Archive for October, 2022

Should You Consider Real Estate Investment Properties?

Sunday, October 16th, 2022

Real estate property investmensts

With the recent stock market volatility, the thought of real estate investment properties may sound appealing to investors. While a good many millionaires will agree that their fortunes were made in real estate, the honest ones will also tell you that they’ve probably lost a few fortunes in real estate along the way. 

Real estate investment properties can be risky, and every property purchased doesn’t always pan out to be a success. There are many risks involved in real estate investing and you would be going into battle unprepared if you didn’t take a moment to carefully study these risks and work to avoid them when planning your property investment strategy.

Each type of investing has inherently different risks. This means If you are considering different types of real estate investments, each will involve a new set of risks. 

Investments can be made in various types of real estate.

  1. Residential Real Estate – This encompasses single-family, multi-family, apartments, and vacation homes. Residential properties can be rented to tenants or sold to homeowners.
  2. Commercial Real Estate – These properties include business or office spaces. Multi-family units can be considered commercial property depending on the number of units within the building.
  3. Raw Land – Vacant, undeveloped properties with no improvements that require little to no maintenance would be raw land. However, new construction development can be possible with the right properties.

You can also invest in non-physical real estate investments such as a Real Estate Investment Trust (REIT) or crowdfunding platforms. These are share-based investments where you own a portion of an investment portfolio.

We are going to look at residential real estate as it is one of the easier types to turn a consistent profit. Let’s look at several ways to invest and what risks are involved.

Rental Properties

This type of investing offers some risks that are unique and some that are also risks when investing in properties that are lease-to-own or rent-to-own as well. 

  1. The risk of failing to make a profit. If the property in question cannot achieve an adequate monthly income to cover the expenses of operating the property, then it is not a solid investment. 
  2. The potential of having a bad tenant. A bad tenant can be costly and, in some cases, destructive. Costs of collecting back rent, evictions, and repairs can add up.
  3. Having a vacant property can also cost money, depending on your costs to carry the property. Ideally, you will have short turnovers and long-term tenants.

“Flipped” Properties

This is one of the most enjoyable types of real estate investment properties for many hands-on investors. This allows the investor to roll up his or her sleeves and take an active role in creating the masterpiece that will eventually bring in serious revenue (at least, that is the hope). This is also one of the riskier investments, particularly when trying to turn a profit in what is known as a buyer’s market. 

  1. One of the most significant risks is paying too much for the property.
  2. Underestimating the cost of repairs can eat into any profit.
  3. Overestimating how much work you can do yourself.
  4. Taking too much time to complete the project.
  5. Making a wrong judgment of neighborhoods that can affect resale.
  6. Over-improving a property can affect your profit margin.

Personal Residence

Keep in mind that your personal home is essentially an investment. The intention is that your home will gain in value over time and that equity in your home will build as you age. There are risks involved in this transaction as well.

  1. Not researching the area well and choosing a home in an area that is not showing obvious signs of growth.
  2. Using less than desirable mortgage financing options such as adjustable rate mortgages, balloon payments, or maximizing home equity loans.
  3. Failing to get a proper home inspection that can rule out potentially costly and even dangerous problems. Many of these problems must be remedied quickly. 

Even during a real estate market slowdown, stagnation, or depression, real estate investments can make profits. So let’s look at some tips real estate investors use in building their portfolio strategy.

Research The Curve

The concept of a property market cycle is not a myth; it’s a fact. So first, check the recent historical price data for properties in the area you’re considering purchasing and determine the current market’s overall feel for prices. For example, are prices rising or falling, or have they reached a peak? Next, you need to know where the property market cycle curve is in your preferred investment area.

Get Ahead Of The Curve

As a basic rule of thumb, professional real estate property investors seek to buy ahead of the curve.  If a market is rising, they will try and target up-and-coming areas, areas that are close to locations that have peaked, and areas close to locations experiencing redevelopment or investment.  These areas will most likely become the next big thing, and those who buy in before the trend will make the most gains.  As a market is stagnating or falling, many successful investors target areas that enjoyed the best levels of growth, yields, and profits very early on in the previous cycle because these areas will most likely be the first areas to become profitable as the cycle begins turning towards positive once more.

