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Yes. America Still Has Affordable Homes (Gasp!). Here’s Where They Are

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The beauty of patterns of Washington streets

America’s torrid housing market isn’t showing any signs of slowing down—at least for now.

In April, every home sold in the U.S. had at least 5 offers on average according to the National Association of Realtors, while three-quarters of offers for homes represented by Redfin agents resulted in bidding wars. In some markets like Westchester, NY, homes are for up to 30% over ask with no contingencies and 48% of houses nationwide last month sold for more than their original list price.

One suburban Washington, D.C. 4-bedroom home reportedly recently had 76 all-cash offers within 72 hours of being listed and eventually sold for 70% over asking price.

The current hyper-caffeinated housing market isn’t just isolated to the U.S.

Home prices in 37 of the world’s wealthiest countries comprising the Organization for Economic Cooperation and Development (a.k.a. the OECD), including the U.S., Canada, Mexico, Colombia, Australia, New Zealand, Japan, Israel, Turkey, Korea, and virtually all of Europe, rose 7% year-over-year between 2019 and 2020, the fastest pace of international housing inflation in two decades since before the Great Recession.

For Millennial first-home buyers in the U.S., current homeowners and Baby Boomers looking to downsize or pull new-found equity out of their homes, or growing families needing to trade up, all of the panic buying raises two essential questions. How long will the current boom last? And, more importantly for buyers who don’t have the time to wait around to find out, are there any affordable houses in America left?

On the former question, there are mixed opinions on how long the current froth can sustain itself against persistently high unemployment and low wage growth on the backside of the pandemic. But most real estate economists and experts largely agree that the fundamentals of the present housing upswing are strong—unlike the glass house that was 2008 and despite predictions that the pandemically-induced economic contraction last year could force tens of millions of Americans into foreclosure and eviction, triggering another national housing crisis.

The reality is that the opposite happened.

For an American economy that’s still recovering, this is all great news for current homeowners, recent buyers, and investors who’ve gotten in early enough to get a piece of the action on one of the hottest asset classes right now outside of the stock market.

But the panic homebuying has driven up prices beyond most current buyers’ financial capabilities, which in turn is exacerbating an affordability and housing supply crisis that’s been building in the U.S. for years since the Great Recession, particularly among the approximately 5 million Millennials turning 30 every year and entering prime first-time homebuying years.

As to the more important second question: Where are affordable homes in vibrant, stable American cities still available?

It turns out a lot of places—if you know where to look and don’t have to commute every day to a top ten U.S. metropolitan area like New York, Chicago, San Francisco, Seattle, or Washington, D.C., which fortunately tens of millions of Americans don’t have to any longer in the new remote work normal.

Against most buyers expectations, most of these affordable cities right now are also in some of America’s hottest destinations currently when it comes to everything Millennials and first-time homebuyers want according to real estate experts, including thriving local hubs for food (Louisville), music (Memphis), sports (Pittsburgh), tech (Indianapolis), and jobs (Birmingham).  

What’s ultimately driving affordability in America’s last attainable housing markets are prices that already were reasonable priced in the first place before the pandemic hit, say most experts. As a result, compared with currently super-charged markets like South Florida and Austin that just got tighter and more irrational over the past twelve months, many homes in these cities already were within most first-time homebuyers’ financial limits in the first place despite nationwide housing supply constraints.

“These affordable markets are not necessarily any less competitive than many others around the country. The crucial difference is price point,” says Arpita Chakravorty, a Zillow Economist. “In some of these cities home values are up almost 20% from a year ago, which are some of the highest growth rates in the country and not far off from what we’re seeing in places like Phoenix or Austin. But even with the strong appreciation in the markets on this list, they remain among the least expensive large U.S. metros in terms of home prices overall.”

The new remote work normal is also empowering millions of potential homebuyers to look at cities and neighborhoods that were never on the map before because they needed to commute to jobs in major metropolitan areas. That’s making homes in formerly lesser know cities in the Midwest and South that always had thriving downtowns and sustainable economies before the pandemic some of the best places to invest in real estate after it based on year-over-year appreciation.

