Small businesses demand more than ever in a space

dc 24

Small businesses are vitally important to
the U.S. economy, and many people are
unaware of just how much they contribute
to the nation’s fiscal health each year.

small space.png

Small businesses are vitally important to the U.S. economy, and many people are unaware of just how much they contribute to the nation’s fiscal health each year. What many do not know is that they account for a sizable amount of the nation’s GDP – 44% to be exact.  They are a prime driver of growth and create more jobs than any other sector in our economy. Because of their importance, small business owners are supported by several national and local professional and governmental organizations that advocate for them, including the Small Business Administration, the National Federation of Independent Business, and local Chambers of Commerce. These organizations provide advice and education about a number of topics from how to start a business to how to leverage local economic incentives when selecting a location.

Small business owners not only know about their business operations but also about the pressures facing them. As a group, they are informed: a little-known fact about small business owners is that 44% of them hold a 4-year degree compared to the general population, which is 33%.  When you include associate degrees and some college, the percentage rises to 56%.


One of the major challenges small business owners face is selecting the right location for their businesses.  Leasing an office or co-working space can on occasion be a complex, time-consuming process, but it doesn’t have to be.  Our REZAIECRE database is the leading online commercial real estate marketplace that helps all parties move through the leasing process in record time.

When they are considering locations, most small business owners don’t know what spaces are available to them and how much they cost. Attracting commercial tenants can be a challenge: one way is to get their attention is to be clear about how much your space costs.  Price transparency is a feature of our database  – we include all the expenses associated with a space.  This ensures that commercial tenants see space listings that match their budget.  REZAIECRE also provides 3D virtual tours so that a space shows well.  This means less property tours, which saves everyone’s time.

Obviously, it’s always good to have informed tenant brokers acting as facilitators.  REZAIECRE, a seasoned group of pofessional’s will assist with the search-to-lease process, owners can pay attention to their businesses and get involved when necessary while a broker does the heavy lifting.  Once a brokers determine what office tenants want, they can use our database to guide them to the spaces that match their requirements.  Our database reduces the time it takes to execute a lease, and faster occupancy.

What We Are Seeing in Our Research

From our database, we are tracking how small business owners preferences are changing.

Here are some of the trends we are seeing:


The length of office leases has been trending down.  Many owners are now offering pre-built, fully furnished suites for short-term leases of 6 months to 3 years. Perhaps this is because small business owners have become risk-averse and do not want to commit to longer contracts.


Many business owners are preferring to lease spaces that have already been built out. They may not be able to handle the inevitable out-of-pocket expenses that come with construction. There’s also the time that it takes to complete a build out – it could take several months to finish a space.


Many business owners are selecting their office spaces based on space configuration and amenities rather than property amenities. For small tenants who tend to not invest in a custom build out, the interior condition of their suite is very important.  Class B and C buildings are destinations for these tenants.


Business owners looking for space prefer to take virtual tours, eliminating those that don’t fit their needs. They are pressed for time – most look for new spaces outside of business hours.  The effect of having more 3D tours has been measurable: business owners on the REZAIECRE database tour an average of 5 spaces versus 10 to 15 the traditional way.

Pricing information – REZAIECRE database only features spaces that have 100% price transparency: tenants want to know all-in costs for spaces.


The more details that a property owner provides, the more those spaces are selected as favorites. Spaces with more than two space-level features are favorited and toured over twice as many times than ones that do not. “Dropping pins” in new areas – some business owners are considering office spaces in urban residential neighborhoods. Despite the lower amount of inventory, many business owners are considering these areas because the rents are lower and the neighborhoods are less dense

What We Are Hearing from Our Prospects

Here are some observations:


They have become more common than traditional space with separate offices and cube farms. This design was originally adopted to promote dialog and decision-making and also to save money: open settings are less expensive than offices to construct. The main complaint about them is that they cause distractions and do not provide the privacy needed for such functions as legal and HR departments. Concerns have also been raised about how secure open spaces are. Open design has evolved to become more efficient and workable as many property owners have worked with interior architects to remain competitive.


This option offers greater flexibility than direct spaces. When all expenses are considered, they are on occasion less expensive than direct spaces. They are also good as interim spaces. Co-working spaces also feature short termination notices, no security deposits, and no personal guarantees to pay the rent.


It’s a reliable index that has been around for a while. The score is an index based on transit, safety, and how walkable neighborhoods are.  Many times, clients consider this data when selecting a location.


Small business owners are selecting spaces that match their lifestyles. These spaces have become more popular than offices that do not offer amenities.


They are becoming more prolific. Local restaurants and other providers like food trucks find it profitable to open limited-service stands in halls, even if they are within close proximity to their original sites. They are profitable for property owners, with short-term leases and higher than usual rents. Because of the short-term leases, the property owner can quickly switch out restaurants that do not work. Purveyors also like the arrangement because they offer an additional revenue stream with low investment in the space.

How to Find a Commercial Tenant

Tenants are becoming more engaged, so following their behaviors could help you boost your occupancy. At this market phase, we are seeing small business owners changing where they want to locate their businesses and what they require of their space. One trend is clear: they are eager to learn as much as they can about commercial real estate and how their space aligns with their business strategy: where they lease, how much space will cost, and whether it will accommodate business expansion or contraction. This vitally important sector of our economy continues to drive growth and establish new trends in many urban office markets.

