So how do you find the best foreclosures. Its not easy as the business is very competitive, especially in this current crazy real estate boom.
Firstly you must be methodical as well as diverse. Deals are all over the place. It is recommended you specialize in an area that you are familar with.
Secondly how do you find inventory?. There are many companies that offer foreclosure lists. You will find them on the web or through a title company. Be careful to locate fresh leads. In other words you need fresh daily leads on Defaulted and Trustee sale properties. If you purchase information that is outdated you may not succeed as the property may sell, be re-instated or refinanced prior to your endeavors to contact the current owner.
Thirdly, defaults, these are loan defaulted properties. The owners of the properties have not paid in 3 months and have been notified that their property could be sold at public auction if they do not re-instate their loan. You are endeavoring to purchase the property prior to Trustee sale. Once you have located a property, made contact with the owner you now need to contact your escrow and/or title company for comparable sales and vesting information. It is important that not only you know what the property is worth BUT more importantly you are going to speak with the OWNER.Vesting will tell you this vital info. After you have satisfied yourself that a possible purchase exists you may request a prelimanry title report that will give you all the information on outstanding loans , liens ,judgements and court actions against the property
Fourthly. How to make contact with the owner. This can be done via mailers, phone calls and the most important,DOOR KNOCK.
Meeting the owner is the beginning of the ‘close’. This is where they will begin to trust you. NO TRUST NO DEAL. Your offer must be a combination of price, accommodation,(helping to move them on), empathy, immediate assistance to support their dire needs. You will see the true picture by the DOOR KNOCK’.
Fifth. The DEAL. So you have come this far WOW, You have made entry into the house, inspected and the seller likes you and wants to do business, the deal is fair, the docs are ready to sign. You have previously contacted your escrow/title company and/or attorney and they have guaranteed that you have all the right docs ready to be notarized. RIGHT! CONGRATULATIONS your in the real estate foreclosure business.
A final tip, make sure the seller /client MOVES OUT,
the old saying ‘POSSESSION IS 9/10ths of the law’ still holds. Have the escorw company hold funds until the property is vacant.
When the movers truck is full, house empty, seller off the property and you have the keys. Release the funds. NOW YOU REALLY OWN THE HOUSE.
Sixth.Trustee Sale properties. If the owner has not re-instated the property prior to the trustee sale date (5 days prior to sale in California) then the property will sell at the nominated court house steps on the date and time posted by the trustee. If you are successful in being the highest bidder you will receive a Grant Deed to the property. This is a popular hassle free way to buy foreclosures as you do not have to deal with the owners and possible associated problems. But of course if ITS EASIER THEN EVERYONE WILL BE AT THE TRUSTEE SALE.
Good luck
For further Info and advise go to; http://www.homeowneresaa.org.614
Peter M Smyth ,a licensed Californian Real Estate and Mortgage Broker. Peter has been involved in the real estate, mortgage lending and distressed property sale business for over 20 years.
He has successfully purchased & sold propeties on four continents. Australia, Asia, Europe and North America
email bigboythai@hotmail.com for advise and business opportunity.
Understand the tax consequences of flipping houses, rehabbing houses, and how to defer taxes with the 1031 Exchange before you get into real estate investing. Problems arise when real estate investors don’t follow federal and state tax laws. This is why you need professional advice. Although I am not a tax advisor, here are some common mistakes beginning real estate investors make by not understanding tax liabilities:
Flipping Houses
The reason flipping houses is a mistake for some beginners is that they don’t know the income tax consequences. One problem with flipping houses, or selling too many properties too quickly, the IRS could say that your real estate business is your trade, subject to ordinary income and self-employment taxes.
Self-employment tax, a social security and Medicare tax primarily for individuals who work for themselves, is similar to the social security and Medicare taxes withheld from the paycheck of most employees. The self-employment tax rate costs you 15.3% of your profits. (However, this may provide retirement benefits.)