Know Your Market

Why are you buying the property?  Are you buying to lease to young executives, purchasing for renovation to resell to a family market, or purchasing real estate for short-term/vacation rental?  Think about your market before you make a purchase.  Know what they look for in a property and ensure that is what you will be offering them.

Purchase Price

Set a budget that will realistically allow you to purchase what you’re looking for and profit from that purchase through capital gains or rental yield.

Entry Costs

Research the fees, charges, and all expenses you will incur when you buy your property. Cost may differ depending on the area. In addition, each municipality may have different requirements and fees.  Know how much you will have to incur and factor this into your budget to avoid any nasty surprises and ensure your investment can become profitable.

Capital Growth Potential

What factors point to the potential profitability of your real estate property investment?  Which economic or social indicators exist to suggest that property prices will increase?  If you’re buying to lease, are there any indications that demand for rental accommodation will remain strong, increase or even decline?  Think about what you want to achieve from your investment and then research and determine whether your expectations are realistic.

Exit Costs 

If you will incur substantial capital gains tax liability if you sell your property investment at a profit, will that render the investment profitless? You can learn more about capital gains tax in this recent blog post.

Profit Margins 

What levels of capital growth can you realistically gain on your property investment, or how much rental income can you generate?  Work out these facts and then work backward toward your initial budget to determine your potential profit margins.  You must always keep the bigger picture in mind to ensure that your real estate investment has good potential for profit.

Think Long-Term

Unless you’re buying property to flip it for resale,  you should view real estate investment properties as a long-term investment. So take a long-term approach to your property portfolio and give your assets time to increase in value before cashing them in for profit.

Robert Kiyosaki, the author of Rich Dad, Poor Dad, said, “Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.”

If you are considering a real estate investment, be sure to do your homework and understand your risks before you take the plunge. This article by Bankrate may help you sort out whether now is the right time for you to invest. A real estate professional who understands the local market can be a great resource to an investor.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate, if you are considering a real estate investment. As a Brooklyn real estate agent with over 35 years of experience, I know the local area and market trends. Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

Charles D'Allesandro

Successful Brooklyn Home Sales Start With Pricing

Monday, October 3rd, 2022

Successful Brooklyn Home Sales start with pricing.

If you keep up with current events, you surely know the unsustainable market driving Brooklyn home sales is slowing down. As a result, it is more important than ever to properly assess the initial offering price of your home before the first buyer walks through the door.

The days of throwing a price on a property and expecting a gazillion offers and selling over that asking price are coming to a close. However, that does not mean that houses still aren’t selling. On the contrary, homes that are in good condition and properly priced are selling.

What has contributed to the shift in Brooklyn home sales? 

There are many reasons. It could be that most buyers have already bought. Some buyers may have changed their desired area to a suburban setting due to working from home. Finally, we are experiencing rising interest rates and a potential recession.

Regardless of the slowdown, sellers need to be aware that the market is changing. Supply and demand dynamics are changing. As a result, buyers will experience less competition in a slowing market. 

Finding the right price to offer your home is crucial and will take some research. 

Homeowners often view listing their homes at a higher price as a way to negotiate a lower price if a buyer makes an offer. But unfortunately, this belief can backfire on a seller.

Statistics show that when a seller overprices a home for their current market, they will end up selling the home for less than they would if they had initially offered the house at the correct price. So you have to decide if that is a risk you are willing to take.

When you overprice a property, you are excluding potential buyers. Buyers are looking for their desired price range and usually search in $5,000 increments. Therefore, the buyer pool narrows when you price your home over the reasonable value. 

You must contend with the home appraisal if you are lucky to find a buyer willing to pay a price over reasonable market value. A home appraisal is an opinion of value based on the most recent sales within a certain proximity of your home.

Correctly pricing a home is a fine art.

Having worked as a real estate professional, I have learned a seller can either “price to sell” or “price to keep.” Simply put, if you are not realistic about your pricing, you must prepare for the possibility of your home not selling.

Five Considerations When Pricing Your Home

There are five factors to consider when you begin to price your home. An experienced real estate agent can help you through this process to come up with your pricing plan. Your home will get the most attention in the first two weeks after hitting the MLS. You want your price to entice buyers.


Your neighborhood and where your home sits within that neighborhood are important. School districts, crime rates, walkability, and accessibility to public transportation and shopping are important. Your location within the community can be affected by being on a busy street or next to a noisy public amenity. 

