2017 Resolution

"This is going to be the year"

Every year, it seems like the same things are on the list but this could be the year you really do invest in a rental home.

Rents are climbing, values are solid and mortgage rates are still low for non-owner occupied properties. A $150,000 home with 20% down payments can easily have a $300 to $500 monthly cash flow after paying all of the expenses.

There are lots of strategies that can be successful but a tried and true formula is to invest in below average price range homes in predominantly owner-occupied neighborhoods. These properties will appeal to the broadest range of tenants and buyers when you’re ready to sell.

Single family homes offer an opportunity to borrow high loan-to-value mortgages at fixed rates for long terms on appreciating assets with tax advantages and reasonable control.

This can be the year to make some real progress on your resolutions. The first step may be to invest some time learning about rental properties by attending a FREE webinar on January 4th at 7:00 PM Central time zone by national real estate speaker Pat Zaby. Click here to register. If you can’t attend live, by registering and you’ll be sent the link to watch at your convenience.

Happy Holidays - Merry Christmas

Happy Holidays - Merry Christmas

Where The Past 50 Years Has Taken Us.

What a Difference 50 years Makes

In 1966, a gallon of gas was $0.32 and today, it is $2.49. A dozen eggs were $0.60 but they’ve only doubled to $1.33. A gallon of milk was $0.99 and today, it costs $3.98. You could send a letter for five cents and now, it costs forty-seven cents.

The average cost of a new car in 1966 was $3,500 and today, it will cost $33,560. New cars have more features than the earlier models but they’re still ten times more expensive. The median price of a new home was $21,700 and now, is $304,500.
Interestingly, mortgage rates are actually lower today at 4-4.5% than they were fifty years ago when they were just under 7%. The rates have been low for long enough that many people have been lulled into believing that they are not going to go up.
Yes, rates are a little higher but in perspective, they’re still a bargain. Years from now, will you be remembering and comparing what they were back when?

Attachments area

How Will A Change In Interest Rates Affect Your Home Purchase?

Interest rates are on the rise, this chart may show you how it could affect your purchase as we move into the New Year.

Since the election, rates have started going up and it will have a direct effect on the cost of housing. There is a rule of thumb that a ½% change in interest is approximately equal to 5% change in price.

As the interest rates go up, it will cost you more to live in the very same home or to keep the payment the same, you’ll have to buy a lower priced home.

Before rates rise too much, it may be the best time to buy a home whether you’re going to use it for your principal residence or a rental property. Low interest rates and lower prices make housing more affordable.

Looking For An Investment Property?

While you are preparing to look for an Investment Property, here is a check list that may be helpful with your search.

It can be very helpful to take time before you start looking at individual properties, to identify specifically the things you want in a rental property. This will help you focus on target properties that will help you meet your investment objectives. Must physically have:  Single-family detached housing  4 bedroom, minimum 2 bath  $125,000 – 175,000 sales price  Plano west of Coit Road  Dallas, north of Beltline; west of Coit  Less than 15 years of age; preferably, less than 10 years  Average condition  Predominantly owner-occupied neighborhood  Traditional style  Something good about location  Two-car garage  Fenced yard Must have financially:  A 10% minimum discount from fair market value  New 80% loan-to-value mortgage  No PMI  Estimated rate of return in excess of 12% after-tax  Would like to have:  Sprinkler system  Will not consider:  On or backing up to busy street  Backing up to shopping center

It's not over until it's FUNDED!!

It Isn't Final Until It's Funded

Mortgage approval isn’t final until it’s funded.  Things can change prior to the loan being closed that can affect a pre-approval such as changes in the borrowers’ financial situation or possibly, factors beyond their control like interest rate changes.

Good advice to buyers is to do nothing that can affect your credit report until the loan closes. Opening new credit cards, taking on new debt for a car or furniture or changing jobs could affect the lender’s decision if they believe you may no longer be able to repay the loan.

The benefits of buyer’s pre-approval are definitive: it saves time, money and removes the uncertainty of knowing whether the buyer is qualified. The direct benefits include:

• Amount the buyer can borrow - decreases as interest rates rise
• Looking at “Right” homes - price, size, amenities, location
• Find the best loan - rate, term, type
• Uncover credit issues early - time to cure possible problems 
• Bargaining power - price, terms, & timing 
• Close quicker - verifications have been made

It is a very common practice for mortgage lenders to require income and bank verifications and to re-run the borrowers’ credit one final time just prior to closing. Mortgage approval isn’t final until it’s funded.

One Of The Great Portland/Vancouver Holiday Events!!

Welcome to the Holidays!  
The Grotto is one of the Great Holiday Events in the Portland/Vancouver Area!

https://thegrotto.org/christmas-festival-of-lights/?utm_source=Festival+Opens+Tonight+2016&utm_campaign=Festival+News+%232+2016&utm_medium=email

Inherit or Gift

Should you Gift your property or let your leave it for an Inheritance?

