Real Estate

Penn State’s Franklin Gets Motivational on Football, Charity, and Community

James Franklin, the 16th head football coach in the storied history of Penn State University’s Nittany Lion program, headlined the Greater Lehigh Valley REALTORS® (GLVR) 6th Annual Signature Event on Thursday, May 31, 2018. Franklin, who drew close to 700 attendees to the Sands Bethlehem Event Center, discussed his philosophy on teams and the importance […]

James Franklin, the 16th head football coach in the storied history of Penn State University’s Nittany Lion program, headlined the Greater Lehigh Valley REALTORS® (GLVR) 6th Annual Signature Event on Thursday, May 31, 2018.

Franklin, who drew close to 700 attendees to the Sands Bethlehem Event Center, discussed his philosophy on teams and the importance of team building and mentoring – all of which are crucial to success on the football field, in business, and in life.

“Franklin provided valuable insight and inspiration to salespersons within and outside of the real estate industry,” said GLVR CEO Justin Porembo. “With Franklin’s teamwork message, we were excited for our Realtors® – and salespersons outside of our industry – to hear how working together can better their lives and their community.”

Several nuggets of wisdom from Franklin included:

  • On work ethic: “No one is going to out-work us. No one. You don’t get to East Stroudsburg University to Penn State University without knowing how to work. Wake up every morning ready to attack. There is no such thing as a snooze button. You do a back handspring out of bed and attack.”
  • On competing: “Compete in everything you do. Compete in the classroom. Compete in the weight room. Compete when it comes to community service. Compete in everything.”
  • On sacrifice: “Do you want to be successful? Yes. But very few people are willing to do the things necessary to be successful. Success is being disciplined to make the right decision moment after moment after moment. You don’t take the path of least resistance. You must be willing to make the decision that the common person wouldn’t make.”
  • On healthy relationships: “The only way you’re going to be successful is with positive, healthy relationships in your building, in your organization. Ask yourself, ‘Is this going to foster healthy, positive relationships in our organization?’” If not, you better believe we’re not going to do it.
  • On motivation: “I gave all the pre-game speeches at Vanderbilt. What happens when you’re the only one talking? You start turning into Charlie Brown. ‘Wah wah wah, wah, wah.’ We’re constantly asking other people, coaches and players to motivate our team. If I have to get the team fired up two minutes before running out to play in front of 100,000 fans, we’ve got a problem.”
  • On resumes: “Resumes are the most ridiculous things. References are more stupid than resumes. You’re going to give me a list of people that are going to say wonderful things about you? I’m not hiring anyone unless I know you or someone I know knows you and can vouch for you. I’m going to call people who will tell me the truth.”
  • On community service: “I’m a huge believer in community service. We fill the entire football program on buses. We go down to Penn State Hershey Children’s Hospital and assault the hospital with the most positive attitude you could imagine. Once you realize in life you can get everything you want by serving others, it comes back to you tenfold.”

With the community in mind, a charity auction followed Franklin’s speech. And, yes, Franklin got competitive and helped drive up the bids. In total, $11,400 was raised. The Boys and Girls Club of Bethlehem received $6,600, and the local Penn State alumni chapter received $4,800.

Attendees had the opportunity to bid on various kinds of Penn State memorabilia, some of it signed by Franklin. Items included a mini helmet, game tickets, posters, and more. Kevin Smith of K.D. Smith Auctions was the auction’s master of ceremonies.

Going Beyond the Transaction

The charity auction is not the only assistance GLVR has recently provided to the Boys and Girls Club of Bethlehem. On June 19, 2018, Realtors®, sponsors and affiliates converged on the club for tasks and activities that included yard work, window cleaning, arts and crafts, dodgeball and basketball, and time spent with some amazing kids.

The Boys and Girls Club of Bethlehem is part of a nationwide affiliation of local, autonomous organizations of Boys & Girls Clubs. These clubs, which help children ages 6 to 18 develop the qualities needed to become responsible citizens and community leaders, have opened their doors to youth in communities across the country, serving as a “home away from home” for nearly 4 million kids each year during the critical time after school and in the summer.

The time spent with the Boys and Girls Club is part of a Quarterly Community Events Program. The program was launched in 2017 in a joint effort with GLVR’s Young Professional Network, Diversity and Community Involvement Committee and Affiliate Committee.

In addition to working with the Boys and Girls Club, the Association has organized blood drives with Miller-Keystone Blood Bank, cleaned up parks in Carbon, Lehigh and Northampton counties, created a team for the March of Dimes walk, collected donations for Third Street Alliance, assisted the Big Brothers Big Sisters of the Lehigh Valley with their annual “Bowling for Kids’ Sake” fundraiser, volunteered at the Lehigh Valley Cystic Fibrosis Foundation of the Lehigh Valley’s Great Strides fundraiser, and more.

