Archive for May, 2010
2008 Winding Down With Bay Area Real Estate Purchases Revving Up
The end of the year is upon us with the holiday’s right around the corner. It has been a very interesting volatile and bumpy ride with the economy stock market Presidential election and real estate crisis. We witnessed some of our largest financial institutions go under Fannie Mae and Freddie Mac both become taken over by the government and the stock market loose nearly 4 trillion dollars. We have witnessed world renowned business and economic figures such as Warren Buffet and Alan Greenspan in the spot light stating they have never seen anything like this. Our national debt has accumulated to unprecedented levels and our economy literally nearly collapsed. We have had numerous phone calls and emails from worried clients who are watching their retirement portfolios dwindle before their eyes and many have felt helpless. It is during these times that I recall a quote my father used to say to me “with every disaster there is always a gift on the other side”. What does this mean for real estate?
Right now is the best time to buy Bay Area real estate in the past twenty years. For those who have been waiting to purchase the time is right now.
We are seeing more buying activity in the fourth quarter than we have seen all year. The market is rich with great deals and multiple offers are happening frequently. Many people have been waiting for the “bottom” to hit but the truth is most of us will see it in the rear view mirror. According to Data Quick Bay Area sales are at the highest volume they have been in 17 months and median values are down 40 from a year ago across 9 Bay Area Counties. Investors and buyers have stepped off the sidelines and into the game. We will most likely see more purchasing activity in 09 with the window of opportunity closing in quickly. The buying frenzy has indeed been initiated and the heat is on. This is a very important step for all of us. Our economy needs to stabilize and homeowners need their property values to stop declining. Bay Area real estate for many is a good investment strategy if it is long term. In today’s market it is not all that bad to have a saleable tangible asset instead of an extremely volatile stock portfolio.
Much of the purchase activity in the real estate market is with bank owned or “distressed” properties. We would like to put out a word of caution when dealing with these types of properties. Many of the lenders who own these are located out of state and have lengthy contracts that are drafted by their own attorneys protecting the banks best interest. The purchase contract in California is designed to protect the buyer not the bank. It is important to watch out for clauses in the banks contracts like their contract supersedes the interest of the California purchase contract in case of a difference between the two. It is also very common in the banks contracts to revert back to the passive removal of contingencies instead of the California contract requiring an active removal. A passive removal of contingency means that per the banks contract the buyer has a certain amount of time to do inspections remove the appraisal and the loan contingencies. If that date comes and goes the contingencies are automatically removed and the buyers deposit is on the line. The California contract requires the contingencies to be removed in writing with both parties signing and dating those removals. Make sure to be very careful when dealing with bank owned properties and that you are working with a professional who knows what they are doing. It is also a very good idea to have an attorney look over any agreement from a bank before you sign it just to make sure you fully understand what you’re getting into.
The real estate market most likely see a significant number of lawsuits arise in the following months largely due to bank owned and distressed properties. There will be many attorneys watching very carefully for negligent behavior and real estate agents and brokers should be cautious in their dealings. There is nothing to worry about as long as business transactions are done carefully and professionally.Real estate has made more people wealthy than just about anything and the Bay Area is no exception. This market is a niche and demand is always been strong. The population will continue to grow and the economy will remain a large player in the global economy.
Please contact Team Enterprise for more information or visit us online.
Best
Matt Larsen
About the writer: If you want to know more about companies offering this kind of service you can visit www.WMDouglas.com to get a better of idea of what you can expect when hiring a Professional HOA Management Company.
1031 Exchange 1031 Tax Exchanges
As a real estate professional currently involved in the real estate investment and development business you understand that there are a number of ways that you can help your business succeed as well as a number of ways that you can let your business languish. One of the best tools for any real estate investor then is the 1031 exchange. 1031 tax exchanges were designed by the IRS to allow real estate investors to defer payment of capital gains taxes while they are actively involved in the real estate marketplace. With a wellmanaged 1031 exchange then savvy investors can increase the value of their assets over time without paying taxes in the interim. Successfully managing those 1031 tax exchanges however requires strict adherence to a set of carefully designed rules.
All 1031 tax exchanges for example are subject to strict time limits. Your 1031 exchange clock begins to tick when you finalize the sale of your current property. From that point you have a total of 180 days to complete the exchange. The exchange is counted as complete when you have legally received your replacement property in other words when your legal purchase is officially complete. In some cases you may find that you have less than 180 days as the period can also close on the date that your taxes are due for the year of the exchange including extensions. Within that overarching 180 days the first 45day period is known as the identification period. During the identification period you must find and legally identify the replacement property that you wish to purchase. Your intent to purchase this property must be documented in a written signed notice.
