Posts from November 2018

Not All Realtors® Are Created Equal
There are over 16,000 member Realtors® in Northern Virginia between the three associations; the Northern Virginia Association of Realtors (NVAR), the Realtor Association of Prince William (PWAR), and the Dulles Area Association of Realtors (DAAR).  The largest association being NVAR with over 12,500 members and each is part of the overarching National Association of Realtors®.  Buyers and sellers should know the only common denominators shared among practicing agents in Northern Virginia is they have passed an exam to become licensed in the state, they have activated their license with a supervising broker, and they have joined one of the three Realtor® associations in Northern Virginia to be recognized as a member.  That's where the similarities and standards generally end.

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Attention Buyers:  Most Buyer-Friendly Level in Years
The DC-MD-VA Affordability Index is at its most buyer-friendly level in years.  The index is presently 147 (meaning the typical buyer generally earns 47% more income than required to qualify for a mortgage to purchase a typical home in the DC metro area).  The current score is 14% more affordable than the historical average of 129 in the DC metro area and well off the unaffordability lows (upper 70's) experienced in the lead up to the 2007 housing market top.

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Most sellers don't realize the probability of successfully selling their home in Northern Virginia versus the probability of failing to sell their home.  It's a probability sellers should know when interviewing a Realtor to represent them in one of the most important financial decisions of their lifetime.  More importantly, how the Realtor will operate differently than average to increase the chances of seller success.

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Home prices bottomed in the 2011-12 range coming out of the housing decline and Great Recession.  Many home buyers don't realize that prices have fully recovered in most Northern Virginia areas and have actually elevated beyond the former 2006 price highs. 

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Investment Property is Real Estate Purchased for the Purpose of Renting.
Investment property is generally considered property held by the owner to earn rent, or acquire gains through capital appreciation, or both.  For the typical buy-hold investor it's both - rent and capital appreciation.

Total Return = Cash Flow + Loan Principal Pay Down + Value Appreciation.
Investors view and financially model investment cases on a total return basis.  Cash flow is rental income less all your expenses, mortgage payments, repairs and maintenance, taxes, insurance, etc. - essentially the money left over after all bills are paid.  Principal pay down is the declining loan balance with each mortgage payment.  Appreciation is the increase in property value over time.  These three financial elements added together create the total return.

Investment Property Produces Highest "Risk" & "Work" Adjusted Returns.
In my opinion, there is no better return on a "risk", "work", and "time" adjusted basis.  One can consider the returns produced by limited and opportunistic stock trades, or an exotic investment like options - which is the reason I mention "time" and "risk" adjusted.  Someone else can point to the returns from starting a business that is scalable and saleable, but that's an incredible amount of work which generally cannot be done in combination with a full-time job.  Yes, landlording is some risk and work, and is also the best return on an adjusted basis compared to other investments.

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