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Welcome to Real Estate Live, a biweekly discussion of the Washington area housing market. Post real estate reporter Daniela Deane takes your questions and comments about Washington's real estate market.

Deane has been a Post real estate reporter since April 1999. Previously, she was a reporter for more than 20 years -- mostly overseas.

The transcript follows.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

Daniela Deane: Hello everyone! Welcome to Real Estate Live at its new time, every other Thursday at 2 p.m. I've got a lot of good questions here today, not all of which are on investment real estate! I'll do my best to get to as many as I can...and will answer as best I can. Remember, I'm far from knowing everything there is to know about real estate in this area! And take everything I say with a big handful of salt...It's all just my opinion, which I've formed from my reporting. With all that in mind, let's get started!

Alexandria, Va.: Sometime insomniac that I am, I often find myself channel flipping at odd hours. A recurring infomercial hosted by a fellow named Carlton Sheets promises quick riches by following his scheme to invest in real estate with no money down and presumably sell it at a profit. What is the catch?

Daniela Deane: Funny you should mention that. In my Saturday story, which is about investing in real estate (see why I wanted to talk about that today!), a couple of investors actually recommended Carlton Sheets as a good source of information. The truth is real estate is a good investment, as my reporting has shown. With a few caveats. Pick up the section on Saturday! (Now that's what you would call a plug!).

Manassas, Va.: My fiancee currently owns a 20+ year old townhome in the Bristow Station neighborhood of Manassas. We had planned to sell his place and buy a single family home in Leesburg this summer.

A realtor recently told him that it is still a seller's market in Manassas and that he would be wise to sell now. We aren't ready to buy for a variety of reasons (my lease, relocating to Leesburg, etc) -- so are considering selling now and having my fiancee find an apt. with a short term lease until we find our 'dream' home.

Would this be advised? Do you think the summer will present better buying options in Leesburg?

Daniela Deane: Well, I would think it would be a hassle to move into a rental for just a few months, throw money away in rent, just to buy by next summer. If it were me, I would just start looking for that dream house in Leesburg now (it'll take a while to find it, I would think...dream houses always do) and put off selling your townhouse until you're ready to move. Nobody is predicting a collapse of the real estate market in this area anytime soon. A slowing of appreciation yes, not as many buyers too, a few more properties out there as well, but I would think that if your townhouse in Manassas is in a decent location and NOT surrounded by a bunch of new townhouse developments that would compete against yours (that could be bad), next summer would be fine. Without saying anything about realtors, because there are some great, incredibly knowledgeable, very helpful ones out there, I'm not surprised they want you to sell now. Are you?

Reston, Va.: Hi, Need help on where to start. Currently, I'm living in a house that is fully paid for. Thinking about renting the current house and buy another house and move. Where should I start? Can I use the equity of the current house to borrow mortgage for the new house?

Daniela Deane: Gosh, congratulations on having a house fully paid for!! That's fabulous....Yes, you can use the equity of your current, paid-off house for many things actually: To put the downpayment on your new house, to put your kids through college, to invest in stocks, to go to Tahiti for a month, whatever you want. I like your idea of not selling, though, but renting. You're well on your way to a nice retirement!

Arlington, Va.: Hi. I really hope you can provide some advice. My husband and I are saving for our first home. Our current rent is quite high ($1450) and we only have a few thousand saved so far, but we are completely debt free. Friends of our have suggested that since we're already paying so much in rent we might as well take out a "80/20" loan (?) and find a house soon. We had previously been approved for a $325,000 loan (first time buyers) so I think we can find something in our price range (I hope!). What is your assessment of the market in northern virginia and do you think we should wait or start to look? Thanks so much for any advice - we're really confused!

Daniela Deane: Hmm....An 80-20 loan as you call it seems a straight mortgage to me with a 20 percent downpayment. Perhaps they're talking about the 80-10-10, where you put down 10 percent, or even a 90-5-5 combination, where you put down only five percent. There are many loan products out there, where buyers don't have to put down much cash at all. Even no cash. I suggest starting to look if you want to buy. In my book, buying where you live is always better than renting. Get started! And good luck!

