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 first time home buyers. Show all posts
Showing posts with label first time home buyers. Show all posts
Monday, December 5, 2011
Wednesday, August 24, 2011
Federal Sales Tax on Your HOME!
LETS VOTE THEM ALL OUT IN 2012! WILL YOU SELL YOUR HOUSE after 2012?
Will you ever sell your house after 2012?
Call your Democratic/Republic Senator's Office to confirm this hidden fact about the ObamaCare regulation.
Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That's $3,800 on a $100,000 home, plus all the other items.
When did this happen?
It's in the health care bill. Just thought you should know.
SALES TAX GOES INTO EFFECT 2013 (Part of HC Bill).
Why 2013?
Could it be that it is coming to light AFTER the 2012 elections?
REAL ESTATE SALES TAX.
So, this is "change you can believe in"?
Under the new health care bill all real estate transactions will be subject to a 3.8%Sales Tax. The bulk of these new taxes don't kick in until 2013 If you sell your $400,000 home, there will be a $15,200 tax.
This bill is set to screw the retiring generation who often downsize their homes.
Does this information make your November and 2012 vote more important?
Oh, you weren't aware this was in the ObamaCare bill? Guess what, you aren't alone.
There are more than a few members of Congress that aren't aware of it either
http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home
Will you ever sell your house after 2012?
Call your Democratic/Republic Senator's Office to confirm this hidden fact about the ObamaCare regulation.
Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That's $3,800 on a $100,000 home, plus all the other items.
When did this happen?
It's in the health care bill. Just thought you should know.
SALES TAX GOES INTO EFFECT 2013 (Part of HC Bill).
Why 2013?
Could it be that it is coming to light AFTER the 2012 elections?
REAL ESTATE SALES TAX.
So, this is "change you can believe in"?
Under the new health care bill all real estate transactions will be subject to a 3.8%Sales Tax. The bulk of these new taxes don't kick in until 2013 If you sell your $400,000 home, there will be a $15,200 tax.
This bill is set to screw the retiring generation who often downsize their homes.
Does this information make your November and 2012 vote more important?
Oh, you weren't aware this was in the ObamaCare bill? Guess what, you aren't alone.
There are more than a few members of Congress that aren't aware of it either
http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home
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
Friday, August 12, 2011
CASH DOWN PAYMENT ASSISTANCE
Most home buyers’ biggest hurdle is coming up with the cash for a sensible down payment. Gone are the days of zero-down loans, so if that was your plan, you’re going to need a new one! Coming up with a down payment for a home is a challenge because it’s not chump change we're talking about, here. The down payment on a $200,000 house, for example, will run you anywhere from $7,000 (on an FHA loan) to $40,000!
That might seem like an insurmountable amount of coin to come up with, but it’s actually more doable than you might think. Some buyers will simply save up their own cash, even if it takes many, many moons. The good news is that if you still need some help to boost your down-payment savings, there are resources you can harness to power your home-buying pursuit:
1.The FHA Bridal Registry. Yes - you read that right! The FHA Bridal Registry Program enables wanna-be home buyers to apply their families’ wedding gifts toward their down payments. And although it’s named a “bridal registry” program, you don’t have to be a prenuptial couple to use it. You could also use this program to collect gifts for graduation, the arrival of a baby or some other major life event in which people want to give you gifts. The FHA Bridal Registry works like a traditional registry, but is more flexible. The registrants visit their choice of FHA mortgage lenders and set up what essentially is a custodial savings account for the sole purpose of funding their down payment. The couple’s (or individual’s) family and friends can either deposit funds directly into the account or give the cash or check to the couple or individual, who then deposits it into the account. The account’s flexibility also goes beyond that of traditional down payment gift rules that are applicable to FHA loans, which are detailed below in insider secret #2. With the FHA Bridal Registry Program, the only gift documentation required is “lender and borrower certification of the funds.”
2.Family gifts. Most lenders will allow home buyers to apply gift money from family members toward their down payment - within guidelines, that is. First, the lender will require a letter from the giver verifying that it in fact is a gift and not a loan. (They generally frown upon it being a loan because it would add to the buyer’s debt and change their debt-to-income ratio.) And second, the person giving you the money must be a relative. The reasoning here is that a friend will most likely expect you to repay the money, whereas a relative won’t. FHA loans will allow the gift to make up any portion or all of the buyer’s down payment, many conventional (non-FHA) loan programs will restrict the proportion of a buyer’s down payment that can come from gift money. The lender may also have specific ways they want to see the money go into and out of your accounts. Before you accept a gift toward your down payment, be sure to check with your mortgage broker or loan rep to be sure that you’re dotting all the right i's and crossing all the right t's.
