At Home Colorado: Boulder County Edition

Open Homes and Virtual Tour Quick Guide

Looking

Real Estate: Comparing Investments

Smart Home Gifts for Homeowners

Whether

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COLORADO HOME & REAL ESTATE

CONTRIBUTING WRITERS

Gabe Bodner

Tom Kalinski

Duane Duggan

Gabe Bodner

ADVERTISING CONSULTANTS

Thais Hafer

Toni McNeill

REAL ESTATE

Mary Romano

MANAGING EDITOR

Greg Stone

Submit your news or home-related events to gstone@dailycamera.com To advertise, call 303.473.1456.

MORTGAGE Are reverse mortgages expensive?

People ask me the question, are reverse mortgages expensive? I typically reply by asking the question, “compared to what”?

Everything has a cost, and a reverse mortgage is no exception. There are both up-front costs to getting a reverse mortgage plus there is ongoing mortgage interest and mortgage insurance (there is no mortgage insurance on the nonFHA reverse mortgages). So how do these costs compare with any other type of mortgage or home equity line of credit? There are both upfront costs and ongoing interest for any of these types of loan programs. The biggest difference is that you pay the interest monthly on a traditional mortgage, so the costs are spread out over a longer period which ultimately makes it seem like traditional mortgages are less expensive. However, have you ever added up the amount of interest you pay each month and multiplied it by 12 months – and then 10, 20 or over the course of 30 years? Yup, the costs for a traditional mortgage can be quite high but because they are spread out over an extended period it does not feel as expensive.

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In most cases, the upfront fees from a reverse mortgage can be financed into the mortgage so the homeowner does not have to use any cash out pocket. If a homeowner rolls the upfront costs into the reverse mortgage and they never make a mortgage payment for as long as they live in the home, and they live in the home for the rest of their life... they would never pay a penny to get the reverse mortgage. They will use some of the equity to cover the costs, but they are not using their cash which is far more valuable. In this case, I would say the reverse mortgage is quite possibly the cheapest

loan available.

You may argue that by using some of their equity to cover the fees, it costs them more equity than it would have cost them in cash. That might very well be true, but home equity is illiquid while cash is king and if they plan to live in the home for the rest of their life, their equity is unusable and worth far less than the value of having cash on hand. When the homeowner either passes away or permanently leaves the home, the estate will inherit the home and will decide if they want to keep the home and pay off the reverse mortgage or sell the home and pay off the reverse mortgage. It is certainly possible that the heirs may receive less equity, but it does not cost the homeowner any cash out of pocket in this case.

Furthermore, one could argue that the upfront costs can be recovered through home appreciation. The average home appreciation rate in the U.S. is around 4% historically. If you consider a $600,000 home, appreciating at 4% per year on average, that is around $24,000 of home appreciation in one year. If the upfront costs for a reverse mortgage are around $21,000, and the home appreciates $24,000, I would argue that the breakeven for the upfront costs is under one year to recover the costs based on a 4% home appreciation rate.

Lastly, I go back to my initial question, compared to what? Meaning, what are the other options you are considering?

Are you thinking of selling your home instead to get access to your home equity? If that is the case, you must also consider the costs of selling your home.  There are not only costs for Realtors but there could also be capital gains taxes that you must pay when you sell your home depending on your cost basis.  Additionally, what is the cost to purchase a new home or to rent? Renting can be even more expensive costing you even more of your equity, and be riskier due to rising rents.

In the end, the costs of a reverse mortgage might be higher than a traditional mortgage. Let’s consider an example: if you have a $300,000 mortgage at 5%, you are paying around $15,000 in interest in the first year alone. With a traditional mortgage, you MUST pay your lender every single month both principal and interest. The interest is an ongoing cost that must be paid every month until the loan is paid off. Over the 30-year term, on a $300,000 mortgage, you will pay around $137,000 in interest over 10 years and around $280,000 of interest in 30 years. So do you think a 30-year fixed rate mortgage is cheaper than a reverse mortgage with no monthly payments?

