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Archive for the ‘Real Estate – General’ Category

Recently I was showing buyers property in several Rockingham County towns.   We looked at Londonderry,  Derry,  Windham and Salem.  Tax rates varied from town to town and my clients inquired why.

Property Taxes

I explained that in many (not all) cases, that property values had an inverse relationship to tax rates.  Another words, higher priced towns have the lowest tax rate and vice versa.     If you are looking at solely “affordability”, the tax rate is the great equalizer.    You may pay less for a house in a lower priced towns, but your overall payment (mortgage, interest, taxes and insurance) may be the same (lower mortage, but higher taxes).   Soooooooooooooo,  when looking at prices in different towns, consider the taxes.

If you have any real estate related questions, do not hesitate to us via email:  jack@LavoieRealtyGroup.com or visit our website at www.LavoieRealtyGroup.com

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 I came across the below paragraph in a publication of “Live Valuation”.  Talks about Freddie Mac’s outlook for the real estate market and mortgage rates.

“According to Freddie Mac, housing will see a “modest improvement” with a big risk of rising interest rates.  The average mortgage rate is projected to be at 5.20%.  Although quantitative easing has not kept rates from rising, it has been said that it did put a damper on the ascending rates.  Mortgage refinancings will slow as a result of higher rates and the projected 5.20% mortgage rate for 30-year fixed rates in 2011 is a full percentage point above the 2010 lows.  This will be the third lowest average since the annual began being recorded.”

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When I am out doing appraisals or consulting a homeowner at a listing appointment, I often get asked what kinds of home improvements add value. They will ask me if I think it makes financial sense to add a particular feature to their house. Here are my thoughts on some of the common questions I receive.
First of all, the best way to increase the value your home is to make any needed repairs or fix a problem in your house. For every dollar you spent repairing or fixing a problem, you will receive 3 to 5 dollars in return. Now that’s a return on investment!!!! As an example, let’s say your roof is older, and needs replacing. Do you realize that most potential buyers will discount their offer on your home by MORE than the cost of repairs to account for the risk, time and inconvenience associated with having to complete the roof themselves? If a roof will cost $5,000 to replace, a buyer will discount their offer price by $10,000 or more. Therefore, isn’t it common sense that by you “investing” $5,000 in your house, you will get a return of $10,000 on that investment? This is the case for most items that need replacement such as heating system, septic system etc. If your house needs painting and it will cost you $6,000, be happy to know that after painting the house, you will get ALL the money back and more. So the #1 rule is…. Fix what is defective, broken, funky or creates a problem.
After everything is fixed, what kind of features add the most value? A deck, a finished attic, a garage? I will list some of the items that I feel add the most. Before, I do that, I do want to make this point. If you are going to live in your home for years and are thinking of adding something major (i.e. Porch, addition etc) and enjoy it for 10 years, isn’t it safe to say you got “value of out it”. Having said that, here are Jack Lavoie’s “resale value enhancers” (Editorial here. I don’t care about the myths and practices of most appraisers and bank guidelines. I base my opinion on 20 years of experience valuing homes in the Greater Manchester and Southern New Hampshire areas).

Minor “Quality” Upgrades” – By adding molding, ceilings fans, upgraded lighting fixtures, quality vanities etc you make the house appear to be of better quality on the surface. Buyers are visual and the very basic upgrades will improve the perception of the houses quality through the buyer’s eyes
Minor Kitchen Makeover – If the cabinets are solid and modern, keep them. If they are solid, but dingy, then paint them. Replace countertops, add a nice big sink and attractive faucets and install new appliances. Tile in the kitchen gives an average kitchen an expensive look. Nice, matching appliances (stainless steel is hot now) completed the kitchen
Adding a 3rd Bedroom – If your home has less than three bedrooms, adding a bedroom will add significant value. Despite what conventional wisdom says, adding a 3rd bedroom in the basement (if there is no logical spot on the main levels) does add value provided it bright, airy, has windows and is of good quality.
Adding a finished basement– Finishing the basement is the most inexpensive way to add living space (hey, the walls, floor and ceiling is already there…lol). Compare that to having to build an addition. Sometimes adding a family room in the basement can really change the functionality of the home.
Adding a 2nd bath – If your house is a 2-story home and has only one bath, then adding a bath will greatly enhance the value. If you have an upscale home, adding a master bath with increase value.
Landscaping/Curb Appeal – YES!!!!! Landscaping makes a difference. Ok, I truly admit that appraisers, banks etc traditionally don’t place much value on landscaping when doing bank appraisals, but I can tell you personally from showing houses and “flipping” houses that curb appeal matters BIGTIME!!!! At a minimum, the there should be some well maintained plants, flowers and shrubs. Bark mulch is also great. The yard needs to be clear of debris, clutter and junk. Outbuildings are fine if well maintained…if not tear them town. Value is determined by the buyer (yes… us appraisers only provide an OPINION of value. If buyers “think” a house is more valuable due to having more curb appeal…then guess what… IT IS!!!
Paint – The single best improvement you can add to your house. The most bang for your buck! If you have a wood exterior keep it freshly painted in 3 colors 1) the body of the house 2) The trim and 3) an accent color for shutters and doors.
Of course, the actual impact of these or other improvements will vary on each house. If you would like an unbiased opinion or analysis of your proposed improvements, don’t hesitate to contact me.
Last point… Never OVERIMPROVE the property. That means, don’t add features that are excessive the neighborhood.
If you have questions of this topic feel free to contact me at jacklavoie@comast.net

