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Some people collect luxury goods such as investment pieces. Think of a Birkin bag, art by the legendary Jean-Michel Basquiat or a Rolex. Anything considered timeless or high-quality and that appreciates in value can be called an investment piece.

The luxury market tends to be more resilient than other sectors during economic instability because of high demand, among other factors. That said, is this inflationary period a good time to invest in luxury goods?

Buying luxury goods amid inflation

The U.S. Federal Reserve has raised interest rates 11 times since March 2022 in an attempt to cool inflation. Interest rates are the highest they’ve been in 22 years, and consequently, we’ve seen the cost of borrowing increase and spending on nonessential goods decrease.

While Americans have cut back on spending, the demand for luxury goods is still strong. Research by J.P. Morgan shows a 7% year-over-year increase in the luxury goods market in the fourth quarter of 2022, despite significant price hikes.

Luxury brands raised the prices of their products by almost 17% in 2020 and early 2021 in response to lower sales during COVID-19, according to a 2022 study by KPMG International. This change is significant considering typical price increases are 5% to 10%. These price increases didn’t only benefit luxury brands; people who invested in these goods in prior years may have also seen gains.

Gloria H. Gill, a retiree who we spoke to on Facebook Messenger, said the value of her large classic Chanel bag has more than doubled in about seven years. Gill purchased the bag for $4,800 in Paris in 2016. It now has a market value of around $10,000.

“I have sold bags before, but I doubt I’ll sell this one,” Gill said. “It’s listed in my will, and my sons are aware of its high value.”

Luxury goods can sometimes hedge against inflation when they appreciate in value, says William Huston, founder of Bay Street Capital Holdings, which has offices in Los Angeles, New York and Fremont, California.

“These luxury goods, they do protect against inflation, but they don’t outperform the general stock market,” he says.

As with any investment, there are risks. As Huston points out, your money could potentially earn a higher rate of return elsewhere. Also, your item could get lost or destroyed, or it may be difficult to resell.

Assess your financial foundation first

Before investing in anything, assess your financial situation. For instance, is your emergency fund well stocked? Keep in mind that possessions are considered “illiquid assets” — not quickly convertible to cash if you need it in a pinch.

Also, saving for retirement comes before investing in luxury goods, says Dora Meyer, a certified financial planner at WellAcre Global Wealth Advisors in Santa Monica, California.

“Make sure you are taking advantage of any tax-advantaged accounts, so your 401(k), your Roth IRAs, before you look at investing in something like this. [And] your HSA,” she says.

Meyer also advises, “Be careful [with] buying on credit, especially in this environment when interest rates are a little bit higher.” And she recommends buying from a reputable source to avoid knockoffs.

Investing in timeless pieces

Valerie Schwank owns the Fashionista Consignment Boutique in Coconut Grove, Florida, where she buys and sells luxury goods. Schwank has seen a significant boom in her business since the pandemic began and is an advocate for investing in luxury pieces. She recommends buying timeless and high-quality pieces, as they tend to hold their value.

“I always recommend that you buy a staple,” she says. And by staple, Schwank means “the Chanel classic double flap, no-nonsense handbag, which has been around forever.”

Think about factors like the color and materials of items, too. That often differentiates timeless luxury goods from ones that won’t hold as much value over time. Keeping your items in good shape, especially if you plan to resell, is also important, Schwank says.

Calculating your potential returns

Research how an item has historically performed before purchasing to ensure it’s a worthwhile investment. You can go to luxury resale sites such as Vestiaire Collective, The RealReal and Rebag and check how pieces have appreciated over time.

Huston advises having a financial plan before making a luxury investment. “With the financial plan, you’d be able to see, ‘I’m 30 years old, I’m gonna save $300 a month,’” he says, as an example. That plan can give you context to decide, “’That’s a meaningful amount of money to me and I can afford that $300, and it’s better for me to save $300 in my 401(k) than to buy a watch,’” he says.

You can also improve your investment returns by negotiating when it comes to items like art, he adds.

“A lot of this luxury stuff is negotiable because again, it’s illiquid” and not easily converted to cash, he says. “So if you find the right person selling the right thing at the right time, you can get it for a really good value because they just want to get some of their money back.”

This article was written by NerdWallet and was originally published by The Associated Press.

Source: nerdwallet.com

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Pricing, Internal Audit, CRM, Home Insurance, Lead Generation Tools; Comp Survey; MBA’s Cost Per Loan Stats

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Pricing, Internal Audit, CRM, Home Insurance, Lead Generation Tools; Comp Survey; MBA’s Cost Per Loan Stats

By:
Rob Chrisman

Fri, Aug 18 2023, 10:49 AM

As numbers approaching a thousand head to Orange County, CA, for the California MBA’s Western Secondary, keeping an eye on the remnants of a hurricane, it is not an easy lending environment with mortgage rates at 20-year highs, firmly in the 7’s. Thomas Edison believed, “Vision without execution is hallucination.” Many owners of lenders and vendors had very good vision and execution some years ago when creating their companies. But thinking that 2020 and 2021 would continue indefinitely would have been classified as a hallucination, and obviously things have become much more difficult with many wondering where things go from here. I don’t have a crystal ball, but a certain percentage of those owners who deferred being serious about exploring a sale, waiting, until after the cycle was obviously on the downside, they’ve perhaps undermined an opportunity for negotiating more favorable deal terms. It can be argued that the smarter entrepreneurs engaged in company sale negotiations while industry mindset is mostly driven by prosperity. (Today’s podcast can be found here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades.)

Lender and Broker Software and Services

“No time for social media marketing? Introducing… Social Media Marketing for Busy Loan Officers. Tired of stressing over what to post on Facebook or LinkedIn? Want to grow your audience on Instagram without spending hours each week crafting the perfect post? With Be Loangendary, we do all of it for you. Here’s how: 1) Our team of mortgage copywriters and designers craft your social posts every week. 2) Once they’re perfect, we schedule and post to your social accounts. 3) You sit back, relax, and watch the “likes” start rolling in. With Be Loangendary, you get engaging mortgage content without breaking a sweat. That’s social media done for you. Want to get started? Enjoy a 14-day free trial on us!”

“Salesforce is committed to partnering with mortgage lenders to drive their technology transformation with modern solutions that are already in practice and serving many of the top mortgage lenders in the country. As part of its efforts to drive the industry forward through the adoption of a modern tech stack, Salesforce identified UMortgage to establish the precedent of utilizing its mortgage and lending software to its fullest potential to facilitate better client experiences. Using customized task management systems and automations within Salesforce, UMortgage has been able to achieve 300% year-over-year growth and near-perfect 95 net promoter score (NPS), an indicator of a best-in-class client experience. Check out the following link to learn more about the innovative technological systems that are helping UMortgage Loan Originators maximize their lead generation & conversion. With an investment in intuitive solutions, UMortgage is driving the mortgage industry towards a better future that enables brokers to thrive.”

We’re hearing that lenders are ramping up their tech stacks and (most importantly) focusing on the quality of the data powering that technology. If you’re considering taking your company’s tech stack to the next level, look for a property data provider that delivers the most comprehensive data through the best channels to meet your unique business needs. That’s why we’re highlighting First American Data & Analytics and its repository of more than 8+ billion recorded documents. First American is more than just a data provider. It offers end-to-end solutions for the mortgage lifecycle. From detecting fraud and risk to providing valuation solutions, First American powers lenders to make informed, data-driven decisions. If you’re ready to have access to the most accurate, complete, and current data, reach out to the team and get a data sample now.

“Lenders, the home insurance market is facing unprecedented volatility. We want to hear if it’s affecting your business and the closing process. Take our five-minute survey to share your thoughts. As a thank you, you can select to be entered to win a $100 Amazon gift card, compliments of Matic Insurance. Click here to begin the survey. Matic is a home insurance marketplace built for the mortgage industry. Learn how mortgage enterprises can implement a new revenue stream that helps borrowers navigate the insurance buying process. Book a demo today.

Wholesale lending is undergoing a transformation that will leave those who cling to outdated processes behind. Using bargain CRMs as electronic phone books or even worse, spreadsheets to track brokers, is a clear sign that your sales process is holding you back. Modern CRM technology like OptifiNow provides a comprehensive, out-of-the-box solution that helps wholesale lenders create a sales and marketing process that drives broker engagement and significantly increases loan volume. Download our guide to finding the right CRM for wholesale lenders to learn how to transform your wholesale business and stay ahead of the competition!

