Is it time to buy a house?

No way. The economy has yet to turn around, and prices are going to keep falling.

Close, but not quite. If the market hasn’t bottomed out already, it’s getting there. It’s definitely time to start looking for a good buy.

Absolutely. There are great bargains out there now. You’ll kick yourself later if you don’t grab one soon.

See what readers have to say.

Why would you even consider a property manager? For one thing, you decided to invest in a rental property, but don?t know what to do next. You?re not alone. The realities of maintaining and running a rental property can quickly become overwhelming- even to the savviest investor. Many times, people choose to hire a property manager to help them in the day to day tasks, which could be just the answer you?re looking for. To help make up your mind if hiring a property manager is right for you, here are 10 reasons that could help influence your decision.

Why would you even consider a property manager? For one thing, you decided to invest in a rental property, but don’t know what to do next. You’re not alone. The realities of maintaining and running a rental property can quickly become overwhelming even to the savviest investor. Many times, people choose to hire a property manager to help them in the day to day tasks, which could be just the answer you’re looking for. To help make up your mind if hiring a property manager is right for you, here are 10 reasons that could help influence your decision.

Collecting and Depositing Monthly Rent Payments. If you’ve ever worked in the billing department of an organization, you know that securing payment from clients and patients can be difficult, not mention awkward. A property manager has his/her own systems in place to effectively collect rent and maintain on-time payments. Especially if you are a small investor, with a limited number of properties, not being able to maintain consistent payments is going to significantly affect your cash flow.

Rental Rates. A property manager is going to make sure your rental rates are competitive, which is the key to securing (and keeping) tenants in your property. Their job is to know the rental market, knowledge which most likely isn’t your forte.

Housing Regulations and Property Law. There is a multitude of applicable laws and regulations that you are going to need to abide by when renting and maintaining your rental property. These include local, state and federal regulations, as well as fair housing regulations (such as the ADA). A property manager can help you avoid lawsuits by keeping up to date and in compliance with these regulations.

Marketing and Advertising. A good property manager is going to have experience in offline and online marketing, as well as local direct mail opportunities, which will increase the exposure of your properties. Carrying a vacant property can be extremely expensive, and is an expense you want to avoid whenever possible.

Inspections. Being extra vigilant in the care of your rental property is critical to the maintenance of your investment. Through routine inspections, a property manager can find and repair problems before they grow into expensive endeavors. It is standard for property managers to perform inspections before a tenant moves in, during their lease, and after the tenant moves out.

Tenants. Securing tenants can be a time consuming process. Depending on the extensiveness of requirements for your rental properties, a property manager can take care of securing all criminal background and security checks, credit reports, employment verification, and previous landlord references. In addition all tenant disputes, conflict resolution and emergency maintenance will all go through a property manager, who will involve you at his or her discretion. In addition,

Access to Professionals. A property manager has existing relationships with maintenance workers, tradesmen, vendors, supplies and contractors that you do not have. This can save you significant time and money when it comes to maintenance on your rental property, not to mention ensuring quality work.

Time Management. By having a property manager that takes care of the routine daily tasks, you are free to focus on other investments and/or your own career.

Remote Locations. If your investment property is in another city or state, it’s simply not possible for you to oversee management and maintenance of the property and its tenants. A property manager can be where you can’t, and can take care of all the details you don’t have access to.

Money. Most property managers charge a percentage of the monthly rental rate which can range anywhere from 8-12%. The cost is actually quite nominal when compared to all the services a property manager can provide, which frees up your personal and professional time.

This article provided by AllPropertyManagement.com

President Obama has signed into law legislation extending the $8,000 first-time home buyer tax credit beyond its scheduled November 30 expiration and creating a new, $6,500 credit for longtime homeowners who buy a new home. With thousands of dollars at stake, it’s not surprising that potential home buyers have lots of questions. We have the answers.

How does the extension of the first-time buyer credit work?

