Author Archives: ericdunstan

About ericdunstan

Real Estate, FinTech, E-commerce; Realtor, Innovator, Advisor, Writer, Mentor; Business Development, Marketing, Social Media; Coffee lover, 5th gen CA native. #mdllg
November 6, 2017

Realtors, Nextdoor is a great source for seller leads

By ericdunstan

Last week I was woken up at 2am by a volley of popping firecrackers followed by a 2:15am encore performance of several bottle rockets.  The pyrotechnic hooligans did not have the courtesy to hang around for a round of applause from the neighborhood they just startled.

Later that morning I logged on to our neighborhood group on Nextdoor, that neighborhood social network, to see what the chatter was on the late night festivities.  Wow…the chatter was popping.  I learned that my street was center stage for the performance (or ground zero) and police were called.  Several neighbors reported seeing kids racing through the streets and someone got a pic of a license plate.  Cool.

Wow, isn’t Nextdoor a cool site for neighborhood watchdogs to keep our community safe? I have to admit I only go to Nextdoor when something happens and I need some scoop.  I also used Nextdoor to sell a bike and to get rid of some furniture to someone a few blocks over. I prefer selling to neighbors instead of to people I do not know on Craigslist…or as my mother calls it, “Gregslist.”

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The biggest value of Nextdoor, however, didn’t hit me until recently. Someone posted “I’m looking for recommendations for a realtor to sell my house.” As a realtor, I was so excited that I froze.  My jaw dropped.  Asking that question is like throwing red meat to a bunch of dogs.

I quickly responded and recommended ME  as I live literally a block away from the neighbor who made the post.  Of course, I was not the only realtor to be recommended or to recommend him/herself!!!  Realtors dream of hearing someone ask that question and spend big money to ensure they are the person neighbors recommend.  Remember all those “Just Listed!” or “your neighbor just sold his house for $200k over asking!” cards you get in the mail? That’s NOT done because realtors like you…it’s done so you REMEMBER them when it comes time to sell your home.

What’s most interesting about posting a “who do you recommend” question is who is doing the posting.  The person posting lives in the neighborhood and is asking for a realtor because he/she is most likely looking to SELL. That lead doesn’t get more “lower funnel” than that!  In this tight real estate market, realtors fight hard to sell someone’s home. The implications of an agent receiving seller leads on Nextdoor are HUGE. Realtors pay BIG money to purchase leads for clients looking to buy…and  most of those leads don’t end up buying a house.

The key for finding these seller leads is in HOW realtors use Nextdoor to build relationships so they can be the realtor neighbors recommend.  More to come once I’ve tinkered with the platform a bit.

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April 4, 2017

Rental property owners save big money with this Scooby Snack

By ericdunstan

I spoke this week to a long time friend I made when I worked at Excite.com. Remember that early Internet portal?! Those were fun times. We share a common interest in real estate investing and in fix-flip projects. Both of us managed to work insane hours during the day and then spent weekends remodeling houses. There is a certain joy in that…but it takes its toll on the physical and mental health for sure! My parents worried that I’d never find someone and get married. I ended up marrying someone who also shares this interest in real estate.

Like many of us in the San Francisco Bay Area, my friend, Darlene, was able to cash out her Non-Qual stock options and use the proceeds to invest in real estate. She found some great opportunities in the Desert Hot Springs area and acquired several properties that she has renovated and is now renting. Score. What a great way to use her stock proceeds to generate more wealth.

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Darlene shared that she recently sold two rental properties and is looking to reinvest in more properties in that area. This is where my heart sank and my ears perked up…at the same time…which is interesting from a purely biological perspective. I have a very active body it seems. My biological reaction was a cringe from the heavy taxation Darlene had to pay and the resulting loss of wealth that could have potentially been avoided.

When Darlene sold her stock options she paid short-term capital gains tax which is very common. She took those proceeds and bought properties. Now, depending how long she owned those properties, she paid capital gains taxes when she sold those properties. She will also pay income tax on the monthly rent she collected. Like wow, Scoob, that’s a lot of Scooby Snacks to give Uncle Sam. Yes, it is….and some of it can be avoided. Step into the Mystery Machine and let me tell you how.

The taxable event of selling stock is totally unavoidable and is a right of passage for success in the Silicon Valley. Paying taxes on rental income is also unavoidable. However, taxes on real estate investments can possibly be avoided…or at least deferred… through a little trick called the 1031 Exchange. The 1031 Exchange is a tool designed to help real estate investors buy “better” and more lucrative properties with the added benefit of not paying taxes on financial gains from properties sold.