A person called into a radio talk program with a situation that was troubling to the caller and disturbing based on the potential tax liability that may have been avoided.

The caller’s elderly father had deeded his home to his daughter a few years earlier because in his mind, his daughter was going to get the home eventually and this would be one less thing to be taken care of after his death. The daughter didn’t really care because the father was going to continue to live in the home and take care of it so that it would be no expense to her.

Obviously, unknown to either the father or the daughter, transferring the title of a home from one person to another could have significant tax implications. In this case, when the father “gave” the home to his daughter, he also gave her the basis in the home which is basically what he paid for it. If she sells the home in the future, the gain will be the difference in the net sales price and her father’s basis which could be considerably higher than had she inherited it.

If the home was purchased for $75,000 and worth $250,000 at the time of transfer, there is a possible gain of $175,000. However, when a person inherits property, the basis is "stepped-up" to fair market value at the time of the decedent's death.  If the adult child had inherited the property, at the time of the parent's death, their new basis would be $250,000 or the fair market value at the time of death and the possible gain would be zero.

In most cases, there are less tax consequences with inheritance than with a gift. There are other factors that may come into play but being aware that there is a difference between a gift and inheritance is certainly an important warning flag that would indicate that expert tax advice should be sought before any steps are taken.

The Power of the Mortgage Rate!!

As we move forward, it may be time to take a look at the possibility of a change in Mortgage Rates.

A Cost to Consider

Homeownership, part of the American Dream: a home of your own where you can feel safe, raise your family, share with your friends and enjoy life. The benefits are easily recognizable but maintenance is just a real and should be considered.

Property taxes and insurance are two of the largest expenses homeowners have aside from their mortgage interest. But, as any homeowner knows, there will be occasional expenses for repairing toilets, faucets, windows and other things. There are also the significantly larger expenses that arise like replacing a water heater or HVAC unit. And don’t overlook the periodic maintenance like painting or floor coverings.

Financial experts suggest that homeowners save one to four percent of the home’s value per year for repairs and maintenance. Two to eight thousand dollars a year may sound like more than you’ll need but the cost of an air conditioning unit can easily be $6,000.

Some homeowners purchase home warranties to avoid the unexpected costs. An annual premium instead of an unexpected large expenditure. Coverage varies from company to company and are not intended to cover existing conditions.

The alternative to not saving for these anticipated expenditures means that a homeowner might have to put it on a credit card at a very high interest rate or get a home improvement loan. Appreciation is a distinct benefit of home ownership and deferred maintenance can limit the value as well as lengthen the market time when it sells.

What Is Available If You Do Not Have A Downpayment?

You have found your dream home, but, you don't have a Down Payment, what are your options?

Saving the down payment may be unnecessarily keeping would-be buyers from getting into a home. They may be unaware that the funds might be available.

The NAR Profile of Home Buyers and Sellers reports that 81% of first-time buyers got all or part of their down payment from savings. Less than 4% said that all or part of the down payment came from a withdrawal in their IRA and 8% from their 401(k) or pension fund.

Traditional IRAs have a provision for first-time buyers which include anyone who hasn’t owned a home in the previous two years. A person and their spouse, if married, can each withdraw up to $10,000 from their traditional IRA for a first-time home purchase without incurring the 10% early-withdrawal penalty. However, they will have to recognize the withdrawal as income in that tax year. For more information, go to IRS.gov. 

Allowable withdrawals from traditional IRAs can be from yourself and your spouse; your or your spouse’s child; your or your spouse’s grandchild or your or your spouse’s parent or ancestor.

Roth IRA owners can withdraw their contributions tax-free and penalty-free at any age for any reason because the contributions were made with post-tax income. After age 59 ½, earnings may be withdrawn as long as the Roth IRA have been in existence for at least five years.

Up to half of the balance of a 401(k) or $50,000, whichever is less, can be borrowed by the owner at any age for any reason without tax or penalty assuming the employer permits it. There can be specific rules for loans from a 401(k) that would determine the repayment; interest is usually charged but goes back into the owner’s account. You can consult with your HR department to find out the specifics.

A risk in borrowing against a 401(k) comes if your employment ends before the loan has been repaid. The loan may have to be repaid as soon as 60 days to keep the loan from being considered a withdrawal and subject to tax and penalty. Even if you continue with the same employer, failure to repay the loan could be considered a withdrawal also.

Your tax professional can provide you specific information on how making a withdrawal from your retirement program might affect you. Additional information can be found on www.IRS.gov.

Property Types Per IRS.

How does the IRS rank your Property?

