Matt Larson Livecast Tuesday July 29th 2014

September 1, 2014


Real Estate Investing Weekly Wisdom #299 - What do you really want? EZ Success secret #4

This week Dean shares a success secret shared to him by his good friend and incredible Entrepreneur Joe Polish.. You can’t miss this one..

 

Need to Sell but Can’t? Turn Your Home Into an Investment Property

The real estate and mortgage crash did a lot more than just throw millions of homeowners into foreclosure or bankruptcy. It also threw many into underwater positions in their mortgages. They owe more than their homes are worth. Even if they’re not in a negative hole, many are not sitting on enough equity to sell without bringing cash to closing. The closing costs and real estate commissions can be as much as 7 percent of the selling price.

Articles have surfaced recently about “reluctant landlords.” These are homeowners who need to move for a job or other reasons and they aren’t able to sell their homes. They end up renting out the home with the goal of selling it as soon as they build enough equity to get out from under the mortgage. Some are lucky enough to rent for more than their mortgage payment, but many are taking on negative cash flow. Their mortgage payment is higher than the rent, and they’re paying to rent or buy another home when they move. This doesn’t have to be the case for many, because thinking of the situation as a business opportunity could bring better financial results.

If you’re in a need-to-move situation and can’t sell your home, you may be in better shape than you think. Throw off the negative thoughts and the “sell when I can” attitude and think like an investor. A few investor tools and tips can help you to rent out your home with better cash flow and some nice tax breaks as well.

Don’t think like a victim if you need to move and can’t sell your home. Think like an investor and business person and do your due diligence. You just may have been forced into a really great business decision!


Dean Graziosi

Statistics Do Not Buy Houses — People Do

BMO Harris Bank has released the results of a survey indicating that 59 percent of homeowners expect their home value to rise over the next year.

Results of this survey could be telling us that there is pent-up demand for homes. Other survey points and some possible conclusions:

59 percent say their home values have risen over the last year.

This is good news if it holds up. Over the last year inventories have dropped, and continuing buying by investors is reported to be the major influencer of prices in the under $ 300k range. Most studies show nationwide that investors have purchased 30 percent or more of homes. In higher price ranges there has also been price appreciation with competition for shrinking inventory. As rising values bring more homeowners out of underwater territory, will there be an increase in listing inventory, and will demand keep pace? If not, we could be in for a period of seesaw price movement.

29 percent indicated they had to delay or end their home buying plans due to market activity.

The reasons for ending their plans isn’t stated, but it’s logical to conclude that they have been priced out of the market by recent price movement, low inventory, and competitive buying pressure. This group may be back if the economy and their financial positions strengthen, but if prices continue to rise, they may not gain enough ground to re-enter the market.

29 percent say they have sped up their timeline for buying due to current market activity.

This goes along with another survey response: 59 percent expect interest rates to go up, with 42 percent expecting a small increase and the other 17 percent expecting a large increase. Most of these are people able to afford a home and qualify for a mortgage. However, you can’t buy something not for sale. Inventories need to approach more normal levels, or this group may become frustrated non-buyers, or they may add to the bidding competition for available homes.

41 percent aren’t being influenced by current market activity.

This group says that current market activity hasn’t affected their home buying timeline. I see this group made up largely of “wait and see” buyers. They would like to buy a home, but the housing and mortgage crash makes them cautious, and with interest rates still low, they feel that there is time to be cautious. They’re also waiting to see if the economy improves and if they may see increased income to afford a better home.

Last year 21 percent experienced a loss in home value, but only 9 percent believe this will be repeated in the next year.

Optimism seems to be surfacing that the housing market has turned the corner, as the majority of homeowners who moved further into underwater territory last year do not expect that trend to continue in the coming year. For some balance though, 7 percent of those surveyed have given up on buying a home anytime soon due to current market activity. The good news is that 7 percent is very much a minority group.

So, what’s coming in the near term future?

Overall these survey responses seem to indicate a growing optimism about the housing market and home prices. From the BMO release: “Housing affordability remains historically very attractive, despite rising home prices and borrowing costs coming off their lows. As a result, there continues to be decent demand for homes, assisted from firming household formation.”

That last phrase is really important. Is household formation improving significantly? Even if it is, are these new households near term buyers, or will they add to the increasing demand for rental homes and higher rents? We investors are watching the market closely. Rental investors win either way. If rental demand stays strong, rental return on investment will as well. If the tide turns and buyers flood the market, it could be time to take profits and sell rental homes. Using the 1031 Exchange to defer capital gains and roll into higher priced rental properties could work well.

