Real Estate in IRAs
Little-Known Secret Allows Real Estate Investors to Create True Wealth
Historically, real estate has given many Americans with a stable investment vehicle that provides both income and appreciation. One of the greatest tools available to real estate investors is government-sponsored retirement plans, such as IRAs and 401(k)s.
Most investors believe that their only IRA investment options are bank CDs, the stock market, and mutual funds.
Few Americans realize that they have the option to self-direct their IRAs and other retirement plans into real estate—and that they can benefit from the tax advantages those plans provide. IRA investments earn tax-deferred/tax-free profits.
Imagine not having to pay taxes right away—or ever—on your real estate deals. Instead of paying 25%, or 30%, or even 50% of your profits to the government in taxes, you keep it.
Additional advantages of the real estate IRAs include:
The power of compound interest
A reduction of taxable income
Asset protection
Estate planning
If you're a successful real estate investor, or if you're just looking to diversify your retirement portfolio, the combination of real estate and your IRA can be very powerful.
Showing posts with label cheap condos in las vegas. Show all posts
Showing posts with label cheap condos in las vegas. Show all posts
Monday, December 5, 2011
Wednesday, November 23, 2011
Black Friday Specials
Suffice it to say, Black Friday is just not my scene. Frankly, I don’t like shopping on the best of days. So the idea of frenzied shoppers elbowing each other to get to the $2 toasters after spending their family’s precious Thanksgiving moments queued up overnight in the megastore parking lot sends an involuntary shudder – and shiver – up my spine.
On the other hand, I like a deal as much as the next person – maybe more. My idea of a real deal, however, isn’t a $2 toaster. It’s getting a steal on the house where the toaster will live!
Fortunately, ‘tis the season for big-time real estate bargains. Whether you’re buying a new home or staying put, here are six ways you can save some serious real estate dollars this holiday season.
1. Home Buying. In most markets nationwide, prices continue to hover at levels we saw almost ten years ago. Of course, just how much of a fire sale you’re talking depends on where you’re buying. In Manhattan and San Francisco, prices actually did rise last year—but much less steeply than in years past. And while you may still have to deal with multiple offers, at least those are no longer in double-digits.
On the other hand, in locations like Bend, Oregon and Jacksonville, Florida, houses are going for half of what they sold for just five years ago (or less!).
Following conventional real estate wisdom, many sellers, especially in cold weather spots, take their homes off the market after mid-November, when people are more preoccupied with the holidays than they are with real estate. The flip side? Those who do stay in the market tend to be highly motivated and willing to deal. Take that into account when making your initial offer and during subsequent counters.
2. Sealing the Deal. Motivated sellers are often willing to sweeten the pot by helping out with all those transaction-related real estate costs (including loan origination fees, title insurance costs, escrow fees and even transfer taxes). Since lenders will often limit closing cost credits from sellers to 3%-6% of the home’s sale price, however, check with your real estate agent and mortgage broker about your lender’s guidelines before you write up your offer.
Even if your home’s sellers don’t have the wiggle room to lower the sale price or to cover your closing costs, they might be able to include home electronics, appliances or furniture in the deal. I’ve even heard stories of a seller who recently threw a Smart Car into the deal! Just make sure that to check with the real estate professionals handling your sale and mortgage to make sure any deal-sweetening seller incentives doesn’t sour your loan.
3. Interest Rates. With mortgage rates still near record lows, this is a very merry time to buy or refi, with a mortgage. Just this week, Bankrate reports that the going rate on a 30-year fixed mortgage dropped to 4.24%, and the rate on a 15-year fixed rate mortgage fell to 3.47%. Odds are that rates will remain rock bottom through the holidays (and beyond), making mortgages the gift(s) that keeps on giving in terms of long-term savings.
4. Property Taxes. Hate to pay taxes? You’re in luck! Since property taxes are usually determined by how much you paid for your house, getting a great buy on your house means great savings on your property taxes. Talk about a two-fer! (Oh – and if you already own a home that has declined in value, give yourself the gift of visiting your County tax assessor’s website and submitting a request to have your homes assessed value reduced. What you save can buy a whole lot of iPhones and Elmos.)
5. Negotiating Existing Loans. At year’s end, some banks and asset management companies who have purchased whole portfolios of second mortgages and home equity lines of credit are motivated to close out outstanding issues that are lingering on their books. So if you’re willing and able to pay a lump sum to settle a second mortgage rather than pay the full amount you owe, jump now. A friend of mine who has a $60,000 second mortgage has been in talks with her bank. If she settles the debt by the end of the year, they’ve agreed to take $12,000 and call it good.
6. Home Improvements. You can take advantage of the last of the remaining federal real estate tax credits by improving the energy efficiency of your home:
You can get back up to $500 on your federal taxes when you install approved, energy-efficient heating, ventilating, air conditioning (HVAC) systems, insulation, roofs, water heaters, and dual-pane windows, as well as skylights and doors. This particular tax credit, which only works for your existing principle residence, expires at the end of this year!
If you go whole hog and install a solar energy system, you can recoup as much as 30 percent of the cost, with a credit that doesn’t expire until December 31, 2016.
Also, many contractors offer very deep discounts for off-season home improvements, like installing an air conditioner or pool upgrades in the wintertime.
complements of Trulia
On the other hand, I like a deal as much as the next person – maybe more. My idea of a real deal, however, isn’t a $2 toaster. It’s getting a steal on the house where the toaster will live!
Fortunately, ‘tis the season for big-time real estate bargains. Whether you’re buying a new home or staying put, here are six ways you can save some serious real estate dollars this holiday season.
1. Home Buying. In most markets nationwide, prices continue to hover at levels we saw almost ten years ago. Of course, just how much of a fire sale you’re talking depends on where you’re buying. In Manhattan and San Francisco, prices actually did rise last year—but much less steeply than in years past. And while you may still have to deal with multiple offers, at least those are no longer in double-digits.
On the other hand, in locations like Bend, Oregon and Jacksonville, Florida, houses are going for half of what they sold for just five years ago (or less!).
Following conventional real estate wisdom, many sellers, especially in cold weather spots, take their homes off the market after mid-November, when people are more preoccupied with the holidays than they are with real estate. The flip side? Those who do stay in the market tend to be highly motivated and willing to deal. Take that into account when making your initial offer and during subsequent counters.
2. Sealing the Deal. Motivated sellers are often willing to sweeten the pot by helping out with all those transaction-related real estate costs (including loan origination fees, title insurance costs, escrow fees and even transfer taxes). Since lenders will often limit closing cost credits from sellers to 3%-6% of the home’s sale price, however, check with your real estate agent and mortgage broker about your lender’s guidelines before you write up your offer.
Even if your home’s sellers don’t have the wiggle room to lower the sale price or to cover your closing costs, they might be able to include home electronics, appliances or furniture in the deal. I’ve even heard stories of a seller who recently threw a Smart Car into the deal! Just make sure that to check with the real estate professionals handling your sale and mortgage to make sure any deal-sweetening seller incentives doesn’t sour your loan.
3. Interest Rates. With mortgage rates still near record lows, this is a very merry time to buy or refi, with a mortgage. Just this week, Bankrate reports that the going rate on a 30-year fixed mortgage dropped to 4.24%, and the rate on a 15-year fixed rate mortgage fell to 3.47%. Odds are that rates will remain rock bottom through the holidays (and beyond), making mortgages the gift(s) that keeps on giving in terms of long-term savings.
