Exploring Types of Real Estate Investments

Choosing the best type of real estate investment will depend on your individual circumstances, goals, market area, and preferred level of involvement.


As an investor, there are a few types of real estate properties you should be familiar with: Residential, Commercial, and Raw Land Investing/New Construction. Each comes with unique advantages and disadvantages which require thorough analysis.

Residential Real Estate

This category includes both new construction and resale homes. The most common subjects are single-family homes, but the scope may also include condominiums, townhouses, multiplex units, and vacation homes. 

In general, the best investment property for beginners is a single-family dwelling or a duplex which tend to attract long-term renters. According to Investopedia.com, the main things to consider when searching for the right residential income property are:

  • Neighborhood

The neighborhood will determine the types of tenants you attract and your vacancy rate. If you buy near a university, for example, chances are that students will dominate your pool of potential tenants and you will struggle to fill vacancies every summer.

  • Schools

If you’re dealing with family-sized homes, consider the quality of the local schools. According to a recent survey by the National Association of Realtors, 25% of homebuyers listed school quality and 20% listed proximity to schools as deciding factors in their home purchases. Although you will be mostly concerned about the monthly cash flow, the overall value of your rental property comes into play when you eventually sell it. Homes in good school districts sell more quickly and command higher selling prices than those in lower-quality ones. If no good schools are nearby, the value of your investment may be affected.

  • Crime

Check the rates for vandalism, serious crimes, and petty crimes, and note if local criminal activity is moving up or down. You might also want to ask about the frequency of police presence in your target neighborhood.

  • Job Market

Locations with growing employment opportunities attract more tenants. Click here for a snapshot of job and wage data specific to the San Francisco Bay Area.

  • Amenities

The presence of parks, restaurants, gyms, movie theaters, public transportation, open spaces, bike paths, and other perks will help attract renters.

  • Future Development

The municipal planning department will have information on upcoming development or one that’s already been zoned into the area. If a lot of construction is going on, it’s probably a good growth area. However, new housing development could also hurt the price of surrounding properties by increasing supply (see: Regional Transportation Plan and Sustainable Communities Strategy for the San Francisco Bay area 2013-2040).

  • Number Of Listings & Vacancies

If a neighborhood has an unusually high number of listings, it can either signal a seasonal cycle or a neighborhood in decline.

  • Average Rents

Rental income will be your bread-and-butter, so you need to know what the average rent in the area is. Zillow offers a searchable database for estimated median market rate rents by housing type across a given region.

  • Natural Disasters

Insurance is another expense you will have to subtract from your returns, so you need to know just how much it’s going to cost. If an area is prone to earthquakes, fires, or flooding, coverage costs can erode your rental income. 

Commercial Real Estate

Commercial real estate is property leased for business and retail purposes. Multifamily apartment buildings are also considered commercial, even though they are used for residences. Commercial properties are generally grouped into the following types: 

  • Office: This includes single-tenant offices, shared-office spaces (favored by Millennials), and skyscrapers.
  • Retail: Strip malls, community retail centers, banks, and restaurants all count as retail.
  • Industrial: Warehouses and buildings designed for manufacturing make up this division.
  • Multifamily: Apartment complexes, high-rise condos, and smaller multifamily units fall under this classification.
  • Special Purpose: This means buildings designed for specific uses, like car washes, self-storage facilities, and hotels.

Raw Land Investing & New Construction

Raw land refers to any vacant land available for purchase. It is most attractive in markets with high projected growth. New construction is not much different, with the exception that properties have recently been built on the land.

Where To Find Real Estate Investment Properties

Multiple Listing Service (MLS) & For Sale By Owner (FSBOs)

Through more than 800 MLS networks, brokers share information on properties they have listed and invite other brokers to cooperate in their sale in exchange for compensation if they produce the buyer. Sellers benefit by increased exposure to their properties. Buyers benefit because they can obtain information about all MLS-listed properties while working with only one broker. In order to access the MLS, you need to work with a real estate agent like Julie who can help you find and navigate the results. 

If you’re looking for FSBOs, you could drive through your target area looking for signs to find these properties—but most investors find it more beneficial to work with a real estate agent. Real estate agents are often aware of FSBO properties in a given area and will pass that information along to their clients.

