Michael Poczynek

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Evaluate Your Insurance Policies

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If it’s been a while since you’ve window-shopped for home and auto insurance, it may be worthwhile to do some comparison shopping. Get quotes from at least three insurers or independent agents; make them compete for your business.

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Bundle Cable, Phone, and Internet

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You can also save money by bundling your cable, phone, and internet services. Shop around to see who is willing to give you the best deal. If switching is too much of a hassle, ask your current provider to match or beat their competitor’s offer.

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Conserve Electricity

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Save electricity by installing energy-efficient LED light bulbs. You can minimize standby or “vampire” power drain by utilizing power strips and unplugging idle appliances. Turning your thermostat up or down a few degrees can significantly impact your monthly heating and cooling costs. To maximize efficiency, change your filters regularly, and make sure your windows and doors are well insulated.

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Outsource Less

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From lawn care to minor home repairs, we often pay people to do many things that we could realistically do ourselves. To save money, try tackling some of these tasks yourself.

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Meal Planning

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Decide before you shop what you and your family will eat for breakfast, lunch, and dinner for the coming week. It can help lower your food bill, eliminate waste, and minimize impulse purchases. When possible, buy produce that is in season, and utilize nutrient-rich but inexpensive protein sources like eggs, beans, ground turkey, and canned tuna.

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Review Memberships and Subscriptions‍

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Are you paying for services and subscriptions you no longer need or use? Determine which ones are worth keeping and ditch the rest.

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Track Your Household Budget

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One of the most effective ways to reduce household expenses is to set a budget—and stick to it. A budget can help you see where your money is going and identify areas where you can cut back. By setting reasonable limits, you’ll be able to reach your financial goals faster.

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1. Know What the Seller Wants and Needs

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How well do you understand the seller’s situation? A well-trained negotiator will always start with the self-interests of both parties rather than just their own. A buyer’s offer must at least adequately satisfy the seller’s needs and interests. There are many valuable elements in a real estate transaction, so take the time to accumulate information, and understand what it will take to satisfy the seller.

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2. Improve Your Appeal

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Homes are listed to be sold, not to be for sale. Show the seller that you have what it takes to close on a house; show them that you know the path of how to get there. If you anticipate any issues, show the other side how you can help them overcome them when the time comes.

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3. Build Trust with the Listing Agent

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Trust is the currency of sustainable negotiations. Take the time to build a rapport with the other agent by showing yourself to be someone who is professional and collaborative, interested in a “Win-Win” type of transaction. Trust opens communication channels, allowing you to learn more about the other side’s needs.

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4. Look for Connections

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It is unlikely that you will be able to put a deal together with someone who doesn’t like you or want to do business with you. Connections, compliments, and cooperation are all factors that make you more likeable to the other side. Look for clues and signs of what is essential to the other side, and see if you can point out those connections. Do not downplay the value of connections – we recently heard that a seller picked an offer over others once he learned that the buyer was also a fan of Golden Retrievers!

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5. Over-communicate

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Perhaps the biggest mistake buyer’s agents make is to fail to communicate sufficiently with the other side. Have you ever seen an offer come in on a property without so much as a phone call? Think about it – how can that agent communicate any of the principles we point out above? Always be accessible and professional with your communications. Create opportunities to interact with the other side to build Trust and get more information.

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6. You Go First

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Most negotiations include “give and take,” or what is often referred to as reciprocation or concession.

The buyer’s agent might say to the listing agent, “My buyer will agree to your seller’s closing date if, in return, your seller will agree to a slightly lower price.”

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Which one of these descriptions piques your interest the most?

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ONE

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Home has 4 bedrooms, 3 full baths, 2 car garage and over half an acre of land.  Great house.  Motivated Seller, bring all offers.  Home is subject to Short Sale.

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TWO

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Imagine sitting in your cozy sunroom on a warm spring morning, reading a book or laughing with family in Ladysmith, VA.  This exceptional sunroom comes with 4 bedrooms, 3 full baths & 2 car garage.  Enjoy over half an acre while playing volleyball, enjoying a garden or having a family cookout.  Seller also including the private master with oversized closet, private bathroom, Jacuzzi, cherry hardwoods, fireplace, granite counters & tall cabinets.

Supply plummets while demand remains strong.