 

Here’s how it works…and it’s totes legal. Let’s say I own 5 single-family home properties that I paid $100K each for a total investment of $500K. I hold these properties over 10 years and each has appreciated by $100K for a total gain in value of $500K. Let’s say I decided to sell all 5 properties and take the gain of $500K. Partaaaaaaay! That’s solid money. But wait, Scoob, if I take the $500K gain and run, I will pay long term capital gains tax….and that amount will hurt. Not so partaaaaaaaay!

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Or, I can play this sale more strategically and use the 1031 Exchange to protect that $500K gain by buying an income property (up to 3 separate properties) of an equal or greater value…and not pay capital gains tax. Keep in mind that the purchased asset must be another investment property…and NOT a primary residence. For this example, I’d sell the 5 single-family homes and then possibly exchange them for a small apartment complex. Do this exchange several times, and there are opportunities to own big time real estate assets…and to defer having to pay capital gains.

The kicker on this type of transaction is that once the 5 properties are sold (or closed), I must identify the “better” property I want to exchange to within 45 days and close on the sale within 180 days. This can be tricky if inventory is low like in the San Francisco Bay Area. Be sure to work with a real estate agent who is well connected to other agents within your local area.

Ok…watch your step out of the Mystery Machine. There are lots of other games that can be played here that are well defined within our lovely, and I mean lovely, tax code and by the SEC. I’ll be share more in future posts….like should real estate be a part of a retirement portfolio. The short answer is, heck yeah!!!

Please leave a question or response directly on this post or Tweet me a question @ericdunstan.

Leave a comment   |  tags: , , , , , , , , , , | posted in Millennial, Millennial Talk, Real Estate, Real Estate Investment, Real Estate Technology, Rental Property

December 20, 2016

Beware the handsy Santa

By ericdunstan
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Yikes, is it December already?!
Our family makes the annual visit to see Santa at the mall.  I learned why this is my wife, Dee Dee’s favorite holiday tradition.  Well, it turns out Santa remembers us and is rather “handsy” as he expresses his appreciation of Dee Dee.  “Wow, you’ve got a real looker for a wife, Dad” shares Jolly Ol’ Saint Nicholas.  Of course, Dee Dee beams and the boys are really puzzled.
“What does ‘looker’ mean, Dad?”

“Just eat your candy canes, boys,” I reply.

Yes, this is my life and this actually happened.  I won’t be happy if Dee Dee wants to wait up all night for Santa on Christmas Eve.

Thank you all for your support and referrals as I build my real estate business.

I hope your Holiday Season is merry and bright.
– Eric

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August 22, 2016

Tips for First Time Millennial Home Buyers

By ericdunstan

ChelseaKrost08-12-16

Last month I was invited by Millennial thought leader, television and radio talk-show host, Chelsea Krost to participate in her weekly Twitter Chat, #MillennialTalk. She invited me to share my thoughts on what Millennials need to consider as they work towards buying their first home. What a fun event. We had a very active and engaged audience who asked several great questions. Buying the first home is overwhelming.  I hope my responses helped alleviate some anxiety and support the confidence of first time home buyers.

I’ve included the scripted Q&A transcript below from the chat session that took place on July 12, 2016 on Tweet Chat. I blew up my Facebook page that afternoon not realizing I had connected my Twitter feed. I got several texts from friends saying “Do you realize you made 1M + posts on Facebook?!” He he…sorry guys! I will be sure to disconnect Twitter from Facebook for the next #MillennialTalk event.

Enjoy and I hope you find the questions and responses informative! Please tweet me additional questions @ericdunstan. Tweet questions to Chelsea as well @ChelseaKrost if you’d like. She’s just great.

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Transcript from #MillennialTalk with Eric Dunstan on July 12, 2016

Q1 @EricDunstan I don’t want to settle down…why would I buy a home? #MillennialTalk

A1a. There are many benefits to owning a home vs #renting. #MillennialTalk

A1b. Sometimes owning a home can be cheaper and more beneficial than renting. #MillennialTalk

A1c. Having your own house means you can do what you want #MillennialTalk

A1d. Loan programs make it easier to buy a home #MillennialTalk

A1e. Depending on home, monthly maintenance can be limited…giving you free time #MillennialTalk

A1f. Each month your payment builds #equity in the home…giving you power to sell and buy a bigger home #MillennialTalk

A1g It also allows you to borrow against the equity to remodel (called a home equity line of credit) #MillennialTalk

A1h. There are many tax benefits in owning your own on. Talk to a financial advisor or CPA #MillennialTalk

Q2. @EricDunstan OK…what do I need to do to even consider buying a home? #MillennialTalk
A2a. Meet w/advisor & build #financial plan – there are several online services that help w/ this including LearnVest.com #Millennialtalk

A2b. Very important to understand money needed 2 buy a home & how long it will take 2 save enough money to make #downpayment #MillennialTalk

A2c. Think about your 5 yr plan for career, savings etc. If you plan to live in the area for 5+ years it makes sense to buy. #MillennialTalk