There are four types of property recognized by the Internal Revenue Service. A principal residence is the place you live or expect to return.  You may only have one principal residence at a time.  The confusion comes because a taxpayer can deduct the interest and property taxes on two homes on the Schedule A of their tax return.  Only one of the homes is the principal residence and the other is a second home which is technically, investment property. Rental property, also known as section 1231 property, is used for income purposes.  It includes homes, condos, apartments, shopping centers, office buildings, warehouses and any improved property which generates rental income.  Only rental property can be depreciated.  Income tax on the gain may be deferred through the use of qualified exchanges.  When gain is recognized, favorable long-term capital gains rates are available on any property owned for more than 12 months. Vacation property is rental property that is used for personal purposes less than 14 days a year or 10% of the total time it is rented. Investment property is real estate primarily held for an increase in value.  It can be improved property or vacant land.  Income tax on the gain may be deferred through the use of qualified exchanges.  When gain is recognized, favorable long-term capital gains rates are available on any property owned for more than 12 months. Dealer property is primarily inventory and does not enjoy the benefits of exchanges and any income is taxed at ordinary income rates.  Examples would be builder's homes whether spec or custom; a home that someone purchases for immediate resale regardless of whether improvements are made

It's a Journey!!

It's a Journey.  

 Let's make sure that you have all that is needed to begin.

“It’s not far, if you know the way.” What this expression implies is that you could have a long way to go if you don’t know where you’re going or how to get there. Just like reading a map, there are some definite steps that will improve your success in buying a home in today’s market.

• Know your credit score – the best mortgage rates are available to borrowers with the highest scores. Unless you know what your credit score is at all three major credit bureaus, you don’t really know what rate you’ll have to pay.
• Clean up your credit – it is estimated that about 90% of credit reports have errors. Some are not serious but others could affect a borrower from getting the loan they want. It is your responsibility to know what is on your different reports and correct them if possible. You’re entitled to a free copy of your credit report each year from Experian, Trans Union and Equifax.
• Get pre-approved – Taking the time to make a loan application with a qualified lender even before you start looking at homes will provide peace of mind, make sure that you are looking at the “right” homes and may help you negotiate the best price on the home you select.
• Do your homework – when you find the home that meets your needs and desires, get the home inspected and research the tax assessments, school ratings, crime activity, possible zoning changes and comparable sales in the area.

Call for a recommendation of a trusted mortgage professional and an inspector.

Tax Benefits for Surviving Spouse

Surviving Spouse Tax Benefits on the Sale of Your Home.

Special consideration is made by IRS for the sale of a jointly-owned principal residence after the death of a spouse. Surviving spouse may qualify to exclude up to $500,000 of gain instead of the $250,000 exclusion for single people if certain requirements are met.

• The sale needs to take place no more than two years after the date of death of the spouse.
• Surviving spouse must not have remarried as of the sale date.
• The home must have been used as a principal residence for two of the last five years prior to the death. 
• The home must have been owned for two of the last five years prior to the death.
• Survivor can count any time when spouse owned the home as time they owned it and any time the home was the spouse’s residence as time when it was their residence.
• Neither spouse may have excluded gain from the sale of another principal residence during the last two years prior to the death.

If you have been widowed in the last two years and have substantial gain in your principal residence, it would be worth investigating the possibilities. Time is a critical factor in qualification. Contact your tax professional for advice about your specific situation. Contact me to find out what your home is worth in today’s market. See IRS Publication 523 – surviving spouse.

Where Were You When You Purchased Your First Home?

A quick tour of the Mortgage Market from the 1970" to Present!  What was your first experience?

It’s not “if” the rate goes up but “when” the rate goes up; it could make a big difference for some buyers. Freddie Mac predicts that mortgage rates will be at 4.5% a year from now.

If buyers can afford a home with higher interest rates, it means higher payments. Higher payments might mean they won’t have the money to spend on other things like furniture or improvements to the home or an unrelated purchase like a new car.

When the rate moves 0.50% on a $250,000 mortgage, the payment goes up by $70.66 a month. If it moves 1.00%, the payment goes up by $143.74 per month, each and every month for the entire term of the mortgage which means paying over $50,000 more for the house.

The question facing every borrower in this situation is “How will you feel about having to pay more to live in the same house because you were not ready to commit?”

Then, there’s the borrower who is absolutely maxed out as to what they can qualify for or sometimes, it is a borrower who just refuses to pay a higher payment. When that’s the case, the buyer has to make a larger down payment. In the same example, a 0.50% increase in rate would require $14,873 more in down payment. That could make the purchase impossible or require the buyer to buy a lesser price home that will not have the same amenities.

Mortgage rates have been low for so long that some people think that is what they should be. There are some economists who believe that the economy will not be strong again until mortgage rates are in the 7% range.