Further questions, contact ALAN A. REZAIE at REZAIECRE by dialing (202) 802-8200 or email

long & foster commercial

Landlord Representation

REZAIE Commercial works with landlords and owners to properly position and market the unique benefits of their properties. With our intimate knowledge of the local landscape we can quickly and efficiently promote your property to not just prospects, but well-qualified tenants who are a good fit for your long-term vision. We creatively and relentlessly reach out to prospective tenants, leverage relationships and connect our clients with tenants who just aren’t on anyone else’s radar.

Our team deliver more than prospects; we work with you to strategically market and match your property with viable tenants. We take a very proactive approach contacting prospects for our listings through calls, door-to-door marketing, email and print. We can represent a single property or an entire portfolio, and have experience with Class-A office space, flex-space, industrial space, leases in historical office space, mixed-use and retail space. Our lease negotiating and accounting skills really pay off providing leases that provide a strong foundation for tenant retention and fostering long-term partnerships while reducing your downtime in between tenants.

Our landlord representation services include:

  • Competitive market analysis and positioning
  • Identification of appropriate prospects
  • Letters of intent
  • Creation and execution of unique tenant/asset-specific marketing strategies
  • Lease negotiation with prospective tenants and/or their brokers
  • Coordinating post leasing services such as property management, space buildout, and appraisal
  • Project management of the entire process

Any questions, contact us at (202) 802-8200 or email to  For more information about us, visit Strategic Guidance To Help Take Your Real Estate Projects From Start To Finish. Investor Solutions.

long & foster commercial

Types of Commercial Real Estate Leases

3 Different Types of Commercial Real Estate Leases:

There are three basic types of commercial real estate leases. These leases are organized around two rent calculation methods: “net” and “gross.” The gross lease typically means a tenant pays one lump sum for rent, from which the landlord pays his expenses. The net lease has a smaller base rent, with other expenses paid for by the tenant. The modified gross lease is a happy marriage between the two. While terms vary widely building by building, this basic overview will help businesses shop for the best deal possible.

Gross Lease or Full Service Lease

In a gross lease, the rent is all-inclusive. The landlord pays all or most expenses associated with the property, including taxes, insurance, and maintenance out of the rents received from tenants. Utilities and janitorial services are included within one easy, tenant-friendly rent payment.

When negotiating a gross lease, the tenant should ask which janitorial services are provided, and how often they are offered. Excess utility consumption beyond building standards is sometimes charged back to tenant; so if the tenant is a big consumer of electricity, this point should be clarified in the lease as well. The tenant pays his own property insurance and taxes.

A benefit of this type of lease is that it is supremely easy for the tenant, which can forecast expenses without worrying about an unexpected lobby maintenance charge, for example. The landlord assumes all responsibility for the building, while tenants concentrate on growing their businesses.

Net Lease

In a net lease, the landlord charges a lower base rent for the commercial space, plus some or all of “usual costs,” which are expenses associated with operations, maintenance, and use that the landlord pays. These can include real estate taxes; property insurance; and common area maintenance items (CAMS), which include janitorial services, property management fees, sewer, water, trash collection, landscaping, parking lots, fire sprinklers, and any commonly shared area or service.

There are several types of net leases:

Single Net Lease (N Lease)

In this lease, the tenant pays base rent plus a pro-rata share of the building’s property tax (meaning a portion of the total bill based on the proportion of total building space leased by the tenant); the landlord covers all other building expenses. The tenant also pays utilities and janitorial services.

Double Net Lease (NN Lease)

The tenant is responsible for base rent plus a pro-rata share of property taxes and property insurance. The landlord covers expenses for structural repairs and common area maintenance. The tenant once again is responsible for their own janitorial and utility expenses.

Triple Net Lease (NNN Lease)

This is the most popular type of net lease for commercial freestanding buildings and retail space. It is known as the net net net lease, or NNN lease, where the tenant pays all or part of the three “nets”–property taxes, insurance, and CAMS–on top of a base monthly rent. Common area utilities and operating expenses are usually lumped in as well; for example, the cost for staffing a lobby attendant would be part of the NNN fees. Of course, tenants also pay the costs of their own occupancy, including janitorial services, utilities, and their own insurance and taxes.

Landlords typically estimate expenses and charge tenants a portion of these expenses based on their proportionate, or pro-rata share. A tenant who leases 1,000 square feet of a 10,000 square foot building would be expected to pay 10% of the building’s taxes, insurance, and CAMS, for example.

Triple net leases tend to be more landlord-friendly, and tenants should carefully review NNN fees and negotiate caps on the amounts they can be raised annually. An NNN lease can also fluctuate from month to month and year to year as operating expenses increase or decrease, making the company’s expense forecasting tricky and sometimes frustrating.

There are tenant benefits in the NNN leases, however. Transparency is an excellent perk, since tenants can see business operating expenses in relation to what they are charged. Cost savings in operating expenses are passed on to the tenant rather to the landlord. In addition, the monthly rent in a NNN lease is potentially lower than in a gross lease, as tenants have a higher level of responsibility for the building.