A2d #Realestate follows a 5-7 year cycle.  If not, consider renting to avoid being caught in a downturn. #MillennialTalk

A2e. Think through life style…what area to live fits your style?  Can you afford that area? #MillennialTalk

A2f  Sometimes 1st time homebuyers need to break into market in area that may not be perfect fit, #MillennialTalk

A2g They can eventually upgrade to target neighborhood once their current home #equity increases. #realestate #MillennialTalk

A2h. If buying home is a big stretch, consider renting a room to someone as a revenue source. #homebuyer #MillennialTalk

Q3. @EricDunstan I want to buy a home…now what? #MillennialTalk
A3a Get prequalified for a loan, understand how much of a house you can afford. #homebuyer #MillennialTalk

A3b Look at all the loan options; conventional/gov insured, fixed rate, adj rate, 30 yr or 15 yr. There are a ton of options. #MillennialTalk

A3c Sometimes seller financing is an option. The seller acts like the bank u make mo payments to them.#MillenialTalk

A3d. Interview at least 3 real estate agents and talk to 3 lenders #MillennialTalk

A3e. Start touring around neighborhoods, going to open houses, use online search tools- @Zillow #MillennialTalk

A3f Get to know your #neighborhoods..and the kind of house that fits you. #MillennialTalk

A3g Determine what kind of house you want. Single family?  Townhouse or condo? #MillennialTalk

A3h When you think through what you want up front…finding the right home is easier! #MillennialTalk

Q4. @EricDunstan How much do I need to put down as a downpayment for my home purchase and how do I calculate closing costs? #MillennialTalk

A4a   It all depends on your financial situation, income level and credit score. #MillennialTalk

A4b To get the best rate possible plan on putting down roughly 20% of the home purchase price. #MillennialTalk

A4c Putting 20% down can be a lot of $$. There are other options but you may pay a hire loan rate #MillennialTalk

A4d. For example, some government secured loan programs require just a 5% down payment #MillennialTalk

A4e Talk to a mortgage officer at a bank or a mortgage broker to understand what is best for u #MillennialTalk

A4e. Closing costs are tricky and vary by state/county. Plan on paying around 2-5% of home purchase price #MillennialTalk

A4f. Mortgage providers and title companies will provide estimated closing costs on home u buy #MillennialTalk

A4g. Don’t worry! You won’t be surprised with BIG costs in the end. #MillennialTalk

Q5 @EricDunstan Do banks have flexibility with interest rates and do you recommend any online mortgage services? #MillennialTalk

A5a Yes! Banks offer different interest rates based on type of loan…#MillennialTalk

A5b. …and on credit score, down payment and savings of applicant #MillennialTalk

A5c As far as online lenders, I’ve been hearing great things about #QuickenLoans and #LendingTree. #MillennialTalk

A5d #BankRate is another great source to compare mortgage rates #MillennialTalk

Q6 @EricDunstan How do I determine if I’m getting a good deal when purchasing my home? #MillennialTalk

A6a He he. That can be tricky. Work closely with a listing agent who knows the area you are buying in #MillennialTalk

A6b Agent should run analysis of sales price of homes sold over past 3 months #MillennialTalk

A6c Analysis reveals average sales price for home of similar square feet and lot size in local area #MillennialTalk

A6d Agent needs to bring local market knowledge and recommend offer price range…#MillennialTalk

A6e based on condition/location of property you want to buy compared to average price in area #MillennialTalk

A6f The best way to lock in a great deal is to buy the worst looking house in the best neighborhood #MillennialTalk

A6g The more opportunity for u to make your own repairs and add $$ value the better #MillennialTalk

A6h You want to avoid paying the highest price for a home in the area #MillennialTalk

Q7. @EricDunstan What suggestions do you have for negotiating the sale price when purchasing a home? #MillennialTalk

A7a This is all market specific. A great real estate agent can guide you based on location and market conditions #MillennialTalk

A7b Your real estate agent needs to learn motivations for why the home is sold by talking to seller agent #MillennialTalk

A7c Maybe home needs to be sold quickly because seller has a job transfer. If so, offer a quick escrow close #MillennialTalk

A7d Or maybe offer to buy home “as is” without asking seller to make repairs. This is risky so ask your agent for guidance #MillennialTalk

A7e Another option is to offer seller a free rent back which means seller has more time to move out once home sold #MillennialTalk

A7f The more you learn about what helps the seller the more impact on sale price. It also shows you want to create deal that works for everyone #MillennialTalk

A7g Of course cash is king. If u offer to buy home all cash with no loan the seller will be VERY interested in working with u on price J #MillennialTalk

A7h I see a lot of all cash offers in the San Francisco Bay Area #MillennialTalk

Q8@EricDunstan Is it better to buy a new or existing home? Which is normally the better deal? #MillennialTalk