Off-Market Properties

Off-market properties can represent an opportunity to get ahead of the competition. Though they are not listed on the MLS, off-market properties are not impossible to find. When it comes to looking for them, there are a few resources investors should check first. These include public records, real estate auctions, wholesalers, networking events, and contractors. 


Julie and her team of experts are ready to help you achieve your investment goals, and we look forward to helping you with any real estate investment questions you may have.


Please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

How to Choose Where to Buy

Silicon Valley is filled with a range of exciting communities that appeal to homebuyers from all over the world. So which one should you consider buying your home in?

Narrowing the list of communities in which you would like to make your home is a process of elimination. The first factor to consider? Affordability. Click here for a guide to determine how much house you can afford.

Now that you have that number in hand, find the communities that make this first cut. The fastest way to do this is to work closely with a real estate agent like Julie, who has access to hundreds of properties through the MLS, as well as in-depth knowledge of the pricing in respect to each community. By giving your agent the price range you can afford, you may be able to immediately identify the communities where your budget will best be applied.

Once your agent provides you with a list of communities that match your price range, it’s time to narrow your choices according to your priorities, values, and overall lifestyle. Current needs and future expectations for your family all come into play at this point. To effectively make these decisions, click here (link to First-Time Homebuyers: Finding The Perfect Neighborhood For Your First Home).

Let’s say you end up with a list of five communities that meet your criteria. What then?

Research further to determine which of these areas are likely to experience the greatest appreciation in value. Again, working alongside Julie or another experienced agent will provide you with a wealth of information in terms of real estate appreciation. Click here for pointers. 

Any experienced agent will urge you to keep an eye on growing trends which could turn a second-tier city into a first-tier city. High prices in the latter category are forcing many homebuyers and investors to consider second-tier cities in search for better value, as reported by Forbes.

This is especially the case for millennials, who, according to the Wall Street Journal, are fleeing first-tier cities and heading to the suburbs in high-density areas like the Bay Area in search of more affordable housing.

Here’s a suggested chart to help your search:

Affordable Good Schools Safety Convenient Amenities Promising Development Plans Appreciation Expectations
Community A
Community B
Community C
Community D
Community E


Once you’ve narrowed your list further, it’s time for a second, third, even fourth date with your final candidates. Some people go to the length of renting a house (short-term) in their chosen area to get a deeper feel for the community. Your agent will be able to assist you in weighing all pros and cons, allowing you to finally determine where your next home should be.


Consider Julie and her expert team as your matchmakers. Our wealth of experience and nuanced knowledge of the market and communities in the Bay Area will help you make the right choice when it comes to selecting your home.

We look forward to helping you with any home buying questions you may have. Please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

Trade Your Space For Better Living



In a previous article (Downsizers: How And Why You Should Think About Downsizing), we talked about the subjective benefits of downsizing.

The advantages are many, and include the freedom and serenity afforded by an uncluttered life, the opportunity to create deeper meaning through simplification, and the time gained by stripping away the nonessentials to focus on the things that matter.

Plus, the many health benefits a less encumbered and more connected way of life offers us, and the chance to finally pay attention and fulfill the personal dreams we’ve had to postpone while raising a family, provide an immeasurable degree of quality of life that could not be fully enjoyed before.

But downsizing has many financial benefits, too—perhaps none richer and more rewarding than to finally cash out on the enormous appreciation in value experienced by the Bay Area housing market for just the past ten years. With annual percentage gains in the double digits, it has been a fabulous decade for homeowners. 

When Is The Right Time To Downsize?

Is now the right time to make a move?” clients are asking us with greater frequency.

Savvy and successful investors question this every day and share a common secret: they know when to cash out. 

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

 – Warren Buffet, CEO of Berkshire Hathaway and fourth wealthiest person in the world

While we are not suggesting a dip in home prices is in the near horizon, if you are approaching retirement or are already an empty-nester, we believe the moment is ripe to consider a smart move. Appreciation in many of communities of the Bay Area is at record highs. Julie and her team can run a comparable market analysis on properties around your home and let you know what kind of return you can expect if you listed your home on the market.

How Can Downsizing Help You Financially?

Downsizing will not only allow you to reap significant gains in home equity, but will free up cash thanks to lower mortgage payments, property taxes, and maintenance and insurance costs. With your treasure chest thus filled, the possibilities are endless. 