What’s an internal audit anyway and do you need one? An internal audit acts as a third line of defense for your mortgage operation. It provides comprehensive assurance based on the highest level of independence and objectivity to evaluate the effectiveness of management’s internal controls. This function should advise your mortgage operation on plans to achieve the company’s strategic, operational, financial and compliance goals. An effective internal audit should go far beyond just checking a compliance box; it should be an integral part of protecting your company. If you want to ensure you’re adhering to regulatory requirements and demonstrating good faith business practices, a Richey May internal audit is a good fit. If you’re looking to be Fannie Mae approved in the future or want to maintain your approved status, it’s required. If you’re unsure whether you need an internal audit, ask one of Richey May’s experts today or learn more here.

Pricing Products and Programs

“Lender Price introduces Composable Pricing UI, an innovative user interface that empowers lenders to effortlessly customize their pricing engine using No Code or Low Code options. With a variety of skinning options and increased flexibility, Lender Price users can now easily create a personalized pricing experience with an abundance of options to choose from. Surpassing the limitations of single UI platforms seen with competitors, the era of rigid, one-size-fits-all PPE’s is over. With a flexible pricing engine like Lender Price, users now have the ability to tailor their interface based on their individual needs and preferences. Composable UI represents a paradigm shift in digital lending technology UX, liberating both individuals and organizations from the constraints of single UI platforms,” said Dawar Alimi, Lender Price CEO. “With an abundance of options and unparalleled flexibility, users can personalize and take charge of their pricing experience.” Email us or request a demo today.”

In this market, hustle is everything. You can’t afford to waste a single deal or a single minute. That’s why ReadyPrice has launched its innovative new Shop, Lock & Deliver loan exchange platform, designed to help independent mortgage brokers like you save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders and all on a single platform, at no cost to brokers. It’s the industry’s most powerful universal delivery portal, and it’s already helping brokers around the country thrive and compete in even the toughest market environments. Multiple lenders. One platform. Zero b.s. Check ReadyPrice out today.

STRATMOR Comp Information and Survey

Yesterday I published, “What do underwriters and processors and LOs make? STRATMOR has the information, spelled out in a recent Perspectives piece.” Several wrote to say that there is a wide disparity in pay based on experience, at every level, and that averages may not be telling the whole story. Point well taken, although the drop in volume/units has not been matched by the drop in personnel. Stay tuned…

Information is critical in making payroll decisions. STRATMOR Group’s Compensation Connection® Study provides valuable insight into compensation components, incentive plan structures, role specifics and more, aggregated by company type, annual volume, and region. Prior three-year trending is also included on most metrics. Get the compensation data you need: sign up for the Fall 2023 Compensation Connection® Study today!

Lenders can Relive the 2nd Quarter of 2023

Spoiler alert: Losses continue but at a slower pace. The MBA has crunched the numbers of those surveyed and calculated that independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $534 on each loan they originated in the second quarter of 2023, an improvement from the reported loss of $1,972 per loan in the first quarter of 2023.

Marina Walsh, CMB, MBA’s Vice President of Industry Analysis and overall good person, summed up the Quarterly Mortgage Bankers Performance Report. “After 11 consecutive quarters of increases, origination costs declined by over $2,000 per loan. Volume picked up during the spring homebuying season and additional personnel were shed. However, the substantial cost savings per loan was not enough to put the average net production income in the black… Production losses were less severe than the previous two quarters and net servicing financial income was strong. Additionally, most mortgage companies in our survey managed to squeeze out an overall profit during one of the toughest times for the mortgage industry.”

Once again, servicing income helped big time. Think about that as companies sell it off. When the MBA looked at both production and servicing, 58 percent of companies were profitable last quarter, an improvement from 32 percent in the first quarter of 2023 and 25 percent in the fourth quarter of 2022. Still, the average pre-tax production loss was 18 basis points (bps) in the second quarter of 2023, compared to an average net production loss of 68 bps in the first quarter of 2023, and down from a loss of 5 basis points one year ago. The average quarterly pre-tax production profit, from the third quarter of 2008 to the most recent quarter, is 47 basis points.

“Total production revenue (fee income, net secondary marketing income and warehouse spread) decreased to 328 bps in the second quarter, down from 358 bps in the first quarter. On a per-loan basis, production revenues decreased to $10,510 per loan in the second quarter, down from $11,199 per loan in the first quarter.

“The purchase share of total originations, by dollar volume, increased to a study high of 89 percent in the second quarter. For the mortgage industry as a whole, MBA estimates the purchase share was at 80 percent in the second quarter, with the average loan balance for first mortgages increasing to $343,386 in the second quarter, up from $329,159 in the first quarter.

It ain’t cheap to do a loan. “Total loan production expenses (commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) decreased to $11,044 per loan in the second quarter, down from a study-high $13,171 per loan in the first quarter of 2023. From the third quarter of 2008 to last quarter, loan production expenses have averaged $7,236 per loan.

“Servicing net financial income for the second quarter (without annualizing) was $94 per loan, up from $54 per loan in the first quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $105 per loan in the second quarter, up from $102 per loan in the first quarter.”

For all the stats, there are five Mortgage Bankers Performance Report publications per year: four quarterly reports and one annual report. Contact Falen Taylor (202-557-2771). The reports can also be purchased on the MBA’s website.

Capital Markets

At this point it can be argued that the Fed doesn’t want to see higher long-term rates. But bond yields continue to rise across the board, impacting mortgage rates of course, continuing an upswing that began nearly three months ago at the beginning of the summer. In fact, the yield on the benchmark 10-year Treasury (US10Y) closed at 4.25% on Wednesday, the highest level since 2008. The upward march this week follows the release of the latest Federal Open Market Committee minutes, which stressed that additional interest rate hikes might be needed.

“With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy… Participants generally noted a high degree of uncertainty regarding the cumulative effects on the economy of past monetary policy tightening... and emphasized the importance of communicating as clearly as possible about the Committee’s data-dependent approach to policy and its firm commitment to bring inflation down to its 2% objective.”

Stronger-than-expected economic data continues to pour in, helping stock market prices, especially if you think the Fed to end its hiking cycle soon. Others say 10-year yields above 4 percent still present a good buying opportunity, in contrast to the potential rewards from pricey stocks and multiples that might not be as appealing. But it seems that bond investors have shifted to a “higher-for-longer” narrative coming out of the Fed, causing nominal rates and real rates to keep moving higher. Not good for housing affordability.

Strong economic data continued yesterday with initial jobless claims -11k and Philly Fed beating expectations by 22 points. That helped to lift benchmark 10-year U.S. Treasury yields above 4.30 percent as MBS once again sold off across the coupon stack. The recent surge in U.S. mortgage rates to anywhere between 10-month and two-decade highs, depending on who you ask, has pushed housing affordability to the lowest level in nearly four decades. Yesterday also brought another troubling sign for the Chinese economy as Beijing authorities are said to have told state-owned banks to step up intervention in the currency market in a push to prevent a surge in yuan volatility.

With no major data releases or Fedspeak today, the market will be left to its own devices. We begin the day with Agency MBS prices better from Thursday afternoon by .250, the 10-year yielding 4.22 after closing yesterday at 4.31 percent, and the 2-year at 4.91: yield curve inversion is alive and well without a recession.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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Everyone seems to agree that Fannie Mae and Freddie Mac need to go away. Well, maybe not the hedge funds that hold their stock.

Nevertheless, there are still plenty of concerns regarding their possible exit, one being the impact to mortgage rates.

While still historically low, everyone agrees that interest rates would rise if the pair were to be replaced by a new housing finance system, something that could become a reality if the Johnson-Crapo housing reform bill eventually becomes law.

This week, the bipartisan legislation will be discussed in front of the Senate Banking Committee, and opponents could point to unaffordable rates as a reason to shoot down the bill.

Interest Rates Could Be 2% Higher?

Last week, Fannie Mae and Freddie Mac released cost estimates if the legislation were to be enacted.

They included low-cost, mid-cost, and extreme-cost estimates. Under the low-cost scenarios, interest rates would barely budge.

But if Freddie’s extreme-cost scenario were realized, mortgage rates would rise more than 2%, enough to really turn housing affordability on its head.

