Monday, 31 May 2010
The popularity and success of the real estate market in Dubai is well documented; but in sharp contrast Bahrain - which is one of the Middle Eastern property markets with the greatest potential - is little known and often overlooked.
Bahrain has a small but well establish luxury real estate market; and recent changes to legislation allowing for foreign freehold ownership of property within certain real estate developments in Bahrain has created a surge of investor and consumer interest in the kingdom.
The kingdom of Bahrain has long been home to a large expatriate community, with expats mainly heralding from the UK, Europe and the US. Expatriates living in Bahrain generally enjoy an incredibly high standard of living, substantial tax free income and an inimitably luxury lifestyle - and the type of accommodation they seek has become the iconic style of real estate now for sale to foreign purchasers. Indeed, the real estate developments where foreign freehold ownership of title is allowed in Bahrain epitomize quality and opulence.
In recent years Bahrain has been working hard to diversify its economy away from oil by focusing on five main business areas; namely business & financial services, tourism, information technology, healthcare & education and telecommunications. As a result many more multinational companies have established bases and headquarters in the kingdom which have created more employment opportunities and in turn attracted more international executives and their families to Bahrain.
This influx of foreign residents to the kingdom of Bahrain has resulted in a thriving rental real estate sector which has further helped to underpin an already incredibly successful economy. Recently Bahraini officials began to realize the potential of the real estate sector if they allowed for foreign freehold ownership, and this led to legislative and constitutional changes and the officials have been rewarded for their foresight by the creation of an incredibly popular and successful property market.
It’s a fact that many of the expats living in Bahrain are now taking full advantage of their right to own freehold title to real estate. It is also a fact that there is still an increasing requirement for quality accommodation to let out in Bahrain and this is pushing rental rates sky high. Both of these facts mean that real estate investors have a property market ripe for exploration in Bahrain with immediate income achievable from the rental sector and the release and realization of capital appreciation easy to achieve with a market hungry for completed resale property.
Therefore real estate investors looking for a market with more room for expansion than Dubai has, a market as equally popular with expatriates as Dubai is and a market offering property as magnificent as Dubai does need look no further than Bahrain.
Sunday, 30 May 2010
The Government has closed the door to investors hoping to get tax relief to put their holiday homes and buy-to-let properties in their pensions from April next year when investing rules are due to be relaxed.
The <b>FT</b> reported a "complete U-turn" by the <b>UK Treasury</b> as generous tax breaks were removed from the SIPPs self invested pensions.
From April 6 next year, pension laws were to be relaxed allowing those saving for their retirement much greater freedoms over what they could hold within their pensions. The rule changes were expected to lead to a boom in self invested personal pension schemes (Sipps), pensions with wide investment freedoms.
Residential property and assets, such as fine wines, classic cars and even stamp collections were among the assets which were expected to be allowed to be held in pensions after April 6 and qualifying for income tax relief up between 22% and 40%.
However, in a technical note accompanying the pre-Budget report, the government suddenly announced it would remove the tax advantages for residential property and other assets, such as fine wines, art and antiques. The move will remove any tax advantages of holding residential property directly or other exotic assets within a Sipp.
The government said the move was aimed at “preventing people benefiting from tax relief in relation to contributions made into self directed pension schemes for the purpose of funding purchases of holiday or second homes and other prohibited assets for their or their family’s personal use.”
The FT reported that tax experts expressed surprise at the government’s U-turn. “This is a complete turnround. It is extraordinary,” said Mike Warburton, tax partner at <B>Grant Thornton.</b>
Simon Philip, tax partner at <b>Deloitte</b> said: “The dream is over for those hoping to enjoy tax subsidised wine drinking and horse racing but it was fun while it lasted,”
Terry Walker of Spanish property specialists, <b>PropertyInSpain.Net</b> said: "This decision might have the opposite effect to what the Government intended. It could see more people buying sunbelt homes with their own money and low cost euro mortgages, rather than putting the purchase through a SIPP and boosting their pension. Spain with the biggest share of the second homes market could see a inrush of new sales from the start of next year as UK buyers focus on the equity growth and lifestyle benefits rather than their tax and pensions.
