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Anthony Zammitt

Why Buying and Owning Rentals is Always a Good Investment

By | Agents, Property Management, real estate, Real Estate Investment

Owning a rental is always good; you get paid for being the landlord. It's a really profitable slice of the Chicago real estate investment market. This is mainly because of two things; the first being the steady stream of passive income it provides, and the second being the opportunity to get tax write-offs.

Of course, owning a real estate rental in Chicago is not an easy feat. The rewards are potentially huge only if you have a keen eye for details, proper preparation, and a sound Chicago property management company in charge of your property.

Managing rentals on the Chicago real estate scene can be done all by yourself, but like most people you may get overwhelmed over time. At this point, you can use the services of a Chicago property manager, such Lofty Real Estate Chicago.

Investing in rental properties is always a good idea, once you know the things you need to know, which we will be discussing.

Buying Rentals: Need to Know

Of course, when buying rentals in Chicago, you can either do it yourself or you can use a Chicago brokerage company. Asides from this, it is usually a sound policy to calculate your expected cash flow on the rental property before you purchase it. Think of it as a business; no one goes into a business to make a loss.

For you as a rental owner, the cash flow your property generates is your profit, so to say. Because of this, your cash flow should be at least at break-even point, when you factor in your expenses on the property.

Buying a property with an expected cash flow level that is below the amount you’d spend on expenses such as monthly mortgage payments, depreciation, etc, is not a good idea, and  we do not advise it.

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What are the Advantages of Owning a Rental Property?

There are a lot of advantages of buying and owning a rental property over other forms of investment (we won’t compare, don’t worry), and they are;

1. Diversification of Investment Portfolio

Investment, no matter the amount of probable gains, always involves a risk. Because of the inherent risk in the world of Investment, it is unwise to put all your money into one investment portfolio, especially stocks.  An unforeseen switch in the market dynamics and all your money might be gone with the wind. Owning a rental real estate property helps you mitigate greatly against the inherent risk involved with the investment. Once you have done your due diligence, your rental property will always be a source of income for you – one you can rely on to a very great degree.

2. Getting Tax Write-offs

The tax system favors owning rental properties a lot, and that’s another perk of buying and owning a rental property.  Owning a rental property means you don’t get to pay tax on your rental income. Owning a rental property means there will be depreciation and other property related expenses.  It is a usual practice to deduct the depreciation and other expenses from the federal income tax, and so this leaves the rental income completely free of any deductions.

3. Steady Stream of Passive Income

Owning a rental property is one of the safest ways to earn a steady stream of passive income every month. It’s your job (or your property management’s job) to ensure you keep renters who pay their rent promptly.

The “steady” in the income hinges on a lot of factors including doing a background check for prospective renters, so you can easily weed out those with a history of causing trouble for their landlords.

The best part is that you do not have to get involved in the background checks exercise or even get involved in the day to day running of the property before you get your passive income. You can simply leave your property to a Chicago property management company and focus on other areas of your life, whilst they manage the property and ensure your passive income keeps rolling in.

4. The Chance to Sell at a Premium

The usual industry practice is that you should try to hold your rental property for at least 10 years, but that rule doesn’t always work for every situation.

Owning a rental property in an area that increases the value of your property means you can sell off the property and make a gain on it at any time.

Even if the market dynamics change and the prices of property plummet, you can still rent out your property and make a rental income that will cover the costs of owning the property. You can do this till you’re ready to sell, and you would not lose any money.

Also, real estate market values generally appreciate over time, and the real estate market is usually one of the first to bounce back in case of a recession. So, the chances of losing money on your rental property investment over time are very low.

5. Growing Your Equity

Growing your equity is a goal for everyone, and owning a rental is a good way to do this. It is always good practice to purchase a rental property with a mortgage. Once this is done, you’ll have to start paying up on the mortgage payments, and you can use the rental income to pay for your mortgage.

This would be especially easy if you’ve accurately calculated the amount of cash flow to expect from owning the property. It would basically be as though your tenants are paying your mortgage for you, and over time, your debt will shrink and disappear, and your equity will start to rise steadily.

Conclusion

Buying and owning a rental property is one of the best ways to not just earn stable, passive income, but to also grow equity. By understanding and calculating just how much you can expect with regards to cash flow from the property, you can forecast how long it will take you to pay off your mortgage and start growing your equity.