Some homeowners have turned the tables on downsizing by utilizing the extraordinary profits made possible by rising Bay Area home prices. In turn, they can purchase larger and more luxurious homes in more inexpensive areas out of state, or afford a grander lifestyle—on a reduced scale—in their own community or in more affordable neighborhoods nearby.

Does Downsizing Mean You Should Give Up Homeownership?

Just because you’re downsizing doesn’t mean you have to surrender homeownership forever. Many downsizing sellers have reinvested their proceeds into other homes. Some have downsized to purchase a second home overseas, or back home, as in the case of immigrants who long to renew their connection with their places of birth and with the family members and friends who stayed behind. Helping children with a down payment for their own home has been another factor motivating families to downsize. 

In previous cycles, savvy investors have also cashed out near the peak, then downsized (or moved temporarily into a rental) to wait for a price correction. They entered the housing market a second time once certain a new upswing was underway.

Can We Help?

Whatever your circumstances, investment strategies, or long-term goals, let our experienced team help you capture the many upsides of downsizing and to guide your next move toward a richer and brighter future. 

For more information on how we can help with your downsizing needs, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.


How To Find The Best Mortgage & Get Prequalified

Now that you’ve determined how much house you can afford (link to “Figuring Out How Much House You Can Afford”), it’s time to shop for a mortgage loan and get prequalified. Prequalification is a non binding promise from a lender about how much money you may borrow. Prequalification can lead to preapproval, which is a binding contract between you and a lender.

However, before you begin, it is essential you familiarize yourself with the marketplace and its terminology.

“What always astounds us,” says Hugh Frater, CEO of Fannie Mae, “is that more than 90% of homebuyer education is accessed AFTER the buyer has an accepted offer. There is inadequate consumer education around what it means to buy a home, and what it means to get a mortgage.”

“Many homebuyers get intimidated by the mortgage process and just go with whatever is easiest—usually what their local bank is offering,” says Greg McBride, chief financial analyst for Bankrate.com. “Smart buyers shop around to uncover the lowest offers.”

Julie and her team will help you shop wisely, arming you with the knowledge to negotiate the best deal possible.

Basic Mortgage Loans

  1. Conventional/Fixed Rate

Known as a plain-vanilla mortgage, a conventional fixed rate loan offers an unchanging monthly payment, with 15 and 30 years being the most common terms. With a locked-in rate, you’ll always know what your payment will be. This is the best route for those who prefer constancy and predictability. If you’re planning to stay in your home for at least a decade, a 30-year fixed-rate loan is your best bet. If you can afford higher payments, consider a 15-year fixed-rate loan which features a lower interest rate and could save you thousands over the life of the loan. 

  1. Adjustable Rate Mortgage (ARM)

ARMs begin with a fixed interest rate for a specified period of time, then the rate is adjusted periodically—usually once a year—based on the cost of borrowing money. A common ARM is the 5/1 loan in which the interest is fixed for the first 5 years and adjusted thereafter. Because ARM interest rates start lower than fixed-rate loans, they are most often chosen by first-time homebuyers to boost their buying power.

  1. Interest-Only

Interest-only mortgages allow the borrower to pay only the interest portion of the loan during the first 5 or 10 years. The monthly loan payments are subsequently increased to pay both interest and principal.

  1. Federal Housing Administration (FHA) Loans

Designed for low-to-moderate income borrowers, FHA loans require lower down payments (3.5% and 10%) and lower credit scores than conventional loans. Currently, a credit score of at least 580 will allow you borrow up to 96.5% of the value of a home. A credit score between 500 and 579 will require a 10% down payment.

Finding The Best Mortgage

Once you’ve run your numbers and decided on the type of loan that best suits your needs, it’s time to shop around.

When doing this, leave no stone unturned.

1. Start by comparing current mortgage rates and best deals at Bankrate.com.

2. Next, shop for a mortgage at a variety of lenders, including your bank, mortgage brokers, online originators like Quicken Loans, and aggregators like Lending Tree.

3. Call or visit your local credit unions and community banks. Smaller lenders typically have better rates for ARMs and offer better terms and rates to people with variable income streams, like the self-employed.