As Porembo always says, “We’re not just here for the transaction, we’re here to help build the community. We soon hope the word ‘community’ comes to mind when you think of our Realtor® members.”

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Lehigh Valley Economy Swinging Above its Weight Class

The Lehigh Valley has continued to see strong economic growth over the past year, which speaks to the remarkable diversity among the region’s various economic sectors, a sign of a well-balanced and multifaceted economy. In fact, the Lehigh Valley’s economy has never been better. Yes, never. The Lehigh Valley’s gross domestic product (GDP) – the […]

The Lehigh Valley has continued to see strong economic growth over the past year, which speaks to the remarkable diversity among the region’s various economic sectors, a sign of a well-balanced and multifaceted economy.

In fact, the Lehigh Valley’s economy has never been better. Yes, never.

The Lehigh Valley’s gross domestic product (GDP) – the measure of total economic output – has reached an all-time high of $39.1 billion in 2017. That marks a more than 4 percent increase in the Lehigh Valley economy over the previous year, which itself had been a record-high number.

To put that into perspective, that means the regional economy of the Lehigh Valley is now larger than that of the entire state of Wyoming ($38.5 billion) or Vermont ($31.5 billion), as well as 108 other countries in the world. The Lehigh Valley is the 65th largest economy in the United States, jumping up eight spots from the year before, and if we were a country, we would be the 87th largest in the world.

As if that wasn’t impressive enough, the Lehigh Valley was also recently named by Site Selection magazine as one of the Top 5 regions in the Northeastern United States in terms of economic development for the second consecutive year.

Based on the magazine’s tracking of total projects by region, the Lehigh Valley ranked behind only the New York City, Philadelphia, Pittsburgh, and Boston metropolitan areas in the Northeast. The Lehigh Valley was the only region in the population range between 200,000 and 1 million to make the top five list.

You need only to look at the four heavy-hitters the Lehigh Valley shares that list with to see that we are swinging well above our weight class. This past year has been a significant one for economic growth in the Lehigh Valley, and we continue to be the fastest-growing region in the state of Pennsylvania.

What makes a solid economy is a balance and opportunity for people of all incomes and skill levels. Economic growth is meaningless if it doesn’t enhance, not harm, a region’s quality of life and strive to create an opportunity for all people, not just the educated or highly skilled. The best pathway for people to realize the fullness of life is the opportunity for meaningful work that pays a life-sustaining wage. To me, that is the aim of economic development

The Lehigh Valley economy is like a sturdy table standing on four legs. Our top four economic sectors are within $2 billion of each other. Our largest economic sector is finance, insurance, and real estate at $7.9 billion. Manufacturing is second with $6.9 billion. We’re the rare community in the United States with a growing manufacturing base helping to lead our economy.

Third and fourth are professional and business services & education and health care. They each generate about 5.3 billion in output. Each individual subsector saw year-over-year GDP growth from 2016 to 2017, according to the U.S. Department of Commerce’s Bureau of Economic Analysis.

Gone are the days when the Lehigh Valley economy depended entirely on one industry, or on a single employer like Bethlehem Steel. Our growth has been broad-based and balanced. All of our eggs are no longer in a single basket.

LVEDC tracked 31 business attraction or expansion projects in the Lehigh Valley that were either announced, under construction, or completed in 2017, creating more than 2,200 jobs and retaining more than 1,300. The organization also provided access to $17.2 million in financing in 2017, resulting in another 810 jobs either created or retained.

The region’s economic success story has started to attract international attention. The Lehigh Valley was the subject of a 24-page dedicated supplement in the In-Flight magazine of American Airlines, the world’s largest airline, which serves nearly 200 million passengers a year.

Additionally, the region’s booming logistics and e-commerce sector was the focus of a front-page article in The New York Times, which notes that the Lehigh Valley “provides a gateway to the nation’s biggest metropolitan area” due to its proximity to highways and easy access to much of the Eastern Seaboard.

Our economy is growing. Our renaissance is well underway — but far from finished. What’s happening here is the envy of many communities and regions across America who’ve yet to find their way back from economic change, and our today’s and tomorrows are even brighter than our storied past.