Ready to invest in rental property? Give us a shout to learn more.

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Leveraging Property to Buy Property: A Full Guide

By | Agents, brokers, Property Management, Property Managemnt, real estate, Real Estate Investment

Is Leveraging a Good Idea?

The unofficial cardinal rule of investing in real estate is that you invest, or buy real estate with someone else’s money, not yours. This is the basis of leverage in the Chicago real estate investment market; by using someone else’s money to invest in real estate, you are making gains from your lender’s money.

Leverage is a well-known strategy in the Chicago real estate market, and it is the most widely used way to acquire real estate. There is a drawback though; when real estate values rise, it is to your advantage. But when they fall, you are at a disadvantage. This is why it is crucial to do your due diligence about a property when you want to use leverage to acquire it.

Leveraging Your Way to the Second Mortgage

Simply put, a second mortgage is a mortgage taken out when you still have a mortgage in effect on your first property. Doing this is only possible if you have enough equity on your first mortgaged property since a second mortgage is a riskier endeavor than the first.

The usual practice is that your first property is used as collateral for the second mortgage, and most lenders will only agree to a deal if you have enough equity on your first property. This is the big risk with leveraging property to buy the property.

The second mortgage can be used for anything, including using them to service personal expenses.

Types of Second Mortgages

There are basically two types of second mortgages available for use in the Chicago real estate market. They are;

  1. Home Equity Loans
  2. Home Equity Line of Credit (also called HELOC)

1. Home Equity Loans

Home equity loans are a type of second mortgage in which you can borrow a certain amount of money in a lump sum, payable over a period not exceeding 15 years at a fixed rate of interest.

Basically, you are using the amount of your home you own (i.e. the amount of mortgage you’ve already paid back on your home) to back up your credit. If you fail to pay, your house is liable to be foreclosed by the lender.

Home equity loans are best for investors looking to leverage their property to buy a rental property, as rental properties usually require a significant amount of down payment.

2. Home Equity Line of Credit

Popularly called HELOC, this type of second mortgage is different from regular home equity loans in that they are payable with adjustable rates.

HELOCs are the credit cards of second mortgages, and they work in a similar manner; there is a credit pool you can repeatedly draw from, it has a set limit and some lenders even give you an actual credit card. HELOCs have draw periods in which you can draw from the credit pool as you need the money, without having to pay back. This draw period is between 5 to 10 years.

HELOCs also have repayment periods, wherein you pay back all the money you have borrowed at adjustable rates, as mentioned earlier.

Investment Real Estate Deductions You’re Eligible

How Do You Leverage One Property to Buy Another?

There are two ways to do this, put simply. They are;

1. Leverage Rental Property to Buy Another

A rental property is a good investment if bought properly. Managing it yourself might not be easy, which is why we advise that you use a Chicago Property Manager, or a Chicago property management company, such as Lofty Real Estate.

Using your rental property as leverage to get another property is the easier of the two ways of leveraging property to buy another property. This is because the rental income paid by tenants can be used to pay up the mortgage on the rental property and gain some equity.

Using a rental property as leverage for buying another property would involve using the rental property as collateral, as mentioned earlier. A second mortgage would also involve higher interest loans than the first, so you have to be absolutely sure your primary property has enough equity to cover the expenses associated with taking a second mortgage.

2. Leverage Your Primary Residence to Buy Another

Another way of leveraging property to buy property can be this scenario; using the equity on your primary residence to get another mortgage. It can be another house or even a rental property. Doing this will mean your primary residence will be at the mercy of the lender if you default on the second mortgage payments.

Requirements for Leveraging Property to Buy Property

Building up a good level of home equity and a great credit score are central to the success of your chances when taking out a second mortgage.

How to Get A Second Mortgage

1. Know How Much Equity You Have

Knowing how much equity you have will help you make a quick decision on whether or not to go for a second mortgage and leverage your property to buy property. The more equity you have, the more your chances of success when it comes to your application for a second mortgage.

2. Check Your Credit Score

This is also another key part of the process. An excellent credit score will also improve your chances of being approved. If you’re interested in leveraging your primary property to buy another property, then you have to possess a credit score to match.

