Opportunities in the New Economic Stimulus Bill

From Diane Kennedy, DKTaxServices.com

This new Economic Stimulus Bill is a doozy! I counted over 50 business opportunities and tax saving strategies that anyone can use in its final version of over 1000 pages.

Join me on Sunday, February 22, 2009 at 11 am Pacific, Noon Mountain, 1 pm Central and 2 pm Eastern for a No Cost! teleseminar, “Opportunities in the New Economic Stimulus Bill“. Please send an email to Teleseminar@DKTaxServices.com to receive call in information.

I’ll go through specific strategies for business owners and investors, where the possible pitfalls are and how this new law will change how you want to file your 2008 tax return.

Remember the teleseminar is No Cost!

Opportunities in the New Economic Stimulus Bill Sunday, February 22, 2009

11 am Pacific, Noon Mountain, 1 pm Central and 2 pm Eastern

Register at Teleseminar@DKTaxServices.com

Warmly,

Diane Kennedy

P.S. Please don’t file your tax return until you learn what this bill could mean for you! Register today.

Some good from the Obama stimulus package

Well, the Obama stimulus package has been signed. Yes there is a ton of pork in there that our kids will have to pay for long after we are gone, but there is some good in it for the real estate market.

In the latest status report from the National Association of Realtors, Charles McMillian, 2009 NAR President, listed some of the achievements that are outlined in the package are:

1) the loan limits will be raised to $727,000 in high cost areas
2) the tax credit will be raised to $8,000 with NO payback [a true credit]
3) interest rates have come down 125-150 basis points
4) the bill has over 50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another 200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.

"In addition mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects)."

The NAR will continue to study the specifics of the stimulus package as it relates to the housing market and I will try to keep you updated here.

I have written about the interest rates, $7500 credit and the foreclosure tidal wave that is crashing down on top of us but now is the time to learn how to surf. Only when we learn to get ontop of the trouble and help others out, will we also begin to profit from the greed and stupidity of the markets that got us into this mess.

Now is the time to buy property if it is at all possible and the deals we make today will be well worth it in the years to come. It is a Buyer's market and if we are careful in our research and preperation in looking for the right properties to buy, our purchases will pay off in the end.

Waiting for the rates to drop? Avoid this costly mistake.

Interest rates have been at historic lows for months. This is because the Fed has been buying Mortgage Backed Securities to fight off inflation and they will continue to do this as needed. The problem with this is that the Fed is buying 5.0% to 5.5% Bonds and the mortgage rates of these outstanding home loans are 6.0% to 6.5%. The loans that the Fed is buying are good loans that are likely to be paid back. Bonds and home loan rates have weakened and lost some ground in recent weeks.

I believe that if you have been sitting on the fence waiting to purchase or refinance, now is the time. Yes, another 1/4 of a point could save you $60/month, but think of it this way. If you refinance or purchase now, the savings that you will have over waiting another month or two could well be worth acting now verses waiting and taking the chance that the rates will indeed start to reverse and go upward, costing more money.

Today, the homeowner with a $220,000 mortgage could buy a larger or newer home with only a slight increase in payment, or refinance and save hundreds of dollars off their current mortgage payment whereas waiting until the summer, thinking the rates could keep falling, could end up costing hundreds of dollars.

Also, another thing to keep in memory is that the credit score needed to qualify for these great rates keeps going up making it harder for some buyers to qualify for a loan to get that bigger house.

Bottom line is NOW is the time to make that decision to buy or refinance that home. If you are selling to move up. think about making your asking price more attractive. Then you can get out sooner and a potential buyer will also be able to get into a house that they believe is a good deal.

Do I need to use a Realtor?

YES! You should always use a Realtor for Buying or Selling real estate for several very important reasons. An experienced Realtor understands the house buying and selling better than anyone else you could find. They will have up-to-date knowledge and values about the area you are looking to purchase houses in.

Another advantage of using an experienced Realtor, which many people overlook, is that you will be able to get access to new properties coming on the market before they are listed. This means you will be able to get a jump on your competition which can mean even greater profits or savings for you when were talking about buying property. A Realtor is able to help you put together the purchase deal and get through escrow, which can be a hassle sometimes. They can advise you on the selling price and when is the best time to market your new property. They know the good home inspectors, mortgage lenders and don't forget about the termite inspection. All these things you cannot put a price on.