It’s simple. The old credit was scheduled to expire November 30, so folks who hadn’t already signed a contract faced a daunting task to get a deal closed by the deadline. Some real estate agents were writing provisions into contracts making the purchase contingent on closing in time for the buyer to get the credit. Failing to do so would kill the sale.

Under the new law, the credit is available to qualifying buyers who sign a binding contract by April 30, 2010, and who close by June 30, 2010. The 60-day period should offer plenty of time for last-minute buyers to get to the closing table.

Are the rules exactly the same, except for the later deadline?

Of course not. There are a few differences that apply to deals closed after November 6, the day President Obama signed the bill into law. First though, the similarities:

The first-time buyer credit isn’t really restricted to first-timers. You’re considered a first-time buyer if you have not owned a home for at least three years prior to the date you settle on your new home.

–The credit is available only for the home you live in. It’s not available for rental properties or vacation homes.

–The credit is 10% of the purchase price of the home, up to a maximum credit of $8,000. Therefore, if the house costs $80,000 or more, you can qualify for the maximum tax credit.

–Unlike the first-time buyer credit that was available in 2008, this credit does not have to be repaid . . . as long as you live in the house for at least three years. Sell or move out before three years, however, and you have to pay back the $8,000 as extra tax on your tax return for the year you sell or move. (The payback can’t exceed the amount of profit you make on the sale, though.)

Now for the key differences:

–You don’t get a credit if the house you buy costs more than $800,000. (There was no price cap for deals closed before November 7.)

More important, the new law increases how much buyers can earn and still claim the credit. For deals closed before November 7, the right to the credit gradually disappeared as adjusted gross income (that’s basically your income before subtracting your personal and dependent exemptions and your standard or itemized deductions) rose between $75,000 and $95,000 on single returns and between $150,000 and $170,000 for married couples who file joint tax returns. Now the phase-out zones are $125,000 to $145,000 for singles and $225,000 to $245,000 for married couples.

When we signed our contract to buy our first home in October, we were kind of bummed because our $190,000 income meant we made too much to qualify for the credit. We won’t close until mid November. Do we get the credit or not?

You’re in luck. The new, higher income limits apply to deals closed after November 6. Enjoy your windfall.

How does the new $6,500 credit work?

This credit is available to qualifying buyers who sign a binding contract by April 30, 2010, and who close on the new home between November 7, 2009, and June 30, 2010. To qualify, you must have continuously owned and lived in a home for at least five of the eight years leading up to the purchase of a new home. If you have owned and lived in your current home for at least five years, for example, you can qualify. If you bought the home you’re living in now less than five years ago, however, you can’t qualify.

The credit is 10% of the purchase price, up to a maximum credit of $6,500. As with the first-time buyer credit, this one is available only for the purchase of a principal residence – not a vacation home or rental property – and if you sell the place or move out within three years, you have to pay back the $6,500 on your tax return for the year you sell or move away. Homes that cost more than $800,000 are ineligible for the credit.

Income-eligibility rules are the same as for the first-time buyer credit. The right to claim the credit disappears as adjusted gross income rises between $125,000 and $145,000 on a single return and between $225,000 and $245,000 for married couples who file joint returns.

It looks as if we qualify for the move-up credit, but we signed a contract to buy our new home before the President signed the new law. We’re going to close at the end of November. Do we get the money?

As long as you close on the deal after November 6, you can qualify for the credit. The new credit is often referred to as a move-up credit.

We are planning to sell our home and retire to a smaller place. Is the credit available only if you buy a more expensive home?

Don’t worry. “Move-up” is a misnomer often used to distinguish this from the first-time buyer credit. It’s okay to downsize. There are no rules about the cost of the house you sell or the home you buy (except that the new house can’t cost more than $800,000).

What do I have to do to claim a credit?