3. Pick out Your Preferred Second Mortgage Option

There are two options for you here, either you go for a HELOC or a home equity loan. Each option has its own peculiarities and benefits, so be sure to pick one that suits you. If you’re leveraging property to buy another house, going for a HELOC might be best. On the other hand, if you’re leveraging property to buy a rental property, then going for a home equity loan where you’ll get a lump sum might prove to be the better option.

4. Look Around

Once you’ve carried out these three steps, then it’s time for you to find out the options you have with regard to lenders and their rates. Check out the terms of each second mortgage very well, and ensure you don’t sign until you’re convinced it’s the best deal for you.

In Conclusion

Leveraging property to buy property is a smart way of acquiring more property, especially if you have the required equity.  With our guide, you have all you need to know about leveraging property to buy property.

Looking to purchase investment property? Give us a shout and let’s learn how we can reach your goals.

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Popular Interior Design Changes In Chicago Rentals

Popular Interior Design Changes In Chicago Rentals

By | Property Management, Property Managemnt, Real Estate Investment

All owners of rental property share the same main goals: keep vacancy to a minimum while maintaining or increasing property value. Besides a clean space and working appliances, there are several more factors that contribute to an ideal situation for owners and renters alike. Interior design can be a big help and won’t cost too much with a little preparation. Though trends come and go, it is important to be aware of what is popular when designing your property for rental.

Experts Are All Around You

With sites like Pinterest and Houzz, there is no shortage of “expert” advice and influence to be found on the internet. Maybe you have a Facebook friend that has their finger on the pulse of the trends and can help you make some informed decisions. There is a balance between making some popular interior design adjustments to enhance your condo/apartment’s aesthetics and spending countless dollars on a full makeover. Knowing your market can really help to find that balance. With the right touches you can easily enhance your condo and make it much more marketable.

When it comes to upgrading rental property, Owners can also learn a lot by looking at other listings in the area. Making yourself aware of the finishes that renters in your market are looking for will set you up to make the right decisions on your own investment.

Even with the advice of the “experts” on the web, sometimes time just isn’t as plentiful as one may need it to be. Savvy owners turn to Lofty, one of the top property management companies in Chicago. Lofty has apartment management in Chicago down to a science.

Want to increase profits and cut down on your time spent managing your properties? Contact us and we’ll show you how to do just that. We provide free market analysis, consultations and professional photography for all our new clients. We will ensure you never have to worry about renting out your condo again.

Some Tips from Lofty

Through their experience leasing condos in Chicago, the Lofty professionals have refined their list of what does and does not work in rental property design elements.

Here are a few tips you can use as a sort of guide or checklist when you are ready to make some changes for the better:

  • Hire a professional service to clean the apartment really well so you can expect to have your unit returned to you in the same pristine condition it was given.
  • A good place to invest a bit of money is in matching, stainless steel, energy efficient appliances. Otherwise, make sure whatever is there is cleaned like new and operating without issue.
  • Choose interior design materials that are timeless. Hardwoods, natural stone, and stainless steel are all good options.
  • When painting or decorating with wallcovering, opt for neutral colors. A neutral color palette will please the majority of potential applicants.
  • Avoid costly, over-the-top customization as adding too many details may limit the appeal or price you out of the market.
  • Built-in storage and shelving can be a big hit. Bookshelves in a flat wall can add some extra space; closet or cabinet organizers in bathrooms and bedrooms will help maximize storage.
  • Simple bathroom updates like a new mirror, faucet, towel rods and light fixtures make a big difference.
  • Depending on marketplace expectations, blinds—especially wooden blinds— are a great investment as they offer more control and class than a pull-down shade. Remember to instruct tenants on proper operation.

 

Here at Lofty, we provide free market analysis and consultations. We would be happy to come out and take a look at your space to help you determine what interior design touches can help you get more income out of your rental. The right interior design elements will get your property rented for top dollar and keep it rented. We want your time spent where it should be, enjoying life.

 

Speak with one of our experts to find out how we can supercharge your investment.

 

 

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Chicago’s Real Estate Market in 2020

By | Agents, brokers, home buyer, home buying, real estate, Uncategorized

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If you’re planning to sell a home in the area, you might need to pack your patience. Recent data shows that Chicago is one of the “slowest” housing markets among the major metros when based on median “days on market.”

