My Contact Information

You can reach me at any of the following:

Cell Phone: 240-483-7556
Office: 301-384-8700
Email:
Coni@ConiOtto.com
Website:
http://www.talk2coni.com/
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Tuesday, March 12, 2024

Adapting to Life's New Chapters



All of us encounter major life events and they have the possibility of disrupting our lives temporarily, if not permanently.  The homes we live in may have met our needs originally but due to a change in our life, it may no longer be adequate or the best fit for us, which will require a move. The decision to change one's living situation often comes as a response to these pivotal moments, and the reasons behind such changes can be as diverse as the events themselves. 

The number of things that can influence these changes is numerous.  It may be the birth of a new child, or the ages of the children are getting such that you simply need more room. 

Marriages generally merge two households into one.  The possibilities are endless, but it could be two single people or two single parents each with children who need the right space to blend the families.

A promotion, transfer, or a new job could require a change in housing, or maybe just make it more convenient to move closer to where a person is working. 

Countless numbers of people have moved as a result of health issues.  It could be to get away from the altitude, or to a drier climate, or to a more rural area where life is simpler.  The death of a spouse can be the impetus for the move.

Empty nesters and retirees have the freedom to make changes to their housing that will better adapt to their new lifestyle.  The time may have come to seek a cozier, more manageable abode that suits the evolving needs of empty nesters.  It may or may not lead them to a new city or state, but it can certainly include a different size or style home than they have currently.

These are just a few examples of how major life events can set the stage for changes in housing. If you are considering a move for one of these reasons now, you will probably think about it at some point.  We can help you through today's market, talk about timing, and guide you through the decision-making process.

We want to be your trusted agent, ready to support you finding your dream home as you start this new chapter in your life. Take the first step, when the time is right, by connecting with us.

Tuesday, March 5, 2024

House-Hacking your way to multi-unit rentals



House-hacking refers to buying a multifamily property on an owner-occupied mortgage, living in one unit and renting the others.  If you're thinking about becoming a rental mogul, starting early is an advantage.  Not only will you have longer to accumulate a larger portfolio, but you can also increase the leverage on the first owner-occupied acquisitions. 

Leverage is the use of other people's money to finance an investment.  The higher the loan-to-value, the greater the leverage which can increase the yield.  The lower down payment gives the investor more leverage which can increase the return on their investment. 

FHA, VA, Fannie Mae, and Freddie Mac each have programs for buying owner-occupied two-to four-unit properties with the same minimal down payment required for a single-family home.  The advantage is that non-occupant investors must have a 20-25% down payment where the owner occupant is much less.

A qualified veteran could get into the first property with no down payment.  FHA only requires a 3.5% down payment.  And owner-occupants seeking to buy a multi-unit property with a conventional loan would need 5-10% down payment.

As an example, let's say there is a 2-unit property selling for $500,000.  A non-owner-occupant investor would need to make a minimum down payment of $100,000.  Whereas an equally qualified investor who was going to live in one of the units, would only be required to make a $17,500 down payment on an FHA loan or $25,000 to $50,000 on a conventional owner-occupied loan.

The difficulty is that there are not a lot of two-to-four-unit properties.  In some cases, they may be older properties in older neighborhoods.  With some searching, you might be able to find lots with the right zoning and get a builder involved.

It is certainly worth investigating to find out what is available in your area and surroundings.

Rental properties offer the investor an opportunity to borrow large loan-to-value mortgages at fixed interest rates for up to 30 years on appreciating assets with tax advantages and reasonable control that many other investments don't enjoy.

Some people consider rental properties the IDEAL investment with each letter in the acronym standing for a benefit it provides.  It provides income from the rent which many investments do not have.  Depreciation is a non-cash deduction from income that increases cash flow.  Equity buildup occurs as each payment is made by reducing the principal owed.  Appreciation happens over time as the value of the property increases.  L stands for leverage that was explained earlier in this article.

The key to making this work is to be an owner-occupant in one of the units.  After a reasonable period of time, you may be able to buy another four-unit as an owner-occupant before you need to start using a normal investor's down payment. 