3.Your Employer. Some companies offer assistance programs to employees. Most are government, university, large company and financial industry employers. One example is safety workers: n some areas, safety workers like firefighters and police can have access to down payment grants from their employers if they buy properties in the city where they are on-call as first responders. Also, many large colleges and universities, very large companies and banks and lending institutions offer down payment help and have below-market-rate mortgages set up for faculty members and staffers. Check with your Human Resources department to see if any such program is available to you.
4.City/County/State Programs. Some states, counties and cities still offer programs that lend or give home buyers some assistance for down payments. These programs vary widely in scope - for instance, many target buyers with low and moderate incomes, while some seek to help the buyers of foreclosed or fixer-upper type homes. Some don’t have to repaid - meaning they are given as grants and are forgiven entirely if the buyer lives in the property for 30 years, but must be repaid if the buyer sells or rents the home out before the 30 years elapses. The programs pretty much all have some sort of homeowner education component that requires applicants to take personal finance and homeownership preparedness classes before they can receive funds. To learn more, visit your city, county and state websites to learn about programs that might be able to help you.
5.Your Retirement Funds. Many financial advisors would advise against this, but if you have a 401K or Roth IRA account and some years to go before retirement, you might be able to tap into it or even borrow against your own funds for your down payment. Currently, you can take up to $10,000 out of your Traditional IRA with no penalty to put toward the purchase of your first home, but you will be taxed. You can take as much as you want out of your Roth IRA contributions with no penalty or taxes, though, and as much as $10,000 from your earnings penalty-free for your down payment. The rules get a little tricky, here, so definitely check in with your tax and financial advisors. And while you can’t similarly draw from your 401K, many retirement and pension plans will allow you to borrow the money against your funds, then repay it to yourself – at interest. So the choice there comes down to paying your lender back with interest or paying yourself with interest. That choice should be you! But first, get some advice from your CPA or financial planner. This option might not make financial sense for your particular situation.
http://www.trulia.com/blog/taranelson/2011/08/5_insider_secrets_for_coming_up_with_cash_for_down_payment?ecampaign=cnews201108B&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F08%2F5_insider_secrets_for_coming_up_with_cash_for_down_payment
Thursday, July 28, 2011
4 Steps to Minimize the Risk of Owning a Home
Not so long ago, in a not-so-distant land, owning a home was thought of as the safest "investment" around. Fast forward to the present day, and home ownership seems super scary to many people who can afford homes, and would like to own them, but are paralyzed by the fear of buying a lemon, or having a mortgage catastrophe.
Here are 4 simple steps to minimize the risk that you'll become the main character in a homeownership horror story.
1. Stick with a fixed-rate mortgage. Recent data shows that adjustable rate mortgages, or ARMs, are increasingly popular, rising from 9 percent of the mortgage market in the fourth quarter of 2010 to 12 percent in the first quarter of this year. This might seem crazy to some, but in financially aggressive crowds, the lure of low, 3 percent(ish) interest rates on ARMs is enough to overcome any qualms. As well, today's ARMs tend to have lower lifetime interest rate caps and require payment of principal, so they don't adjust as violently as the subprime interest-only and option ARMs that contributed to the foreclosure crisis.
If the thought of your mortgage payment changing over time gives you the shakes, you don't want to live in a state of interest rate obsession for the next few decades, or you simply crave the simplicity and predictability of knowing what your housing payment will be for the next 15, 20 or 30 years, then stick to
a fixed-rate mortgage. The rates are higher, but with a fixed-rate loan, the risk of scary payment changes are not only lower, they are non-existent.
2. Put - and keep - a home warranty in place. One of the most frightening things about going from renter to homeowner is the prospect of being solely responsible for the care and feeding of your home and all its systems and appliances. Responsibility for both the costs and the actual logistics of repairing things like a leaky roof, a broken hot water heater or a haywire electrical fixture looms large in the minds of first-time buyers, in particular.