"It could be that holiday breaks have more appeal than tax breaks for many families"
<i>Spanish Property News</i>
Saturday, 29 May 2010
Commissione agreements that spell out how brokers are paid typically use form documents. The commission formula sometimes changes, but the terms and conditions usually stay the same. Consequently standard terms and conditions of commission agreements are often ignored by brokers and owners once the agreement is signed. Since the broker’s income is tied to the terms of those agreements, close attention to details are vital to all parties involved.
Recent lawsuits stemming from disputes over broker commissions reveal tough lessons about the importance of paying close attention to commission agreements.
A building owner in Detroit was forced to pay a commission because the original agreement did not contain an expiration or termination date. The building owner argued that there are a number of key terms understood and agreed to prior to signing the agreement that were not contained in the final written agreement. The judge overruled this argument stating that the contract was clear as written.
Judges and juries are not real estate professionals. The term “procuring cause” may have a standard definition in the real estate business, but mean nothing to a juror. All parties involved must make sure the language is clear. A judge or jury will not rewrite a contract to save either party from a bad business decision.
Even after a favorable commission contract is successfully negotiated and written, it’s not OK to simply file it away. Either party cannot claim they forgot about the agreement.
The lesson here is to carefully note important terms and conditions, especially those that relate to performance, compensation, and termination.
Legal disputes are not unique to any location. Judges and juries nationwide are showing resistance to insert terms into commission contracts or allow parties to ignore the terms of a contract. Recently there’s been an increase in the number of disputes. Some have settled out of court, yet a fair number have gone to litigation. This can be reversed through the efforts of brokers and owners who invest more time and effort putting together agreements and abiding by them. This is the best method of prevention.
Good luck to you,
Friday, 28 May 2010
If you are facing a foreclosure, there may be options to negotiate a workout program with your lender. To get help with a foreclosure you have to start by talking to your lender. Help is available if you are willing to workout a reasonable repayment plan with your lender, while this can sometimes be difficult, you may be able to save your home. They really do not want your house back. Let us cover some options that may be available to you if you are facing a foreclosure.
The continuing flow of creditors and collections agencies called you can be over whelming, while it may seem hopeless, you may have options. Starting with the most important, your home, the others may have to wait and be fixed later.
Lenders usually will offer several options to a homeowner that is in default on their contractual obligations of a mortgage payment. They would much rather workout a program that is best suited for all parties involved then to come and take your house. They are in the business of lender money, not managing properties. This is true even more today, with foreclosures at record highs, banks have been overloaded with homes that they must not manage and maintain until they are able to sell them to someone else.
The time that you have to negotiate a deal, is often very limited. In most states, a borrower that is in default 60 or more days is just about out of time. This period varies from state to state so make sure that you have checked your local laws. Lenders can and will take legal action to foreclosure on your home if you are not talking to them.
Here are some possible solutions that you can offer to the lender to avoid foreclosure. While not all will be satisfactory to the lender, you can at least make the offer and let them tell you.
Lenders may be willing to take a reduced payment for a specific period, this will allow you to remain in the home and catch up the default amount over time. Some lenders will not allow you to do this, but it never hurts to try.
Lenders may let you sell the property for less then what they are owed on the loan. More and more lenders are allowing this type of transaction as they have realized that it costs them much more to pursue the foreclosure then if they just settle and take what they can get.
Some lenders may allow you to defer a payment or two, they tack the payments on the end of the loan and allow you time to catch up and stay current. This option is only just now beginning to become available as lenders are doing whatever they can to help avoid the foreclosure process.
While this article only covers a few options that may be available, check with your lender and try to work something out, it may keep you from losing you home in the process. Keep in mind that a foreclosure will cost you money, even if you just walk away. The impact on your credit is substantial and will hinder your borrowing power for years to come.
Thursday, 27 May 2010
Buying a home is a stressful and emotional affair. You can avoid the home buying blues by keeping your cool at closing.
I've just come from a settlement table at which a friend bought a new condo. It's beautiful, convenient and just what she wanted. However, at the settlement table she and a relative whom she clearly loves got into a tiff with each other. What should have been a happy occasion was almost spoiled. Thank heavens they got themselves together and the situation was saved, but arguments and hurt feelings are frequent at settlement tables and on moving day. It doesn't have to be that way.