The procedure is the same for both the first-time buyer and longtime resident credits. Once you close on a qualifying house, you claim the credit on your federal income-tax return. If you close in 2009, you can choose whether to claim the credit on the 2009 return you file next spring or on an amended 2008 return. Choosing the amended return route would bring you a refund of the full credit amount. If you claim the credit on your 2009 return, it will reduce your tax bill for the year by the amount of your credit. This is a “refundable” credits so if the credit reduces your tax bill below $0, you’ll get the difference as a tax refund. If you close on a home in 2010, you can claim the credit on either your 2009 or 2010 return. Sooner rather than later is the choice to make.You’ll need to file a Form 5405 to claim the credit and include a copy of your settlement statement (such as the HUD 1 form) to prove that you bought the house. The settlement statement was not required for deals that closed before November 7.

Is it true that there is an age limit for the credit?

Not on the upper end. But as part of an antifraud effort, neither home buyer credit is available to taxpayers under age 18 at the time of the purchase. The discovery that taxpayers as young as four years old were claiming the first-time buyer credit cast suspicion that some hanky-panky was going on. Married couples can qualify for the credit as long as one spouse is at least 18 at the time the deal is closed.

The new law also bans anyone who is claimed as a dependent on someone else’s return from claiming a home buyer credit.

Can I claim the credit for the purchase of a vacation home? How would the IRS know whether I was living there full-time?

The credits are available only for the purchase of a principal residence. As for how the IRS might know a new house was a vacation property, the fact that you tax return was filed from a different address than the address of the new property (which will be shown on the settlement sheet) might raise some eyebrows. If the IRS concludes that a claim is fraudulent, it could impose a 75% penalty, which would cost $6,000 on an $8,000 credit claimed for a vacation home.

We bought a home on October 15, 2003, and sold it in August 2008. So we owned the home for slightly less than five years. We are living in Arizona now and renting an apartment. We are looking to buy a home in Chandler, Ariz. Do we qualify for the first-time home buyer tax credit as amended, assuming that we pass the necessary income tests?

Sorry, but based on the facts you present, you’re out of luck. To qualify for the first-time buyer credit, you can’t have owned a home within the previous three years. You sold your previous home just 15 months ago. And it appears that your ownership of that home was a few months shy of five years – the minimum period of continuous ownership required to qualify for the longtime resident credit.

Can I qualify for both the first-time buyer and longtime resident credits?

No. You can only claim one or the other.

My husband’s parents are offering to sell us their vacation home as our first home. Would we qualify for the first-time buyer credit?

Not anymore. The original first-time buyer credit law nixed the credit if the home sale was between related parties, but there was a loophole for the situation you describe. Since you are not related to your husband’s parents – except by marriage – you could have qualified for the credit assuming you bought the home jointly. The new law, however, puts the kibosh on that, effective for purchases after November 6, 2009.

Article provided by Kevin McCormally, Editorial Director, Kiplinger.com

]]> http://www.lakenonarental.com/477/orlando-real-estate-news/faqs-new-home-buyer-tax-credits/feed 0 http://www.lakenonarental.com/461/orlando-real-estate-news/inexpensive-ways-improve-rental-property http://www.lakenonarental.com/461/orlando-real-estate-news/inexpensive-ways-improve-rental-property#comments Wed, 03 Feb 2010 11:00:22 +0000 Joey Guest http://www.lakenonarental.com/?p=461 If you had an unlimited budget for upgrading your properties you wouldn’t need an article like this one. In this current economic downturn we have to be creative and financially careful when we are trying to make our units more appealing.

If you had an unlimited budget for upgrading your properties you wouldn’t need an article like this one. In this current economic downturn we have to be creative and financially careful when we are trying to make our units more appealing.

As an investment property owner, you know what it is like to have a tight schedule and an even tighter budget, so I thought I’d share with you some simple and “cheap” ways to spruce up your rental property to attract new residents.

Here are five easy-to-do, inexpensive ways to improve the rental properties that you manage or own.

Paint the Kitchen Cabinets

If the cabinets are over ten years old (or look cheap from day one) they are probably ready for a makeover. Replacing cabinets is an expensive proposition, but painting them can make them look as good as new. Use a semi-gloss paint and don’t bother painting the insides. Just make sure the inside of the cabinets are clean and smell good.