4. Property Taxes. Hate to pay taxes? You’re in luck! Since property taxes are usually determined by how much you paid for your house, getting a great buy on your house means great savings on your property taxes. Talk about a two-fer! (Oh – and if you already own a home that has declined in value, give yourself the gift of visiting your County tax assessor’s website and submitting a request to have your homes assessed value reduced. What you save can buy a whole lot of iPhones and Elmos.)
5. Negotiating Existing Loans. At year’s end, some banks and asset management companies who have purchased whole portfolios of second mortgages and home equity lines of credit are motivated to close out outstanding issues that are lingering on their books. So if you’re willing and able to pay a lump sum to settle a second mortgage rather than pay the full amount you owe, jump now. A friend of mine who has a $60,000 second mortgage has been in talks with her bank. If she settles the debt by the end of the year, they’ve agreed to take $12,000 and call it good.
6. Home Improvements. You can take advantage of the last of the remaining federal real estate tax credits by improving the energy efficiency of your home:
You can get back up to $500 on your federal taxes when you install approved, energy-efficient heating, ventilating, air conditioning (HVAC) systems, insulation, roofs, water heaters, and dual-pane windows, as well as skylights and doors. This particular tax credit, which only works for your existing principle residence, expires at the end of this year!
If you go whole hog and install a solar energy system, you can recoup as much as 30 percent of the cost, with a credit that doesn’t expire until December 31, 2016.
Also, many contractors offer very deep discounts for off-season home improvements, like installing an air conditioner or pool upgrades in the wintertime.
complements of Trulia
Wednesday, August 17, 2011
5 Questions to Ask Before Buying a home!!
In most parts of the country, the housing market is good (or great!) for buyers right now - interest rates are bizarrely low, lots of inventory means lots to choose from, and the cost of renting has increased in a lot of markets. But just because the market’s good doesn’t mean it’s the right time for everyone to buy.
The decision whether to buy a home is a very personal one; you need to carefully examine your own situation to determine whether it’s right for you.
So, what are the questions you need to answer in deciding whether you’re ready to buy? Here are some of the big ones:
1. Do I have enough money for a down payment?
And how much, exactly, is “enough?” Today’s minimum down payment requirements range from 3.5 percent on an FHA loan to 10 or even 20 percent for conventional loans. That means coming up with anywhere from $7,000 to $40,000 on a typical $200,000 house. While there are still programs that can give you a down payment assist (see last week’s post, 5 Insider Secrets for Coming Up With Cash for Down Payment), much of the heavy lifting here will need to come from you - in the form of saving up your hard earned cash. And keep in mind there are also closing costs you’ll probably have to pay in cash, which can run as high as 3-4% of your total purchase price.
Talk with a real estate pro and a mortgage broker in your areas to start wrapping your head around how much “cash to close” (i.e., down payment + closing costs) will run, approximately, on a local property that would meet your needs. Can your savings cover this? If not, where will you get the money - what’s your plan for coming up with it?
Putting down as much as you can a) makes you more attractive to lenders, so you might qualify you for better loan terms and b) gives you additional purchasing power, either decreasing your monthly mortgage payment or increasing your purchase price limit for a home.
2. Can I handle the not-so-glamorous aspects of homeownership?
If you can’t even fathom the prospect of having a home maintenance crisis without having a landlord to call to fix it, you might want to reconsider homeownership - or at the very least, buy a lower maintenance condo or townhome in great condition, and make sure you get a home warranty! As a home owner, after all, you essentially are your own landlord. Pipe bursts in the middle of the night? Guess who’ll be up fixing it or calling (and paying) the plumber? (Hint: you.)
There are also some less-than-glamorous bills you’ll have to deal with in your new role as a homeowner that you never laid eyes on as a renter: property taxes and hazard insurance, to name two. When you go from renter to owner, you also need to account for the cost of appliances and maintaining the property’s roof, windows, and landscaping, among other things.
3. How long do I intend to stay in the house?
If you think you might move out of the area next year, then you really shouldn’t be thinking about buying a house (unless of course, you want to play landlord and rent it out after you leave - a prospect which requires its own risk/rewards analysis). For your home purchase to pencil out as a good deal, financially, you’ll shouldn’t buy unless you’re comfortable staying in the house at least 5-7 years - even longer, if you’re buying a home in a foreclosure hot spot or an area with a sluggish job market.. This gives you some time to build up equity and make up for the costs of buying, selling and moving.
4. Are my job and finances stable?
Maybe you just went through a major career change and are in the process of working your way back up from the top. Or maybe you work in a field that has been hit really hard by layoffs and cutbacks. The worst case scenario is to find yourself in a spot with mortgage payment you have no way to make, when you could have avoided that by seeing the writing on the wall. If you feel like there’s a real chance you could lose your job or income tomorrow, you may want to hold off on buying a house - that has the added bonus of giving you the geographic freedom to move, if needed, to get a new job.
Is there really such a thing as 100 percent job security in today’s economy? Probably not. But the best practice is to be confident that your finances could handle a temporary loss of income and still make your mortgage payments, before you buy. One way to do this is to have enough money in the bank to cover 4-6 months’ worth of living expenses, calculating them to include your mortgage payment - before you deem yourself ready to buy. That way, even if you lose your job with no warning at all, you’ll at least have a reasonable window of time to find a new one without digging yourself into a hole - or worse, losing your home altogether.
5. What are my real reasons for buying?
Buying a home is a long-term commitment that will have massive impacts on your lifestyle, your family and your finances. In other words, don’t do it unless you’re really sure you want to and are ready for the lifestyle change - don’t let someone else talk you into it. Worthy reasons renters with homeowning readiness give for their decision to buy include some or all of the following:
•You want to build equity instead of paying a landlord. Fact is, if you get a fixed rate mortgage and make the payments for the full term of the loan, you'll eventually pay it off. That's not possible when you're renting.
•You want a place to call your own, where you can paint a wall purple, add a pottery spinning studio or build your dogs an obstacle course (oops - that's my reason for homeownership!), because it's your prerogative.
•You want the tax advantages of homeownership.
•You want a stable place you and your family can live for as long as you'd like.
Ask yourself these questions, and be honest with your answers. If you really want to buy, but your answers to these questions today don’t weigh in that direction, it doesn’t mean you’ll never own a home. It’s usually just a matter of strategically timing your purchase out a year or two when your savings, your career and your lifestyle are in alignment with the implications of ownership - consider working closely with a real estate broker and a mortgage professional to get an action plan in place and start working that plan.
http://www.trulia.com/blog/taranelson/2011/08/5_questions_to_ask_yourself_before_buying_a_home?ecampaign=cnews201108C&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F08%2F5_questions_to_ask_yourself_before_buying_a_home
The decision whether to buy a home is a very personal one; you need to carefully examine your own situation to determine whether it’s right for you.
So, what are the questions you need to answer in deciding whether you’re ready to buy? Here are some of the big ones:
1. Do I have enough money for a down payment?
And how much, exactly, is “enough?” Today’s minimum down payment requirements range from 3.5 percent on an FHA loan to 10 or even 20 percent for conventional loans. That means coming up with anywhere from $7,000 to $40,000 on a typical $200,000 house. While there are still programs that can give you a down payment assist (see last week’s post, 5 Insider Secrets for Coming Up With Cash for Down Payment), much of the heavy lifting here will need to come from you - in the form of saving up your hard earned cash. And keep in mind there are also closing costs you’ll probably have to pay in cash, which can run as high as 3-4% of your total purchase price.
Talk with a real estate pro and a mortgage broker in your areas to start wrapping your head around how much “cash to close” (i.e., down payment + closing costs) will run, approximately, on a local property that would meet your needs. Can your savings cover this? If not, where will you get the money - what’s your plan for coming up with it?