Foggy Bottom: Looking into getting a home equity loan. What is the diff exactly between home equity LOAN and obtaining a home equity line of credit. I'm told the line of credit works like a credit card which personally scares me (y'know, debt never paying off, endless monthly payments). Can you provide the pro/con of each -- or which you prefer? THANKS!

Daniela Deane: A home equity line is like a credit card limit in the sense that you can borrow up to that amount. The way it works is that a bank will come appraise your house and then decide how much they'll lend you on it based on the equity you've built up in it. You can borrow as little of that or as much as you want. It's basically there when you want it. And yes, it can be tempting to use it. Rates are so low now, though, that, for example, if you do have a bunch of credit card debt at interest rates of 15 percent or more, it would be wise to pay those off with the home equity line to get a cheaper interest rate. Once you've borrowed it, it becomes a home equity loan. So, you have a line of $100,000, say, and you've borrowed $20,000 of that, so that $20,000 becomes the loan. A home equity loan is a fixed amount you borrow and then pay on it. But if you don't know how much you need or will, a line is preferable. You use what you want, and then you pay as you use. Think about what you're paying out (car payments, credit cards, etc.) and at what interest rates. Home equity lines and loans are based on the prime rate, which is at historic lows at the moment because of the Federal Reserve easing of this year. It's worth it to look into it. But, of course, you need to know that you are spending the equity you've built up in your house. So you need to spend it wisely.

Washington, D.C.: Bravo has recently been showing the film "Glengarry Glen Ross," a screen adaptation of David Mamet's play about seedy real estate hustlers. How true to life is that film? Are there really swamps in Florida called by names such as "Rio Rancho Estates" and "The Glengarry Highlands," and to suckers really invest in them sight unseen?

Daniela Deane: Haven't seen that movie, I'm sorry to say!! Anybody out there who has?

New York, N.Y.: I recently submitted a bid for a 3 bedroom townhouse in Herndon. My intentions are to use it as an investment property. What is the rental market like and what kind of interest rates are out there for investment properties? I am willing to put a 20 percent down payment. Also, do I get any benefit as a first time homebuyer?

Daniela Deane: Check out the rental market there carefully. That area of northern Virginia has had a build-up of inventory of rentals...basically the rental situation there has changed a lot from even a year ago with the dot-com implosion. Look at all the rental ads in our apartment section recently...Landlords giving away a month's free rent and other incentives to move into their rentals. For an investment, you routinely have to put down 20 percent of the purchase price -- or even more. Different rules apply to investors -- larger downpayments, higher interest rates, and more hoops to jump through to get approved. Unless you want to live in it for awhile before you rent? Check out my Saturday story..it's all about investment property.

Arlington, Va.: If I don't have any money sitting around to make a downpayment on an investment property, can I still buy? I own my home and have some equity in it.

Daniela Deane: Absolutely! You can use the equity you've built up in your home for a downpayment on the investment property. I've done that, for example, as have other people I know. Some financial planners advise caution with that, though, saying that if you're not sophisticated enough, you could get in trouble if you can't rent the investment property. But heck, I'm not sophisticated at all and I've done it! Be sure you buy a place that's easily rentable. The key to investing is renting well. Check out my Saturday story for what to consider with investment properties...Okay, now I'm making you all sick with my non-stop plugging of the Saturday paper!!! (I do go through a lot of these questions though...)

Washington, D.C.: Daniela, I'm probably going to get married within the next 12 months. Should I wait until I am married to consider buying or renting a new place? Are landlords and property managers willing to rent to a tenant who plans to live alone for a while and then bring in the spouse or fiancee, if that tenant is up front about it? Also, how does being married change the equation about buying vs. renting? Thanks.

Daniela Deane: Some leases specify how many people can live in the property, but if you're upfront with a landlord, saying you're planning on getting married and moving in with your spouse, I don't think there should be a problem...No, the equation doesn't change if you're married...It's still better to buy rather than rent your principal residence! I'm a firm believer in that...

