Approximate Retail Value - ARV is one of the most important values to the real estate investor/buyer in calculating profit. It is extremely important for this figure to be realistic and formulated for the market in which the property will be sold.

"The market in which the property will be sold". Remember that sentence. Write it down. Unfortunately, when calculating ARV, many real estate buyers, investors and even real estate agents don't put enough weight on that statement.

The way most investors and agents calculate ARV is by looking at the most recent sold properties in the area, adjusting for square footage, lot size and improvements and coming up with a number. That's great and that is how most appraised values are factored. But, the ARV is not what the value was in the past, it is what a buyer will be willing to pay for the property in the future.

So, what are we supposed to do to arrive at THAT figure? Look into a crystal ball? Have our palms read by a psychic?

Realistically, it's not that difficult. Accurately arriving at ARV just involves taking into account a few more factors. Let's look at some:

• What is currently on the market? Competition drives down real estate prices so if there is a lot of inventory for buyers to choose from in your price range, you will need to be priced better than the competition in order to compete.
• What is the season? Seriously. I can tell you for a fact that in a particular neighborhood near the beach in Truro Cape Cod, real estate prices increase 7-12% once it gets warm outside. Look at the seasonal trends for the neighborhood in which you are selling.
  
• Where are mortgage interest rates and what is the forecast for the rates?
• Existing/upcoming barriers or future features. For example: (barriers) road construction (alot in Provincetown Cape Cod over the winter), pending government legislation, next-door neighbor's lack of exterior maintenance, (features) new recreation center, local utilities being installed etc.
• What is the current time on market for properties? If the average market time is 6 months, you will need to consider setting your ARV lower if you want to sell in less time.
• Remember to factor in any customary seller-paid buyer concessions.
• PERCEPTION. This has become incredibly important as buyers have turned more and more to the internet for their real estate information. What value does the city/county have the property assessed? What is the Zestimate® for the property on Zillow.com? While these figures don't necessarily reflect true value, sellers need to be aware of these figures and understand that buyers are looking at them.

Whether you are buying to fix and flip or are purchasing a property as a long term hold, it's always important to know the property's retail value over th short and long haul.....Call Deb Camuso to learn more about the values of property in Truro, Provincetown, Wellfleet and Eastham and what the best deals are to date.

When I initially speak with a real estate buyer, particularly the investor, I ask a lot of questions. Unfortunately, many don't have some of the most important answers.

Whether you are investing in real estate as a job or are buying real estate for a family home, all purchases are investments. You never want to lose money...you always want to make money. To invest in real estate, you must have a goal, an objective. You must also have a formula. We cannot create a successful real estate investment plan without the formula.

It's really very simple: P = ARV - (PC + SE + HC + RC). Where P = profit, ARV = Approximate retail value, PC = purchase cost (not purchase price), SE = selling expenses, HC = holding costs and RC = rehab costs.

For investors who use short term rehab financing, HC will be much higher than those who pay cash out of a savings account. RC will be higher for the investor who contracts out the work than the one who can do a lot of the work himself (keep in mind to factor TIME into that figure though if you rehab yourself). SE - it is common in your area/price range for the seller to pay the closing costs for the buyer? Be sure to include that as well as any other factors such as required radon inspections etc. For example, here on Outer Cape Cod, particularly Truro, Wellfleet and Provincetown, the Seller must pay for Title V septic inspect etc. PC is much different than PP (purchase price) as there are always costs associated with the actual purchase of the property.

Play around with this formula and some figures. Insert the P=Profit figure first. That is why I put it at the beginning of the equation, not the end. P also equals your goal, your most important objective. By inserting P first, you are being a pro-active rather than a re-active investor. You should be able to get a pretty good idea of what your bottom line is when investing.

With record low mortgage rates, record low prices in the Outer Cape Cod market and Sellers who are more than willing to negotiate, now is an ideal time to buy. Whether it is as a PRS or as a long term hold, this is the time to make a killing in real estate investing.

Buyer's remorse. Appraisal problems. Loan denial. We all know the pitfalls of what can cause a contract to fall apart. ..especially in today's market. Here is a list of ways to keep that agreement together.

1. Don't allow closing dates too far into the future. If necessary, a closing date can always be extended through an addendum to the contract. The quicker the closing, the easier it is to keep everything moving and all parties on their toes. If a buyer is in a lease and claims to not be able to close quickly, offer to pay the remainder of their lease or some other incentive to get them to the table sooner rather than later.