Putting down as much as you can a) makes you more attractive to lenders, so you might qualify you for better loan terms and b) gives you additional purchasing power, either decreasing your monthly mortgage payment or increasing your purchase price limit for a home.
2. Can I handle the not-so-glamorous aspects of homeownership?
If you can’t even fathom the prospect of having a home maintenance crisis without having a landlord to call to fix it, you might want to reconsider homeownership - or at the very least, buy a lower maintenance condo or townhome in great condition, and make sure you get a home warranty! As a home owner, after all, you essentially are your own landlord. Pipe bursts in the middle of the night? Guess who’ll be up fixing it or calling (and paying) the plumber? (Hint: you.)
There are also some less-than-glamorous bills you’ll have to deal with in your new role as a homeowner that you never laid eyes on as a renter: property taxes and hazard insurance, to name two. When you go from renter to owner, you also need to account for the cost of appliances and maintaining the property’s roof, windows, and landscaping, among other things.
3. How long do I intend to stay in the house?
If you think you might move out of the area next year, then you really shouldn’t be thinking about buying a house (unless of course, you want to play landlord and rent it out after you leave - a prospect which requires its own risk/rewards analysis). For your home purchase to pencil out as a good deal, financially, you’ll shouldn’t buy unless you’re comfortable staying in the house at least 5-7 years - even longer, if you’re buying a home in a foreclosure hot spot or an area with a sluggish job market.. This gives you some time to build up equity and make up for the costs of buying, selling and moving.
4. Are my job and finances stable?
Maybe you just went through a major career change and are in the process of working your way back up from the top. Or maybe you work in a field that has been hit really hard by layoffs and cutbacks. The worst case scenario is to find yourself in a spot with mortgage payment you have no way to make, when you could have avoided that by seeing the writing on the wall. If you feel like there’s a real chance you could lose your job or income tomorrow, you may want to hold off on buying a house - that has the added bonus of giving you the geographic freedom to move, if needed, to get a new job.
Is there really such a thing as 100 percent job security in today’s economy? Probably not. But the best practice is to be confident that your finances could handle a temporary loss of income and still make your mortgage payments, before you buy. One way to do this is to have enough money in the bank to cover 4-6 months’ worth of living expenses, calculating them to include your mortgage payment - before you deem yourself ready to buy. That way, even if you lose your job with no warning at all, you’ll at least have a reasonable window of time to find a new one without digging yourself into a hole - or worse, losing your home altogether.
5. What are my real reasons for buying?
Buying a home is a long-term commitment that will have massive impacts on your lifestyle, your family and your finances. In other words, don’t do it unless you’re really sure you want to and are ready for the lifestyle change - don’t let someone else talk you into it. Worthy reasons renters with homeowning readiness give for their decision to buy include some or all of the following:
•You want to build equity instead of paying a landlord. Fact is, if you get a fixed rate mortgage and make the payments for the full term of the loan, you'll eventually pay it off. That's not possible when you're renting.
•You want a place to call your own, where you can paint a wall purple, add a pottery spinning studio or build your dogs an obstacle course (oops - that's my reason for homeownership!), because it's your prerogative.
•You want the tax advantages of homeownership.
•You want a stable place you and your family can live for as long as you'd like.
Ask yourself these questions, and be honest with your answers. If you really want to buy, but your answers to these questions today don’t weigh in that direction, it doesn’t mean you’ll never own a home. It’s usually just a matter of strategically timing your purchase out a year or two when your savings, your career and your lifestyle are in alignment with the implications of ownership - consider working closely with a real estate broker and a mortgage professional to get an action plan in place and start working that plan.
http://www.trulia.com/blog/taranelson/2011/08/5_questions_to_ask_yourself_before_buying_a_home?ecampaign=cnews201108C&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F08%2F5_questions_to_ask_yourself_before_buying_a_home
Wednesday, July 27, 2011
FHA DECREASE
Did you know that effective September 30, 2011, FHA Maximum Loan Amount is set to DECREASE from $400,000 to $287,500.00 FHA Maximum loan limits will change for the following Nevada Counties (effective 9/30/2011)
New Loan Limit
Carson City $286,350.00
Clark County $287,500.00
Douglas County $350,750.00
Elko County $271,050.00
Eureka County $271,050.00
Lyon County $271,050.00
Nye County $271,050.00
Storey County $325,450.00
Washoe County $325,430.00
Call me today, and lets discuss how this could/will impact your wallet. As your real estate professional, coach/mentor keeping you up to date witht the most current and relevant information is what I love and live for! (702) 236-6266
New Loan Limit
Carson City $286,350.00
Clark County $287,500.00
Douglas County $350,750.00
Elko County $271,050.00
Eureka County $271,050.00
Lyon County $271,050.00
Nye County $271,050.00
Storey County $325,450.00
Washoe County $325,430.00
Call me today, and lets discuss how this could/will impact your wallet. As your real estate professional, coach/mentor keeping you up to date witht the most current and relevant information is what I love and live for! (702) 236-6266
Monday, July 25, 2011
City Of North Las Vegas Values
Last week in the news we heard of the possibility that the City of North Las Vegas, Nevada may be taken over by the State of Nevada.
See articles:
http://www.lasvegassun.com/news/2011/jul/21/north-las-vegas-mayor/
http://www.lasvegassun.com/news/2011/jul/12/north-las-vegas-finances/
In the first article: “Mayor Shari Buck stresses that North Las Vegas is not at risk of being taken over by the state, but she admits the city will have a difficult time figuring out its finances for the next two years.”
In the second article:
“But a city doesn’t reach the brink of insolvency because of one hardheaded union, or even two. Recent and past moves by city officials, the unions and residents have led to this fix. North Las Vegas, once among nation’s fastest-growing cities, has seen steep declines in tax revenue during the recession, while its operating costs have risen to pay for big projects planned in anticipation of continued growth” The article continues with the poor planning on the city councils part.
Personally, it’s time for some hard core decision making….Voters. Instead of voting in politicians that have NO experience in running businesses much less know and understand how a budget works or even know what that word means. Vote in solid business owners and entrepreneurs that have a proven track record of how to stay within budget and grow businesses.
Hearing this news, I have to wonder what will this do to the already low property values in the city. The state of Nevada is in no financial condition to take over more financial responsibility.
See articles:
http://www.lasvegassun.com/news/2011/jul/21/north-las-vegas-mayor/
http://www.lasvegassun.com/news/2011/jul/12/north-las-vegas-finances/
In the first article: “Mayor Shari Buck stresses that North Las Vegas is not at risk of being taken over by the state, but she admits the city will have a difficult time figuring out its finances for the next two years.”
In the second article:
“But a city doesn’t reach the brink of insolvency because of one hardheaded union, or even two. Recent and past moves by city officials, the unions and residents have led to this fix. North Las Vegas, once among nation’s fastest-growing cities, has seen steep declines in tax revenue during the recession, while its operating costs have risen to pay for big projects planned in anticipation of continued growth” The article continues with the poor planning on the city councils part.
Personally, it’s time for some hard core decision making….Voters. Instead of voting in politicians that have NO experience in running businesses much less know and understand how a budget works or even know what that word means. Vote in solid business owners and entrepreneurs that have a proven track record of how to stay within budget and grow businesses.
Hearing this news, I have to wonder what will this do to the already low property values in the city. The state of Nevada is in no financial condition to take over more financial responsibility.
Sunday, July 17, 2011
Timing verses Location
One of the things that I have found over the years in working with clients that own real estate is that people love buying real estate. With that said some make critical mistakes when doing so. The starting point in deciding what to buy and how to buy it should begin with the answer to this question: Why Should I buy and what is it for?