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I met a client at a Manchester NH multi family property today. It was a 3 unit apartment building they bought 3 years ago for over $300,000 and today it is worth around $200,000. She wanted me to appraise the property and provide some advise on a plan of action as the building is causing them great pain. The couple bought it nearly 100 percent financed with a subprime mortgage with a $240K 1st mortgage at 8 percent and a $60K 2nd at 13 percent. They were told that they would be able to refinance the property, but since they are now upside down that is impossible. Declining rents combined with a costly mortgage equals a nearly $1000 per month NEGATIVE cash flow. They are stuck!

Unfortunately the Manchester NH apartment building market has suffered severe declining values and anybody who bought property from 2005 to 2008 (or refinanced to pull out cash) is most likely in trouble and stressed unless they put a huge down payment down. If you fall in this category, here are a few things you might want to do

Apply for a Tax Abatement – Since Manchester NH apartment buildings have declined in value so much, they are nearly ALL over assessed compared to other types of real estate. A successful tax abatement will lower your monthly costs and increase your cash flow (or reduce your negative cash flow). While you can apply yourself, I would recommend hiring a consultant or a professional appraiser for a tax abatement.

Short sale – In my client’s case, they cant sell the property traditionally since they owe $100,000 more than they could ever sell the property for. A short sale is when an owner sells a property to a buyer and the lender agrees to accept the purchase price which is far “short” of the mortgage balance as payment. Lenders do this because they realize it is better to get some of the money now rather than have to foreclose upon the property and take it back. If your finances are stressed and you can show hardship you may have a good chance of getting your short sale approved. I have taught courses on “short sales” and will gladly assist you with any questions you may have.

Fill those vacancies – Forget the high rents of yesterday. Lower your rents and keep your building filled. Your apartment building may show a negative cash flow but it will be a lot less damaging than vacancies.

If you need any assistance with your apartment building whether it is located in Manchester or anywhere in Southern New Hampshire, feel free to contact me at 603-644-1000 or jack@jacklavoie.com

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When I am out doing appraisals or consulting a homeowner at a listing appointment, I often get asked what kinds of home improvements add value. They will ask me if I think it makes financial sense to add a particular feature to their house. Here are my thoughts on some of the common questions I receive.

First of all, the best way to increase the value your home is to make any needed repairs or fix a problem in your house. For every dollar you spent repairing or fixing a problem, you will receive 3 to 5 dollars in return. Now that’s a return on investment!!!! As an example, lets say your roof is older, and needs replacing. Do you realize that most potential buyers will discount their offer on your home by MORE than the cost of repairs to account for the risk, time and inconvenience associated with having to complete the roof themselves? If a roof will cost $5,000 to replace, a buyer will discount their offer price by $10,000 or more. Therefore, isn’t it common sense that by you “investing” $5,000 in your house, you will get a return of $10,000 on that investment? This is the case for most items that need replacement such as heating system, septic system etc. If your house needs painting and it will cost you $6,000, be happy to know that after painting the house, you will get ALL the money back and more. So the #1 rule is…. Fix what is defective, broken, funky or creates a problem.

After everything is fixed, what kind of features add the most value? A deck, a finished attic, a garage? I will list a some of the items that I feel add the most. Before, I do that, I do want to make this point. If you are going to live in your home for years and are thinking of adding something major (ie. Porch, addition etc) and enjoy it for 10 years, isn’t it safe to say you got “value of out it”. Having said that, here are Jack Lavoie’s “resale value enhancers” (Editorial here. I don’t care about the myths and practices of most appraisers and bank guidelines. I base my opinion on 20 years of experience valuing homes in the Greater Manchester and Southern New Hampshire areas).