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Many would-be sellers hold off on listing their homes, waiting for the spring “selling season” to put their homes on the market. But if you’re ready to sell your home now, is waiting until spring the best strategy?

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Not according to past PEI sales trends:

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- Homes listed in winter are more likely to sell.

- Homes listed in winter sell faster.

- Homes listed in winter sell closest to their original price.

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Yes, you read that right!

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Overall, homes listed in winter sell best: 5.8% more PEI homes listed in winter eventually sell (compared to the overall percentage of homes listed throughout the year), and they sell 1.4 percentage points closer to their original list price than the median—that’s $4,900 on a $350,000 home.

RENOVATIONS THAT PAY OFF

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These three common home improvement projects add function and style to your home and offer a strong return on investment.

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Minor Kitchen Remodel

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A minor kitchen remodel is one of the top investments you can make in your home.  The key is to keep it modest in scale.  Make an effort to keep your existing layout and paint or reface cabinets instead of replacing them.  Update countertops with low-maintenance quartz and swap out old appliances for energy-efficient models.  The average cost for a minor kitchen remodel is $22,500, and it’s likely to recoup more than 80% at resale.

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Wood Deck Addition

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A deck addition is a popular way to extend and enhance the use of your outdoor space.  It’s the perfect spot for grilling, dining alfresco, and entertaining.  In fact, 81% of surveyed homeowners said they have a greater desire to be home since completing a deck addition.  For a 16 x 20-foot wood deck, you can expect to spend around $13,000.  Fortunately, the money you invest offers an average return of 76%.

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Siding Replacement

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Everyone knows good curb appeal is essential when selling your home.  And while it may not be the most exciting way to spend your remodelling budget, new siding can make a big impression on buyers and your selling price.  Replacing 1,250 square feet of siding costs around $16,000 and will net you an average of 76% at resale.  For an even greater impact, consider replacing a portion of your siding with manufactured stone veneer.  A 300-square-foot area will run you around $8,900, but you can expect to see a nearly 95% return when it comes time to sell.

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RENOVATIONS WITH WEAK RETURNS

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These three popular remodelling projects are homeowner favourites.  But don’t expect to see a high rate of return when it comes time to sell.  Instead, consider them an investment in your current quality of life.

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Major Kitchen Remodel

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For a major kitchen remodel, expect to spend between $66,000 (mid-range) and $130,000 (upscale).  Unfortunately, you’ll only get back around 60% at resale.  Of course, an outdated or non-functional kitchen could turn buyers off from your home completely and keep you from enjoying it yourself!  So if your kitchen needs a major remodel, choose carefully where to splurge and where to save.

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In-ground Pool

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The average expense to install a standard 18 x 36-foot in-ground pool is $57,500, but the estimated return is only 43%.  In addition to the installation cost, plan to spend money each year on maintenance, repairs, and insurance.  However, 92% of surveyed homeowners said they “have a greater desire to be home” since installing a pool, and 83% have “an increased sense of enjoyment when they are at home.” For you and your family, the perks of a pool may be worth the price.

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Master Suite Addition

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Master suite additions have become increasingly popular—both in homes that lack one as well as those with aging owners who can no longer accommodate stairs to an upper-level bedroom.  But what’s the typical return at resale?  With a median cost of $125,000, most sellers will only recoup around 52% of their investment.  Nevertheless, in a survey of homeowners, the majority were satisfied with their decision to add a master suite, giving it a “Joy Score” of 10 out of 10.

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1.  Stage Your Home to Show Its Full Potential

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According to the Real Estate Staging Association, homes that are professionally staged sell 73% faster.  When staging a home, you might rearrange the furniture to make a room feel larger or remove heavy curtains to make it brighter.  The goal is to highlight a home’s strengths, minimize deficiencies, and help buyers envision themselves living in the space.

Some sellers choose to hire a professional stager.  Others opt to do it themselves, using guidance from their agent.  We can help you determine the appropriate path to push your home ahead of the competition.  The good news is an investment in staging pays off.  A 2018 survey found that 85% of staged homes sold for 6-25% more than their unstaged neighbour’s homes.

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2.  Draw Buyers in with High-Quality Photos

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Many buyers use listing photos to determine whether or not to visit a property in person.  Therefore, poor-quality or amateur-looking pictures could keep buyers from ever stepping through your door.  That’s why we only work with the top local professionals to photograph our listings.