“The explosion of remote work has caused many to reimagine what and where they want their home to be,” continues Chakravorty. “So more affordable areas of the country are in high demand as buyers look for homes that offer more room to spread out. That could mean moving farther from a downtown core into nearby suburbs, or from a more-expensive metro to a less-expensive one which is in part what’s driving price appreciation in these smaller, Midwestern and Southern cities. The bottom line is that we are still in the early stages of what we call the Great Reshuffling as many are taking advantage of more flexible remote work policies to rethink where and how they want to live. Some who have been working remotely during the pandemic may be called back to the office. But others will receive firm guidance from their employer of a permanent ability to work remotely and take advantage of that freedom for years.”

As for the future of America’s housing affordability crisis, few are bold enough to predict what comes next. But everyone agrees on the most obvious solution: more supply—particularly when it comes to first-time, women, minority, and immigrant homebuyers.

“More housing is the clearest path to a more balanced market between buyers and sellers,” says Chakravorty. “Ideas like down payment assistance can help, especially for younger generations who are competing in today’s incredibly competitive market with long-time homeowners who have built up equity from the home price gains in recent years. But demand shows no signs of meaningfully slowing any time soon, so without more supply to meet that demand it’s likely that prices will continue to grow at a fast pace and make down payments a bigger and bigger challenge for first-time buyers. Builders are doing their part, but it will take years, if not decades, to catch up from the underbuilding that took place following the Great Recession.”

In the meantime here are fifteen of America’s most affordable cities where home prices still are attainable with some of the most, vibrant up-and-coming cultural, entertainment, hospitality, and tech scenes in the country.

[NOTES: Cities are ranked from high to low based on mortgage affordability as determined by Zillow and based on the share of a metro’s median income that would be needed to pay a mortgage on the median house in that metro area. A negative number in mortgage affordability Y-O-Y means that city got more affordable between Jan. 2020 and Jan. 2021. All data courtesy of Zillow]

