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Posts Tagged ‘investment’

Real Estate Benefits on the Budget Cutting Block

Thursday, November 15, 2012 posted by Tommi Crow

    Some of us may not have considered that real estate benefits are on the political chopping block in Washington…but, they most definitely are.   Ramsey Su, writer at Seeking Alpha, outlines the mostly likely cuts that will effect most homeowners and real estate investors in the future.

Mr. Su asks…Is the perfect storm approaching? 

First, there are no more stimulus plans on the table that he knows of.  Everything ahead are takeaways.  While he has heard these mentioned, he  no idea what is real and what is just talk.  We should find out more as the fiscal cliff cage fight moves into the later rounds, but we wanted to give our readers a “heads up” about what may lie ahead for real estate investment.

1. QE3. QE1 and QE2, one way or another, dropped mortgage rates from the 6% range to the sub 4% range. That is hell of a lot of stimulus but the results have been minuscule. QE3 has been in effect for close to two months now and so far mortgage rates may have dropped 10-20 basis points with no noticeable change. The Fed is exhausted. There is nothing they can do to pump up a real estate bubble.

2.Capital Gains. This is one scary storm for real estate. If the upcoming tax reforms include changes to capital gains so that Warren Buffett can pay more taxes than his secretary, it may be very detrimental to the real estate market. With less than two months left, it is probably too late to try to sell before year end, which would be locking in the favorable capital gains treatment of old.

3. $500,000 Homeowners Capital Gains Exemption.   How many homeowners would have a $500,000 gain, when that is way above the average, medium or median price of a home in the U.S.?  Could this trigger a massive sell-off in the higher end of the property market to capture this exemption while it is still in effect?

4. Mortgage Deductions. No comments needed if this is changed.

5. Tax Deferred 1031 Exchanges. This is one of the best tax breaks, available to real estate and not stock market investments.  By being able to trade up and deferring taxes on the profit, real estate investors have far more capital to build upon.

6. Mortgage Debt Relief Act. This act exempts debt that has been forgiven from being treated as income.  This freebie is due to expire by year end.  Even though the odds are it will be extended again, it should be a wake up call for those with negative equity that this gift may not be available indefinitely.  It is also a gift the significance of which many do not appreciate.  For example, let us say you are a doctor in Las Vegas, with a $200k deficiency in your mortgage and a $200k income.  Without the exemption, a short sale would push you into the over $250k bracket immediately.  You would become the target for higher taxes.

7. Loop Holes.  There are lots of references to closing loop holes.  Pertaining to real estate, I do not know what they may be.  Are they looking at depreciation schedules?  Other deductibles?

In conclusion, we believe tax accountants and tax attorneys are going to be very busy strategizing the most advantageous moves for their clients.  There may be many different outcomes, but Wu is wondering, will there be any tax related reasons to buy?  So it is likely that all the pressure will be on the sell side, the only question is how big it will be.

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Don’t Pay Down that Mortgage

Monday, October 15, 2012 posted by Tommi Crow

  Article by Boston Real Estate

Is your dream to own your home free and clear?

If so, join the crowd. More borrowers than ever are taking out 15-year mortgages in hopes of accelerating the day they can wave bye bye to the bank, the Globe’s Jenifer McKim reports.

While the traditional 30-year loan has long been king, 30 percent of borrowers during the second quarter opted for shorter loan terms with 15-year terms the most popular, the Globe’s Jenifer McKim reports.

That’s up from just 10 percent during the same time period in 2006, when the real estate market was at its peak.

And rock bottom interest rates have been one big factor – the piece offers up a Natick homeowner who found she could shift to a 15-year loan and save money given the drop in interest rates.

It is certainly an intoxicating dream at a time when debts, both personal and national, seem so crushing. Yet there are some potentially big pitfalls to this approach.

For starters, my bet is that our Natick homeowner is in the minority.

First, not everyone is in position to capture the lowest rates – you have to have some darn good credit these days.

And if you end up having to pay a bit more in order to pay down your mortgage faster, there is an opportunity cost here. The extra cash you are pumping into your mortgage is money that you could otherwise stash, tax-deferred, into a retirement account.

For that matter, if you have credit card debt, you should be paying that down first – the interest rates are likely much higher than on your mortgage.

Moreover, if you do run into trouble, such as losing your job or taking a hit to the paycheck, you have locked yourself into a format that may not be so easy to get out of. Good luck trying to refinance back into a 30-year mortgage at that point.

A Plymouth financial planner cited at the end of the piece actually had the best advice for homeowners eager to hasten the day when they make their final mortgage payment. He argues for making extra payments on a 30-year mortgage in order to accelerate repayment. If money gets tight again, you can just stopping paying that extra in.