This question that you ask yourself may sound ridiculous, however an important one for your financial future. Timing is so important. What was the famous line in real estate? Location, location, location. Look back at the years 2003 to 2008 at the feeding frenzy. If someone bought in those years they bought at the high part of the market; thus, the foreclosure and short sale phenonumen. The rule of thumb to any investing or any business is TIMING, TIMING, TIMING.
Another questions to ask yourself what time frame of investing, expectations, do you have the cash or financing and most importantly, whether the property will cash flow. Analyze the property, take all the expenses, taxes, hoa, maintenance, property manager, vacancy, home warranty, landlord insurance policy, holding the property in an LLC, etc. Find out what the property can be rented for. Find out the crime stats in the area and then do the math.
When buying real estate for income it is necessary to look at the type of income that you purchase. Single family homes in the Las Vegas area will be a great investment, for income if done correctly. Let me give you an example: A three bedroom home in Las Vegas, Nevada that would sell for 80,000 rents for $1,500 per month. Subtracting out the annual expenses of the debt service (mortgage payment), property taxes, insurance and the other expenses I mentioned above. It would not be uncommon for this property to net $7,200 yr after expenses. Take that to another level. Invest in 10 homes with that same outcome that would be $72,000 a year. Go a little further, invest in 20 homes would equal $144,000 a year. We have not even discussed the tax advantages. Your CPA would give you that information.
Let’s take a look at commercial property. Multiunit properties, apartments, or commercial properties may be far superior in terms of income than single family homes. In today’s market, you may be able to find a 4 unit property for $100,000. Obviously the figures are larger however so the return is. If done correctly.
Using leverage (OPM or OPC) may also allow for additional income on a property.
End Result: You need to do some planning prior to purchasing a property and find a knowledgeable real estate agent that has done investing for themselves. You should consider the types of properties, how to fund the property, whether to use leverage, who will manage the property, what improvements it may need, and what annual expenses it may have, among other items. The list of considerations is long, but the outcome will be well worth the hard work and profitable. Happy Investing!
This question that you ask yourself may sound ridiculous, however an important one for your financial future. Timing is so important. What was the famous line in real estate? Location, location, location. Look back at the years 2003 to 2008 at the feeding frenzy. If someone bought in those years they bought at the high part of the market; thus, the foreclosure and short sale phenonumen. The rule of thumb to any investing or any business is TIMING, TIMING, TIMING.
Another questions to ask yourself what time frame of investing, expectations, do you have the cash or financing and most importantly, whether the property will cash flow. Analyze the property, take all the expenses, taxes, hoa, maintenance, property manager, vacancy, home warranty, landlord insurance policy, holding the property in an LLC, etc. Find out what the property can be rented for. Find out the crime stats in the area and then do the math.
When buying real estate for income it is necessary to look at the type of income that you purchase. Single family homes in the Las Vegas area will be a great investment, for income if done correctly. Let me give you an example: A three bedroom home in Las Vegas, Nevada that would sell for 80,000 rents for $1,500 per month. Subtracting out the annual expenses of the debt service (mortgage payment), property taxes, insurance and the other expenses I mentioned above. It would not be uncommon for this property to net $7,200 yr after expenses. Take that to another level. Invest in 10 homes with that same outcome that would be $72,000 a year. Go a little further, invest in 20 homes would equal $144,000 a year. We have not even discussed the tax advantages. Your CPA would give you that information.
Let’s take a look at commercial property. Multiunit properties, apartments, or commercial properties may be far superior in terms of income than single family homes. In today’s market, you may be able to find a 4 unit property for $100,000. Obviously the figures are larger however so the return is. If done correctly.
Using leverage (OPM or OPC) may also allow for additional income on a property.
End Result: You need to do some planning prior to purchasing a property and find a knowledgeable real estate agent that has done investing for themselves. You should consider the types of properties, how to fund the property, whether to use leverage, who will manage the property, what improvements it may need, and what annual expenses it may have, among other items. The list of considerations is long, but the outcome will be well worth the hard work and profitable. Happy Investing!
Wednesday, July 13, 2011
5 Questions to ask Your Home Inspector
5 Questions to Ask your Home Inspector
Courtesy of
http://www.trulia.com/blog/taranelson/2011/07/5_questions_to_ask_your_home_s_inspector
Most home buyers feel like they are bona fide real estate experts after all the studying up on loans and neighborhoods, online house hunting and open house visiting it takes just to get into contract on a home these days. But for all but the most handy of house hunters, getting into contract and starting the home inspection process only surfaces how little you actually know about the nuts and bolts and brick and mortar of the massive investment you’re about to make: a home!
So, you hire a home inspector, but it seems like they’re speaking an entirely different language - riddled with terms like “serviceable condition” and “conducive to deterioration” - about your dream home! Here are 5 questions you can use to decode your home inspector’s findings into knowledge you can use to make smart decisions as a homebuyer - and homeowner.
1. How bad is it - really? The best home inspectors are pretty even keeled, emotionally speaking. They’re not alarmists that blow little things up into big ones, nor do they try to play down the importance of things. They’re all about the facts. But sometimes, that straightforwardness makes it hard for you, the home’s buyer, to understand what’s a big deal and what isn’t so much - the information you need to know whether to move forward with the deal, whether to renegotiate and what to plan ahead for.
I’ve seen things categorized in home inspection reports under “Health and Safety Hazards” that cost less than $100 to fix, like replacing a faucet that has hot and cold reversed. And I’ve seen one-liners in inspection reports, like “extensive earth-to-wood contact” result, after further inspection, in foundation repair bids pricier than the whole cost of the home!
In many states, home inspectors are not legally able to provide you with a repair bid, but if you attend the inspection and simply ask them whether or not something they say needs fixing is a big deal, nine times out of ten they will verbally give you the information you need to understand the degree to which the issue is a serious problem (or not).
2. Who should I have fix that? I always ask this question of home inspectors, with dual motives. First, very often, the inspector’s response is - “What do you mean? You don’t need to pay someone to fix that. Go down to Home Depot, pick up a ___fill in the blank__, and here’s how you pop it in. Should cost you $15 - tops.” And that’s useful information to know - it eliminates the horror of a laundry list of repairs and maintenance items at the end of an inspection report to know that a number of them are really DIY-type maintenance items. Even buyers who are really uncomfortable doing these things themselves then feel empowered to either (a) watch a few YouTube vids that show them how it’s done, or (b) hire a handyperson to do these small fixes, knowing they shouldn’t be too terribly costly.
And even on the larger repairs, your home inspector might be able to give you a few referrals to the plumbers, electricians or roofers you’ll need to get bids from during your contingency period, which you may be able to use to negotiate with your home’s seller, and to get the work done after you own the place. Dropping the inspector’s name might get you an appointment booked with the urgency you need it in order to get your repair bids and estimates in hand before your contingency or objection period expires.
And same goes for any further inspections they recommend - if neither you nor your agent knows a specialist, as the general home inspector for a few referrals.
3. If this was your house, what would you fix, and when? Your home inspector’s job is to point out everything, within the scope of the inspection, that might need repair, replacement, maintenance or furthe inspection - or seems like it might be on it’s last leg. But they also tend to be experienced enough with homes to know that no home is perfect. Many times, I’ve asked this question about an item the inspector described as “at the end of its serviceable lifetime” and had them say, “I wouldn’t do a thing to it. Just know that it could break in the next 5 months, or in the next 5 years. And keep your home warranty in effect, because that should cover it when it does break.”