Scranton, PA

·     Mortgage Affordability: 11.1%

·     Mortgage Affordability Y-O-Y Change: -2.2%

·     Median Home Price: $139,985

·     Y-O-Y Price Appreciation: 14.2%

Jackson, MS

·     Mortgage Affordability: 11.1%

·     Mortgage Affordability Y-O-Y Change: -6.9%

·     Median Home Price: $157,611

·     Y-O-Y Price Appreciation: 8.8%

Little Rock, AR

·     Mortgage Affordability: 11.3%

·     Mortgage Affordability Y-O-Y Change: -7.2%

·     Median Home Price: $166,580

·     Y-O-Y Price Appreciation: 7.6%

Baton Rouge, LA

·     Mortgage Affordability: 12.6%

·     Mortgage Affordability Y-O-Y Change: -5.4%

·     Median Home Price: $198,547

·     Y-O-Y Price Appreciation: 3.3%

Birmingham, AL

·     Mortgage Affordability: 12.6%

·     Mortgage Affordability Y-O-Y Change: -2.9%

·     Median Home Price: $195,643

·     Y-O-Y Price Appreciation: 10.7%

Oklahoma City, OK

·     Mortgage Affordability: 12.7%

·     Mortgage Affordability Y-O-Y Change: 0.8%

·     Median Home Price: $179,922

·     Y-O-Y Price Appreciation: 8.9%

Indianapolis, IN

·     Mortgage Affordability: 12.8%

·     Mortgage Affordability Y-O-Y Change: -1.2%

·     Median Home Price: $212,334

·     Y-O-Y Price Appreciation: $13.7%

Columbia, SC

·     Mortgage Affordability: 12.8%

·     Mortgage Affordability Y-O-Y Change: 2.1%

·     Median Home Price: $179,785

·     Y-O-Y Price Appreciation: $10.3%

Augusta, GA

·     Mortgage Affordability: 12.9%

·     Mortgage Affordability Y-O-Y Change: 1.4%

·     Median Home Price: $177,614

·     Y-O-Y Price Appreciation: 12.2%

Louisville, KY

·     Mortgage Affordability: 13%

·     Mortgage Affordability Y-O-Y Change: -6.8%

·     Median Home Price: $205,647

·     Y-O-Y Price Appreciation: 10.6%

Memphis, TN

·     Mortgage Affordability: 13.3%

·     Mortgage Affordability Y-O-Y Change: -0.7%

·     Median Home Price: $182,914

·     Y-O-Y Price Appreciation: 13.2%

Pittsburgh, PA

·     Mortgage Affordability: 13.4%

·     Mortgage Affordability Y-O-Y Change: -0.1%

·     Median Home Price: $185,063

·     Y-O-Y Price Appreciation: 13%

Winston-Salem, NC

·     Mortgage Affordability: 13.4%

·     Mortgage Affordability Y-O-Y Change: 0.5%

·     Median Home Price: $184,526

·     Y-O-Y Price Appreciation: 15.1%

St. Louis, MO

·     Mortgage Affordability: 13.7%

·     Mortgage Affordability Y-O-Y Change: 0.4%

·     Median Home Price: $205,604

·     Y-O-Y Price Appreciation: 11.5%

Cleveland, OH

·     Mortgage Affordability: 14%

·     Mortgage Affordability Y-O-Y Change: 0.8%

·     Median Home Price: $184,224

·     Y-O-Y Price Appreciation: 13.5%

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Ten Best Outdoor Design Trends Of 2021

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A picnic with rattan chairs, pillows, a table and other accessories in a woody outdoor space.

Summer is finally here. If you’re excited to see friends and family, you aren’t the only one. For many of us, this season is sure to be filled with pool parties, patio picnics, and backyard barbecues. So, there has never been a better time than now to refresh your outdoor space. Whether your backyard needs a major overhaul or just some sprucing up, here are the top outdoor design trends of 2021. From the colors you must accessorize with to the design elements that stayed popular from last year, these are all great ways to upgrade your outdoor space.

Painted Details

Bid farewell to the white picket fence and say hello to pink, aqua or any vibrant hue you choose because painted details outdoors is one of the newest trends of 2021 according to Danielle Blundell, Home Director of Apartment Therapy.

This includes everything from fences painted unique colors to custom murals and even painted pool decks. This is also a great DIY project to try. “Exterior paints can be different colors. And you don’t have to worry about the wear and tear. You might have to refresh it seasonally the same way do with decking or your driveway,” she tells me.

This trend may very well be inspired by the Instagram walls that we so popular prior to the pandemic. 

Rattan

We’ve been seeing rattan for several years right now and there’s no chance this trend is going away any time soon. There’s a good reason for this. Rattan is an eco-friendly, high quality material with a timeless aesthetic, according to Janelle Bowers, founder and CEO of Resol Beach. “Rattan is made from natural, sustainable materials that can weather the elements and will last over time. It has been a major trend in outdoor design because it allows us to spend more time outside while enjoying these products, which in turn creates value through memories and experiences.” 

The only caveat to keep in mind is that it can take a little bit of work to maintain. “The best way to care for rattan is treating it like any other piece of furniture. Proper care will ensure the longevity of the natural materials. To maintain the beauty of rattan, clean regularly with a damp, clean cloth and avoid harsh chemicals or oil-based products. When not in use, use a cover to avoid direct sunlight and store in a cool, dark place,” say Bowers.

Broken Plan Layouts

If the pandemic taught us anything, it’s that the open floorplan home isn’t quite as appealing when everyone is home all day every day. The same rules apply to outdoor spaces as well, interior designer and HomeGoods Style Expert, David Quarles tells me. “This summer, creating designated spaces outdoors is just as important as it is indoors, as broken-plan layouts are rising in popularity.”

Fortunately, building out a separate layout for patios and backyards can be easy. “Just use your home’s interior layout as your inspiration. Designing outdoor kitchens, lounge areas and dining ‘rooms’ can be easy and affordable by shopping stores like HomeGoods. My favorite trick is to mix-and-match chairs within matching outdoor dining sets, like I did with this solid teakwood table set I found at HomeGoods, to creatively bring the indoors to your outdoor oasis” he says.

Yellow

We could all use a little extra sunshine and there’s no better way to do this than with the color yellow.

“Yellow is the color of optimism and a beautiful way to add a bit of cheer to any space. Try adding hints of your favorite shade of yellow with weatherproof throw pillows, ceramic vases, or handcrafted baskets like I have on my deck’s lounge area, that I purchased from my local HomeGoods for amazing prices! Yellow is also one of Pantone’s colors of the year,” says Quarles.

