Financial Benefits to Home Ownership

In the past, owning a home was part of the ‘American Dream’; however, with the rise of a global economy which can require professionals to pick up and move for their job on a moment’s notice and with the turbulence of the housing crash of 2008, the love affair for home ownership as a means of fulfilling a vision of success and integrating one’s self into the community has become antiquated and somewhat distrusted. Therefore, I like to present a different side of home ownership to prospective purchasers or renters sitting on the fence, which is the financial benefits of owning a property. In other words, how can the home work for you rather than you work for the home.

One of the main financial benefits to owning a property is the creation of wealth over time. Owning a property can be an investment, particularly if you analyze the type of property which fares best in your market. And like the stock market, holding onto properties as investments for the long term and weathering any short term downturns, generally rewards the property owner with appreciation. As you pay down the debt, you build equity, which is like a forced savings account.

Secondly, home ownership is a way of controlling costs or expenses. We all have to live somewhere. As inventory fluctuates, the price of rent will also. When you own your home, the monthly payments are fixed. You will also have more control over cost saving choices. For example, if your utility bills are high, you can invest in energy saving appliances or automated controls which will lower your usage. And with historically low interest rates to boot, you can leverage someone else’s money through a home equity line to pay for those cost saving initiatives.

Which brings me to another major benefit of home ownership, tax deductions. Speaking of home equity lines, the interest portion of those payments are in fact deductible, as are the interest on your mortgage, the origination points of your closing costs and property tax. Furthermore, if you buy an owner-occupied multifamily (which tends to be my recommendation in the NYC area) you can also claim itemized deductions on the investment portion of the property for your utility payments including water/sewer, fuel and electricity, and what is referred to as depreciation. Depreciation is the reduction in the value of the property with the passage of time due to wear and tear, and you can write this off.

Continuing on, homeowners benefit from the capital gains exclusion when they sell the property. The federal and state authority will tax a homeowner on the profits of their home sale, similarly to how they tax your earned income each year. However, for a single filer selling a primary residence, there is a $250K exemption, and for a married couple, there is a $500K exemption! This illustrates how many homeowners turn their home into a retirement egg. And if an elderly homeowner doesn’t wish to sell their home, they can use the equity in a reverse mortgage and remain in the property.

In addition to the more obvious benefits already mentioned, there are plenty of others including how home ownership reduces your car insurance payment, improves your credit and aids in obtaining loans. There are already so many benefits, could there be more? Of course! As I mentioned previously, I highly recommend multifamily properties in the market I service and for a lucrative reason. The rent is very high in New York City. In fact, this city was ranked as the second most expensive city in the U.S to rent, which for a property owner, means you can collect a substantial income from your rental units. This passive income can pay for you to live!

In the age old debate of whether to rent or buy, it is especially true here in New York City that in the long run it is better to buy, and because of all these financial benefits of home ownership!

How much does it cost to hire a real estate agent on the purchase of a property?

As a real estate broker, this is a question I have been asked on several occasions, when a buyer was seeking representation by a real estate agent to purchase a property. And the question has been posed by first time buyers as well as those looking to sell and then buy another property. Even if it is not your first time purchasing, you may not recall how the fee structure is commonly paid or by whom. Perhaps you inherited a property, but never went through the home search process or you bought from a neighbor or landlord, and there was no agency representation involved.

So, I thought it would be valuable to explain to prospective home purchasers what is the value of having representation and what they can expect to pay for the service. Now, how does working with an agent benefit you? In NYC, I think most people would agree that time is the most valuable commodity, and working with an agent will save you ALOT of time. Successful and seasoned agents will have the opportunity and insight of closing many transactions in a given year, and they will use that experience to help you navigate an ever changing market while making you a more informed and therefore competitive buyer. Most buyers on closing day are relieved to have the experience completed. It can be a stressful and exhausting couple of months or even years, and in NYC in particular, it is complicated. There are so many different types of property and issues that can arise during the transaction, and having a good agent will assist you in avoiding the pitfalls and solving the problems that inevitably surface.

Furthermore, an agent will be there through every step of the transaction, to connect you with the right mortgage agent to arrange the necessary financing, putting together a strong offer package to be competitive in the market, negotiating price and terms of the sale, selecting a capable attorney to represent you, and preparing you for closing. A few qualities I would recommend in an agent are being knowledgable about NYC real estate and its market, available and ready to arrange showings around your schedule, accountable by being prompt and honest in all transactions, and hardworking and therefore eager to search for the right property until it is found!