A8a Great question. I just made an offer on a new home for a buyer and there are benefits and risks #MillennialTalk

A8b Again, it all depends on the market conditions, location of home and needs of the buyer #MillennialTalk

A8c Some people prefer buying a new home for everything is..well…new! Nothing needs to be repaired. #MillennialTalk

A8d Amenities tend to be the latest standards and technology #MillennialTalk

A8e. New home developments also have units reserved for gov sponsored affordable housing programs if buyer is qualified #MillennialTalk

A8f Typically new homes tend to be in planned communities with home owner associations which define what can/can’t be done to home. #MillennialTalk

A8g Understand these requirements. #MillennialTalk

A8h Be sure to understand any additional fees associated with these associations as well. #MillennialTalk

A8i One potential downside is on sales price. Developers have a price needed to recoup costs in building new development. #MillennialTalk

A8j This price may not reflect market conditions. #MillennialTalk

A8k Existing homes have been on the market a while and may be more influenced by market conditions and seller motivation. #MillennialTalk

Q9. @EricDunstan What kind of expenses can I expect with #homeownership? #MillennialTalk

A9a Build a home ownership budget #MillennialTalk

A9b. Understand fixed expenses of owning home – #mortgage, insurance, taxes, water, electricity, taxes, etc #MillennialTalk

A9c. Understand tax rate for your state; safe for your #taxes each month #homebuyer #MillennialTalk

Q10 @EricDunstan What do I need to keep in mind after buying my home? #Millennialtalk

A10a Don’t buy your home and forget!! #MillennialTalk

A10c. Keep an eye on monthly expenses…track over 6 months are adjust spending #MillennialTalk

A10d.  Look at #interestrates…if a rate is .5 less than your rate, consider #refinancing #MillennialTalk

A10e. Why should you #refinance?  The difference in rates can mean saving $200+ a month #MillennialTalk

A10f  Homes require regular upkeep – create a maintenance schedule #MillennialTalk

A10g.  Create a plan and #budget to make home improvements. #MillennialTalk

A10h The money to #remodel the home may be in the house…consider a home equity line of credit. #MillennialTalk

Q11. @EricDunstan What parts of the home to #remodel to gain the most equity? #MillennialTalk

A11a. Generally speaking, a remodeled #kitchen and #bathrooms always generate greater value in a home #MillennialTalk

A11b. Expanding a master bedroom/bathroom also increases value #MillennialTalk

A11c. If you are up to the challenge, adding a bedroom and/or bath adds value…but there are implications to consider. #MillennialTalk

A11d Taxes tend to increase when the home size is increased. #MillennialTalk

A11e. As you #remodel, consider how appealing the rooms, amenities, etc will be to a potential buyer. #MillennialTalk

A11f This is a hard one for many people who want to create a home the way they want. #MillennialTalk

A11g  However, in the event the home must be sold, it’s important to have a house buyers want to receive the highest purchase price. #MillennialTalk

Q12 @EricDunstan Where can we find more of your great info on #realestate and #homeownership? #MillennialTalk

A12a Thank you. I love sharing what I’ve learned. Please send me further questions through Twitter @ericdunstan or visit my blog at http://ericdunstan.com #MillennialTalk

A12b. Of course I will continue to post regular updates to your Twitter feed and blog #MillennialTalk

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August 5, 2016

Owning a home requires Top Ramen and a budget

By ericdunstan

Eric DunstanOver the past few months I’ve been working with a first time homebuyer who is searching for a single-family home in the heart of the Silicon Valley. Yikes, I had to help him overcome the sticker shock of San Francisco Bay Area real estate prices in comparison to prices in his hometown in Alabama! What is most exciting about this buyer is that he clearly sees the value of owning his own home and put a financial plan together to make it happen. He is currently renting an apartment at a rate equal to the monthly mortgage payment he will pay. The big “#winning” for him are the tax benefits of owning a home and the option of controlling his own space. Apparently his next-door apartment neighbor has an affinity for pungent cuisine in the early morning. “There are certain smells that I just can’t deal with in the morning.” I totally get that.

This buyer is the quintessential engineer who thrives on process and data. The search process has been very methodical replete with weighted ranking system across buyer needs. I love it. So cool. I applaud the zeal he brings to the search and the questions he asks. “Can you help me understand the various expenses I should plan for after I buy my home?” Great question.

Getting your financial house in order to buy a home is a first critical step. Understanding the cash flow needed to own and maintain a home is the second. Saving to buy a home shows great financial discipline. Owning a home requires a commitment to maintaining the discipline.

I helped my buyer understand the financial requirements by helping him build a monthly budget that breaks out costs by fixed home ownership costs and variable costs. I am defining fixed costs as expenses that are required to own a home. For example, costs include:

Mortgage Payment: Paid monthly.