Appraisal guidelines include finding comparable homes within a ½ mile radius of your home. Homes sold within that radius must be considered first if they are equivalent. The appraiser can go outside that radius if they do not find the required comparable properties.

Location is not something you can change or improve when selling your home. However, if your location is less than ideal, you must adjust the price.

Comparable Home Sales

The next consideration is the recent home sales. As stated above, there is a radius that the appraiser must stay in when evaluating a home’s value. Recent Brooklyn home sales reveal what a buyer is willing to pay for a specific type of home. 

The comparable homes should be similar to your home but do not have to be identical. 

An important point to remember is that not only is the appraiser looking at this information, but so is the buyer when determining an offer on your home. A buyer does not want to overpay.


It may be obvious that an updated home in excellent condition will sell better than a home with a 1970s kitchen. But, at the same time, a knowledgeable buyer knows that a kitchen update could cost them between $40,000 to $60,000. 

Properly preparing your home for sale is essential. Check out this previous blog post on increasing the value of your home.

A well-maintained home will always be preferable to a buyer. If your home has significant issues, you will need to price accordingly. If you know of repairs but don’t want to make them, you will need to adjust your price. 

Selling “as is” has pros and cons that you should discuss with your real estate agent.

An appraiser will also evaluate the condition and compare it to the sold homes he is using to determine a fair market value of your home.

Improvements and Updates

You should consider significant improvements to your home when determining your price. Although, don’t expect you will get a dollar-for-dollar return on that investment. Remodeling Inc. publishes an annual Cost Vs. Value report by region may help you understand the return on the value of an improvement.

Specific projects offer a higher return than others, as seen in this report. You can not simply add the cost of improvements to the price you paid to determine an asking price.

Market Conditions

There are three types of markets: a Buyer’s market, a Seller’s market, and a Neutral market. The kind of market will give you information about the market conditions.

For example, we are coming out of a Seller’s market. In this market, there was insufficient inventory to meet the number of buyers ready to purchase a home. As a result, the supply of available homes was low, increasing the competition between buyers to win the bid. 

As the inventory of homes increases, we enter a neutral market where the supply and demand are balanced.

A buyer’s market is when more homes are available for sale than buyers are ready to purchase. 

The area that you live in may also affect the market conditions. Markets vary geographically across the country.

Pricing Tips

Keep these tips in mind when you are deciding on a price for your home:

Understand Pricing Search Criteria

Buyers search for homes in price ranges, usually in $5,000 increments. So, for instance, if their maximum price is $350,000, and you price your home at $352,000 they may never find your home in their search.

Watch The Local Market 

Look out for the homes on the market near you, especially those considered your most significant competition. Are they going under contract quickly? Are prices reduced? Try to stay ahead of the market.

Implement the “99” strategy.

In real estate and just about every business, there is a psychological element to pricing at $399,000 versus $400,000. So, for example, buying in the 300’s feels better than the 400’s, even though it is only a $1,000 difference.

Hire a real estate professional.

A real estate professional monitors the current real estate market and offers valuable advice when the market shifts. An experienced agent has probably maneuvered through the three types of markets and can guide you to a successful sale.

The Price Is Right

You will know the price is right based on a few facts:

Initial Buyer Interest

If you receive requests for showings in the first week of the listing, you are probably priced right.

Comparable Homes Are Priced Similarly

If the competing homes are similar in square footage, condition and price, you are probably priced right.

Offers Received Within The Average Market Time

The average market time will vary depending on the market conditions. If you receive an offer within that expected market time, you are probably priced right.

As I said earlier, pricing a home correctly is a fine art. Not only do you have to consider the current market conditions, but you also have to consider future conditions. Pricing ahead of the market would be easy if we had a crystal ball. But unfortunately, pricing is affected not only locally but also nationally by our economy. 

Two common mistakes that affect Brooklyn home sales are overpricing your home and emotional attachment. As I said before, overpricing is a risk. However, pricing your home correctly is essential to a successful sale as the market shifts. Also, I find most home sellers emotionally attached to their homes. That is understandable, but you can not let your emotions cloud the facts.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate, if you are considering selling your home. As a Brooklyn real estate agent with over 35 years of experience, I understand the intricacies of pricing a home to sell! Reach me by phone at (718) 253-9500 ext. 1901 or by email at [email protected].

Charles D'Alessandro