🙂
These days when I pass the mirror, I always wonder whose looking back at me cuz it’s sure not the 30 something person I think I am. I guess the answer to that problem, is not look into the mirror!
So, I’m looking for the good things about getting older. Know what the best thing is (given that I have no grandchildren yet)? For me it’s the day when I turn 59.5 and can take money out of my retirement fund and start spending it!
For those of you who can’t even think that far ahead, at least give some thougt to tax planning. Remember a dollar saved in taxes is a dollar you don’t have to earn! Real estate as an investment vehicle works for me, becuase of the leverage involved and the control I have and the great tax incentives. When you combine a good real estate investment with good tax planning, you can grow your wealth faster since you have some great tax free or tax deferred IRS sanctioned programs to take advantage of. Here’s a quick rundown of three of these programs to shelter real estate investment income. I’ve been using two of them for years.
Self Directed IRAs Investing in Real Estate
If you have a retirement account from a job you’ve left, did you know that you can self direct that money and invest it in real estate? Or, if you have IRAs, you can also self direct and invest them in Real Estate. First, you need a custodian to handle the transactions. Simply set up self directed IRA’s and self directed Keogh’s and 401K’s through a custodian such as Entrust or Pensco Trust. I use Pensco Trust out of San Francisco. They’re great at making sure you handle all the details and they can help you through the process. There are tricky issues to work through like needing non recourse debt financing and working through the UBIT taxes can be a challenge.
But for every roadblock there is a solution and if you have a Roth IRA and invest right, then your money can grow tax free! There are lenders willing to finance the necessary non recourse loans, and the UBIT tax is only on the leveraged portion and can be as low at 15%. Be sure to check out your particular situation with a tax professional.
In the next couple of days, I’ll write about the 1031 and the Family Foundations.
So, give it some thought. Don’t be afraid of getting older becuase it’s a blast!
For those agents that are “paying for the privilege of marginalization,” Craigslist expanded to 100 new cities last week. Only selected agents in New York will actually be paying: in tandem with their expansion, they are charging New York City appartment brokers $10 per listing.
Craigslist is a pretty incredible business – they are so focussed on user experience that fees are only implemented when a section gets too many repeat posts or gets too spammy for Craig, now a full time customer service rep, to keep a lid on. There was a great interview with CEO Jim Buckmaster in the WSJ on Saturday. Here’s a choice quote that sums up their business philosophy:
It’s unrealistic to say, but — imagine our entire U.S. workforce deployed in units of 20. Each unit of 20 is running a business that tens of millions of people are getting enormous amounts of value out of each month. What kind of world would that be?”
And despite the fact that we may not have Ardell’s magic open house touch, we are showing it on Sunday between 12 and 3PM as described in the open house listing on Trumba.
Update:
I also created an adword campaign around our home. If you see the following ad while surfing the web, don’t click on it because it costs me money and just takes you to this blog post! 🙂
[photopress:beautiful_ballard_home.jpg,thumb,centered]
Funny side note… I decided to try out Google’s option to target ads at specific websites and noticed that Zillow was on the list for real estate related sites. However, in order to see the ad for my home on Zillow, I had to disable the one-two punch of Adblock and Filter.G on my Firefox browser. By disabling these two extensions, so many websites that I visit on a regular basis looked so much uglier! It was like traveling the web naked! It you’re not using the firefox browser with these two extensions, then you are almost definitely surfing a web that looks much more annoying than mine!
Noah Rosenblatt brings up a timely article (timely for me anyway) on the tax benefits associated with selling a primary residence. Here’s the pertinent info:
To claim the maximum exclusion on the capitol gains on the sale of your home, you MUST first meet the Ownership and Use tests…
- Owned the home for at least 2 years (the ownership test), and
- Lived in the home as your main home for at least 2 years (the use test)
The general idea is that a single person can exclude $250K in capital gains while a married couple filing joint taxes can exclude $500K provided they meet some basic conditions and the meet the two tests above. (Noah includes the conditions on his post!)
Now for my question, is there a timeframe that someone needs to plow this money back into a new residential property in order to reap the capital gains benefits?
Since Noah doesn’t mention this, I’m assuming that the idea of reinvesting within a certain timeframe only applies to investment properties, but I’d sure like to be more confident of this assumption and (horror of horrors) I’d rather not try to read the tax code!
Looks like Gates has announced his plans to retire from the Day to Day activity over at Microsoft, between now and 2008.
Will this have any impact on the Company? The stock? The area? Doesn’t sound like good timing for this announcement to me, right after the “no more towels” fiasco. Your thoughts/opinions?