Fire Pits

Fire pits were a major trend last year and at one point most major retailers were seemingly sold out. Whether built-in or freestanding, they’re just as popular this year. According to broker Gerard Splendore of Warburg Realty, these accessories are the ideal way to get groups outside and reunite with friends and family.

“The fire pit is a gathering spot seen more frequently this summer, as neighbors and friends get reacquainted after isolating for much of the year. Lighting a fire for immediate family members is just as satisfying as it is for a larger group,” he says.

Outdoor Speakers

Whether it is a hardwired system or a portable Bluetooth speaker, as we say goodbye to Zoom happy hours, music is a great way to create an ambiance. “Outdoor music speakers or portable sound systems are a part of every summer gathering this season, which may not be to everyone’s liking. Loud music late at night is a part of the summer landscape, both urban and beyond, but is more prevalent this year as people congregate outdoors,” says Splendore. While you might enjoy the music, you should still be considerate of your neighbors unless you want to read about it on NextDoor.

Outdoor Kitchens

If you’re considering selling your home, there couldn’t be a better time to install an outdoor kitchen. And if you plan to stay, they’re an easy way to help entertain friends and families, agent Karen Kostiw of Warburg Realty tells me.

“What’s a party without the food? Outdoor kitchens have been built out with all of the bells and whistles: fancy grills and smokers, pizza ovens, refrigerators, etc. It’s still difficult for many people to travel, so they are making their outdoor living spaces into a special oasis.”

Greenery Everywhere

While plants have been a major trend for both indoor and outdoor spaces, it’s becoming popular to integrate greenery into other aspects of design. “A lot of cool treatments you’re seeing include stones and grass mixed together, or pavers and grass mixed together,” Blundell tells me.

In addition to this, she has seen a lot of people installing checkerboard floors outside with pavers. “That’s kind of another big trend [along the lines of a] return to classical motifs.”

If grass isn’t growing abundantly in your yard, Blundell suggests mixing it with a bit of faux grass “It’s hard to tell what’s real versus fake,” she says. After all, every home has a few secrets.

Bringing The Indoors Out

Bringing the outdoors inside has been one of the biggest design trends in recent years. Now bringing the indoors outside is having a moment. “At Apartment Therapy’s Small/ Cool Experience, it’s one of our top trends for 2021. And it’s all about maximizing your comfort and being cozy outside no matter the season,” Blundell tells me.

To get this look, she recommends accessorizing your outdoor space with throws, lanterns, and bistro lights. “Turn whatever sliver of space you have, into an outdoor living room where you can kick back and relax. And it goes further than just lighting and textiles. We are starting to see mirrors come outside and sculptural pieces on the sides of homes.”

Outdoor Rugs

Outdoor rugs are another example of bringing the indoors outside.

So what’s the best way to integrate this accessory into your outdoor space? “When it comes to styling, I always start with an outdoor rug as it’s typically an indoor element that can bring beautiful texture and familiarity to an outdoor space. Be sure to look for a rug suited for outdoor use: a material that is easy to clean, won’t fade with sunlight and can handle high moisture and heavy foot traffic,” says Roxy Te Owens, founder and creative director at Society Social.

Outdoor rugs look great on patios or even to section off an outdoor living space in a backyard with a dining table or a sofa and chairs.

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15 Strategies For Succeeding In A Saturated Real Estate Industry

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Photos of featured members.

Many professionals believe they need to avoid a saturated market because it presents too much competition. However, there are plenty of opportunities for innovation in markets heavy with competitors. Real estate professionals are not immune to an overly saturated market. As such, they’ll need to carefully implement strategies that will enable them to experience successes in their local communities.

Which strategies will allow real estate professionals to focus on standing out from the pack? Below, 15 members from Forbes Real Estate Council offer their best advice on how to succeed in a saturated real estate industry.

1. Always Bring Value To Your Clients

Bring real value to your clients so you are no longer a commodity. In that space, there is no saturation! Keep elevating your knowledge, too, so that you are a few steps ahead of the pack. – Nancy Kowalik, Nancy Kowalik Real Estate Group

2. Gain Access To Capital

Finding reliable and cheap capital, which you can execute efficiently, is the greatest obstacle. The CRE space will only get more crowded, and capital allows investors and owners to move faster than their competitors. – Paul Monsen, GSP


Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?