4. Once you’ve found the best deal, it’s time to gather your information and complete the necessary paperwork. While information requirements vary by lender, refer to this basic checklist.

5. After you’re prequalified, your next step is to get pre-approved. Getting pre-approved is almost like applying for a real loan, but it happens before you select a home. This is an in-depth process, and you’ll need to submit paperwork about your income, assets, employment history, and residency status. Refer to Zillow’s checklist of what’s usually required.


Julie and her team of experts are ready to help you achieve your home buying goals. We will prepare you with all the necessary info, and even recommend tried-and-true financial professionals with competitive rates.

We look forward to helping you with any real estate financing questions you may have. Please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

Financing Options For Purchasing A Larger Home



As of 2018, household net worth was at an all-time high of $100.3 trillion, nearly double the level in 2008 when wealth was devastated by the recession.

“Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investment,” says Lawrence Yun, Chief Economist for the National Association of Realtors. 

Commenting on the growing trend of second home purchases, Yun says it “reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years.”

The impressive gains in household net worth and investment portfolios are allowing young families and near-retirees alike the opportunity to move up into larger homes. Since purchasing a second home before selling an existing, primary residence offers many advantages (Homesellers, Owner-Occupied VS. Vacant Homes), move-up buyers are using a variety of financing options.

Partially Liquidating Investment Portfolios

Some people are selling part of their investment portfolios (stocks, bonds, etc.) to lock-in the significant gains in the stock market while freeing-up cash for the down payment or outright (cash) purchase of a second home. Liquidating part, or all of your portfolio, however, has tax implications you should review with your investment broker and tax advisor before proceeding.

Using An Investment Portfolio As Collateral

You can borrow against your stock portfolio by taking out a securities-based line of credit or SBLOC. A typical SBLOC agreement permits you to borrow from 50 to 95% of the value of the assets in your investment account depending on the value of your overall holdings and the types of assets in the account. SBLOCs generally allow you to borrow as little as $100,000 and up to $5 million. Click here for more information.

401(K) Loans

Technically, 401(k) loans are not true loans because they do not involve either a lender or an evaluation of your credit history. They are more accurately described as the ability to access a portion of your own retirement plan money—usually up to $50,000 or 50% of the assets, whichever is less—on a tax-free basis.

Conventional wisdom advises against withdrawing funds from your 401(k) early; however, borrowing from yourself is different from withdrawing funds permanently and does not incur the same tax penalties as withdrawing funds. If you fail to repay your loan within the allotted timeframe, it will be treated as a taxable withdrawal.

Using Existing Homes As Collateral

By means of a home equity line of credit, or HELOC, you can borrow up to 85% of your primary home’s value, minus the amount you owe on your existing mortgage loan. To get a home equity line of credit, you’ll typically need a debt-to-income ratio in the lower 40s or less, a credit score of 620 or higher, and home value that’s at least 15% more than you owe.

This type of loan is different from your primary mortgage in that you don’t get a lump sum. Instead, the loan acts as an on-call line of credit from which you can take out sums at any time during the withdrawal period and only required to pay interest until the end of the term. Note, however, that the interest rate is almost always variable. Click here for more information.

Cash-Out Refinancing

A cash-out refinance replaces your existing mortgage with a new home loan for more than you owe on your house. The difference goes to you in cash, and you can spend it on home improvements, debt consolidation, or other financial needs. You must have equity built up in your house to use a cash-out refinance. Click here to learn the differences between a cash-out refinance and a home equity line of credit (HELOC).

Can We Help?

When considering the different financing options at your disposal, make sure you contact your investment and tax advisors to choose the right one. Julie and her team are ready with excellent tax professionals we can recommend to you if needed.

For more information on how we can help with your move-up needs, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.


Financially Preparing To Buy Your First Home

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” ― Abraham Lincoln

Having made a thoughtful decision to buy a home (link to “Homebuyers: Finding The Right Time To Buy A Home”) and after calculating how much you can afford (link to “Homebuyers: Figuring Out How Much House You Can Afford”), it is time to sharpen your ax and prepare your personal finances. This foresight will ensure you can cover the upfront costs and obtain the most favorable terms on your mortgage loan.