Footnote: Please note that every situation is different, and you should speak to a reverse mortgage specialist about your specific situation. The reverse mortgage does not require you to make any mortgage payments as long as you live in the home, but you are still required to pay the property taxes, home insurance, HOA dues and home maintenance.

Gabe Bodner is a Retirement Mortgage Planner in Boulder. Gabe utilizes the latest research from the top researchers to assist his clients to Live for Today and Plan for Tomorrow. To reach Gabe, call 720.600.4870, e-mail gabe@bodnerteam.com or visit reversemortgagesco.com.

GABE BODNER

Have you noticed?

We’re living in the future. Just look at the smart home gadgets for the year. You’ll want them all – and homeowners on your gift list would enjoy these, too. But whether your gift recipient owns their home, lives in a dorm, or a rented apartment, here are our favorite smart gift ideas suggested by PC Magazine.

Smart speakers: the ultimate atmosphere enhancer

Nothing brings enjoyment like mood-enhancing music and wireless speakers. Many speakers meet the need, but PC Magazine reports the stand outs as the second-generation

Sonos. And, in keeping with a future-forward perspective, these speakers offer voice control through Alexa or Google Assistant.

But why stop at music? Smart speakers can also enable you to control most of your home gadgets with your voice. Google’s line of Nest Hub

speakers and smart displays range from big room sound to the smaller Nest Audio, Nest Mini, and Nest Hub.

Keeping your smart display at the heart of your home: in the kitchen

Ever been on kitchen duty and wish you could enhance your tidying activities with the news, a movie, or a cooking show? Enter the Echo Show 8 smart display. Ask Alexa to play the news while you’re washing dishes, search for and save recipes, and add items to your shopping list.

Robots to vacuum, mop and empty themselves

The Jetson’s popular family cartoon pegged the future, and we’re still trying to catch up. In a true Jetsons Rosey the Robot moment, cleaning robots are

future-vision come true. Now it’s time to level-up with a oorcleaning robot that also cleans itself. The Shark IQ Robot stores a month’s worth of dust and debris in a bag-less base. You empty the bin once a month and schedule cleaning of targeted rooms for cleaning and virtual no-go zones.

But why stop there? The Samsung Jetbot Mop scrubs oors and walls.

Dog camera by Furbo

Dog owners, treat yourself and your best friend to this one. This camera doubles as a dog sitter and indoor home security camera with barking alerts and the ability to hear and talk to your pooch — and toss them treats from your phone. This camera offers a 1080p livestream video to watch your

– See Page 14

TOM KALINSKI

(Photo: John Tekeridis/Pexels). CONTINUED

REAL ESTATE INVESTING Comparing real estate investments

calculates the cap rate, you have garbage in, garbage out. Therefore, for this rule of thumb to have the most meaning to an individual investor, it is best to try to figure out as closely as possible what the expenses are for each property and add realistic estimates for total expenses for each property analyzed. Its other drawback is that it only considers rent, expenses, and price, out of all the factors listed above.

Cash on Cash

DUANE DUGGAN

The real estate investment market can move very quickly. When an attractive investment property comes up, there will often be multiple offers in the first few days on the market. Therefore, as an investor, you need to be able to analyze the investment as quickly as possible to determine if it is right for you.

There are several rules of thumb that help you compare different investment properties. The perfect comparison would account for all factors involved in a real estate investment: rent amounts, purchase price, initial investment, appreciation, depreciation, expenses, loan amount, holding period, time value of money, exact future sales price, and tax liability upon sale. None of the following methods are “perfect” comparisons. They all have their advantages and disadvantages.

Gross Rent Multiplier (GRM)

The most commonly used rule

of thumb is called the gross rent multiplier. It simply compares the price of the property to the annual gross rent. Part of the reason it is so popular as an investment measure is that on each listing sheet in the local area Multiple Listing Service (MLS) for income property, a GRM is calculated by the MLS system and shown on the listing sheet. In general, the lower the GRM, the better the value and rate of return on the dollar invested. Its drawback is that it only considers rent and price out of all of the factors listed above.