3. Be Innovative And Creative

In these times, you must be able to not just deliver but deliver quickly. To do that, you must be innovative and creative in how you operate and market. – Jammie Jelks, Legacy Home Loans

4. Use Technology To Save Time

Go tech-first. You need to delight your customers and do it on a cost basis that is more efficient than ever required. If you can use technology to automate all the busy work, you have time to focus on what makes you stand out. It will also save you time in the long run. Time is money, so you’ll become more efficient. You’ll be able to focus on providing the important human touch that is critical in real estate. – Chuck Hattemer, Onerent

5. Find Your Expertise In A Specific Niche

The riches are in the niches! Always remember that. By focusing on a specific niche in the market, you will be seen as the expert. Thus, you have much higher chances of success in a saturated market. For example, if you focus on investment sales in the commercial real estate market, you will become an expert in that field and always stand out among other real estate professionals. – Pamela Bardhi, The Mosche Group

6. Answer The Phone And Return Calls

It’s simple: answer the phone or, at the very least, quickly return every call. It’s a No. 1 rule in deal-making 101. I know it sounds obvious, but nowadays, it’s increasingly rare to catch someone on the first try, so use this common frustration to your advantage by leaving voicemails and waiting for a call back. We’ve won more business simply because we picked up the phone or returned calls before anyone else had. – Ronnie Miranda, NewQuest Properties

7. Utilize Credibility Building Tools

Find the thing that sets you apart. We make sure that we are providing as many value-adds as we can for the seller. We also use testimonials and other credibility builders, such as BBB and Google My Business reviews. If you’ve been in the industry for a long time, these credibility builders are the easiest way to set yourself apart and position yourself as an expert with longevity in the business. – Melissa Johnson, webuyhousessanantoniotx.com

8. Build Trust In Local Communities

In an increasingly saturated real estate industry, companies that are mission-driven and generate returns for all stakeholders demonstrate distinct value. We focus on being proactive community partners and building trust in the communities we serve. This helps us maximize our impact and catalyzes success on future projects. – Jeremy Bronfman, Lincoln Avenue Capital

9. Share Knowledge With Industry Experts

Engage industry participants. If there were a magic method, you wouldn’t believe it because of all the get-rich-quick schemes around. If those purveyors really knew what they were selling, why would they share that information? What needs to happen is a concerted engagement effort with clients and industry functionaries. Make a lot of calls. Once you have done that, get updated to expand your own knowledge. – Michael J. Polk, Polk Properties / Matrix Properties

10. Strive For Creativity In All That You Do

Be flexible and creative around how you align the values, desires and interests of all parties in the transaction. This method has the ability to unlock opportunities that are less saturated while maintaining alignment with your clients. In my business for example, we are the creators of radical consistency, which makes our product unique in itself—in what could be called a saturated marketplace. – Alex Allison, D. Alexander

11. Be Authentic With Clients And Investors

Always be authentic in your interactions with your clients and investors. Sometimes, this business can have a sole focus on closing the deal. It’s important to remember to bring value first to the customers you serve and success will follow. – Todd Sulzinger, Blue Elm Investments

12. Prioritize And Delegate Tasks

Do not spread yourself too thin. One of the biggest mistakes is to get involved with too much too fast. Real estate professionals are known for wanting to do it all alone, from marketing to learning about every community in town. It is important to build solid foundations, delegate jobs that are not income-producing and focus on a niche. – Marco Del Zotto, LIV | Sotheby’s International Realty – Breckenridge CO

13. Become An Authority Brand

In a very competitive environment, you must establish a brand with very strong authority. Agents should define a niche, such as first-time buyers, luxury housing or veterans, and master it. Then, everything you do and say comes from that authority stance. Clients want to work with experts, not amateurs. Begin blogging, doing live videos and collecting recommendations. – Lisa Copeland, The Agentcy by Tarek El Moussa by Exp Realty, LLC

14. Be A Compassionate Human

Be a good human. I know that sounds crazy and incredibly simple, but that’s because it is. Now more than ever, people want to be cared for, heard and treated well. Be patient, kind, follow up and follow through. Love is the best thing we do. As romantic as it sounds, I believe in this phrase in business just as much as I do in life. – Chris Turcotte, Centum Financial Group

15. Commit For The Long Haul

Be persistent about staying in it for the long haul. Newbies come and go but to truly succeed, you need to commit yourself to the long haul, during the good times and the bad. Master your craft, and become smarter and more innovative than your competition. – Nick Ron, House Buyers of America

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Real Estate

Why Don’t Alternative Asset Investors Care About Fees?