Absolute Triple Net Lease

This is a less common option that is more rigid and binding than the NNN lease, where tenants carry every imaginable real estate risk, for example, being responsible for construction expenses to rebuild after a catastrophe, or for continuing to pay rent even after the building has been condemned. Aptly called the “hell-or-high-water lease,” tenants have ultimate responsibility for the building no matter what.

Modified Gross Lease

As the gross lease is more tenant-friendly, and the net lease tends to be more landlord-friendly, there exists a compromise lease for the convenience of both parties. The modified gross lease (sometimes called the modified net lease) is similar to a gross lease in that the rent is requested in one lump sum, which can include any or all of the “nets”–property taxes, insurance, and CAMS. Utilities and janitorial services are typically excluded from the rent, and covered by the tenant. Tenants and landlords negotiate which “nets” are included in the base rental rate.

The modified gross lease is more popular with tenants, because its flexibility translates into an easier agreement between tenant and landlord. Unlike the NNN lease, if insurance, taxes or CAM charges increase, the lease rate would not change. Of course, if those expenses decrease, the cost savings is passed on to the landlord. As janitorial service and electricity are not covered, tenants can better control how much they spend compared to a gross lease.

Summary of Commercial Real Estate Leases: NNN Lease, Modified Gross Lease, or Full Service Lease

When evaluating options for office space lease, it is important to compare the different lease options with an eye toward all expenses, and not just the base rental rates. NNN base rental rates tend to be much lower, with additional expenses added for the real monthly rate.

Market forces will tend to even out rental rates for comparable properties, regardless of type of lease. Tenants should expect to pay roughly the same amount with an NNN, modified gross, or full service lease for similar quality office spaces in the same area.

The most important rule of commercial leases is for tenants to read their leases carefully, and use their broker and attorney to help clarify any questions.

Any questions, contact us at or call (202) 802-8200.

long & foster commercial8227 OLD COURTHOUSE ROAD, 2ND FLOOR TYSONS, VIRGINIA 22182

First Time Home Buyer Options by Prosperity Mortgage


Looking for your first home? Now is the time to buy!
Let us show you low- and no- down payment options today.

Great news! With the many options now available for qualified buyers, you may be able to buy a home sooner than you ever thought possible.  Below are 5 mortgage programs that require little or no money down:

1.“97% LTV” Conventional Loans: The 3% Solution!

  • For 1-unit principal residences only, including condos!1
  • Fixed-rate mortgage with maximum 30-year term
  • Loan limits: $484,350 in most counties
  • Down payment and reserves may come as a gift from an eligible donor2

See us to compare the cost of a conventional loan vs. FHA loan:

Conventional 97% LTV3

3% down payment minimum
No upfront mortgage insurance premium
Monthly mortgage insurance can be terminated


3.5% down payment minimum
Requires upfront mortgage insurance premium
Most FHA loans require monthly mortgage insurance for the life of the loan

Now available for qualified buyers: the new Freddie Mac Home Possible® Mortgage offers reduced rates on private mortgage insurance for low- to moderate-income borrowers.

2. FHA Loans: Down payments as low as 3.5%

Federal Housing Agency (FHA) loans have the benefit of a low down payment. Be certain to compare the overall costs of all loan products, including the monthly and long-term costs and conditions of the required mortgage insurance. FHA loans require both an annual Mortgage Insurance Premium (MIP) and an Upfront Mortgage Insurance Premium (UFMIP).

On January 26, 2015, FHA reduced the annual MIP4 that new borrowers will pay by half of a percent. This action is expected to lower the cost of housing for the approximately 800,000 households who use FHA annually.5 For example, on a 30-year fixed mortgage loan with a principal balance of $200,000, the savings to the borrower could be $1,000 a year.

3. Conventional Loans: Down payments as low as 5% PLUS Gift Funds allowed

Qualified first-time and move-up borrowers may be able to get a conventional loan for as little as a 5 percent down. In addition, the funds needed to complete the transaction may come from a personal gift from an acceptable donor. This may include funds for all or part of the down payment, closing costs, or financial reserves.6

4. VA Loans: 0% down payment

Veterans, active-duty service personnel, and reservists deserve to live the American dream that they help protect. Features of the VA loan program include:

  • Up to 100% financing for qualified borrowers
  • Choice of fixed-rate or adjustable-rate products
  • Funds for down payment—plus all closing costs—can come entirely from gifts, grants and waivers

5. USDA Rural Development Guaranteed Housing Loan Program: 0% down payment

If you’ve been house hunting in an outlying area, a “Rural Housing” loan is designed to create opportunities for those with limited savings or modest incomes.7 There are no minimum down payment or cash reserve requirements, and closing costs may be financed as part of the loan amount.

There are a variety of down payment options available. It’s important to note that loans with low down payment features may require monthly mortgage insurance which could increase the overall cost of the loan. Talk with a home mortgage consultant for additional details. Contact us today for a complimentary consultation.

1 Manufactured housing is not eligible.

2 Acceptable Gift Donors: A relative of the borrower (borrower’s spouse, child, or other dependent, or one related by blood, marriage, adoption, or legal guardianship), a fiancé, fiancée, or domestic partner.