Capitalization Rate (Cap Rate)

This is popular because it is also easy to compute. It is arrived at by dividing the Net Operating Income (NOI) by the price. It is also indicated on the MLS sheet for each property. In theory, it is a better measure than the GRM because it takes into account the Net Operating Income (rent less the expenses of the property). The problem is that the expenses of the property are rarely reflected accurately in the MLS and are often inaccurate even when they come directly from the owner. If the expenses are in error, and the MLS system

Cash on Cash is one of the easiest factors to compare directly with a more liquid investment. Simply take the annual cash flow after expenses but before taxes and divide it by the initial investment. The result is a percent return, which you can compare to the investment where the cash is sitting prior to investing in real estate. The drawback is that it only considers rent, expenses, and initial investment, out of all the factors listed above.

Debt Coverage Ratio

When applying for a loan on a multi-unit or 5+ unit, most lenders will consider a ratio called the debt coverage ratio. This ratio compares Net Operating Income (NOI) to the principal and interest payment. Lenders will typically want to see a ratio of 1:1.2. Another way to look at it is that the NOI must be 120% of the monthly principal and interest payment. Lenders will be using their own formula for computing NOI. Sometimes the biggest variable will be an estimate for expenses and vacancy allowances.

Internal Rate of Return (IRR)

Probably the best comparison of all used by the most serious investors is the Internal Rate of Return (IRR). In general, the IRR is probably utilized the least because it is the hardest to calculate. This comparison

considers many more of the factors listed above, but its accuracy is limited by the accuracy of expense information available, correct mortgage figures, accuracy of prediction of future cash flows (rents and future sales price), accuracy of predicted investor tax bracket at time of sale, etc. Even though the theory behind the IRR is great, it is still just a guess about how the property might perform in the future. The best example of how inaccurate it might be is the appreciation factor. Let’s say in your analysis of past data, the appreciation rate has been 8% a year. Just after purchasing it, the real estate market slows, and the appreciation rate is actually 4% per year over the ownership period. The difference between those two numbers significantly affects the IRR. Using IRR does, however, provide a great opportunity to enter “real numbers” into the formula after the property has been owned for five years, sold, and the taxes paid. Using those “real numbers,” you can truly compare a real estate investment to other investments that competed for the investment dollars five years ago.

There are several products that have been developed to help you do an Internal Rate of Return analysis. If you are interested in that, you can go to landlordsoftware.com and check out the various products available.

When you are purchasing investment property, be sure to consult your REALTOR®, CPA, and other investment advisors to make sure the property is right for you.

Duane has been a Realtor for RE/MAX of Boulder since 1982. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail DuaneDuggan@boulderco.com, call 303.441.5611 or visit boulderco.com.

When an attractive investment property comes up, there will often be multiple offers in the first few days on the market. Therefore, as an investor, you need to be able to analyze the investment as quickly as possible to determine if it is right for you.

NEW HOME BUILDERS / COMMUNITIES

BOULDER, BROOMFIELD & LONGMONT AREA

BOULDER

1 Velo Condos Builder: Thistle Velo LLC

BROOMFIELD

8 Baseline Colorado Builders: Boulder Creek Neighborhoods, Meritage Homes, Thrive Home Builders

7 Vive on Via Varra Builder: Meritage Homes

ERIE

22 Coal Creek Commons Builder: Century Communities 23 Colliers Hill Builders: Boulder Creek Neighborhoods, KB Home, Richmond American 20 Compass Builder: Lennar 21 Erie Commons Builder: Boulder Creek Neighborhoods

Our region is home to more than 300,000 residents and includes some of the most diverse, natural landscapes and sustainable development along the Norther n Front Range of Colorado From open space, land use and sustainability policies to forwardthinking and compassionate human services programs, our city and town gover nments help foster a vibrant, healthy and active community It’s no wonder why those who live here stay and why our the area is coveted as a place to relocate to Here we highlight a selection of the area ’ s new home communities and which builders are building where.

