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Condominiums and co-ops are great choices for first-time homebuyers, singles, couples and roommates, and down-sizing families, but they are very different types of property ownership.

Condominiums are usually located in the most in-demand areas, near plentiful jobs and entertainment districts. You’ll own your unit and share amenities with other owners such as garage parking, fitness rooms, and swimming pools. You’ll pay a monthly, quarterly, or annual homeowners association (HOA) fee which is levied to take care of common areas. HOA fees vary widely, depending on amenities and the market.

As an investment, a condo owner is free to rent out their unit, but some HOAs impose limits on the number of units within the community that can be rented out or restrictions that prevent short-term rentals or the use of some amenities, because a high number of renters raises the HOA’s exposure to risk.

Co-op owners have a percentage ownership of their building and property, based on the size of their units, but they don’t own their individual units. You’re more likely to run into co-ops for sale in the Northeast, particularly New York City, where co-ops are operated like a corporation in which homeowners are shareholders. They have the right to approve new owner-occupants based on financial requirements and they can reject applicants they don’t like or trust. They can’t discriminate against protected classes, such as race, creed, age or gender. Most co-ops don’t allow renters; if they do, they impose restrictions such as rental terms and credit worthiness.

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Your return on investment (ROI) is how much money you make or lose on a property investment. It should be enough to cover expenses and have positive cash flow. ROI can vary greatly, depending on the formulas you use.

The 2% rule. This rule states that the monthly rent for a rental property should be at least 2% of its purchase price. If you paid $300,000 for your home, you should be able to rent it for $6,000, as $300,000 X 0.02 = $6,000. This figure may be unrealistic in most markets.

The 1% rule. Let’s say that monthly rents for single family homes like yours are closer to $3,000. That’s only a 1% return on your $300,000 home. Is it worth it? Yes. If you combine the costs of your first mortgage and equity loan at $240,000, and the projected monthly rent of $3,000, you’ll net $600 a month in addition to the renter paying your mortgages. $240,000 X 0.01 = $2,400. $3,000 – $2,400 = $600. $600 X 12 = $7,200.

ROI for rental properties is determined by subtracting the total operating costs from the total rental income for the year and dividing this number by the mortgage amount. Operating expenses don’t include mortgage costs, but it does include repairs, maintenance, taxes, utilities, vacancy losses, management fees, etc. $3,000 X 12 = $36,000. Monthly operating costs are $800 X 12 = $9,600. $36,000 – $9,600 = $26,400. $26,400 / $240,000 = 0.11 ROI.

ROI should increase the longer you own the property.

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When you choose to remodel your home, it’s crucial that you hire the right contractor for the job. You can get referrals from friends, family, or your Berkshire Hathaway HomeServices network professional. But there are other ways to get information so you can make the right choice.

It’s a good idea to interview at least three contractors, including your referrals. Depending on your state’s licensing rules, you should know the rules and regulations for licensing professionals. The purpose of licensing is to ensure that “the contractor meets the city’s, town’s, or state’s requirements for working on residential and commercial construction projects.” Not all states require contractors to be licensed, and some focus only on specialties such as plumbing, electrical and HVAC, which makes it harder to ascertain a contractor’s expertise.

Angi.com offers a convenient state-by-state list of contractor license requirements and a license check tool with “links to the regulatory agencies’ real-time license verification websites” so you can confirm the contractor’s status before you hire. Some states also provide certifications that show the contractor has completed educational and work requirements for their specialties. Some regulators require contractors to carry general contractor insurance, provide references, financial statements, and proof of registration.

Ask for references and to see a portfolio of completed jobs. The contractor should agree to provide a written, detailed contract outlining the work to be done, the costs for each step, quality of materials to be used, completion dates, payment and inspection schedules, warranties, and means of communicating.

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One truism about the housing market is that it changes constantly to favor sellers or homebuyers. Seldom does a balanced market exist where buyers and sellers are more evenly matched except for summertime, when schools are out. That’s why it’s the busiest of homebuying seasons.

To be a better prepared buyer, you should get prequalified for a mortgage loan, and if costs are too high, you should lower your debts and pump up your savings for a down payment until you’re ready to buy.

If you’re looking to sell, you should get your homes in top condition so you can command the highest price possible. But the most important step is to build a strong relationship with your Berkshire Hathaway HomeServices network professional.

Your broker or agent can help you, whether you’re a buyer or seller. With a vast amount of data at their fingertips, they can keep you abreast of any changes in your local market. This spring, for example, the share of homes with price reductions was the highest since January 2017 and mortgage interest rates dropped slightly, which enticed sidelined buyers back into the market.

Freddie Mac predicts that interest rates won’t drop by much before June 2024, so homebuyers and sellers should be aware of the importance of having good credit. As banks tighten lending standards for unsecured loans like credit cards, they’ll favor purchase mortgages for borrowers and home improvement loans for sellers who’ve protected their credit without high balances, late payments or defaults. Mortgages are also secured by the borrower’s home.

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Binge-watching streaming channels is so popular that homeowners are letting gigantic black holes take over their living spaces. The problem is that most homes weren’t built to comfortably accommodate 85 to 97-inch TVs; owning one means making it an awkward focal point above the fireplace that causes neck strain.

Is there a better way? Absolutely. One of the most important interior design principles is scale. Just as too many small items can clutter a space, a single large item like an oversized TV can overwhelm a space unless you can make it look intentionally and elegantly planned.

One way is to purchase a “framed” TV such as the Samsung The Frame, or custom frame any flat screen TV after market. The advantage is that your TV becomes a gorgeous piece of framed art on USB when you’re not watching the screen. The unit lays flush against the wall and any wiring can be hidden in the sheetrock. You can even make the TV/art piece part of a gallery wall or make a bold statement with an accent wall with the TV/art piece as the focal point.