This question positions your home inspector to help you:
• understand what does and doesn’t need to be repaired,
• prioritize the work you plan to do to your home (and budget or negotiate with the seller accordingly),
• get used to the constant maintenance that is part and parcel of homeownership, and
• understand the importance of having a home warranty plan.
4. Can you point that out to me? Often, when you attend the home inspection, you’ll be multi-tasking, taking pictures of the interior, measuring for drapes or furniture, even meeting the neighbors, or fielding several inspectors at a time. Worst case scenario is to get home, open up the inspector’s report and have no clue whatsoever what he or she was referring to when they called out the wax ring that needs replacement or the temperature-pressure release valve that is improperly installed.
Your best bet is to, at the end of the inspection, while you’re all still in the property, just ask the inspector to take 10 or 15 minutes and walk you through the place, pointing out all the items they’ve noted need repair, maintenance or further inspection. When you get the report, then, you’ll know what and where the various items belong. (One more best practice is to choose an inspector who takes digital pictures and inserts them into their reports!)
5. Can you show me how to work that? Many home inspectors are delighted to show you how to operate various mechanical or other systems in your home, and will walk you through the steps of operating everything from your thermostat, to your water heater, to your stove and dishwasher - and especially the emergency shutoffs for your gas, water and electrical utilities. This one single item is such a time and stress saver it alone is worth the lost income of missing a day of work to attend your inspections.
Courtesy of
http://www.trulia.com/blog/taranelson/2011/07/5_questions_to_ask_your_home_s_inspector
Most home buyers feel like they are bona fide real estate experts after all the studying up on loans and neighborhoods, online house hunting and open house visiting it takes just to get into contract on a home these days. But for all but the most handy of house hunters, getting into contract and starting the home inspection process only surfaces how little you actually know about the nuts and bolts and brick and mortar of the massive investment you’re about to make: a home!
So, you hire a home inspector, but it seems like they’re speaking an entirely different language - riddled with terms like “serviceable condition” and “conducive to deterioration” - about your dream home! Here are 5 questions you can use to decode your home inspector’s findings into knowledge you can use to make smart decisions as a homebuyer - and homeowner.
1. How bad is it - really? The best home inspectors are pretty even keeled, emotionally speaking. They’re not alarmists that blow little things up into big ones, nor do they try to play down the importance of things. They’re all about the facts. But sometimes, that straightforwardness makes it hard for you, the home’s buyer, to understand what’s a big deal and what isn’t so much - the information you need to know whether to move forward with the deal, whether to renegotiate and what to plan ahead for.
I’ve seen things categorized in home inspection reports under “Health and Safety Hazards” that cost less than $100 to fix, like replacing a faucet that has hot and cold reversed. And I’ve seen one-liners in inspection reports, like “extensive earth-to-wood contact” result, after further inspection, in foundation repair bids pricier than the whole cost of the home!
In many states, home inspectors are not legally able to provide you with a repair bid, but if you attend the inspection and simply ask them whether or not something they say needs fixing is a big deal, nine times out of ten they will verbally give you the information you need to understand the degree to which the issue is a serious problem (or not).
2. Who should I have fix that? I always ask this question of home inspectors, with dual motives. First, very often, the inspector’s response is - “What do you mean? You don’t need to pay someone to fix that. Go down to Home Depot, pick up a ___fill in the blank__, and here’s how you pop it in. Should cost you $15 - tops.” And that’s useful information to know - it eliminates the horror of a laundry list of repairs and maintenance items at the end of an inspection report to know that a number of them are really DIY-type maintenance items. Even buyers who are really uncomfortable doing these things themselves then feel empowered to either (a) watch a few YouTube vids that show them how it’s done, or (b) hire a handyperson to do these small fixes, knowing they shouldn’t be too terribly costly.
And even on the larger repairs, your home inspector might be able to give you a few referrals to the plumbers, electricians or roofers you’ll need to get bids from during your contingency period, which you may be able to use to negotiate with your home’s seller, and to get the work done after you own the place. Dropping the inspector’s name might get you an appointment booked with the urgency you need it in order to get your repair bids and estimates in hand before your contingency or objection period expires.
And same goes for any further inspections they recommend - if neither you nor your agent knows a specialist, as the general home inspector for a few referrals.
3. If this was your house, what would you fix, and when? Your home inspector’s job is to point out everything, within the scope of the inspection, that might need repair, replacement, maintenance or furthe inspection - or seems like it might be on it’s last leg. But they also tend to be experienced enough with homes to know that no home is perfect. Many times, I’ve asked this question about an item the inspector described as “at the end of its serviceable lifetime” and had them say, “I wouldn’t do a thing to it. Just know that it could break in the next 5 months, or in the next 5 years. And keep your home warranty in effect, because that should cover it when it does break.”
This question positions your home inspector to help you:
• understand what does and doesn’t need to be repaired,
• prioritize the work you plan to do to your home (and budget or negotiate with the seller accordingly),
• get used to the constant maintenance that is part and parcel of homeownership, and
• understand the importance of having a home warranty plan.
4. Can you point that out to me? Often, when you attend the home inspection, you’ll be multi-tasking, taking pictures of the interior, measuring for drapes or furniture, even meeting the neighbors, or fielding several inspectors at a time. Worst case scenario is to get home, open up the inspector’s report and have no clue whatsoever what he or she was referring to when they called out the wax ring that needs replacement or the temperature-pressure release valve that is improperly installed.
Your best bet is to, at the end of the inspection, while you’re all still in the property, just ask the inspector to take 10 or 15 minutes and walk you through the place, pointing out all the items they’ve noted need repair, maintenance or further inspection. When you get the report, then, you’ll know what and where the various items belong. (One more best practice is to choose an inspector who takes digital pictures and inserts them into their reports!)
5. Can you show me how to work that? Many home inspectors are delighted to show you how to operate various mechanical or other systems in your home, and will walk you through the steps of operating everything from your thermostat, to your water heater, to your stove and dishwasher - and especially the emergency shutoffs for your gas, water and electrical utilities. This one single item is such a time and stress saver it alone is worth the lost income of missing a day of work to attend your inspections.
Monday, January 3, 2011
Better Than Expected!
Existing Home Sales - Stable Pricing, Better than Expected Sales
The third quarter gave us an opportunity to see the effects of both slow bank-owned (REO) additions to the market as well as the effect of the homebuyer tax credit (there were three versions). As a result of these factors, demand was pulled forward,
essentially borrowing sales from the future.
In terms of the housing tax credit’s effect on pricing, we observed a temporary bump in the prices of homes on the lower end of the spectrum. Nationally, research has shown that the third version generated an approximate 6.4% growth above trend (FNC,
2010). Our research has demonstrated that locally, prices on large homes (typically greater than 2,000 sq. ft.) did not experience an increase in prices, but more of a slowing of price declines.
The second half of 2009 and early 2010 was a vibrant period, with multiple offers on well-priced homes becoming commonplace. The post-tax credit season has included moderating sales, but has been outperforming our own expectations in the third
quarter.
Potential homebuyers had been craving more inventory, and the third quarter experienced additional inventory due to a combination of moderating sales
and more new placements on the market. This turned into a benefit for home buyers by helping to decrease their search time. With the increase in inventory we have observed a rise in the number days on market. This has yet to manifest itself in a resulting decline in prices for the bulk of homes sold; some housing types continue to see declines, but this is not symmetric for the whole market.
There is some pressure on home prices, but it is moderated by investors recognizing the long-term potentials of the market, as well as the cash flow opportunities yielded by rental properties. The bottom line for a great deal of buyers is that buying is less expensive than renting. This fact is further substantiated by the observed returns from homes sold with tenants in place, where investors have been able to achieve un-leveraged returns in the high single digits and often double digits.
