Ask Pat
Welcome to ‘Ask Pat’
a place where you can get the answers to your burning
LBI real estate questions.
You can browse the questions already asked and if you do not see what you are looking for,
then feel free to ‘ask a question‘ using the form below.
It may just become our Questions Of The Week!
(Even if not, Pat will answer your question via your email address)
As this gains speed, each Thursday, in conjunction with This Week On LBI,
we will post the Questions Of The Week (as they appear in The Sandpaper or asked), with an answer.
Feel free to share you thoughts as well. If you wish more detail, give Pat a call.
As Posted in The Sandpaper
June 25th 2025
Why purchase a vacation home on LBI? Generally, there are two main reasons why people purchase a second home on LBI. Some lean a bit more to one aspect over the other, but both definitely come into play.
#1 Personal Aspect – The Beach Lifestyle – They want a home at the beach where everyone can gather in a relaxed environment and enjoy one another’s company. This usually leads to making wonderful beach memories to share for a lifetime.
#2 Investment Aspect – Income & Tax Deduction – LBI has proven over the years to be a pretty solid investment with above average appreciation compared to many other areas. Also, an investment property brings with it some pretty nice tax advantages including the use of a 1031 Tax Deferred Exchange.
When is the best time to sell my home? Traditionally, LBI has two major sales markets. Although we do sell throughout the year as well.
#1 Spring Market – The Spring market is generally our most active. Buyers are more incented to purchase so they can enjoy a full summer at the shore. We start to see activity for this market pick up in mid Jan and early February.
# 2 Fall Market – As the summer season comes to a close and homeowners have enjoyed their last summer or collected their rents, the decision is made to put the house on the market. Sometimes we will experience more flexible pricing since the income potential is several months away and usage not high on the list. This market begins after Labor Day and generally runs until Thanksgiving.
July 9th 2025
What is the difference between assessed value, a Zestimate and market value?
The assessed value is for tax purposes set by a Municipality, County and State. On LBI reassessments are generally done once every 5 years. So, in LBI speak that is a long time for values to change. There are Zestimates and the like, which are generated mostly by algorithms. On LBI the computer can’t distinguish between a good water view, a great water view or know the value of what 50’ closer to the ocean means. These work best in a more homogenous area, LBI is not. Market value is the price a property sells for in a competitive market and is the closest to true value.
A Competitive Market Analysis helps put the value of a particular property in focus by analyzing similar homes currently for sale, those ‘under contract’ and finally recent sales. This analysis should be detailed in the specifics of the comparison properties as well as were the future of the market lies. Whether buyer or seller, this is key to determining the right ‘offer’ or the right ‘acceptance’.
Other factors do come into play that can push the number a bit up or down, such as; desired timing of the sale, condition of the property (home inspection report), the esoteric ‘love’ of the buyer. Also, the market is never static and pricing often is a moving target as the market changes daily. These generally do not contribute to large price changes either way. A professional CMA sets the groundwork for both parties to begin the negotiations and hopefully reach a satisfactory and fair sales price.
July 16th 2025
What are the first items ‘To Do’ when selling my home on LBI?
Getting your home ‘Show Ready’. Today that also means ‘Photo Ready’. Just about all buyers start their search window shopping on the internet looking at pictures. First off, take the ‘Home’ out of the House: This is depersonalizing the house; i.e., take a lot of your personal stuff out of the home. You will be doing this anyway once the sale is completed, so why not get a head start now. Maintenance Check: Fix all those items you didn’t get to last time down: leaky faucets, closet doors off their tracks, torn screens, loose doorknobs, etc. Deep Clean: Clean everything you can inside and out, neutralize orders and stage the home for the best ‘photo shoot’ potential. You get the picture. You want to have a great first impression whether on the internet or in person showings.
What are the first items ‘To Do’ when purchasing a home on LBI?
If financing, research your bank options. There are the traditional mortgage banks, your current bank and banks in the sky. What is most important is to pick a bank that has experience writing vacation home mortgages on LBI. If the bank isn’t familiar with LBI and doesn’t work with local knowledgeable appraisers you could end up with a low appraisal which could end the deal or force you to put more money down. Once you have picked the bank, ask for a pre-qualification letter for your desired mortgage amount. This letter will be necessary when placing an offer on a property to assure the seller you are able to complete the transaction.
Formulate your thoughts: Will the purchase be for personal use or more as an investment, what is my desired price range, do I want a ‘fixer upper’ or a more ‘turn key’ property, where on the Island- town, location, etc.