Arlington, Va.: Are properties with frontage on the Chesapeake Bay western shore increasing in value? If so, at what rate?

Daniela Deane: I have no idea at what rate properties in that area are increasing...What I do know is that Chesapeake Bay property has increased a lot over the past few years of hot housing markets, like all second home markets have. (The beaches, Rappahannock county, the Bay, etc, have all gone up dramatically.) And economists believe the second home market (which is what that mostly is, right?) will stay strong with the huge bulge of baby boomers coming up to empty nesterhood and retirement. I would say buying there would be a good bet, but I'm not an expert in the different areas of the bay.

Germantown, Md.: Last two years house prices have gone up at very fast rate. Do you have break out of average house prices increase in different region like Germantown, Fairfax, Ashburn etc. Thanks

Daniela Deane: I don't have that on the tip of my tongue, no. I can tell you though, that average house prices in the Washington area went up more than 8 percent from the second quarter of 2000 to the second quarter of 2001. All the areas you've mentioned have seen leaps in values over the past three years of sizzling housing markets. Even now, property is still appreciating in this area, although not at the rate of last year, for example.

Washington, D.C.: How advantageous do you consider "locking in" a mortgage rate?

Daniela Deane: Ah, to be able to predict the ups and downs of mortgage rates! It's very hard...Rates have gone up the past couple weeks and now they're at the highest level they've been at since July...But they're still incredibly low...A lot of banks offer what they call float-down options, where you pay a certain amount (usually refundable) for the privilege of floating down to a lower rate, if the rate goes down a certain amount after you lock in. Locking in is great if rates then drift higher than when you first locked in...And you can usually protect yourself against them going down a lot with these float down options. Most mortgage brokers I've talked to recently think rates will go back down in a couple weeks, but you know what, nobody knows!!!

Washington, D.C.: Glengarry Glen Ross stars Al Pacino, Alec Baldwin, Jack Lemmon, Kevin Spacey, Ed Harris, and a few notable others. You MUST see it.

As for Rio Rancho, it is one of horrible "leads" the salesmen are forced to sell in a competition whereby the loser loses his job. All of the properties they sell are either shams or close to it. I think the real estate moral of the story is: DON'T BUY IT UNLESS YOU'VE SEEN IT!

Daniela Deane: You've got me interested...I'm going to rent it this weekend! Thanks!

Washington, D.C.: I am looking to buy a small row house in NW Washington. Are people still buying "as is?" That's not something I'm prepared to do. Also, one house I'm looking at was purchased barely a year ago (and for less than the current asking price). What do you make of this? I'm worried that spells trouble about the condition of the house -- and it seems weird to have to pay more than what it was worth in fall 2000...

Daniela Deane: Oh no, it's not weird at all, Washington..House prices have definitely gone up since the fall of 2000, which is now more than a year away....And the city is proving to still be a good market...And yes, I think people are still buying "as is" although I don't think it's as prevalent as it was in the heady days of last year. But, if it's a nice lot in a sought-after area, I think sellers can still get away with it for certain properties..

Fairfax, Va.: Hi, I am thinking about buying a condo in the area. I keep hearing from different people that condos are terrible investments, but yet they are selling like hotcakes around here. I live alone and don't want the hassle of yards, etc. that I would get with single family home, or even a townhouse. Am I crazy for wanting to purchase a condo?

Daniela Deane: No, you're not crazy. COndos do provide that hassle free, lock the door and leave convenience. And, yes, they are selling so much better than they used to. Investors are buying them for investment purposes now much more than they used to as well, because they rent easily and for good money, too. If you want a condo, buy one is my suggestion. I understand well why you would want to and it seems there are plenty of people out there who feel just like you do these days. Good luck condo lover.

Arlington, Va.: Is renting -- or being a landlord -- difficult? I'd worry about tenants trashing the house or not paying. And if I hire a property management company, will it be worth the fee?