To see how this type of scenario might affect you, go to the If the Rate Goes Up calculator.

When To Visit A House Of Interest.

What is the best time to visit a house that you are interested in?  This chart may be of interest to you in making a decision.

How is the Housing Market in your Area?

Here is an insight into the Housing Market in Your Area.  If you are looking to Purchase or Build.

http://eyeonhousing.org/2016/09/sale-and-contract-prices-per-square-foot-in-2015/

Getting ready to be inside for the Winter..

With the doors open during the Spring, Summer and Fall, I have noticed a collection of dust around the house, I am sure that I am not alone.

Having a dust-free home isn’t difficult, but it takes a serious commitment and a housekeeping strategy that addresses the dust and its causes. Whether your motive is cleanliness or to eliminate the cause of some allergies and asthma symptoms, it will be worth it.

• Try to dust your home at least twice a week. Dust the tallest items and work your way down. Dust picture frames, blinds, baseboards and anything that stands out from the wall.
• Feather dusters can spread more dust than they collect compared to microfiber cloths that attracts dust because they have an electrostatic charge.
• Filters on heating and air-conditioning systems should be changed often not only to remove dust from the air but to increase the efficiency of the units themselves. Special HEPA filters can improve the overall indoor air quality.
• Frequently changing the bag or emptying the container in your vacuum is helpful in eliminating dust.
• Vacuum the floors at least once a week. Vacuum under furniture and periodically, move appliances to clean behind and underneath. Use the proper attachments to vacuum upholstered furniture and under cushions.
• Eliminate dust magnets like carpet, heavy drapes and upholstered furniture. Consider hard surface flooring like wood or tile instead of carpet.
• Keep windows closed to keep dust out.
• Clean your pillows and drapes.
• Damp mopping and dusting with plain water helps hold the dust and is environmentally friendly.
• A humidifier can eliminate static electricity which holds dust.
• Air purifiers circulate are and capture dust and other pollutants.

To Invest or Not To Invest.

Rental Property, is this for me?

Rental properties have five primary factors that contribute to the return on investment.  Based on market conditions and investor strategies, the individual motivating factor can change from property to property. There was a time when the benefit of tax savings to offset income from other sources was considered important to some investors.  However, in today's environment, they are more likely valued as incidental benefits. Some investors expect appreciation to deliver the satisfactory results which can be reasonable over time if a reliable appreciation rate is used.  Savvy investors today are using conservative estimates for long-term holding periods. Leverage occurs when borrowed funds are used to control a larger asset.  Positive leverage can actually increase the yield on an investment.  Equity build-up happens due to the amortization of the loan which requires that a portion of the monthly payment reduces the principal owed. The last component that contributes to a property's yield is the cash flow.  When the rents are greater than the expenses of operating the property and servicing the debt, there is a positive cash flow.  A property with a good cash flow doesn't have to go up in value to justify the investment. The combination of lower prices, low mortgage rates and rising rents are attracting investors to rental properties that include single-family homes in predominantly owner-occupied neighborhoods. Even if you were to ignore the benefits of tax savings, potential appreciation and leverage, the attractive cash flows make rental property a very smart investment alternative.  Contact me for more information

An Investment Route to Saving.

Helping your Children/ Grandchildren to Achieve Their College Goals.

Most people have lots of reasons to save but not always enough discretionary income after the family essentials have been met. A relatively small investment in a rental home can control a good home that will rent easily, generate positive cash flows and pay for itself.  The borrowed funds create leverage that earns a return on the total value of the home and not just the amount of cash you have invested. The strategy is simple.  Find a slightly below average priced home that will rent well.  It will appeal to a larger group of people while it's rented and when it's ready to be sold. Rent the home and maintain its condition over the years.  As the loan amortizes and the value increases, the equity will grow.  When your student is ready to start college, you'll actually have several options. You can sell the property; pay the tax on the gain at the reduced capital gains rate and fund the education.  Another option would be to refinance and take the proceeds to pay for the tuition.  This would allow you to continue to own the asset but would free your equity and under current tax laws is a non-taxable event. Regardless of whether you're trying to plan for your children's education or your own retirement, rental property offers many solid investment opportunities.  All investments contain risk.  Knowledge and expert advice from tax professionals can reduce the risk.  Contact me if you want more information.

How to Pay Off Your Mortgage.

Here are some great tips on paying off your Mortgage early.  

Pay Off Your Mortgage?

Becoming debt free is as much a part of the American Dream as owning a home but there certainly can be conflicting circumstances that make the decision to pay off your mortgage early unclear.

The advantages of paying off debt early is increased cash flow, less interest paid and a higher credit score. The disadvantages are lower cash flow available as discretionary funds for meals, entertainment and other things. If the ultimate goal is financial security, is it worth the intermediate sacrifice?