In the meantime, you could have eight units that are increasing in value while the mortgage balance is decreasing with every payment made.  If there is sufficient equity in the properties by the time you're ready to buy more units, you may be able to take cash out of the existing ones to use for the down payments.

This can be a great way to turbocharge your net worth by becoming an owner and a real estate investor at the same time.  To learn more about rental properties, download the Rental Income Properties guide and/or contact me at  to schedule an appointment to meet to answer your questions and discuss the possibilities.

Tuesday, February 27, 2024

The relationship between homeownership and net worth



During the span between 2019 and 2022, the COVID-19 pandemic significantly disrupted both society and economic activities. Nevertheless, the latest Survey of Consumer Finance, which has recently been unveiled, highlights widespread enhancements in the financial well-being of American families during this timeframe, especially concerning their net worth.

The median net worth of homeowners increased 37%, after adjustment for inflation, between 2019 and 2022.  This is the largest three-year increase in the history of the modern Federal Reserve Board's triennial survey dating back to 1989 and more than twice the next largest one on record.

The survey showed increases in both median and mean net worth were near universal across different types of families, grouped by either economic or demographic characteristics.

For families who owned a home, the median net housing value, the value of the home, less secured debt, increased 44% between the same three-year period.  The median homeowner has a net worth of $396,000 compared to approximately $10,400 for renters making the net worth of a homeowner 38 times the household wealth of a renter according to the latest data.

Housing wealth, in this study, represented on average approximately 75% of the total assets of the lowest income household.  In the middle-income distribution, housing wealth represents between 48% and 74% of total assets.  For the top 10% of the income distribution, the wealthiest households' share was 33%.  The study suggested that as income and net worth increases, the diversification of investments increases.

Even though there was significant increase in the value of homeowners' property during this period, the debt secured by the residential property was relatively unchanged and the median amount of this debt decreased by less than one percent to $155,600 in 2022.  During the same period credit card debt was stable.

Odeta Kushi, deputy chief economist at First American, summarized by saying "For the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the biggest positive drivers of wealth creation in this country."

Starting in 2022, mortgage rates more than doubled the rates during the fall of 2021 and continued to rise throughout 2022 and most of 2023 to the high 7% range which the market had not reached for 30 years.  This rate affected buyers' affordability and challenged a belief that rates would stay low since they had been for over ten years after the Great Financial Crisis.

While homeownership is still a major part of the "American Dream", would-be buyers are having to adapt to the higher rates.  And even if rates moderate during 2024, the low housing inventory experienced across the country will continue to increase prices which favors current homeowners.  It could take years to reach a balanced market.

The challenged buyers should remember that homes have appreciated 5.56% annually for the last sixty years.  The average mortgage rate in the same period is 7.74%. 

Based on the impressive margin that homeowners have 38 times more net worth than renters and that the contributing factor is the home's equity, Buyers who can financially afford to buy now should investigate exactly what it will take to get into a home now.

Download our Buyers Guide.

Tuesday, February 20, 2024

Understanding Credit Life Insurance for Home Buyers



Credit life insurance is a specialized type of insurance designed to provide financial protection for borrowers and their families in the event of the borrower's untimely death. This insurance is often associated with loans, including mortgages, and is specifically tied to the outstanding balance of the loan. In the case of a home purchase, credit life insurance will cover the remaining mortgage balance if the homeowner passes away before the loan is fully paid off.

In some cases, lenders may include the expense of credit life insurance in your loan principal. This arrangement means that you'll accrue interest on the combined amount, potentially resulting in increased costs over time. Consequently, opting for traditional life insurance, as opposed to credit life insurance, might be a more financially prudent choice to protect your family's financial well-being.

Credit life insurance offers peace of mind to homeowners, knowing that their loved ones won't be burdened with mortgage payments in case of an unexpected tragedy.  It can be a safeguard for their loved ones from inheriting the mortgage debt in the event of their death. It ensures that the home loan is paid off, preventing financial strain on surviving family members.

Some lenders may require or recommend credit life insurance as part of the loan approval process, making it easier for homebuyers to qualify for a mortgage but it is not typically mandatory, and the borrower usually has the option to request its removal from the loan agreement. 