And now that you have a better understanding of how an agent will benefit you as a buyer, what should you expect to pay a qualified agent, and really this is the best part! Traditionally, the commission is negotiated between the seller and their listing agent, and this provides for compensation to both the listing and the selling agent. So as long as you are working with brokerages which are cooperative and co-broke with another, you can expect for the fee to be paid by the seller. Now, there are instances where a home seller may be selling without representation, which your agent will then need to negotiate their fee with the seller or build it into the offer, or you can choose to ignore listings where the seller is not paying the fee. Many of these tricky situations will be discussed up front with your agent, so that you’re not surprised or confused during the process, and together as a team you will decide the best way to handle them by knowing all of your options.

Ready? Set.. Go! Happy house hunting!

What is HPD and do you need to register your property with them?

If you have recently purchased or inherited a property in the NYC area, you may be wondering what measures you need to take in order to be in compliance with the rules and regulations enforced by the local housing authorities. One such agency is New York City’s Department of Housing Preservation and Development, otherwise known as HPD, which promotes the construction and preservation of affordable housing for low and moderate income families and enforces housing quality standards.

So who needs to register their property with HPD? Property owners of residential buildings are required by law to register annually with HPD if the property is a multifamily of 3 or more residential units or if the property is a private dwelling of 1-2 residential units in which neither the owner nor the owner’s immediate family resides. In other words, if you have a 3 family and up or any # of unit investment property, then you will need to register.

The good news is that the registration process is not complicated. You can register and pay online at HPD Property Registration Online System or print your form and mail it in with your payment. The registration fee is $13 per year and is due on July 1 of each calendar year. More detailed information can be found at Property Registration. Failure to register your property can result in civil penalties of $250-500 in addition to being unable to certify a correction of violations on the property or bring an action for nonpayment of rent against a tenant.

If this is the type of thing you don’t want to be dealing with as a homeowner, you might consider hiring a property manager to streamline and manage these tasks for you. The more you know!

Existing Two Family For Sale on 25×100 Lot (5000 SF Buildable)

Kristen Jock – (518) 859-3056

License# 10301209234


Land For Sale

408 Seneca Ave

408 Seneca Ave, Queens, NY 11385

Price: $1,100,000
Lot Size: 2,500 SF
Property Type: Land
Property Sub-type: Multifamily (land)
Features:

  • Electricity/Power
  • Water
  • Last Verified: 12/12/2016
    Listing ID: 20079592


    Description

    Located in the rapidly appreciating neighborhood of Ridgewood on the Brooklyn/Queens border, this lot measures 2500 SF with R6B/C2-4 zoning. With both a residential component and a commercial overlay, the development potential includes condos, a mixed use building with commercial on the ground floor, a multifamily apartment building or an attractive live-work arrangement for an entrepreneur interested in building and operating a business on the site. The max FAR, without an affordable housing component, is 2, allowing up to 5,000 SF build-able. An existing frame, two family building is situated at the rear of the lot and is in mint condition. The property is built 25 x 25 FT and can be delivered vacant. In addition to the building, there is parking for up to four vehicles with curb cut access. The property is nearby to multiple lines of transportation including the M train at Seneca and the L train at Dekalb as well as several bus lines, Wyckoff Heights Medical Center and Grover-Cleveland playground. The area has seen an influx of commercial and residential development in the recent years, including many incoming businesses on a national level such as Planet Fitness, Modells and Starbucks, which indicates future upside and anticipated growth for the area.


    1 Lot Available

    Lot 1

    Price: $1,100,000
    Lot Size: 2,500 SF
    Price/SF: $440
    Lot Type: Multifamily (land)
    Commission Split: 2.5%
    Description: The lot measures 25×100 SF with R6B/C2-4 zoning.


    Kristen Jock – (518) 859-3056

    License# 10301209234


    The information above has been obtained from sources believed reliable. While we do not doubt its accuracy we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness.

    CJ6DL9M

    Potential tax reform under the President elect and how that may affect property owners

    Political feelings aside, there are whisperings of potential changes in the tax code under the President elect, that may have a significant affect on property owners looking to unload in the coming year. Since the election, I’ve been receiving phone calls from many clients I met with in the past, who are now rethinking whether it might be an advantageous time to sell that investment property or family estate, that they’ve been holding onto. Additionally, those looking to sell their primary residence and cash in on property values may also be facing lower tax brackets and a reduction of 3.8% in capital gains, which currently goes towards the Affordable Care Act. If the incoming President follows through with his proposed plan to eradicate the Affordable Care Act, then the capital gains tax will be lowered by 3.8%. See the following excerpt from Trump’s proposed tax plan:

    Brackets & Rates for Married-Joint filers:
    Less than $75,000: 12%
    More than $75,000 but less than $225,000: 25%
    More than $225,000: 33%
    *Brackets for single filers are ½ of these amounts

    The Trump Plan will retain the existing capital gains rate structure (maximum rate of 20 percent) with tax brackets shown above. Carried interest will be taxed as ordinary income.