Home Owner Association Dues (if applicable): Paid monthly.

Property Tax: Paid 2x a year, but good to budget for each month.

Property tax is an important cost to examine closely for it can be a substantial amount depending on the state you live in. For example, in the San Francisco Bay Area where the average home price is above $1M, the tax rate requires budgeting at least $1K a month to pay the annual amount. I know, YIKES! That’s more than a car payment. A mortgage lender and/or a financial advisor will help you understand the tax implications in your local area and how best to budget for them. For example, tax payments can be included in an impound account to be part of your monthly mortgage payment. Think through how best to budget for tax payments. Trust me, you don’t want to be surprised by the tax bill.

Home Insurance: Various payment schedules are available depending on provider, but good to budget monthly.

Other Fixed Costs: Costs include electricity/gas, water and garbage. Unfortunately there are no work arounds to having these services. Having your own landfill is not a good idea.

Once the fixed costs are defined, an understanding of the money available for the variable costs, or everything else, will become clear. I know…not much is left of your monthly paycheck!!! Now it’s time to prioritize and budget for what variable costs are important and not important including…

Medical/Dental Insurance: What are the best and lowest cost plans available to you? Does your employer provide or do you need to pay for some or all of these policies yourself?

Transportation:  Car payments, car insurance, gas, etc. What’s the cheapest way to get to work? Maybe walk more?

Food: Do you want to eat? If so, do you want to shop at a grocery store or grow your own? J He he. Remember eating Top Ramen in college? Top Ramen is a food staple for homeowners too!

Services: Netflix, cell phone, cable, Internet, dry cleaning, home cleaning, etc. Maybe it’s no longer a “want to come over for a Netflix and chill?” and now a “want to just come over?”

Entertainment: Going out to eat, movies, concerts. I had to cut my Entertainment budget BIG TIME once I bought my first home. Free concerts in the park always work for a date night.

Vacation: Do you take an annual trip home or go on a vacation? Maybe take the train home instead of fly? Maybe it’s Europe in hostels or cashing in the hotel rewards points to save on hotels?

I know, I know. This gets a little overwhelming. However, it’s SUPER IMPORTANT that these costs are identified and a budget is built. Understanding the monthly finances gives you power to control what to spend and not spend on. Knowledge is power. Unfortunately, I know people who own homes who don’t know what their monthly mortgage payment is. They set it up once on automatic bill pay and forget. HOW SCARY IS THAT? The big consumer learning from the mortgage crisis in 2008 is don’t buy a home that you can’t afford…no matter how affordable it seems on paper! If budgeting gets tedious, always keep your mind on why you are being so budget conscious. YOU OWN YOUR OWN HOME. That’s cool.

My goal is to share with others the great opportunities, benefits and risks of home ownership to empower them to make their own decisions for what works best.

Please feel free to Tweet me with questions about this post @ericdunstan .

Leave a comment   |  tags: , , , , , , | posted in Financial Technology, Millennial Talk, Real Estate, Real Estate Technology

June 29, 2016

Owning your own home is totally doable

By ericdunstan

TIMG_5496he thought of owning a home never crossed my mind until my early thirties. I remember a myriad of limiting thoughts crossing my mind including, “there is NO WAY I can afford a home,” or “I don’t have the time or the money to maintain a home” or “owning a home is something you do when you settle down…and renting is still cheaper.” Looking back on those thoughts I can’t help but laugh. Yes, those thoughts are all legit, but SO NOT true.

I was 31 when I seriously considered buying my first home. Up until that time I did what all of my other friends did…rent an apartment with roommates. At that time of my life, I was in my last quarter of my MBA program at Santa Clara University. I was going to school part time and working full time as to not take on giant school debt. “Who has the time or money to own a home? All I do is work and go to school at night,” I remember thinking.

A roommate, Greg, told me one night that he planned to buy a house and asked if I would be open to renting a room from him once he found a home. Hmmm….clever. Seeing him go through the home buying process opened my eyes to how that “trick” is done. Greg found a home after a few months search and I rented a room from him at a price equal to what I was paying for the apartment…and he got all the financial benefits. I quickly realized if Greg could do it, so can I.

The first step in buying a home is to get your financial house in order and determine when you are ready to buy a home. Yes, this can be tough given the lack of financial education people receive these days. Or, if you totally “Kanye” your finances buying too many Yeezy shirts. One of the best things I did was meet with a certified financial planner (CFP). Financial planners will help you obtain a clear snapshot of your current financial health and help you identify short-term and long-term goals…including buying a house. Planners will also provide you the tools to get there.