Advantages of Regular Life Insurance:

While credit life insurance serves a specific purpose, there are advantages to opting for a regular life insurance policy instead:

  • Regular life insurance provides a broader range of coverage beyond mortgage debt. It offers financial protection to beneficiaries for various needs, such as income replacement, education, and long-term financial security.
  • Unlike credit life insurance, which is tied to a specific loan, regular life insurance can be used to address multiple financial goals and needs, making it a versatile option.
  • Regular life insurance remains in force regardless of changes in your mortgage or loan status. It can be maintained even if you refinance, pay off your mortgage, or move.
  • Some life insurance policies, such as whole life or universal life, offer a cash value component that can grow over time, potentially providing additional financial benefits.
  • With regular life insurance, you have the flexibility to choose any beneficiary, not just the lender, ensuring your loved ones are financially protected.

Credit life insurance can provide a valuable safety net for homebuyers by addressing their mortgage debt in the event of their passing. However, it's essential to consider the broader financial needs of your family and explore regular life insurance options, which offer more extensive coverage and flexibility. Ultimately, the choice between credit life insurance and regular life insurance should align with your specific financial goals and priorities.

Tuesday, February 13, 2024

Discover how to make a difference in your neighborhood



Whether you're a seasoned homeowner or just starting this thrilling chapter, every time you turn your key, you're not just entering a house but also embedding yourself in a neighborhood. The heartbeat of a vibrant community doesn't solely rest upon pristine lawns or architectural beauty, but predominantly on its residents � wonderful folks like you! Consider these suggestions to enjoy your new neighborhood and actively contributing to making it a wonderful place to live.

Foster Connection - Begin your journey by fostering connections. Introduce yourself to your neighbors, participate in or organize social events, and involve yourself in local gatherings, HOA, Next Door, or forums. Establishing a network of friendly faces creates a sense of belonging and shared responsibility towards the well-being of the neighborhood.

Create a Safe Environment - A safe community is a serene community. Be mindful of adhering to speed limits while driving through your neighborhood, watch out for children playing, and consider organizing or participating in a neighborhood watch program. Ensuring that everyone feels secure enhances the quality of life for all residents.

Champion Cleanliness and Green Practices - Your new neighborhood is an extension of your home. Engage in and advocate for practices like regular clean-up drives, recycling initiatives, and maintaining green spaces. Planting trees or creating communal gardens can be wonderful projects that not only beautify the area but also instigate sustainable living.

Support Local Businesses - Frequent local shops, cafes, and services to boost the neighborhood's economy. Supporting local businesses fosters a self-sustaining community, often making it more attractive to future residents and other local entrepreneurs.

Volunteer and Offer Support - Whether it's helping a neighbor with yard work or volunteering in local schools, your acts of kindness will ripple through the community, establishing a culture of support and assistance that enriches everyone's lives.

Organize and Participate in Events - From block parties to garage sales, events can add vivacity to any neighborhood. They provide a platform for residents to mingle, forge friendships, and create cherished memories, threading a fabric of unity and camaraderie.

Respectful Living - Being mindful and considerate of your neighbors is foundational. Adhere to noise guidelines, maintain your property, and respect shared spaces. A culture of mutual respect enhances peaceful co-existence and cultivates a harmonious environment.

Advocate for Improvements - If you observe areas for improvement, like a need for better street lighting or safer playgrounds, take the initiative. Work with local authorities, attend town meetings, or organize petitions to facilitate beneficial changes.

In contributing towards shaping a great neighborhood, you're not only enhancing your living experience but also elevating the quality of life for existing and future residents. Your active involvement, care, and initiatives sow the seeds for a community where everyone enjoys a sense of belonging, security, and joy in their daily lives. After all, the richest neighborhoods are those woven with the threads of unity, understanding, and collective effort. So, embrace your role and be the beacon that lights up your community with positivity and progress!

Tuesday, February 6, 2024

How Home Value Growth Beats Renting



Over the last 60 years, the average sales price of homes has appreciated at a rate of 5.56% annually, according to the Federal Reserve Economic Data. During the same period, rent has increased at a rate of 3.88% annually which presents a compelling argument in favor of homeownership.

