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In November 2009 President Obama has signed the extension of the first time home buyers $8,000 tax rebate. President Obama also has signed an expansion of the original plan. The expansion provides a $6,500 tax rebate for qualified buyers who already own their own home. Both will be in effect until April 30, 2010. The provisions are providing a tremendous opportunity for homeowners as a huge incentive for buying a home. The new extension and expansion has created a sense of urgency for those buying homes. According to Mark Sauers, Assistant Vice President with Sun Trust Mortgage

“The only thing i would say is that if history teaches us any lessons we should move forward sooner rather than later. April 30 will be here before we know it. I really do not expect any further extensions beyond this”

The following guide will simplify the qualification process for homeowners looking to take advantage of the home buyer tax credit.

    $6,500 Tax Credit for trade-up buyers who already own their own home:

1. Income qualifications: Single taxpayer incomes must not exceed $125,000 and married couples income can not exceed $225,000

2. Purchase date qualifications: Purchase must be after November 6, 2009 and on or before April 30, 2010.

3. Ownership qualification: Buyers must have lived in their previous home for five consecutive out of the past eight years. The purchase price of the new home can not exceed $800,000 and the new home must be a personal residence (non investment or non-owner occupied).

The total tax rebate is equal to 10% of the purchase price, up to a total of $6,500 and does not need to be repaid back to the Government.

    $8,000 First time home buyer tax credit:

1. Income qualification: Single tax payer income can not exceed $125,000 and couples filing jointly can not exceed $225,000

2. Purchase date qualification: All sales that occur between January 1, 2009 and April 30, 2010

3. Buyer qualification: Anyone who has not owned their own home during the previous three years prior to current purchase

The tax rebate is available for 10% of the purchase price of the home with a maximum of $8,000 and can not be used on a home that is over $800,000. Really now, how many first time home buyers can afford an $800,000 home?

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first time home buyers rebate expanded and extendedPresident Obama has signed the bill to extend and expand the home buyer tax rebate.  First time home buyers have been enjoying the $8,000 tax credit since it was signed in early 2009.  The first time home buyers tax rebate was set to expire on November 30, 2009 but now it has been extended to all houses put under contract before April 30, 2010.

Along with the extension President Obama signed an expansion of the original tax credit.  The expansion allows many homeowners, who purchase a new primary residence home, to enjoy a $6,500 refund.  Homeowners are eligible for the $6,500 if they have lived in their home for five consecutive years out of the past eight years.   The earnings income limit for receiving the tax credit are $125,000 for individual and $225,000 for a couple.  The new purchase does not need to cost more than the original purchase and here is an example of how the 5 out 8 consecutive year residency should apply:

Renting scenario:  If you previously owned your home for the five consecutive of previous 8 years, then sold it and chose to rent a different home you would become eligible to purchase a home and receive the rebate. Please contact your cpa or tax specialist to be certain of your situation.

Divorce scenario:  If you and your spouse lived together for five consecutive out of the past eight years, got divorced and went your own paths but did not repurchase a new home you would then potentially be eligible for the $6,500 tax credit.  Please be sure to contact your cpa or tax specialist to be certain of your situation.

It is estimated that approximately 2 million home buyers will take advantage of the tax rebate this year and that this tax credit could pump more than $20 Billion into our general economy.  The hopes of our Government leaders is that it will ultimately lead to a sharp rise in home sales and ultimately help lead to a stabilization in the overall market and economy.

Extending the tax rebate will help to continue to give a great incentive to first time home buyers nationwide.  The expansion is expected to lead to greater sales in the “Trade-up” category where home owners move up to a more expensive home to take advantage of this offer.

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Nearly 1.5 Million people have taken advantage of the $8,000 tax rebate since it’s conception in January 2009. The tax credit has been available to all first time home buyers. The first time home buyer is defined as anyone who has now owned their own home for three consecutive years. Oh, one more criteria for eligibility… It must be for your primary residence which is unfortunate for investors. The credit is in the form of a tax rebate for 10% of the purchase price of the home, up to a total of $8,000. One of the great benefits of the tax rebate is that is FULLY refundable to the buyer. For instance if the first time home buyer owed no taxes on their taxes, then the first time home buyer can ammend their tax return and capture the full $8,000.