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How Tax Reform Really Affects Current and Prospective Homeowners and the Real Estate Professional

I have been approached by many REALTOR® members recently who have asked me my thoughts on The Tax Cuts and Jobs Act and what it means for homeowners and real estate professionals. Well, many homeowners, homebuyers, real estate investors and members of the National Association of REALTORS® (NAR) may initially see a benefit from the […]

I have been approached by many REALTOR® members recently who have asked me my thoughts on The Tax Cuts and Jobs Act and what it means for homeowners and real estate professionals. Well, many homeowners, homebuyers, real estate investors and members of the National Association of REALTORS® (NAR) may initially see a benefit from the reform. The final bill includes some big successes as a result of the REALTOR® effort. The exclusion for capital gains on the sale of a home was saved, and the like-kind exchange for real property was preserved. Many agents and brokers who earn income as independent contractors or from pass-through businesses will see a significant deduction on that business income.
There is, however, a large concern that this bill reduces the tax benefits of homeownership and will impact some markets more severely than others. In Pennsylvania, our markets are very different, and it’s hard to generalize about its effect on real estate. The changes have, however, affected NAR’s projection for the market with slower growth in home prices. In markets with higher-priced homes and higher taxes, the market may experience price declines as a result of the legislation’s new restrictions on mortgage interest and state and local taxes. Unfortunately, the tax code no longer provides strong incentives for most people to become homeowners since the increase in the standard deduction would greatly reduce the value of interest and tax deductions as tax incentives for homeownership. However, even with the changes in the code, being a homeowner still allows you to build wealth and equity- something renters cannot say.
Looking at some provisions that will impact homeowners the most, the tax code now sets a cap on the combined total of state and local property taxes and incomes or sales tax deductions at $10,000 instead of the full amount of those expenses. The new law reduces the amount of deductible mortgage debt on primary and secondary homes. These two items were priorities for NAR, the Pennsylvania Association of Realtors® and the Greater Lehigh Valley REALTORS® as we met with our Congressional delegation locally and in Washington, D.C. Initially, language in both Senate and House bills threatened to totally eliminate the SALT deduction and would reduce the Mortgage Interest Deduction (MID) to $500,000 for new homeowners. Thanks to the hard work of Realtors® and staff from across the country, we were able to make the change to the state and local tax and had MID bumped up to $750,000 (from the previous $1 million mark).
In the Lehigh Valley, the median sales price in 2017 was $185,000. According to Multiple Listing Service statistics, less than 3 percent of the available market – 63 homes – is listed with a price of $751,000 or above. Since the impact of the MID change will only be felt by property owners with mortgages above $750,000, I do not anticipate the change to the MID cap to have a significant impact on Lehigh Valley property owners.
Looking at the bigger picture and beyond the MID, and despite not getting all of the items we wanted in the final bill, I am optimistic that the tax changes will not negatively impact the housing markets in Carbon, Lehigh, and Northampton counties.
So, we have a general idea of how the tax changes will affect Pennsylvania and the Lehigh Valley, but how will they affect current and prospective homeowners and the real estate professional? The National Association of REALTORS® has a great summary of provisions that affect the aforementioned parties. They also provide examples that are for illustrative purposes and based on a preliminary reading of the final legislation as of December 20, 2017. Individuals should consult a tax professional about their own personal situation. You can find this information at https://www.nar.realtor/tax-reform.

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Does Staging a Property Really Make a Difference?

Is staging a property with personal property essential to sell a home? Watch the real estate channels on cable television, and you’ll see the dramatic transformation. Unfortunately, many sellers have lost so much equity in their homes that there just isn’t enough money to invest in the staging process. So, as we consider the cost, […]