3 Available for qualified buyers and limited cash-out refinance.

4 HUD Mortgagee Letter 2015-01, January 9, 2015

5 HUD Press Release No. 15-001

6 Subject to certain minimum borrower contribution requirements. Certain affiliation and relationship restrictions may apply. See your home mortgage consultant for specific details.

7 Credit is subject to approval. Property location and income restrictions may apply and home buyer education may be required.



Romy Espino, Senior Mortgage Consultant

NMLSR ID 176685

Cell (202) 299-7750 | Private eFax (844) 398-2448

Maryland Homebuying and Closing Process


Maryland Buyers

NOW IS A GREAT TIME TO BUY A HOME IN Maryland, Virginia or District of Columbia!

  1. Mortgage interest rates are still near historic lows.
  2. Prices have moderated.
  3. The selection of homes to choose from is huge.
  4. Historically, the value of your home will increase over time.
  5. There are many tax advantages to owning a home.

When looking to enter the home-buying market in Maryland, there are many details and special cases that are nearly impossible to navigate if you have not dedicated your career to the real estate market. That is exactly why prospective buyers that work with REZAIECO- Long & Foster -Fairfax Mosaic have such an advantage.  For years, REZAIECO Long & Foster | Christie’s International have been dedicated to the study of the Metropolitan Washington, DC real estate market, and have gained the experience that comes with professionally buying a home.

Looking to find a realtor who can help you through every step of the process of buying a home?

REZAIECO- Long & Foster sets their clients up for success by faithfully staying in their corner and supporting them through each step of the home-buying process.  Through extensive marketing materials and info graphics (listed below), REZAIECO- Long & Foster has built a support structure for their clients that never leaves you feeling lost, or unsure of the next step.  For complete confidence in knowing the entirety of buying a home, from open house to moving in day, contact Alan A. Rezaie at REZAIECO- Long & Foster to get started.


  • Maryland’s home buying process is similar to other states where an attorney or representative from a title company is used to consummate the transaction and prepare all the closing documents.
  • In Maryland, buyer and seller often consummate the transaction at the same closing (or ‘settlement’) table.
  • Maryland has its own environmental features that influence which inspections get performed, such as termite inspections.

Step by Step

Part 1: Disclosures, inspections, and title

These are the initial tasks once a buyer is in contract, and are most often done in parallel to Part 2: The mortgage process:

  1. An offer is accepted by the seller and a contract is signed and accepted.
  2. Concurrently, a deposit, or earnest money, is paid to an escrow agent, an attorney, or broker (never to the seller directly).
  3. The signed contract is sent to a closing attorney or title company to begin preparation of all work related to transferring and changing the title to the new owners and preparing the title commitment.
  4. The buyer reviews and signs off on any disclosures.  These disclosures vary based on property type, but often include things like known flaws with the property, prior improvements or repairs, and potential environmental hazards.  A standardized disclosure form called the Maryland Residential Property Disclosure Statement is generally provided by the seller as an addendum to the contract and must be signed by both buyer and seller.  Sellers may see making these disclosures as beneficial to themselves, and believe that buyers will build these pre-disclosed facts into the contract price (and thus sellers may be reluctant to provide any credits for these defects).
  5. The buyer elects to perform inspections on the property if agreed upon in the contract (in Maryland, there is generally a separate addendum that covers a series of possible inspections).  Each of these inspections must be completed by a certain date, which is called an inspection contingency date.  The types of inspections vary by property type and situation (and locale), but in Maryland, a home inspector generally inspects the home first, and other inspections and tests can be ordered if revealed to be necessary by the initial inspection.  A termite inspection is also often performed in Maryland.
  6. Based on the outcome of inspections, buyers may elect to walk away if something material is found.  Or, they can ask the seller for repair work, closing cost credits, or a reduction in the sale price due to flaws that were uncovered.  Sellers have three options: agree to all of the buyers’s requests, offer a modified solution back to the buyer, or decline to make any amends.  In response, the buyer can continue to negotiate, accept the seller’s position, or walk away. All of this, of course, is done in writing.
  7. The buyer may also negotiate for a home warranty that covers major appliances from failure for a time period after the sale, typically a year.

Part 2: The mortgage process

For those borrowing to purchase their home, the mortgage process is usually the most stressful and opaque part of the transaction.  It’s best to start as early as possible and be ready to produce lots of documentation.  The following is the general process in Maryland:

  1. A buyer submits a loan application to their lender, either directly or through a mortgage broker.
  2. Within 3 days, the lender sends a ‘Good Faith Estimate,” or GFE, to the buyer that is a breakdown of estimated closing costs.  The final costs are likely to deviate from this estimate.
  3. Before the buyer is ready to write an offer, a pre-approval with a lender should be acquired.  The buyer sends a series of personal financial disclosures to their lender.  These vary by situation, but the most commonly requested documents are:
    • Several months of statements for each bank account a borrower holds (including any investment accounts)
    • Several months of statements for any outstanding loans, lines of credit, or other liabilities. This can also include documentation of rent payments.
    • Up to two years of tax returns, released to the lender via an authorization submitted by the buyer using IRS form 4506-T.
    • Recent pay stubs and contact information for each borrower’s employer.  The number of pay stubs varies by situation.
    • Any other disclosures that are material to a borrower’s financial situation. This includes but is not limited to marriage licenses, divorce settlements, child support, liens, bankruptcies, or judgments.  If there’s something that affects how much money you have on hand that isn’t shown by simply looking at your salary, be prepared to document it.
    • Explanation of any credit inquiries
    • Substantiation of any large deposits or cash gifts that aren’t regular income.  In some cases, a large cash gift may look similar to a personal loan by a friend or family member, and lenders will require gift letters from those that gave you the cash gift, stating that the gift was not a loan. They may also ask for itemized deposit slips. The exact amount that triggers this requirement varies by situation (for instance, a $1,000 cash gift may be material to a single borrower that makes $35,000/yr but may not be material to a borrower that makes $350,000/yr), so it’s good practice to ask your lender if you suspect you might have a material cash gift or large deposit – so you aren’t surprised by this at the last minute.
    • Repeated and updated documentation of any of the above. Keep in mind: to a lender, anything can happen to a borrower’s personal financial situation and credit during the escrow process.  Thus, you may be asked more than once for the same type of document so that your lender has the most recent pay stubs, rent receipts, bank statements, or other disclosures that may change over time.  Any material changes in these documents -or any element of your personal financial situation- may require the lender to reassess your eligibility for the loan for which you’ve applied.
  4. The lender renders a preliminary approval decision, called a preapproval. A preapproval takes into account the entirety of the borrower(s)’ financial situation but is contingent upon a satisfactory appraisal of the home being purchased.
  5. Provided all goes well with appraisal (and nothing changes in the borrower(s)’ personal financial situation, a lender will issue a loan commitment letter, stating its willingness to fund the mortgage.  While this is the ‘final’ approval, it’s important for buyers to understand that commitment letters are always contingent upon there being no material change in your situation -or the property- as initially disclosed to your lender.
  6. The financing contingency (a.k.a. loan contingency) is removed by the buyer before the expiration of the financing deadline (also referred to as the loan contingency date) as defined in the contract, by obtaining a copy of their loan commitment or approval.  If the buyer/borrower is unable to get this approval before the expiration of the financing deadline, the both buyer and seller can cancel the contract (though in the buyer’s case, they have to prove they were declined financing through no fault of their own).
  7. An appraisal is ordered by the lender or mortgage broker via a central directory of appraisers (often called an Appraisal Management Company or AMC).  Choosing a specific appraiser is not possible, but a mortgage broker can reject an appraiser and ask for a new one.  If the appraisal comes in lower than the purchase price, the buyer has until the appraisal contingency date to request a reduction in price from the seller.  The seller generally has a set period of time to accept or reject the buyer’s request. If the seller rejects the request, or that time lapses, the buyer can walk away from the contract without penalty.
  8. Homeowner insurance is purchased (or substantiated, if the property being purchased includes homeowners’ insurance as part of association fees or similar arrangements), and proof of homeowners’ insurance is submitted to the lender.
    Tip: As this process can be long, arduous, seemingly arbitrary, and is often critical to your home buying transaction, try to prepare these documents (or at least figure out how to prepare them) in advance.  Also, do not make any changes to your employment or credit until your transaction is complete (not just until you get a loan commitment letter).  This means not switching employers even if it results in a higher income, as counter intuitive as that may sound. It also means not leasing or financing a car, opening a new credit card account, or anything else that can affect your credit report.

Part 3: The closing (‘settlement’) itself

The closing, or ‘settlement’ process itself general takes place at one table (either at the office of an attorney or title company), where buyers sign all documents related to their loan and the transaction itself. After all documents are signed and payments exchanged, buyers generally take possession of the keys unless a separate agreement has been reached to allow the seller to stay in the property for a period after closing. The detailed steps that make up closing are:

  1. As part of the preparation for closing, the attorney or title company performs a title search (if they haven’t already) to determine if there are any liens or assessments on the title. Provided the title is deemed ‘clear,’ the closing proceeds as planned and the attorney or title company issues a title commitment.  All paperwork for changing the title / deed and title insurance is prepared, and a final closing date is confirmed with all parties.
  2. A final cash figure for what a buyer needs to bring to the closing in the form of a cashier’s check is calculated. This is based not only on a mortgage’s closing costs but factors like property taxes and utilities paid in to date by the seller.
  3. A final walk through (also referred to as a final inspection) will often be performed the day of or before closing to verify the property is in the same condition it was when the process began.
  4. At the closing, or settlement, table, the buyer (and seller) sign all closing documents, including the HUD-1, and the final loan documents.
  5. The buyer pays the remaining funds in their down payment to an attorney or a representative of the title company (who is present at closing, and sometimes called a ‘settlement agent’) via cashier’s check.
  6. The representative from the title company or attorney will then record the transaction and deed with the appropriate municipality.
  7. The buyer receives the keys and, unless indicated differently in the contract, officially takes possession of the property.