Despite losing residents at a high rate, Chicago is still America’s third largest city and the economic driver of the Midwest. Although there is not a negative impact of buying a house in 2019 versus 2020, it is strongly advised by experts to purchase a house next year. In 2020, the largest group of Millennials will turn 30, which will be good news for an industry that may need it.

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The National Association of Realtors’ annual home-buyer profile has recorded an average home-buying age of 30 that has stood for decades.

While young people have flocked Downtown, bringing with them corporations seeking skilled workers, Millennials will likely turn back to the suburbs when it comes time to buy. But because so many jobs have moved from the suburbs to Downtown, Millennials will likely look for housing in inner-collar suburbs that have urban amenities like public transportation and walkability.

 

The year 2020: where inflation and financing qualification could hurt prospective buyers. According to Zillow, rising mortgage rates are encouraging homeowners to stay put and discouraging would-be buyers.

Higher interest rates should eventually slow the intense pace of home value appreciation that we have seen over the past few years, a welcome relief for hopeful buyers. Overall, home prices aren’t expected to grow much, and market crashes are highly unlikely. That should make it a safer purchase for buyers and more difficult for sellers to get the best price possible.

 

 

 

 

How to prepare for the next 2yrs in Real Estate

By | Agents, brokers

As 2019 revs up, we are entering into a new phase of real estate. It’s important for real estate brokers, property owners and investors to know where the market is headed in the coming years. Companies are now beginning to leverage new technologies like virtual reality and machine learning to work smarter and sell like never before. To prepare, we’ve outlined our predictions on the upcoming trends and changes that will forever change the future of the real estate industry.

Technology

The real estate industry has gone years without major disruption by technology. Established systems and processes have remained consistent and even outdated. Recently,  $2.7 billion was invested in real estate technology a month by month increase of 132%. This investment in technology has the ability to alter the landscape on how agents are selling and how buyers are searching and buying their ideal homes. Technology will help you reach thousands of more customers while also giving you tools to show homes like never before.

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The buyer

The real estate buyer is now more informed than ever. Buyers now search online to get better insight into the types of properties they’re interested in as well as the neighborhoods. They can also see a home’s estimated value and use tools that tell them if it’s a good investment or not. The buyer will become more independent of the agent which will result in a different sales process all together. Buyers will even be able to get more information about their agent from online rating platforms which will force agents to build a positive online presence if they want new business from online search.

Virtual Reality

The latest trend of VR will soon hit the real estate market.  Buyers will begin to use VR technology to “view” homes without ever having to step foot inside one. This will change the process of open houses. Sellers can even stage their homes using VR. This will help them cut the cost of staging while begin able to show the potential of a home using updated decor. As an agent, it’s important to familiarize yourself with VR to stay ahead of the trend and ultimately save yourself valuable time and money.

Millennials

According to Danielle Hale, the chief economist at Realtor.com, “Millennials will continue to make up the largest segment of buyers in 2019, accounting for 45% of mortgages, compared to 17% of Boomers, and 37% of Gen Xers.” There will be a surge in millennial demand which will change the market to adjust to the needs of millennials. As an agent, it’s important to start researching not only how millennials will buy, but what they are looking for in their first home. Get to know the future buyers and how they navigate buying a home. We’ve compiled a list of tips on our predictions for how millenials will bring their preferences to the market.

  • Online. For millennials, all searches start online. As an agent, you’ll need to create a powerful online presence for yourself and for your listings. Make the extra effort to invest in good photos and a well designed website.
  • Quality over size. Millennials have shown that they are more concerned about the quality of properties over the size. They prefer open spaces with lots of usable space.
  • Location. Make sure to highlight the location of your properties. Even if you think a home isn’t in the most desirable location, get creative and list some notable local spots close by.
  • Low-maintenance. We live in a day where Amazon Prime, Grubhub and Uber make life easier while saving millennials their valuable time. Homes with energy efficient and smart appliances are more appealing.

At Lofty, we pride ourselves on keeping our agents ahead of the curve through constant proactive research and learning. 2019 offers lots of potential for agents who prepare for the industry changes and use them to their advantage.

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Top 8 Ways to Make a Great First Impression

By | Agents, brokers, first impression, real estate

You've probably heard time and time again the importance of first impressions in career development. In real estate, first impressions are so vital that they can make or break your career and reputation. The customer experience you provide is the one thing in this industry that you have complete control over. Technology will never compare to the human interaction and the value you can bring to the home buying/selling experience.