This also gives you the extra flexibility to craft an approach that works from you, maybe putting a little bit more into both the mortgage and the retirement account as opposed to either or.

Makes sense to me, but how about you?   

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                           The recession/depression and housing crash have certainly altered the old American Dream…at least for the foreseeable future.   The ongoing foreclosure crisis will drive another 3 million families to rent single family homes before 2015.

These millions of people are not typical renters, either.  They are older.  They have furniture, appliances, kids and pets.  They are not interested in apartment living.  They are looking to move back into single family homes, after foreclosure.   This new growth in single family rentals is the fastest growing part of the rental market and the pace is unprecedented.

A Nation of Renters Appears to be the Plan?

Private Equity groups smell the blood in the water.  They are buying up billons of dollars in distressed property, which they will in turn rent back to American families.  Colony Capital, for example, has purchased over 1ooo single family homes since December of this year and plans to invest at LEAST $1.5 BILLION more this year. 

In the next 5-10 years, investment firms will gobble up hundreds of billions of dollars of single family homes, at basement prices.  They will Raise rents every chance they get over the next 3-5 years.  Then, they will dump these properties for a profit and move on something else.

How does a Renting Society change the American neighborhood? 

The combination of transient families and declining home values will take a huge toll on American neighborhoods.    A rentership society is much less likely to spend money on plants, a fresh coat of paint, new carpet or a fenced yard—as they would if they owned the home they live in.   

Renters also mean shifts in student populations and present more challenges for our school systems.  Many schools in the Phoenix area report that 50% of their students will be new this year, a far higher percentage than normal.   Everything slows down when a new student enters a classroom and parents are less likely to be involved, when they are not sure they will be there for long.

Is American homeownership still the American Dream?

Thankfully, the answer is YES.  83% of people who lost their homes to foreclosure or distress sales say they want to own their own home again.  Most say they will buy something smaller than they had.  Many promise they will never again tie up so much of their income for a home.  Many who are forced to rent feel displaced.  They feel that they are living in someone else’s house.   They are fearful of entering retirement without having a home that is paid for…which only owning and paying off a mortgage will accomplish.    So, yes, neigborhoods are changing…new homeowners aren’t families, but are investment firms…but appears for all the right reasons… the American dream is alive… at least for now. 

Thank you for visiting  We have been helping homeowners, builders and investors market their properties since 1988.  We can help you, too.  Please visit our website for details.

If you are one of the millions of Americans who would love to take advantage of record low home prices and record high levels of foreclosures, but your cash on hand is coming up  little short… consider using a portion of your IRA funds to buy a piece of rental property.

Millions of Americans have billions of dollars tied up in IRA’s that nay be paying little to no interest or gains to investors.  Maybe it’s time you considered diversifing from stocks or mutual funds… and add some tempting real estate bargains into the mix.

Here are the basic rules:

  • The funds used to buy the property must be held in a self directed IRA.  You can not use 401K funds or Roth IRA’s to buy real estate, but you can roll over those funds into an IRA before you buy.
  •  The property you buy must be an investment property.   You can not buy a second home or primary residence with IRA funds without paying a penalty.
  • You must pay cash for the investment property.  You can not borrow or take out a mortgage against your IRA investments.  
  • Monthly rental income must be placed back into the IRA account.
  • When the property is Sold…the sale proceeds must be deposited back into the IRA.
  • No taxes are due on rental income or capital gains held in the IRA, until the money is withdrawn at retirement age, so earnings grow tax free.
  • The IRA can pay all expenses associated managing and maintaining the property.
  • You can use a property manager or manage it yourself.

Real Estate IRA

Here is a simple example of how the investment could grow and fund your retirement.

  • You buy a $100,000 rental property with IRA funds.
  • You collect $10,000 a year in rent that is paid directly back into the IRA. 
  • After 10 years, the entire $100,000 you invested in the home has been paid back into the IRA.  Bonus, you still own the property and you can sell it anytime you chose and put the proceeds into your account, too.
  • You pay NO TAXES on income or capital gains until you withdraw money from the IRA.

Tax deferred gains

Buying a foreclosure with IRA money can be a great way to diversify your retirement portfolio and take advantage of historically cheap real estate prices and highly motivated sellers.  As with any tax related investment…ALWAYS consult your tax expert before investing.

Thank you for visiting  The spring home selling season is underway and it looks to be the best one in several years.  If you are in the market for home, this is a great time to be shopping.   Check out some of the great deals on our site…or place your property listing on our site for FREE.