The Trauma of Change
Changing one's home is right up there with the big changes in life - birth, death, divorce, and retirement. Most of us recognize the trauma of the first three. Many of us recognize the need to prepare mentally and emotionally for retirement. Few of us realize how badly buying and moving into a new home frays our nerves and shortens our tempers. It can have serious consequences. I've seen deals blow up, and almost blow up, because of it. (Sometimes the protagonists are the buyer and seller.)
There are a number of things you can do to ensure that the day you buy or sell your home is calm, sane and happy. Let's consider some of them. Some are easy. Some harder. You're apt to think of some which will be unique to you and your family.
First of all, simply realizing that these are flash points and discussing it with family members is a good starting point. There are many decisions to be made and much work to be done. Life is about to change for everyone who is a party to the process. It helps to just acknowledge that you'll need to work together so that it's a good experience for everyone in the end. Remember the expression, "I need to take a deep breath and get my equilibrium back." Clue in family members when you feel the tension rise.
Get a good night's sleep the night before the settlement. Have a good, unrushed breakfast. Have someone you know well look after small children and pets until after settlement; you don't need distractions during a large financial transaction.
At settlement, ask questions about anything you don't understand. Use a quiet, neutral voice. Don't sound like you are accusing someone of something. Simply ask for information and clarity. Don't feel rushed. Take the time to understand. Many of the arguments I've seen at the settlement table happened because someone assumed something and didn't ask about it. They just pitched into an irritated tirade. Not a good idea.
What if your questions turn up an unexpected and unacceptable answer? Let it be known that you expected it to be handled another way and why. Listen to any explanation calmly. Evaluate it. Does the other person have a valid point? How much difference does it make to you? Remember, it isn't necessary to have everything exactly as you'd like in order to have the transaction go well for you. Keep the big picture in mind. You don't have to be right about everything, nor do you have to win every point in order to be pleased with the final outcome.
Whether you call it settlement or closing, the final meeting will be stressful even if absolutely everything goes perfectly. Make sure you get through it by minimizing the stress.
Wednesday, 26 May 2010
Looking down the barrel of a foreclosure, if you are among one of the over 1.4 million homeowners facing this same issue, there may be a creative technique to save your home. Save your home and salvage your equity so that you can fight again. The last thing that you want to do is give your home back to the lender.
If your financial hardship has left you in a position whereby you are not able to pay your mortgage payment, whatever the reason may be, then you cannot afford to live in your home. Foreclosures are growing dilemma for many homeowners in the Untied States today; foreclosures are at an all time high. Alan Greenspan has made comments that the US may be heading for a recession in 2008.
Some lenders out there have not been playing fair, and some even to the point of unethical practices. These unethical practices are a primary reason that foreclosures are at an all time high and not expected to slow down in 2008, from what most experts have said.
On the bright side of things, you may have an option that may allow you to keep your home, even if the foreclosure process is already under way. Something that has been around for many years, and you may possibly utilize to save your home and equity. You may need to wait a year or two in order to cash out the equity on the property, but it is better then the alternative.
This option is referred to as a Lease Purchase Agreement, find a tenant to lease your home from you, with an option to purchase the home at the end to the agreed period or time; usually 12 to 24 months. You set a price for them to buy the house when the agreement is signed; this will allow you to set the price so you can save the equity and by some time to recover. With a tenant that has the option to buy your home you may be able to:
1) First and foremost is the avoidance of a foreclosure
2) Since renters are paying less today due to the high foreclosure rates, this may be a way to increase the monthly rent, due in light of the purchase agreement
3) A one-time payment, up-front as a non-refundable deposit, this is usually 1% - 3% of the sales price. The best part of this is that even if they decide not to buy your home, you still keep the money
4) Quickly locate a buyer for your property, most times faster then trying to sell you home in the traditional manner
5) Someone else will be paying the mortgage payment, and potentially a few hundred dollars a month more
Lease Purchase Agreements usually work well in any real estate market; these agreements referred to as a "lease option" as well. This is a very valuable strategy to keep in mind, especially during market that in a distress.
