farms

Located in Hebron, Kentucky McGlasson Farms is less than 30 minutes away from Cincinnati depending on your location.  They feature live music performances by local bands, apple and pumpkin picking as well as fresh...

Important Commercial Real Estate Terms To Know

Want to invest in commercial real estate?  Knowing the commonly used terms can be important when it comes to talking with sellers, buyers and lenders about a property.  Understanding the commercial real estate terminology also can help the commercial real estate investor make sure they are buying a profitable investment.  Commercial real estate investing is quite a bit different compared to residential investing and understanding the different terms used is important. 

Capitalization Rate (Cap Rate) – Cap rate refers to the rate of return one can expect for a commercial real estate investment property.  The Cap Rate is expressed as a percentage and is based on Net Operating Income (NOI, see below) divided by the purchase price of the property.  It can also be based on the current value of the property if the property is not currently for sale but is instead being refinanced and the mortgage lender is wanting to know the cap rate of the property as part of lending due diligence.

Cash Flow – Real estate cash flow is the amount of income an investor will get from a particular investment property (can be commercial or residential rental) minus all expenses.  Expenses include taxes, maintenance, insurance, management fees.  Basically, anything spent towards generating that income is an expense that should be deducted from the income to determine the actual cash flow.  Ideal investment types should have positive cash flow.  Investors who buy based on appreciation and not for positive...