When we analyze these figures, it becomes evident that homes have not only appreciated in value at a faster rate than the increase in rental costs, but they have also provided homeowners with a substantial asset that builds equity over time. This discrepancy in growth rates means that, in the long run, homeowners are likely to experience a greater return on their investment compared to renters.

Renters, while they may have the flexibility of moving without the ties of property ownership and might have lower upfront costs, do not gain any equity from their monthly payments. Their money goes straight to their landlord, and they are subject to the annual increases in rent. Over time, as rent continues to rise, renters might find themselves allocating a larger portion of their income to housing expenses compared to homeowners with fixed-rate mortgages, whose monthly payments remain constant.

Homeowners, on the other hand, can lock in their housing costs, particularly if they have a fixed-rate mortgage. Even as the value of their property increases, their monthly mortgage principal and interest payments remain steady. Furthermore, as they pay down their mortgage, they build equity in their home, which becomes a valuable asset. This asset can be leveraged for other financial opportunities, such as funding education, investing, or purchasing additional property.

In addition, homeowners can capitalize on the tax benefits associated with mortgage interest and property tax deductions, and potential capital gains exclusions, which can contribute to the overall financial advantage of homeownership.

In conclusion, while renting may offer flexibility and potentially lower upfront costs, homeownership presents a compelling long-term financial opportunity. The significant difference in the annual growth rates of home prices and rent over the past 60 years underscores the potential for wealth accumulation and financial stability that comes with investing in real estate and the equity building that comes with homeownership.

Download our Buyers Guide and consider getting together with your agent to get the facts of today's market.

Tuesday, January 30, 2024

Bridging Wealth Gaps: Homeownership's Stand Against Inflation



When exploring the benefits of homeownership, it's more than just having a place to call your own. Among its many advantages, homeownership stands as a formidable safeguard against inflation and a strong vehicle for long-term wealth accumulation. This article will delve into the dynamics of appreciation and amortization, explaining why owning a home can be one of the most impactful financial decisions you can make.

Inflation, the overall upward price movement of goods and services in an economy, erodes the purchasing power of money. In simpler terms, as inflation rises, each dollar you have buys a smaller percentage of a good or service.  The same inflation that is driving rising mortgage rates is putting upward pressure on home prices.

Over the past sixty years, homes have appreciated in value at an annual appreciation rate of 5.56% according to the Federal Reserve Economic Data.  As a homeowner, you want to benefit from the appreciation.  Inflation for the same period averaged 3.7% (Bureau of Labor Statistics) making homes an effective hedge against inflation.

Real estate, unlike many other assets, is a tangible, real asset. History has shown that over the long term, the value of real assets tends to rise at a rate that at least matches, if not outpaces, inflation. So, as the price of goods and services increases, so does the value of real estate, making homeownership a strategic move against inflationary pressures.

With a fixed-rate mortgage, your monthly principal and interest payment remains constant. As a result, while other costs may rise due to inflation, your primary housing cost (if you exclude taxes and maintenance) remains stable, shielding you from the full impact of inflation.

Home appreciation refers to the increase in the home's value over time. Given the finite nature of land and the ever-growing demand for housing, especially in thriving areas, real estate often appreciates. This appreciation can result in substantial equity gains for homeowners, creating a form of 'forced savings' and making it a powerful tool for wealth accumulation.

Amortization has been considered the silent wealth builder.  Each time you make a mortgage payment, a portion of that payment goes toward the loan's interest, and the rest pays down the principal, thus retiring your debt incrementally. This process means you're gradually building equity in the home with each payment. Over time, a larger portion of your payment goes towards the principal, accelerating your equity buildup.

Combined, appreciation and amortization can lead to significant wealth growth for homeowners. As the home's value rises and the mortgage balance decreases, homeowners often find themselves sitting on a substantial asset, which can be leveraged in various ways, from securing loans to planning retirements.

While the emotional and social benefits of homeownership are often celebrated, the financial benefits are equally compelling. In a world of economic uncertainties and inflationary pressures, owning a home emerges not just as a source of stability but also as a strategy for long-term financial prosperity. By understanding and leveraging the twin forces of appreciation and amortization, homeowners can pave a path to meaningful wealth accumulation even during periods of relatively high mortgage rates.