Whether you pay off your mortgage early is a personal decision that may be right for one person and not for another. Consider the following before you get started:

Reasons you should

• Peace of mind knowing that you don’t have a mortgage
• You’ll save interest regardless of how low your mortgage rate is
• Lowering your housing costs before you retire

Reasons you shouldn’t

• You can invest at a higher rate than your mortgage
• You have other debt at a higher rate than your mortgage that needs to be paid off
• You might need the money in the future and want to remain liquid
• You might not qualify for a mortgage currently
• You should pay off other debt with higher interest rates
• Your employer has a matching retirement plan that would benefit you more
• You have more urgent financial needs like emergency fund, life, health and disability insurance
• You expect high inflation and the value of your mortgage debt will decrease

Use this Mortgage Accelerator to determine how quick you can pay off your mortgage.

Reset Button..

Negotiations are always an important part of an offer!

Two Negotiations

There are two negotiation periods in some home sales. The primary negotiation takes place when the contract is agreed upon that includes the price, closing and possession. Buyers and sellers alike feel relieved once this first round has resulted in an agreement but there may be more negotiations to come if there are contingencies for financing, inspections or other things.

The purpose of an inspection is for the buyer to receive an objective evaluation about the condition of the home and its components to identify existing defects and potential problems. The expense for inspections can be several hundred dollars and it’s reasonable for buyers to not want to spend the money before they find out if they can come to terms with the seller. From a different perspective, sellers want to know quickly if the buyer is going to reject the home due to the inspections.
Sometimes, buyers will expect sellers to make all of the repairs listed on the report and this is where the second round of negotiations begins. If the seller refuses, the negotiations can go back and forth until the other party accepts the offer on the table or the contract falls apart.
When purchasing a new home from a builder, it is expected for everything to be in working order; after all, it is new. However, it is reasonable to expect that existing homes, that are not new, have a different standard. While it’s understandable that buyers would want to be aware about major items that are not in “working order”, normal wear and tear of components based on its age should be expected.
In a highly competitive seller’s market, buyers might do whatever they can to get their contract accepted, realizing that there is another place to negotiate when they’re not competing with other buyers’ offers to purchase.
For this to be a WIN-WIN negotiation, both seller and buyer must feel good about the transaction. Neither party should feel that they have been taken advantage of.

Attachments area

What Does Your Dream House Look LIke?

Have you been thinking of a new "Dream House"  here are some suggestions...enjoy!!

Dream House   (Click Here)

Have you begun to plan your Retirement?

It’s surprising to realize that most people spend more time planning their next vacation or cell phone purchase than they do on their own retirement. Let’s look at a hypothetical situation where you have $35,000 to invest for your retirement in 15 years. Have you compared where you might have the best opportunity?

The safest place to put it might be a certificate of deposit because it’s insured but unfortunately, rates would be less than 2%. The value would grow to $47,233.26 at the end of the 15 year holding period.

Investing in a mutual fund has more risk but also a greater opportunity to earn a higher rate of return. An estimated 7% return would project an accumulated value of $99,713.14.

Using the $35,000 for a 20% down payment and closing costs on a $150,000 rental home could realize much higher proceeds. Using a familiar investment analysis spreadsheet, the $35,000 could grow to a future wealth position of $153,302. This analysis considers leverage, 3% appreciation, re-investing cash flows, 7% sales expenses and paying applicable taxes which the previous examples do not.

The rate of return on these three examples are 2% for the CD, 7% for the mutual fund and a comparable 14.19% return on the rental. As the rate of return increases on investments, additional risk is reasonable.

Most people are much more familiar with homes than they are with mutual funds, bonds and other similar investments. The same REALTOR® who helped you with your home can help you invest in a rental home.

August News

What is in your Garage?

Can you fit your car in your Garage?  Or do you need to clean out your garage and put items into storage?

Garage Cleaning Tips for the Overwhelmed

How Important Are The Listing Photo's To Your Listing?

What is the first thing that a potential Buyer looks at when looking at homes?  How do you want your Photo's to look?

Listing photos may be one of the most important marketing efforts that lead to a potential buyer.

Nearly, all buyers use the Internet during the home search process. They usually start looking at homes online before they contact an agent. It’s far more efficient to screen properties by looking at the pictures that have been posted than to make appointments with each homeowner, drive all over town and waste a lot of time looking at homes that would never meet a buyer’s criteria.

