Purchasing a Home Can Be Nerve Wrecking

When I first start working with a potential buyer, the buyer may feel anxious, nervous, and even confused about what is involved in purchasing a home.  To remove the anxiety, nervousness, and confusion, I first seat down with the potential buyer and explain the buying process from beginning to end.  It takes about an hour or two depending on the questions that the buyer may have.  I make it a point to discuss everything from mortgage to home appraisal and everything in between.  When this session is over the buyers are more relaxed and feel empowered about the buying process.   I do not leave any stone unturned because I give the buyer the same information that I went over with them in writing so if they did not catch all the information in the hour or two we talked they can review and ask more questions later.

It is best that the buyer get educated on the buying process so that he or she can understand what they are signing and understand the impact those documents can have on his or her life.

The educated buyer is now equip to buy the home of his or her dreams.  Let’s imagine that he or she has found that home and now it is moving day.  What will the buyer do? The buyer can get a quote on moving expenses at The House Removals Company they have taken the guess work out of the cost of moving.  Visit their site at http://www.thehouseremovalscompany.co.uk/

Real Estate Investor, Beware

Originally posted 2009-01-01 22:53:35. Republished by Blog Post Promoter

The IRS made changes to the tax that will affect 2007 tax returns if the investor claims a loss. In addition, just reporting a loss may cause your taxes to be audited.

The new law has to do with the real estate investor classification. The investor can be classified as a real estate professional. Under the new law, the investor qualifies as a professional, regardless if licensed real estate agent or broker by working at least 750 hours on real estate activities. The IRS considers real estate activities to be renting, leasing, converting, operating, developing, redeveloping, managing, constructing, and acquiring of real estate.

In addition, as a real estate investor you are limited on your deduction to your passive income in the amount of $25,000. That amount decreases as your passive income increases and tops $100,000. Still yet, the eligibility for the deduction disappears as your income goes over $150,000.

The reason this change came about was due to the increase in number of investors during the market “boom”.

The ramification of these modifications to the tax law hit the investor who works a full time W2 job the hardest. Remember, the losses can only be taken on passive income.

However, under that same law there are two classifications for passive losses. There is material participating passive loss and passive loss.

The material participating rule requires that the investor work on each property for 500 hours. The work can be any or all the qualifying activities listed above. The investor can also opt to combine all properties under one 500 hour block, but the election must be made at the beginning of the tax year.

Another tax law change is that in the designation of a limited partnership’s interest. The properties owned and/or held under this entity is no longer considered material participating, so are not eligible for the deduction if there is a loss.

It is important to note that no longer can research of potential properties that the investor is considering adding to his or her portfolio a valid passive activity.

Keeping accurate records is crucial. The investor needs to keep date, time, location, and activities and in some cases it may be helpful to have photos to show evidence.

The changes mention above came out in December of 2007 and are retroactive to 2007 and may be earlier tax returns. Have your accountant review your current and previous returns to make sure you are in compliance.

Related Real Estate Investing Articles

• Help Offered for Indirect Investors With Madoff (nytimes.com)
• House Flipping Makes a Comeback (online.wsj.com)
• Homebuyer Tax Credit Provides Incentives for Buyers Says Elika Associates (prweb.com)

Invest in Real Estate Like the Wealthy

Ever now and then, I find it fascinating to review what are the buying trends of the wealthy.  I discovered that the wealthy are not shying away from real estate, but they are re-focusing their wealth from one commodity to another.    The wealthy are buying land.  Yes, that right land and acres of it.

Ted Turner, for instance, owns about two million acres of land to include 15 ranches.  His effort would definitely be appreciated by animal lovers everywhere because he may have single handedly save the bison.  The bison which were near extinction now inhabitant much of his land and are now 45,000 strong.

The owner of Burt’s Bee purchased several acres but recently have been criticized for not allowing hunters to hunt on the land.

You may be wondering why land.  Well, land unlike stock will never go to zero.  The land that the wealthy purchase can be used for several other things like testing a development vehicle, recreation, or hunting.