Ask a trusted friend or parent for a referral or there are options available online. Alexa von Tobel created LearnVest to help people get control of their money. Be financially fearless! The service and tools are all available online and certified financial planners are available to work with people one on one to achieve their dreams. I’ve met Alexa several times during my time with a financial technology startup. She is really great and has a passion to help others. Believe me, once you understand your financial strength, the path to affording a home becomes clear. I think many of you will find the path a lot less difficult than you think. I know I did.

A second step in understanding the affordability of a home is the cost of ownership. This is a BIG factor I find many people don’t quite think through clearly. Getting your financial house in order to buy a home is focused mostly on getting approved for a loan to buy a house. This second step is focused on what’s needed to keep and maintain a home once you buy it. So beyond the monthly mortgage payment, homeowners must consider costs of home insurance, taxes, utilities, homeowners association dues (if applicable) and more. These home ownership costs are in addition to the typical living expenses we all have including cable, phone, Internet site subscriptions, going out, etc.

So how is this done? Build a budget! Building a budget helps identify and prioritize monthly expenses within the context of your financial priority…in this case, home ownership. Yikes, many people quickly realize the need to say “no!” to a Tuesday trivia night at a local bar. I remember making the decision to NOT buy a BMW so I can afford a home. I will be writing more about budgeting in a future post…and will maybe throw in some trivia for those needing a fix.

A third step in understanding home affordability is changing the mindset that it’s what people do who want to settle down. Or that renting is still cheaper. I recently wrote a post for TV and radio talk show host, Chelsea Krost, about the benefits of buying versus renting so check that out as a resource.

The shift in mind-set is up to you and it’s hard to change people’s thinking without a catalyst. What shifted my mind into wanting to own a home was my room mate Greg. He bought a home and I rented a room from him. He used my rent money to pay down HIS mortgage and gave HIM great tax benefits. Greg got to experience the many financial benefits of owning a home…and I paid him to do it. That relationship changed my mindset. “I need to look into this!” I remember thinking.

Yes, home ownership is scary. The more you understand how it’s done and the many benefits received the less scary it is. I argue the more EXCITING it is. Home ownership is one of the many things that make America great. It’s your property. You can do what you want with it…within reason, of course. Do laundry at midnight. Fry fish and stink up the house. Netflix all night with the sound WAY up. If you do it in your own house, no one complains to the landlord. Better yet, NO BODY CARES! To me, that’s the true benefit of home ownership.

My goal is to share with others the great opportunities, benefits and risks of home ownership to empower them to make their own decisions for what works best.

Please feel free to Tweet me with questions about this post @ericdunstan.

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February 15, 2016

Happy Spouse, Happy House and Happy Employee

By ericdunstan

I’d dragged myself out of bed most mornings at 6am to go to the company gym. Now don’t worry, I always made sure I put deodorant on and brushed my teeth before I left. Fresh breath is a priority in my life. * The company gym offered classes, trainers, and a decent variety of equipment that rivaled most pricey outside gyms. Most importantly, the gym also offered a chance to get to know work colleagues at all levels of the organization.

Over time I built “gym buddy” relationships with executive staff including 2 who recently relocated to the San Francisco Bay Area. Weight lifting and stationary bike conversations quickly transitioned away from weekend talk to “who do you know” questions to support remodeling projects or referrals to meet family needs. Given my real estate experience and deep roots to the Bay Area, I am always happy to share what I know about remodeling, landscaping, and local area information. I really enjoy helping others along their path and helping them avoid the challenges I’ve faced!

I was surprised by how hungry many relocating colleagues were for information. Don’t the company relocation teams help these executives with this sort of stuff? Don’t they get assigned a “relocation buddy” to help sort out the details to ensure everything is moving smoothly? It turns out no. “We were very disappointed with the relocation process here. The team helped sell my home and buy a home here. The buying process was a real grind because the assigned realtor had little local knowledge. After we moved in we were kinda left to fend for ourselves. My wife had to scramble to get the kids plugged in and we had no idea how to start on getting a remodel project done. Not a good experience,” one seasoned executive shared.

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I am passionate about employee relocation in response to what my executive colleague shared with me. This is a common story I’m hearing from several friends. Let’s face it, uprooting and moving the family to anywhere is a disruptive and scary process no matter how great the opportunity. Families must say goodbye to family, kids say farewell to friends and loved teachers, and the familiar rhythm of life (sounds like a Disney song) is broken.

Moving to the Bay Areas is double scary because of the high cost of housing, population density and pace of life. It’s triple scary if you are moving from another country and experience culture shock! It ain’t easy here. I know, all of my Los Angeles and NYC friends are snickering at this statement.

A successful relocation reaches beyond just moving the family and folding the employee into the company culture. A successful relocation program must go the extra mile by integrating the family into the right home in the right community, supporting any legal documentation requirements, providing guidance in how to plug the family into schools, clubs and organizations and more. Why? It’s simple. Happy spouse, happy house…which means happy, high-performing executive who does not need to worry about the home front. Knowing that the company is taking great care of the family will also build a strong loyalty and commitment from the employee to the company.