Recognizing these returns, investors have made up a great proportion of our sales, possibly up to fifty percent. This is not the ideal speculator we saw in the past, but rather a majority of investors we encounter have a long-term hold strategy. This has been very beneficial for the marketplace.
The third quarter gave us an opportunity to see the effects of both slow bank-owned (REO) additions to the market as well as the effect of the homebuyer tax credit (there were three versions). As a result of these factors, demand was pulled forward,
essentially borrowing sales from the future.
In terms of the housing tax credit’s effect on pricing, we observed a temporary bump in the prices of homes on the lower end of the spectrum. Nationally, research has shown that the third version generated an approximate 6.4% growth above trend (FNC,
2010). Our research has demonstrated that locally, prices on large homes (typically greater than 2,000 sq. ft.) did not experience an increase in prices, but more of a slowing of price declines.
The second half of 2009 and early 2010 was a vibrant period, with multiple offers on well-priced homes becoming commonplace. The post-tax credit season has included moderating sales, but has been outperforming our own expectations in the third
quarter.
Potential homebuyers had been craving more inventory, and the third quarter experienced additional inventory due to a combination of moderating sales
and more new placements on the market. This turned into a benefit for home buyers by helping to decrease their search time. With the increase in inventory we have observed a rise in the number days on market. This has yet to manifest itself in a resulting decline in prices for the bulk of homes sold; some housing types continue to see declines, but this is not symmetric for the whole market.
There is some pressure on home prices, but it is moderated by investors recognizing the long-term potentials of the market, as well as the cash flow opportunities yielded by rental properties. The bottom line for a great deal of buyers is that buying is less expensive than renting. This fact is further substantiated by the observed returns from homes sold with tenants in place, where investors have been able to achieve un-leveraged returns in the high single digits and often double digits.
Recognizing these returns, investors have made up a great proportion of our sales, possibly up to fifty percent. This is not the ideal speculator we saw in the past, but rather a majority of investors we encounter have a long-term hold strategy. This has been very beneficial for the marketplace.
Welcome 2011
I hope you all had a Safe New Years Day. Its time to get back into the groove.
There is no better way to start 2011 than to begin with supplying your retirement; Real Estate Investing is a sure fire way to do just that.
Las Vegas is the hottest market! With prices as low as they are along with interest rates at the lowest they have been since 1950.
There are properties that you can purchase for $20,000. Rent it out for $500.00 a month. If you had 10 properties that would be $5,000 a month, now. Now lets discuss 10, 15, 20 years from now. Inflation..... at 3.5% a year, you would be charging $800 to $1,000 a month. Calculate that, $1,000 a month times 10 properties that would be $10,000 a month. Thats a nice nest egg, not to mentioned that tax deductions too. Check my website out, www.sharebuildersinc.com or just call to set up an appointment, (702) 236-6266
There is no better way to start 2011 than to begin with supplying your retirement; Real Estate Investing is a sure fire way to do just that.
Las Vegas is the hottest market! With prices as low as they are along with interest rates at the lowest they have been since 1950.
There are properties that you can purchase for $20,000. Rent it out for $500.00 a month. If you had 10 properties that would be $5,000 a month, now. Now lets discuss 10, 15, 20 years from now. Inflation..... at 3.5% a year, you would be charging $800 to $1,000 a month. Calculate that, $1,000 a month times 10 properties that would be $10,000 a month. Thats a nice nest egg, not to mentioned that tax deductions too. Check my website out, www.sharebuildersinc.com or just call to set up an appointment, (702) 236-6266
Tuesday, November 30, 2010
Real Estate Buzz.....
Bank of America, the nation’s largest mortgage service company since acquiring Countrywide in 2008, announced that they will resume foreclosing on homes Wednesday, December 1st. This comes after the banking giant self-imposed a foreclosure moratorium in the wake of the “robo-signing” scandal that received wide spread media attention in 2009. While this news is undoubtedly another blow to beleaguered homeowners, it comes none too soon for investors looking to purchase post foreclosure properties. In the final quarter of 2010, investors have found slim pickings at Trustees’ Sale auctions across the country.
Fannie Mae and Freddie Mac also made an announcement on November 24th that they will resume the auction sale of homes that have loans serviced by Bank of America, Chase, PNC Financial and others.
The last several years have seen several cessations and moratoriums on foreclosure proceedings that have caused the pool of available investment properties to dry up until the next wave of foreclosures begins. Many agents have struggled during these times to find suitable properties for their clients. My unique approach to securing homes for my investor/clients has insured that we at Share Builders Inc/The Force Realty have actually thrived during these past several years of market flux.
Fannie Mae and Freddie Mac also made an announcement on November 24th that they will resume the auction sale of homes that have loans serviced by Bank of America, Chase, PNC Financial and others.
Fannie Mae and Freddie Mac also made an announcement on November 24th that they will resume the auction sale of homes that have loans serviced by Bank of America, Chase, PNC Financial and others.
The last several years have seen several cessations and moratoriums on foreclosure proceedings that have caused the pool of available investment properties to dry up until the next wave of foreclosures begins. Many agents have struggled during these times to find suitable properties for their clients. My unique approach to securing homes for my investor/clients has insured that we at Share Builders Inc/The Force Realty have actually thrived during these past several years of market flux.
Fannie Mae and Freddie Mac also made an announcement on November 24th that they will resume the auction sale of homes that have loans serviced by Bank of America, Chase, PNC Financial and others.
Thursday, October 7, 2010
The Real Estate Buzz......
Real estate prices in our area continue to remain steady. After the tax credits for home buyers expired last May, there was concern that the market could tank. Yet, existing home sales have stabilized over the past year. Lawrence Yun, Chief Economist for the National Association of Realtors, reports that the housing market continues to recover on its own power without the homebuyer tax credit. The NAR reported in September that existing-home sales rose by 7.6% in August following a big correction in July.
I think people are beginning to hedge their bets. Prices haven’t been this good for a long time. Sellers are serious. The rate for a 30-year conventional fixed-rate mortgage fell to a record low of 4.43 in August according to Freddie Mac. Note that the rate was 5.19 percent in August 2009.
So what is holding back more buyers? The main reason given is a lack of confidence in our national economy. Many believe that the November elections will create a new direction and confidence will grow. If that is so, then buying now will be seen as the smart move.
JUST ASK
Q: What is a CMA?
A: A Comparative Market Analysis, or CMA, is an in-depth analysis of the home’s worth in today’s market. If you are thinking about selling your home, then we need to determine the fair market value first. There are online sites as well as newspaper listings that will give valuations. But each house is different and most sales are not posted publicly for months. It takes an expert who has walked through the recent homes for sale, knows the streets of the neighborhood, and knows the trends of real estate transactions to best assess which properties to compare to yours in order to create a realistic CMA.
MY TOWN
Any parent knows the value of good schools for their children. But the value of good schools doesn’t only affect children and their families, it also impacts neighborhoods and the property values of your home. Even if you don’t have school-age children, knowing the ratings of schools in your current home or prospective new homes will affect your pocketbook in the long run.
The Internet offers some free resources to find school ratings. Check out www.greatschools.org for comprehensive school data nationwide. Peruse the website to find the top schools in small, medium, or large US cities (click Find a School tab, then Choose the Right School, then Moving with Kids). Or search for a specific city to review the Academic Performance Index results.
FYI
With a large amount of bank-owned properties on the market, it's a great time for homebuyers looking for good deals. But bidding on bank-owned homes also means the homebuyer has to compete with investors bringing cash offers.