Additionally, we’re always on-site during the photo shoot to let the photographer know about unique or compelling selling features they should capture.  The extra effort pays off in the end.  In fact, listings with high-quality photography sell 32% faster than the competition and often for more money!

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3.  Price It Properly From the Start

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Most buyers view homes within a set price range.  If yours is overpriced, it can’t properly compete with other similarly priced listings.  But if you price your home aggressively, it can be among the nicest homes buyers have seen within their budget.  This can lead to a fast sale with fewer seller concessions.  And in some cases, it can create a bidding war.  The result?  More money in your pocket.

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4.  Put on a Good Show(ing)

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Once buyers are interested enough to schedule a showing, it’s crucial that you make your home available—even on short notice.  That means keeping it show-ready as long as it’s on the market.  For most of us, our homes reflect the day-to-day reality of our busy (and sometimes messy) families.  But keeping your home clean, fresh-smelling, and ready for buyers will help it sell faster, so you can get back to your regular routine as quickly as possible!

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5.  Use a Proven Promotion Plan

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We know that 93% of buyers search for homes online.  That’s why we invest in the latest training and technology—to ensure our listings appear in the places where buyers are most likely to look.  By utilizing online and social marketing platforms to connect with consumers and offline channels to connect with local real estate agents, your property gets maximum exposure to prospective buyers.

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Boost bathroom storage capacity.

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Start by tossing old or expired products.  Add vanity drawer organizers and roll-out baskets so your items are easier to find.  Mount open shelves to store towels.  These inexpensive additions can streamline your morning routine AND net you a 102% return at resale.

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Upgrade your laundry room.

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Install a mix of cubbies and cabinets for storing supplies.  Add a hanging rod and drying rack for sweaters and delicates.  Include a work surface for ironing or folding clothes.  A few simple tweaks can turn this chore into a score.

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Fully utilize your basement or attic.

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These areas can quickly become a dumping ground for clutter.  Donate items you no longer use.  Built-in cabinets and shelves will help you organize the rest.  Basement and attic renovations can net you a 60-70% return when it’s time to sell.

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Customize your closets.

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The key to an organized closet is giving every item type space—high rods for dresses, low rods for pants, and racks for shoes and bags.  A well-equipped closet can be a major draw for buyers.  But most importantly, surveyed homeowners gave their closet remodel a “Joy Score” of 10 out of 10, higher than both kitchen and bath upgrades.

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Install built-in bookcases and cabinets.

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Built-ins give your home a high-end look.  They also provide an attractive place to store and display items.  Just don’t go too custom—a design that only fits your furniture or belongings could turn off future buyers.

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Equip your garage.

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It may be time for a clean-out if you can no longer fit your car in your garage.  Install overhead racks for seasonal items and wall racks to hang bikes and other gear.  Use a pegboard to organize your tools.  You’ll be pulling in your car (and buyers) in no time!

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WHY INVEST IN A RENTAL PROPERTY?

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The Top 5 Reasons

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Before we delve into the differences between long-term and short-term rentals, let’s answer the question: “Why invest in a rental property at all?”

There are five key reasons investors choose real estate over other investment vehicles:

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1. Appreciation is the increase in your property’s value over time.  And history has proven that the cost of real estate continues to rise over an extended period.  Recessions may still occur, but in the vast majority of markets, the value of real estate does grow over the long term.

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2. Cash Flow: One of the key benefits of investing in real estate is the ability to generate steady cash flow.  Rental income can be used to pay the mortgage and taxes on your investment property, as well as regular maintenance and repairs.  If appropriately priced in a solid rental market, there may even be a little extra cash each month to help with your living expenses or to grow your savings.  Even if you only take in enough rent to cover your expenses, a rental property purchase will pay for itself over time.  As you pay down the mortgage monthly with your rental income, your equity will continue to increase until you own the property free and clear.  This leaves you with residual cash flow for years to come.

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3. Hedge Against Inflation: Inflation is the rate at which the general cost of goods and services rises.  That means as inflation rises, the money you have sitting in a savings account will buy less tomorrow than it will today.  On the other hand, real estate prices typically match (or often exceed) the inflation rate.  To hedge or guard yourself against inflation, real estate can be a wise investment choice.