The tax rebate has helped improve the national home sales. The current tax rebate is set to expire on November 30, 2009.  This means that the purchase must be fully closed and completed in order to qualify. It typically takes approximately 30 days to close on a home transaction with conventional bank financing. The point is that in order to be confident your purchase will qualify you should plan to be under contract to purchase your home by November 1, 2009. If you are trying to capture the $8,000 tax rebate and have not yet put your home under contract or you dont qualify for conventional financing then you need to consider finding an alternate approach. One alternate approach is to find seller financing. If the seller is providing the financing and you do not need to wait the typical 30 days for bank financing, then you can still close by December 1, 2009 without many challenges.

What about the possibility of extending the rebate past December 1, 2009?   There are currently several bills  in Congress that would allow the extension. Each of the bills in Congress provide alternate solutions toward the extension. Of course there is a lot of politics involved in completing the extension, from all poitical parties. Here is a brief summary of the extensions:

S1230:  Senator Johnny Isakson  introduced Senate Bill 1230 in June.  The Bill proposes a tax credit up to $15,000 that can be split over 2 year for everyone who purchases a home for their personal residence.

HR 2619:    This one  proposes to extend the existing $8,000 tax credit to July 1, 2010 and adds provisions for a tax credit of up to $3,000 for homeowners who refinance.  This would certainly create a ton of refinanes.  Is this part of the recent mortgage issue?  Many Americans seem to use their home equity as an ATM machine, pulling it out and spending it.  I guess that would potentially help spur the ecomony in the short term.

HR 2801 – Similar to S1230 but it extends benefits to January 1, 2011.

Several key politicians are publicly making comments about getting the extension approved by early November.  Those making positive comments include Senator Bill Nelson of Florida, Senate Majority Leader Harry Reid and Senate Finance Committee Chairman Max Baucus.  They are hoping to extend the rebate along with unemployment benefits at the same time. 

One thing for sure is our current Government is committed to spending an unlimited amount to try and stimulate our ecomony.  Our Leaders appear to be committed to short term gains at the expense of future generations.  That said, extending the first time home buyer credit will certainly help encourage American’s to own their own home. 

What do you think?  Should the first time home buyers credit be extended?  Why or Why Not?  What are the short term benefits and long liabilities associated with this extension?  I would like to hear your viewpoints so please leave some comments.

Gross looking kitchen

Gross looking kitchen

Door with hole in it from dog

Door with hole in it from dog

Gross bedroom before renvoation

Gross bedroom before renvoation

Welcome! We are glad you have joined us for our series on the Road to Financial Security.  We are going to follow a road map that will lead to cash.  Anyone need extra cash in this economy?  Ulitimately the real road to financial security is the buy and hold strategy.  I recognize that our economy will prevent those with job loss and insecurities from following this road map which is why this series will focus on flipping a house for fun and profit.

As mentioned in the previous blog our chosen investment needs a lot of loving in order to restore it to it’s former glory.   This house was literally a Dog House prior to our acquisition.  There is evidence of this point throughout the house.

1.  Severe dog stains on the hardwood floors…  you know what I mean by dog stains right?  You can see and smell them.

2.  Holes in the bottom of the doors and moulding around the doors in the lower bedrooms.  I believe the dogs were kept locked in these bedrooms and the literally attempted to chew their way out.  Take a look at the attached photo to see what I mean on this point.

3.  The whole downstairs really smells bad right now.

Besides the bedrooms ruined by the dogs, the kitchen is the next worst room needing some serious attention.  Take a look at the photo to see what I mean.  We will soon be gutting this kitchen and look forward to brand new cabinets, countertop, plumbing, appliances and a ceramic floor.