Survey results cited in this report are from a Pollara survey commissioned by BMO Harris Bank using interviews with an online sample of 2,500 Americans conducted between April 1st and 7th, 2014. The margin of error for a probability sample of 2,500 is ± 1.96%, and 250 is ± 6.2% 19 times out of 20.


Dean Graziosi

How Flipping Real Estate Effects Your Taxes

August 12, 2014

taxes
Flipping houses has become a popular way of making money in real estate. The chances to buy a home at a lower price, then fix it up and sell at a higher one may sound exciting, but are you aware of the tax implications? Dean Graziosi has provided some useful information about this below.

Flipping is a viable source of income as long as you live or buy in a region where prices haven’t significantly decreased. It’s important to understand both the advantages and pitfalls before entering into such a venture.

If you plan to flip houses, you will need to consider two factors. One is the amount of money you have to put into actually buying the house. The other is how much you have to then turn around and fix it up. If you are able to do the work yourself, this cost will be significantly less, but if you aren’t able to or if you simply don’t have the time, you’ll need to factor in the cost of hiring someone else to do it instead.

Taxes for properties you flip can get a bit confusing. Many people operate under the idea that it is possible to get a tax break when selling a property. This is true if the property is your own personal residence and you’ve lived there for quite some time, but this is not the case for properties you plan to buy and flip. Since the residence you are purchasing to flip is an investment as opposed to an actual dwelling in which you will live, the tax considerations will be much more costly and differ significantly.

As an article posted on bankrate.com points out, high expectations bring higher taxes. Sure you can buy and flip for a profit, but once the taxes are figured into it all, that profit you make can actually be reduced.  A slower investment pace on the other hand, could net you a better tax situation.

Before beginning your new real estate career flipping properties, learn about all the tax implications. Knowing how to flip is crucial to coming out ahead in the end. Sure you might make a profit off the top, but you might just wind up paying a lot of taxes which will net you significantly less money in the end. What looks like more money can really wind up being less at the end of the year when it comes time to file your income taxes. You want to grow your business slowly, and your profit is no different. It will increase over time if you slow down your buying and flipping process just a little, and you’ll wind up seeing a true profit at the end of the year. Visit Dean Graziosi’s website for more real estate topics and information.

Is Crowdfunding a Good Idea

August 5, 2014

agreementOne of the latest real estate trends for investors is crowdfunding. This unique approach to investing in property has both benefits and risks, and should be entered into after careful consideration. Dean Graziosi has provided the following information to help you decide if it is right for you.

Crowdfunding presents a new way of raising capital. The concept is an interesting one that breaks the mold for traditional funding. In the past, entrepreneurs would secure funding by seeking banks or other professional institutional investors for obtaining capital needed to see an idea through to the end. Crowdfunding allows entrepreneurs to raise the money they need via a group of smaller investors. This is accomplished through an online environment that is both secure and automated.

How It Works

Investors who wish to put money into a lucrative real estate opportunity will need to think outside the box. Here, those outside the traditional investor groups can join in on the process of raising money. That way the capital won’t all come from one place and the investor will be able to gather resources and take advantage of the opportunity much more quickly and easily. Those who choose to invest in the idea will be taking part in a lower risk option. Because several investors will be taking part in raising money, smaller monetary amounts are needed by each. Investors who see a great opportunity can become involved and help the real estate investor become an entrepreneur.

What Does This Mean for The Real Estate Investor

Yes, real estate is a great money-making endeavor, but it can be difficult to get started because it takes a lot of money. Crowdfunding enables the real estate investor to purchase and develop properties, then turn them into desired properties. This enables the investor’s real estate business to grow. According to an article posted in Forbes, crowdfunding is a better alternative to securing investment capital the traditional way.

Benefits of Crowdfunding

Crowdfunding can improve the likelihood of raising the needed capital for a real estate investment. It can help the investor get started when raising the necessary money to do so would be otherwise impossible. Crowdfunding also allows other people to get in on the action by helping out in a worthwhile business.

Disadvantages of Crowdfunding

Raising money online or through a connected network of sorts can present a few issues. This platform can make it difficult to find people in a specific area who are willing to invest. There is also the trust issue that comes along with making online decisions.

Crowdfunding presents some interesting opportunities for the real estate investor, but it should be entered into only after careful consideration. Visit Dean Graziosi’s website to learn more about this and related topics.

How To Protect Your Home While It’s On the Market

July 30, 2014

homeYou’ve finally decided that you’re ready to list your home.  You’ve cleaned, trimmed your trees and hedges, planted new flowers, updated the paint where needed and you’re ready to get busy showing your home.  The one thing that the majority of homeowners share is the fear of leaving behind all of their prized possessions when they have a showing or open house.