Building a solution is also an option. A good carpenter/contractor can design a wall of built-ins to frame your TV with books, collectibles, and family photographs and create a sliding door or cabinet doors to hide your TV when not in use.

And if you’re selling your home? You can tell potential buyers that the TV stays as a bargaining tool.

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Rent-to-own, or lease purchase, is a legal means of buying a home with a future closing date, usually one to five years from the date of the rent-to-own contract. Until then, the homebuyer rents the home before applying for a mortgage to buy the home. The concept can benefit both homebuyers and home sellers, but there is loss potential, too.

Here’s how it works: The renter pays the homeowner a non-refundable option fee of 1% to 7% of the purchase price of the home. The renter also pays a rent premium above the rental amount, and the rent premiums plus the option fee go into an escrow account that can be used to make the down payment or reduce the sales price of the home. This allows the renter the chance to build up their savings and/or improve their credit history. If all goes as planned, the renter will be approved for a mortgage loan to pay off the seller, but sometimes, buyers lose their jobs or fail to qualify for a mortgage loan and must forfeit the money in the escrow account.

Lease purchase agreements are often used by family members to help a loved one get into a home sooner. They also become more widely used in slower markets, when sellers are having trouble getting the price they want for their homes. Tech companies such as Divvy Homes, ZeroDown, Dream America, and Landis are trying to make homeownership easier by providing rent-to-own homes, advises NerdWallet.

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As a first-time homebuyer, you may be racking your brains trying to figure out how to make more money quickly for a down payment to qualify for a mortgage loan. You need to have cash tucked away that’s hopefully building interest, yet it also needs to be accessible in case the right home comes along and you need to act fast.

Thanks to low interest rates for over a decade (that disappeared with the rise in inflation after the pandemic), it’s been easy to put savings accounts out of your mind. Who cares about a yield of .03%? But as interest rates have risen, so have better returns on some savings accounts. High-yield savings accounts (HYSAs) or high-interest savings accounts, are a type of deposit account that gives you a greater return than a traditional savings account.

HYSAs are available at banks, online banks, and state and federal credit unions. You’ll be able to transfer money with an ATM card or online, and you’ll earn quite a bit more in interest, as much as 5% or 10 times the national savings account rate. You may pay fees, have restrictions on when you can take money out of the account, and you may have to maintain a minimum balance to avoid a monthly service charge. Your annual percentage yield (APY) can be tied to the amount you put into the account.

HYSAs are federally insured, so you can’t lose money, and you’ll earn compound interest for rapid account growth.

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When you put 20% down on a home using a mortgage loan, you own 20% and the lender owns 80%. As you make payments, most of the money goes to pay interest while some goes toward reducing your principal. Meanwhile, favorable market conditions may be increasing the market value of your home, giving you instant equity.

Equity is the amount of the home that you own, much like a savings account that pays interest on money you want to keep growing. After a few years, you may want to tap into that money to carry out home improvements, make a down payment on a second property, or pay off credit cards and other bills. Is it a good idea to use your equity?

The answer is this: you’re putting your home in deeper debt, so your reasons for using equity instead of another means of borrowing or consolidating must be worth the risk.

Home improvements are designed to add value to your home, a sure thing that will net you more money when you decide to sell it one day. Making a down payment on another home is riskier—as you’ll have two mortgages—but if you can afford it, you’ll have two properties potentially building equity.

Credit cards are unsecured debt so interest rates are high. Home equity loans are far less costly, so you could get much relief by paying credit cards off. However, you must avoid “reloading” the cards with new charges, which will take dedication and self-discipline.

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You’ve bought an older home that needs some work. How do you decide what needs redoing and how much money to spend?

The first rule of thumb is: don’t improve more than the best homes in your immediate neighborhood. A starter home, or a lot-value home, can be renovated to be attractive and functional, but keep in mind that if your future homebuyer wants a finer home, they’ll look at more expensive neighborhoods where all the homes are equally upscale.

If your house needs everything, tackle the changes that will make the most difference in your convenience, comfort, and utility, like the kitchen. Will you need new cabinets, countertops and appliances, or a whole new floorplan? Is there room to borrow space from another room? If so, a kitchen designer can help you plan, manage costs and get more storage and workspace. Realtor.com advises that you also have a plan B and C, in case what you want is too expensive or becomes unavailable. You can price high-end appliances, then choose less expensive back-ups. Ask your designer to provide a schematic with different price points.

Budgetdumpster.com recommends that you spend no more than 10% to 15% of your home’s value on any single room. If your home is valued at $400,000, your kitchen remodel should be no more than $40,000 to $60,000. If you also need to remodel baths, cut the total remodeling budget down to 10% per room, and set aside another 10% for unexpected expenses.

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For those who aren’t married, the housing market doesn’t have to pass you by: you and your significant other, best friend, family member, or business partner can purchase a home together as joint owners. Simply decide how you want to buy, use and, eventually, sell the property to determine what form of ownership goes onto the deed—as tenants in common, or as joint tenants with the right of survivorship.

As tenants in common, you both own shares of the property, you both have the right to use the property and you can make your own financial agreements. Either of you can sell your share of the property to a third party or pass your share to heirs.

Joint tenancy with right of survivorship (JTWROS) has specific requirements: each joint tenant must take title of their share at the exact same time, using the same legal instrument to create a JTWROS. Each tenant must have an equal interest in the property and can use and/or profit from the property equally, but shares cannot be sold or inherited, instead going to the remaining tenant(s).

The benefits of joint ownership are numerous as long as you each disclose your finances honestly and are willing to share the responsibilities of maintaining the property. You share the debt on the property, making it more affordable to own. Building equity leads to more financial security and having a clear deed that outlines your ownership rights helps to protect your interests and those of your partner.

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