Any questions, call us at (202) 802-8200 or Email to


MD (301) 906-7707 | DC (202) 802-8200 | VA (703) 629-0994


Banker Optimism Remains Strong


CBSI_logo_white_0.pngThe September CSBS Community Bank Sentiment Index came in at 121. This is a very small decline from the very strong initial reading of 122 in the last quarter.

The index is calculated based on community banker expectations in seven key areas:

  •  Business conditions
  •  Monetary policy
  •  Regulatory burden
  •  Capital expenditures
  •  Operations expansion
  •  Profitability
  •  Franchise value

Bankers lowered their expectations for future profits and overall business conditions. In both areas, there was a shift from expecting “better” to expecting “the same.”  Given the generally positive economic environment and performance of community banks, even being the same is good news.

Community bankers expect monetary policy to continue to be more accommodative. Comments in the press started suggesting a cut in the federal funds rate during the survey period for the national survey, which includes the index questions. The first-rate cut occurred after the survey closed, with a second cut during the data collection for the current index. Overall, bankers expect this environment to continue.

Even as the September index is being released, there seems to be growing concern that contraction in economies outside the United States are now impacting the United States. Our hope is the data collected from community bankers to calculate this index will provide insight to what is actually happening at the local level as bankers talk to consumers, farmers and business people who live and work in the real economy. Currently, their optimism remains. Let’s see if that holds.

The next data collection will kick-off on December 2.

Any questions, let us know.




There are currently 387,049 properties in U.S. that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 920,048.

In August, the number of properties that received a foreclosure filing in U.S. was 4% higher than the previous month and 24% lower than the same time last year.

Home sales for July 2019 were up 0% compared with the previous month, and down 100% compared with a year ago. The median sales price of a non-distressed home was $0. The median sales price of a foreclosure home was $0, or 0% higher than non-distressed home sales.

Values are calculated by running automated valuation models for all active foreclosure properties on a monthly basis. The automated valuation model relies primarily on recent comparable sales and price per square foot. The values are grouped into ranges for a purpose of this graph.

DEMOGRAPHICS- Population: 303,965,272; Household Median Income: $51,914; Unemployment: 4.10%; Percentage of vacant homes: 12.15%

NUMBER OF PROPERTIES PER ESTIMATED MARKET – Highest Availability 100-200K/102,599 Properties
Counts are updated monthly and calculated by aggregating all active foreclosures with square footage data available. Square footage are grouped into ranges for purposes of this graph.

NUMBER OF PROPERTIES PER SQUARE FOOTAGE- Highest Availability 1200-1399 SF/46,026 Properties
Counts are updated monthly and calculated by aggregating all active foreclosures with bedroom count data available.

NUMBER OF PROPERTIES PER BEDROOM- Highest Availability 3/96,795 Properties
Counts are updated monthly and calculated by aggregating all active foreclosures with year built data available.

NUMBER OF PROPERTIES PER YEAR BUILT- Highest Availability <1950/75,880 Properties


The current distribution of foreclosures based on the number of active foreclosure homes in the U.S.

Pre Foreclosures – Prior Month 9.8 % (up) | Prior Year 22.8 % (down) Auction- Prior Month 01.% (down) | Prior Year 7.2 % (down); Bank Owned- Prior Month 3.8 % (down) | Prior Year 46.9 % (down)


The number of new foreclosure filings by foreclosure type.

Pre Foreclosures – Prior Month 9.8 % (up) | Prior Year 22.8 % (down) Auction- Prior Month 01.% (down) | Prior Year 7.2 % (down); Bank Owned- Prior Month 3.8 % (down) | Prior Year 46.9 % (down)


The number of new foreclosure filings by foreclosure type.

The number of new foreclosure filings compared to the 30-year interest rate.