To view new home communities and builders across the Colorado Front Range, view our interactive map online at: www AtHomeColorado.com/NewHomeMap

24 Erie Highlands Builder: Oakwood Homes 27 Erie Village Builder: Porchfront Homes 18 Flatiron Meadows Builder: KB Home, Taylor Morrison, Toll Brothers 26 Morgan Hill Builder: Lennar 19 Rex Ranch Builder: Taylor Morrison 25 Westerly Builder: McStain Neighborhoods, SLC Homes, Wonderland Homes 28 Wild Rose Builder: Lennar

FIRESTONE

9 Barefoot Lakes Builder: Brookfield Residential, Creekstone Homes, Lennar, Richmond American Homes

FREDERICK

10 Seasons at Silverstone Builder: Richmond American Homes

LAFAYETTE 15 Blue Sage Builder: Markel Homes 16 Avalon Meadows Builder: Von’s Colorado Concepts 17 Silo Builder: Cor nerstone Homes 14 Silver Creek Builder: Markel Homes

LOUISVILLE 13 North End Builder: Markel Homes

SUPERIOR

3 Downtown Superior Builder: Thrive Home Builders, Remington Homes

4 Heights at Downtown Superior Builder: Toll Brothers

5 Lanter ns at Rock Creek Builder: Boulder Creek Neighborhoods

6 Montmere at Autrey Shores Builder: Koelbel

2 Rogers Farm Builder: Boulder Creek Neighborhoods

LONGMONT

11 Highlands at Fox Hill Builders: Dream Finders Homes, Landmark Homes 12 Parkside Builder: Coast to Coast Development 29 Terry Street Townhones Builder: New Leaf Properties

“We originally thought we did not need an agent to help us with our new home purchase and after several months of frustration, a friend suggested we contact Mar y at Boulder Home Source, within a month she helped us find the perfect new build and negotiated a lower rate and upgrades that we never expected.” The Smiths

COVERPROFILE

The Bernardi Group

Marketing Feature

Coldwell Banker Realty agent Karen Bernardi has built her business from the ground up. A tenacious self-starter, Karen juggled the demands of being a working single mom with teaching herself everything she needed to know about real estate. A successful agent for the past 35 years, Karen now leads the award-winning Bernardi Group and belongs to the prestigious Coldwell Banker® Society of Excellence, awarded to less than 1 percent of agents globally. Having sold more than

market.

Karen has built a team of experts for the group’s clients. For sellers, the team’s extensive market knowledge, negotiating skills and marketing skills including home staging, videography, photography, digital ads and more, help sell homes quickly and at a maximum price. Sellers also have access to a listing manager and closing manager -- invaluable teammates who help get homes on the market

a half billion dollars in real estate sales over a three-year period, her name is synonymous with the Colorado real estate

The team at The Bernardi Group at Coldwell Banker. (Photo courtesy: The Bernardi Group).

Courtney Wentworth (Left) and Madison Cervo (right) discuss with Karen Bernardi (center) about the year in real estate. (Photo courtesy: The Bernardi Group).

and who negotiate offers. Buyers agents work tirelessly to find clients’ dream homes, and also use top notch negotiating skills. These services are unmatched in the industry, with the added benefit of around-the-clock availability.

In addition to its real estate expertise, The Bernardi Group

enjoys giving back to the community. Their end of summer party was a fundraiser for the Community Foundation’s Marshall Fire relief fund. They also plant 25 trees for every house that they sell. Karen is a patron of the Emergency Family Assistance Association – an organization that helped her

years ago. Recently, the team brought holiday toys to the organization. She also supports Intercambio, a nonprofit organization providing cultural integration and English classes to immigrants in Boulder County.

And, the Bernardi Group truly enjoys working together as a team to make the real estate

dreams of local home buyers and sellers come true.

For more information on The Bernardi Group at Coldwell Banker, visit 2700 Canyon Blvd., #200 in Boulder, call 303.402.6000 or go online to thebernardigroup.com.