Prepare

If you have the opportunity to have a call before meeting a client, ask a few quick questions that can give you insights into who they are and what they are looking for. Their answers will help you better prepare for the first in-person meeting. Before your first meeting with potential clients, conduct some brief research on the person you’ll be meeting. With LinkedIn, Facebook, and Instagram you can determine their career and personal interests with a few clicks. Also, it’s not uncommon, that you will find mutual friends which are great for a conversation starter. If they’ve already reached out to you with some information, make sure that you go back and re-read so that you’re prepared and not asking questions that they’ve already given you the answers to. If you’ve had a previous phone call with them, refer to your notes and show that you are an active listener. Try to prepare at least three talking points that you think are important to your client. Top real estate agents never come to meetings empty-handed. Print out ideas, suggestions, information about sites and pricing. This shows you are the expert in the industry and are taking the lead. Without preparation, you can come off as unorganized and unprofessional.

Appearance is also extremely important for first impressions. Dress professional, clean, and polished. Don’t overdo your look with flashy jewelry or accessories that can be distracting. Avoid the fancy attire, and stay true to you. It’s also important to dress for the market. Don’t wear a black suit and tie or a gown to show a beach house.

If clients are coming to your office, create a clean and organized environment that also has character. Local artwork is a great way to get away from the sterile office stigma.

The in-person meeting

It’s game time! You’ve done your prep work and you’re now ready to meet with your client for the first time! Be positive, confident and remember that you are the expert. Always arrive at the location early, because showing up late is a great way to ruin any first impression. Introduce yourself and thank them for taking the time out of their day to meet with you.

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Body language

Some may argue that body language can have more power than words. Try to walk with your chest high and practice sitting up straight without crossing your arms. Be completely open towards them and refrain from closing yourself off.

Build rapport/common ground

Finding common ground is a great way to start off on a positive note. Common ground is something that you both can relate to and can connect on. It could be anything from sports teams, to attending the same college, to kids. This is where your social media research will come in handy! The more information you have on someone, the easier it is to make that initial connection.

Ask the right questions 

By now, you should already know what questions you want to ask your client to ensure that you walk away from the consultation with all the information you need to immediately get started helping them and so that they feel as if you’ve proactively done your part to help them.

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Active listening

If you’re asking the right questions that don’t always end with a yes or no answer, you should be getting your clients to speak with depth on what they need/want. The power of active listening has a positive impact on people. Really listening to what they’re saying and engaging lets them know that you understand them and want to know more. People love talking about themselves and your thought-provoking questions will help you find out more about them on a deeper, mutually beneficial level. Try not to look at your phone or computer unless you are showing them something.

Show how you stand out from the rest

Now that you’ve built rapport and connected with your clients, it’s time to show them your abilities as an agent and the unique experience you bring to the table. Introduce why you’re passionate about real estate and share your background. Highlight your credentials and go into some detail on the markets you’re familiar with and the technology you use to make the buying/selling process easier for them. Clients will pay more for an agent that offers an experience that makes their life easier.

Follow Up 

You should follow up with them almost immediately with a thank you note and outline of next steps. If possible, put in any extra work you can to show that you go above and beyond for your clients. For example, stop by the neighborhood they’re interested in, take pictures and send to them. Anything you can do that shows how you take customer service to the next level is always appreciated.

Great first impressions are a sure way to win more clients and keep them happy. Don’t forget that over 60% of business each year comes from the people you know, past clients, and referrals. One great first impression can lead to countless future clients.

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What To Expect Throughout The Buying Process

By | Agents, closing on a home, home buyer, home buying

Whether it’s your client’s first home, or they’ve been through this process before, every experience is different. However, top real estate agents know the core elements of what to expect during a buying process.

Determine housing needs

In order to deliver the best service to your clients and make the home buying process as enjoyable as possible, it’s important that you get to know them very well. Ask the right questions to find out their motives for buying, what they’re looking for, and what they truly need to be happy in their new home. This will not only help you find them homes to show, but it will also help you tailor your efforts to their needs and wants and create a trusting relationship.

Set a clear budget

It’s important for your clients to know their numbers. As an agent, you never want to put your client in a position of buying a home that they can’t afford and vice versa. You want to be able to show them all the options for homes that they can afford. Show them how to determine the cost of homes they can look at by accessing their financial situation and taking into consideration their current debt and bills etc. If they haven’t already, make sure they are pre-approved for a mortgage.

