Real Estate blog

Archive for the ‘Taxes’ Category

I’ve written that I’m not a big fan of the legislation currently making its way through congress that would require lenders to cut homeowners a break as they look into the chasm of foreclosure. While I’m not against the idea of giving consumers a helping hand – particularly when doing so shores up the economy – I am against the idea of trying to characterize such moves as free, tax-neutral bailouts funded which the banks will fund. These costs are always passed on to the consumer.

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Successful real estate investing is a long term game. Following the right strategy with discipline and perseverance will allow smart investors to weather the market’s cycles and build equity. Time and leverage are your friends.

But don’t underestimate the importance of the time part of the equation. In the past I’ve compared the performance of the real estate market with the stock market. For the disciplined investor, real estate performs favorably to the stock market over any reasonable period of time, but you’ll need a few years for the strategy to be effective. If you’re only going to stay in the game a year or two you might as well buy a mutual fund and call it a day. But investors with perseverance will see their wealth grow much faster by pursuing a prudent real estate strategy than they will betting on the stock market.

Those of you who watched this week’s Democratic Party debate will note that the current foreclosure mess was an oft repeated theme. The candidates are trumpeting what they’ll do if they win in November, but two bills are already before Congress that will impact lenders and consumers.

The somewhat awkwardly named Emergency Home Ownership and Mortgage Equity Protection Act of 2007 and the Foreclosure Protection Act of 2008

One economic indicator that I consult from time to time is the Global Insight quarterly study on housing prices in America. Here’s an interesting conclusion from the report: of the 330 regional markets surveyed, Houston is the most undervalued.

The Global Insight uses a number of factors in determining the theoretical price equilibrium level for each market, to include tax rates, population density, income levels, plus a somewhat nebulous “desirability factor”. So, as with all economic studies there is some art mixed in with the science, but nonetheless I find this study to be an useful data point when thinking about the relative valuation of markets.

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In A Brief History of Time, Stephen Hawking mentions a publisher’s rule of thumb that every equation that a writer uses will cut his readership in half. Real estate investing is based on relatively simple principles - especially compared to the stuff that Hawking tackles - but there are some real estate investing concepts that can be delivered a bit more effectively aided by a few equations and numerical examples. So bear with me…

I wrote in a recent column that when an investment starts “getting good” – when it starts kicking off some cashflow and putting some dollars in your pocket on a month-to-month basis – then that’s the time to sell. This might sound counter-intuitive, but I’ll give a couple of examples that show why it is true.

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I had an fun and informative phone conversation the other day with Jeff Brown of Brown & Brown

How do you buy real estate at the right price? This is one of the most common questions beginning real estate investors make and it is a very important one. After all, no one ever wants to pay too much for a property, in any real estate market.

When investing in distressed properties, most often there are repairs needed and it is important to figure in those costs when making an offer. You should also know the local real estate market so you have a clear picture of property values in the neighborhood where the home is located.

There are many free resources available today to determine recent home sales in a neighborhood. Several websites feature free property value estimates. Zillow.com and RealEstateABC.com are just two examples. You can type in the property address and you will see the estimated property value, assessed values from the tax collector and in some cases recent resale amounts in the neighborhood. This will give you a good idea of an approximate value of your investment property.

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Sub-prime mess, foreclosures, sliding home prices - today’s market conditions are causing sleepless nights for some but others are smelling the opportunity to make a quick buck.

YouтХитЦУтХи╨Т╤В╨Ф╨▓ve heard the buzz of Australian Real Estate Investing, but its not all life on the beach.

The market is in a transitional stage right now, and though there are many changes happening, these will happen over time. Find out where to get in and what to expect with Australian Real Estate Investing below…

Australian Real Estate Investing and the quality of life the area brings is a mature market, but investors have been the cause in economical, residential and commercial growth. All States and Territories have been battling to keep up with the demand by huge tax and duty hikes over the past 5 years.

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I was interviewed today by KRDO, our local ABC affiliate. The segment was on the Federal government’s announcement last week that they were getting involved in the pending foreclosure train wreck.

Although there was no real groundbreaking news from either Washington or Wall Street, this was still a welcome announcement, at least in the Real Estate trenches. The implementation on the new FHASecure program gives homeowners that are stuck in ToxicARM’s an option out and into an FHA insured loan.

The President has also asked Congress to change a provision of the tax code that can penalize borrowers who are able to negotiate forgiveness of part of their mortgage debt. The Internal Revenue Service currently considers cancelled mortgage debt as taxable income, which can complicate the process of working out loan modifications or holding a short sale in exchange for forgiveness of debt. “If the bank modifies your mortgage and forgives $20,000 of your loan, the tax code treats that $20,000 as taxable income,” Bush said. “When your home is losing value and your family is under financial stress, the last thing you need to do is to be hit with higher taxes.”

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