    The 3.8 percent Obamacare tax on investment income will be repealed, as will the alternative minimum tax.

    It will be interesting to see how this unfolds, and how it might affect the market. Stay tuned.

    How will the election affect real estate in the long and short term?

    We are in the midst of what will certainly be remembered as a crazy election cycle, characterized by unexpected candidates and their antics. And although there is less than a week before the outcome for the next President is decided, there is still great uncertainty as to who that will be and what implications that decision will have on our economy as a whole and the real estate market in particular.

    The economic and employment policies of the incoming President will have lasting, although not immediate, effects in the U.S. and abroad. A survey by national real estate entity, Redfin, showed that 27% of buyers thought the election would have a negative impact on real estate, up from just 15% only 3 months earlier. Although this sentiment was not shared by the majority, it does show an upward trend of anxiety among buyers about the future stability of the real estate market.

    So, lets look at how the election and its candidates may affect the real estate market in the short and long term. Aside from buyer hesitation due to uncertainty before a candidate is announced, there are not many short term implications. One area of the market, the office sector, may experience tenants delaying resigning their leases until after the election is decided. However, the main concerns are more long term impacts such tax implications, which wouldn’t really take effect until 2018. Proposed changes in the tax code, would likely hurt small businesses most, as many lack the financial resources to hire a tax specialist in order to navigate the new regulations. Additionally, interest rates, access to capital and financing, and employment and job growth, will all factor into the long term health of the economy and the housing market.

    There is generally more turmoil or losses in the markets, when the current President is not seeking reelection, as is the case this term. But the uncertainty of a new President and a new party coupled, has shown in the past to incur more of a down market than when an incumbent party takes office. Furthermore, markets also respond well to proposals to reduce corporate tax rates, which are currently 39% and the highest in the developed world.

    To buy, or not to buy? That is the question.

    With tremendous waves of uncertainty about the future of the country, so far as economically, environmentally or politically, many potential home buyers are becoming less confident about whether to invest in real estate at the present time. Some people are nervous about an impending recession, while others are terrified as to who will be running the country come next January. And then there are folks in areas of the country rebounding from devastating natural disasters such as Hurricane Matthew’s impact on the eastern coast of the U.S., flooding in Louisiana and wildfires across California.

    So what do I tell my clients when they ask the inevitable question, “When is the best time to buy?” I always tell them the best time to buy is when you have the need or desire. Trying to time the real estate market to hit that opportune prime buying time, is like rolling the dice at a casino. The truth is that the prime time to buy has a lot more to do with the circumstances going on in your life than what everyone else is or isn’t doing. You may have been relocated by your job or hired for a new position. Your family could be growing, or you recently became engaged and will be getting married in the near future. These life events generally precipitate a change in your housing needs, and could present a need for you to buy.

    When working with a buyer on the fence, I also ask them what they would do with their money in the bank, if they don’t buy. In other words, if they are looking to purchase more so out of a desire to invest in real estate, they are seeking a way to make their money work for them. If they choose not to purchase a property, what would their alternative game plan be? I would advise them to look at potential rates of return on real estate prospects versus their alternative investment strategies. Many of the buyers who fall into this category don’t have an alternative plan or see the obvious alternatives, such as the stock market, as too risky. I would then point out that keeping their money in the bank won’t even keep them ahead of inflation.

    People will always try to time the market to capitalize on their investment, but in trying to do so, you may be ignoring factors that are much more significant to you. Lets say you are currently renting, but want to buy during the next downturn in the market. You could be waiting for years, meanwhile throwing away your money in rental payments being applied towards someone else’s mortgage. If we look at StreetEasy’s latest market report for August 2016, the median rent in Brooklyn is currently $2,932/mo. That’s over $35,000 annually, which could be applied towards equity in a property rather than flushed down the drain, while you’re waiting for the market to drop.