Short Term Rentals in Washington, DC New Laws Starting October 1, 2019

Home-sharing platforms, such as Airbnb and VRBO (Vacation Rental By Owner, now owned by HomeAway), have dramatically increased in popularity over the past ten years and have completely changed the shape of the short term rental market in Washington DC.
This drastic rise in the popularity of vacation rental sites has caused ripples through the DC housing market, and regulators have taken notice. How will this impact landlords and tenants in DC?
Local lawmakers have enacted new restrictions on short term housing which will have a direct impact on homeowners who are using Airbnb and similar short-term rental platforms in DC. These new regulations took effect October 1st, 2019.
If you are a homeowner who is currently renting out a property via Airbnb, please read below for a full breakdown of what to expect from these regulatory changes.
In high cost-of-living urban areas like Washington DC, lawmakers have argued that short term rental platforms like Airbnb absorb inventory that would otherwise be available for traditional 12-month leases. This ends up restricting the housing supply and causing rental prices to climb higher.
In expensive cities where the average rent prices are already unaffordable for the average resident, additional restriction of the housing stock will create issues for local residents and will have an impact on the local economy. As it currently stands, there remain very few affordable neighborhoods in DC, and limiting the housing supply would push rent prices even higher.
The rapid gentrification of many neighborhoods in DC has displaced thousands of residents who can no longer afford their rent as it continues to climb year after year.
As more landlords opt for a short-term rental option instead of offering a unit for a traditional lease, demand will continue to outpace supply and we’ll see even more residential displacement over time as platforms like Airbnb continue to grow in popularity.
In 2019, there were reported to be over 7,800 short term rental units listed on home-sharing platforms in the District. Of those, 85% were listed on Airbnb alone.
Airbnb is also under attack from the hotel industry, who is losing market share due to the rise of home-sharing platforms.
The American Hotel and Lodging Association (AHLA) has spent over $1.6MM on lobbying this year, arguing that the short-term rental market has caused a loss of affordable housing as residential units have been converted into transient accommodations for tourists.
From the perspective of a tourist in DC, Airbnb is an excellent option compared to the traditional hotel model as it affords more flexibility when traveling.
In major cities throughout the US, local lawmakers have started to take action to limit the impact of home-sharing on the local housing market.
Washington DC recently passed new short-term rental restrictions that are effective as of October 1st, 2019.
The Bill, “The Short-Term Rental Regulation Act of 2018“, was passed by DC Council in the Fall of 2018 by a 9-4 vote.
The bill sets forth a new set of laws governing the short-term housing market in DC, and these new comprehensive regulations are much stricter than what landlords adhered to in the recent past. Here are the key points to know:
1) The new laws go into effect October 1st, 2019
2) Property owners in Washington DC will only be allowed to rent out one home as a short-term rental, and this home must be the landlord’s primary residence.
3) To legally operate a short-term rental, landlords (or “hosts”) must register with the city.
4) If you want to rent out an entire property (as opposed to renting out a single room), you’ll need to obtain a “vacation rental” license from the city.
5) The maximum number of times you can rent out an entire property as a vacation rental is 90 nights per year.
6) Hosts will still be required to collect the city’s 14.95% sales tax on accommodations from guests, and will be required to pass it on to tax authorities.
7) All short-term rental hosts are required to register for tax collection with the DC Office of Tax and Revenue (OTR) and must file regular sales tax returns.
8) Property owners who do not adhere to these new restrictions and requirements will be subject to fines ranging from $500 to $6,000.
Many commercial investors have purchased single family and multifamily product in Washington DC with the intent of renting it for short-term stays through Airbnb or similar home-sharing platforms.
These investors stood to see large gains through the short-term rental model, due to the high volume of tourists and other short term guests in the District—when you rent out a home on a per-night pricing model, you can charge more than if you were to rent it to a longer term tenant.
In light of these new regulations, this investment model may no longer be possible in DC. Unless the new laws are overturned or materially modified in the very near future, there is a lot of risk in continuing to run a short-term rental business in DC.
The fines would dilute your returns, and the DC government has funded a new initiative to enforce these laws beginning October 1st, 2019.
To protect your investment against legal complications under the new regulations, the safest move is to convert the property to a traditional long-term tenant lease model. The level of risk involved in operating an illegal short-term rental would render the investment untenable.
Despite the higher gross potential revenue that can be generated on a short-term basis, there are quite a few benefits to a traditional long-term-tenant model for homeowners and investors. Given the recent regulatory restrictions on short term housing, now is the best time to make the switch.
Here are the key benefits of converting an investment property into a long term lease model:
​1) Much Better Income Stability – you can lock in stable fixed income over a 12-month or 24-month lease. This fixed-income approach allows you far greater leverage of the asset.
2) Lower Turnover Rates – with fewer tenants (or “guests”) coming and going, you’ll have less wear and tear on your property. Longer term leases help support the property’s longevity from a maintenance-cost standpoint.
3) Actual Passive Income – once a tenant is in place for a long-term lease, you don’t need to worry about handling the day-to-day activities involved with constant guest bookings.
4) Legal Compliance – you’ll be in good legal standing with the city, and don’t need to deal with the stress of operating an illegal short term rental.
The DC regulatory landscape is constantly evolving, and it is crucial for all stakeholders to stay up to date on these changes. The new short term rental laws will have an impact on landlords, tenants, visitors, and potentially the local housing market as a whole.
Any questions, contact REZAIE REPORT at 1.800.674.4574 or email to
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7 Most Common Real Estate Mistakes

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Small and mid-market companies are at an inherent disadvantage in their ability to use real estate as a strategic driver of their business.  Where large, global companies employ departments to provide deep expertise and infrastructure to manage the process, small and mid-market companies have neither the expertise nor the ability to sustain such infrastructure.

As a result, they treat it as an expense to be minimized, rather than an asset that can support and leverage their efforts to grow their business, increase profits and maximize the enterprise value of their business.

7 Most Common Real Estate Mistakes

  1. Disconnect Between Real Estate Decisions and Overall Business Strategy

The most important thing you must keep in mind when engaged in a business real estate decision is that the decision you are making isn’t about real estate… it’s about your business.  You’re not leasing/purchasing space—you’re growing your business.

The biggest mistake made by small and mid-market companies is the failure to fully align and connect real estate decisions with overall business strategy.  Even companies with as little as 2,500 sq. ft. of space can gain significant operational, financial and marketing advantages by taking a strategic approach.

The failure to connect real estate to you overall business strategy not only has the direct impact of higher occupancy costs, it is likely to have measurably adverse effects on cash flow, the flexibility and control of your business, productivity, and your ability to compete.