Dean Graziosi states that homes listed for sale can be targeted by thieves, lawsuits that someone filed as a result of an injury sustained during an open house or showing and more.  To help you feel more at ease when it comes time to show your home, I have listed some ways in which you can protect your home while it’s on the market.

If you do not plan on coming straight home after you have had a showing or an open house, you may want to ask one of your neighbors to stop by your home and make sure that all of the doors have been locked.  This will help protect your home from any unwanted visitors who may be aware that you are currently not home.  While a home is listed, neighbors become used to the fact that strangers are coming and going from your home, sharing with them when you are expecting a showing or when you will be away for a long period of time may help them be more aware of anything unusual.

The next way that you can protect your home while it’s on the market is to keep all of your expensive items out of sight.  If you have any high-priced collectibles, jewelry, or other expensive items Dean Graziosi recommends placing them in a safe or lockbox you may have in your home.  If you do not have a safe place to store these items in your home, you may want to consider renting a safety deposit box until you sell your home.  You should also be careful about the paperwork that you leave lying around your home during this time.  You should ensure that anything with your social security number or any other account information is filed away or shredded.

During the time that you have your home listed, someone may get hurt while visiting your property.  This is not something that every homeowner considers prior to listing their home, but accidents do happen.  In the case that someone is injured while on your property, they may hold you liable and decide to sue.

To help keep lawsuits at bay, you should ensure that any loose or uneven flooring has been properly repaired.  If you have your home listed during winter months, you need to remove all ice and snow from your steps and sidewalks.  If you have rugs on your floors, you may want to secure them with tape or non-slip padding.  You may also want to simply remove them entirely for the time being.  Make sure that all of your stairways and hallways are clear of clutter and make sure that your home is properly lit during any showings.

Is Architecture Important

July 22, 2014

ArchitectureAnyone who has ever searched for a home knows exactly how important the architecture of a home can be.  If you do not think ahead consider your current and future needs, you may end up buying a home that is either way too small or has rooms that tend to go unused.  Dean Graziosi recommends that homebuyers seriously consider all of their current space needs and how they may change in the future.  This will help ensure that the home you purchase will be sufficient for your current needs and possibly even your future needs as well.

Experts recommend that you consider how much space you will need for storage.  While many people believe that the more space you have available, the more stuff you will end up purchasing to fill that space, it doesn’t necessarily have to be that way.  The first area that you should focus on is the garage.  If you plan on parking more than one car in there you will then need to decide on an additional place to store your lawnmower and other yard tools that typically end up in the garage.  You should also consider your holiday decorations and patio furniture as well, when it comes to sufficient storage space.

On the interior of the home, you should consider areas where you will store all of your interior cleaning items.  Having space to store bulky vacuum cleaners, carpet shampooers, and other larger household items, can be extremely important to many homebuyers.  Dean Graziosi recommends that you find space for these items close to the rooms in which they will be used most often.  This will cut down on the amount hauling and carrying of these heavy items and make them easier to use.

If you are moving into a newly built home, one of the areas that you should definitely pay close attention to is the efficiency of the home.  This is one of the most common areas where homebuyers try to save money, but it may actually end up costing them money in the long run.  If you opt for a less expensive window or choose to use less insulation, you may end up paying more in energy bills later.  It is recommended that you choose the most energy efficient options as possible to help reduce your energy bills and reduce the amount of repairs you may have to make later.

One of the most common architecture related mistakes that homebuyers tend to make is planning for the now, rather than the later.  If you’re having a home built, you should take into consideration everything that you would like to have later and figure those items into the design now.  Waiting to add these options after your home is constructed may end up costing you more than it would now.  Carefully consider everything you would like to have in your home and add those options now.  You’ll be happy you did later down the line.

The Good and Bad of HOA’s

July 17, 2014

HOA good vs. badAre you interested in purchasing a home that has an HOA or have you recently purchased a home and are not sure of what exactly an HOA is responsible for?  In either case, I have some helpful information that will ensure you understand what an HOA is and how they can be both good and bad for homeowners.  According to Dean Graziosi, HOA’s were designed to help maintain the home values in the neighborhood by ensuring that homeowners take proper care of their homes, while also following the rules put in place by the HOA.

Homeowners are required to pay a monthly fee to their HOA.  In many cases, when homeowners are experiencing financial problems, this is often the first bill that they put aside.  When this happens, the HOA has the ability to place a lien on your home until the outstanding fees are paid in full.  So, if you are considering purchasing a home that is in an area overseen by an HOA, you should take this into consideration.  Below you will also find a list of some of the pros and cons associated with HOA’s.

Good


Bad

 

Mr. Graziosi states, that in some cases when the HOA is known for causing issues for residents, sales are often lost.  In some cases, HOA’s have also been known to file lawsuits against builders, which make the entire project unappealing to potential buyers who do not want to deal with the additional headache.  If you are considering purchasing a home in a neighborhood with an HOA, you should seriously consider everything that is involved.