Replace the Shower Curtain

It almost seems like a no-brainer, but replacing the shower curtains and liners with a clean, contemporary look make a bathroom look cleaner and newer. Just go to any large discount chain and you can find nice curtains for $30 or less. While you’re at it, replace the curtain rod as well, which is also a meaningful low-cost improvement.

Upgrade the Switch Plates

For about 50 cents each you can add some shiny new electrical switch plates that look more expensive than the old ones. Spend a little more and you can find ones that look like wood or brass. This can be an eye-appealing feature and can add that special extra touch that nice details can bring.

New Doors

Replacement doors can be as cheap as $20 for the basic hollow-core door. If you can’t afford a new front door at least paint or stain the existing one.

Replace or Paint Trim

If the unit already has trim give it a fresh coat of bright white paint. If it doesn’t, or the trim is in bad shape, add new trim. Trim and molding is around 50 cents per square foot, yet it dramatically improves the appearance of any room.

You’d be surprise how many investment property owners underestimate what a difference these five easy and inexpensive ideas can make.

Few investors have noticed that rents are finally covering mortgage payments again in residential real estate.

In many regions for the first time in years, rental income can pay the mortgage on smaller residential properties. We’ve waited a long time for this opportunity.

We have several friends who steadily became “high net worth investors” while creating significant income for their families. How did they do it? They did one thing right multiple times. They bought rental properties over the years whenever the rent exceeded the mortgage payments. They started during times like these.

Then with the help of inflation and leverage their money grew exponentially. Here’s how that works.

If you believe the government is willing to devalue the dollar, then buying a rental property where the rent exceeds the mortgage payment is very sensible.

You see if inflation arrives and the dollar’s purchasing power keeps crashing, that little $100,000 rental property might someday be worth $175,000. It happened in the 1970s and it will happen again.

As the value of the house goes up with inflation you can keep increasing what you charge in rent. And if you buy it with a fixed-rate mortgage, then your cost in dollars will stay the same.

Yes, your mortgage costs are fixed and your rent can go up while the value of the property rises. By buying a rental property with borrowed money (a fixed-rate mortgage), you’re doing what my wealthy friends did… using inflation and leverage to create great wealth.

As Dr. Steve Sjuggerud recently wrote for The Daily Wealth (www.DailyWealth.com) “Your total return on the small amount you put up for this deal could be extraordinary.”

“Your downside risk is simply that you tread water… since your rent covers your costs. (Of course, there are rental property maintenance issues to watch out for, too.) Your upside potential is huge – in both price appreciation and future rent increases.”

The facts are:

Housing prices have fallen at least by a 30-50%

Mortgage rates are the lowest in many decades.

The government is doing all they can to support home prices.

The government is printing money generously which can cause inflation.

We can take benefit from inflation and leverage. When we see the numbers and how much we can make on our investment, it’s exhilarating.

Let’s take a look at some of the opportunities and positive indicators for the future of Florida’s real estate market.

1. Great prices. Statewide, home prices have fallen about 20 percent in the past year. Florida Association of Realtors® statistics show the existing-home median sales price was $185,400 in the third quarter of 2008, compared with $233,200 in third quarter 2007. By the way, those numbers are still significantly higher than in the early years of the decade. In 2003, the third-quarter sales price was $163,700, which reflects an increase of about 13.3 percent over the five-year period. (The median is a typical market price where half the homes sold for more, half for less.)

2. The time is right. Home sales volumes are rising again — a signal that the market recovery may be underway. In third quarter 2008, statewide sales of existing single-family homes were up 5 percent compared to the same period last year, according to FAR statistics.

3. High inventory levels. Conditions are ideal for buyers to find their dream home. Inventory is plentiful in all price ranges. But as sales volumes increase, inventory levels are likely to shrink. That reality translates into this advice for buyers: Don’t wait too long.

