Real Estate Terms You Should Know
Appreciation: This term applies to the increase in the value of your property. Example: If you bought an apartment building for $300,000 and the current market value for the building is $400,000, there would be $100,000 of appreciation. Basis: This term applies to any real estate that you own. The three ways you gain basis in properties are 1.) you bought the property yourself, 2.) you received the property as a gift, and 3.) you inherited the property Example: If you bought a property for $300,000 and spent $50,000 to improve it, the total you spent on the property is $350,000. If the property depreciated by $20,000, then the basis of the property would be $330,000. Capital Expenditures: A capital expenditure is a category of expenses that include the major repairs of a property, such as the foundation, the roof, the HVAC system or furnace. Capital expenditures are used in Cash Flow calculations. Capital Gains: The profit that is made when an investment property is sold. The capital gains is the difference between how much the property is bought for and how much the property sells for. Capitalization Rate Computation: Also known as the cap rate computation. Used to find the fair market value of a property. Equation: FMV = NOI / CR FMV: Fair Market Value NOI: Net Operating Income CR: Capitalization Rate Debt Service Ratio: Debt service ratio informs you of the relationship between the Net Operating Income and the amount that is necessary to service the debt on the property. Example: If you own a 5 unit apartment building that has a NOI of $34,000 and a mortgage of $500,000, with a monthly payment of $2,083. The annual total of the mortgage is $25,000. In order to find the debt service ratio, you would divide the NOI by the annual mortgage amount; 34,000 / 25,000 = 1.36. The debt service ratio on this property would be 1.36 or 136%. Equity: Equity is the actual value you have in the property. It is expressed by the amount of money you profit if the property were to be sold. Equity is considered “net value” because it must be calculated. Equation: E = FMV - MPO - L - OD E: Equity in the property FMV: Fair Market Value MPO: Mortgage Payoff Amount L: Liens on the property OD: Other Debts on the property Net Operating Income: Also known as NOI. The gross operating income minus the operating expenses. Example: If you own a four unit building and the gross operating income is $50,000 and the operating expenses are $20,000, then the net operating income would be $30,000. **Consult with a CPA about your specific situations.**
8 Steps To Buying A Home This Summer
Thinking of buying a home this summer? You may be wondering what steps to take to make that dream come true! Here are the top 8 steps to prepare yourself to jump into the home buying purchase. Save up your down payment: Whether you are hoping to do a large down payment or if you qualify for 100% financing, home buying comes with some added costs to the buyer and it is best to be prepared. Inspection costs, appraisal costs and earnest money deposits need to be ready and available when putting a home under contract so saving those funds ahead of time in order to best prepared is the best way to go. The more you can save, the more options are opened up to you as well. Know Your Credit Score: Make sure all past due payments and bills are taken care of and become aware of what your current credit score is. Knowing this will help with financing and may allow you time to take care of some items to improve your credit score. Get Pre-Qualified For A Loan: Contact your local mortgage broker or personal bank and have them pre-qualify you for a loan. This will allow a professional to fully look at your financial situation and determine how much you would be approved to purchase for. Most people have an idea of how much they can buy but knowing that number for sure allows you to really determine which homes will be available to you. Find A Real Estate Agent: Once you have saved the needed funds and determined how much of a loan you qualify for, find a local real estate agent to assist you through the process and guide you as you take the remainder of the steps to purchase a home. Go Look At Homes: Once you know the price your looking at and found the agent that will be working along side you, make a list of homes that seem to fit what you are looking for and get out there and start looking. Once you start looking at what is really out there, it makes it easier to determine exactly what will be the right place for you to call home. Make An Offer: Once you find the property you want to make your home, work with your real estate broker and write up an offer. Be clear in writing up all the terms requested but also listen to your buyer agents advise on what is common in the current market and what sellers expectations are on the other end. Also discuss what your highest and best terms would look like to assist in the following possible conversations and negotiations. Do Home Inspections: Hire a professional of your choice and test and inspect any items in and outside of the home that are a concern for you. Keep an open mind that every home will likely have some items that need repair but also be aware of what items are too big for you to take on. Discuss the important issues with the seller and re-negioate if necessary. Work With The Lender and Close: Work closely with your lender to get the appraisal ordered and send them all documents needed for the loan processing. Get your homeowners insurance lined up and any other items needed in a timely manner. Communicate with the closing company and get yourself prepared to move in. Home buying can be a lot of fun when you are working with the right real estate agent who knows how to best advise you through each step of the process. Don't wait to call us today to assist you in your home purchase this summer!
Thompson Lake
Thompson Lake is one of the larger lakes in the area and is rated as one of the top ten lakes in Maine for water quality. Stretching through Casco, Poland, Oxford, Norway, and Otisfield, you will find Thompson Lake in three Maine counties: Androscoggin, Cumberland, and Oxford counties. Although it's shoreline is fairly well developed, it still will provide you with a variety of recreational opportunities and offers you with some very beautiful scenic views. Thompson Lake covers 4,225 acres, or nearly 7 square miles, with a maximum depth of 121 feet and mean depth of 35 feet. It stretches twelve miles long and is on average two miles wide. Being spring fed from the Poland Spring Aquifer, Thompson Lake has clarity up to thirty five feet in depth. The lake will offer you a tranquil setting with two public boat launches, a private marina, a pubic beach, and three summer youth camps. Thompson Lake's water quality has been monitored since 1977 and is considered to be excellent. The average water clarity is 8.8 meters and little dissolved oxygen depletion. Thompson Lake Environmental Association (TLEA) has also focused efforts on watershed stewardship for many years. Thompson Lake boasts a variety of different shore lines for your enjoyment. There are some areas of steep rocky shoreline and other long stretches of sandy areas with undeveloped shores. Thompson Lake also offers several coves and islands throughout the lake for you to explore or where you can snorkle. The shores of Thompson Lake are home to approximately 1,200 cottages and homes. If you are a fisherman, Thompson Lake is also a huge attraction for anglers. The Maine Inland Fisheries stocks the lake with landlocked salmon annually and also manage the quality of the fish. Due to this fact, salmon up to 5-6 pounds is are not uncommon for you to pull out of the lake. Additional fish that you may find at Thompson Lake are lake trout, small mouth bass, large mouth bass, and more. Growth for fish is excellent at Thompson Lake and you can catch bass up to 3 pounds. One of the quite attractions that you can enjoy is The Heath. This is a separate body of water located at the southern end of the lake across from the Thompson Lake Marina. You can canoe and kayak here and connect to Thompson Lake by a culvert that runs under the causeway. Come check out Thompson Lake for yourself! It is well liked by others for it's beauty and tranquility.
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