Transitions: The Good, Bad and Ugly.

transition

Last week I got married, yay! The wedding marked an end of what seemed like a year of transitions. In the last year, we bought a new home which catapulted a number of other events… the sale of one home and turning another home into a rental. Then not being able to rent the home out in the dead of winter and deciding to switch gears and sell the home because this made more sense. Oh, and not to mention, the home we bought needs work, which still hasn’t been done.

Although, two weeks before my wedding, I decided to start renovating my kitchen. So, yes, while we were dealing with last minute wedding details and had family in town, we were having new countertops installed and lived without a faucet for a week (because I had forgotten to order one until the countertops were installed). Needless to say, it was completely unproductive.

Change is really difficult and I saw firsthand how when you are faced with change, your first reaction may not be the most productive. Buying a home, selling a home, moving to a new location, starting a family, divorce and marriage are all considered huge changes in your life and can evoke a wide range of emotions. Anxiety, happiness, fear, threat, guilt, excitement, disillusion and acceptance are just some of the emotions you may feel. Overall, there are three different reactions to change:

Reactive: This is where I reside when I get stressed. People with this reaction make a fast decision while under pressure. Often decisions are made without the necessary information and in a frantic manner. From the outsider, a reactive person looks almost erratic.

Avoidance: Change is resisted and often people remain in denial. Decisions are put off as people start to feel stress. In this stage people often don’t move forward and remain stuck in the face of change. From the outsider, an avoider looks lazy.

Proactive: The most “normal” of reactions. In this state people often do more research, are more deliberate and are not as hasty. People with this reaction focus on what they CAN control, take actions and create positive outcomes.

Big life changes can evoke strange reactions and you should always give yourself some grace. However, there are some very helpful coping mechanisms that can be useful in getting you through difficult transitions. In the next newsletter, we will go over how to alleviate some of these stressors and reactions to change (I will need to research them since I certainly didn’t do a good job this time around in the face of stress!)

 

Liz is  broker and owner of Liz Daigle Realty.

A Summer Book List.

book

If you know me, you know I love to read. I can often go weeks without turning on the television and instead read at night (a task much easier in the summer when all the shows are over). I may never know what is going on with Pop Culture but I sure can recommend a handful of books at any given time. This summer, I have been busy devouring books and wanted to share some of my favorites…

    1. Big Shifts Ahead. This is a phenomenal read. Somewhat geared toward real estate agents but I think it would be a great book for anyone trying to determine what demographic is going to be driving the changes in the marketplace in the future. The book outlines what the authors think are the seven biggest opportunities and how to shift your approach to accommodate these opportunities.
    2. Secrets of Six Figure Women. Women and money is always an interesting topic for me. This book was originally written in the early 2000’s so the numbers are a bit outdated, although, the information is still valid. The author explores the characteristics of successful women and she has found there were a number of traits of all successful women making 100k or more.
    3. Maybe You Should Talk to Someone. This book was fabulous! This two person dialogue is of a therapist and her clients and the therapist and HER therapist. The author examines the parallels of the therapist and her clients and then her as the client and her therapist. A reminder that life has its ups and downs and a humorous take on human nature and life.
    4. A Year of Less. This year we sold two homes and consolidated the households into one SMALLER home. Through this process, I have become intrigued with ‘stuff’. Have you ever thought about where all your stuff comes from and the space it takes up? The author of this book decided to go on a spending freeze for a year and the book chronicles her year. This ends up being a cathartic experiment AND the reader is surprised with what the author both gains and losses through the year of less. HINT: this has more to do with life than the actual items.
    5. Digital Minimalism. I have such a love/hate relationship with my phone. Obviously, I need it to chat with clients, friends, family, etc. but I can get so addicted to it. There are days that I come home and my hand hurts from scrolling through my phone, looking at texts, emails, social media and the Internet. I was hooked when this book opened comparing the scrolling of social media to a slot machine at a casino. This book will make you examine your relationship with your phone and social media.

    As Dr. Sesus said, ““The more that you read, the more things you will know. The more that you learn, the more places you’ll go.” Tell me, what are YOU reading currently?

 

Liz is  broker and owner of Liz Daigle Realty.

How To Get Anything Done.

Do you find yourself putting off taking action? This may mean that you are at the cusp of taking a risk and the action is scaring you. It is very typical to stall out as you look a big goal head-on. Although, taking educated risks is the heart of building wealth and the quicker you become comfortable with it, the better off you will be. Here are some tips on how to handle moving forward and taking necessary risks.