A good Realtor is a great intermediary between the buyer and seller with no emotional ties to the property. This is a big plus when negotiating a selling price. They also understand the time line from contract to close and all the little things that need to be taken care of in the correct order.

Everyone knows a Realtor. Take your time and find a good Realtor that you can work with. Your relative may not be your best choice just because they are family. When it comes to selling houses, an experienced Realtor is a priceless commodity that can speed the process up for you and you will value all the input and time they will save you. Ask your friends, relatives, and other people you trust who would be a great fit for what you are doing. You can do it without a Realtor, but going it alone just to save 6% will end up costing you more time and money.

Who wants a $7500 tax credit?

The $7500 Tax Credit for first time home buyers authorized by The Housing and Recovery Act of 2008 will expire on July 1, 2009.

A first time home buyer (as defined by the IRS) is:
Neither spouse can have owned a primary residence in the last 36 months. This can include Homes, Townhouses, Condos, Mobile Homes and House Boats.
Income phaseouts to qualify for the entire amount are $75,000 for single filers and $150,000 for married filing joint. Partial credits are available up to $95,000 for single and $170,000 for married.
The home is purchased between April 9, 2008 and July 1, 2009

The tax credit is just that, a credit against the taxes owed the IRS not to exceed $7500. Basically it's an interest free loan. After the credit is claimed, beginning 2 years later your federal tax refund will be reduced by $500 per year for 15 years.

If you sell the house within the next 15 years, you must pay back the balance owed from the gain on the sale of the home. If the home is sold at a loss, the debt is canceled.

Always count the cost before committing. Check out all of the financing options before locking in on a specific mortgage. In essence, this is an interest free loan that has to be paid back.

You can find out more information by visiting http://www.federalhousingtaxcredit.com/

Owner financing can help buyers get into a home

With the economy in a near disaster, today it is much harder for a home buyer to get a mortgage than it was a couple of years ago. Some home sellers are being creative and offering owner financing to qualified buyers.

Getting a mortgage in the past 12 to 15 years has been relatively easy for most prospective home buyers. Creative financing has not been a subject that most have thought about when obtaining a home. The concept of owner financing isn’t new,But in today’s tough real estate markets, a seller that is able to finance the sale of their home may have an edge over other sellers in their market.

Owner financing is great for buyers who may be having trouble getting a loan because they are self-employed or work on commission and with the credit rating required to get a traditional mortgage continually being raised, there are more and more buyers that are not able to get a mortgage.

Today, more than ever there are buyers who have recently been foreclosed on because they had an adjustable rate mortgage (ARM) on a property that they were not able to make the payments when the fixed period of the loan ended and it started to adjust.

To protect themselves, sellers should ask for a sizable (non-refundable) down payment from a buyer when they do this type of deal-especially if the buyer has a weak credit score. Accepting too small a down payment can be a huge mistake because the buyer has less of a stake in keeping the home.

As with a traditional mortgage where the interest rate is based partly on the buyers credit score, a seller can receive a steady income stream from the mortgage payments by asking a higher interest rate of perhaps 7% or more. The buyer can always repair their credit and refinance the home and get the deed in their name at a later date.

There is a down side to owner financing also. If the seller needs money to purchase another home and there is always the risk of the buyer defaulting on the payments which would cause the seller/mortgagor to have to make additional payments on the property while having to reclaim the property through foreclosure.

It is wise for the seller to hire a real estate attorney to craft the terms of the deal, with details including what constitutes a late payment and default, or what happens if the buyer neglects to adequately insure the property.

Unlike renting a house where the owner/landlord is responsible for everything, the buyer in an owner financing deal is responsible for upkeep and maintenance. A good home warranty is worth it's cost for both the buyer and seller. There are also insurance issues to be addressed before the closing.

In the end, the key objective is for the seller to sell the house and the buyer to be able to purchase the house. A win/win situation.

Are you using Twitter yet?

Twitter, http://twitter.com, is a micro-blogging Social Media Community where you can meet many people who have like interests as you.
The future is not about technology, it's about people. You and I and others meeting on-line, communicating and learning from each other.