Still yet, land can be divided into resources that makes owning it more profitable.  Imagine if you will the Beverly Hillbillies, the land they owned had oil on it.  Yes, oil and the discovery of that oil made them rich beyond imagination.

Land can also produce income by selling and planting of trees.

You can even, if you own enough, sell the air rights, mineral rights, etc.

Therefore , the next time you have an extra million or even thousand lying around consider investing it in land.

Cancellation of Interest on Your Mortgage

Originally posted 2008-12-05 07:59:21. Republished by Blog Post Promoter

     Before we discuss how we will accomplish the cancellation of interest, we must discuss a key component in accomplishing our goal of interest cancellation.

     This component is the advanced line of credit or home equity line of credit.  Why an advanced line of credit, you ask?  Well, with the advance line of credit, the lender must apply your payment to the loan balance on the day received.  Remember, with our mortgage, the closed end loan, the payment is applied, but it does not effect the mortgage in the month or day received but it effects the following months principal balance and calucated interest.

     If there is a payment several times a month on the open end loan the lender will have to recalculate interest several times in the month.  Consequently, the interest can be reduced daily (if we send in a payment daily) or several times a month.  This in turn forces the lender to recalucate your interest subsequently cancelling interest. 

      This type of account has another advantage you can take money out and put money in.  This feature is similar to your checking account.  With that being said, we are going to examine using the advanced line of credit as a checking account.    Stay tune when we pull this together.

Lake County to Have Tax Sale

Originally posted 2009-03-21 05:48:30. Republished by Blog Post Promoter

If you are counting on the amnesty bill from the state of Indiana to give you more time to pay your property tax you may be out of luck.  The bill that was developed to help homeowners is stalled in the state General Assembly.    As a result of this stall, Lake County Treasurer John Petalas has scheduled the first property tax sale in two years for July 9.

What does this mean?  It means that if you are behind on your property taxes like 24,000 homeowners are in Lake County you may need to work on getting the money together to pay your back property taxes before then.

Remember, even if your mortgage payment is current, but your property taxes are not you can still lose your home.    The property taxes supersedes the mortgage payment, so most mortgage companies make sure they are paid.  However, if the property is an investment property the latter does not hold true, so if you can pay your property tax before July 9, 2009 do so or you may lose your home to a tax sale.

A Breakthrough Idea for Those Considering Going “Green” With Your Next Rental or Purchase of a Home

Originally posted 2009-06-29 05:13:36. Republished by Blog Post Promoter

Green or environmentally is no longer a fad it is a reality.  We are slowly approaching our very own “George Jetson” era.  In order to save money on your utilities an maybe your health care insurance, it maybe worthwhile to consider going “green”

New York City has taken to the concept of green or “eco friendly household” by storm.  There are furnished two bedroom condos “with nontoxic partially recycled or otherwise sustainable decor available for rent.

The rent for these environmentally efficient apartments and/or condominiums start at $2,500 to $7,500 a month.  The amoun for rent vary based on how many bedrooms with the studio been on the low end and a three bedroom being on the high end.  There is a thousand dollar increase if you upgrade from a studio to an one bedroom.  If you need a two bedroom, add another two thousand to the price of the one bedroom apartment.

Interestingly enough because of the concept of “green” is new, appraisers still are not certain if having an “eco-friendly” property will add to the long term value of the property. 

Despite the higher rent, most tenants reported savings on utilities that makes paying the higher rent worthwhile.

If you have allergies, astma, or simply want to save on your utilities it may be worthwhile for you to consider converting your home or finding a rental property that is “eco-friendly”

Do You Sincerely Want to Avoid Foreclosure?

Originally posted 2009-06-09 15:22:35. Republished by Blog Post Promoter

There is renewed hope for homeowners in default on their mortgage.  The program started October 1, 2008 and will end September 30, 2011.  The program is called Hope for Homeowners Program.

The homeowner can get a 30 year fixed rate mortgage from the Federal Housing Administration (FHA).  The program is designed to refinance homeowners out of high interest rate loans and possible adjustable rate loans to a fixed affordable rate loan.