Rehabbing Houses
Another common mistake that beginning investors make is selling a property after holding it for almost a year. Some rehabbers work part time on a fixer and take six months to get the house ready. Add on two months to sell with a 60 day closing, and they’re up to ten months. To take advantage of the low 15% capital-gains tax rate, you must keep the investment property for at least a year before selling. If you sell before a year, your tax rate, the usual capital gains rate of 35%, could eat up a significant amount of your profits.
If you’re rehabbing houses, be patient. You could save thousands in taxes by holding your property just a few more weeks.
1031 Exchange
However, the Internal Revenue Code provides real estate investors away to defer capital gains taxes indefinitely. Section 1031 of the Internal Revenue Code provides a tax-free exchange. Also known as a “like-kind” exchange, this code allows you to sell a business or investment property and defer capital-gains taxes by immediately reinvesting the gains into a similar piece of property. The key, replacing a business or investment with similar property, means that no gain gets paid to the investor. Any profit taken out of escrow gets taxed. This means that beginning investors might take out a portion of the profit after they carefully explore their tax liabilities. In other words, talk to an accountant and find out what your tax would be according to your current usual income. Many business owners take advantage of this because they have many business deductions.
The big mistake beginning real estate investors make doing a 1031 tax-free exchange, taking possession of the profits, voids the tax deferment. You must declare the sale of your property to be a part of a 1031 exchange before you sell the property. Then you have the money placed in a trust account held by an intermediary until you purchase the new investment property. You have 45 days to identify a replacement property and 180 days to close on the new investment. You can’t purchase a primary residence or a vacation home with funds from an investment property and defer taxes in a 1031 exchange.
The best advice for beginning real estate investors:
Talk to an accountant.
Would you be better off making extra money, even if you must pay taxes?
Purchase Agreements - Buyer/Seller
The following information in the document is geared to those who are purchasing or selling - renting or leasing existing structures. When it comes to purchasing or selling land, buildings etc. which can be built upon or added to, obviously there is a great deal more information which is required.
The “all-important” budget
I honestly wish I had a dollar for every time I had to go over this with a client. It often amazes me just how little we do not take into account.
So you are getting married and your parents and future in-law’s decide to get together and purchase an apartment for you and your spouse. Great! Congratulations! Mazal Tov! They tell you your budget is $250,000 - and not one penny more. And even that is pushing the limit.
So with a big smile and a heavy pocket you call an agent and tell them your budget is $250,000. Guess what? That is NOT your budget. That is how much money you have to spend on the purchase of an apartment. That is NOT how much you can buy the property for. Why? Because you conveniently left out,
lawyer fees, agent fees, and any other miscellaneous fees that you have not taken into account. That is assuming that for $250,000 you will find the exact apartment you want in the neighborhood you want all painted and ready for you to move into it! What about changes or improvements? And if you are buying on paper what of escalating and hidden costs? What happens if it is not ready on time?
Each case is different. When you are asked what your budget is,
you MUST become aware of the other “incidentals”. If the $250K is all you have, then your budget should be realistically below that amount depending on the property you wish to purchase.
Rule of thumb: If you think that the “incidentals” will cost $15,000 make that amount $18,000. Always round UP, never down. If you follow that simple rule you will at worst never be sent into a tizzy by some cost not figured in and at best find yourself with some extra cash in your bank account to do some desired change to a bedroom or buy some new furniture.
Tabu & Arnona
The Israel Land Registry registers all land and property in the name of the owner. This is something that the lawyer takes care of and is an integral and critical part of the process of owning a property. When you purchase a property the final step is usually registering that property in your name. Without such registration, legally, the property does not belong to you. (Tabu is a term and institution which was first imposed during the 19th Century by the Ottoman empire which ruled Israel at the time. It was the first attempt in modern times to register all land owners in Israel. This system still exists today. Simply put, Tabu grants the individual the right to own land (including apartments.)
However, there are cases that the Tabu is impossible. Certain properties in Jerusalem are owned by the Church, and leased to the government for ninety-nine years. Thus, Tabu is often impossible in these properties and there is a legal mechanism that protects you as the owner. However, you should be aware if the property you wish to purchase is one that is “church-owned and then leased land”.