    Furthermore, we find ourselves in an unprecedented time of historically low interest rates. What I mean is they can’t get much lower, and they can really only go up. When you break down the concept of interest rates, you begin to realize that a potential price break of say $50,000 dollars on the average home price of $926K in Brooklyn (according to the Corcoran Q3 Market Report) doesn’t save you money if it occurs in the future when interest rates are even just a point higher. That interest hike over the course of a 30 year loan will cost you over $80,000. Meaning you would be $30K ahead by paying $50K more for the property when interest rates were a point lower.

    This is precisely the reason why trying to time the market can be a fruitless endeavor. The best time to buy is when you have the need or desire to buy. A better pursuit would be to strategize what kind of property will best suit your needs, enabling you to build equity, create passive income and make your money work for you!

     

    If you build it, they will come. Or will they?

    There is much discussion lately of the slow down in the real estate market throughout NYC. Many high profile, luxury new development projects have been put on hold until further notice. Which begs the question, if you construct a new building in Brooklyn or elsewhere in the city, will the buyers or renters come?

    I think that greatly depends on the type of product you’re planning to construct, and whether that portion of the market is underrepresented or totally over-saturated. After all, there is no such thing as ‘one size fits all’ in the world of real estate. There are various kinds of housing, in this great city of ours, from cooperatives, condominiums and condops generally ranging in size from studios to 3 bedrooms, to townhouses, multi-families and mixed use properties. It is a valuable trait of the developer to recognize what the next wave of buyers and renters will prefer in terms of type of housing.

    In addition to the types of property, developers also need to assess the location of their development, and more specifically, what housing options are underrepresented in that area. If we look at trends from the past few years, focusing specifically on Brooklyn, we would see that 1 bedroom condos had the highest demand between 2008-2010, while the city and the world were reeling from the U.S. housing market collapse and the economic collapse of the world’s top financial institutions. This may be best explained by a period of downsizing in combination with young professionals’ burgeoning interest in Brooklyn, and reflective of a demand for first time buyer starter apartments.

    Around the Spring of 2010, the demand for 2 bedrooms versus 1 bedrooms began to arise, eventually resulting in townhouse demand matching that of 1 or 2 bedroom apartments during Spring of 2013. By Spring of 2014, townhouse demand had exceeded that of 1 or 2 bedroom apartments, highlighting a growing urgency for larger homes and an influx of more affluent buyers across the borough, relocating from Manhattan, other metropolitan cities and abroad. A major contributing factor to this trend of buyers into Brooklyn was a burgeoning tech scene and shared office space like We Works, with several companies relocating their offices to Brooklyn from the West coast and Manhattan.

    For the developers who recognized this trend, appropriate housing in the form of higher end condos and upscale, two family townhouses ensued. By August of 2015 that inventory appears to have peaked with an average price per SF of $860 in Brooklyn, all the way up from a measly $550 per SF back in the Spring of 2010. The following Spring of 2016 saw that average drop to around $800 per SF with new development inventory decreasing ever since. So now the developer must go back to the drawing board, to figure out what inventory is not currently represented in the Brooklyn market.

    And sometimes, developers can be stubborn in recognizing the signs, that the inventory doesn’t fit the demand. They may try to offer more amenities to sell the units, but eventually the market will self correct, and prices will go down. Fewer developers will build during these times of uncertainty, but some will have the vision to determine the next wave of home buyers and renters and capitalize upon that. So what do we see happening next?

    The townhouse market appears very saturated, although newly gentrifying areas like East New York, Cypress Hills, East Flatbush, Flatbush and Kensington, may provide locations affordable for developers to construct or renovate and flip existing townhouses to home buyers seeking larger living spaces at a more affordable price point than the prime areas of Brooklyn. These areas may also offer opportunity to develop rental buildings, with a potential affordable housing component tied in, to provide tax incentives to the developer. Additionally, condo developments will be likely across Brooklyn, with more emphasis on space, quality, live-ability and lifestyle, than on a trendy and transient amenities package or flashy finishes. I believe the most important take away for developers right now, is to recognize that there are segments of the buyer and renter pool, whose housing needs are not being constructed and are thus relocating out of the city. This is an opportunity for a developer, who is willing to accept smaller margins of profit for a growing segment of the population, in exchange for less risk during an uncertain time.

    DON’T sell your home, But DO find out the market value!

    standupbedstuy-flier4With all of the media attention lately in Brooklyn concerning at risk, uninformed homeowners, particularly the elderly, being preyed upon and taken advantage by developers and investors, I thought it would be helpful to suggest how, as that person’s neighbor, friend, family or colleague, you can offer a helpful tip to those being approached by aggressive or misleading, opportunistic investors or developers.