Begin the home search

Once all the prep work is done and you have a clear understanding of your client’s needs and expectations, let the home search begin! While seeing homes, take note of what they love and what they hate. This will help you narrow down the homes you show in hopes of finding the right home, faster.  Top real estate agents say that their client will know within the first 30 seconds of entering a property if they’re interested or not. Pay attention to your clients during those critical moments. If clients are interested in a certain property, make the extra effort to do repeat tours at different times of the day so they know what the neighborhood is like at night, and they can see the lighting at peak daytime. For pre-construction homes, check the floor plans and get to know the reputation of the developer.

buying a home in Chicago

The offer

Use your expertise as a real estate agent to guide your clients in negotiating a fair offer that they’re happy with and is comparable to homes in the same neighborhood.

Escrow

The hardest parts are over! The offer was accepted and your clients are ready to start getting excited. The home is now in escrow, the period of time it takes to complete all remaining steps in the home buying process.

Home inspection

It’s common for offers to be contingent on a home inspection of the property to ensure there are no signs of structural damage or to take note of things that may need fixing. As a real estate agent, you should have developed trusted contacts who you can refer to your clients to conduct the home inspection. Work with them to schedule the inspection within a few days of the offer being accepted by the seller. Keep them well informed during this process and review the inspection in person with them if possible. Explain to them the power behind the contingency and how it protects them by giving them a chance to renegotiate or withdraw their offer without penalty if the inspection finds any substantial damage. Also, review with them if there’s anything that they want to ask the seller to fix before closing. Once everything is agreed upon, you will do a walk-through with your clients as one last chance to confirm any repairs that were requested. Make sure the seller / previous owner has vacated. If you or your client does find an issue, you’ll need to bring it up to the sellers as soon as possible.

Closing

To avoid any delays, it’s extremely important to properly prepare your clients on what to bring and what to expect during closing. Remind your clients that they must bring proof of homeowners insurance, a copy of the contract, home inspection reports, government-issued photo ID

and the down payment. Make sure that you explain that a personal check will not work and it has to be a wire transfer or a cashier’s check. It’s also common for most lenders to require a title search of public property records to make sure there aren’t issues with transferring the property to your client’s name. There will be lots going on that day and lots of signatures. Set the correct expectations for your client, but also let them know that it’s not uncommon for things to go wrong like a missing document or a misspelled name. As a real estate agent, take all precautionary measures to make sure everyone is prepared and the day goes by as painless as possible.

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How To Write A Killer Property Description

By | Agents, how to, Photography, property descriptions

If you’re in the real estate industry, you’ve probably already experienced the power behind compelling content. Professional photos receive more clicks and great property descriptions can help sell a home faster. Writing a killer property description is also a great way to get creative and have fun with your listings while also creating clear communication that sets the proper expectations for all potential buyers.

Stand out

Many real estate agents think that they need to begin writing their property listings like everyone else. Trying to fit in is one of the worst things you can do when marketing your listing. Making your property sound average and repetitive is an easy way to be forgotten by your reader. Try to think outside of the box and think about your potential buyer. Who are they and what would best resonate with them?

Structure and Plan

To make sure that your listings include all the necessary information and call-to-action without rambling, make sure to structure and plan your listing before you begin to write. Ask any journalist about the hardest, yet most vital part of writing and they’ll tell you it’s creating the headline. It’s the one chance you have to grab the reader’s attention, set the expectation, and compel them to learn more. This first impression has to be short, yet engaging enough to attract the attention of the already distracted reader.  Once readers click on your headline you then present them with an opening statement. This can be a sentence or two and should inform readers on what they are about to see and set expectations. The opening sentence gives readers a reason to keep reading and entices them to learn more. For example, “Come see this charming ranch complete with panoramic views of mountains and only steps from a quaint downtown.” Now onto the property features. This is your chance to get creative and really highlight this home through words. Most property ads are written like “New paint, backyard pool, 1 large master bedroom, new garage door.” To stand out and make it interesting for your reader, you’ll want to tell a story. “You’ll love this 4 bedroom walk-up, perfectly placed in Chicago’s hottest neighborhood. Enjoy the stunning views of State Street while still having the option to escape to the backyard oasis complete with greenery and privacy.” This paints a better picture for the reader and becomes a more attractive way of listing out the house features. Don’t forget to include all the property upgrades. Top real estate agents will tell you that buyers love when homes have recent upgrades. It also makes potential buyers feel like the previous homeowner really took care in keeping the home up to date. While it’s important to paint a picture, try not to get too specific. However, there is a fine line between telling a story, and over exaggerating features to the point where it sounds like you’re lying. If readers detect anything deceptive, you could lose their attention forever.