While there may be many other reasons to take advantage of a lease option, they are defiantly an excellent way to avoid foreclosure, and salvage your home from the bank. In a foreclosure, your credit will be destroyed for years to come, and the additional financial repercussions can take a tool on your personal life.
Tuesday, 25 May 2010
Twice now, I have spotted a bat in our home. My husband and I recently purchased this house. As careful, first-time buyers we made sure to dot all of our i's and cross all our t's. We hired a reputable building inspector and he spent hours checking into all possible or potential problems with our to-be home. The house was built in 65' and as expected, the inspection brought up a few concerns. What did come up seemed minor and do-able: until the bats flew in.
Now, I dont know for sure if we have a bat colony roosting in the house. But watching my husband flailing around the house, swatting at these moth-like flying mammals, all the while experiencing my first lock-myself-in-the-bathroom screaming session, was enough to kick-start a thorough investigation. I called the bat police. If we have bats in the house, their removal will be a potentially costly service. Likewise, there are specific health concerns that set off significant alarm bells. So, let's talk bats, in hopes that as you look into the purchase of your next home, you make sure to check for the tell-tale signs.
First off, just to get you thinking seriously about this concern, consider the fact that bats are not pests. In most states, as in most places in the world, these unique critters are both endangered and protected. Indeed, when I first googled my problem, I was expecting a sea full of comforting headlines: BAT EXTERMINATORS AT YOUR SERVICE. GET YOUR EFFECTIVE BAT POISON HERE. This was not the case. Most of my research sang to the tune of bats being the least understood and most persecuted animals in the world. I was ignorant to the fact that people, our environment and our legislation, love bats. Okay, I get it now. Without bats we could be swarming in a swamp fullof blood hungry mosquitoes. Bats are serious insectivores and their populations are on the decline. For this reason alone, they need our protection. But beware, homeowners who unwittingly house them, may end up paying for this unconditional love. It is best to avoid this problem completely, by not buying into a house with bats.
If you are interested in purchasing a home that is on the old to older side, it won't hurt to look for signs of bats. Chat with your building inspector before an official house inspection and see that he/she is savvy to these indicators. The following signs may be evidence of bats roosting in your to-be home:
Look for unusual brown or grey stains in areas where bats might potentially enter the home. These entry points may be attic vents, cracks and holes under rotted eaves, where a chimney meets the house and openings where the pipes and wiring enter the house. The main characteristic of these stains is that they are oil based and difficult to remove.
Guano is a pretty, Spanish name for bat poo. The droppings will be found around the roost site. Guano droppings are pellet-like and give off a particular scent. This ammonia or musky smell may be present near the roosting bats, notably in the summer. In the winter months, the scent lessens as the bats have either migrated or are hibernating. Guano presents the most dangerous concern in housing bats. Inhaling dust that contains fungal spores found in guano can cause a serious lung infection. Histoplasmosis is the name of this fungal lung disease associated with bat droppings.
If your inspector thinks they hear the sweet chirpings of baby birds, have them double check that this cute social chatter is not emerging from a bat colony. Bats audible chatter is very similar to that of birds.
The reason for all the ominous forewarnings, is not that bats flat-out creep me out. Yes, I was terrified when I first saw one flying about our house. Now, after having done some research, I have gained a vast respect and curiosity for these amazing mammals of the night. Still, who wants to live with bats? The reason to consider checking for signs of roosting bats, is that they can be very tricky to remove. You can't poison them. It is illegal and otherwise ineffective. Proper bat removal usually involves an intervention by a bat removal company. The company will use exclusion methods to remove the bats and seal up any potential re-entry points in your home. Depending on the size of the bat colony and how long they have roosted, the damages, guano clean-up, re-insulation and repair can be costly and time consuming. So buyers beware of bats. Yes, they are vital ecosystem managers and need to be protected. Let them be protected by our laws and not by our roofs.
THE BIG BAT FACTS:
- Bats are the only mammals in the world capable of natural flight.
- Bats can consume 500-1000 insects per hour.
- Bats are protected in the United States and should never be harmed or killed.
- Bats make up nearly one quarter of all known mammal species.