There are other instances, each specialized, where registration in Tabu may be delayed for months. These are things which must be discussed with your lawyer and only your lawyer can offer you proper advice in this matter.
The one important thing of the Tabu, is that it lists the size of the property. This is crucial! The amount of meters listed in the Tabu is the legal size of the property you are purchasing or selling. (Below you will learn just how important this is.)
Arnona is the “city tax”. The important thing again about this document is that it too lists the exact meters of the property with some caveats. It does not include any open areas, such as porches and gardens. In Israel, we pay city tax, or the Arnona, only on an enclosed area. (There are other computations made in regard to storage rooms etc.) This is for the agent to show and explain to you depending upon the property.
Many people walk into view an apartment and ask the owner how big it is. The owner says 110 meters. But in Tabu or Arnona (see below) the apartment is listed as 86 meters. Okay, perhaps the missing meters can be found on open porches or in the garden. And perhaps, just perhaps, the owner has exaggerated or never really knew just how big the property was.
It should be noted that there is usually a discrepancy of a few meters between Tabu and Arnona. This is to be expected. However anything over ten meters should require an explanation that makes sense. Again this is also up to the lawyer to make sure that what you are purchasing is what you have seen.
Be careful. Be prepared. Be informed.
Ted W. Gross owns Virgin Earth, a real estate brokerage firm in Jerusalem, Israel. Virgin Earth represents residential and commercial real estate all over Israel. The web site for Virgin Earth is: http://www.virginisrael.com. Virgin Earth also maintains an RSS Feed on its current properties which can be found on most pages in the web site of Virgin Earth. Ted Gross can be reached at: virginearth@gmail.com Ted Gross is also a published author and maintains a web site for his works. This can be found at: http://www.virginisrael.com/twg/iw.html
Higher taxes on top of a high LTV can destroy your cash flow.
Over the past couple of years, I have been concerned that rising property tax rates will eventually threaten the livelihood of rental property owners.
As if to partially confirm this, I have recently been contacted by two different investors who are victims of property tax hikes that took them from a positive to a negative cash flow.
In both cases we are talking about a doubling of the property tax bill in one single year.
I personally experienced a near tripling of taxes on a rental property. My per month cost for taxes went from an initial estimate of $54.17 at the time of purchase to $125 per month the following year.
The fact is no single entity on the face of the earth can affect your real estate investments the way that government can. Governments can add a significant cost of doing business via rising tax rates.
It can change the rules in the middle of the game, force you to pay up or else, and only government, (especially local government), has the power to affect every single property owner in a given city, or county. Even bankruptcy won’t rescue you from the clutches of the tax man.
The general rule of thumb for residential property investing is that you should never exceed 80% financing on your income property. You should plan for higher taxes and keep your LTV at a reasonable level. While there are 90% and even 95% loans out there for investors, it can be dangerous to take out such loans as the risk of negative cash flow is much higher.
Most investors and even home owners, should be very cautious about refinancing residential properties to pull additional cash out. A higher loan amount, combined with a large tax assessment could put you in the red overnight.
If your strategy is to buy and hold, be very cautious about exceeding an 80% Loan To Value. Over-financing can cost you a whole years profits to compensate for a two month vacancy.
If your rent rates have to be artificially high in order to cover loan payments and taxes, you may not be able to find a suitable tenant. Few investors can handle the financial strain of vacancies and negative cash flow for long periods of time.
The issues facing our cities and counties in the 21st century are complex and appear to be beyond the knowledge and expertise of most local politicians. We must find new ways to manage the costs of government services in order to insure a supply of affordable housing in the years to come. Increasing property taxes has traditionally been a local governments answer to every budgeting need. If this continues, it could put investors in many cities out of business, and ruin the small investor’s ability to provide affordable housing.
For now, keeping lots of equity in your properties is the only real way you have to protect yourself from negative cash flow caused by rising property taxes. While it is exciting to think about taking tens of thousands of dollars out of your properties to use for “tax free income”, smart investors are very conservative here, and prefer to keep lots of equity for a rainy day.