If you are selling a home, we can set you up with an MLS listing and you can still sell the property yourself.  Click Here to learn more.


President Obama just announced a plan to help US families.  And, miraculously, he doesn’t need the approval of Congress to help us.

  • Obama promised relief to homeowners who are trapped in high rate loans by banks.  If a homeowner is current on their current high interest loan payment, they can not be turned down for a lower interest rate loan that reduces their monthly payment.
  • Obama will cut closing costs for loan refinancing on FHA loans to make refinancing affordable.  The average borrower will save at least $1000 a year in fee’s and charges, in addition to saving about half of the closing costs on the new loan.
  • Obama waives appraisal value as a criteria for refinancing a high rate loan.  In other words, your bank can no longer use an appraisal against you…no matter how much you owe on your current loan.
  • Obama promises to compensate all US Servicemen and Veterans who were foreclosed upon during their tour of duty.  All Veterans who attempted to refinance their home to avoid foreclosure, and were turned away by their lender…are entitled to full compensation for all penalites, fee’s and losses.

We applaude this action and feel that it is long overdue.  This is exactly the type of change that Americans, and the housing market, need to avoid further personal and financial losses.  There is no legimate reason for a bank, who received taxpayer handouts, to turn down a borrower who wants to benefit from low Fed bank rates.   If a borrower is able to afford a $1500 house payments at a 10% interest rate, then why would a lender turn them down for a loan payment of a $1000 per month at 4.5%?    The only answer is a unfortunately a common one…GREED.    Banks are closing ranks to protect their 10% rate of return from dropping to 4.5%, even though the Fed’s (ie: taxpayers) are giving them the money for nothing.

Thank you for visiting  If you have been turned down for refinancing…reapply today.  

Housing Returns Beat Gold, Hands Down

Monday, January 3, 2011 posted by Tommi Crow

Returns on Housing Beat Returns on Gold, hands down. Owners of Residential Real Estate reaped returns 150 percent higher than the Gold Bugs over the last 30 years. And, unlike gold, we can live in our houses, reap tax benefits for ownership and receive a $500,000 non-taxable gain on our homes when it’s time to sell. Real Estate Bulls Rule!

Check out great deals at!!!

Tips for New Landlords

Tuesday, September 21, 2010 posted by Tommi Crow

Given the millions of homes that are languishing on the market, it’s no surprise that many owners are considering leasing their homes in order to avoid big financial losses.  If you are an owner that is debating the pro’s and con’s of leasing your property, we have some very valuable advice to share with you.

Leasing out your home can be a great experience.   A good tenant will care for your property, while paying your mortgage.   Owning investment property also has tax benefits, and while the home selling market maybe soft…the present rental market is stronger than ever.


  • Don’t be afraid of bad credit.  References are as important as a credit report.   In addition, many renters who lost their homes have gotten rid of their biggest expense…their mortgage.  So, if their references check out and they have good jobs, don’t let a bad credit report scare you.
  • Ask the tenant to provide a current copy of their credit report, references and their last paycheck stub. 
  • Call the renter”s employer to verify that they are still working there.
  • Consider hiring a private investigator for less than $50.  They can immediately find out whether the tenant is a scammer or not.
  • Check you local laws to see if you have to have a permit to rent out your house.
  • If you are using a standard lease agreement, ask your lawyer to look it over and avoid potential surprises.
  • Build in convenience for yourself.  Requests wire transfers and automatic deposits for monthly rent payments.
  • Craigslist and are fantastic places to advertise your rental.  Best of all, both sites are Free and allow pictures.

Thank you for visiting, your FREE homes for sale and rent listing website.  Please check back in with us tomorrow when continue our blog with Property Management Tips for Homeowners.

Some real estate professionals predict that the British Petroleum (BP) oil spill, which is contamining much of the pristine US Gulf Coast, will be 100 times more devastating than Hurricane Katrina was.

Christine Weber, a real estate agent living near Biloxi, MS, can already smell oil fumes at her home located 5 miles from shore.  “It is not something that can be cleaned up like a hurricane, where you can replace a roof.  You can’t remove oil from the sand or the water”, said Ms Weber.     She also added that the destruction of beaches, wildlife and healthy living conditions could bring desolation to the entire area.

Randy Tanner of Dauphin Island Real Estate, Inc, says the oil spill has had an immediate effect on tourism at the pristine barrier island in Alabama.  In the last few days, his company has lost $400,000 in vacation rental cancellations for as far away as September.

In addition to scaring off tourists…the environmental catastrophy is also scaring real estate investors who planned to redevelop the area.   Venture capitalists have pulled out of the area.  They will wait until this entire mess is cleaned up before they fund any projects for developers.