• There needs to be enough pictures of a property to adequately represent the home; most websites allow for at least 24 and more may be needed if it is a large home.
• Take horizontal shots to accommodate the format of most listing websites.
• The pictures should be well-lit so that it is easy to see all of the features of the room. Natural light is preferred over the limitations of flash.
• They should be taken with a wide-angle lens so that you can see the majority of the room in one picture.
• Large rooms can be taken from different angles to give the buyers a different perspective.
• Rooms should be set if not staged prior to taking the pictures so they will give the buyer an idea of what the room might look like with their own things in it.
• Arrange pictures in website to help buyers visualize the floorplan as if walking through it.
• Think about using a tripod; professionals do to absolutely hold the camera still.
• They should definitely not be “photoshopped” to modify factual elements like removing power lines.

Everyone occasionally takes a great picture but it doesn’t make them a photographer. Since the photography can be one of the most important marketing efforts, consider using a professional photographer to show the home to its best advantage.

It Is Time To Take A Good Look At Your Future Nest!!

Rates continue to be good, do not wait for the Future, act Now!!

How Will It Feel?

It has been said that change is the only constant. Most of the financial experts have been expecting interest rates to increase along with home prices. While homes, in most markets, have definitely seen increases over the past five years, the mortgage rates today are actually lower than they were a year ago.

If the interest rates were to increase by 1% over the next year while homes appreciated at 6% during the same time frame, a $250,000 home would go up by $15,000 and the payment would be $211.53 more each month for as long as the owner had the mortgage. The increased payments alone would amount to $17,769 for the next seven years.

When facing a decision to postpone a purchase for a year, a legitimate question to ask oneself would be: “how will it feel to have to pay more to live in basically the same home a year from now?”

It is easy to understand that if the price of a $250,000 home goes up by 6%, it increases the price by $15,000. A slightly more difficult concept to realize is that if the interest rate were to go up by ½%, it is approximately equal to a 5% increase in price. A 1% increase in mortgage rates would approximately equal a 10% change in price. This means that if a home goes up in price by 6% and the interest rate goes up by 1%, it is equivalent to the price of the home going up by a little more than 16%.

Use the Cost of Waiting to Buy calculator to estimate what it might cost to wait to purchase based on your own estimates of what interest rates and prices will do in the next year.

As House Prices Go Up, So Do Rents.

Where are you and your Family today?  

Are you ready to Sell, Buy or Rent?

Are you looking at Capital Gain?

In the last few years, some people who were unable to sell their homes, rented them instead. The market has improved in most places and the home may easily sell now and possibly, for a higher price.

Even though the opportunity to sell in the near future might not change, there could be another opportunity that could quickly disappear for some homeowners.

Most homeowners are aware that there is a capital gain exclusion on the profits of a principal residence of up to $250,000 for single taxpayers and $500,000 for married taxpayers filing jointly. The rule requires that you must own and use the home as your principal residence for two out of the last five years.

A homeowner can rent their home for up to three years and still be eligible for the exclusion. As an example, if they had owned and lived in it for two years and then rented it for two and a half years, they would need to sell and close the transaction before the remaining six months expired.

If there was a $200,000 profit in the home that didn’t qualify for the exclusion, a 15% long-term capital gain tax of $30,000 could become due depending on the tax bracket of the owner. With some careful planning, the tax could be avoided. Awareness of the time frames and the right team of tax and real estate professionals could save a considerable amount of the homeowner’s equity.

Keeping the Kids Safe Around The Pool..

The Fourth is all about having a great time for most of us!  However, we need to take the little extra steps to keep the kids safe while around water over the Holiday and the Summer Months.  

http://www.houzz.com/ideabooks/64938505

Where are you getting your funds for your Home Purchase?

Retirement Funds For Home Purchase...

For the person who has good credit and income but not enough money for the down payment on a home, their qualified retirement program could offer them some help. The rules are different depending on whether it is a 401(k), a Roth IRA or a traditional IRA.
Up to half of the balance of a 401(k) or $50,000, whichever is less, can be borrowed by the owner at any age for any reason without tax or penalty assuming the employer permits it. There can be specific rules for loans from 401ks that would determine the repayment; interest is usually charged but goes back into the owner’s account. You can consult with your HR department to find out the specifics.
A risk in borrowing against a 401(k) comes if your employment ends before the loan has been repaid. The loan may have to be repaid with as soon as 60 days to keep the loan from being considered a withdrawal and subject to tax and penalty. Even if you continue with the same employer, failure to repay the loan could be considered a withdrawal also.
Roth IRA owners can withdraw their contributions tax-free and penalty-free at any age for any reason because the contributions were made with post-tax income. After age 59 ½, earnings may be withdrawn as long as the Roth IRA have been in existence for at least five years.
Traditional IRAs have a provision for first-time buyers which include anyone who hasn’t owned a home in the previous two years. A person and their spouse, if married, can each withdrawn up to $10,000 from their traditional IRA for a first-time home purchase without incurring the 10% early-withdrawal penalty. However, they will have to recognize the withdrawal as income in that tax year. For more information, go to IRS.gov.
Another interesting fact about this provision is that the taxpayer making the withdrawal can help a relative includes children, grandchildren, parents and grandparents.
If you want more information to clearly understand the issues involved relative to your specific situation, talk to your tax professional or consultwww.IRS.gov.

