Knowing When It’s Time to Buy a Move Up House
February 24th, 2009 categories: Selling Strategies
In today’s real estate market, there is a very compelling argument that it’s a good time to buy a move up property.
You say, “I can’t sell now, I’ve lost money on my house.” Assuming you’re not upside down and owe more than the house is worth, you may not be losing as much as you think.
Say you’ve lost 20% in value - as shown in the first slide - your “loss” compared with the loss the larger property incurs wouldn’t be as high. The percentage decline is a function of the value of each of the homes. If your loss is $90,000 and theirs is $130,000, then when you net this out you could say that you’ve gained $40,000 by trading up.
You’ve now moved into your beautiful, and larger home. Stay there awhile. You’ll need to hang tight for several years, but eventually inflation will take hold and the price of the home will begin to rise.
You decide to sell at some future point. The gain is 20% in value since you purchased the house. If you had stayed in your smaller home, your 20% gain over that time would amount to $72,000. The gain you’ll recognize on the larger house would be $104,000! Can you see why it’s a great time to move up when the market is depressed?
Rarely is there such a dramatic convergence of low prices and low rates. It can’t last forever. You should speak to a reputable mortgage lender and see if you’re a good candidate for a move up now. Check out Denver Real Estate at my web site, www.GretchensDenver.com, with nearly every listed property in the Denver Market available to see.
Thanks to Steve Harney and Keeping Current Matters for the terrific slides.
| Discussion: 3 Comments »
Your IRA and 401k Can Buy a House! Five Ways to Become a Landlord on Someone Else’s Money
February 15th, 2009 categories: Market Trends, Real Estate News
You know that this would be a great time to get into investing. You know that mortgage rates are down. You know that the millions of people losing their homes to foreclosure can’t stay on their mother-in-law’s couch much longer. And you know that sellers are bargaining when a buyer finally does walk through the door.
Why not buy a rental property?
Yes, I know. You’re thinking:
- I don’t have any money for down payment or fix up costs
- I don’t think I’d make a good landlord
- My credit score is too low to qualify for a loan
- My investment adviser says she doesn’t offer that
Moving your account to a Self-Directed administrator who will facilitate such an investment is easy - getting your head around the rules regarding IRA purchase of property is a little harder.
The first thing you need to do is look at your IRA (or 401k) as a separate person or entity. If it’s easiest just call your IRA, “good old Uncle Ira.”
Uncle Ira can buy you real estate, and Uncle Ira can hold it for you. Uncle Ira pays all of the expenses out of his pocket for any work that needs to be done, and Uncle Ira pays the mortgage, if there is one. Uncle Ira also gets all of the potential gain in the future. The money from the rent and the appreciation all go into his wallet.
Being a dutiful niece or nephew, you’re going to help out Uncle Ira around his place. You’ll handle getting it rented (but make sure the tenant knows which address to send the rent checks to), you’ll coordinate any repair work needed (don’t pay for any of it out of your pocket.) And when the time comes to sell it, you’ll choose which Real Estate Broker to hire to list and sell the property, and Uncle Ira will pay the Realtor’s fee.
This is not a new provision to the tax code, it has been allowed since the inception of the rules stating what types of investments can be held in retirement accounts. Here are the basic rules in nutshell:
- You can’t use the property personally.
- Lineal relatives are disqualified persons (i.e. children or parents) and can’t reside in the property. A brother or sister could live there.
- You can mortgage the property if your retirement account isn’t large enough for a cash purchase. You would use what’s called a “non-recourse” loan. Here in Colorado, First Bank of Colorado issues non-recourse loans. So does North American Savings Bank in Overland Park, Kansas.
- If you’re bumping up against the Fannie Mae/Freddie Mac rule that you can’t own more than 4 investment properties - this is a way to buy a fifth or sixth. This type of purchase doesn’t count against the requirement because it’s Uncle Ira’s purchase, not yours.
- You must place your IRA or 401k money in a self-directed account with a self-directed account administrator. Most fund managers do not offer this service because they’d rather put you into a mutual fund and call it a day. You are allowed to move your IRA or 401k money to another administrator. I’ve recently met with Patrick Hagen at The Entrust Group. Patrick, or any of the other staff at this small and very responsive firm can answer all of the questions that aren’t answered here. Their web site is www.NewDirectionIRA.com. Patrick’s email address is phagen[at]ndira.com.
After you’ve had the chance to talk to Patrick, contact me and we’ll start searching for your first rental property for Uncle Ira. You should choose a Real Estate professional who knows a little about this, because there are very specific rules about filling out the purchase contract.
Being a landlord isn’t that hard, and you can watch your IRA grow much faster than it would in a mutual fund!
| Discussion: 26 Comments »
Denver Colorado Real Estate | January 2009 Market Statistics
February 8th, 2009 categories: Market Trends, Real Estate News
Denver real estate sales seemed to take a hiatus in January.
While January is typically a slow month for closings, this was softer than usual. Buyers and Sellers were truly jarred by the economic cliff we fell off. As the plummet felt faster and faster in November and December, people hunkered down and focused on family and the holidays.
Remember, closings in one month are a result of contracts written the previous two months.
January 2009 was slow because at the end of 2008 people were waiting. Waiting for the new administration, waiting to see what their 401k looked like, waiting for rates to come down, waiting for the sun to shine.
We still have a much lower inventory of homes to choose from and judging from how many offers we’re seeing this month, things will pick up a bit from here. This is typically the best selling season in Denver (February - May) and I think that with the low rates and the lessening inventory we’ll see the under contract and closing numbers pop next month or the month after.
Here’s the thing, though… In order to get a truly balanced market, we need to begin to sell properties in all price ranges. The lower and middle range homes are still what’s selling - as I’ve said in past months. But, in January we only had 23 homes sell priced over $1,000,000. The luxury and high end market must clear out inventory to get our entire real estate market back on the fast track.
The past two weeks I’ve had a flurry of activity on my luxury property listings, and one is under contract, with two more possibly so. The buyers I’ve spoken with about this say they feel like the prices have come down enough to be a good deal. We’ll see what this portends. I’ll keep you posted!
| Discussion: 5 Comments »
You Are Going to Love The Tavern Restaurant in Denver’s Washington Park
February 1st, 2009 categories: Life In Denver, Restaurant Reviews
When we eat out, we usually stick close to home. We often choose to walk to a nearby restaurant, and last week we chose the newly opened Tavern Wash Park.
This 
is a high energy take on the other Tavern Restaurant in the Lowry neighborhood. Mainly because it’s much smaller. The menu is very casual, and they’re currently advertising a “romantic” Valentine’s dinner, which I just can’t picture. It will probably be more like a Valentine’s dinner with the rest of the neighborhood celebrating along with you.
My son and husband both chose the Stuffed Stromboli, and I got a nicely prepared bowl of Chicken Tortilla Soup. My favorite part was the Cosmopolitan. I think it was the best one I’ve had in Denver (so I actually had two). Good thing we were walking…
The Tavern Wash Park is located on Old South Gaylord Street in the former Las Margaritas location. They also serve brunch for those of you who are morning people! I hope this restaurant lasts, and judging from the crowd, I think it will.
Denver real estate has picked up some serious steam, and I received two offers on a listing of mine this weekend. Prepared to buy or sell? Drop me a line!
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