    As with any asset or possession of value, there will always be the concern of how to protect that item, whether by insuring its value, educating yourself about the risks of depreciation, proper care and maintenance or the like. For most people there is a normal trajectory for which to hold an asset before it becomes time to liquidate and cash out. More specifically in regards to real property or real estate, an end user owner will usually purchase property and plan to live there for a certain length of time, either until they outgrow the unit or need to downsize, decide to relocate or retire, or a change in financial situation.

    Whether a homeowner is facing one of those decisions or not, understanding and educating one’s self about the value of a property, and what is often times that person’s most valuable asset, is always a good idea. Even if you’re not considering to sell and especially before you are considering to sell, obtaining a comparative market analysis from a licensed real estate professional, will better arm you with the knowledge to protect your asset, in the event that some developer or investor does knock on your door, offering you $X amount of money to take the property off your hands. Some people do seek an appraisal when they begin thinking about selling, which is one option; however, an appraisal will cost an owner a few hundred dollars and in a fast moving market, may not be accurate to what potential buyers are willing to pay NOW; where as, an experienced and knowledgable salesperson, broker or realtor, are fully in tune with what properties are selling for in the current market (versus 3 months previous) and offer a complimentary analysis and price opinion.

    I meet with prospective sellers and clients every week, who disclose stories of how their neighbors were approached by an investor to sell their home, not knowing if what they were being offered was a fair compensation. I’ve also experienced customers, who tell me that people were going ‘door to door’ and approaching their neighbors and even chasing them down the street or blocking the door, so they can’t leave and have to hear the investor’s pitch. If an investor knocks on someone’s door, and the owner responds to their offer by telling them the market value of their home and what they are willing to sell for, that would eliminate their chances of further hounding. The investor would know that person is informed and not likely to be ripped off.

    Furthermore, I regularly check property transfers for the areas I service, and am routinely perplexed by the variance of sales price for ‘like and kind’ properties. So, there is no doubt that a significant number of homeowners are selling their property for less than the market value. I don’t foresee opportunistic investors and developers stalling these practices when there is so much money to be made, but hopefully more property owners will seek to inform themselves of their property’s worth, so that they are compensated fairly, when and if they decide to sell.

    Kristen Jock

    Licensed Associate Broker

    Fillmore Real Estate

    345 Atlantic Ave, Brooklyn, NY 11201

    KristenJock@Fillmore.com

    (c) 518.859.3056

    (o) 718.643.0040

    OPEN HOUSE: 1146 East 103rd St, Brooklyn, NY 11236

    1FIRST OPEN HOUSE

    1146 East 103rd Street

    Brooklyn, NY 11236

    Legal Two Family

    3 Bed/1.5 Bath Duplex over

    2 Bed/1 Bath rental over

    Fully Finished Basement

    Sunday, May 31st from 1-2:30 PM                                    w/ kitchenette and full bath

    Welcome to 1146 East 103rd Street, located in the southeast section of Brooklyn, in the neighborhood of Canarsie. The brick, attached property is a legal, two family home arranged as a 3 bedroom, 1.5 bathroom owner’s duplex over a 2 bedroom, 1 bathroom garden level rental, over a fully finished basement. As you enter through the front yard gate, there is a nicely landscaped shrubbery aligning the pathway up to the entrance of the owner’s duplex. Once entering inside, a large open living area greets you, with beautiful hardwood floors, recessed lighting and plenty of natural light. From the living area, enter into the dining room which has ample space for a formal dining arrangement. From the dining area, enter into the kitchen, which has generous, cherry wood cabinets along with stainless steel appliances including a dishwasher and granite countertops. Adjacent to the kitchen, a small hallway provides access to a pantry and a modern half bathroom. On the second floor of the owner’s unit, there are 3 bedrooms and a full bathroom. The master bedroom accommodates a king size bedroom set, with wall to wall built in closets for storage. The second and third bedrooms accommodate a queen and full size set and both contain closets. A staircase has been installed connecting the owner’s duplex to the garden level rental, which allows for possible triplex arrangement or can be used as a separate rental. The garden level is also accessible from the front and upon entering this fully renovated unit, there is a living area and eat-in kitchen, with 2 queen sized bedrooms and a full bathroom. A fully finished basement, with 7+ ft ceilings, provides a kitchenette, full bathroom and playroom. Laundry hookups are available in both the basement and top floors of the home. The backyard is tiled and can be used either for recreation or parking for 2 cars. It is accessible from the garden unit, owner’s duplex and basement. A shared driveway at the rear of the property allows access for your vehicles. The house has been delightfully renovated throughout, and is ready to move in and be called home!

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