The program is voluntary, and both the homeowner and the lender must agree to participate in the program.

To be eligible, the homeowner must meet these guidelines:

• the home must be your primary residence
• you can not have ownership interest in another home such as, a second home
• your mortgage was originated on or before January 1, 2008
• you have made at least six on time payments
• you are not able to pay your existing mortgage without assistance
• your monthly payment is more than 31 percent of our gross monthly income
• you have not been convicted of fraud

To participate in the program, you must contact your lender.

The new loan will be no more than 90% of the appraised value of your home.  As a results of this, the lender will be required to write down your loan to that amount.

The new mortgage will replace your current mortgage if it is approved by the lender.  In other words, you will not owe anything on the original mortgage.  This new mortgage will replace it.  You will allso have to share both the equity and any future appreciation for five years.  In essence, you are not eligible to carry a second mortgage for five years after initiation of the Hope for Homeowners Program.  You will have to pay 1.5% annual mortgage insurance premium and 3% mortgage insurance premium up front.  By the way, the 1.5% annual mortgage insurance premium is part of your monthly mortgage payment.

You will be paying closing for the loand to include the 3% mortgage insurance premium, the 10% down payment, title insurance, etc.

You can prevent foreclosure by contacting your lender to find out what your options are.  Remember to ask for the loss mitigation department.

Will a Trip to Japan and China Bring Jobs to Indiana?

Originally posted 2009-09-01 14:06:59. Republished by Blog Post Promoter

It remains to be seen if a trip planned by 52 Indiana business and community leaders will bring jobs to Indiana.

The governor believes that this trip is important to “gain ground on other states that are raising taxes and making themselves less attractive to business.”

Presently, Japanese companies employ over 42,000 Indiana residents, so this trip is a means to discover if there are other opportunites for growth in Indiana by those companies or others in Indiana.

The trip is promising to be jammed packed with possible business investors such as: Honda, Mitsubishi, Sony, Toyota, and Subaru.

This is a great opportunity for Indiana, but it is also limiting Indiana in growth potential since once again all the possible investors rely on steel and steel products.

Come on, Governor Daniels, open the state up to opportunities outside of steel.

Property Taxes Are Still a Concern in Indiana

Recently, I had a reader contact me asking questions pertaining to filing a property tax appeal.

I began to think that the question he asked may be question that other readers may have, but were afraid to ask.

His question was pertaining to how to obtain the parcel or key number if you live in other counties besides the ones highlighted in the video series below:

Property Tax Appeal Review (Video 1 of Section 1)

Indiana Property Tax Appeal (Part 2)

You can search for the parcel number and the basic information needed to fill out your appeal form by visiting http://beacon.schneidercorp.com.   On this site you will be able to find the parcel number for all 92 counties in Indiana.

The parcel number is an eighteen digit number it is used by all 92 counties.The parcel number itself is significant.  How, you ask?  The 18-digit State Key PIN is made up of the following parts: (2 digit County Code; 45 for Lake County) – (2 digit Township Number) – (2 digit Section Number) – (3 digit Quadrant Number) – (3 digit Parcel Number) . (3 digit Class Number; usually 000 for Noble County) – (3 digit Tax District Number).  For example, the following PIN, 45-08-28-202-029.000-004, is in: Calumet Twp (08), Section 28 (28), 202 Quadrant (202), parcel number 029 (029), class number of 000 (000), and Calumet township taxing district (004).Each county has a two digit number that represents that county.

I hope this helps you file your appeals.

Surviving a Recession of Real Estate (Part 6)

Today, is the last day of the series of tips on “Surviving a Recession in Real Estate”.

The cost saving tip for today is considering Pre-paid legal.   Pre-paid legal is a monthly fixed amount that you pay.  The monthly amount varies based on the amount of legal service you think you may require; however, the coverage is as low as $19.95 a month.

Instead of having the attorney draw up a lease each time you have a new tenant have the attorney draw up one lease that you can duplicate.  You could also have the attorney review several contracts at once for a reduced amount per contract.

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