Tag Archives: real estate

Paying the Mortgage But Not Getting the Tax Write Off?

If you know someone who owns a home but has not transferred the property into their name, or doesn’t know how, and is frustrated because they’re not getting the tax write off, then this success story will brighten their day.

Success story: Client has been living in her home for 10 years, inherited from her mother, (but property is not in her name).

She was making payments, but no tax write off since the mortgage loan is not in her name.

We were able to put the property in her name, keep the low, low property tax bill, and get the loan so she can now write off the property.

Getting the property out of the mother’s (who is still alive) name also helped the mother qualify for more benefits.

Why the Fed Didn’t Raise Rates, and…

Another week of a little movement to the bad side and a little movement to the good side of rates leaves us flat…

Next week JOBS JOBS JOBS could move rates…

Monday was a holiday, so the markets were closed.

Tuesday markets were quiet waiting for the Fed meeting minutes.

On Wednesday, the Fed’s minutes indicated that they were ready to raise rates but were a little hesitant in that they wanted to wait to see more clearly what President Trump’s economic policies will be, or more importantly how they will be implemented.

Then the same day, existing home sales for January were up 3.3%, the strongest since 2007. This was interest rate unfriendly.

Friday we learned that new home sales were up 3.7%, but after a down month last month, this was interest rate “neutral” news.

With all this, interest rates remained the same.

Don’t gamble: lock in your rate.

Need to lock in for 60, 90 even 180 days? Yes, we can do that on a purchase!

Your buyer’s interest rates can be locked in, so if you have a client who is close to having an accepted offer and is nervous about rates we can lock that interest rate in.

Remember, we also have the float down: if rates improve more than .25% after lock-in and after full approval, your client gets the lower rate.  All rates are quoted at a 45 day lock in and assume a 720 credit score with 20% down, except for FHA and VA.

Have a great week, and call me if you need anyone qualified.

Listening and Learning Works – Investor Success Story

6 years ago, a 25 year old man was dragged into my real estate investment class at TUSD.  He listened and learned.   A few months later he came in for his 90 minute free consultation.  He also played CASH Flow 101 a couple of times and had fun.

During the consultation and loan pre-approval that I gave him, he learned that he could buy a duplex for $500k.

1 year later he bought a duplex where his payments were $3000 per month and the rent from the 2nd unit was $1700 and he lived in the 2nd side of the duplex (his unit could rent for $1800).  When he moves out, it will be positive cash flow, BUT while he lives there with tax benefits, his expense is $900 per month.

1.5 years later, he decided he was ready for his next property.   He ended up buying out of state, investing $30,000, and getting $300 per month in cash flow. He is now onto his 3rd property.

10 Things Every Homebuyer Should Know

Anyone who’s ever purchased a home before will tell you that there are things they wished they had known before making such a big decision, things that would have saved them time, money, and a lot of heartache.

In this article, I outline the 10 crucial things that every homebuyer should know.

1. What payment you can afford? An obvious question, but it’s one that’s often overlooked by new homebuyers.Banks will give you their “number,” but the real issue is what can you afford and still maintain the same lifestyle, or are you willing to cut back? Do you plan to take off work in the near future to grow your family, write a book, take an extended leave for travel, etc.? If you do, then you will have to plan the mortgage to integrate your plans into your other financial goals.

2. What is the true tax benefit of buying a home? Many homeowners believe that the tax write offs of homeownership will help to offset the cost of the home.  According to Interest.com, “Studies show you’re most likely to benefit from the deduction if your household income is more than $100,000 a year or if you live in an area with higher housing costs, such as the West or East coasts or a major city.” (citation).

If you’re not sure whether you should rent or buy, try using my calculator to help you crunch the numbers: http://athenapaquette.com/calculators/rent-vs-buy/

3. What is the true cost of homeownership? Have you considered that the utilities are “all on you” when you own a home? You might have had free utilities at your apartment and haven’t considered water, gas, and electric bills. The house will also require maintenance over the years such as roof repair/replacement, repainting, gardening, plumbing repairs, and other maintenance items. Do you plan to have cash reserves for that, or just handle it when it comes up (i.e. credit card financing)?

4. If this is your first home, do you plan to buy another or is this something you could live in forever? What are your plans? Do want to have a family, become self-employed and work out of home, or move to another area in retirement?

5. Closing costs when buying a home. Did you know that besides your down payment you could need up to 2% or more of the price of the home in closing costs? In a seller’s market, it’s tricky to ask the seller for help with closing costs since most of them will want the cleanest, easiest buyer who will give the highest bottom line profit.

6. Did you know that FHA has no credit score limit? Even if you have a low credit score (below 660) and have been turned down by the banks, you can still get a loan? This is great news if you’re ready to buy a home but have had some credit mishaps in the past.

7. Did you know that you only need to be on the job for 6 months to get a loan to buy a home? Most banks will stay on the strict 2 year rule, but we can help you find the right financing. If you just graduated from a professional program or upper level degree and immediately get a job, the requirement is waived since school can be counted as the work history.

In general, however, there cannot be a gap of more than 1 month in your school history. A diploma and first paycheck on the new job will be required before loan approval is issued.

8. Did you know that going to the listing agent DOES NOT always get you the best price? Having your own realtor is free to you and could get you a lower price than if you had gone directly to the seller’s agent (they guy with the sign in the yard). For more on the difference between Realtors and Real Estate Agents click here. http://athenapaquette.com/difference-realtor-real-estate-agent/

9. You could use a co-signer to qualify for a more expensive home. Certain loan programs allow you to have a co-signer such as your parents or a sibling to increase your chances of qualifying. However, they must provide the same full documentation, and will be responsible for the mortgage if you fail to pay. FHA allows this, and Freddie Mac allows for a co-signer. It’s called “blending of ratios.”