Fannie Mae's got a new program for their Real Estate Owned (REO) properties. For homeowners, this is a way to buy properties that have reduced prices BEFORE investors can buy them. After the property hits the market, you've got fifteen days to look at the property.
Qualified homebuyers must be owner-occupants and can receive up to 3.5% of the final sales price, which can be used toward closing cost assistance including a home warranty, if desired and available. Eligible offers must be submitted on or after Sept. 23, 2010, and must close by Dec. 31, 2010. The sale must close within 60 days of the offer being accepted.
Let me know if you are interested in this program. It is being offered through real estate professionals to give their clients the heads-up. Properties available under this program can be viewed on the REO Web site www.HomePath.com.
I think people are beginning to hedge their bets. Prices haven’t been this good for a long time. Sellers are serious. The rate for a 30-year conventional fixed-rate mortgage fell to a record low of 4.43 in August according to Freddie Mac. Note that the rate was 5.19 percent in August 2009.
So what is holding back more buyers? The main reason given is a lack of confidence in our national economy. Many believe that the November elections will create a new direction and confidence will grow. If that is so, then buying now will be seen as the smart move.
JUST ASK
Q: What is a CMA?
A: A Comparative Market Analysis, or CMA, is an in-depth analysis of the home’s worth in today’s market. If you are thinking about selling your home, then we need to determine the fair market value first. There are online sites as well as newspaper listings that will give valuations. But each house is different and most sales are not posted publicly for months. It takes an expert who has walked through the recent homes for sale, knows the streets of the neighborhood, and knows the trends of real estate transactions to best assess which properties to compare to yours in order to create a realistic CMA.
MY TOWN
Any parent knows the value of good schools for their children. But the value of good schools doesn’t only affect children and their families, it also impacts neighborhoods and the property values of your home. Even if you don’t have school-age children, knowing the ratings of schools in your current home or prospective new homes will affect your pocketbook in the long run.
The Internet offers some free resources to find school ratings. Check out www.greatschools.org for comprehensive school data nationwide. Peruse the website to find the top schools in small, medium, or large US cities (click Find a School tab, then Choose the Right School, then Moving with Kids). Or search for a specific city to review the Academic Performance Index results.
FYI
With a large amount of bank-owned properties on the market, it's a great time for homebuyers looking for good deals. But bidding on bank-owned homes also means the homebuyer has to compete with investors bringing cash offers.
Fannie Mae's got a new program for their Real Estate Owned (REO) properties. For homeowners, this is a way to buy properties that have reduced prices BEFORE investors can buy them. After the property hits the market, you've got fifteen days to look at the property.
Qualified homebuyers must be owner-occupants and can receive up to 3.5% of the final sales price, which can be used toward closing cost assistance including a home warranty, if desired and available. Eligible offers must be submitted on or after Sept. 23, 2010, and must close by Dec. 31, 2010. The sale must close within 60 days of the offer being accepted.
Let me know if you are interested in this program. It is being offered through real estate professionals to give their clients the heads-up. Properties available under this program can be viewed on the REO Web site www.HomePath.com.
Thursday, September 2, 2010
The Real Estate Market is HOT
Although the news may sound like the world is coming to end. The real estate market and the individuals who are in the "know" are CASHING IN!! This is the best time to purchase whether a owner/occupant or as a real estate investor. If you are wanting to get into the market as an investor here are a few rules to live by:
RULES TO INVESTING IN REAL ESTATE
1. Have a business plan….. Why real estate? What do you want to accomplish investing in real estate?
2. Have a criteria and stick to it.
3. Do your research on the properties.
4. Always put your investment property in an LLC. Get legal advice.
5. Have a good CPA and Attorney
6. Always have CASH FLOW. Without the cash you will not be able to make it work.
7. Do not purchase investment property with large yards or swimming pools. Costly to maintain.
8. Never rent to FAMILY or FRIENDS. This is a business not a charity.
9. If you are purchasing property with a loan, ALWAYS get a fixed interest rate and on a 15, 20 or 30 year loan program.
10. ROI (return on investment) less than 60 months. This will depend on your own criteria and properties Performa
Visit my website www.sharebuildersinc.com or call (702) 236-6266
RULES TO INVESTING IN REAL ESTATE
1. Have a business plan….. Why real estate? What do you want to accomplish investing in real estate?
2. Have a criteria and stick to it.
3. Do your research on the properties.
4. Always put your investment property in an LLC. Get legal advice.
5. Have a good CPA and Attorney
6. Always have CASH FLOW. Without the cash you will not be able to make it work.
7. Do not purchase investment property with large yards or swimming pools. Costly to maintain.
8. Never rent to FAMILY or FRIENDS. This is a business not a charity.
9. If you are purchasing property with a loan, ALWAYS get a fixed interest rate and on a 15, 20 or 30 year loan program.
10. ROI (return on investment) less than 60 months. This will depend on your own criteria and properties Performa
Visit my website www.sharebuildersinc.com or call (702) 236-6266
Tuesday, August 3, 2010
Defense for you Asset
I have had a discussion on this topic a few months back, however It seems I having the same conversation with many investors, homeowners, and business owners.
An important discussion is keeping your asset protected.
Living trusts are used by millions of people who wish to keep their assets from going through probate when they die. Most living trusts, however, are not adequate for protecting assets from creditors because the trusts are revocable. This means that the person setting up the trust can revoke or change the terms of the trust at any time. If you have a revocable trust, and you can get control of the assets, the courts have consistently held that your creditors can also get control of those assets.
Trusts that are irrevocable can be more successfully used to protect assets. Once you set up an irrevocable trust, you cannot change the terms or revoke it. In essence, you have given your assets away; they are no longer available to satisfy claims against you. A judgment creditor cannot get to these funds. These are just two trusts that are avaiavable, there are many more.
What about LLC's, S, Corps, C Corporations are another way of protection.
Real estate asset protection do you need it? Well, considering that real-estate is risky enough as it is, if someone gets killed or hurt you are likely to be sued by the injured victims or family members. That is a given as accidents do happen but lawsuits are more likely to happen when people know you own property. Particularity in this age where someone can sue a business because the coffee they were drinking was too hot or where a lady was awarded 12 million dollars in a foiled suicide attempt on the train tracks.
Consider this scenario you are sued for $2,000,000, your insurance will cover $1,000,000 but guess who is left with a $1,000,000 problem. The day before life was rosy but today you are in the poor house. You could of avoided that issue all together if you had real estate asset protection that is if you didn't have the property in your name.
The biggest mistake you can make is to put your real estate in your own name as it all a part of public record. Anyone can look at what you have determine its current market value and deduct what you owe to see what they can take you for. Putting your name out in public land registry is equivalent to painting a bulls eye on your back to prying eyes such as attorneys, creditors and even tenants.
But what entity is the real estate asset protection? What entity or corporate structure do I use to buy and sell to hold real estate? How can I limit my liability exposure? These are very good questions to ask and a good place to start.
Certainly your first protection is liability insurance, but should judgments exceed your insurance or should your insurance not cover you for whatever reason you need real estate asset protection.
A land trust is a form of an irrevocable living trust used to take title to real estate so the beneficiaries cannot be easily discovered. However the land trust is not considered to be a separate taxable entity and there are no tax benefits of transferring property in or out of it.
A corporation is an effective device to buy and sell real estate so if the beneficiary of the land trust is a corporation one can have the tax benefits of being taxed after expenses at a corporate rate rather than before expenses and at the higher rate of an individual. As an individual you may also be taxed as a dealer at 15% for buying and selling.