Another rule that is important to the 1031 exchange process is the rule of likekind property. This rule is intended to preserve the integrity and intent of 1031 tax exchanges by guaranteeing that the replacement property you are purchasing represents the same type of investment to you that your original property did. Fortunately the governments rules for likekind property are generous: you could for example exchange a multifamily apartment building for a tract of undeveloped land as long as it is clear that the properties represent the same sort of overall investment and business opportunity for you. The likekind rule is simply designed to help ensure that investors use the 1031 exchange process in the way that it was intended.
In short 1031 tax exchanges are a valuable tool for any person who regularly works with real estate for business or investment purposes. Completing them successfully however relies on strict adherence to a number of rules and regulations so take care that your 1031 exchange falls within the rubric of acceptable transactions.
About the writer: Real estate investors looking to increase the worth of their assets quickly and effectively can make a smart move by utilizing the 1031 exchange process in their next sale and purchase transaction. 1031 tax exchanges are great tools but their completion hinges on adherence to a set of rules and regulations.
Where To Find Sources Of Start-up Capital For Your Real State Investment?
If you are like most people you have been working for several years maybe more than you care to count trying to save money for retirement. Then someone convinces you that the bulk of your funds should be placed in real estate now when property prices are low in the recession time.
“That’s great” you think “but just where are my funds now?” The first thing you need to do is to refer to your personal financial statement. Without it you really don’t know how much money you have or where it’s located.
Let’s look into the usual places where people keep money and then consider some possible sources you may not have thought of.
Savings accounts
Banks are the “holders” of billions of dollars of investors’ excess capital. People invest in these institutions because it’s easy safe and the interest the institutions pay is guaranteed. But you already realize that the 1 to 3 percent interest you are receiving does not come close to keeping up with inflation. Each year you are losing ground.
So begin by making a list of how much cash you have tied up in savings accounts fixed deposit accounts and any other similar type of investment.
Cash value life insurance: ideal if you have built up a substantial cash reserve
Your insurance policies that have a cash value are an excellent source of capital. Review your policies and determine how much loan value you have built up. Perhaps you have an Endowment Policy for yourself your family or your child’s education that you have been paying into for years.
Once you have determined how much cash or loan value you have in these policies find out how much interest you will have to pay to borrow that money. Whatever it is it will be at a much lower rate than current mortgage because you’re borrowing your own money. You can check with your insurance agencyto find out more about this option.
Stocks: you don’t necessarily have to sell
Do you own stocks? They are a source of capital. You have two choices. You can sell the stock outright and invest the aftertax profit. There is another alternative. You do not have to sell and give up the fun and excitement. You can use your stock as collateral and borrow against it. Your local banker will tell you how much you can borrow and the interest rate. This facility is normally called share margin financing.
Refinancing real estate: a secure source of taxfree money in today’s economic climate
If you do have a lot of equity in your home you may want to consider this source of investment capital. The same opportunity is available for any other real estate you may own. You can refinance a property that has considerable equity in order to obtain additional investment funds especially when interest rate are expected to drop further during recession time. And that is taxfree money.
Friends and relations
Don’t overlook the opportunity of borrowing funds on a secured basis from people you know that have money. Talk to your rich aunt who has a bundle in a savings account. Show her how you will pay her 1 to 2 percent higher interest which is still below your mortgage interest rate than she is currently earning. Her investment will be secured by a mortgage on your property.
The husband and wife team
When both a husband and wife are working and the salary of just one is sufficient to cover living expenses deposit the other spouse’s salary in an interestbearing account each month and let it build up. Don’t touch it except in an emergency. Everyone knows that if a cheque is cashed instead of just depositing it all or most of it “mysteriously” seems to disappear. Instead of letting it disappear make it works for you to build up your investment capital.
You know that the majority of investors who never take a risk will leave all of their investment funds in “secure” savings accounts or other fixed investments end up practically broke when they retire. Waiting to build a substantial amount of investment capital may prevent you from ever getting a start in real estate investing and the sooner you start the more time you’ll have to secure your future.
Read more about real estate investment tips at http://reijb.com
We write regularly about real estate investment. Some of our featured articles include:
“Why apartment can be the best real estate investment?
“How important is location to an investment real estate?
About the writer:nbsp;nbsp;Coming from a humble little town called Tangkak in north Johor state of Malaysia OngKL has chances to learn and work both in Johor Bahru and Singapore a conurbation with 6.49 million still fast growing population since year 1996. He is now having a chance to contribute back to the community by sharing what he sees what he knows and what he learns in this wonderful place.http://reijb.com