Of course, there’s a reason it’s referred to as “extreme.” It probably won’t go down that way, though legislators do need to get the details right to avoid any uncertainty.

Moody’s Analytics co-founder Mark Zandi weighed in on the subject, arguing that interest rates probably won’t rise all that much as long as capital requirements are ironed out beforehand.

Long story short, raising the required level of capital will lead to higher interest rates, and how those capital requirements are implemented is key.

How About a Half Point Instead?

While that’s still unclear, Zandi and his colleague Cristian deRitis made some assumptions about the cost of various forms of capital and found that rates probably wouldn’t climb much higher.

In fact, they believe the Johnson-Crapo legislation would likely only cause mortgage rates to rise anywhere from 41 (liberal case) to 58 (strict case) basis points.

So instead of enjoying a 4.5% rate on your 30-year fixed mortgage, you’d be subjected to a rate of about 5% or 5.125% instead.

On a $200,000 mortgage, you’d have to pay another $60 or so each month, which probably wouldn’t make or break most borrowers.

Yes, it’s still meaningful, but the current housing finance system puts taxpayers at risk, which clearly isn’t favorable either.

For the record, Fannie and Freddie’s mid-cost estimates are pretty similar to what Zandi came up with, so the consensus is that rates wouldn’t rise all that much.

As you can see from the chart above, most scenarios aren’t that apocalyptic, so we probably don’t have too much to worry about on the interest rate front.

Additionally, Zandi noted that any increase would be phased in over as long as a decade, surely enough time for the market to adjust if need be.

Still, this is all very convenient to consider when mortgage rates remain in unprecedented territory.

Assuming they eventually rise back to more normal levels, this legislation could make housing increasingly expensive and force more borrowers to stay in their homes longer than they normally would.

Source: thetruthaboutmortgage.com

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Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

When I became an accredited investor, I found myself among an elite group with the financial means and regulatory clearance to access investments that many couldn’t. This opened doors to exclusive realms like hedge funds, venture capital firms, specific investment funds, private equity funds, and more.

Even though I had this “exclusive access” it took me awhile to start investing in alternative asset classes.

The Securities and Exchange Commission states that as an accredited investor, I possess a level of sophistication that equips me to craft a riskier investment portfolio than a non-accredited investor. While this might not be universally true for everyone, in my case, I had demonstrated the financial resilience to bear more risk (see barbell investing), especially if my investments took an unforeseen downturn.

One of the intriguing aspects I discovered was that investment opportunities for accredited investors aren’t mandated to register with financial authorities. This means they often come with fewer disclosures and might not be as transparent as the registered securities available to the general public.

The underlying belief is that my status as a sophisticated investor implies a deeper understanding of financial risks, a need for less disclosure on unregistered securities, and a conviction that these exclusive investment opportunities are apt for my funds.

On a personal note, as a practicing CFP®, I hadn’t always worked with accredited investors. Early in my career, I didn’t quite grasp the allure. But as time went on, I began to see the broader spectrum of investment options available to accredited investors.

As I learned more the clearer it became why this realm was so sought after. The variety and potential of these exclusive opportunities were truly eye-opening, reshaping my perspective on the world of investing.

Introduction to Accredited Investors

An accredited investor is an individual or a business entity that is allowed to trade securities that may not be registered with financial authorities. They are entitled to this privileged access because they satisfy one or more requirements regarding income, net worth, asset size, governance status, or professional experience.

The concept of an accredited investor originated from the idea that individuals or entities with a higher financial acumen or more resources are better equipped to understand and bear the risks of certain investment opportunities.

Historically, the distinction between accredited and non-accredited investors was established to protect less experienced investors from potentially risky or less transparent investment opportunities.

Regulatory bodies, such as the U.S. Securities and Exchange Commission (SEC), have set criteria to determine who qualifies as an accredited investor, ensuring that they have the financial stability and sophistication to engage in more complex investment ventures.

Criteria for Becoming an Accredited Investor

To be classified as an accredited investor, one must meet specific criteria set by regulatory bodies:

Criteria Description
Income Requirements An individual must have had an annual income exceeding $200,000 (or $300,000 for joint income with a spouse) for the last two years, with the expectation of earning the same or a higher income in the current year.
Net Worth Requirements An individual or a couple’s combined net worth must exceed $1 million, excluding the value of their primary residence.
Professional Credentials Recent updates have expanded the definition to include individuals with certain professional certifications, designations, or other credentials recognized by the SEC. Examples include Series 7, Series 65, and Series 82 licenses.
Business Entities Entities, such as trusts or organizations, with assets exceeding $5 million can qualify. Additionally, entities in which all equity owners are accredited investors may also be considered accredited.

Best Investment Opportunities for Accredited Investors

Here’s a rundown of some of the top investment for accredited investors…

1. Fundrise

  • Minimum Investment: $500
  • Best for: Newbie Investors

Fundrise has revolutionized the real estate investment landscape. By democratizing access to real estate portfolios, it allows individuals to invest without the complexities of property management or the need for vast capital. The platform’s innovative approach provides exposure to a traditionally lucrative, yet often inaccessible, sector of the market

Through Fundrise, investors can access a diversified range of properties, from commercial ventures to residential units. The platform’s expert team curates these portfolios, ensuring a balance of risk and reward. With its user-friendly interface and transparent reporting, Fundrise has become a top choice for many venturing into real estate investments.

How it Works:
Investors start by choosing a suitable investment plan on Fundrise. Once invested, the platform pools the funds with other investors and allocates them across various real estate projects. As these properties generate rental income or appreciate in value, investors receive returns in the form of dividends or appreciation.

Pros:

  • Diversified real estate portfolios.
  • User-friendly platform with transparent reporting.

Cons:

  • Limited liquidity compared to public markets.
  • Returns are dependent on real estate market performance.

2. Equitybee

  • Minimum Investment: $10,000
  • Best for: Experienced Investors

Equitybee offers a unique platform that bridges the gap between private companies on the cusp of going public and potential investors. This innovative approach provides a golden opportunity for investors to tap into the potential of startups and other private firms before they make their public debut.

The platform’s primary focus is on employee stock options. By allowing investors to invest in these options, they can potentially benefit from their appreciation as the company grows. With a vast array of companies, from emerging startups to established giants, Equitybee presents a diverse range of investment opportunities.

How it Works:
Investors browse available stock options from various companies on Equitybee. Once they choose an option, they invest their funds, which are then used to purchase the stock options from the employees. If the company goes public or gets acquired, the investor stands to gain from the increased value of these stocks.

Pros:

  • Access to pre-IPO companies.
  • Diverse range of startups and established firms.

Cons:

  • Platform fee of 5%.
  • Potential risks associated with private market investments.

3. Percent

  • Minimum Investment: $500
  • Best for: Novice Investors

Percent stands as a beacon in the vast sea of the private credit market, illuminating a sector often overshadowed by traditional investments. This burgeoning market, valued at over $7 trillion, consists of companies borrowing from non-bank lenders. Percent offers a unique vantage point into this market, allowing investors to diversify their portfolios beyond typical stocks and bonds.

The allure of Percent lies in its ability to offer shorter terms and higher yields, combined with investments that are largely uncorrelated with public markets. This makes it an attractive proposition for those looking to step away from the volatility of traditional markets.

How it Works:
Upon joining Percent, investors are presented with a plethora of private credit opportunities. After selecting an investment, funds are pooled with other investors and lent out to companies seeking credit. As these companies repay their loans, investors earn interest, providing a steady income stream.

Pros:

  • Access to the burgeoning private credit market.
  • Potential for higher yields.

Cons:

  • Requires understanding of private credit dynamics.
  • Less liquidity compared to public markets.

4. Masterworks

  • Minimum Investment: $10,000
  • Best for: Novice Investors

Masterworks paints a vivid picture of art investment, blending the worlds of finance and fine art. Traditionally, investing in art was a luxury reserved for the elite. However, Masterworks has democratized this, allowing individuals to buy shares in artworks from world-renowned artists.

The platform’s strength lies in its expertise. From authentication to storage, every facet of art investment is handled meticulously. This ensures that investors can appreciate both the beauty of their investments and the potential financial returns.

How it Works:
After registering on Masterworks, investors can browse a curated selection of artworks. They can then purchase shares, representing a fraction of the artwork’s value. Masterworks takes care of storage, insurance, and eventual sale. When the artwork is sold, investors share the profits based on their ownership.