Minor Kitchen Makeover – If the cabinets are solid and modern, keep them. If they are solid, but dingy, then paint them. Replace countertops, add a nice big sink and attractive faucets and install new appliances. Tile in the kitchen gives an average kitchen an expensive look

Adding a 3rd Bedroom
– If your home has less than three bedrooms, adding a bedroom will add significant value.

Adding a finished basement– Finishing the basement is the most inexpensive way to add living space (hey, the walls, floor and ceiling is already there…lol). Compare that to having to build an addition. Sometimes adding a family room in the basement can really change the functionality of the home.

Adding a 2nd bath – If your house is a 2-story home and has only one bath, then adding a bath will greatly enhance the value. If you have an upscale home, adding a master bath with increase value.

Of course, the actual impact of these or other improvements will vary on each house. If you would like an unbiased opinion or analysis of your proposed improvements, don’t hesitate to contact me.

Last point… Never OVER IMPROVE the property. That means, don’t add features that are excessive the neighborhood.

If you have questions of this topic feel free to contact me @ jacklavoie@comcast.net

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Short sales often bring excellent opportunities for buyers to purchase a property at below market value. Below is a video of a great example of such a deal:

If you would like more info on this unit call (603) 644-1000 or send email to: jack@jacklavoie.com

For more information on Short Sales click SHORT SALES

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A client of mind inquired about buying a Manchester NH fixer upper recently so I provided her with some coaching.  Many other people  have called me recently and inquired about buying foreclosure properties to “Rehab” (fix up) and sell for profit.  Thoughts of real estate profits dancing through their head.   The truth of the matter is that you CAN make money that way, but there are some important factors one would need to analyze. 

There is an old saying that you make your money when you buy.  This means yo MUST buy it right.  Pay too much for the property up front and you are doomed.  I dont care whether the property you are buying is on the street you live on or Sydney Australia for that matter. Buying it right is essential.  So, Jack…How do you buy it right?

The MOST important step is estimating what the property will be worth and eventually sell for AFTER repair.  Estimate it right and follow my formula and you will make money.  Estimate it wrong and your profit will be in danger.

Step 1 –  Hire an appraiser, broker or another seasoned investor to help you (until you become proficient at it yourself) search out sales and COMPETING listings to see where your house will fit in.  In a slow market, active or competing listings are important as they are your houses competition.  Remember the list prices are just asking prices and each of the homes will most likely sell for less than full price.  This number is the AFTER REPAIRED VALUE or “ARV”

Step 2- After you determine market value figure on selling it a little less than market value as to move the property faster.  The last thing you need is costly carrying costs.  The discounted price (let’s say 5-10 % below market) is the ESTIMATED SELLING PRICE.

Step 3 -Hire an contractor to provide you with real estimates for repairs BEFORE you buy the property.  Fix the obvious, but dont forget the finishing touches, such as landscaping, light fixtures, towel racks, driveway sealcoating and interior staging.  In rehabbing, the profit is in the last 5% of the details!  The contractor estimates need to include a 20% Misc cost for over runs.  These estimates plus a 20% buffer are your REPAIR COSTS.

Step 4 – In addition to repairs, you will have acquisition costs (Title search, transfer tax, inspections etc), carrying costs (mortgage payments, utilities, heat, lawn/snow plowing) and selling expenses (real estate commission, transfer tax, etc).  These items will add up to a lot of money. 

Step 5 – Determine your Minimum profit. I would say that given the risk, time and expertise needed to rehab a house, that the profit should be NO LESS than 15% of the after repaired value.  This might be on the low side.  Your actual profit requirement will vary based on the type of property and your investment requirements.  Your profit needs to be factored in BEFORE you make an offer.

Step 6 – What to offer.  Here are two formulas for you.  The “long” one is as follows

Estimated Selling Price minus (Acquisition costs+Carrying costs+Selling costs+Repair Costs+Required profit) = Your MAXIMUM OFFER

The shorter rule of thumb is:

Estimated Selling Price X 65% less repairs = MAXIMUM OFFER.  Within the 65% are all your other costs and profit.  For riskier investments use 60%.

Remember, Estimate the Final Selling price carefully and factor in all costs.

Oh one last thing…. Don’t get greedy, a profit is a profit..    jack@jacklavoie.com

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