July 23rd 2025
What are the difference Tax Advantages of a 2nd Home and of an Investment Property?
The good news is that there are several positive tax advantages afforded both a 2nd home and an investment property. Let’s start with the IRS definition of what constitutes a 2nd home versus an investment property.
Second Residence: Personal use of more than 14 days or 10% of Fair Rental Value Days
Investment Property: Personal uses of less than 14 days or 10% of fair rental value days
It is recognized that LBI is a seasonal rental, not a year-round market. So, most use the 14- day usage as a guide.
Deductions: Second Residence: Real Estate Taxes & Interest with the caveat that the total of the primary home and 2nd home not exceed $750K
Deductions: Investment Property: Rental expenses (operating expenses, depreciation, interest, taxes, insurance, repairs, etc.) in excess of rental income may be deductible but the loss is subject to passive activity rule. Best to check with your accountant to see how your income comes into play with the deductions; however, you can carry forward losses if you can’t use them all in a particular year.
Both types of property qualify for long term capital gains provided they are held for longer than one year. For most taxpayers the profit would be taxed at 20% tax rate.
The other tax advantage an investment property has, and not a 2nd home, is the use of a 1031 Tax Deferred Exchange. This will be discussed in more detail in next week’s column.
August 7, 2025
Will rental income cover the cost of ownership?
The simple answer as to whether rental income will cover all your operating costs is – probably not. In most cases, a property with a typical 80% mortgage will not carry itself. The rental monies will help with the carrying costs and the tax deductions will be another added benefit. LBI, as a mainly summer destination, has a fairly short rental season and often owners like to take their entitled two weeks as well. An LBI investment allows you to collect income, take tax deductions, take a two-week vacation and watch your investment grow in value. It is much more enjoyable than reading the quarterly statements from your investment banker! And, of course, while you are doing maintenance in the off season, you can walk down the road to either watch a beautiful sun rise over the ocean or a colorful sunset over the bay!
August 13, 2025
How Do I Set My Rental Rates?
It is important to set your rates properly from the get go. You also want to use the bell curve approach. Higher rates in prime time and lower pre and post. Some rental owners will start high and drop later; however, if someone who already rented see a price drop, they are most likely to ask for the new price. If you are too high, you might run out of time to re-adjust and lose a week or two. So, look at your competition, your offered amenities, your internet presentation and decide where your property fits in the pricing scheme of competitive properties. How did you do last year? Any empty weeks? Do you have a fair amount of repeat tenants? Remember: it may be better to lose a hundred or two rather than a week or two. Err on the side of caution, the rental market has become very competitive and therefore much more sensitive to pricing.
August 20, 2025
How does Buyer & Seller Representation work in New Jersey?
Real estate agents are required to disclose how they intend to work with buyers and sellers in a transaction. For Seller’s that may be as a Seller’s Agency Only – where the agent’s fiduciary duties are to the seller only. Or they may work in a ‘Dual Disclosed Agency’ –where they represent both seller and buyer, this must be by written consent of both parties. This relationship does not put one party’s interest above the other party For Buyer’s that may be as a Buyer’s Agent Only – where the agent’s fiduciary duties are to the buyer only. This must be a separate written buyer agency agreement and must be signed prior to showing the potential buyer any homes. This document must also cover who and how much commission will be paid to the agency. Another option for the buyer or a seller, is their agent working as a Transaction Broker – the agent without representing either party, serves more as a manager of the transaction and performs tasks to facilitate the closing of the transaction.
August 27, 2025
What is a CMA and do I need one? How do I determine my pricing strategy?
A Competitive Market Analysis helps put the value of your property in focus by analyzing similar homes currently ‘for sale’, those ‘under contract’ and most importantly recent ‘sales’. This analysis should be detailed in the specifics of the comparison properties as well as taking into account were the future of the real estate market lies. Whether buyer or seller, this is key to determining the right ‘offer’ or the right ‘acceptance’.
Other factors do come into play that can push the number a bit up or down, such as; desired timing of the sale, condition of the property (home inspection report), the esoteric ‘love’ of a buyer for the property.
Also, the market is never static and pricing often is a moving target as the market changes daily. These generally do not contribute to large price changes either way but the market needs to be constantly monitored to see if the price needs a reset. A professional CMA sets the groundwork in determining the property’s pricing strategy based on current comps, future market trends and your desired time frame for the sale of your property.
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