Pros:

  • Opportunity to diversify with fine art.
  • Managed by art experts.

Cons:

  • Art market can be unpredictable.
  • Long-term investment horizon.

5. Yieldstreet

  • Minimum Investment: $15,000
  • Best for: Advanced Investors

Yieldstreet stands at the intersection of innovation and alternative investments. It offers a smorgasbord of unique investment opportunities, ranging from art to marine finance. For those looking to venture beyond the beaten path of traditional stocks and bonds, Yieldstreet presents a tantalizing array of options.

The platform’s allure lies in its curated selection of alternative investments, each vetted by experts. This ensures that while investors are treading unconventional grounds, they’re not stepping into the unknown blindly.

How it Works:
Investors begin by browsing through the diverse investment opportunities on Yieldstreet. After selecting their preferred asset class, their funds are pooled with other investors and allocated to the chosen venture. Returns are generated based on the performance of these assets, be it through interest, dividends, or asset appreciation.

Pros:

  • Wide range of alternative investments.
  • Potential for high returns.

Cons:

  • Some niches may be too specialized.
  • Requires a deep understanding of chosen investments.

6. AcreTrader

  • Minimum Investment: $10,000
  • Best for: Newbie Investors

AcreTrader, as its name suggests, brings the vast expanses of farmland to the investment table. It offers a unique opportunity to invest in agricultural land, combining the stability of real estate with the evergreen nature of agriculture. With the global population on the rise, the value of fertile land is only set to increase.

The platform meticulously vets each piece of land, ensuring only the most promising plots are available for investment. This rigorous process ensures that investors are planting their funds in fertile ground, poised for growth.

How it Works:
Investors peruse available farmland listings on AcreTrader. After selecting a plot, they can invest, effectively owning a portion of that land. AcreTrader manages all aspects, from liaising with farmers to ensuring optimal land use. Investors earn from the appreciation of land value and potential rental income.

Pros:

  • Stable, tangible asset.
  • Potential for steady returns.

Cons:

  • Returns may be slower compared to other platforms.
  • Limited to U.S. farmland.

7. EquityMultiple

  • Minimum Investment: $5,000
  • Best for: Experienced Investors

Summary:
EquityMultiple is a testament to the power of collective investment in the real estate sector. By leveraging the principles of crowdfunding, it offers a platform where multiple investors can pool their resources to finance high-quality real estate projects. This collaborative approach allows for diversification and access to projects that might be out of reach for individual investors.

The platform’s strength lies in its curated selection of real estate opportunities, ranging from commercial spaces to residential properties. With a team of seasoned real estate professionals at the helm, EquityMultiple ensures that each project is vetted for maximum potential and minimal risk.

How it Works:
Upon joining, investors can explore a variety of real estate projects. After committing to a project, their funds are pooled with other investors to finance the venture. Returns are generated through rental incomes, property appreciation, or the successful completion of development projects.

Pros:

  • Diverse real estate opportunities.
  • Managed by real estate professionals.

Cons:

  • Market risks associated with real estate.
  • Longer investment horizons.

8. CrowdStreet

  • Minimum Investment: $25,000
  • Best for: Advanced Investors

CrowdStreet stands as a pillar in the commercial real estate investment domain. With its vast experience and industry connections, it offers a platform where investors can tap into prime real estate projects across the nation. From bustling urban centers to tranquil suburban locales, CrowdStreet provides a diverse range of investment opportunities.

The platform’s expertise ensures that each project is meticulously vetted, offering a blend of potential returns and stability. For investors looking to delve into commercial real estate without the hassles of property management, CrowdStreet is an ideal choice.

How it Works:
After registration, investors can browse a myriad of commercial real estate offerings. Upon investing in a project, CrowdStreet manages the investment, providing regular updates and ensuring optimal project execution. Investors earn returns based on the project’s performance, be it through rentals, sales, or project completions.

Pros:

  • Access to prime commercial properties.
  • Established platform with a proven track record.

Cons:

  • High minimum investment.
  • Market dependency for returns.

9. Mainvest

  • Minimum Investment: $100
  • Best for: Newbie Investors

Mainvest offers a refreshing twist in the investment landscape, focusing on the heart and soul of the American economy: local businesses. From quaint cafes to innovative startups, Mainvest provides a platform where investors can support and benefit from the growth of small businesses in their communities.

The platform’s community-centric approach ensures that investments are not just about returns but also about fostering local economies. For those looking to make a difference while earning, Mainvest presents a unique opportunity.

How it Works:
Investors can explore various local businesses seeking capital on Mainvest. By investing, they essentially buy a revenue-sharing note, earning a percentage of the business’s gross revenue until a predetermined return is achieved.

Pros:

  • Support and invest in local businesses.
  • Low minimum investment.

Cons:

  • Risks associated with small business investments.
  • Returns might be slower compared to other platforms.

10. Vinovest

  • Minimum Investment: $1,000
  • Best for: Novice Investors

Vinovest uncorks the world of wine investment, offering a blend of luxury, history, and financial growth. Fine wines have been a symbol of opulence for centuries, and Vinovest provides a platform where this luxury becomes an accessible investment.

With a team of wine experts guiding the way, the platform ensures that each wine is not just a drink but an investment poised for appreciation. From sourcing to storage, Vinovest handles every facet, ensuring the wine’s value grows over time.

How it Works:
After signing up, investors set their preferences and investment amount. Vinovest then curates a wine portfolio based on these preferences, handling sourcing, authentication, and storage. As the wine appreciates, so does the investor’s portfolio.

Pros:

  • Unique investment opportunity in fine wines.
  • Managed by wine connoisseurs.

Cons:

  • Long-term holding for optimal returns.
  • Market influenced by external factors like climate.

11. Arrived Homes

  • Minimum Investment: $100
  • Best for: Novice Investors

Arrived Homes offers a fresh perspective on real estate investment, focusing on the charm of single-family homes. While skyscrapers and commercial complexes often dominate real estate discussions, single-family homes offer stability, consistent returns, and a touch of nostalgia.

The platform’s strength lies in its focus. By concentrating on single-family homes, it offers investors a chance to tap into a stable real estate segment, benefiting from both rental income and property appreciation.

How it Works:
Investors browse available properties on Arrived Homes. After selecting a property, they can invest in shares, representing a portion of the home’s value. As the property is rented out, investors earn a share of the rental income. Additionally, any appreciation in property value benefits the investors.

Pros:

  • Low minimum investment.
  • Quarterly dividends.

Cons:

  • New platform with a shorter track record.
  • Limited to single-family homes.

12. RealtyMogul

  • Minimum Investment: $5,000
  • Best for: Novice to Experienced Investors

RealtyMogul stands tall in the commercial real estate investment landscape. It offers a platform where diversification meets opportunity, presenting a range of commercial properties for investment. From bustling office spaces to serene residential complexes, RealtyMogul provides a plethora of options for investors to expand their portfolios.

The platform’s prowess lies in its dual approach. Investors can either dive into non-traded REITs or make direct investments in specific properties. This flexibility ensures that both novice and experienced investors find opportunities that align with their investment goals.

How it Works:
Upon joining RealtyMogul, investors can choose between REITs or direct property investments. Their funds are then channeled into these real estate ventures. Returns are generated through rental incomes, property sales, or successful project completions.

Pros:

  • Wide range of commercial properties.
  • Both REITs and direct investments available.

Cons:

  • Market risks inherent to real estate.
  • Higher minimums for direct investments.

The Future of Accredited Investing

The world of accredited investing is dynamic and ever-evolving. Emerging trends suggest a shift towards democratizing investment opportunities, with regulatory bodies considering more inclusive criteria for accredited investor status. This shift aims to balance the need for investor protection with the recognition that financial acumen can come from experience and education, not just wealth.

Furthermore, technological advancements are playing a pivotal role. The rise of blockchain and tokenized assets, for instance, is creating new avenues for investment and might reshape the landscape of opportunities available to accredited investors.

xAs the line between traditional and alternative investments blurs, the future promises a more integrated, inclusive, and innovative environment for accredited investors.

The Bottom Line – Top Investments for Accredited Investors

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Understanding the role and opportunities of accredited investors is crucial in the modern financial landscape. While the distinction offers privileged access to unique investment opportunities, it also comes with increased risks and responsibilities.