Depending on your tax situation you might be better off with a C Corporation rather than a S Corporation. A corporation is a C Corporation by default and files a separate tax return whereas a S corporation is specially set up so that it splits up its profits to its shareholders as dividends. The shareholders then report their income on their own personal tax returns. In most cases its better to start out as a S Corporation and later change into a C Corporation when the tax advantages become evident.
A LLC or limited liability company allows the shareholders to participate in the running of the company without sharing its liability. Like a S Corporation the profits and losses flow to the owners. Buying and selling may subject the owners as an active activity to a dealers tax of 15% making the C corporation a better choice. If the business is primarily rents the LLC may be better. Its conceivable that one can form an LLC for every property and file one personal income tax if there is only one owner.
In any case get as much insurance as your entity can sustain to cover your real estate and business activity. Insure the entity is the names insured. Making sure the entity holds title to all your real estate to insure you won't be named the defendant in any potential lawsuit.
Those are some areas to consider before you obtain further professional advice for getting the best real estate asset protection
An important discussion is keeping your asset protected.
Living trusts are used by millions of people who wish to keep their assets from going through probate when they die. Most living trusts, however, are not adequate for protecting assets from creditors because the trusts are revocable. This means that the person setting up the trust can revoke or change the terms of the trust at any time. If you have a revocable trust, and you can get control of the assets, the courts have consistently held that your creditors can also get control of those assets.
Trusts that are irrevocable can be more successfully used to protect assets. Once you set up an irrevocable trust, you cannot change the terms or revoke it. In essence, you have given your assets away; they are no longer available to satisfy claims against you. A judgment creditor cannot get to these funds. These are just two trusts that are avaiavable, there are many more.
What about LLC's, S, Corps, C Corporations are another way of protection.
Real estate asset protection do you need it? Well, considering that real-estate is risky enough as it is, if someone gets killed or hurt you are likely to be sued by the injured victims or family members. That is a given as accidents do happen but lawsuits are more likely to happen when people know you own property. Particularity in this age where someone can sue a business because the coffee they were drinking was too hot or where a lady was awarded 12 million dollars in a foiled suicide attempt on the train tracks.
Consider this scenario you are sued for $2,000,000, your insurance will cover $1,000,000 but guess who is left with a $1,000,000 problem. The day before life was rosy but today you are in the poor house. You could of avoided that issue all together if you had real estate asset protection that is if you didn't have the property in your name.
The biggest mistake you can make is to put your real estate in your own name as it all a part of public record. Anyone can look at what you have determine its current market value and deduct what you owe to see what they can take you for. Putting your name out in public land registry is equivalent to painting a bulls eye on your back to prying eyes such as attorneys, creditors and even tenants.
But what entity is the real estate asset protection? What entity or corporate structure do I use to buy and sell to hold real estate? How can I limit my liability exposure? These are very good questions to ask and a good place to start.
Certainly your first protection is liability insurance, but should judgments exceed your insurance or should your insurance not cover you for whatever reason you need real estate asset protection.
A land trust is a form of an irrevocable living trust used to take title to real estate so the beneficiaries cannot be easily discovered. However the land trust is not considered to be a separate taxable entity and there are no tax benefits of transferring property in or out of it.
A corporation is an effective device to buy and sell real estate so if the beneficiary of the land trust is a corporation one can have the tax benefits of being taxed after expenses at a corporate rate rather than before expenses and at the higher rate of an individual. As an individual you may also be taxed as a dealer at 15% for buying and selling.
Depending on your tax situation you might be better off with a C Corporation rather than a S Corporation. A corporation is a C Corporation by default and files a separate tax return whereas a S corporation is specially set up so that it splits up its profits to its shareholders as dividends. The shareholders then report their income on their own personal tax returns. In most cases its better to start out as a S Corporation and later change into a C Corporation when the tax advantages become evident.
A LLC or limited liability company allows the shareholders to participate in the running of the company without sharing its liability. Like a S Corporation the profits and losses flow to the owners. Buying and selling may subject the owners as an active activity to a dealers tax of 15% making the C corporation a better choice. If the business is primarily rents the LLC may be better. Its conceivable that one can form an LLC for every property and file one personal income tax if there is only one owner.
In any case get as much insurance as your entity can sustain to cover your real estate and business activity. Insure the entity is the names insured. Making sure the entity holds title to all your real estate to insure you won't be named the defendant in any potential lawsuit.
Those are some areas to consider before you obtain further professional advice for getting the best real estate asset protection
Thursday, June 24, 2010
NO LIMITS!!
I had an incredible coach (Jordan Wirsz) share this information with me and I thought I would share it with you.
Do you know what a 10% stake in the Apple Inc. company is worth today? I do. $22 Billion to be exact. Did you know, there were actually THREE founders of Apple? His name was Ron Wayne, and was one of the three original founders of Apple. His story is a bit more unique than the typical Billionaire technology founder...Instead, he made a decision that would change his life (or maybe a better way to put it, would NOT change his life) forever. Only 11 days after the Apple enterprise was founded, Ron Wayne began to second guess himself and the other two Apple founders, including legendary Apple icon, Steve Jobs.
We all doubt ourselves at times...Our business, our thoughts, our "gut instincts," but what Ron Wayne did, was sold out. Literally. Only 11 days after his entry into the business, he sold his stake back to the other two founders for a mere $800, considering it "found money," at the time he was thrilled to have the $800. Today, that same 10% stake would be worth a staggering $22 Billion. Today, Ron Wayne lives in Pahrump Nevada, in a small single story house, with a metal carport, and living off of his social security check, going to the Casino's every day, hoping his luck will turn around.
Ron said, "I made the best decision I could at the time, with the information I had, and now I'm living with the decision."
Who would have known, right? I mean Apple, who would have thought? In 1976, that $800 was worth a lot more than it is today...And at the time, Ron's greed made him take the short, sweet, and easy way out of a partnership before it really even began. That greed driven decision cost him $22 Billion.
If you have a passion, a mission, drive, focus, dedication, determination, tenacity to succeed, then you need to know that there is absolutely NO limits to what can be accomplished. The only limits we have are the ones we give ourselves.
Do you know what a 10% stake in the Apple Inc. company is worth today? I do. $22 Billion to be exact. Did you know, there were actually THREE founders of Apple? His name was Ron Wayne, and was one of the three original founders of Apple. His story is a bit more unique than the typical Billionaire technology founder...Instead, he made a decision that would change his life (or maybe a better way to put it, would NOT change his life) forever. Only 11 days after the Apple enterprise was founded, Ron Wayne began to second guess himself and the other two Apple founders, including legendary Apple icon, Steve Jobs.
We all doubt ourselves at times...Our business, our thoughts, our "gut instincts," but what Ron Wayne did, was sold out. Literally. Only 11 days after his entry into the business, he sold his stake back to the other two founders for a mere $800, considering it "found money," at the time he was thrilled to have the $800. Today, that same 10% stake would be worth a staggering $22 Billion. Today, Ron Wayne lives in Pahrump Nevada, in a small single story house, with a metal carport, and living off of his social security check, going to the Casino's every day, hoping his luck will turn around.
Ron said, "I made the best decision I could at the time, with the information I had, and now I'm living with the decision."
Who would have known, right? I mean Apple, who would have thought? In 1976, that $800 was worth a lot more than it is today...And at the time, Ron's greed made him take the short, sweet, and easy way out of a partnership before it really even began. That greed driven decision cost him $22 Billion.
If you have a passion, a mission, drive, focus, dedication, determination, tenacity to succeed, then you need to know that there is absolutely NO limits to what can be accomplished. The only limits we have are the ones we give ourselves.
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