Many of the tech giants work with 3rd parties to provide these services, but I’m sensing that the ball can be dropped in finding the right home in the right local community and in providing the right support after the family has moved. I’ve also come across instances where the assigned realtor had no specific knowledge of the communities in and around where the company was located. Yikes. How will the employee be set up for success if that’s the case? Clearly one standard relocation program does not meet the needs of all. My goal is to provide services to help address these problems.

Please email me at eric@dunstanproperties.com if you, or someone you know, needs help in successfully relocating to the San Francisco Bay Area from within the US or Internationally. I can provide an area tour of the Bay Area, share area specific market analysis and insights into local schools or traffic patterns. I’d be happy to share my unique local perspective and market knowledge.

Thank you for your continued support in making the San Francisco Bay Area a great place to live and work.

* Is fresh breath a priority in your life? Reply on Twitter to @ericdunstan to this message with the movie and character reference and be entered to win a Starbucks gift card.

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January 15, 2016

Lend Me Some Sugar! I Am Your Neighbor!

By ericdunstan

Dunstan_HNYI became a realtor to help preserve what makes the San Francisco Bay Area such a great place: our communities! I want every client I help to say, “Lend me some sugar! I am your neighbor!” *

I was born and raised in Saratoga and my roots go back 5 generations in California. I have seen our communities evolve as people from across our nation and the world come to the Bay Area to live and work. Remember, the technology developed here changes the world. How great is that!?

I depend on all of you for referrals to colleagues and friends who need support in relocating their families to a community that best meets their needs.

Please email me at eric@dunstanproperties.com if you, or someone you know, need a tour of the Bay Area, a referral to a trusted lender, insights into local schools or traffic patterns. I’d be happy to share my unique local perspective and market knowledge.

Thank you for your continued support and friendship. May 2016 bring you and your family much happiness!

– E

* Be cooler than cool. Reply on Twitter to @ericdunstan with the song/artist reference and be entered to win a Starbucks gift card.

Check out “The Hawaiian House”

IMG_5693 (1)

My son, Cole, was inspired by a recent trip to Maui to design his own beach house. The result is his “Hawaiian House” complete with palm tree. Enjoy!

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November 23, 2015

Renters, it may be time to buy a home!

By ericdunstan

Screen Shot 2014-09-17 at 11.29.14 AMI was reminded again this week by how red hot the residential rental market is in the San Francisco Bay Area. Over lunch with a few friends, discussions quickly turned from the quick “what are you doing now” update to rants like “I am spending so much on rent…and my landlord is going to increase it again this year!” This statement is quite common for renters in non-rent controlled areas like Palo Alto or San Jose.

Finding a decent place to live in the Bay Area has always been a challenge, but it seems over the past 2-3 years the search has become even more formidable. However, with rents so high, the BIG $1M QUESTION is now does it make sense to continue paying high rent or is it better buy a house (or condo) and put the money towards a mortgage. Interest rates are so low now that monthly mortgage payments could actually be lower than paying rent! Yikes. The barrier to explore this option, however, lies in finding at least $200K in cash for a down payment. No matter your income level, obtaining that amount of cash is not easy and requires discipline. As I mentioned in a previous post, don’t buy that BMW M series with your options. Buy the house first!

Screen Shot 2015-11-22 at 6.45.36 PMI have been asked this “should I rent or should I buy” question several times recently. I am fan of buying a home as a longer term, 5-7 year play. I reached out to a mortgage broker friend to help build the business case for home ownership taking into consideration economic factors including home appreciation, tax benefits, etc. Of course, the analysis is positioned within the context that anyone considering buying a home should consult a CPA or financial planner to understand the implications for their specific circumstances. Come on guys, you know I had to say that!!!

Following is a rough analysis that focuses on the tax advantages of home ownership. The numbers used are for illustrative purposes only to explain the concepts. Feel free to manipulate the equations as needed. Or run a few calculations yourself using a “rent vs buy” calculator.

OK, let’s get to it! For example, let’s assume someone makes $120,000/year and is in a combined state and federal 30% tax bracket and will pay $36,000 in taxes.

Now, let’s assume a $800,000 home is purchased with a 20% down payment of $160,000 and with a $640,000 loan at 4%. The monthly payment breaks down as:

Monthly payment: $3,055.46

Property taxes: $833

Insurance: $80

Total Monthly Payment: $3,968

The same home could be rented for $3,000 per month, BUT don’t forget that the mortgage interest and property taxes are tax deductible. The high tech salaries being so high in the Bay Area this benefit is potentially HUGE. The annual interest paid on the loan in this example is about $25,000 and annual taxes are $10,000. As a result, taxable income has been reduced by $35,000. The buyer will pay $10,500 less in taxes, or $875 less per month, or the equivalent of $3,093/mo ($3,968 – $875).