As the world of investing continues to evolve, potential accredited investors are encouraged to stay informed, conduct thorough research, and seek professional advice. The realm of accredited investing, with its blend of challenges and opportunities, promises exciting prospects for those ready to navigate its complexities.

FAQs – Investment Options for Accredited Investors

Why is there a distinction between accredited and non-accredited investors?

The distinction is primarily for investor protection. Accredited investors are deemed financially savvy or stable enough to handle the risks associated with unregistered securities, which might be riskier and less transparent.

What investment opportunities open up for accredited investors?

Accredited investors gain access to a broader range of investment opportunities, including hedge funds, private equity, venture capital, certain private placements, and more.

Are investments for accredited investors riskier?

While not inherently riskier, these investments often come with less regulatory oversight and transparency, which can increase potential risks. It’s essential to conduct thorough due diligence before investing.

Do accredited investors have any advantages in the public stock market?

While the primary benefits of being an accredited investor pertain to private investment opportunities, the financial acumen and resources associated with accredited investors can also be advantageous in public markets, especially when considering more complex investment strategies.

About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion – educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.

Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University – Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® – Accredited Asset Management Specialist – and CRPC® – Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia’s distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC’s Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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Source: goodfinancialcents.com

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Tomorrow (April 8th) at 11 am PST, Geek Estate is conducting a virtual discussion on affordable housing — facilitated by Matt Hoffman at HousingTech Ventures. It is a discussion, not a webinar…. so limited to 15-20 participants. If you are a founder/operator working on a solution in the space, we have a couple open slots. There is an agenda outline included below to give you a better sense of what will be covered.

If interested in joining, please shoot me a note (drew at geekestatelabs dot com).

Market level considerations

  • Will rents be paid? If not, what are the implications? (forbearance; lease modifications; evictions)
  • Will mortgages be paid? If not, what are the implications? (forbearance/foreclosure)

Government/Policy

What policy fixes will be short-term and what if any will be long-term?

How do we not waste this crisis to fix:

  • Zoning issues
  • NIMBY issues
  • Permitting issues
  • Other regulatory barriers

How do we not waste this crisis to get:

  • Cheaper capital for affordable housing
  • Funding for resident services

Solutions

  • What operational solutions are now likely to be more palatable for landlords/portfolio owners?
  • Will banks, insurance companies, and appraisers change underwriting criteria?
  • What tenant services are landlords likely to eliminate or want to adopt?
  • How can landlords/portfolio owners operate more virtually?
  • How do you get people’s attention in a time of crisis to try your service/solution?

Source: geekestateblog.com

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This article originally appeared on The Financially Independent Millennial and was republished with permission.

If investing is of interest to you, then you’ve probably heard about stocks vs. options. How can you make the best choice when deciding which investment strategy to use?

After all, investing comes with risk attached – learning how to navigate that risk and make sound investment decisions is the key to building a good investment portfolio.

Knowing as much as you can about options and stocks will mean you can make better investment choices. In this comprehensive guide, I’ll explain the differences between stocks vs. options in detail. Armed with this knowledge, you should be better prepared to achieve your financial targets.

What Are Stocks?

A stock means you own part of a company that has sold shares on an exchange. These shares that you can buy are known as stocks. When you buy shares, you’re then a shareholder of that company.

Every company has a certain number of shares available on the stock market. Those stocks can be bought and sold on the stock exchange. Each company decides how many shares can get bought and can raise or lower how many shares are available on the exchange at any time.

The stock market can rapidly change from one moment to the next based on many factors. Anyone trading in stocks must remain aware of how their stock is performing to minimize the risk of a loss.

Benefits of Stocks

The first benefit of investing in blue chip stocks (unlike options) is that most investors will build wealth, as stocks nearly always rise over a long period. Individual stock prices fluctuate daily, but investing in companies with a proven track record of growth and investments means in the long-term, your wealth will grow.

Investing in stocks is extremely easy these days, thanks to modern technology. You can get started with just a mobile phone and an internet connection with many apps doing a lot of the hard work for you. This ease of access makes stock trading appealing for many beginner investors.

It also means you can often start trading using small amounts. Learning to trade for a few dollars a month is a great way to build confidence and understand how it all works. Once you’re established, then you can gradually invest more!

Stocks are good assets to have as they are considered liquid. Liquid means they can be converted to cash quickly, unlike other assets such as real estate. And, this may good if a situation arose that required you to get cash fast.

Drawbacks of Stocks

Investing in stocks comes with risk attached. The biggest one is that the price could drop dramatically, and you lose all your investment. Stocks can vary wildly from one day to another. Therefore, experts recommend stocks as a long-term investment strategy, and you should plan to keep the money invested for at least five years.

Another way to avoid losing all your investment is by diversifying your portfolio. Don’t put all your money into one stock. Invest in a variety of stocks to spread the risk.

Other drawbacks of trading in stocks include fees, capital gains taxes, and commissions. Commissions and fees vary. Some brokers don’t charge any at all. Make sure to shop around before opening a brokerage account to find the best deals for you.

While investors can’t avoid taxes, the rate you pay does vary depending on several factors. How much profit you’ve made, your income, and how long you’ve held the stock affects Rates. Generally, any investments held for less than a year attract a higher rate—another good reason to own stocks long-term.

What Are Options?

An option is when you purchase the right to buy or sell an asset (typically a stock) for an agreed price and at an agreed time. The seller has no choice but to allow you to exercise the option. The buyer pays for the right (but not the obligation) to have the option to buy or sell an underlying security for an agreed price on or before an agreed date.

There are two types of options – call options, and put options. 

Call Options

Call options are the most common. Investors who buy call options expect the stock price to end up above the strike price before the expiration. Profit gets made when investors can either sell the stocks on the open market for a higher amount than they paid or sell the option they originally bought for a profit.

Call Option Example

An investor may buy a call option on AAPL with a $120 strike price that expires 9/17/2021. The investor pays $6 for the call option (Options get sold in lots of 100, so the total is $600). If at expiration (9/17/2021) AAPL is trading at $130, the investor can either:

1 – Exercise the option by buying 100 shares of AAPL for $120 each and then sell them to the open market for $130 each making a net profit of $400 ($10/share gross profit – $6 premium * 100).

2 – Sell “to close” the call option before expiration for a profit.  

Put Options

Investors buy put options as a way to insure against a downturn. For example, investors can sell an asset at a specific price within an agreed time (expiration). These options work the opposite way to a call option. Investors buy put options hoping the stock price will drop. Profit gets made when investors sell the underlying security at a higher price than it’s worth.

Related read: How to Sell Covered Calls for Monthly Income

Put Option Example

You buy put option on AAPL with a strike price of $100, expiring 9/17/2021. The cost of this put option is $20 ($0.20 * 100 shares). On expiration, if AAPL is trading at $95: 

You can exercise the option and sell AAPL to the Put option seller for $100 each. Doing so will earn you $5 minus the original $0.20 premium, times 100 (net total $480).

Or

You can sell the put option at a higher price than you originally paid for it.

Benefits of Options

Investing in options usually costs less upfront than stock trading. And, this can be appealing if you’re starting to invest and don’t have much capital. You could get more for your money trading in options.

Trading in options can be more flexible than stocks. That’s because you’ve got several moves you can make when deciding how to play out your investment strategy. 

You can exercise the option and buy the shares to add to your investment portfolio. Another option is to exercise the option and either buy or sell the shares at a profit. There are also various points through the process where you could sell the options contract to another investor.

One of the critical benefits of options is that the underlying stocks strike price is fixed. For the agreed period, the stock price agreed is the price you can buy or sell the stocks for up to the expiration date.

Drawbacks of Options

Options trading can be much more time-consuming than investing in stocks. You might want to exercise the option before expiration, which means keeping a close eye on the stock price. To help with this, you can set up alerts with most online brokers.

Some options strategies carry more risk than others. Some strategies are so risky that only experienced traders should attempt them. You must understand what you’re doing before making the trade. Make sure to do your research and don’t trade in anything you don’t fully understand. 

Commissions, fees, and capital gains taxes can also be higher than the cost of trading in stocks. Keep in mind that the more you trade, the more your costs are going to be. Taxes are also higher on investments held less than a year, in some countries.

Stocks vs. Options: Making a Decision

When thinking about stocks vs. options, it’s entirely your choice as to which you prefer. Everyone has their investing style and appetite for risk that will drive their decision.