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Confident Businesswoman Working With Laptop In The Financial District

Eliot Bencuya is Co-Founder of real estate investing firms Streitwise and Tryperion Partners.

One of the most interesting dynamics I’ve realized working with retail investors is how little investors, sophisticated or otherwise, focus on fees. From what my team has gathered, only a small percentage of investors even ask questions about fees, profit sharing, the structure of the transactions and other non-property-level questions. 

What’s particularly fascinating about this is that in the public markets, lower fees across all products have been front and center. Exchange-traded funds (ETFs), both passive and active, have been extraordinarily focused on gathering market share by reducing costs and expenses, and that seems to have really resonated with public markets investors. 

In the alternative investing space, which includes private real estate, something is preventing the same focus. For sophisticated allocators, it appears that other incentives in the decision-making process take precedence over fee negotiations (e.g., career risk, or the job safety of allocating capital to known managers, and the lack of daily price changes like in public markets). For retail investors, the lack of information about what questions to ask can be a challenge. 

What’s even more interesting is that investors in many cases are not even aware of who the operator of the real estate investment is and what layers that may add to return dilution. And while an offering may represent a “projected XX% IRR” with ostensibly attractive return targets, the foundation of those projections is largely a black box.

There is absolutely nothing wrong with investing as a limited partner (LP) in a joint venture (JV) with an operator that charges certain fees and waterfall. But if you’re investing through the LP and the LP tells you it’s “fee free” because the fees and profit sharing are being charged within the JV and not directly to you, then it’s entirely detached from reality as it pertains to the investment dollars no matter how technically true the statement might be.

What are the right questions to ask?

It’s not appropriate to tell anybody what they should or should not accept, what is too much risk or not enough risk, or what fees should be or should not be. 

When all is said and done, the market for capital is the same as the market for anything, and if a willing investor is happy to demand an investment allocation from a sponsor, then the sponsor will charge fees until they no longer can. At the very least, one should be armed with the right kinds of questions to ask.

The most obvious question is ‘What are the fees?’

Everyone presumably knows to ask this one. The responses will vary, but in general I’m talking about upfront offering fees, acquisition fees, ongoing asset management fees, construction management fees, leasing fees, disposition fees, guarantee fees and so forth. What one ought to be looking for in the response is two-fold: the effect on net investment returns and the effect on net sponsor co-investment. What’s really important is how much money one makes after fees and how much risk is being shared by the sponsor.

The next question, which pertains to the investment dilution, is ‘What’s the waterfall?’

Investors need to understand the split at different levels of return to truly understand how much potential upside one is forgoing and what the likelihood is of hitting those parameters. In order to put an investment in the context of one’s overall portfolio, upside surprises are as relevant as downside surprises, because the upside surprises are a ballast to downsides. (It also helps to know the track record of the sponsor in delivering and/or the ability to underwrite the real estate itself, but for many investors these are not realistically available.)

The last question, and most importantly the least asked question, is ‘Where are the fees?’

Too often sponsors and other service providers will suggest that they are charging limited fees wherein the fees are simply buried somewhere else in the capital structure. If the investment vehicle in which one invests doesn’t charge fees, but such an entity is the LP of a joint venture where the joint venture is charging all sorts of fees, that dilution is still being passed through. Sponsors love to play tricks with wording where “fee free” simply means “net investment dilution somewhere else in the capital structure so I can claim that ‘I’ am not charging you such fees.”

Even if you’re ultimately happy with a 6% return or a 10% return, or if you’re really shooting for a 20% return, if you don’t understand the fee structure, you won’t understand how much you’re being held back from achieving or outperforming those goals by the dilution of your investment dollars.

The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.


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