Upfront Costs

  • A 20% down payment will lower your monthly payments and, in most cases, eliminate the need to carry private mortgage insurance.
  • Closing costs include a variety of expenses above the purchase price of your property, such as attorney fees, title search, title insurance, taxes, lender costs, and some upfront expenses such as homeowner’s insurance. The amount you’ll pay varies according to the size of your loan and tax laws in your area. Closing costs are average between 2% and 5% of the purchase price.
  • While moving costs are dependent on the amount of furniture, appliances, and other household items you currently own, average costs for local relocation within the Bay Area are below:
    • 1-bedroom home: $200-$500, 3-5 hours of labor
    • 2-bedroom home: $375-$750, 5-6 hours of labor
    • 3-bedroom home: $800-$1,500, 7-10 hours of labor
    • 4-bedroom home (and up): $1,000-$2,000, 10+ hours of labor

The hourly cost of labor varies widely among moving companies, so it is helpful to get a few estimates from different companies for a more accurate idea of expected costs.

Because Julie has collaborated with many different moving companies when assisting her clients with relocations, she has several prospects she can recommend to you.

  • Minor repairs and additional furnishings should also be considered. Cosmetic issues and normal wear-and-tear are not usually the responsibility of the seller, so keep some money aside for minor repairs. If you’re moving to a larger space, make a list and price out any additional furnishings.    

Most Favorable Loan Terms

  • Your credit score is the first thing a mortgage lender will check to determine your eligibility. For a conventional mortgage loan, your FICO score should not be lower than 620. Before applying for a loan, check your credit score and, if needed, take steps to improve it.
  • The 28/36 rule is generally used by lenders when considering a conventional loan. The 28/36 rule states that a household should spend no more than 28% of its gross monthly income on total housing costs, and no more than 36% on all debt which includes total housing costs plus other recurring debt payments. Taking steps to reduce the amount of these other recurring debt payments—car loans, student loans, and credit cards—will bring you closer to meeting the 28/36 rule. Before applying for a loan, keep these tips in mind:
    • Lower your monthly student loan payments by: (a) extending your repayment plan, (b) opting for a graduated payment plan, (c) enrolling in an income-driven repayment plan, (d) consolidating your student loans, or (e) refinancing at a lower interest rate (for details, click here and here). If your student loans are being paid by a third party (such as your parents), lenders will not consider them when calculating your debt-to-income (DTI) ratio.
    • Banks will exclude your car loan from your recurring debt payments when only nine months (or less) are left to pay it off.
    • Whenever possible, pay off your credit card debt. If you don’t have the cash at hand, consider borrowing from your 401K plan. While lenders won’t consider this new loan as part of your DTI, it is good practice to disclose it during negotiations.
    • Avoid taking on more debt until after you close on your loan.

Discover more about your debt-to-income ratio here.

Julie and her team of experts are ready to help you sharpen your ax and prepare you to achieve your dream of homeownership. We look forward to helping you with your home buying questions.

Please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

Helping Aging Parents Downsize While Building Wealth



America is getting older. 

By 2040, about one in five Americans—or eighty million people—will be 65 or older, up from about one in eight in 2000. The number of adults age 85 and older (the group most often needing help with basic personal care) will have quadrupled by 2040. And while overall longevity rates are declining, affluent and well-educated individuals are still expected to live past their eighties.

An aging population is expected to strain government budgets because younger people are much more likely than older people to work and pay taxes that fund Social Security, Medicare, Medicaid, and other public-sector services. The latest Social Security Administration projections indicate that, by 2040, there will be 2.1 workers per Social Security beneficiary, down from 3.7 in 1970.

Meanwhile, the cost of long-term care keeps going up and most Americans keep believing—incorrectly—that the government will cover most, or all of it.

“Our population is aging, living longer, and not prepared.”

 – David O’Leary, president and CEO of Genworth’s US Life division

Preparing A Place For Your Aging Parents

Caring for our aging loved ones in their later years is becoming a costly challenge.

Nationwide, a private room in a nursing home now costs more than $8,000 per month, or $97,455 per year, according to a report by Genworth Financial. That’s an increase of nearly 50% since 2004. A semi-private room is less expensive, but still carries a hefty price tag: $85,775 per year. As it is, 87% of adults over the age of 65 want to age in place, according to an AARP survey, and nearly three-quarters of those will eventually need some kind of long-term care, reports Genworth.