Is staging a property with personal property essential to sell a home? Watch the real estate channels on cable television, and you’ll see the dramatic transformation. Unfortunately, many sellers have lost so much equity in their homes that there just isn’t enough money to invest in the staging process. So, as we consider the cost, we have to weigh that against the benefits.
Back in 2010, the Lehigh Valley real estate market was saturated with distressed properties, foreclosures, and short sales. There was a glut of homes on the market and few buyers actively shopping. The economy was in recession, people were extremely nervous, and many buyers needed to sell their current homes before they could purchase their new one. Those with large homes were looking to downsize, those with modest homes were just trying to hang on, and many were displaced for a variety of reasons pushing them into the rental market.
This had an impact on investors, as well. Many of my clients depended on the ability to FLIP properties as their primary source of income. When homes took longer to sell, it directly impacted their ability to provide for their families. Average market time to obtain a contract was approximately three months and, if you had a property in a less desirable area or had an odd aspect to the home, it took even longer. The marketability of a home is subject to the public’s perception of its location, condition, and price. Therefore, if the property was already remodeled, the price was the only variable left, and investors saw their profit margins disappear.
So, we conducted an experiment. We’d already remodeled a particular home, and it had been on the market for two months with no offers. The seller had even dropped the price from $189,900 to $169,900. That’s when we called in the services of a professional stager, Corrie Taylor of Set 2 Sell, who staged the living room, dining room, kitchen, and master bedroom. We launched the listing a second time and even increased the price to $179,900. In 30 days, we’d sold it for $172,000! The same house that no one wanted at a lesser price in the typically busier Spring Market had now sold for a higher price at the end of summer. From that point, this particular investor began staging every property he flipped, and this fueled his business through the tough times.
Let’s face it. Buyers are highly emotional and tend to make decisions based on their feelings rather than logic. Staging elicits that emotional response that gets many buyers to take the plunge of making the offer. We found it to be highly effective when buyers have multiple options and hesitate to make a decision.
Staging can be addressed in many different forms. It’s easy when a home is vacant, but what about homes that are lived in? Sometimes a Staging Consultation is sufficient, especially when the home’s décor is modern and appealing. A trained professional can illustrate the difference between “living condition” and “showing condition.” It will require a lifestyle adjustment during the period of conducting showings and some discipline on the part of the resident, but a simple rearrangement of the furniture layout, reduction in the number of furniture pieces, and a serious de-cluttering process can make a world of difference.
If a seller is on a tight budget, you can also focus on what “needs” to be staged. Is there a bedroom slightly smaller than most? Staging it with a twin bed will eliminate the emotional statement like “A bed won’t even fit in here!” Removing a king size bed in the master and replacing it with a queen size can open up the needed walkways and change the perception that it’s “just too small”. By reducing the size of the kitchen table in that tight Dining Room or Eat-In Kitchen will make the entire house seem larger. If a kitchen is small, adding a drop leaf or pub table will answer the question “where do you eat?” These simple staging solutions can eliminate objections in the buyer’s mind, and that will lead to a quicker sale. If you consider that a typical price drop of $5,000 to $10,000 is far more than the cost to stage the property in the first place.
Even adding simple décor items to add a touch of class will make the house feel homier and help buyers to envision themselves living there. The goal is to warm the house up and provide some visual interest that helps buyers see the house as a home in which their family would be happy. It’s the emotional reaction that matters and an empty house just doesn’t do it. Even worse, a cluttered un-kept home will chase people away. Seek professional advice and don’t be afraid to invest some money. The return is well worth it!

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Did You Choose Your Title Agency?

When you bought your home, did you choose the title agency to handle the title transfer? More often than not, your realtor or sometimes the loan officer may suggest a company for you. You may wonder why does it even matter? It is against federal law for a service provider to insist that you must […]

When you bought your home, did you choose the title agency to handle the title transfer?

More often than not, your realtor or sometimes the loan officer may suggest a company for you. You may wonder why does it even matter? It is against federal law for a service provider to insist that you must use their title company. It is always the buyer’s choice. Here are some things to consider.

Pennsylvania is one of the few States where the title rate is all-inclusive. That means when you pay the premium it includes the cost of the search, title examination, escrowing the funds, conducting the settlement, issuing the title policies (lender’s policy and owner’s policy), and record the documents. In PA there are 17 title insurance companies that are members of TIRBOP. These title underwriters file their rates all the same with the PA Department of Insurance. The cost for the premium is based on the coverage amount. Title agents are licensed and are contracted with a title underwriter to issue their policies. Some agents are contracted with more than one underwriter.

If the cost of the premium is the same, then why does the cost differ between agencies?

Title agencies usually will have a menu of extra charges like bank/wire fees, notary fees, printing fees, tax certification fees, courier fees, settlement fee outside the office or after hours, and so on. Ask the agent for a title quote of all their fees.

Should I choose an independent agent or an affiliated company?

Many real estate offices have a title agency in their office. The broker may own or have an ownership interest in the agency. Some brokers even sell ownership shares to their agents. The hope is that the real estate agent will refer the consumer to the in-house company.  The real estate agent must disclose to the consumer any business affiliations with the title agency. An independent agent will probably get referrals through word of mouth, or by networking and marketing.

Should cost be the deciding factor when choosing a title agency?

The owner’s policy will ensure ownership as long as the owner or their heirs own the real estate. The hope is that you will never have to use the policy. The standard in the industry is to search the chain of title back 60 years. Some agents buy the search or production as it is called from the underwriter. Some underwriters may not go back as far when considering the cost of labor versus the cost of paying a claim. When you buy title insurance, you are also buying title assurance. Ask if the chain of title was examined back 60 years.

What is a title commitment?