A home warranty plan kicks in when escrow closes, and depending on the coverage you select, will cover your home against the breakdown of major systems and even some appliances, like furnaces and water heaters. In some cases, you can even upgrade the coverage to protect against roof leaks and some plumbing issues. When a covered item breaks down, just remember to call the home warranty company first - for the cost of a service call you can get the item repaired or even replaced, if necessary. I remember the home warranty company replacing a $900 water heater in my first home; what a GOD send!
Talk with your agent - you might even be able to negotiate for the seller to pay for the first year's cost of the warranty. Just remember to renew it when it expires every year, to keep a cap on your risk of unexpected repair costs for the duration of your tenure as a homeowner.
3. Get repair bids and estimates, not just inspections. After you find the home of your dreams (or the home of your budget!) and get into contract, you'll have a contingency or objection period ranging from 7 to 17 days during which you can obtain all the inspections you want. Most buyers start out with a general property inspection, a pest inspection and a roof inspection, then get more specialized inspections if the property calls from it. Pest and roof inspectors will generally provide an inspection report AND a repair bid for any work they find needs to be done.
But the overall home inspection could very well list a dozen needed repairs, upgrades and maintenance items, without providing any information about how much those repairs will cost. If your inspection report surfaces work you'll need to have done to fix things (or avoid bigger fixes down the road), work with your agent to schedule actual repair contractors to come in and give you bids on the work before your contingency or inspection period expires. That will position you to negotiate around repair costs with the seller, or to know what you're getting yourself into, cost-wise, if you take the property as-is.
4. Buy on the 10-year plan. Warren Buffett once famously advised stock investors to "only buy something that you'd be perfectly happy to hold if the market shut down for 10 years." The same advice is good for buying a home in today's real estate market. Take on a mortgage you know you can sustain, buy at a price you can comfortably afford and avoid having to sell because you need to move for some urgent reason, or because the home no longer meets your needs.
You can take this last step to hedge against losing money on your home by planning your space, career and lifestyle needs out 5, 7, even 10 years in the future - everything from how many bedrooms and garage spaces you'll need to where you'll want to be located, geographically - and selecting a home that will meet those needs for that foreseeable future. As a general rule of thumb, the harder hit the area was in the recession, the longer you should plan to hold it.
complements of
http://www.trulia.com/blog/taranelson/2011/07/4_steps_to_minimize_the_risk_of_owning_a_home?ecampaign=cnews201107D&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F07%2F4_steps_to_minimize_the_risk_of_owning_a_home
Here are 4 simple steps to minimize the risk that you'll become the main character in a homeownership horror story.
1. Stick with a fixed-rate mortgage. Recent data shows that adjustable rate mortgages, or ARMs, are increasingly popular, rising from 9 percent of the mortgage market in the fourth quarter of 2010 to 12 percent in the first quarter of this year. This might seem crazy to some, but in financially aggressive crowds, the lure of low, 3 percent(ish) interest rates on ARMs is enough to overcome any qualms. As well, today's ARMs tend to have lower lifetime interest rate caps and require payment of principal, so they don't adjust as violently as the subprime interest-only and option ARMs that contributed to the foreclosure crisis.
If the thought of your mortgage payment changing over time gives you the shakes, you don't want to live in a state of interest rate obsession for the next few decades, or you simply crave the simplicity and predictability of knowing what your housing payment will be for the next 15, 20 or 30 years, then stick to
a fixed-rate mortgage. The rates are higher, but with a fixed-rate loan, the risk of scary payment changes are not only lower, they are non-existent.
2. Put - and keep - a home warranty in place. One of the most frightening things about going from renter to homeowner is the prospect of being solely responsible for the care and feeding of your home and all its systems and appliances. Responsibility for both the costs and the actual logistics of repairing things like a leaky roof, a broken hot water heater or a haywire electrical fixture looms large in the minds of first-time buyers, in particular.
A home warranty plan kicks in when escrow closes, and depending on the coverage you select, will cover your home against the breakdown of major systems and even some appliances, like furnaces and water heaters. In some cases, you can even upgrade the coverage to protect against roof leaks and some plumbing issues. When a covered item breaks down, just remember to call the home warranty company first - for the cost of a service call you can get the item repaired or even replaced, if necessary. I remember the home warranty company replacing a $900 water heater in my first home; what a GOD send!