The BP oil spill, combined with the lack of any intelligent response plan, is very much an unfolding tragedy.   The start of the hurricane season brings the risk that our gorgeous coastline will be flooded and battered by waves of oil.   The scenes of burning oceans, dead oil-soaked animals and clumps of churning oil in crystal blue waters conjure up armageddon like images to be sure.   And, while predictions of disasters in the past have been sensationalized and overstated…I have a horrible feeling in my gut that this time predications about catastrophic disaster have not been exaggerated.   

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Purchasing a For Sale by Owner property has a number of unique benefits that all buyers should be aware of.    Too often, buyers don’t consider fsbo listings because they are working with a real estate agent.  They are unaware that most builders and owners are willing to work with buyer’s agents and many advertise their homes on the local MLS.  If you are in the market for a home and you are not considering “by owner” listings…you could be missing out on some great deals.   Here are a few of the Advantages of buying a For Sale by Owner home.

Save Thousands on Commissions and Fee’s

When purchasing a home listed by a traditional listing broker, a 6 percent commission is factored into the seller’s asking price.  Buyers often think they aren’t paying the listing commission…but in fact…the agents $6000 cut is included in every $100,000 of the asking price.   When a homeowner or builder sells their own property, they pay no commission or a much smaller 3 percent to the buyers agent.  This substantial savings can be passed onto the buyer, who can now afford more home or get the same home for less money.

Easy Appointments to View

If you want to look a home listed with a full service broker, you have to schedule all appointments through the listing broker.  The listing broker then has to contact the owner and the buyer agent to schedule a time to look inside the home.  This process can often be inconvenient or sometimes aggravating depending on the time lapse in getting everyone on board.   When dealing directly with the seller, there is no need to go through other people to schedule a tour.  The seller will look at his schedule and immediately give you the date and time, making the entire buying process much simplier.

Negotiating the Offer

When purchasing directly from the property owner, negotiating the offer can be much easier, too.  Typically, the buyers agent first presents the offer to the listing agent…then, the listing agent makes an appointment to relay the offer to the seller.   If the seller makes a counteroffer, the whole procedure is reversed back through both agents making the whole process take a lot longer than it should.   When making an offer directly with the seller, the middle men are eliminated, which increases the odds of putting together a deal that works for both parties….and does so in record time. has over 20,000 properties listed directly by owner or by builder.  We encourage buyers to seriously consider these properties, whether you are working with an agent or not.  Working directly with the owner has many distinct advantages and benefits….no drawbacks. 

Finished Building Lots. The Next Boom.

Tuesday, February 16, 2010 posted by Tommi Crow

Are you one of the millions of people looking for the next boom in real estate?   If so, you might want to consider abandoned subdivisions.  Savvy investment groups and individuals have been snapping up finished building lots like candy.  

Why?   There are so many incomplete developments for sale, that finished building lots are being dumped onto the market at 50 cents or less on the dollar.   Small builders or investors, who have the time to hunt down smaller projects, or buy the fill in lots that don’t interest big investors, are doing even better.  They report buying quality building lots at 20 – 30 cents on the dollar.

The Law of Supply and Demand.  

Supply:  The two to three year supply of unsold building lots has stopped developers from investing in more land, finishing projects or starting new ones.   

Demand:  The United Stated needs 1.2 million new homes for the next 10 years, just to keep pace with population growth.  During the past few years, builders have constructed only 500,000-600,000 homes per year, or less than half the amount needed to keep pace.    When housing demand rises, the need for finished lots will be painfully obvious and builders will pay a premium to get their hands on them.

Investment in building lots was significant by the end of 2009.  Before you jump in and invest in a vacant building lot, make sure your expectations are reasonable.   Other than the Golden Rule…Location, Location, Location…, keep in mind, generally, land can not be flipped.  Plan to hold on to the property for a minimum of one year and up to three.  If you are considering unfinished lots, plan to wait a minimum of three to four years before ringing the register.

MORE…..Check back with us tomorrow.  We’ll tell you how to spot a good price for a lot and buy below the finishing costs!

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Rent or Buy? Slick Tool Makes Deciding Easy

Thursday, November 20, 2008 posted by Tommi Crow

When it comes to making or losing money in housing, the main question to consider is often whether it makes better financial sense to rent or buy.  

While a lot of formula’s exist to determine the answer, I stumbled across a great tool for calculating your strategies that doesn’t involve math.