  • Make smaller mistakes and then build.This is the best way to get used to making mistakes. Start making decisions that involve a small amount of risk. Since taking the biggest risk of my life and moving to Denver to start a business and finding myself responding to the anxiety and stress of this risk the same way as I always have – with more stress. I have realized there is a lot of value in starting smaller. This year I made a goal of getting better at public speaking path and my first step forward was joining a local Toastmasters and taking advantage of their impromptu speaking in the beginning of the event. You are asked a random question on the spot and you have to learn to answer as clearly and proficiently in two minutes. Joining Toastmasters put me in the position to start working on my public speaking and make plenty of mistakes on the way.
  • Reframe mistakes as lessons. But here is the secret, these mistakes that I was making at Toastmasters, weren’t REALLY mistakes, they were more like learning opportunities over and over. Take the time to learn from these mistakes. In the beginning of Toastmasters, I found myself saying a lot of filler words, such as “um” and self-soothing. Each week, when it was my turn to speak, I made a goal of ONE less “um” as the previous week.
  • Support. Once I got better at the impromptu speaking, I realized I need more help that Toastmasters might be able to offer. It was then that I decided to hire a public speaking coach to offer me individualized help and support. In an addition to a coach, you can ask a mentor, friend or family member to hold you accountable. As a real estate agent, I also find my role is to act as a coach for my clients through the home buying and selling process.
  • Create a hard deadline. With the guidance of my public speaking coach, we chose a date to have my very first speech booked and completed. This helped me stop procrastinating and jump right into public speaking.
  • Check in. The final step would be checking in with yourself. How did that feel? Invigorating? Terrifying? This step ensures that you don’t bite off more than you can take on (something I am notorious at doing examples, include, moving to Denver and starting a business, joining BOTH Toastmasters and a public speaking coach, buying rentals that need work when I have no extra time, the list goes on….).

Challenging yourself is hard and each new level of yourself requires more work and challenges. What risk are you shying away from? There is no risk too small or too big. If you are putting off buying that home, you are luck because I can happily step into the support role for this goal. Start your search here.

Liz is  broker and owner of Liz Daigle Realty.

Does Your Home Have a Name?

home

Does your home have a name? Ours do somewhat, although, they aren’t particularly creative. I refer to one as “The Blue House”  since it used to have blue carpets and blue countertops. While the others are called by their street name. Borrrrrring…

This article makes an argument to name your home.  “Once reserved for grand estates and castles, house naming is a much more casual affair these days thanks to social media. House names can be like Twitter names or vanity license plates: Another place to define your identity and communicate your personality and humor.” If you are drawing a blank on what to name your home, this fun name generator could help (or serve as a laugh).

Still on the fence? “The survey undertaken for the property website Globrix, found that one in 14 said they would be prepared to pay more for a home just because it had a name. Even those that were not prepared to pay more said their opinion of the property would improve, with 40 per cent saying they would be more interested in viewing a property with a name.”  I am not surprised by this fact. The book, Tell to Win reminds readers that we are all emotional transporters and to market ourselves, a service or product we must convey a story that evokes emotion to make an impression with the consumer or public. A home with a name will immediately convey emotion to potential buyers.

It is no secret that we bought a home in Downtown Littleton that we are slowly renovating. I termed it the “Downtown Littleton Project” and have written about it here and here and here. Since “Downtown Littleton Project isn’t the most exciting name for a home, I used the name generator and was provided with a number of different options: “White Fenceside”, “Peonies House”, “Front Porch View” and “Rabbit’s House”. All of these options certainly paint a better picture of the home and certainly make it more welcoming.

So, now the question is, what are you going to name your home?

Liz is  broker and owner of Liz Daigle Realty.

Feel the Fear and Do it Anyway.

fear

I never realized how many conversations I would have about fear once I got into real estate. These conversation are about my own fear and my client’s. For myself, there is a whole lot of fear that peaks its head when you move across country, leave behind a corporate job (ahem, bi-weekly paycheck) and get into real estate in a city that you don’t know anyone. As my business (and myself) have grown, the fear has subsided a bit but if you are living life right and pushing your limits, fear should never fully dissipate.

Fear for my clients can come out at any part of the transaction. Lets admit it, real estate is scary and can evoke a wide array of emotions. In most cases it is one of the biggest purchases that you will make. Maybe this is your first home post divorce. Or maybe, the financial crisis of 2008 still weighs on you and buying a home sounds so scary since you lost your footing in 2008.