For beginner investors, or anyone preferring straightforward investing, stocks are usually the best choice. Options may become more appealing as you become a more experienced investor or if you prefer an investment that requires more active participation.

Don’t forget that you don’t have to stick with one or the other. There is no reason you can’t invest in both stocks and options should you want to. Just make sure you have a thorough understanding of any investment before going ahead with it.

Stocks vs. Options: Further Considerations

When considering stocks vs. options, keep in mind that they are intricately linked. You can hold both stocks and options for the same company. Plus, option prices get calculated based on the difference of the strike price and the current stock price, the implied volatility (IV), and the amount of time before expiration.

When planning your investment strategy, there are some questions you should ask yourself to determine how to proceed. What is your appetite for risk? Do you want to make long-term or short-term investments? Do you want to make a mix of investments? Where will you get the best return for the money you have available to invest?

Think about your answers to these questions. Don’t forget to keep in mind your financial goals and your current situation when making your decisions.

Ultimately, only you can decide which investment opportunities are best for you.

Importance of a Balanced Portfolio

Having a diverse and balanced portfolio is essential for achieving your financial goals and, ultimately, growing your wealth.

The best strategy balances the need for long-term returns while absorbing any economic shocks. For example, if all your money is in bank stocks and there’s a financial crisis, you could lose all your money. However, having a balanced portfolio means that although the asset values diminished, your other investments can help balance that loss until the market recovers.

Conclusion

Now that you understand the difference between stocks vs. options, you can make better financial decisions. Making the right choices now makes it much easier to reach your financial goals in the future!

Source: credit.com

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The real question, though, is can you afford to live in this quaint state? In order to figure this out, it’s best to look at all the factors that contribute to your cost of living in Virginia. By comparing averages with what you can afford, you’ll be able to match up your budget to the perfect Virginia city.

Here’s what you should take into consideration when tallying up the cost of living:

Virginia housing prices

When it comes to the overall cost of living in Virginia, numbers tend to linger close to the national average. The same is not true when looking at housing prices. Where you live and how close to Washington, D.C., you are definitely impacts housing prices in Virginia, so pack a big budget if you’re planning on commuting into our country’s capital.

Alexandria

Just outside of Washington, D.C., if you’re coming to Virginia as a commuter, Alexandria is where you’ll want to live. At only seven miles or one subway ride away, it’s very easy to head to work without having to live right in D.C. However, this convenience comes at a price, and the small-city living you’ll find in Alexandria has housing prices that are 108.4 percent above the national average.

Rent and home prices also take quite a leap here. Even with moderate price increases over last year, a one-bedroom apartment’s average monthly rent is $2,014, and a two-bedroom’s is $2,490. One-beds rose in price by 5 percent over last year, and two-beds rose by 5 percent.

The median home price in Alexandria is $650,000, but the price is only up 6.6 percent from last year.

Arlington

The most expensive city on our list, Arlington is practically in Washington, D.C., so it has serious housing prices. They’re 132 percent above the national average. This means you’ve really got to pay for where you live in Virginia, especially when you can see D.C. from your house.

Both one-bedroom and two-bedroom apartments in Arlington saw a 17 percent increase in cost over last year, but what’s significant is what that takes rent to each month. Again, this is an expensive city, especially when we’re talking about rent. One-bedroom apartments have an average monthly rent of $2,527, but two-beds are a whopping $3,442 per month. Might be time to consider a roommate.

Homes are also expensive, though, with not as drastic of a price tag as renting an apartment. The median home in Arlington is $670,000, down 7.6 percent over last year.

Charlottesville

Combining hiking and canoeing with skiing and snowboarding, Charlottesville provides outdoor activities all year long. Sitting at the foot of the Blue Ridge Mountains, this scenic city offers a perfect location for just about everyone. It’s both a college town and a foodie city, a place full of culture, history and more. With all this going on, Charlottesville housing prices edge just above the national average at 2.9 percent over.

This also means that rent is going to cost you. Both one and two-bedroom apartments have seen price increases over the last year and come with a sizable monthly rent. One-bedroom apartments, up 16 percent over last year, have an average rent of $1,592 per month. Two-bedroom apartments, up 19 percent over last year, are costing an average of $1,767 per month.

Homes for sale are rising at a slower rate than those for rent, up only 10.1 percent over last year. The median sale price for homes in Charlottesville is $413,000.

Lynchburg

An outdoorsy location, just east of the Blue Ridge Mountains, Lynchburg is great city for hikers, skiers and those who like to partake in water activities. Situated in the center of the state, it’s a ways from Washington, D.C, meaning housing prices are more affordable at 24.7 percent below the national average.

Rent prices are quite affordable in Lynchburg, having only risen by 6 percent over last year on all accounts. A one-bedroom apartment is only an average of $875 per month, and a two-bedroom averages out at $965 per month.

Home prices are rising a bit faster, up 16.7 percent over last year. The median home price in Lynchburg is $228,000.

Richmond

The capital of Virginia, Richmond is a hub of higher education. Home to the University of Virginia, Virginia Commonwealth University and more, students flock to the area, but Richmond offers so much more. It’s also a favorite spot for millennials and its location on both sides of the James River makes it an attractive destination for outdoor enthusiasts. Home prices in Richmond are also on the more affordable side at 13.3 percent below the national average.

Seeing decent growth in the rental market, one-bedroom apartments have increased in price by 13 percent. Two-bedrooms are up 12 percent to an average monthly rent of $1,756 and one-bedrooms average out to $1,425 per month.

Home prices are up 22.6 percent over last year bringing the median sale price in Richmond to $352,000.

Virginia food prices

Another cost of living in Virginia is food. Known for Southern-style cuisine, must-try Virginia dishes may not have originated in the state, but they’re now part of the culture. You can get delicious barbecue, blue crab, oysters and Brunswick Stew here, but the state is best known for its country ham. For those Virginians who like to infuse their own home cooking with this Southern charm, the average grocery shopper spends between $233 and $267 per month.

Just like with housing, prices on food tend to go up the closer you get to Washington, D.C.

  • Lynchburg is 8.1 percent below the national average
  • Richmond is 7.5 percent below the national average
  • Charlottesville is 3.6 percent below the national average
  • Arlington is 10.6 percent above the national average
  • Alexandria is 11.4 percent above the national average

When it comes to individual grocery items, these differences in food pricing overall can mean a lot. You’ll pay almost a dollar more for a dozen eggs in Alexandria over Lynchburg, and almost two dollars more for potatoes. These small price differences can easily add up when building your weekly grocery list.

Going out to eat has the same issue, as well. It costs $59 for a three-course meal for two in Lynchburg, but you’ll pay 21 percent more or $75 in Charlottesville.

Virginia utility prices

Utilities are pretty much at the national average across Virginia. Although some are slightly under, and some a little above, it’s typically by just a tiny bit, which is good news for the overall cost of living in Virginia.

  • Alexandria and Arlington are both 2.3 percent below the national average
  • Charlottesville is 0.4 percent below the national average
  • Richmond is 3.5 percent above the national average
  • Lynchburg is 9.7 percent above the national average

When it comes specifically to energy costs, you’ll spend, on average, anywhere from $170 to $210 per month. If you want to save a little, Blacksburg has the lowest electric bill at $138.37 and the lowest utility prices at 13.2 percent below the national average.

Virginia transportation prices

Transportation prices include all the costs associated with getting around any given city. Throughout Virginia, that could mean owning a car, using public transportation or even getting around on foot or by bike.

Cities like Alexandria and Arlington have a relatively high walk and bike scores meaning you may not even need to own a car to comfortably navigate the city. Arlington tops the charts with an 81 for a walk score and 74 for a bike score, but Alexandria isn’t too far behind with a 62 walk score and 58 bike score.

Overall, when it comes to transportation prices:

  • Charlottesville is 12.8 percent below the national average
  • Lynchburg is 7.4 percent below the national average
  • Richmond is 6.8 percent below the national average
  • Arlington is 10 percent above the national average
  • Alexandria is 36.5 percent above the national average

Again, the closer you are to D.C., the higher the cost of living Virginia. This could be a result of parking prices if you drive around, or simply just the cost of being able to utilize public transportation to get around.