Check out the New York Times slide calculator.  This slick tool instantly reveals the answer to all rent vs buy dilemia’s.   Just enter in some basic information about your housing or investment idea, and the chart reveals how much time, if ever, it will take for your investment to pay off.

Thanks for visiting, a great website for discovering unknown properties seen no where else on the web.

Best Advice for Emerging Trends in Real Estate

Friday, October 24, 2008 posted by Tommi Crow


The housing market and US economy is extremely scary this Halloween.   Many of us feel as if we have been buried alive.  But, just like the zombies on a late night horror flick, real estate investor’s will raise from the dead and roam the earth again.

The market forecaster’s predict that the market will hit bottom in 2009, and will fight to survive through much of 2010. 

During this period, we will experience further drops in property values, as foreclosures and deliquencies continue.  Job loss and the faltering US economy will continue to pinch property cash flows and hamper an active lending environment, .

So, what signs of life will investors see before exhumation begins?   Which opportunities are lurking, just below the surface, that the prudent should take advantage of?

  • The gruesome death of US real estate market has a beneficiary.  The cash rich, foreign buyer.  These well-healed investors will take advantage of a weak dollar, focusing on “trophy” properties located in major, active cities with plentiful employment and quality of life.
  • The first area’s of the country to show signs of recovery will be the “cities that never sleep”, located in coastal area’s.
  • Multi-family and higher density properties with retail shopping will be the focus for future developers.
  • Other developer’s will focus building in area’s with neighborhood retail centers with big box grocery and chain drug store anchors.
  • Apartment building investments may pay off now.  Look for mid-range property near transit in high density locations.  Vacancy rates are very low, and will remain so, as people cut living expenses. 
  • Distressed condo’s located in urban area’s near transit bode watching.
  • GREEN is GOOD.  Cutting energy expenses will be a priority for investors and buyers, alike.
  • Residential building lots will get a cheaper, as builders dump options and inventory.   Spelling profit potetianal for the patient.
  • Commericial will show signs of life, before residential.

The world is indeed a dark, scary place at the moment.  But, rest assured, the sun will come up.  And, while we have no quick way to stop the bleeding, the ones of us who survive the slaughter may grow fat on the plentiful carnage.  To the mindful, patient go the spoils.

Thanks for visiting  Happy Halloween and Happy Home Hunting!! Don’t be SCARED to make a comment…no one will BITE your HEAD OFF.

Home for Sale

Home for Sale

While the present ecomonic situation in this country is uncertain, one thing remains unchanged.  Markets will rise.  Markets will fall.  Markets will Recover.  Savvy Investors/Buyers will Profit.

Too much inventory, and too much absurd lending and borrowing, have Americans facing the worst housing market since the great depression.  While this is not new news, the opportunities in this market may be.   

Home buyers with money in the bank, a job and good credit have not been in such a great position in decades.   Price declines and record loan defaults have made bargain hunting for a home a lot more fun.   The McMansion, many believed they could never afford, is now well within their grasp. 

So, what is the truth about getting a great deal in this market?   Are some properties easier to buy than others?    Can you really get a steal from lenders sitting on unsold inventory?   

The answer is YES, but there are big differences in the types of distressed property being offered for sale.

  • SHORT SALES:  A short sale is one in which the borrower is behind on their mortgage, but they still own the property.   Usually, the borrower owes more to the lender than they can sell the home for (upside down).  Usually a short seller will ask the bank to consider any offer on the property and “forgive” the outstanding loan balance.   A short sale is good for the home owner because short sales do not reflect as poorly on their credit report.  Short sales are good for the lender because they don’t have another vacant home on their books.
  • MAKING A OFFER ON A SHORT SALE HOME:  This is the most difficult type of distressed housing to make an offer on.  Unless you have a lot of patience or an unlimited amount of time to sit and wait for a response to your offer, you may want to seriously avoid properties advertised as Short Sales.  Truefully, very few, if any, offers made on Short Sales ever close.
  • REO’s and Foreclosures:  These are bank owned properties and there are plenty to choose from.  These types of listings sell very quickly.  Generally the buyer can be sitting in their new living room in less than 30 days after submitting an offer on a lender owned property.
  • MAKING AN OFFER ON A FORECLOSURE OR REO:  Banks are completely detached and unemotional from their home listings.   They know exactly what they need in terms of price, they know the local market and they love quick closings.  That being said, you won’t be successful offering 75, 80 or even 90 percent of the list price.  You will more than likely be out bid, as often the winning bid is over the list price.  Keep in mind that the bank is not like a human home seller, they usually never counter low ball offers, they simply move on to the next offer in the pile.

Thanks as always for visiting  We are here to help you sell and buy, so let us know your thoughts.