I'm on twitter at http://twitter.com/How2Renovate and http://twitter.com/remerlive.

If your not on twitter yet, go join, it's FREE. just go setup a gmail account if you don't have one already, select an easy to type name like "YourName" and start your twitter community. Then come back here and post your twitter name so that we can follow you.

If you are currently a twitter user, please post your twitter name here also.

See you in the twittisphere.

Always Call Before You Dig

Potential Consequences Of Ignoring The "One-Call" System

The guy who did this and anyone else helping him, surely did not survive.

You just never know what you are going to find when you go poking around below the surface.

I thought we could all learn a little about safety from this dramatic event.

Just because you think you are in the "middle of nowhere" does not mean there is not something there.

The pictures below are a result of a guy using a post hole digger without calling for a "locate" ...he hit an underground intra-state cross country natural gas pipe. This is what a high pressure gas main is capable of:

Real Estate Professionals Take Notice

Considering our nation's current economic woes, it's not hard to hear discussions about falling home prices and the glut of un-sold homes...

In fact, you'd almost think that's the ONLY thing happening in the real estate world right now.

But there's another big thing happening in real estate, and you'd do well to pay attention to it.

I'm talking about a rising interest in real estate professionals that specialize in senior concerns.

Demand is growing for RE professionals who understand the unique needs and services needed when our elderly need to downsize, sell their home or re-locate.

In-demand titles such as "Senior Move Manager," Certified Relocation Transition Specialist(CRTS)," 'Certified Senior Advisor (CSA)," and "Seniors Real Estate Specialist," are top priority for more and more companies.

Someone's got to know how to help the elderly figure out how they're going to switch from living in a 2,500 sqft. home (or bigger, depending on how "large" they were living,) down to a 750 sqft. place.

What exactly needs to be done? How? When? What next? All of it.

With a significant portion of our citizens getting older, the need for solutions to issues that arise from this, also swells.

How does this apply to home renovators, REI's and "flippers?"

Well when making your plans and repairs, it can benefit you greatly to understand the new needs/demands, and how this affects how and when you will sell the homes you are repairing/renovating.

Things like widening doorways and other pathways; overall accessibility and "space" issues are now more important than ever.

Plus, since these senior service representatives are also essentially your customer too, it can help you to have this insight.

There's no shrinking market ahead; only a growing one. So it'll be interesting to see where this issues goes....

Posted Aug 26,2008 by Alicia to the Members Forum at www.howtorenovatehouses.com

Emotional Buying

If you are going to be in the business of renovating houses or flipping houses, you must determine that you are not going to become emotional over these properties. For most people, their home is their single biggest purchase in their lives. For real estate investors, it is just another vehicle for creating revenue.

I saw something recently about a young couple buying their first home. They were completely attached even BEFORE the closing. So when the appraisal came back a little low (they had offered above the asking price in order to beat out another buyer), they paid $1,000 above the appraisal plus their own closing costs of about $4,500. This means that they started their newly married lives in a home in which they owed $7,000 more than the appraisal.

The first thing that the wife did was to buy a hot tub for the back patio for a wedding present for her new husband. These were young professionals who could afford this house. It was about $160,000 plus the hot tub. The point is not whether they could afford it - the point is that they now are "upside down" with their biggest investment in their lives.

When the husband brought up the question of children and the school district this house was in (they didn't even know because they were totally new to this city), the wife just blew him off and said, "We have enough to worry about right now with the dogs." She WANTED this house so badly that she could taste it.

That disregard for common sense is a great thing to have in a buyer if you are the seller, but it is a very, very bad position for you to be in as a real estate investor. Homes are a commodity, not an emotional purchase. You need to look at a home's resale value -- not its cute breakfast nook.

Analyze the pros and cons of a property based on facts. Know without a doubt what houses are worth per square foot in the area that you are going to be investing. Don't speculate how much your renovations are going to cost. KNOW this from past experience or a detailed trip to the lumberyard. Also know what the expected carrying costs are going to be. How many days are homes on the market on average in this area? What are your mortgage payments, utilities, etc. going to be? An informed investor is a wise investor.

From www.HowToRenovateHouses.com
Article by Jodi Faulkner