Brie Jones, Stephanie Borge, Rachel Rasmussen, Aidan Dougall. (Photo courtesy: The Bernardi Group).

Alyssa Dean, Courtney Wentworth, Karen Bernardi, Madison Cervo, Megan Evoe. (Photo courtesy: The Bernardi Group).

DESIGN RECIPES

Start the new year off right with this home checklist

By Cathy Hobbs Tribune News Service (TNS)

Ready for that feeling of “out with the old, in with the new”? We’ve all heard of New Year’s resolutions. But what about fixes for your home? The back-burner items that you have been putting off for months can now become front-burner fixes in the new year.

Not sure where to begin? Here are 10 items you can put on your to-do list to get your new year off to a good start.

Winterize

From making sure seals around windows are tight to winterizing outdoor faucets, protecting your home from the elements can prevent potential issues.

Refresh and swap

Now is a good time to refresh and swap out old or worn items and replace with new and fresh ones.

Check the filters in your HVAC unit

So often, these filters get clogged simply because they are not checked and changed on a

Smart home gifts

pet morning, afternoon, or night and lets you toss treats to your furry friend remotely.

Devices to protect you from porch pirates

Want to or not, we order online for everything from household items and groceries to holiday gifts. Video doorbells help keep tabs on package deliveries to your front porch. The Toucan Wireless Video Doorbell is easy to install, offers a remote chime, and works with Alexa and Google Assistant. Other good choices include Google Nest Hello Smart Wi-Fi and RemoBell

regular basis.

Prune and mulch

This time of year, it is best to cut back some of your landscape and mulch to help protect plantings for the warmer months.

Donate

Those extra items around the home causing clutter can easily be put to better use by donating them to your favorite charity.

Do an energy assessment

One of the most costly aspects of home ownership is heating and cooling. An energy assessment

can help you discover potential deficiencies.

Check for leaks

Undetected, water leaks can cause severe damage. This time of year is a perfect one to make sure your home is properly sealed.

Change batteries

From the smoke detector to the carbon monoxide detector and flashlights, now is an ideal time to make sure everything is in working order.

Plan for spring

Now is a good time to plan

(continued)

S, a slim device that gives you on-demand HD video, free cloud recording and support for Alexa and Google voice commands.

Security cameras to keep your home safe

The best security cameras not only trigger motion-detected video capture, but also cast a bright light on your property when movement is detected. The Arol Pro 4 Spotlight Camera is wireless, easily installs and offers plenty of integration options with other smart home devices. Wyze Cam Outdoor delivers sharp 1080p video and SimCam

1S does all of the great stuff of other systems plus uses face recognition to tell you who is coming and going.

And the list goes on.

Santa knows you when you’re sleeping — and now, so can you. You can track how long you sleep and when you snore, cough or breathe overnight with the second-generation Google Nest Hub.

Why not enhance your outdoor environment especially during our dark winter months? You can enliven your backyard with the Govee Lynx Dream String Lights featuring voice- or phone-controlled multicolor

those spring outdoor projects so that as soon as the weather warms up, you are ready to go.

Bring the outdoors

in

Many of your treasured outdoor items, from furniture to outdoor equipment, may not be able to brave the elements, so it may be best to bring them indoors.

Cathy Hobbs is an Emmy Award-winning television host and a nationally known interior design and home staging expert. Email info@cathyhobbs.com or visit her website at cathyhobbs.com.

LEDs.

Yes, the future is here to stay.

See the full list of gift suggestions at www.pcmag.com/ picks/the-best-smart-home-giftsfor-living-in-the-future.

Tom Kalinski is the broker/ owner of RE/MAX of Boulder, the local residential real estate company he established in 1977. He was inducted into Boulder County’s Business Hall of Fame in 2016 and has a 40-year background in commercial and residential real estate. For questions, email Tom at tomkalinski33@gmail.com, call 303.441.5620, or visit boulderco.com.