Archive for June, 2009
The Advantages of Home Ownership
June 24th, 2009 | 
Author: The Advantages of Home Ownership
Buying a Home is at the heart of the ?American Dream?. It can bring happiness and provide a solid foundation for you and your family. It has also proven to be a wise investment in recent years. It has many benefits, but the following three in particular ?
Tax Breaks
When compared to other investments, few can generate the healthy and long lasting tax breaks that home ownership does. When you become a homeowner, there may be tax breaks that you can take advantage of that renters and non-homeowners cannot, the mortgage interest deduction being just one of them. In addition, the deduction of your real estate tax on your federal income tax return is a common practice. Some homeowners choose to use their homes equity to obtain Home Equity Lines of Credit (HELOC) or home equity loans. Interest on these loans may also be tax deductible. With investment real estate, additional tax advantages include the deduction of depreciation and other expenses. With proper planning you may receive tax advantages that last a lifetime. As always, consult with your own tax advisor as to the specific benefits of home ownership that apply to you.
Equity
A home is an investment that can, and usually does, increase in value over time. In some markets, home values have been rising dramatically in recent years (California, Florida, Nevada, Arizona, etc.). In other markets the rise has been more slow and steady.
In addition, you can use your own hard work to make improvements that will increase the value of your home. Each improvement that you make will add to the overall value of your home and your way of living.
As the value of your home increases, and the amount of your mortgage shrinks, you build equity. That is, the money that would be left over if you sold your home and paid off the mortgage. As mentioned above, you can borrow against this equity should the need arise. It?s almost like a savings account that you live in.
Community
Moving into a home gives you a chance to meet new people, get involved in your community, patronize local merchants, and shape your new neighborhood. It?s a way to put down roots and invest in your town. Home ownership provides a sense of permanence and a solid foundation for our lives, and the lives of our children.
Buying a home may be the single, largest investment you will make in your life. But there are so many benefits, some tangible and some emotional. If you are paying rent year after year you are missing out on the advantages mentioned above. Maybe now is the time for you to take the plunge and buy a home, condominium or townhouse and experience this part of the ?American Dream?. Choose a Realtor and get going today.
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Tenant Quality Affects Real Estate Value
Tenant Quality Affects Real Estate Value
I was looking through one of my Valuation Reports the other day, and found a nice quote which demonstrates how valuers evaluate commercial real estate.
“Well located suburban properties, securely leased to national tenants, with modern building improvements, represent prime property investments and sell on yields of between 6.5%PRCTG% and 8.0%PRCTG%…
Properties that do not possess all of these attributes but have reasonable lease covenants of say 5 years, are selling on returns of 8.5%PRCTG% to 9.5%PRCTG%, depending upon location and building quality.”
Now, your mileage will vary – the numbers themselves will change from region to region. But the key is this: a better quality tenant will give you a more valuable property.
You see, it’s all about risk.
With a big, national company, your tenant has a strong financial backing, which means you can have a lot of confidence in your income.
With a smaller tenant, no matter how well-intentioned or business-smart they are, there is inherently more risk. One big lawsuit, one marital split, one fraudulent employee, or some unexpected occurrence, and their business (consequently, your income) is under threat.
People are willing to pay more for a lower risk.
Back to my valuation report. The valuer went on to value my property using a capitalization rate of 8.75%PRCTG%. This reflected the fact that my property had a single, independent operator.
Now, I’ve got a chance to re-lease the building, and I’m going after a national tenant.
Let’s say my property brings in %50,000 per year in rent. Assuming the valuer chooses the mid-point of the respective ranges, here’s the math:
With a lower-quality tenant, my property gets valued with a capitalization rate of 9%PRCTG%, giving it a value of %556,000.
With a national tenant, my property gets valued with a capitalization rate of 7.25%PRCTG%, giving it a value of %690,000.
So, switching from a standard, independent tenant, to a strong national tenant will make me %134,000. Even if the rent doesn’t change at all. That’s a massive difference! Makes it worth acquiring a good tenant, doesn’t it?
Some people are surprised by this. It’s the same land. It’s the same building. Surely the value can’t just change like that? What you have to remember is that a potential buyer doesn’t just buy the land and building. They also acquire the tenant and the lease. That’s why the value can change so significantly overnight.
Tenant Quality Affects Property Value!
The Art of Finding Motivated Sellers
The Art of Finding Motivated Sellers
Such is that of good real estate deals, the good deals are those which are not entirely based on the selling price of the home relative to it’s neighborhood, but of the emotions attached to the owners at the time.