Positive Home Equity

TX, HI, WA and CO have the highest 

percentage of homes with positive equity in 

the first quarter 2016.

92% of Mortgaged Properties Have Equity

DAILY REAL ESTATE NEWS | MONDAY, JUNE 13, 2016

More home owners now have equity. About 46.7 million residential properties with a mortgage had equity at the end of the first quarter of 2016, according to data from CoreLogic. Home equity rose year-over-year by $762 billion.

In the first quarter alone, 268,000 home owners regained equity, which boosted the percentage to 92 percent of all mortgaged properties with equity.  

“In just the last four years, equity for home owners with a mortgage has nearly doubled to $6.9 trillion,” says Frank Nothaft, chief economist for CoreLogic. “The rapid increase in home equity reflects the improvement in home prices, dwindling distressed borrowers and increased principal repayment. These are all positive factors that will provide support to both household balance sheets and the overall economy.”

More than 1 million home owners have escaped the negative equity trap over the past year, adds Anand Nallathambi, president and CEO of CoreLogic.

“We expect this positive trend to continue over the balance of 2016 and into next year as home prices continue to rise,” says Nallathambi. “If home values rise another 5 percent uniformly across the U.S., the number of underwater borrowers will fall by another one million during the next year.”

Still, 4 million -- or 8 percent of all homes with a mortgage -- remain in negative equity territory. But the number of negative equity properties has been steadily dropping. In comparison to the fourth quarter of 2015, negative equity properties dropped 21.5 percent year-over-year. 

Read more: 1 Million Borrowers Regained Equity Last Year

Five states accounted for 30.2 percent of negative equity in the U.S. The states with the highest percentage of homes in negative equity are: Nevada (17.5%); Florida (15%); Illinois (14.4%), Rhode Island (13.3%); and Maryland (12.9%). 

On the other hand, the states with the highest percentage of homes with positive equity in the first quarter are: Texas (98.1%); Alaska (97.8%); Hawaii (97.8%), Colorado (97.5%); and Washington (97.2%).

Photo Shoot Tips

Are you getting your home ready for the Photo's to put with your listing?  Here are some great tips for getting ready for the Photographer.  You want only the best when you place your home on the Market.

The Marketability of Your Property

Are You ready to Sell or List?


The seller has three tools available to affect the marketability of their home: price, condition and terms. Price is the easiest to adjust for the competing properties, amount of inventory or market conditions. However, lowering the price is not necessarily the best decision when trying to maximize the proceeds of sale.
If a home is in poor or outdated condition, updating can be done to make it show favorably with other homes that are currently on the market. Sometimes, sellers rationalize not doing the work by saying they believe the buyers would rather make their own choices. The truth is that most buyers are using all their resources to get into the home and will have to live in its present condition until they can save enough to make the changes they want.
Another reason to go ahead and invest the money and effort into improving the condition is that it is difficult for buyers to imagine the home any other way than its current condition. When comparing one home to another, buyers will sometimes refer to a home as the “stinky house” or the “old kitchen” which may put it at a disadvantage.
While price and condition are the main things that control the marketability, terms can be equally effective. Terms relate to financial considerations made by the seller to induce a buyer to make a decision to purchase their home.
Seller-paid points or closing costs, interest rate buy downs and owner-financing are examples of terms that may increase the marketability of a home because of the additional benefits they offer to buyers.
An example could be that a seller will carry a 10% second lien so that the buyer can get an 80% loan and avoid the expense of mortgage insurance. The seller gets most of their equity plus a fair interest rate on the loan that doesn’t have to be tied up for 30 years like the first mortgage.
Increasing the marketability of your home is a great conversation to have with your real estate professional especially to help you get the highest price in the shortest time with the fewest problems. Just be aware that not all agents may be as creative as some.

This Is A Tough Game!!

If you are not in for the long haul, you may want to get off the track..This is a very hard game, one that you need your sweat band on to run...


If competition is a buyer’s biggest concern, for goodness’ sake, get in the game. In a new survey of close to a thousand home buyers conducted by Redfin, affordability is still the number one concern but due to low inventories, competition from other buyers is moving its way up the poll.
26% identified affordability while 19% mentioned competition and 15% mentioned low inventory as their respective top concerns.
To win, athletes study the competition to come up with a plan and buying a home is not different.