We will also be gutting the lower bathroom and installing new ceramic, tub, vanity, etc. into that so it will be brand new as well.  The hardwood floors will be refinished, the house will be painted entirely on the interior.  Once complete you can walk through the front door into the living room and the nice fireplace will catch your attention along with the refinished hardwoods and the newly installed ceiling fan.  From there you will notice the nicely renovated side screened porch and proceed to the brand new kitchen.  This house will offer 4-5 bedrooms, 2 full baths a nice yard and great neighborhood once complete.

On the exterior of this house we will be repairing the vinyl siding, painting the porches, and fixing up the garage along with lots of yard work.

Come along with us on the road to financial security.  The next segment will be coming soon with our construction updates and new photos, etc.

French St - Richmond, VA

French St - Richmond, VA

Welcome!  We are glad you have joined us for our series on the Road to Financial Security.  We are going to follow a road map that will lead to cash.  Anyone need extra cash in this economy?  Ulitimately the real road to financial security is the buy and hold strategy.  I recognize that our economy will prevent those with job loss and insecurities from following this roadmap which is why this series will focus on flipping a house for fun and profit.

The house we have chosen to chronicle is located on French St in Richmond, VA.  French St is an awesome neighborhood where every single house is very well kept and the home owners shown tremendous pride in keeping their lawns and such in a meticulous fashion.  It is also just 3 short blocks to the Maymont Park Pond and the Byrd Park area.  These are the reasons we have chosen to buy, fix up and flip this house.

The chosen house is the only house in the block that needs work.  The neighbors are very happy, let me repeat VERY happy to know it will soon be fixed up.  The neighbors are great and have lived in their houses for a long time (aka stable, nice neighborhood).

This house has grass that is higher than my knee’s along with heavily overgrown shrubs and trees.  Other than the outrageous lawn, the exterior is not in bad shape.  It already has nice vinyl siding and vinyl replacement windows.  Inside is another story…

The story from the neighbors is that when the former owners died the house went to the kids who then moved their dogs into the house.  Needless to say this is the smelliest house we have tackled.  The dogs were kept in a bedroom and they literally chewed a hold in the door and chewed off the door moldings.  Did Michael Vick live here at one point?  ha-ha, just kidding on that one.

This house does have a lot of great features including 4 or 5 bedrooms, hardwood floors and some nice character features.  It also has a nice fireplace and screened in side porch.  This home has approximately 1700 square feet and will appraise for around $220k once  our renovation is complete.

We are buying this house for $106k so their is penty of equity in this house.  I have financed it using a private lender so I did not need a bank mortgage.  I have worked with this private lender on several other houses and he continues to receive an outstanding return on this investments with me.  If you would like to partner with me and have available capital for one of our investments, please contact me direct at 804-677-9025.

The next blog will include the interior photos along with our construction plans and budgets, you wont want to miss it…  Happy House Hunting!

From acquiring, to investing, to repairing, to staging, to appraising, to inspecting, to putting it on the market, to open houses, to listing, to contracts, to actually selling… the process of investing in and selling a home from start to finish can be confusing and a daunting task. We want to make it easy! We are working with a new home that a private lender has invested his money in to yield a great percentage. We are the experts in the field of home acquisition and investments. This particular home has just been acquired and is in the process of getting repairs and getting ready to go on the market… SO we have decided to do a series of blog entries following this home and it’s investors from the beginning to the day it sells.

I continue to get a lot of questions on this investing now blog series via email, etc.  In the last post we highlighted what each person involved in this investment received.   Investing is all about who gets what.  A Seller may get debt relief, a Buyer may get a great house to raise their family in, an investor may get tremendous equity and rental income.  While making your investments it is very important to determine what each of the people involved in the transaction are seeking and what you can offer them to meet their needs.  Some may need the highest price, some may need a super fast closing, others may need to sell the house as-is.  Some buyers want a fixer upper, some want a house move-in ready and others are looking for just a great deal.  For private lenders, some may want a safe conservative interest rate such as 7% and yet others may want a piece of the action in the form of an equity position in your deal. One key to sucess is to determine what each player in the transaction needs and then engineer a solution that meets everyones needs, including your own.