2. Have someone (other than you or your real estate agent) who is familiar with your property (and any work that has been done) attend the home inspection. This helps to show the buyers that you care about your property and also gives you someone (and a more neutral, 3rd party) to address any immediate issues which could cause buyer's remorse.

3. Before putting your property on the market, go into the attic, crawlspace and/or basement. Check for leaking pipes, animal infestation, unsecured insulation, etc.

4. Keep your property maintained while it is under contract/in escrow. Buyers want to see their future home. They will drive by - a lot. Keep it looking as nice as it did when they wrote the offer.

5. Have your attorney or escrow company run a title search as soon as you are ready to sell. This way you can be made aware of any title issues that need to be addressed sooner, rather than later.

6. Don't be a jerk and don't tolerate the people who are working for you be jerks either. This may be the first time the buyers have ever purchased a house. Maybe they are in the midst of relocating. Whatever the reason, it is often a very emotional time for them. Bite your tongue and be the voice of reason - and encourage those working on your behalf to do the same.

7. Be willing to open up dialogue when/if necessary. Look at the path of communication in a real estate transaction. As a real estate agent, I can attest to the fact that when a problem arises, sometimes it takes a seller talking directly with a buyer to work it out.

8. Talk to the buyer's lender. Ask him or her point blank, "will you be able to approve a loan for these buyers to purchase my property and will you be able to close it on time?" Instead of just being "the seller", you have now identified yourself as a real person; a person who has a significant interest in that lender doing his or her job effectively.

9. Read the purchase agreement. Know what it says and what both parties have agreed to. Check with your real estate agent to make sure the appraisal was ordered on time, that inspection contingencies are being removed in a timely fashion, etc.

So many problems can be avoided by staying on top of the deal and being efficient.

Its that time of year again! April 15 will be rearing her ugly head before we know it! I'm here to remind you of a tax deduction often overlooked by buyers - the cost of traveling to your own investment properties as well as the cost of travel when looking for new properties.

Travel expenses connected with the management of your real estate investments are deductible if they are ordinary and necessary.

A few rules regarding the deduction of travel expenses:

1. At least 50% of the time you spent away on travel must have been spent doing business related to your real estate investment business. The primary reason for travel must be business as well.

2. Taking a week long vacation to Hawaii and attending an open house while there doesn't count.

3. Expenses that are commonly deductible include: travel, lodging and meals.

4. You can get creative...while the costs of bringing your family with you may not be deductible, if you hire those family members to do landscaping work or other maintenance activities, then you may have another deduction.

5. Everyone's situation is different and you should always consult with a professional accountant for tax advice.

Head out to Truro, Wellfleet or Provincetown and check out some real estate over Easter weekend and have a nice mini vacation that you can write off next year!

With the new Massachusetts building code officially in effect, the cost of building a new home is about 20% more expensive than it was only one year ago. This is especially true in the Lower Cape Cod area because of the high winds. Because of this, Buyers are finding it less expensive to buy already constructed homes than to buy land and build new. This is a bit frustrating for those Seller clients who are trying to sell raw land. It is equally frustrating for those entry level Buyers who want to own a home in such areas as Truro or Wellfleet but can't afford it.

Having several clients who fall into both of these categories, I did some research on modular homes. By all accounts, these homes look like any other newly constructed homes. Not to be confused with mobile or manufactured homes, a modular home is built in a controlled environment and then shipped in pieces to the construction site. The popularity of this type of construction has more than doubled in the the past decade. Modular homes can offer a faster building time as well as construction cost savings of up to 30%!

Modular homes are built and packed using computer generated technology, which allows for very precise measurements and very little waste. Homeowners can even customize their homes right down to the type of studs they want - ie: some are choosing to order their homes with steel studs - these homes aren't attractive to termites like their stick-built cousins.

Buyers who are looking to build on vacant land or investors looking to profit on vacant land or a tear-down structure, may benefit from considering the modular home option. Holding costs, market time and construction costs may be surprisingly less than taking the traditional building route. With land values being well under $200,000 in Truro and Wellfleet this may be the ideal solution for Buyers wanting to get in the real estate market in the Lower Cape of Massachusetts before the prices are back on the climb.