We are, for the most part, in a “normal market”, meaning that in some segments, it is a Seller’s Market, while in another segment, in the same city and price range, it is a balanced to Buyer’s Market. I used this sample to show how, in a small geographic area and price range, you can have two types of markets going on simultaneously.
What does that mean to you as a buyer? If you find one in the charted area that shows 0 available and 24 sold in six months, you need to act quickly and be less picky about condition and location. If you find one in the area that has 15 available and 149 sold in the last six months (same City and same Price Range, different Zip Code) then you can take your time, be more picky and even wait for a better one.
What does that mean to you as a seller? If you are putting your property on market in the first graph area and price, you can likely push the price based on supply and demand and still sell quickly at full price. If you are a seller in the second market segment noted by the second graph, you will have more competition and should price competitively and put the property in the best showing condition possible.
I have not highlighted the true “Buyer’s Market” segment, which is one where only 3-5 of every 10 homes for sale, will sell at all, meaning the ratio is 10 sellers for every 3-5 buyers. That is occuring in higher price ranges (over $1,500,000) and harder to define market segments, and not necessarily as relevant to the average RCG reader.
Perhaps other agents who work further out, like Sultan, Monroe, Des Moines, etc… can do some stats in those areas for us. Anyone seeing the ratio of buyers to sellers such that there are not enough buyers in the marketplace to absorb current inventory in a reasonable timeframe?
Anytime you see a house listed FSBO at over $200K below market you gotta wonder what’s going on. This particular one on Craig’s list was just down the street from my home so I decided to take a look.
$307000 – 4 bedroom fhouse or sale by owner
4 bed 2 bath completely remodeled inside in desireable redmond location for sale by owner.this lovely split level home is located within walking distance of lake sammamish ,parks,and schools in a secluded neighborhood!
Serious buyers only!
I will be holding an open house friday through sunday 7am-8pm if im not there my wife will be so feel free to stop by and have some cookies and a mocha 🙂
please do not email i rarely check it
These poor owners had people knocking on thier door all weekend thanks to someone’s idea of a practical joke. Open posting options like Craig’s List, Google and others are free and get great exposure, they are also prone to abuse. As the man said “If it sounds too good to be true…”
… just by bringing bagged lunch and brewing your own coffee. Ignore your raises to save the rest. Also, lots of calculators including a balloon calculator.
Seems to me that misinformation fuels many of the conversations regarding relationships between agents and consumers in today’s real estate marketplace. So let’s take a crack at one of Craig’s comments in #48 of Dustin’s post.
“If the mls were “open” – i.e. anyone could list – then agents will have an even harder time justifying the 3%/3% commission.”
Last I looked, every option known to man was available to sellers, with very few “having to pay” 3% to their listing agent, at least in the Seattle area. Many if not most agents do not charge 3% on the listing side, if the seller buys their next home from the same agent. There are many flat fee options available for limited service. High end often pays 1% for full service, especially on new construction homes. 2% is fast becoming the norm for the average Joe. 3% is more typical in the lowest of price ranges where 3% doesn’t amount to much and is a bargain for full service on a $120,000 condo. I have to wonder why people keep pretending that sellers by and large pay 3% to the listing agent? As this figure is not published, there must be some “hidden agenda” to the purveying of misinformation, I think.
As to why sellers offer 3% to convince more and many agents to come and show their home, I guess because it must make sense for them to do that, or they wouldn’t be doing it. That doesn’t mean the Buyer’s Agent GETS 3%, that only means that there is an allowance in the List Price, up to that amount, as far as the SELLER is concerned. Then it is up to the buyer and his agent to determine the actual fee, as they negotiate it within the target amount set by the seller.
Clearly all commissions are negotiable and always have been. Anyone who believes an agent, or attorney in this case, who pretends otherwise is mistaken. All commissions are and always have been negotiable. You just have to understand the structure, and the reasons for it, to maneuver within the system to your best advantage. If you don’t understand the system in place, you leave yourself open for someone to take advantage of your lack of knowledge, by exploiting that weakness. Know that you can, for sure, and in fact, negotiate any fee you want AND participate in the mls system in place while doing so. This is true for both buyers and for sellers, as long as the seller negotiates his side, and the buyer negotiates the other side. There is absolutely nothing in the system, as it exists, that prevents you from negotiating commissions, other than the misinformation which is keeping you from understanding the system.
As to using an attorney instead of an agent in a real estate transaction, it’s apples and oranges. No attorney purports to do, or even tries to do, what an agent does in a transaction. A great attorney is no replacement for a good agent in a real estate transaction. A monkey is a sufficient replacement to both, if they are not good, and monkeys may be more pleasant to deal with 🙂