The title commitment is the company’s promise to issue the title policy after settlement. It contains the same terms, conditions, and exclusions that will be in the actual insurance policy. It will show the parties to be insured, the vested owners, any liens, requirements, and exceptions. The lender will need this early in the transaction to do their part. It is best for you and your realtor to go over it with the title agent.

What other questions should I ask the title agent?

Do they have a presence in your area? Larger title agencies may service many states. Make sure they know the intricacies of the areas that they service. Do they have full-time employees to conduct the settlement or will they hire a notary to collect signatures? Are they able to handle last minute changes at the settlement table? Do they have the ability to reprint checks or even hand them out at settlement? An out of area agency may not be able to meet the challenges at the settlement table. Do an internet search on the title agency and make sure they have good customer reviews.

You have heard it many times, “buying a home is likely the largest purchase you will ever make.” You received recommendations for the best realtor. You shopped for the best lender. You did your research on where you want to live, and your offer on your dream home was accepted. Choosing a reputable title agent can be just as important. If you shop for title insurance, you can find the best value and save hundreds of dollars too. Remember, it is always the buyer’s choice.

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Proving the REALTOR® Value in the Digital Age

In a world ruled by technology and automation, today’s consumer is being turned into the “expert” on things like banking (there’s an app for that), healthcare (WebMD symptom checker, anyone?), and real estate (For Sale By Owner, FTW!). When it comes to real estate, though, nothing beats the human professional, and I wholeheartedly agree with […]

In a world ruled by technology and automation, today’s consumer is being turned into the “expert” on things like banking (there’s an app for that), healthcare (WebMD symptom checker, anyone?), and real estate (For Sale By Owner, FTW!).

When it comes to real estate, though, nothing beats the human professional, and I wholeheartedly agree with a recent statement by William E. Brown, 2017 President of the National Association of REALTORS®: “There’s a human element to buying and selling a home that can’t be replaced.”

But today’s sellers are being wined and dined by the likes of OpenDoor.com and OfferPad.com, which offer attractive online platforms that promise a quick, hassle-free, cash sale. Zillow recently joined this fray, introducing its “Instant Offers” platform in Phoenix, Las Vegas, and Orlando. The platform enables sellers to receive and compare cash offers from selected investors, as well as obtain a CMA from a Zillow Premier Agent.
In addition to catching sellers’ attention, these online investor sales may be exacerbating an already tight inventory situation. Instant Offers, for example, connects sellers with a small group of investors who are partnering with Zillow. Sellers who go that route are taking their home out of the inventory for the average buyer.

A lack of inventory has plagued the Lehigh Valley housing market over the last two years. In July, the most recent statistics available as I write this article, saw inventory levels shrink 39.5 percent to 2,321 units. Months Supply of Inventory dropped 42.4 percent to 3.4 months (a severe lean in favor of sellers). Most economists consider a balanced market to be a five- to six-month supply.

In addition, sellers who choose direct sales aren’t listing their property on the Multiple Listing Service (MLS), which could affect the reliability of MLS data. Not just real estate professionals but also economists and governments use that data to spot market trends, determine fair market values, and make plans.

I’m not here to tell sellers (or buyers) to not utilize online platforms for their real estate needs because it’s none of my business and illegal. While our REALTOR® members may be unhappy with technological advancements that drive consumers in a different direction, it is unlawful for associations to encourage or facilitate the withholding of listings or business from any company.

Instead, I choose to educate on the value of a REALTOR®. To the seller who is considering the option of a direct, cash sale, I want you to keep a few things in mind:

REALTORS® work in your market and know the community better than any website could.

REALTORS® will help you get your house ready for sale.

REALTORS® will market your home to the widest possible audience, not just investors seeking to make a profit on your home.

REALTORS® will aim to get you the best offer possible and have the skills to help you negotiate the terms of the sale.

REALTORS® follow a Code of Ethics that includes a pledge to “protect and promote the

interests of their client” (Article 1). These online companies may facilitate your transaction, but not necessarily with your interests in mind.

I understand the importance of an online presence, especially in real estate. According to the National Association of REALTORS®’ 2016 Profile of Home Buyers and Sellers, 51 percent of home buyers found the home they purchased online.

Just remember that Online + REALTOR® = Best Case Scenario and Biggest Return.