WMATA and DASH in Alexandria

Because of its proximity to Washington, D.C., Alexandria has services from two different public transportation systems. The WMATA operates the subway. Also called the Metro, there are four stations within Alexandria that provide access to both the yellow and blue lines. The time of day you ride determines the Metro price you’ll pay. For peak hours, a one-way fare is between $2.25 to $6.00. During off-peak hours you’ll pay between $2.00 to $3.85.

Local bus services in Alexandria motor through the city thanks to DASH. There are three color-coded routes. Red routes are frequent routes, with buses coming every 15 minutes or less. Blue routes run slower, but all week long, and green routes only run on weekdays. DASH is now free to ride throughout Alexandria. There’s also a free King Street Trolley you can take advantage of when in Old Town Alexandria.

ART in Arlington

Arlington’s bus system, ART, also connects to the Metro, among other modes of public transportation. It has 16 routes. Those with frequent service come every 20 minutes or less. The one-way fare on ART is $2. To transfer to the Metro, you’ll pay an additional 50 cents.

GRTC in Richmond

A long list of bus routes and a few express options make up the GRTC system. Covering Richmond and surrounding counties and cities, the GRTC has been in operation for over 150 years, only stopping service once, during the Civil War.

Today, the single-way fare on any local route is $1.50 and passes are available. You can get a seven-day pass for $17.50, or a 30-day pass for $60. Express and extended express routes, do cost more per way and vary in price.

Virginia healthcare prices

Throughout Virginia, healthcare is on the more costly side, with more cities above the national average than in most other costs of living categories. This total includes visits to your doctor, dentist and eye doctor. It includes urgent care stops, as well as any prescriptions you have to buy.

  • Lynchburg is 3.2 percent below the national average
  • Alexandria is 1.1 percent above the national average
  • Richmond is 2.7 percent above the national average
  • Charlottesville is 9 percent above the national average
  • Arlington is 14.4 percent above the national average

At these numbers, the average doctor’s visit in Virginia could cost as much as $162.50 in Arlington or as little as $136.80 in Lynchburg.

Virginia goods and services

For all those things that go onto your monthly budget that isn’t really necessary for survival, they fit into the cost of living in Virginia for goods and services categories. These are the items you need to have for you, but if you suddenly couldn’t afford them, you’d still get by.

Totaling all of these up, goods and services in our Virginia cities almost all cost more than what you pay on average across the county.

  • Lynchburg is 5.9 percent below the national average
  • Richmond is 2.1 percent above the national average
  • Charlottesville is 7.1 percent above the national average
  • Arlington is 11.3 percent above the national average
  • Alexandria is 18.4 percent above the national average

To understand how this can impact the prices of individual goods and services you like, here are average prices for just a few.

Alexandria almost holds onto the most expensive items for our whole chart. Arlington beats the city out only when it comes to dry cleaning bills. Similarly, Lynchburg isn’t always the cheapest city when it comes to individual goods and services. Seeing how the order continues to switch, it’s important to look at costs that relate to the goods and services you use when budgeting.

Childcare as a good/service

One of the priciest items within the goods and services category is childcare. Most first-time parents experience quite a shock when they have to start adding this into their monthly budget. Childcare isn’t cheap, but where you live can greatly impact the price.

The most expensive city when it comes to paying for a full-day, private preschool is Alexandria. Monthly costs are, on average, $1,833.33. Arlington and Charlottesville both also have monthly costs above $1,000, as well. The least expensive city is Richmond, at only $516.67 per month for preschool.

Taxes in Virginia

Virginia has four different income tax rate brackets based on income. You’ll either pay 2, 3, 5 or 5.75 percent.

When it comes to sales tax, the state rate is 5.3 percent. Localities can add on to this an additional amount, bringing the total up to no more than 7 percent. At the max, for every $1,000 you spend shopping, $70 goes right to taxes.

Arlington, Alexandria and Richmond all have the same sale tax rate of 6 percent. Charlottesville and Lynchburg opted to stay a little lower, sharing the same sales tax rate of 5.3 percent.

How much do I need to earn to live in Virginia?

When calculating how much you really need to make to live in a specific place, the cost of rent should always come into play first. Since experts suggest you put 30 percent of your annual income toward rent, you need to afford this expense first and foremost.

In Virginia, the average rent is $1,748, so you’d need to make a minimum of $69,920 to meet the 30 percent requirement.

The annual average wage in Virginia comes close to this at $62,330 but means you won’t always be able to get an ‘average’ apartment in every city. You may have to look at more affordable locations to find the perfect apartment.

To be certain you can afford to live in the Virginia town of your choice, plug your specific numbers into our rent calculator.

Living in Virginia

With a strong economy, so much professional potential, plenty of natural beauty and so much history, Virginia has a lot to offer potential residents. Whether you’re looking to live close to Washington, D.C., to commute, or think the laid-back, nature vibe on the other side of the state is more your speed, there’s something for everyone.

All you have to do is figure out whether the average cost of living in Virginia is something you can actually afford. Grab that calculator to start figuring things out.

The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of June 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.

Source: rent.com

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Welcome to the hidden treasures of North Carolina, where the charm of small-town living meets the richness of Southern hospitality. Beyond the bustling cities and popular tourist destinations, these towns offer a glimpse into a world of quaint streets, warm community bonds, and a pace of life that’s refreshingly different. From Clayton to Shelby, join us as we discuss 12 unique, small towns in North Carolina.

1. Clayton, NC

Median sale price: $360,000 

Walk Score: 73

As you stroll through Clayton’s streets, you’ll find a variety of locally-owned shops, cafes, and restaurants, each contributing to the town’s vibrant atmosphere. Clayton’s parks and outdoor spaces are perfect for leisurely walks and public gatherings, while its local events foster a sense of community that’s hard to resist. Whether you’re exploring its historic sites or savoring its culinary delights, Clayton promises an unforgettable experience.

Homes for sale in Clayton, NC

Apartments for rent in Clayton, NC

2. Southern Pines, NC

Median sale price: $564,950 

Walk Score: 78

Southern Pines exudes a timeless charm that captivates both residents and visitors alike. With its elegant streets and historic architecture, the town offers a window into its rich past. Golf enthusiasts will delight in its renowned courses, while art and culture aficionados will find galleries and performances that showcase the town’s creative spirit.

Homes for sale in Southern Pines, NC

Apartments for rent in Southern Pines, NC

3. Pinehurst, NC

Median sale price: $470,000 

Walk Score: 63

Nestled in the heart of North Carolina, Pinehurst beckons with its blend of golfing excellence and small-town allure. The town’s lush golf courses have earned it a reputation as a golfer’s paradise, attracting enthusiasts from all around. Beyond the fairways, Pinehurst’s shops, eateries, and cultural spots offer a diverse array of experiences. Tee off on world-class courses or savor local cuisine, Pinehurst has plenty to do for any visitor.

Homes for sale in Pinehurst, NC

Apartments for rent in Pinehurst, NC

4. Hope Mills, NC

Median sale price: $299,073 

Walk Score: 61

This town’s picturesque parks provide ample opportunities for outdoor activities and leisurely picnics. With a focus on public events, residences of Hope Mills gather to celebrate the essence of small-town life. Whether you’re exploring its natural beauty or joining in town festivities, Hope Mills offers a warm and inviting haven for all who visit.

Homes for sale in Hope Mills, NC

Apartments for rent in Hope Mills, NC

5. Laurinburg, NC

Median sale price: $173,000 

Walk Score: 54

Laurinburg, a town rich in history, extends a warm welcome to all who venture here. Its historical sites and architecture offer glimpses into its past, while local events and gatherings strengthen its present bonds. The town’s sense of unity is reflected in its array of activities, from outdoor markets to cultural festivals.

Homes for sale in Laurinburg, NC

Apartments for rent in Laurinburg, NC

6. Spout Springs, NC

Median sale price: $343,500 

Walk Score: 19

Amidst North Carolina’s landscapes, Spout Springs provides a tranquil retreat. The town’s natural beauty is mirrored in its parks and outdoor spaces, perfect for those seeking a peaceful ambiance. Whether you’re embracing nature’s serenity or engaging in town gatherings, Spout Springs offers a quiet haven to experience the beauty of North Carolina.