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4.  Leverage: Leverage is the use of borrowed capital to increase the potential return of an investment.  You can put a relatively small amount down on a property, finance the rest of the investment with a mortgage, and then profit on the combined value.

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5. Tax Benefits: Don’t overlook the tax benefits that can come with a real estate investment.  There are many ways a real estate investment can save you money on taxes, from deductions to depreciation to exemptions.  Consult a tax professional to discuss your particular circumstances.

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LONG-TERM (TRADITIONAL) RENTAL MARKET

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When most people think of owning a rental property, they imagine buying a home and renting it out to tenants to use as their primary residence.  Traditionally, investors would use their rental property to generate an additional income stream while benefiting from the property’s long-term appreciation in value.

In fact, that steady and predictable monthly cash flow is one of the key advantages of owning a long-term rental.  And as an owner, you don’t usually have to worry about paying the utility bills or furnishing the property—both of which are typically covered by the tenant.  Add to this the fact that traditional tenants translate into less time and effort spent on day-to-day property management, and long-term rentals are an attractive option for many investors.

However, long-term rentals also have limitations, which often come down to your ability to control the property.  Perhaps the most obvious one is that you do not get to use the home or closely monitor its upkeep (this is different from a short-term rental, which we’ll share in the next section).

In addition, while you can usually generate a steady, predictable income stream with a long-term rental, you are limited in adjusting rent prices based on increasing or seasonal demand.  Therefore, you may end up with a lower overall return on your investment.  In fact, according to data from Mashvisor, in the ten hottest real estate markets, short-term rentals produced “significantly higher rental income” than long-term rentals.

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SHORT-TERM (VACATION) RENTAL MARKET

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Short-term rentals are often referred to as vacation rentals, as more and more travellers enjoy the benefits of staying in a home while on vacation.  In fact, according to Wells Fargo, vacation rentals are steadily growing and are predicted to account for 21% of the worldwide accommodations market by 2020.

Investing in a short-term rental or funding your second-home purchase by renting it out can offer many benefits.  Suppose you purchase an investment property in a top travel destination or vacation spot.  In that case, you can expect steady demand from travellers while taking advantage of non-rented periods to enjoy the home.  In addition to greater control over how your property is used, you can also adjust your rental price around peak travel demand to maximize your returns.

But short-term rentals also have risks and drawbacks that may dissuade some investors.  They require more significant day-to-day property management, and owners are typically responsible for furnishing the property, upkeep, and utilities.

And while rental revenue can be higher, it can also be less predictable based on seasonal or consumer travel trends.  For example, a lack of snowfall during ski season could mean fewer bookings and lower rental revenue that year.

In addition, laws and limitations on short-term rentals can vary by region.  And in some areas, the regulations are in flux as residents and government officials adapt to a new surge in short-term rentals.  So make sure you understand any existing or proposed restrictions on rentals in the area where you want to invest.

Urban centers or suburban communities may be more resistant to short-term renters, thus more likely to pass future limitations on use.  To lower your risk, you may want to consider properties in resort communities that are accustomed to travellers.  We can help you assess the current regulations on short-term rentals in our area.  Or, if you’re interested in investing in another market, we can refer you to a local agent who can help.

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WHICH INVESTMENT STRATEGY IS RIGHT FOR YOU?

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Now that you understand these two real estate investment options, how do you pick the right one for you?  It’s helpful to start by clarifying your investment goals.

If your goal is to generate a steady, predictable income with less time and effort spent on property management, then a long-term rental may be your best option.  Also, if you prefer a less-risky investment with more reliable (but possibly lower) returns, you may be more comfortable with a long-term rental.

On the other hand, if your goal is to purchase a vacation or second home that you’ll use, and you want to defray some (or all) of the expense, then a short-term rental may be a good option for you.  Similarly, suppose you’re open to taking on more risk and revenue volatility for the possibility of greater investment returns.  In that case, a short-term rental may better suit your spirit as an investor.

But sometimes the decision isn’t always so clear-cut.  If your goal is to purchase a future retirement home now to hedge against inflation, rising real estate prices, and interest rates, then both long- and short-term rentals could be suitable options.  In this case, you’ll want to consider other factors like location, market demand, property type, and your risk tolerance.

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