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What Homebuyers are Waiting For…

Most homeowners are content with their purchase. In a recent Bank of America survey, 95 percent of current homeowners reported that they feel proud of owning their home. And it looks like there may be more happy owners in the future soon. Twenty-five percent of prospective buyers said they plan to purchase in the next […]

Most homeowners are content with their purchase.
In a recent Bank of America survey, 95 percent of current homeowners reported that they feel proud of owning their home.
And it looks like there may be more happy owners in the future soon. Twenty-five percent of prospective buyers said they plan to purchase in the next two years. The majority (61 percent) are delaying purchasing to pay off bills and debts, while 47 percent are striving to improve their credit score. Forty-five percent are saving for a new home, while 39 percent are saving for retirement. Nearly one-third are still paying off student loans, while 28 percent are saving for their child’s education. However, 35 percent of buyers have started saving for a down payment, and 75 percent said their savings would pay for their down payment. Most aspiring buyers are not sure how much they have to put down for a down payment. Thirty-one percent said 10 percent, while 29 percent said 20 percent, and 15 percent said more than 20 percent.
So, what leads prospective homebuyers to become home buyers? According to the majority (52 percent), it’s having the financial means. Forty percent are ready to have their own place, while 35 percent want a reliable job with steady income.
For those who do already own, across all generations, 36 percent believe their current home is a stepping stone to their dream home. To 68 percent of millennials, that’s their plan.
About one-third of owners said that their home’s value is determined by how much they spent to purchase it. Ninety-one percent reported that they treasure the memories made there.
Homeownership has a positive impact on their long-term financial picture, according to 79 percent of millennials surveyed. For first-time buyers across generations, 72 percent believe that is true. Eighty-six percent of millennials believe buying a home is more affordable than renting, compared to 54 percent of first-time homebuyers of all generations.
With that being said, According to the fourth annual housing survey from Neighbor Works, more adults are struggling with their student loans, making homeownership more of a dream than a reality.
In 2016, 30 percent of respondents said they know someone whose student loans were delaying them from purchasing a home, up from 28 percent in 2015, and 24 percent in 2014. More than half of respondents this year (53 percent) said their student loans are at least somewhat of an obstacle to purchasing a home, down from 57 percent last year, but an increase from 49 percent in 2014.
Affordability continues to be an issue, as only 45 percent of respondents said their community is affordable for first-time homebuyers, but 56 percent believe that rent prices are too costly for someone to save enough to purchase a home.
Additionally, more than half of respondents said that they believed home buying is complicated, down 3 percent from 70 percent last year.
However, the positive outlook on home ownership has been growing for minorities, which are the fastest-growing segment of homebuyers, according to the survey. This year, 14 percent of African Americans, along with 12 percent of Hispanics said that homeownership is the most important part of their “American Dream,” compared to only 9 percent of whites. Last year, 16 percent of African Americans, 10 percent of Hispanics and 8 percent of whites reported that homeownership was the most important part of the “American Dream.” However, 52 percent of minorities reported that rent in their area is too high to save for a home, once again, delaying them from purchasing.

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Tackling a Giant

An Interview with Borko Milosev Regarding Repositioning Real Estate “What were you thinking?”  I inquired half-jokingly when the conversation began.   The response I received was a boisterous laugh followed by, “we studied the building, put together the right team and determined if we did something different, we could make this work.” Developers across the country […]

An Interview with Borko Milosev Regarding Repositioning Real Estate

“What were you thinking?”  I inquired half-jokingly when the conversation began.   The response I received was a boisterous laugh followed by, “we studied the building, put together the right team and determined if we did something different, we could make this work.”

Developers across the country are seeing the value in repositioning properties, and the same holds true in the Lehigh Valley. Whether it is updating an old building, redeveloping a brownfield or adaptive reuse (i.e. changing building’s purpose), the repositioning of an existing building is a popular, socially responsible approach.

As an avid mountain climber, including a recent summit climb of Mount Rainer, and one who enjoys swimming with sharks in Honduras, local developer Borko Milosev is no stranger to great adventures and taking risks. In the real estate game, his risks have included purchasing underperforming and poor conditioned properties since 2003.  “I was in college when I bought my first investment property, a single family house.  It was in horrible condition. It brought my mother to tears when I sent her a picture of a falling ceiling captioned ‘Mom, I bought my first house!’ I did not have a construction background.  I learned how to do repairs from a Home Depot Home Improvement 1-2-3 book.”

For Borko, the idea of purchasing real estate came from a mentor who often spoke of real estate investments and recommended the book Rich Dad Poor Dad by Robert T. Kiyosaki.  Borko’s means for purchasing the property is one that developed from a bit of good luck.  He reminisced, “With about $300 in my bank account, I received a letter from my bank alerting me to a bank merger and initial public offering. I took the letter to my finance professor and asked her what I should do.  She advised me to buy as much stock as possible.  I was able to borrow $10,000, purchased the stock and, after paying everyone back, I had $7,000 profit.”  This served as his deposit monies, closing costs, and construction funds.