Donna Robinson is a real estate investor, author, and consultant located in Atlanta Georgia. You may read more of her articles on her website at http://www.RealEstateInvestorHelp.com or you may contact her by email at drobinson@reihelp.com or call 404 542-9903.
The Telephone Excise Tax Refund (TETR) is a one-time payment available on your 2006 federal income tax return. It is designed to refund previously collected long distance telephone taxes. Individuals, businesses and tax-exempt organizations are eligible to request it. Over 159 million filers are eligible to request the refund.
Individuals taxpayers have a choice, they can take the standard refund amount between $30 to $60 (based upon their exemptions on their 2006 return OR they can locate old bills and use the actual amount.
Even if you don’t have to file a return, you can still request the refund. Details can be found at the IRS web site.
If you are filing a Schedule C, E, or F you may be eligible to use a special formula that reads like this: The refund is capped at 2 percent of the total telephone expenses for businesses and tax-exempt organizations with 250 or fewer employees (this covers over 99 percent of all businesses in America). The refund is capped at 1 percent for those with more than 250 employees.
IRS provided this example of computing the Telephone Excise Tax Refund (TETR): If a business has an April 2006 telephone bill of $1,000, which includes federal telephone excise tax of $28, the tax percentage is 2.8 percent. If the September 2006 bill is $1,100 including federal telephone excise tax of $16.50, the tax percentage is 1.5 percent. The business’ long-distance excise tax percentage is 1.3 percent (2.8 percent for April minus 1.5 percent for September). The business multiplies 1.3 percent by its total phone expenses over the 41-month period to arrive at the amount of its refund. If this business had more than 250 employees, its refund would be limited to 1 percent of its total phone expenses for the period. If the business had 250 or fewer employees, the 2-percent cap would apply and would not limit the amount of the refund
This refund is the most wide-reaching in IRS history. For sure tax software companies are gearing up to include this refund in the 2006 software programs. For those choosing the standard method to compute this refund, there will be an additional line right on your 2006 tax return for the refund
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Cassandra Ingraham is a Tax Accountant and Instructor for Basic Tax Classes in the San Francisco Bay Area. During the balance of the year she can be found at http://www.taxeswilltravel.com providing Formal Introductions to Lenders for Accounts Receivable Funding (Factoring) and Purchase Order Funding. Individuals with Tax issues can find dozens of self-help tax articles at: http://taxeswilltravel.com/article_index.htm |
How do some people seem to always pay less tax or get a bigger tax refund than anyone else, while you try everything possible, just to break even? What if you could find a way to get 20%, 30% or even 50% more money on your tax refund, how much money would that be? Hundreds, maybe even thousands of dollars.
If you could learn just one thing that would help you to get more money back at tax time, this is it. Learn how to use more Federal tax deductions and tax credits when you prepare your taxes. When you learn how to find and use the over 350 tax deductions and credits that are available to every taxpayer, you get more money back at tax refund time.
Here are just a few of the over 350 free tax deductions and credits available to you:
- Home mortgage interest, real estate taxes, property taxes
- Earned income credit, child tax credit, child care credit
- Energy tax credits
- State and local income taxes
- Charitable contributions
- Home office deduction
- Medical and dental expenses
You could spend a bundle paying a tax accountant to find every tax deduction and credit, but you no longer have to. I’ll show you how you can use tax deductions and credits to give you a triple digit increase in your income tax refund.
Just one tax credit can get you an extra $500
You’ve practiced energy conservation and purchased energy efficient windows and insulation for your house. You can transform this into an (energy tax credit) on your income tax. This is a true tax credit not just a deduction, in other words you can slice up to $500 off of your tax bill or add it to your refund. You can take the energy tax credit on:
- Home improvements: windows, high efficiency heating and cooling devices, metal roofs, heat pumps and boilers
- Efficient cars: gas and electric, diesel, alternative fuel and fuel cells
- Solar energy: solar heaters, photovoltaic systems and fuel cells
Luckily for all of us, there are now free tools on the Internet, to help find more income tax deductions and credits than ever before. This year when tax time rolls around, try searching for those overlooked tax deductions, and make your tax refund bigger than ever!