Several people have asked what happened to the house featured in this investing now blog series.  It has been sold in a rather unique situation.  We ended up receiving an offer one morning which looked pretty good.  Before we signed the contract that day we received a second offer on this property.  The second offer was an all cash-offer with no financing contingencies, etc.  The best part of any cash offer is the super fast closing.  In this case they offered to close in one week so we took the offer on this house.  The unique part of the sale was the story behind the sale.  It was an all cash offer because parents were buying it for kids who are getting married…  Yes, this house became someones wedding gift!

Always remember to make your real estate transactions a win-win scenario so that the Seller, Buyer, private lender and yourself all can win and achieve their goals!

From acquiring, to investing, to repairing, to staging, to appraising, to inspecting, to putting it on the market, to open houses, to listing, to contracts, to actually selling… the process of investing in and selling a home from start to finish can be confusing and a daunting task. We want to make it easy! We are working with a new home that a private lender has invested his money in to yield a great percentage. We are the experts in the field of home acquisition and investments. This particular home has just been acquired and is in the process of getting repairs and getting ready to go on the market… SO we have decided to do a series of blog entries following this home and it’s investors from the beginning to the day it sells.

Welcome to WEEK TWO of our entries: the process of investing in real estate from START to FINISH.

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The Bolling house -- Week TWO.

Our project -- Week TWO.

Of course, there are no surprises this week!  Renovating a house is just like peeling an onion–you never know for sure what you have until you peel it all back.  We had TEN people working on this house for the better part of this week.  It is critical to be prepared to start the work the very first day that you close on the home. Our first trip to Lowe’s home improvement center was fun. It was like a parade with about four carts full of materials.  [BTW: ANYONE can save 10% at Lowe’s by getting the coupon from the “change of address packet” at their local post office.  This week we spent $1,400 in materials at Lowe’s and saved $140. Pretty sweet, right?]

Here is what we did this week:

Constructing the new full bathroom

Construction of the new full bathroom

  • New dimensional shingle roof
  • New deck in the back yard
  • New full bath (almost done)
  • New heating and air conditioning installed (WITH a 2.5 ton heat pump)
  • Prepped all walls for painting

Here’s what’s happening NEXT week:

  • Completing all interior work
  • Refinish all hardwood floors
  • Lay new kitchen floor
  • Lay new bathroom flooring
  • Replacing shutters
  • Painting of exterior trim
  • Complete all landscaping work
  • Determine sale and listing price
  • List home using Just List ‘Em: http://www.justlistem.com

Our investor is very pleased with the progress of the renovations on the property. By using his IRA to fund the project, he is receiving an 8% interest return on his overall investment–something he would never have received from a bank. We are so happy to be collaborating with a private lender on such a great project. By becoming a private lender and investing in real estate when the stock market is not at it’s best, you are able to achieve greater financial gain in an easy and reliable manner. After last week’s post, we received A LOT of questions regarding this process. We would be happy to answer them, but I would also like to refer you to this website:http://www.entrusttexas.com. [The contact is Quincy Long.] The Entrust Group provides a lot of GREAT information regarding self-directed retirement plans–this is a great place to start when considering investing in real estate and properties.

Look forward to next week when we discuss the completion of the renovations, sale-price, and MORE.

In the meantime, follow us on Twitter! @justlistem

-Jim Ingersoll

From acquiring, to investing, to repairing, to staging, to appraising, to inspecting, to putting it on the market, to open houses, to listing, to contracts, to actually selling… the process of investing in and selling a home from start to finish can be confusing and a daunting task. We want to make it easy! We are working with a new home that a private lender has invested his money in to yield a great percentage. We are the experts in the field of home acquisition and investments. This particular home has just been acquired and is in the process of getting repairs and getting ready to go on the market… SO we have decided to do a series of blog entries following this home and it’s investors from the beginning to the day it sells. 

Here is our first entry. ENJOY! 