Whatever the reason, fear is a very typical emotion to feel whether you are buying or selling a home. For this reason, I find myself talking to a client’s fear a lot. Sometimes the fear needs more facts, a nudge forward or a bit more coddling. Fear has a number of different faces and one of the ways it can present itself is procrastination. If you find yourself constantly putting off that home purchase or sale, the underlying cause may be fear. Here are a few tips on how to overcome that fear and stop procrastinating!

  1. Practice making mistakes. No one wants to make a mistake and certainly not a mistake of buying a pricey home. Consider taking small risks which may result in a mistake. This could be as simple as investing a minimal dollar amount into a stock. See what happens – does it grow or does it lose money?
  2. Reframe mistakes as lessons. Did you end up making a mistake with your chosen investment. No biggie, use it as a learning experience. What could you do differently next time?
  3. Accountability. If you tend to procrastinate, ask someone to hold you accountable. For the goal of owning a home, this person would help keep you on track, make sure you are looking at homes, setting proper expectations, keep you moving toward the goal. Looking for someone to hold you accountable? Consider your real estate agent as your accountability partner.
  4. Create a hard deadline. Give yourself time but also a deadline. This ensures you don’t continue procrastinating.

As interest rates drop (again) and we approach a time in the market where it becomes easier for buyers, you may want to examine if now may be the time to take the plunge into homeownership or moving up. Pushing yourself out of your comfort zone can be anxiety provoking but keep in mind….

“Acknowledging the unproductive thoughts and ineffective behavior that you’ve tried to ignore can be uncomfortable. But, stepping out of your comfort zone and choosing to proactively address bad habits will skyrocket your ability to create long-lasting change.“

Know when to HOLD and when to FOLD.

rental.

Were you lucky enough to buy your Denver home years ago when prices were significantly lower? If so, pat yourself on the back as you made a really great investment. Maybe you have since bought another home and your original home is now a rental. With rents also appreciating with home values, you are probably able to cash flow the home quite nicely but is it REALLY the best investment?

There are a lot of different numbers people will look at when determining if a rental is a good investment. One of the most commonly used is the cap rate. The equation to calculate the cap rate is as follows:

Gross Yearly Income – Gross Yearly Expenses (Net Income) / Purchase Price.

This is a superb equation when setting out to buy a home that will be primarily an investment property.  With both the rental and housing market quickly appreciating in the last five years, many homeowners who have chosen to buy a new home and rent out their first home can get a great cap rate. When you choose to turn a primary home into an investment home, what is the best way to determine if it is a good investment?

Consider this, ten years ago you bought a home in Denver and now are in need of a new home.  You may be faced with the decision of turning the original home into a rental or selling. Of course, over the years the home’s value has appreciated as well as the amount of rent you can charge. For easy numbers lets say you originally bought a home for 250k with 10% down and it is now worth 450k and a loan value of $180,000. You have 270k (450k-180k) of equity in the home and can charge $2,5000 ($9,600 a year is the annual cash flow). Is this a good return?

Depends.

Sure, the cap rate is close to 6% but here are a few other factors to consider…

  1. Return on equity. Using the above example, the return on equity is a minimal 3.5% ($9,600 (annual cash flow)/$270,000 (total equity)). The return on equity is measuring a changing number. When you purchase a home, your return on equity is measuring your income as a percentage based on your down payment. As you continue to hold the property, the return on equity will take into consideration your down payment and appreciation (equity you have built). This is an equation that you need to periodically look at as the measures change.
  2. Capital Gains. When you sell an investment, such as a rental, you often owe capital gains. When you turn a primary residence into a rental, you can face capital gains depending on how long that home is a rental. To avoid capital gains, the home must be a primary residence 3 out of the last 5 years. If you do find yourself selling a rental, you can also invest in another property and avoid capital gains by performing a 1031 exchange. Although, if you expect to need any of the cash from the home, you will owe capital gains if the money hasn’t been reinvested.
  3. Alternative Investments. Ah, the sneaky opportunity cost that tends to keep me up at night. Can I make better money somewhere else? There is no simple answer to this question but something to consider. Will your money perform better in another market or investment?

The decision to turn a primary home into a rental can be a bit elaborate. You will want to consider multiple factors, such as, whether you will need the funds in the near future, how much equity you have in the home and how long you may keep it as a rental. If you are considering turning your home into a rental, chat with Liz further to determine if this is the best decision. As always, be sure to talk with your accountant to determine your own personal tax situation.

 

Liz is  broker and owner of Liz Daigle Realty.