Talk with your agent - you might even be able to negotiate for the seller to pay for the first year's cost of the warranty. Just remember to renew it when it expires every year, to keep a cap on your risk of unexpected repair costs for the duration of your tenure as a homeowner.
3. Get repair bids and estimates, not just inspections. After you find the home of your dreams (or the home of your budget!) and get into contract, you'll have a contingency or objection period ranging from 7 to 17 days during which you can obtain all the inspections you want. Most buyers start out with a general property inspection, a pest inspection and a roof inspection, then get more specialized inspections if the property calls from it. Pest and roof inspectors will generally provide an inspection report AND a repair bid for any work they find needs to be done.
But the overall home inspection could very well list a dozen needed repairs, upgrades and maintenance items, without providing any information about how much those repairs will cost. If your inspection report surfaces work you'll need to have done to fix things (or avoid bigger fixes down the road), work with your agent to schedule actual repair contractors to come in and give you bids on the work before your contingency or inspection period expires. That will position you to negotiate around repair costs with the seller, or to know what you're getting yourself into, cost-wise, if you take the property as-is.
4. Buy on the 10-year plan. Warren Buffett once famously advised stock investors to "only buy something that you'd be perfectly happy to hold if the market shut down for 10 years." The same advice is good for buying a home in today's real estate market. Take on a mortgage you know you can sustain, buy at a price you can comfortably afford and avoid having to sell because you need to move for some urgent reason, or because the home no longer meets your needs.
You can take this last step to hedge against losing money on your home by planning your space, career and lifestyle needs out 5, 7, even 10 years in the future - everything from how many bedrooms and garage spaces you'll need to where you'll want to be located, geographically - and selecting a home that will meet those needs for that foreseeable future. As a general rule of thumb, the harder hit the area was in the recession, the longer you should plan to hold it.
complements of
http://www.trulia.com/blog/taranelson/2011/07/4_steps_to_minimize_the_risk_of_owning_a_home?ecampaign=cnews201107D&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F07%2F4_steps_to_minimize_the_risk_of_owning_a_home
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
Thursday, July 1, 2010
First Time Home Buyers Tax Credit
Nevadans Receive Kudos For Efforts to Extend First Time Homebuyer's Tax Credit
2010 NAR President Vicky Cox Golder expressed her thanks to the NVAR Board of Directors for their efforts to extend the closing deadline for the Homebuyer Tax Credit. NAR worked closely with Congressional leaders on both sides of the aisle to enact this important legislation. Extending the Tax Credit Closing deadline will help provide additional stability to real estate markets across the nation.
Click here to read 2010 NAR President Vicky Cox Golder's letter.
2010 NAR President Vicky Cox Golder expressed her thanks to the NVAR Board of Directors for their efforts to extend the closing deadline for the Homebuyer Tax Credit. NAR worked closely with Congressional leaders on both sides of the aisle to enact this important legislation. Extending the Tax Credit Closing deadline will help provide additional stability to real estate markets across the nation.
Click here to read 2010 NAR President Vicky Cox Golder's letter.
Monday, June 28, 2010
Wealth Creation through Real Estate
I have found many people wanting to know how to create wealth through real estate but have not done anything about it. Reasons are many:
1. Scared and/or Fear
2. Do not know how or where to start
3. Have a mentor to show them
4. No Credit or Money
5. No time
The list goes on.
There is an easy way to create wealth through Real Estate!
Check out www.sharebuildersinc.com
1. Scared and/or Fear
2. Do not know how or where to start
3. Have a mentor to show them
4. No Credit or Money
5. No time
The list goes on.
There is an easy way to create wealth through Real Estate!
Check out www.sharebuildersinc.com
Monday, June 7, 2010
Sprint into Action! Real Estate Investing
I pride myself in sprinting into action to get things done. Yes, I make goals and reach them. However if you just keep making and creating goals and doing nothing it will never happen.
So I ask these questions
Have ever wanted to invest in real estate?
Have you ever wanted to purchase your first home?
Do you have good/bad credit?
Do you have enough down payment?
How soon do you want to achieve you goal?
I say SPRINT INTO ACTION, find someone that assist you and do it.
So I ask these questions
Have ever wanted to invest in real estate?
Have you ever wanted to purchase your first home?
Do you have good/bad credit?
Do you have enough down payment?
How soon do you want to achieve you goal?
I say SPRINT INTO ACTION, find someone that assist you and do it.
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