Promotion

Another great way to step up a property description is to add a promotion (if you can.) Having a promotion can be as simple as stating “For a limited time, offering a small discount from the listing price.” This will be a statement that influences your call-to-action, which should follow next. Call-to-action statements are a way to summarize your listing and tell your readers what to do next. If possible, include a sense of urgency to show that this property could go quickly if they don’t act fast.

As you write more property descriptions, keep in mind of best practices but also take note of what works best for you and your clientele. Recently, Zillow conducted a study and found that around 250 words is the sweet spot for listing descriptions. Strategically use those 250 words to tell the story of your listing and the neighborhood. Be sure to spell check, grammar check, and don’t overuse trendy lingo! It’s important to make sure you appeal to all ages and demographics.

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Chicago mortgage budget to by property

Mortgage Interest On The Rise, Why You Should Buy Now

By | Agents

For years, interest rates have been at historic lows since 2008. By now, you’ve probably heard from either the media or a real estate agent on how the Fed is raising interest rates. For example, the average rate of a 30-year fixed rate mortgage is around 4.40%, which is the highest rate since April 2014. This upward pressure comes at a time we’re all familiar with, home buying season, which typically lasts spring through early fall. If you ask any real estate agent or market expert, they will all agree on telling you that now is the time to buy. Not only will the higher rates get in potential home buyers way, but also the limited housing supply could allow matters to get worse for those who wait to buy.

The Federal Funds Rate

The Federal Reserve controls the Federal Funds rate which is the interest rate in which banks lend to each other.  According to Financial Samurai, “If a bank has a surplus over their minimum reserve requirement ratio, they can lend money at the effective Federal Funds rate to other banks with a deficit and vice versa. You can see how an effective Fed Funds rate of only 0.15% would induce a lot more interbank borrowing in order to re-lend to consumers and businesses and keep the economy liquid. This is exactly what the Federal Reserve hoped for once they started lowering interest rates in September 2007 as home prices began to collapse.”

The Impact

Although you may not understand how the growing interest rates could directly affect you, they do have potential to impact you in a meaningful way. Mortgage rates are generally known to move in the direction that the Fed Funds rates move. Aside from rising mortgage rates, housing prices are also on the rise. Home prices nationwide are up 48% since 2011, according to the National Association of Realtors. The prices for single-family homes hit record highs in 114 of 177 major metropolitan areas that were tracked. Throughout this time, incomes have only risen 15%.  Real estate agents also advise taking advantage of the low rates by locking in an interest rate now with a 15-30 year fixed rate mortgage if you plan to stay in the home for a long time.

This year’s spring homebuying season has been off to a relatively slow start. According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey,  mortgage applications have dropped 3.3 percent week over week. Many believe that this is a result of the growing lack of affordable housing.

Nationally, the collective data shows that interest rates and home prices will continue to trend up. However, you do have time to get your finances in order if you feel like you’re not truly prepared to buy. However, to take advantage of the optimum benefits, it’s best to buy sooner than later.

While there are positives and negatives to the rising and falling interest rates, the bottom line depends on what your financial goals are. For those who’ve been thinking of buying a home, it’s best to stop putting it off and take action to buy now before rates get too high.  Many experts say that if people begin to take advantage of the current lower rates, buying homes can lead to more home building, construction, and decor sales and even boost our economy in a unique way.

Next Steps

If you haven’t started already, immediately begin doing your research on homes and neighborhoods where you’re interested in moving.  Look for housing trends in certain areas and take note of the average home listing prices.

The top real estate agents and industry experts recommend that people look for homes that cost around 3 – 5 times their annual household income while planning to make a downpayment of 20% of the home price.

When you think you’re ready to start looking for a home, it’s best to get pre-qualified for a home so you know exactly how much you’re able to spend. Once you provide financial information to your mortgage banker, you can review the price range of homes that you should be looking for. As always, we’re available to support you and answer your questions whenever you may need us.

