Thursday, January 28, 2016

Buying Or Renting: Which Is Best For You?

Are you facing this million-dollar question: should I buy or rent my next place? If so, you're not alone because this question is commonly up for discussion among millions of people looking to move. Both buying and renting have unique advantages but it really boils down to a few things, including where you see yourself in a few years. Let’s discuss some of the benefits of buying and renting so you can get an idea of what you'd like to do.

Buying a home is generally considered a long-term investment because you will build up equity in your home that you can use in the future if you decide to sell. But, in order to buy a home, you must first secure home financing and save up for a down payment that is typically 20% of the selling price. While down payments can be quite costly up front, you do get to take advantage of some tax incentives like mortgage interest, interest on home-improvement loans and property taxes.

The IRS allows you to deduct your mortgage interest when it comes time to complete your taxes and all of that interest is deductible unless your home loan is more than $1 million. If that's the case, the IRS will limit your deductible interest, but you still get to take advantage of a tax break. At the same time, the IRS will also consider the interest on home-improvement loans fully deductible, up to $100,000. Additionally, property taxes are deductible on your federal taxes, but you'll need to do an itemized deduction during tax season.

While there are a few other tax incentives when it comes to buying a home, it is a situation to carefully consider when hunting for your next place to live. Homeowners have the opportunity to make adjustments, repairs and improvements as they see fit and will cover the expenses out of their own pockets. On top of that, most homeowners plan to live in their homes for a number of years because their mortgages may have 15-, 20- or 30-year terms. If they choose to move at some point, homeowners can sell their home by listing it on the real estate market.

Renting townhomes, houses, apartments or new condos in NJ is little different than buying. Renters are unable to take advantage of some of the tax incentives associated with buying homes; however, they do have other desirable attributes to consider. First, renters typically avoid large down payments when moving into a new residence because they are not financing the home. While they may be required to put down a deposit, it's generally much less up front and they can get it back at the end of their lease if everything is in good condition.

Speaking of leases, most lease agreements span a 12-month time frame, which means a renter must resign a lease if they want to continue living in the space for another term. This is where buying and renting are different, because a homeowner doesn't have to wait out or extend 'lease' terms, while a renter must make the decision of staying or finding a another place to live. But at the same time, it's easier for a renter to move from place to place because they aren't tied down to selling a home and can essentially pack up to leave.

Another thing to consider when renting is that most repairs and maintenance are included in the rent you pay each month. If something breaks or the roof leaks, the property manager is responsible for the bill. However, on the down side, a renter can't alter floorplans or take on extensive improvement projects (add an addition, upgrade kitchen countertops, etc.). While they may be able to paint the walls for a more personal touch, much of the home’s existing features and amenities cannot be changed by renters.

Choosing to buy or rent can be challenging, but the above information can help you make your decision. If you prefer to have complete control over future renovations or improvements, you might want to buy and take advantage of tax incentives. If you would rather have maintenance-free living, you might want to rent. Take time to weigh your options and you will find your perfect solution!

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Friday, January 8, 2016

2016 NJ Commercial Real Estate Outlook

Taking a look at the 2015 real estate market, both commercial and residential markets did generally well in New Jersey, and 2016 seems just as promising. There are quite a few factors as to why the real estate market will continue to see positive strides throughout the next year. Read on to find out more about the 2016 commercial real estate outlook!

Drop In Unemployment
The unemployment rate has a lot to do with the economy in general, and being that as it is, it is influencing the growth of commercial real estate. The 2015 year-end report from the New Jersey Department of Labor and Workforce Development released positive notes about the job sector, which translates into an increase demand in commercial real estate. According to the report, the Garden State is experiencing the strongest employment growth the private sector has seen in the last 15 years, with employers adding nearly 50,000 jobs in the last four months of 2015.

To put it in perspective, non-farming employment grew by 224,100 jobs since February 2010, which marked the recessionary low point for employment in the private sector. On top of that, the unemployment rate in November 2015 continued to decrease to 5.3 percent, following a significant drop of 1.2 percent points since May 2015. With that said, more businesses are adding more employees to their workforce and that can translate into the need for larger workplaces to accommodate their growth. If trends continue to show growth throughout 2016, commercial real estate will reap the rewards.

The Year Of 18-Hour Cities
Earlier in 2015, we pointed out in another post, Making The 18-Hour Adjustment, that 18-hour cities are emerging as urbanization sweeps through smaller towns and communities. To put it simply, 2016 will be the year for a boom in the 18-hour city according to Realty Today. Why? First time homebuyers will come from one of the largest home buying groups – Millennials – that account for over 80 million individuals born between the 1980s and early 2000s. This group of buyers will be scooping up residential housing in the suburbs but need those communities to fit their lifestyles.

The Millennial generation isn't working the traditional 9 to 5 job, anymore and its members want their cities to accommodate their schedules. Businesses are making the adjustment to reap the rewards of their patronage and many are looking for localized commercial hubs to take advantage of this growing suburban explosion. Expect to see a rise in commercial properties for lease around small to medium sized cities throughout New Jersey that have extended business hours.

Fast Fashion & Smaller Retailer Dominance
The ways Americans spend their money has certainly changed post-recession and that has also challenged the old 'norms' of shopping plazas that used to be dominated by large and in-charge department stores. Americans tightened up their wallet, but after roughly 8 years of penny pinching, their money is burning a hole in their wallets and they are looking to shop.

However, no longer are they looking to shop at big-named department stores, they are looking for low-cost shopping gratification and fast fashion that can satisfy their desire to shop while keeping a budget in mind. What's that translate into? Commercial spaces filled with numerous niche retailers and fast fashion outlets that meet the needs of today's shopper. For the commercial real estate market, you can expect to see a rise in many smaller scaled stores and an increase in competition to lease out hot properties in desirable locales.

The commercial real estate landscape seems to be quite promising for 2016 and with the above points, now is the perfect time to jump on some commercial properties in New Jersey.

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