But wait, there’s more to this. Now hear me out. Let’s assume the property value increases by a modest 5% per year. Over a 5-year term, the $800,000 property will be worth $1.021 million. Not bad, right?

Let’s assume rent increases by a modest 5% per year when in reality it has increased by much more!! Given the $3,000/mo rent in this example, rent will increase to $3,828 per month by year 5. Keep in mind that any renter (tenant) is at the mercy of a landlord and the laws that govern the local rental market as well. A renter could be asked to leave if, for example, the landlord wanted to sell the property.

Again, this scenario is designed to introduce the basic concepts to understand the benefits of buying a home vs renting. There are a ton of other factors to consider beyond the quantifiable including emotional benefits. We all have our hot buttons for what makes us happy.

Personally, I find happiness in home ownership from the remodeling and interior design perspective. I love that stuff. My mom spent many years as an interior designer and it rubbed off. Many family meals include conversation around what projects we are working on or what great home interiors we’ve seen. However, I have friends who are SCARED TO DEATH of any home project and prefer to just rent and let a landlord take care of it. To each his own.

However, my goal is to share with others the great opportunities, benefits and risks of home ownership to empower them to make their own decisions for what works best.

Kirk out.

Please send me an email (eric@dunstanproperties.com) or call me (408-674-2825) if you have any questions.

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September 9, 2015

Buying the first home means not buying the sports car

By ericdunstan

Screen Shot 2015-09-03 at 9.29.22 PMThe explosive growth of the Internet brought a lot of money to the San Francisco Bay Area and the Silicon Valley in the late 1990s. Many of my work colleagues and friends cashed in their stock options and bought high-end cars or lived BIG in San Francisco during those go-go years. Many of us younger employees did not know the difference between paper wealth and actual wealth. Unfortunately, the paper wealth quickly disappeared as pro-forma balance sheets fell out of fashion and stocks plummeted. Easy come, easy go.

Fortunately for me I did not get sucked into the craze of buying a BMW M5 and renting an apartment in the Marina. My Mid-West style upbringing made me far too frugal (or cheap!) for such “extravagance.” Fortunately I was able to same-day sell a chunk of my ISO options and chose to just sit on the cash. I continued to drive the 1988 Toyota Carolla I owned in college and rented with a roommate a two-bedroom apartment in less than trendy Sunnyvale. I was also able to have my company pay for a good portion of the MBA program I attended to avoid taking on massive student loan debt.

Yes, I experienced a ton of peer pressure for not living in the city. “Come on, Dunstan! Move up to the Marina with us. You won’t have to make the long drive home to Sunnyvale late at night…and “Social Safeway” is just crawling with honeys.” Many a tale has been told about love found in the produce aisle.

Screen Shot 2015-09-03 at 9.43.19 PMWhy didn’t I cave to the peer pressure or buy-in to the spendy trends at that time? I wanted to buy a house. That was my goal. Even back then, living in San Francisco was expensive and many of my friends there lived paycheck to paycheck. Several work colleagues graduated with an MBA and $100K+ in student debt. I graduated with no debt. Shortly after I started my first job after business school I was able to purchase my first house. Goal accomplished.

The San Francisco Bay Area housing market is even more competitive (read “expensive”) now than it was in the early 2000s. Buying a home or condo takes a significant cash down payment to meet the more stringent lending requirements. A hefty monthly cash flow is also required to take care of the trappings of ownership…namely property taxes, insurance and then basic living expenses. Home ownership gets expensive. Fast. But I think it’s SO worth it!

First time home ownership is still possible in the Bay Area despite the gloom and doom affordability market data. Sacrifices have to be made and savings goals have to be achieved. Life style choices have to be made too. The process of saving for the first home may take some time and may require renting with a roommate in a less fashionable area to amass cash. Building a monthly and annual budget is a great tool to help analyze where the monthly paycheck goes and decide what changes are to be made to funnel more cash to savings. I highly recommend Alexa von Tobel’s book, “Financially Fearless” to help with building a budget and savings plan.

Buying what type of house and in what neighborhood will also be defined by company stock performance and salary compensation. People make a lot of money in the Bay Area. However, how well one manages money will play a key role in the home purchasing power of the individual. Keep in mind that most first time home buyers will NOT be able to buy a home in a top neighborhood. Be OK with that. Buy what you can afford in the best neighborhood possible. How this is done will be discussed in future posts. Start small and gain equity to then move up to the next house/neighborhood. This is all very possible. It takes time, commitment and money management. I did it. So can you.

Please send me a note on Twitter (@ericdunstan) if you have any questions.

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