Wondering if a switch might be right for you? Give us a shout and learn more.

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real estate agent tax deductions

Real Estate Agent Tax Tips: What You Should Know

By | Agents

Real estate agents know that this career often requires investing much of your own time and personal finances before seeing the fruits of your labor. Tax season can be rough, but if you stay on top of your finances, document all important deductions, and understand your true profit by year end, you’ll appreciate the savings. It’s extremely important to set up a basic filing system to organize all paper receipts, income documents, checks and credit card statements for all transactions that relate to the business you conduct. It’s also important to keep receipts for property that depreciates for as long as you own them. Documenting all of your eligible tax deductions has the potential to help you save thousands of dollars.

Usually, real estate agents receive a 1099 tax form and receive compensation as an independent contractor, meaning that most agents are considered self-employed. Therefore, a schedule C (profit or loss from business) must be filed. Agents can write off deductions directly from income but may be subject to Self-Employment Tax on profits.

real estate agent tax deductions

Learn about The PATH ACT

The Protecting Americans from Tax Hikes (PATH) Act provides real estate agents and brokers relief when it comes to business-related purchases by changing the IRS Section 179 deduction. The PATH Act was established in 2015 and allows you to deduct all or a greater portion of your business related purchases which translates into bigger savings on taxes. For example, since agents use their cars for showings, you can write off up to $25,000 for the price of a new car the year you purchased it.

Important tax deductions to remember

Aside from large purchases, there are minor costs that add up over the year that can also be deducted. Some may not even be apart of your every day business, but are still allowed. Make sure that you are only deducting things that you pay for personally and not your brokerage.

Take advantage of these common real estate agent and broker deductions:

-Marketing and sales assets. Open house signs, flyers, cards, mailers etc. You can also deduct marketing expenses like website development and maintenance and even the money that you paid to have the assets designed.

-Marketing and advertising spend. This includes all money you put towards digital advertising.

-Internet and phone. Any bill that you pay for and are not reimbursed can be written off.

-Real estate training. Coaching, and education costs including books bought for personal use.

-Real estate licensing. Any renewal fees, licensing fees, association dues, and MLS dues.

-Desk fees.

-Transportation. Automobile maintenance repairs, gas, mileage, auto insurance, parking and new car purchase or lease costs. Tolls, ravel airfare, lodging, meals during real estate education or conducting business with clients. Taxi and uber fare when seeing clients is also included.

-Home office costs.

– Gifts ($25 deduction limit)  & entertainment. Entertaining and client thank you’s can be a large expense of any successful real estate agent. However, be careful here, as you may have a hard time explaining a $2,000 dinner at the Ritz. In most cases, you are able to write off half.

-Cold callers. Sales assistants and virtual assistants also qualify for this deduction. If their earnings come out of your pocket, you can deduct them.

-Prospecting lists. This is often overlooked by agents, but can be deducted if you purchase them using your own money and not by the brokerage or firm.

-Commissions paid.  Absolutely do not forget to list all of the commissions you pay to other agents or brokers. Top real estate agents say that commissions paid on split listings or other arrangements can add up to by the biggest tax deduction.

-Retirement plan contribution. If you haven’t already began this process, you should!

-Insurance. General business insurance and E&O Insurance is deductible. You must have your own policy and cannot be covered by your brokerage, unless it’s covered by desk fees, then it’s deductible.

-Legal services. This includes all lawyer fees that you’ve accumulated from your business over the year.

-Franchise fees.

100 percent brokerage chicago

Keep in mind that to qualify as deductible, real estate business expenses must be: ordinary and necessary, directly related to your business and a reasonable amount. IRS Publications 463 and 535 can help you determine whether a specific expense is tax deductible (SOURCE: TURBOTAX.COM). 

Be smart about how you claim your deductions and make sure you have the correct documentation to back them. Use your calendar to remind yourself to file receipts or use an app to take a picture of everything and digitally organize it. While there are many ways to cut corners in the tax system, the potential harm outweighs the benefit and may ruin your career.  Stay organized throughout the entire year so that when April rolls around, your prepared to receive the best outcome for you and your business.

Thinking about switching brokerages?

Give us a shout and learn what make us different.

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