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Henrico County Home - Stage ONE

Henrico County Home - Stage ONE/Before

Here is some background on this adorable little home in Henrico County: This home is a 3 bedroom/1.5 bath located in Henrico County, Virginia. The last recorded sale on this home was in 1994 and it was sold for $53,000. One year ago it was put up for sale and listed on the MLS (Multiple Listing Service) for $109,900 and did not sell. A few months later this adorable home was foreclosed on and introduced, once again, to the market at $95,900.

What we are doing: My companies, Cheap Richmond Houses & Just List ‘Em negotiated with the bank to purchase the house for $66,100 and to close in 45 days. As time went on, we continued to watch a leaky roof do significant damage, in addition to other problems around he house. Therefore, we worked with the bank to renegotiate our contract to include a credit of $5,850 for roof repair bringing the total price of the home down to $60, 250. We did this knowing that we can put around $22,000 in repairs into the home and deliver it to the market completely renovated in about 15 days. 

What is the next step?: Our next step was to determine the financing on the acquisition of the negotiated price of $60,250 to also include the $22,000 in repairs. We have decided to use a private lender’s IRA (Individual Retirement Account). Using real estate as an investment for your IRA is a GREAT way to succeed financially. This private lender was truly sick and tired of losing money in the stock market, therefore he loaned 100% of the cost of acquisition and repairs at an interest rate of 8%. For us, we were able to receive very easy funding, including no bank fees, and no mortgage payments since his interest in accruing until we pay him off. For the investor, he is very happy to finally enjoy a yield on his money. He has not earned anything close to 8% in a very long time, making the decision to loan us the money very easy for him.

The key to all of this is to create and foster a win-win scenario for both the private lender, borrower, and/or investor. We customize the lending solution directly with the private lender to be sure he receives an acceptable return on his investment.  His funding is then secured with a first position deed of trust and promissory note on this house.  We have been able to create a very easy transaction to satisfy the both of our needs on this property.

We are so excited and honored to be working with this particular investor and we are so eager to work on this home and get it ready for sale. 

Please contact us if you would like to work with us as a financial partner and put your money to work at a great yield. We ARE the experts in real estate investing. Let us know what you need and we will be HAPPY to help! Contact me at: Jim [at] Cheaprichmondhouses [dot] com or call me direct at 804-270-7377.

Our next entry on this home will highlight the renovations we are doing! Check back. 

-Jim Ingersoll

Let’s face it: the economy stinks. Sure, everyone is saying it. The media is calling the public “Debbie Downers” and “Nancy Negative” and “Paul the Pessimistics” – but frankly, I feel there’s a whole lot more to the situation than we are considering. So right now, opportunities, encouragement, and support are what everyone really needs.

Real Estate CAN help.

Real Estate CAN help.

REALITY: There are people with too much money who don’t know what to do with it. There are people with not enough money who would do anything to get it. Somewhere among each individual struggle there lies a middle ground. Many bridges can be built between the two, but one bridge and opportunity in particular that lies within our society currently is: real estate. IDEA: Real estate investing can, in the end, help to solve the dilemma for the rich and the not-so-rich.

What does this all mean? Well, with the state of the housing market right now, therein lies the unprecedented opportunity to buy a home. TRUTH: It is a buyer’s market. I would say not only is it a buyer’s market, but also among it lies the greatest transfer of wealth in our generation. “How?” You say.

Well, there are several reasons why/how/because:

  1. The rise of short sales and foreclosures. This has led to an unprecedented amount of distressed inventory in the area markets, which has allowed those who previously could not afford a home, to actually consider making that big purchase. It has opened the door to a great influx of first-time-home-buyers. For real estate investors, foreclosures have allowed investors to purchase homes at astonishingly low rates, fix each one up, and then re-list them at a very reasonable price, making the sale a win-win for both buyer AND seller.
  2. The $8,000 tax credit for first-time-home-buyers. This was included in the stimulus package that was passed in February 2009. This tax credit is essentially “FREE MONEY” to ALL first-time-home-buyers. It doesn’t have to be repaid AND it won’t be taxed. WOW. That big chunk of change is extremely motivating and encouraging for those on the fence about buying that first home.
  3. Astonishingly low mortgage rates. Mortgage rates across the country are dropping because banks and mortgage companies want to make sales. This benefits buyers because they are saving a lot of money and it benefits sellers because buyers are snatching up homes faster than ever.