After college, Borko began working in New York City for a large financial group, but could not shake the ‘real estate bug.’  In the years that followed he purchased additional distressed or underperforming properties.  In 2015, he and a business partner decided to take a chance on the ten story, a 100,000-square-foot darkening tower located at 65 E. Elizabeth Avenue in Bethlehem.  The vacancy rate of the building at the time of purchase was 60%.  Outdated mechanical systems, lack of amenities, and inefficient layouts and finishes were part of the problem for the struggling building.

With an attorney, a lender, a broker, an architect, an interior designer, and construction team in place, the partnership began to reimagine the sad giant of a building into what is now known as The Pinnacle @ 65.  The once drab and dark building is now buzzing with activity, and commercial vacancy is down to 5%. The first four floors are occupied by an array of commercial tenants including medical, media, and service oriented business. Santander Bank and a soon-to-be-completed restaurant occupy the entire first floor.  The upper floors house 48 luxury homes which consist of 1-, 2- and 2-bedrooms plus a den units available for lease in July of 2017.  The oversized apartments are equipped with high-end finishes, wine coolers, nest thermostats, washers and dryers, double ovens and cooktops.

The building’s amenities are designed for tenants who enjoy the “live, work, play” lifestyle.  They include a health facility staffed with a fitness instructor and a nutritionist, a Package Concierge System, electronic lockers, storage lockers, and bike racks. There is a quiet room, conference room, game room, and a lunch room.  The building also features onsite management. “We focused our design to increase tenant retention.  Based upon current market trends, it is anticipated that the majority of occupants will be empty nesters and millennials,” said Borko.

For those looking to reposition real estate, Borko suggests a hands-on approach, a detailed study of the financials, and an assemblage of hardworking, trustworthy team members to raise the bar and lessen the risk.

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The Economic Bridge from Our Past to the Future

It’s often hard to get perspective when you are close to something. Those of us living in the Lehigh Valley during the last five years realize that something is going on here. We are changing, getting bigger, more cosmopolitan and diverse. The annual Site Selection Governor’s Cup ranking provides some perspective on that growth. The […]

It’s often hard to get perspective when you are close to something.

Those of us living in the Lehigh Valley during the last five years realize that something is going on here. We are changing, getting bigger, more cosmopolitan and diverse.

The annual Site Selection Governor’s Cup ranking provides some perspective on that growth. The Lehigh Valley was the fifth leading metropolitan area in 2016 for growth and development in the Northeastern United States. The only metros with more growth were New York, Philadelphia, Pittsburgh and Boston, in that order.

What makes this even more significant is that Site Selection is the premier magazine for the economic development and location consultant crowd. Its annual ranking is based exclusively on objective criteria such as the number of new projects, the amount of investment and number of jobs created, not on subjective observations.

This is not your grandfather’s Lehigh Valley.

The annual economic output of the two-county region has hit $37 billion in GDP, that’s more than the entire state of Vermont and 97 countries in the world. Job creation of 5.5 percent in the Lehigh Valley since the Great Recession of 2008 outranked every other region in Pennsylvania. The next highest was the Lancaster region with 4.5 percent job growth.

Most importantly, the growth has been broad-based and balanced. The Lehigh Valley is not just a one or two industry economy. All of our eggs are no longer in a single basket.
GDP in the Lehigh Valley is very balanced in four economic sectors with manufacturing at the top generating $5.6 billion in economic output. Not far behind is the financial and real estate sector with $5 billion of GDP, followed by education and health care with $5 billion and professional and business services with $4.9 billion.

Health care still leads the way in the number of jobs with about 55,000. The growth of e-commerce drives the industrial economy, and the Lehigh Valley’s location in the middle of the Northeast with 40 percent of American consumers within an 8-hour truck drive, is the fastest growing sector.

Since 2014, 10 million square feet of industrial space has been added in the Lehigh Valley, leading to the region being deemed a new Inland Empire of the Northeastern U.S. There is another 6.1 million square feet of industrial space under development.

Not all of the industrial space is for e-commerce and warehouse centers. Manufacturing is a big part of the industrial market. There are more than 680 manufacturers in the Lehigh Valley employing about 32,000 workers. The products produced here cover a wide range of goods from medical devices to food and beverage to traditional heavier manufacturing like cement, Mack Trucks, and metals.