Homes for sale in Spout Springs, NC

Apartments for rent in Spout Springs, NC

7. Statesville, NC

Median sale price: $299,999 

Walk Score: 82

Statesville’s historical landmarks and preserved architecture tell tales of its past, while its bustling downtown boasts shops and eateries that mirror its contemporary flair.  Have you ever heard of the Crossroads Pumpkin Festival? It’s an autumn extravaganza held in Statesville with everything pumpkin-themed you can think of. Fun fact: Statesville’s Davis Regional Medical Center was the first hospital in the world to use 3D-printed knee implants.

Homes for sale in Statesville, NC

Apartments for rent in Statesville, NC

8. Lexington, NC

Median sale price: $255,000 

Walk Score: 76

Known as the Barbecue Capital of the World, this small town in North Carolina offers a delectable culinary scene that’s hard to resist. Its vibrant downtown boasts shops, galleries, and historical sites that reflect its diverse character.

Homes for sale in Lexington, NC

Apartments for rent in Lexington, NC

9. Mount Airy, NC

Median sale price: $235,000 

Walk Score: 76

Mount Airy, known as “Mayberry,” welcomes you with open arms to experience its small-town atmosphere. As you explore Mount Airy’s streets, you’ll find quaint shops, cozy cafes, and a genuine sense of community. If you’re strolling down memory lane or partaking in local festivities, Mount Airy offers a charming retreat for all who visit.

Homes for sale in Mount Airy, NC

Apartments for rent in Mount Airy, NC

10. Lewisville, NC

Median sale price: $347,500

Walk Score: 44

This town’s parks and outdoor spaces offer a serene escape for outdoor enthusiasts. If you’re a nature lover, you’ll dig the Tanglewood Park – it’s got everything from serene trails to horseback riding. Additionally, you can visit Shallowford Square, a great gathering spot for locals to enjoy concerts and festivals. 

Homes for sale in Lewisville, NC

Apartments for rent in Lewisville, NC

11. Boone, NC

Median sale price: $336,250 

Walk Score: 72

Boone invites you to bask in its mountain charm and dynamic atmosphere. Located in the Blue Ridge Mountains, the town offers stunning vistas and outdoor adventures that attracts all who seek natural beauty. Boone’s lively downtown features shops, galleries, and eateries, each contributing to the town’s unique spirit.

Homes for sale in Boone, NC

Apartments for rent in Boone, NC

12. Lenoir, NC

Median sale price: $253,500 

Walk Score: 72

Lenoir’s historical landmarks and preserved architecture offer a glimpse into its past, while its local events create connections among its residents. Whether you’re embracing its art scene or engaging in community festivities, Lenoir promises an enriching experience that you’ll love.

Homes for sale in Lenoir, NC

Apartments for rent in Lenoir, NC

Wrapping up small towns in North Carolina

From the historic charm of Clayton to the mountain vistas of Boone, each small town in North Carolina offers a unique blend of community, culture, and natural beauty. Try immersing yourself in local events, indulging in culinary delights, or simply wandering through picturesque streets, these towns will surly welcome you with open arms.

Source: redfin.com

Apache is functioning normally

The latest revamp of loan fees at government-sponsored enterprises Fannie Mae and Freddie Mac drew its share of critics, leading their regulator to ask whether it should rethink the capital framework driving them — and it looks like the answer, in some cases, is yes.

To be sure, many critics, including Republican legislators who’ve sought to roll back the latest pricing change, have balked at the idea of overturning loan-level risk-based pricing in response. But not everyone has, and comment letters released recently confirm there are mixed opinions.

Specifically, some affordable housing advocates are reprising past calls for a return to an alternative used prior to the Great Recession: a flat guarantee fee based on portfolio-based cross-subsidization rather than the current loan-level tradeoffs.

“We do not support risk-based pricing at the loan level by the enterprises,” said David Dworkin, president and CEO of the National Housing Conference, expounding on the view in his group’s letter to Fannie and Freddie’s regulator.

“That’s different from private mortgage insurance, which involves risk-based pricing. We have no objection to risk-based pricing at the portfolio level,” Dworkin clarified. “We’re not against risk-based pricing, we’re against individual consumers paying for their own risk.”

The most recent pricing changes were well intended, but the GSEs shouldn’t “pick winners and losers” among borrowers if it involves charging those with less income higher fees, potentially driving to the neighboring government-backed market and increasing taxpayer risk, he said.

And while by one measure used by the GSEs, the Enterprise Regulatory Capital Framework, they are undercapitalized, the NHC said more realistic measures like stress tests suggest there’s room to reduce capital enough to have a lower (but not excessively reduced) flat g-fee.

The letter references a recent stress test measure that shows that the largest loss the GSEs would take in a “severely adverse” scenario (with allowances for deferred tax assets) included is $8.4 billion. It contrasts it with the 2021 ERCF goal of roughly $319 billion in adjusted capital.

“Even if the losses from a future crisis with five times the impact of the 2008 financial crisis were to occur, costing the enterprises a total of $42.25 billion, under the ERCF they would be required to hold $276.75 billion in unnecessary capital,” the letter said.

The ERCF goals are based more on what capital enterprises might need if they were released from their government conservatorship, and measured more by private market standards, whereas the stress tests aim to model likely risk on the enterprises in current form.

Dworkin called the ECRF number “extremely excessive.

“They’re comparing them to a bank capital, but mortgages are a very small piece of what banks do and capital requirements for banks are really driven by much bigger investments that have much higher risk than mortgages,” said Dworkin.

Dworkin also opposes a separate regulatory proposal that would increase risk weightings for some mortgages that have higher loan-to-value ratios and are held in bank portfolios. 

Following the Great Recession, the GSEs downsized their portfolios and shifted their focus to securitizations. Because of this, and rules that now hold lenders responsible for the borrower’s ability to repay, Dworkin thinks the previous flat g-fee model wouldn’t have the risks seen in ’08.

But other respondents to the FHFA’s request for input disagree.

“The cross-subsidization model, with full flat-pricing, does not work and was one factor in the failure of Fannie Mae and Freddie Mac in 2008,” Ed DeMarco, president of the Housing Policy Council and a previous acting director of the FHFA, said in a letter to the agency.

“It creates market distortions, encourages inappropriate risk-taking, and misleads consumers by removing beneficial pricing signals,” he added.

DeMarco upheld the current capital framework at the enterprises but, like Dworkin, was critical of the proposed changes to bank standards.

While a kerfuffle has arisen over some of the most recent revisions to pricing at the GSEs, most notably a proposed debt-to-income-based differentiator that they eventually dropped, DeMarco indicated some types of loans are appropriate to apply a premium too, subsidizing others.

“Loans that are neither central to Fannie Mae and Freddie Mac’s public mission and that are capable of obtaining private sector financing may be suitable for higher targeted returns,” he said.

Cash-out refinance, investment property, high balance and second home loans fall into this category, he said. 

(Other groups, notably the National Association of Mortgage Brokers, have opposed the cash-out refi price hikes. The Community Home Lenders of America initially showed some resistance to the fees for high balance loans, but were later said it was mollified by an adjustment to the threshold for them that helped middle-income borrowers.)

While price changes can be disruptive to the industry, the HPC indicated that there is a need for regular updates to them, which should be made with adequate consideration for the operational burden involved.

“FHFA should reconsider the upfront fees every one-to-three years, depending on changing economic conditions, any changes to ERCF, and the results in the annual g-fee study,” DeMarco said. “Pricing realignments should always reflect the level of risk to the Enterprises and the capital required to support that risk.

“Further, adequate notice should be provided to the industry to execute pricing changes, with substantial transition time during periods of high production volume or adverse market conditions,” he added.

Other trade groups, while accepting of the need for changes in line with the current capital framework and thankful for adjustments the FHFA has made for their needs over time, also noted they can take an operational toll on mortgage companies and should be limited.

“Frequent pricing changes can pose a cost and resource burden on lenders, particularly with respect to necessary IT changes,” the Community Home Lenders of America said in its letter.

“CHLA would be comfortable if guarantee fees and LLPAs remained at the current levels for a

significant period of time — e.g. through the end of 2024,” the group added.

The Community Home Lenders of America also said that it continues to oppose non-risk-based upcharges for loans.

“CHLA continues to be extremely critical of the Congressional action at the end of 2021 to renew the non-risk related 10 basis point Fannie/Freddie guarantee fee hike — with the proceeds of such fee collections being used solely to pay for non-housing federal expenditures,” the group said.

Source: nationalmortgagenews.com