Daniela Deane: Certainly one of the potential risks of being a landlord are the tenants that you get on your property. Careful screening of potential tenants with credit reports and checking of references is imperative for a landlord. Property management companies usually charge a month's rent to find and screen prospective tenants. Then they charge between six and 10 percent of the rent to manage the property after the tenants have moved in. Many investors -- especially if they live near their investment properties -- opt for managing their investments themselves. You have to ask yourself if you're the kind of person who doesn't mind being woken in the middle of the night by a tenant with an overflowing toilet. If you are, get a property manager. Remember, that if you're paying between six and 10 percent of the rent to a manager, the profit you can make on your investment will go down accordingly.

Washington, D.C.: I have a fanstasy: I buy the vacant/eyesore house across the street from mine, demolish it and build a charming home consistent with other houses in the neighborhood. Then I sell it. In my dream, I manage to beat out the well-known infill developer brothers in NW DC, before they can tear out the trees and build a 4 1/2-story McMansion that violates the spirit, if not the letter, of every DC zoning reg.

I guess the question is, do 'regular' folks like me -- with no construction background -- ever pull off this sort of thing? How can a nondeveloper without corporate resouces ever hope to outbid a developer for a single, "hot" parcel of land? How might a bank view neighbor/investors who've banded together to seek a construction loan for such a project?

Thanks for any input!

Daniela Deane: I love your fantasy. I've had similar fantasies about houses that have been built in my own neighborhood. I do believe though that it is difficult to compete against developers. Banks like investors with proven track records with investment properties. And are you sure you'd like to take on something like that? It sounds like a fulltime job. But I share your concerns.

Washington, D.C.: How long do you need to live in a place before you can turn it into an investment property without reporting it as such for your mortgage?

Daniela Deane: Not that long, actually. If when you are buying you are going to occupy the house then you qualify for an owner/occupier mortgage. If that changes in a few months it doesn't seem to matter that much because you already have the mortgage in place. As long as they keep getting their money, they don't care.

Washington, D.C.: I am looking to rent an apartment in D.C. for the first time. What resources (online and other) should I use to find a great apartment?

Thank you.

Daniela Deane: The Washington Post, the City Paper and the Blade are three publications that run ads both in print and online for property rentals. The Post has a large section on Saturday full of apartment ads. Those are the three main places to look for apartments to rent in the city.

Clifton, Va.: My townhouse in Clifton, VA increased in value from 6/99 and $186k to 9/01 and $279k. So roughly 50 percent.

Daniela Deane: Congratulations. Isn't it great that you bought? Remember, you can use some of that built-up equity for other purchases that you might need to make, like putting a kid through college, paying of credit cards, car loans, buying more property or going to Jamaica for a month.

Washington, D.C.: I'm a single, late 20s lawyer with law school debt. I can only qualify for a $300,000 mortgage at best. However, I can afford more than that as I would take a roommate. Why can't that be figured into the equation, as well as the fact I have no dependents?

Daniela Deane: Lenders base what they lend on income. If you already had a tenant and could show an agreement to pay rent you might be able to qualify for more from a lender, but they need to know that you can pay the mortgage. Remember, lenders need to be sure that you can pay a mortgage. Could you put down a bigger deposit?

Washington, D.C.: I have a question about the property value in the Northeast section of Washington. I know that there seems to be a lot of revitalization various sections in the District.

I was interested in this particular rehabilitated three-bedroom townhouse in Northeast Washingtonin for $129,876. Do you foresee the property in the District going up in the future? Are local residents really moving back into the city?

Daniela Deane: Most local economists, real estate agents and investors predict a continued appreciation in the District. D.C. was undervalued for a long time and many people still believe in its upward potential. Although I don't know exactly what area in northeast you're talking about, and there could be specific local considerations that I don't know about, I basically believe that buying property in the district is a pretty good bet.

Like I said, there could be local conditions in the neighborhood you're looking at -- like, for example, crime. But in general, I'm bullish on the future of the District.

Daniela Deane: Okay folks, it's 3:00. Another enjoyable hour with all of you. Thanks so much for all your questions and my apologies that I couldn't get to them all. See you again in two weeks, on Thursday, Dec. 13. I'll miss you in the interim.

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