As the industrial base and manufacturing have grown, contrary to what is taking place across many areas of the U.S., there has been a rebirth and resurgence in the Lehigh Valley’s three cities of Allentown, Bethlehem and Easton. Riding a groundbreaking state economic incentive, which created a 130-acre Neighborhood Improvement Zone in the downtown and on the Lehigh River waterfront, Allentown has seen more than a $1 billion in new office, residential and downtown development, including the 10,000-seat PPL Center arena.

City Center Development has led the way in developing a new skyline and luring major companies and institutions back to the downtown of the state’s third-largest city, along with building new apartments for Millennial workers and Baby Boomer retirees.

Easton has taken full advantage of its river town vibe developing a wide variety of restaurants, shops, and nightlife to go with the Crayola Experience and State Theater. Bethlehem has continued its urban growth on both sides of the river as the former lands of Bethlehem Steel Corp., which stretch for 1,800 acres on the South Side of the city, have become a nearly fully redeveloped industrial and commercial job center. New apartments and townhouses, along with an office complex, are being added to the core of the South Side neighborhood near the Greenway walking path. Lehigh University and St. Luke’s Hospital will be the lead tenants in the new 127,000 square foot Greenway Park office building, anchored by a new municipal parking garage.

No matter where you look in the Lehigh Valley the landscape is changing, and jobs are being created, and the rest of the world has begun to take notice.

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Searching for Your Dream Home?

 Make Sure You’re Prepared It’s home buying season! While interest rates have risen slightly, they continue to remain low which has fueled buyers to look for homes. Currently, we are seeing the demand for homes listed for sale exceeding supply, so it is important you are properly prepared to start the home buying process. Most […]

 Make Sure You’re Prepared

It’s home buying season! While interest rates have risen slightly, they continue to remain low which has fueled buyers to look for homes. Currently, we are seeing the demand for homes listed for sale exceeding supply, so it is important you are properly prepared to start the home buying process.

Most often buyers look for a home before contacting a lender to be pre-qualified or pre-approved for a mortgage; however, it is important to know how much of a home you can afford to buy before you begin the search. Buyers need to realize how much money will be needed for a down payment and closing costs as this impacts the amount for which you will be approved. Many times, people qualify for a higher price home based on income, but do not have the adequate funds for down payment and closing costs and realize too late that their “dream home” is, in fact, out of reach.

Unless you can make an all-cash purchase, it is important to be pre-qualified or pre-approved for a mortgage before you begin to look for a home. This will show you are a qualified buyer and allow your realtor to offer a copy of the pre-qualification or pre-approval letter to the sellers.

What is the difference between Pre-Qualification and Pre- Approval?

For a pre-qualification, a tri-merged credit report is pulled which is a credit report from all three credit bureaus consolidated into one. Most often the information needed is obtained in a phone call between the borrowers and the mortgage consultant. Based on this verbal conversation, the consultant can work the numbers and issue a pre-qualification. This is done without seeing documentation proving the borrowers’ income and assets. Instead, the pre-qualification is provided based on the information provided, which will be verified when you apply for the mortgage. In most cases, a pre-qualification can be done quickly, usually within hours.

For a pre-approval, there are additional steps taken. Like is done for a pre-qualification, borrower information is obtained, and a credit report is pulled. In addition, all supporting documentation is collected such as recent pay stubs, W-2’s, tax returns, bank statements, driver’s licenses, etc. These are processed and underwritten which provides the seller and realtors with confidence the pre-approval is accurate, and it is likely the sale will go through.

Another benefit of getting pre-qualified or pre-approved is that you will know what your monthly payment will be. To calculate the amount of your pre-qualification or pre-approval your total housing debt needs to be determined. This includes estimates for annual property taxes, homeowners’ insurance, and mortgage insurance. These expenses are then added to the anticipated monthly principal and interest mortgage payment to determine your total monthly cost. Knowing this figure can help you determine what will work for your budget. You can then shop for homes in the price range with which you are comfortable.

One thing to keep in mind is that property taxes can vary greatly depending on the county, city, borough or township and school district in which the property is located. When looking at homes always ask your realtor how much the taxes are on each property even if you are looking at homes in a similar price range all located in the same general area. Borough and township lines as well as school districts often divide neighborhoods and can impact taxes for similarly priced homes just a street or two apart.

Purchasing a home is likely one of the largest purchases you will ever make. While it can sometimes feel like an overwhelming process, working with the right mortgage consultant can help alleviate some of the stress and anxiety. Do not hesitate to ask questions, and then more questions, until you fully understand the details of mortgage for which you are applying. Your mortgage consultant should explain the process and be happy to answer questions. If you are ready to begin your home search, please contact me at 484-347-2586.

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