Given the staggering rise in nursing home costs and the uncertain long-term financial viability of Medicare and Medicaid, a growing number of families are seeking to add a “senior-friendly flat” to their aging relatives’ properties. This can be rented out until the time comes when Mom and Dad are ready to move-in. In the meantime, the rental income is held in escrow to help cover future in-home healthcare costs. Once the seniors move into the smaller flat, the main residence is rented out to outsiders, or used by the younger generation who wish to stay close to their parents and save money on in-home healthcare services (which can run as high as $47,000 per year, for homemaker services, and $49,000 annually for an in-home health aide).

How An ADU Can Help

Adding a “granny flat” or auxiliary dwelling unit (ADU) to an existing property is not only a creative solution to allow seniors to age in place and save money. It also boosts the property’s resale value. According to Remodeling Magazine, real estate professionals in high-tech areas of the West Coast (Silicon Valley, San Francisco, North Bay, etc.) report that most of the homes sold in recent years that included a recently constructed ADU more than recouped the ADU project cost in the resale—well beyond, in most cases.

To help alleviate the housing crisis, the California legislature recently passed a series of bills ( “Homesellers, New ADU Housing Bills Could Add Significant Value To Your Home) aimed at facilitating the addition, or new construction, of auxiliary dwelling units. This easing of restrictions, coupled with the potential for rental income and higher property values gained by the addition of an ADU, are allowing families to build wealth. But more importantly, it gives loved ones the chance to age in place and save money on senior care in the process.

Rental income, higher property resale values, costs savings—what’s not to like?

Can We Help?

For more information on how we can help with your downsizing and life adjustments needs, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.


Buy Before Sell? Or Sell Before Buy

The answer to this chicken-or-egg dilemma can be summarized in three words: “It all depends.”

The determining factors are these two things:

  1. Your finances, and
  2. Prevailing market conditions.


Buying Before You Sell

In a competitive environment, with continued home-value appreciation like the one prevailing in the Bay Area, it makes sense to buy before you sell.

You won’t have to move twice, won’t be pressured to quickly pick a house that may not exactly be what you want, and you’ll be able to vacate your home and properly stage it (“Sellers: Owner-Occupied Vs. Vacant Homes”) to appeal to a greater number of buyers.

If you don’t have the cash reserves to make the down payment on your new home and temporarily cover two mortgages, you can use the built-up equity on your existing home to take out a line of credit, or HELOC, in which a lender promises to advance you a particular amount which you can draw upon as needed.

This type of loan is different from your primary mortgage in that you don’t get a lump sum. Instead, the loan acts as an on-call line of credit from which you can take out sums at any time during the withdrawal period. You are only required to pay interest until the end of the term.

However, note that the interest rate is almost always variable.


Selling Before You Buy

What if you have neither the cash nor the equity? 

  • Sell with contingencies.


Homeowners can sell their properties with contingencies built into their contracts, stating that they must be able to buy a replacement house, or the deal is off. The time limit is usually between 30 and 60 days.

However, a contingent agreement may include a kick-out clause allowing the seller to continue showing the house and “kick out” the buyer if the seller receives an offer from another buyer without a home sale contingency. Sellers are likely to view contingent offers as less attractive than those with no strings attached.

All things being equal in terms of the amount of the offer and credit qualifications, a would-be buyer making a contingent offer is likely to lose out if the seller also has an offer on the table from someone who is ready to fully commit. 

  1. Implement a rent-back agreement.

A rent-back agreement essentially lets you become the new buyer’s temporary tenant, giving you extra time to live in your home after closing. It doesn’t last for long, but it will give you a chance to close on your new home and pack up for the big move.

Of course, just like the previous contingency option, a rent-back requirement will likely get fewer offers. 

  1. Sell and hope for the best.

Since contingencies and rent-back agreements may place you at a disadvantage compared to other buyers, the alternative is to sell without conditional clauses. If you don’t have family or friends you can move in with in the meantime, then you can temporarily rent elsewhere.

This option can buy you plenty of time to focus on searching for your next home. Julie and her team can help with this too, as we’ve helped many of our satisfied clients find temporary housing while in between homes.


Can We Help?