Before you purchase a home in one of these neighborhoods, it is highly recommended that you ask for a copy of the HOA rules and carefully go over them.  You may find that there are restrictions you may not be comfortable with.  The better that you understand the good and bad of living in an HOA controlled neighborhood; the more prepared you will be to make an educated decision on your home purchase.

Tips for Choosing Siding for Your Home

July 8, 2014

siding Siding provides protection for your home and can help enhance the look of its exterior. There are many different types, all of which come at different costs. Dean Graziosi has provided information about some of the most common types to help you when making a decision.

Vinyl siding is one of the most popular types. It’s great for those who are on a budget. Best of all, it’s easy to maintain. It doesn’t rot, can’t be destroyed by termites, and is much less expensive than other choices. Vinyl siding is available in a variety of colors and installation is simple.

Fiber cement siding is another option. This type falls into the mid-range of pricing and is stronger than vinyl siding. It’s made up of a mixture of sand, cement, and cellulose. It is possible to imprint it with various designs and paint it in many different colors. It is also available in a wide variety of shingle sizes, thus allowing you to create a unique look. It’s more costly than vinyl siding, but is a great choice when compared with other types.

Higher end siding materials are available for significantly more money. These materials range widely from brick to stone and different choices in between. These are more permanent types and are typically more durable. It also lends itself to a very solid appearance.

Deciding to add siding to your home will provide several advantages for you as both a homeowner and potential seller in the future. First, it will help keep unwanted cold air out during the winter and hot air out during the summer. Likewise, it will keep the desired air in during the appropriate seasons. This will save on your energy bills and help protect your home while making it look great.

If you want to save even more money, you may choose to install your own siding. As an article posted on frontdoor.com advises, however, take caution when doing this. If you don’t know just how it is to be installed, you will wind up with a job done incorrectly.

Installing siding on your home may also raise its value. Potential home buyers look for energy conservation features, and siding is considered to be among the most important. You will be able to enjoy the benefits of siding while increasing the sellability of your home.

So how do you decide which type of siding to use? First establish how much you are able or willing to pay. Plan a budget. This will let you know how much you have to spend, and you can then decide whether or not to choose a less expensive type now, or keep saving up for one that will cost more but may last longer. You can read about more real estate topics by visiting Dean Graziosi’s blog.

The Pros and Cons of Owning a Pool

July 1, 2014

IMG_0968When it comes to selling your house, there are several factors that can help raise its value. Owning a pool has typically been viewed as a definite selling point, and is often a feature prospective home buyers are willing to pay extra for, especially if it is in-ground. As Dean Graziosi explains in this article, however, there are many pros and cons of pool ownership.
Some of them are outlined below.

Pros

Swimming pools provide a great means of exercise. This is great for both children and adults because it promotes physical fitness right in one’s own backyard. This type of exercise is also often recommended for those who have knee, leg, or other injuries.

Pools can provide hours of fun. Since in many climates, people can swim or relax in their pools from late spring to early fall and sometimes even beyond, there are several months out of the year when a swimming pool can be used. Even just relaxing in the water can be calming.

A swimming pool in the backyard can actually raise the value of a home. This is especially true if the pool is in-ground and if a deck and fence have been placed around it. Outbuildings for changing clothes and storing pool-related items will only increase the home value because the pool can serve as an entertainment area of sorts.

Cons

Pools can be costly to install. Even the above-ground variety can come at a high price. An above-ground pool is also difficult to install, especially if you plan to make it a more permanent fixture in the yard. Also, you will either be responsible for the installation yourself or will need to hire someone to do it for you. Hiring someone else will, of course, come at an added cost.

An in-ground pool may be installed by someone else thus taking the work off you, but it is quite a bit more costly than an above-ground option. What it may come down to is how badly you really want a pool and how much it will be used.

Pools are also expensive to maintain. Cleaning them takes time and effort, and is a process that must take place on a regular basis.

Swimming pools can also be dangerous for those who are unable to swim. Small children may also fall in and become injured or drown if unsupervised. That is why a fence around the pool is absolutely necessary and there should always be more than one person either in or by the pool at all times whenever it is being used. As an article posted on freshome.com denotes, a homeowner may actually be held responsible for accidents caused in the pool.

So is pool ownership worth it? That is up to the individual homeowner. If you are willing to shell out the cash and take on the responsibility that comes along with it, the answer may very well be yes. If, on the other hand, you do not want the responsibility or feel it really isn’t an affordable investment for you, perhaps you should look at other home improvement options. You can learn more about this and other real estate topics by visiting Dean Graziosi’s website.

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