4. Low mortgage rates. Mortgage rates are still at the lowest levels since the 1960s. Lower rates multiply a buyer’s financial power. Even half a percent can make a sizeable difference. For example, on a $200,000 home, half of 1 percent could save the homeowner about $815 a year. Buyers can get more home for the money, which is a perfect scenario for families looking to upsize.

5. Incentives to buy. Federal, state and local housing programs can help buyers make that big purchase. The American Recovery and Reinvestment Act has increased the First-Time Homebuyer Tax Credit from $7,500 to $8,000 for purchases on or after Jan. 1, 2009, and before Dec. 1, 2009. Talk to a local mortgage lender about state and federal incentive programs.

6. A long-term-growth state. Long-term economic and demographic trends continue to favor Florida. By 2010, economists forecast that Florida will be the third-most-populated state in the country. Florida has been one of the 10-fastest-growing states in the U.S. for each of the past seven decades, and often the state has been in the top four, according to Census data. Population growth will continue to provide a foundation for other economic development, such as new jobs and growing incomes. All of these trends are positive indicators for real estate growth.

7. A migration magnet. Even with a slowdown in economic growth nationally, projections call for Florida’s population to return to more normal growth levels of about 317,000 a year between 2010 and 2020, similar to the 1980s and 1990s, said Stan Smith, director of the University of Florida’s Bureau of Economic and Business Research. That’s a lot of new buyers coming into the market.

8. A favored retirement destination. Over the long term, Florida stands to benefit from the migration of the aging Baby Boomer generation, roughly 80 million strong. Demographic studies show that the Sunshine State’s mild climate and outdoor amenities continue to make Florida a favorite retirement destination.

9. A diverse economy. Florida’s economy, like the rest of the nation, is impacted by the recession. Some business sectors, though, appear promising for the Florida economy. The healthcare and technology sectors are quickly becoming an important economic force in South and Central Florida. The Milken Institute/Greenstreet Real Estate Partners ranked five Florida communities on its “Best Performing Cities Index 2008,” which ranks U.S. metropolitan areas by how well they are creating and sustaining jobs and economic growth. Florida’s business climate ranked fourth among executives and sixth overall on Site Selection magazine’s 2008 Top State Business Climate rankings.

10. Investment outlook. Every quarter, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a survey of industry executives, market research economists, real estate scholars and other experts. In the fourth quarter 2008 survey, the investment outlook for various types of Florida properties declined from the third quarter of 2008, although it is noted that the investment outlook remains higher than it was at times in 2006 and 2007. “We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in,” says Director Dr. Wayne Archer, when referencing the 2008 third quarter results.

11. Homeownership has value. Realtors® believe — and research supports the belief — that homeownership provides a variety of tangible and intangible benefits to the community and homeowners. Studies show that home equity is still the largest single source of household wealth.

12. Greater sense of well-being. Owning a home leads to increased personal well-being. Research shows that people who own their own homes tend to show higher levels of personal self-esteem and life satisfaction, which in turn helps to make homeowners and their children more productive members of society.

13. Beneficial for kids. Studies show that children raised in homes owned by their families are more likely to stay in school and graduate high school. They’re also shown to have a higher lifetime annual income.

14. Community involvement. People who own homes have a strong financial stake in what happens to their community and tend to become more involved in community and civic affairs. Studies show that homeowners also interact more with their neighbors and communities. Compared to renters, homeowners join up to 41 percent more civic and/or nonprofessional organizations, such as the PTA or Scouts; vote in local elections 15 percent more often; enhance their neighborhoods with gardens 12 percent more often; attend church about 10 percent more often; and have a 3 percent greater chance of being interested in public affairs.

15. An unsurpassed lifestyle. Finally, let’s not forget the things that brought people to Florida in the first place, and will continue to attract them — beautiful beaches, fabulous weather and a friendly business climate, with no state income tax. It’s no wonder that Florida’s combination of temperate climate, outstanding recreational amenities and economic opportunity has consistently put the Sunshine State in the top three of Harris Poll’s “Most Desirable Places to Live” survey.

This article provided by, Orlando Sentinel

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