Whatever your circumstances, Julie and her team will help you navigate through every option to choose the one that best meets your needs.

For more information on how we can help with your buying and selling needs, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

A Targeted Remodel Before Moving Up



Savvy Bay Area homeowners looking to purchase and move to a larger house are increasingly utilizing a new, targeted approach: remodeling their existing home to extract maximum value upon sale.

Rather than basing their choices on what they would like, they are considering renovations from the perspective of future buyers. At 83 million strong, those buyers are millennials, who, in 2019, made up the largest share of homebuyers according the National Association of Realtors.

The next generation of homeowners wants smart, stylish homes that enable them to connect with friends and family. 

– Jill Waage, Editorial Director at Better Homes & Gardens

With nearly three-quarters of this demographic preferring experiences over things, millennials—now representing one-third of the national population—are often referred to as the “Experiences Generation.” Thus, how a home “lives” and “feels” is becoming the blueprint for design and the vital criterion for home features. 

New Trends To Consider

  • Open-Concept Living


Millennials’ strong desire to connect and engage with people is breaking down the walls in interior home design, resulting in flexible, open-concept floorplans. For example, being raised on cooking shows and the “foodie” movement explains their strong desire for an open kitchen that faces a family room so they can engage with others during meal preparation. Front-row seats for family and friends to marvel at their culinary skills is another hot trend in kitchen design. Function over size is now the main driver.

  • Outdoor Entertaining


Outdoor spaces for entertaining are also now a “must-have” feature in multi-family and single-family homes. Three out of four millennials say outdoor space is important for entertaining ,and consider an outdoor living space an extension of the home and a relaxing retreat for family and friends to spend time together.

  • Working From Home


Savvy developers and designers are also responding to the growing trend in remote work. This conceptis revising workplace needs and enhancing a desired work/life balance by the upcoming generation. Future housing may contain design features that allow millennials the flexibility to work or play depending on the time of day. Living spaces may now double as workspaces with plenty of built-in storage to help maximize space and furniture that can serve more than one purpose. Smart, flexible, efficient, and minimalistic are now the guideposts for interior design.

  • Home Sustainability


Known also as the “Green Generation,” millennials continue to be most willing to pay extra for sustainable offerings. Consequently, they’re more interested than ever in sustainable and regenerative features such as solar panels and dual-pane windows, as well as eco-friendly materials, including paint and floor coverings that don’t contain volatile organic compounds (VOCs), Energy Star appliances, LEED-compliant lighting, and organic materials such as wood and stone. Heating and cooling cost efficiencies are also top of mind with 33% of millennials saying they are a very important consideration.

Preferred Features

  • Eco-Friendly


Millennials’ concerns about the environment and desire for a closer connection to the natural world are driving their preferences for more organic materials that give the feeling of bringing the outdoors in. Tile in all its forms—from ceramic to stone—along with hardwood floors, river-rock shower flooring, rainfall showers, and quartz kitchen countertops, are among features being used by developers and designers to respond to the growing environmental awareness and concerns of their clients.

  • Minimalist


Perceptive developers are incorporating sleek, simple design lines, light/muted color palettes, and abundant natural light to respond to millennials’ desire for natural, harmonious, and uncluttered living spaces.

  • Technologically Advanced


More connected and tech-savvy than any previous generation, millennials also prefer homes to be pre-wired with plenty of electrical outlets that offer USB ports for charging their devices, ethernet ports for connecting wireless routers, and HDMI jacks for flat-panel televisions and home theater systems. Smart home technology is fast becoming an essential component in home design, offering this new generation what they want and need: greater automation, connectivity, and control.

Can We Help?

Whether you are ready to move-up to a larger home or just considering a remodel for the time being, Julie and her team of experts are ready to help. Our vast experience and high-quality network of contractors and providers will ensure you maximize your investment return while preparing your home for maximum buyer appeal when ready to sell. 

For more information on how we can help with your buying and selling needs, please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.


Figuring Out How Much House You Can Afford

“If you fail to plan, you’re planning to fail.” – Benjamin Franklin

Americans are an optimistic bunch. Consider a recent study from Bank of The West that found 85% of millennials are confident they’ll achieve the American Dream, of which owning a home is a big piece. Yet more than half of those surveyed don’t have a plan to actually get there, and once they start on the path, are often shocked at how much it costs. Not surprisingly, 68% reported buyer’s remorse, wishing they had been more prepared going into the purchase.