1. Ask what terms are important to the seller before you write the offer.
2. Once you decide to make an offer, do it as fast as you can, hopefully, to be the only one the seller is considering.
3. Make a good (or possibly, your best) offer in the beginning; you may never get a chance at improving it. In highly competitive situations, offer above the list price.
4. Attach your pre-approval letter from a respected lender. This means you’ll need to get pre-approved before you even think about writing an offer.
5. Have your lender call the listing agent to reassure them of your ability to qualify.
6. Include a higher than normal amount of earnest money to show you are serious.
7. Eliminate unnecessary contingencies.
8. Write a personal, hand-written letter telling the seller what you like about their home and why you want it. Consider including pictures of your family.
9. Minimize seller expenses paid for the benefit of the buyer.
10. Shorten inspection times.
11. Don’t ask for personal property.
12. Be flexible on closing dates to accommodate the seller’s move.

Once you find your dream home, don’t take a chance on losing it. Write a winning offer that will be good for both the sellers and the buyers.

So Many Burglaries Happening Lately!!

Some Helpful Hints to Secure Your Family and Home!

The Journey To College Tuition

Starting early on the path to college tuition is the best path.  We think that in the early years it is hard, we just don't realize how hard it gets later.  Here are some investment ideas for the journey.

Parents, with children getting closer and closer to entering college, may also be feeling stress because they haven’t saved enough for tuition and other expenses. It’s estimated that the average cost for the 2015-16 school year is $32,405 for private colleges, $9,410 for state residents of public colleges and $23,893 for out-of-state residents.
If you started saving the year your child was born, you’d have to save $4,608 per year for 18 years at 5% to accumulate $129,620. If you waited until they were 10 years old, you’d have to save $13,574 per year to have the right amount. Saving enough can be difficult if you have a lot of time but if you only have a short time to meet your goals, it can seem impossible.

Student debt is one way to handle the tuition but many parents are reluctant to saddle their children with the obligation. Currently, there is more than $1.2 trillion in outstanding student loan debt to 40 million borrowers with an average balance of $29,000. Some economists suggest that this debt is delaying would-be buyers from making their first home purchases.
There is another way to pay for the education by making an investment in a rental property. Rents are continuing to rise, homes in owner-occupied neighborhoods are appreciating and the leverage due to borrowed funds can be a huge help in building the equity to pay the tuition.
Rent the home and maintain its condition over the years. As the loan amortizes and the value increases, the equity will grow. When your student is ready to start college, you'll actually have several options.
You can sell the property; pay the tax on the gain at the reduced capital gains rate and fund the education. Another option would be to refinance and take the proceeds to pay for the tuition. This would allow you to continue to own the asset but would free your equity. Under current tax laws, it is a non-taxable event.
In effect, your tenants are paying to send your kids to college.

Happy Memorial Day Weekend!

Memorial Day is the last Monday in MayOriginally known as Decoration Day, it began in 1865 by decorating the graves of Civil War patriotic soldiers and later to remember the U.S. men and women who lost their lives serving their country.

Poison In Your Yard and Garden

As we head out and into the Yard and Garden be on the lookout for Poison Vines..

Keep an eye out folks,

“Leaves of three, let it be”

"Longer Middle Stem, Don't Touch Them"

“Berries white, run in fright”

“Hairy vine, no friend of mine”

Rentals, there are never enough and Rent is increasing.

Have you been thinking about purchasing an Investment or Rental Property?


Rental homes can be a natural alternative investment choice for homeowners because they are already familiar with houses. Maintenance on a rental is not that much different than on your personal home. The same plumbers, painters and other workmen can be used to make repairs.
Single family homes offer an investor high loan-to-value mortgages at fixed interest rates for long terms on appreciating assets with defined tax advantages and more control than other investments.

1. High loan-to-value mortgages – most investments require that you pay cash but rental properties can be purchased with 20% down payment.
2. Fixed interest rates – most commercial loans are based on a floating rate such as prime interest plus one or two percent compared to real estate loans as fixed rates for the term.
3. Long terms – commercial loans are generally short-term such as six months or a year with the possibility of being renewed for another six months or a year unlike real estate where a 30-year mortgage is commonplace.
4. Appreciating assets – real estate has a long-term history of going up in value.
5. Defined tax advantages – many investments are taxed as ordinary income but rental real estate enjoys a non-cash deduction called cost recovery, the profits from sale are taxed at lower long-term capital gains rates or may be eligible for a tax-deferred exchange.
6. Control – rental homes don’t require partners and afford the investor more options than investing in mutual funds and other traditional investments.

The demand for good rentals is strong and the rents continue to go up in most markets.  There are people who choose not to buy or cannot buy a home who would prefer to live in a single family home rather than an apartment.

Are Your Currently Looking For A House Or Thinking About It?

Here are some great tips on looking for a new Home in a Sellers Market.  

Click to view:

Looking for a house in a Sellers Market..