No one wants to sell their home more than the seller themselves. No one wants to buy a home more than the buyer themselves. It’s about connecting the two, bridging the gap, and ultimately, transferring the wealth between individuals. We all know that the market is like a roller-coaster, constantly experiencing it’s ups and downs. It’s important to get involved and participate while the opportunity is there and thriving. 

-Jim Ingersoll

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This blog post is courtesy of Just List ‘Em: a Flat Fee MLS real estate company geared towards helping YOU sell YOUR home.
We love them. You should too.

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After reading a great article by real estate guru, Mike Andrews on Real Estate Marketing in an Online World, I felt compelled to write and share some of my thoughts on a related topic. Whether or not a real estate company, or any company for that matter, is working on marketing, buying, selling, or just listing (pretty close to JUSTLISTEM, am I right?), social media has become a viable venue for building and expanding a business. However, when a business is just starting, or if a business is new to the interactive world, it can be overwhelming to decide how to successfully hit and tackle the right social media outlets–there are SO many.

So, here are a few questions and concerns I want to briefly consider and address:

1. What exactly is social media and why is it so important for business, more specifically real estate?

  • Social media, in essence, is the new, hip, and ONLINE version of what face-to-face mixers and organized networking events used to be. (Not to say that those things aren’t valid anymore, because frankly, nothing beats meeting, connecting, and relating to someone face-to-face).
  • For real estate etc., social media creates an interactive, responsive, and engaged audience 24 hours a day, 7 days a week. Can you honestly say you get that with a print, radio, or television ad presence? 
  • Real estate can be a tough venue, for anyone, particularly in this economy. When someone is buying or selling a house, stress levels are UP, way up. Social media creates transparency, which ultimately, fosters a more inviting and relatable atmosphere giving potential clients the feeling of working and doing business with a trustworthy resource.

2. Which venues should I tackle first in my social media quest? (Yes, there are a lot of places to start. I say start with the big THREE and work your way from there).

  • TWITTER: The micro-blogging, status updating, networking tool-of-champions. Twitter helps connect you to people all over the world. Any business can benefit from the networking power of Twitter. 
  • FACEBOOK: Quite possibly the largest social networking tool out there. With almost 200 million users, creating a prominent Facebook presence through a group, profile, or fan page sets your real estate business up for far-reaching success. 
  • BLOGGING. It doesn’t matter where [we like wordpress :)], but blogging allows your audience to “hear” your opinion and learn what you know. You are the expert in some area and there are people who want to learn more about that particular topic… therefore, share your expertise, and you are ultimately bound to create a sense of legitimacy among your audience. 
  • **BiggerPockets.com: This is a great social networking tool for real estate companies. Use it. Share tips. Be awesome.

3. What should I or my business keep in mind when creating an online/social media presence?

  • Be honest. Now that your real estate business has an online presence, which is somewhat detached from the general public, the general public is and will be savvy to everything you say. 
  • Be present. Don’t set these outlets up, post once or twice, and then ditch out on them. You will only be successful if your community is always active. 
  • Be engaged. Don’t talk AT people all the time. These are called communities for a reason, pose questions, answer questions, share links, respond to hot topics, etc. By becoming active among the communities you participate in, you allow your audience to grow and continue to be responsive. Be a participant, not a lecturer. 

So what is the overall lesson here? Don’t just use these tools to use them. Becoming a part of the social media spectrum takes time and commitment. Commit to these things like you would any other part of your business. You wouldn’t set up a time to meet with a potential client and not show up… you would follow through. Treat all of these avenues as a client meeting and FOLLOW THROUGH with each one. You wouldn’t buy a bunch of tools and not build the house. (I like metaphors). We are in the process of practicing exactly what we preach. We recently joined the social media spectrum and we are finding it to be extremely beneficial. In a tough economy, fostering a positive community is key to running a successful business.

Share your thoughts with us!

Jim Ingersoll

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