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You can go to Turbo Tax Online Tip! Whichever you decide, taking the time to look at your taxes both ways can really help to give you a bigger tax refund this year. The computer will do all calculations and the paperwork, so, you have nothing to lose, and everything to gain.
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Property taxes are a major expense, often forgotten when buying a home. They can cost you thousands of dollars per year. But property taxes are not the same for like properties or owners.
Property taxes provide much of the revenue for local and state governments. When property values go up, property tax collections also go up, which means that there are additional dollars for public services and schools — and even tax refunds. If property values decline, the government programs are short and there is pressure to raise your taxes to make up for the deficits.
How much you pay in property taxes depends on the value of your home and local policies. In most cases, the property value is established by the government assessor. Once the value is set the tax rate is applied. For example, if the tax rate is $1.50 for each $100 of value, then a $100,000 home would have an annual tax bill of $1,500 or $125 each month.
You should ask some questions about property taxes when looking to buy a home, including:
-What value is used to assess the property taxes? You might think that the current market value would be used, but that’s not always the case. In many areas, circuit breaker programs limit the amount to which you can be taxed. Another approach is to apply the tax rate on a portion of the assessed value and not the full worth of the property.
-What are the current owners paying in property taxes? Is this consistent with neighboring properties of equal size and condition. If it is different, why?
-How will property taxes affect your ability to get a mortgage? Lenders look at many different measures to qualify you for a mortgage. One of the most important is the percentage of the monthly income in relation to the amount spent each month for mortgage interest, principal, property taxes and insurance, also called your PITI. Lower property tax bills free up more money for other parts of the PITI.
-Has the tax bill been appealed. Values by tax assessors can be questioned if the owners feel that the estimates are too high — for example, if the math was wrong or an incorrect schedule was applied. Local assessment offices can help you with your appeal.
-Are you or the current owners eligible to an exemption?
-Can property taxes be deferred?
-What are the income tax benefits of property tax payments?
- Will the sale trigger a different tax bill than the current one?
-How often are assessments made?
Martin Lukac, represents http://www.RateEmpire.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! Visit http://www.RateEmpire.com today.
How to estimate your Federal income tax refund or return for free
Perhaps you want to know how much your tax refund will be, or maybe how much money you might owe come tax time. If you want to find out, the fastest way to do it is by using an online Federal income tax refund - return estimator.
To estimate your taxes
The best way is to select a website that has a tax estimator and that you know has a great reputation for helping people with their tax returns. Start by creating a user account on that website. Don’t worry, it’s free. Now you can use their tax preparation software to estimate your tax. Depending on your situation, this will take 30 minutes or less.
This may take a few minutes, but I assure you, it will be worth the effort. You will know the value of this as soon you see the tax return calculator do its magic. Once you start to see the way the the tax estimator works, you will begin to come up with ways to use the income tax estimator to your advantage.
This is by far the best way I’ve found for increasing the amount of my Federal income tax refund
Next time you sit down to work on your tax return or refund, try going to an online tax filing website. You’ll find the tax estimating software to be a great tool for increasing your tax refund amount, increasing your tax deductions, and will also increase your knowledge about saving money at tax time.
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You can go to Turbo Tax Online and estimate your tax refund or return for Free. Just create a user account, and your good to go. The only |
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Apartment buildings with more than six units in Cook County are generally designated as Class 3 properties, and they’re assessed at 26% of market value (as estimated by the Cook County Assessor).
But Class 9 properties are assessed at a lower 16% assessment level for a period of ten years. And that’s means significantly lower property taxes for owners of buildings designated Class 9.
For example, an seven-unit worth $300,000 (by the Assessor’s measure) would normally have an annual tax bill of somewhere in the neighborhood of $12,500. Under Class 9, a building with similar value would owe around $7,700 in property taxes