10. Be leery of the rates posted in the newspaper or online. They may be 3-4 days old. If you want the latest rates or to start the pre-qualification process then contact me directly at 310-218-6855 or email me at Athena@AthenaPaquette.com

How to Buy Real Estate with Your IRA

Warning! This is cutting edge information for new and experienced Investors and Realtors.

Thursday, January 29th

6:30 PM to 9:00 PM

*Waddell and Reed, 3625 Del Amo Blvd., Ste. 360
Torrance, CA 90503

Includes Wine and Cheese Reception

Isn’t it time you took control of your cash flow opportunities?

We’re doing it again! I’m hosting another exclusive event for Investors and Realtors.

If you, like many Americans, are afraid of another stock market crash, are not happy with your returns, or you just want a little more security in your retirement fund, then this seminar is for you!

Whether you have a SEPP, Simple IRA, IRA, or Roth IRA you have options.

Please join me and my special guest CEO and President of Exeter 1031 Financial Services Bill Exeter, for this enlightening seminar!

This is a FREE event, and you must RSVP to attend.  

To register please call or text 310-218-6855 or visit: www.IRAevent2.eventbrite.com

The 5 Principles of Successful Real Estate Investing

This is Athena’s first broadcast on Investor’s Corner.  We thought we would give you an inside the studio view of her interview with Renee Riker, experienced real estate investor.

In this video, Renee will walk you through the 5 principles of successful real estate investing.

She gives you an inside look at how much research and work it takes to invest properly.  She has been actively investing real estate property since 1996, so she can give you detailed insight into how best to invest your real estate.

homeowners corner newsletter

The Difference Between a Realtor and a Real Estate Agent

Not all Real Estate Agents are Realtors.

In fact, there are a small percentage of real estate licensees who are members of The California Association of Realtors.

The California Association of Realtors is a voluntary organization that has a very strict code of ethics which describes the professional responsibilities and expectations of its members.  The CAR also has its own government and systems in place to hold members accountable.

They have a board of grievance that hears consumer complaints and Realtor complaints. If a Realtor is found guilty of breaking the code of ethics, they can be removed from the association and lose access to the MLS. There’s no such over site for Real Estate Agents.

Another advantage for homebuyers is that Realtors are able to network for properties that are not yet available, and they have access to legal research, studies, and other professionals such as legal counsel within the organization. In other words, being part of the CAR places them on the cutting edge in all areas that matter, and gives them and their clients more protection through knowledge and resources.

However, both Real Estate Agents and Realtors are licensed by the California Department of Consumer Affairs, Bureau of Real Estate Division. But not all agents chose to hold themselves to the higher standards of the California Association of Realtors.

As a buyer or seller you may not know what your rights are. So, hiring a Realtor will offer you the most protection and give you peace-of-mind. 

The realtor.com site claims 7834 members. The CalBRE states that there are currently 410,701 licensees in CA (a/o june 2013)**.  To see their work, videos code of ethics and more, go to the national association of Realtors other website Realtor.org.


Should You Invest in Real Estate or Stocks?

I am asked this question quite a bit.

When looking to invest, you need to consider your goals.  That is, do you want appreciation (the asset to go up), cash flow (income from the assets), or both.

Real Estate has 4 advantages over stocks and bonds

With real estate, you get leverage, control, tax benefits, and the tangibles aspects that stocks and bonds don’t give you.

Advantage #1–Leverage: You can buy real estate with only 3.5% down if buying for yourself to live in or 20% down if you are buying the property as pure investment.

Hypothetically, this means you would control a $200,000 asset with only a $7,000 to $40,000 investment (down payment) and enjoy the benefits of it increasing in value over time, creating income or both.

With stocks and bonds you may have a margin account (ability to borrow against the value of the asset) but only after you paid 100% of the price. If the value of the asset goes down they can call the margin loan due and payable.

If you like control, but don’t want to spend too much of your money real estate wins this one.

Advantage #2—Control: Unlike securities, real estate allows you to take over a problem, say an old apartment building, fix it, and profit from your efforts.

Rarely will a company, where you own stock, allow you to come in and tell them how to improve their bottom line…that is unless you are Warren Buffett.

Real Estate, gives you the opportunity to own a tangible asset, see and fix a problem, manage people and finances, and profit from it immediately or over time.

This is called being a value buyer.

Advantage #3—Tax Breaks: Real estate gives you some tax advantages that stocks and bonds don’t.

Real estate can earn money and be offset by a tax write off called depreciation.

Depreciation is the tax incentive that the government gives for you to maintain and improve the property over the years.

Whether you spent money or not they assume you are. This is a paper loss or phantom loss.

So if the property has $300 per month in cash flow you may keep this income tax-free, as your tax liability may be offset by the depreciation.

Real estate and securities both have a tax treatment called the “exchange” that can defer income into eternity, so they are equal there.

To learn more go to http://www.IRS.gov and look up IRC 1031 and 1033.

Advantage #4—The Tangibles: Real estate also fulfills a need for altruistic “feel good” endeavors.

You can make a positive difference in the world knowing that you are providing quality housing for others.

By owning rental property, you are improving the tenants’ lives and neighborhoods in which they live. Improved neighborhoods mean more money for schools, and better schools means increases in property value.

Usually you wouldn’t get those “feel good” feelings by investing in stocks.

When you buy a beat-up 14 unit building in a low income area, clean it up, get rid of the nuisances, and maintain it, you know you have done “good.”

If you’re interested in knowing more about investing in property, then contact me today for your free 90 minute consultation.

“The Good Life is Within Your Reach!”

The above illustration is for demonstration purposes only and is not a true case study. Investing in any asset involves risk and you should therefore consult tax, legal and financial experts before investing as individual results may vary.