The last thing you want to do is jump into a home loan that’s too expensive for your budget, even if you can find a lender willing to underwrite the mortgage.

What You Should Consider

  1. The 28/36 Rule

Lenders generally use the 28/36 rule when considering a conventional loan. The 28/36 rule states that a household should spend no more than 28% of its gross monthly income on total housing costs, and no more than 36% on all debt which includes total housing costs plus other recurring debt payments.

The first part of the 28/36 rule requires your front-end ratio to be no more than 28%. The front-end ratio equals your monthly housing costs divided by your gross monthly income. Monthly housing costs, or PITI, include:

  • The principal and interest portion of your mortgage payment
  • Property taxes, and
  • Property and hazard insurance.

The second part of the 28/36 rule requires your back-end ratio to be no more than 36%. The back-end ratio equals your monthly housing costs (PITI) plus your other monthly debt payments (car loans, student loans, credit cards, etc.), divided by your gross monthly income. Where applicable, the back-end ratio also includes required child support or alimony payments.

Example: Add together the amount you and your spouse earn per month (before taxes) to determine your gross monthly income. Let’s say each of you earn $5,000.

Multiply your combined income by 0.28 to determine the maximum monthly housing costs (PITI) you can afford. In this example, you’d multiply $10,000 by 0.28 to get $2,800, which means you can afford up to $2,800 per month based on the front-end ratio.

Next, determine your and your spouse’s total monthly non-housing debt payments, such as car loans, student loans, credit cards, and alimony and child support. For this exercise, we’ll assume you and your spouse pay $1,000 in total monthly non-housing debt payments. Multiply your gross monthly income by 0.36 to determine the total monthly debt payments you can afford, including your mortgage payment and non-housing debt payments. Following the example, you’d multiply $10,000 by 0.36 to get $3,600, which means you can afford up to $3,600 per month in total debt payments.

Subtract your monthly non-housing debt payments from your result to determine the maximum monthly mortgage payment you can afford based on the back-end debt-to-income ratio. In this example, subtract $1,000 from $3,600 to get a $2,600 maximum monthly mortgage payment.

The $2,600 back-end ratio mortgage payment is the lower payment of your two ratios, which means you can afford up to $2,600 for a total monthly mortgage payment.

2.       Property Taxes

Counties in California collect an average of 0.74% of a property’s assessed fair market value as property tax per year. Based on the median price of $ 830,000 reported for the San Francisco Bay Area in March 2019, the annual property tax payment would be $6,142, or $511/month. (For county-specific average property taxes click here).

3.       Property Insurance

According to a 2018 study by Insurance.com, average home insurance costs vary widely from state to state. Generally, you can expect to pay roughly $3.50 for every $1,000 of property value. For a median home price of $830,000, insurance payments would total $242/month (for a comprehensive look at property insurance click here).

If you are purchasing a condo, property insurance is typically covered under a master policy which homeowners pay along with homeowner association (HOA) dues. It is essential you review the HOA’s financial documents and by-laws to ascertain coverage.

4.      Other Recurring Costs

    • Private Mortgage Insurance (PMI): If you put down less than 20%, your lender will most likely require you to buy insurance from a PMI company. PMI protects lenders from the risk of default and allows buyers who cannot make a significant down payment – or those who choose not to – to obtain mortgage financing at affordable rates. PMI typically costs between 0.5% to 1% of the loan amount on an annual basis.
    • Maintenance: According to the Harvard University Joint Center on Housing Studies, you should plan on paying 1% to 2% (annually) of the value of your home in maintenance and upkeep. If you’re purchasing a condo, general maintenance costs are usually covered by HOA dues. However, make sure your HOA has adequate reserves for large-scale maintenance projects such as roof replacement, exterior paint, access-road maintenance, and wood rot and siding repairs.

Julie understands purchasing a home might seem overwhelming. This is why we have a team of seasoned experts ready to help you navigate this complex process, developing a prudent financial plan to achieve your dream of homeownership.

We look forward to helping you with your real estate questions. Please contact Julie at 650.799.8888 or Julie@JulieTsaiLaw.com to schedule a free consultation.

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