For instance, a homeowner may be undergoing a sea of emotion and may be more eager to sell than others. Scenarios such as foreclosure, divorce, or a death in the family-
though quite unfortunate for the homeowners, in reality provides an opportunity for the investor or homebuyer to purchase a home for much less than it’s true value. Instead of thinking of these opportunities as predatory and exploitative of the homeowner, realize that these individuals are eager to sell their homes to resolve a problem-i.e. in a foreclosure or bankruptcy they will have many fees to pay off and as a result must liquidate their assets in order to stay afloat. In the event of a divorce, assets will also have to be redistributed which will incur large legal fees as well, etc. The reasons vary, and the truth is, investors are not only helping themselves with windfall profits but also helping the homeowners in the aforementioned scenarios get out of a financial rut. It’s a win-win, which is what real estate is all about.
So now that you are convinced that the good deals in real estate depend on identifying these motivated sellers, how do you go about and find them? Your local County Recorder’s office is an indispensable research source. Put on your CSI thinking caps, and start finding leads!
1. Notice Of Default: available publicly, is a notice that banks send out to borrowers notifying them that they are delinquent on their mortgage payments.
2. Notice To Condemn: notifies the homeowner that their property doesn’t meet zoning or building code requirements for that county.
3. Notice Of Divorce: this happens before the actual divorce, and provides a clue that a divorce will happen in the near future.
4. Delinquent Property Taxes: back taxes that the State will try to recoup one way or another.
5. Pending probate court cases where the beneficiaries live out of State: Out of state beneficiaries may be more eager to sell for a fair range since they do not have an interest in managing the property remotely.
6. Out of State owners can usually qualify as a possible lead to a good deal.
7: Rental houses – the idea behind rentals is that some rentals are on the market, because owners may have tried to sell in the past with no success, and are no stuck with a property that they really don’t want. Look for clues such as broken windows, graffiti, and other tell-tale signs that this property is not highly valued by the current owner.
8: For Sale By Owner – some of these homes may not have enough equity to pay a realtor. These are prime candidates for a subject to type deal.
In all cases, approach as a consultant trying to solve a problem they may have. Empathy and listening skills are highly important. Ultimately by demonstrating your sincerity you will be able to also reap benefits from this transaction in the forms of:
1: Lower price offering.
2: Subject to deals
3: Flexible price offering.
4: Low to no down payment required.
So after you find these deals, make sure you close in on it as quickly as possible because competitors are everywhere! But first hire a handyman to evaluate the property in question to see if and how much repairs would be necessary on the property and factor that into the overall costs.
Stop Foreclosure Fast With Help From webuyhousesforcash
Stop Foreclosure Fast With Help From webuyhousesforcash
When a person falls upon financial hard times without their fault at several times and they are behind on mortgage payments they may need some financial help to stop foreclosure on their property. You can stay apart from foreclosure through hard work and not by sitting back and giving up frequently. You have the potential to do some things for stopping the foreclosure because nobody wants the sheriff to deliver a foreclosure notice. In any circumstances do not ignore letters or phone calls concerning your aberrant mortgage payments. Get in touch with the lender and elucidate your situation, as they may be keen to work and know that you are annoying to make things in an exact way so offer you financial help to stop foreclosure. While discarding the property you may get debarred for aid. When you work with the lender and your financial problems are temporary, the lender might be able to help with financial help to stop foreclosure. Often this is a one time loan, bringing your mortgage payments up to date. The upside is that the monthly mortgage payments are smaller but the lender interest rates are higher.
Always be honest and upfront with the lender and they will work with you. After examining your financial position and the reason for your nonpayment, the lender could reduce the monthly payment or suspend payments temporarily. Be honest with your lender and by working with them and examining the options available as it is possible to get the financial help to stop foreclosure. Foreclosures cost lenders money, big money, so it is in their interests to reach a workout with the borrower, either to rescue the mortgage, if this is possible, or to reduce the loss as a result of foreclosure. Don’t be intimidated by the lender or his attorneys. Apprise yourself of your exact financial position. Know your rights as well as options and be honest in your statements. Maintain a written record of all communications.
Read all communications from your lender. Time is your enemy, so the earlier the potential problem is recognized by both parties, the better the chances of a resolution. If you are suffering from financial loss due to the death or loss of a spouse, illness, or unexpected increase in your outgoings, contact the lender and request a loan modification, which effectively changes the terms of the loan to lower the payments. This is a very common process, but you will need to offer evidence about the change in your circumstances. If you feel that you are qualified for a loan modification, and your lender refuses, contact the HUD for advice. Get in touch with your lender and request forbearance if your loss of income is temporary. This means that you may get period which is granted during which your monthly payments are “suspended”, after which you must resume your monthly payments with a partial payment in addition towards the payments you missed.
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