  1. Failure to Understand the Market

With the Internet today, it is easier than ever to think you have an understanding of the market. In a matter of a second you can see what space is available and even how much the space is leasing or selling for.

This has had two negative consequences:

  • Armed with this information, business owners and executives have been lulled into a false sense of confidence.
  • And, frankly, real estate brokers have gotten complacent. It’s easier than ever to pull reams of data, print out tons of pictures, and present the appearance of knowledge.  While this has helped real estate agents close business, it’s hurting their clients.

The reality is that while the transaction informational real estate is easily available, the knowledge about real estate and how it strategically aligns with your business is as difficult to access and disseminate as ever.  The ecosystem that comprises the commercial real estate industry is fraught with complexity and fractured service providers.  Understanding the market and utilizing your project’s appropriate industry tools is paramount to a successful and timely real estate services.

  1. Confusing Direct Costs with Total Cost of Occupancy

It seems simple enough; add up your annual rent/mortgage payments, add any build-out, and add the cost of utilities and upkeep.  Once you add up these factors you find the space that fits your needs and has the lowest “cost.” As with most business principles, what appears simple and obvious is usually not effective.

We call the calculation above The Direct Cost of Occupancy.  Far more important is The Total Cost of Occupancy; which could also include costs such as furniture, Internet connectivity, employee commuting time/gas, landlord pass-through, etc. This is THE critical number that shows all the underlying costs of real estate instead of just the direct cost.  The Total Cost of Occupancy must be understood to ensure that your real estate decisions move you toward success. Countless times, we’ve seen that the lowest direct cost represents the highest total cost.

  1. Buying When You Should be Leasing and Leasing When You Should be Buying

Over the last 10 years, one of the most frequent questions received from clients is about the pros and cons of buying vs. leasing.  While the issue can appear to be relatively simple and straightforward, the reality is that the entire issue is fraught with complexity.

It is impossible to clearly and confidently address this issue without there first being clear alignment with the overall business strategy (see mistake one above). The decision to buy or lease impacts an almost infinite number of variables, some of the most important being:

  • Cash flow
  • Total cost of occupancy
  • Restricting funds
  • Taxes
  • Risk
  • Income statement & balance sheet
  • Company valuation
  • Personal wealth creation

Making the buy vs. lease decision isn’t really about making a right/wrong decision. It’s about understanding the trade-offs incurred with each decision, and ensuring that you make the one that best fits your strategy and investment goals. It requires scenario planning and a comprehensive review of financial impacts.

  1. Not Integrating Build-out and/or Construction Management

While the entire real estate process can be complex and disruptive, the build-out process stands out at the extreme.  While large, global organizations employ entire departments to manage the process, small and mid-market companies don’t have the infrastructure or permanent need to manage the process professionally.

This leads companies to typically choose between two less-than-desirable approaches: rely on the landlord to manage the build-out, or do it themselves.

Doing it yourself will typically yield far better results, but it also multiplies the disruption, the indirect costs of the process as well as opportunity costs. Additionally, it can add significant risk in the near and long-term.

It is far more effective to utilize construction management services to ensure the process works smoothly for you. At first blush, this approach may appear to “cost” more, but it is certain to reduce the total cost of occupancy. This frees you to focus on your primary business while leveraging our experienced professionals to manage your project’s complexities and risks.

  1. Failing to Utilize a Clear Negotiation Process

Anyone who has negotiated a lease understands just how difficult the process can be. It’s disruptive, emotional and high impact. When your real estate decisions are integrated with your business strategy (see mistake one above), you have a full understanding of the market (see mistake two above), and you understand the needs of the other party. If you combine these elements with a clear negotiation process, you gain a tremendous advantage that can have a multi-million-dollar impact on your business.

  1. Ineffectively and Inefficiently Using Your Capital

Real estate decisions are fraught with complexity and risk. The decisions you make today will have a direct impact on what you are able to do in the future, as well as the results you will enjoy.

Make good decisions and you’ll see your business grow and your business enterprise soar.

Make ineffective decisions and you’ll find your business hamstrung, and your business will become more volatile.

Real estate is typically the second-largest controllable expense for small and mid-market businesses. As any executive of a growth business understands, the decisions you make about cash and capital will have a disproportionate impact on your business results.



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Get LuxInsight® on High-End Homes


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As a leader in bringing luxury buyers and sellers together, we share our unique perspective on the region’s luxury real estate markets in our exclusive LuxInsight report.

Take along look to learn more, and then feel free to contact RezaieCo for help selling or buying luxury homes.

Washington D.C. Metropolitan Area:

A summary of the latest market statistics across 22 cities and counties in the Washington D.C. Metropolitan area: District of Columbia; Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania, Stafford, Warren Counties and Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Manassas Park Cities in Virginia; Calvert, Charles, Prince George’s, Frederick, Montgomery Counties in Maryland; Jefferson County in West Virginia.

Baltimore Metropolitan Area:

A summary of the latest market statistics across seven major cities and counties in the Baltimore Metropolitan area: Anne Arundel, Baltimore, Baltimore City, Carroll, Harford, Howard and Queen Anne’s.

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