- Bats use echolocation, a kind of natural sonar, to navigate and locate food.
- Bats are gentle, passive creatures that will only bite in self defense if they are picked up and handled.
- Never touch a bat with your bare hands! Although rare, sick bats may carry rabies.
- Bats can crawl through openings as small as 1cm in diameter.
- Over the past 20 years nearly 80 percent of the country's bat population has been lost.
- To help conserve the bat population, build a bat house. It may attract bats to roost near, but not in your home!
Monday, 24 May 2010
<p>If you are thinking of relocating to the state of Texas, it may interest you to know that <a href="http://www.austintexashomes.com">Austin real estate</a> is a buyers market at this time. As we move into summer Austin real estate generally starts seeing more sales, and that is what we are seeing. With all the issues in the national market and with the subprime mortgage crisis, there was some worry that the <a href="http://www.austintexashomes.com">Austin real estate</a> market would not heat up in the summer but sales appear to be on the increase. Buyers are seeing much better deals than they saw this time last year.</p>
<p>The economic outlook for Austin generally mirrors the Texas forecast: local job and population growth outperforms the national economy. The Texas Workforce Commission predicts 3.1% job growth and the unemployment rate for December 2007 was estimated at 3.6%, down from 5.1% in the Austin area during October 2006.</p>
<p>Job growth is expected in Austin’s traditional strong employment areas, such as government, education, and health services. Austin is the state capital and seat of Travis County, which makes government a major employer. Austin’s local, state, and federal government employs more than 150,000 workers and that number is expected to increase. With the University of Texas and over twenty other colleges within 30 miles, Austin will need more educators. Austin continues to employ many workers in the leisure and hospitality industry, and large healthcare employers are expected to add workers in the near future. With the high quality of life and the increasing population, Austin should see positive job growth through 2009. </p>
<p>The quality of life and entertainment opportunities are another reason that Austin is a bright and thriving city with a diverse cultural scene. Austin is rich with theaters, live music venues, excellent restaurants and unique shopping centers. Population growth in Austin is driven by the high quality of life in the region, with the area being ranked as a top destination for relocating singles and families.</p>
<p>Buying and selling <a href="http://www.austintexashomes.com">Austin real estate</a> can be overwhelming so an experienced realtor that will provide you with information, but won't pressure you is advisable. They currently have over 11,000 properties to choose from in the Austin, Texas area.</p>
Sunday, 23 May 2010
Don’t let the median price of a home in the Austin area fool you. It is true that the median value of homes in the Austin area is lower than the national average. However, this can be a bit deceiving.
Many investors, retirees and people relocating for jobs have seen the have been attracted to our area because of how inexpensive homes are here. It is true that the median price of a home in Austin is not very high relative to other places in the country. In May, the median price of a home in the Austin MLS Area was $174,000. The average sale price was $236,406.
This year, I have talked with a number of people relocating to Austin from California, Phoenix, Florida and other areas. Many have thought they could pick up a pretty nice home for a relatively low price. This is where the misconception comes in.
There are parts of Austin in which homes really are pretty inexpensive. This includes much of Cedar Park Leander, Round Rock, areas in East Austin, areas east and northeast of the Austin city limits and much of South Austin and outlying areas south and southeast of Austin. These are all areas in which home sales are tracked by the Austin Board of REALTORS®. This include the counties of Travis, Williamson, most of Hays and parts of surrounding Counties. This is a lot of ground to cover and there are a huge number of homes in these areas.
One thing that attracts many people to the Austin area is the Central Texas Hill Country. This includes much of the Western Travis County and Dripping Springs area. If you take a look at an <a http://www.abor.com/MLS/mlsboundarymaps.cfm> Austin MLS Area map</a>, this includes Areas 8E, 8W, W, LS, RN LS, LS, HD and HH. These areas contain few homes that are valued close to the median price stated earlier. These areas also do not have as many homes in the areas previously mentioned.
Let’s look at these area and do some comparing. Let’s compare sales of all single-family homes built between in 2002 and 2003 that sold in May, 2006. In the relatively less expensive areas mentioned above, there were 100 homes sold in May, 2006. The average sold price was $178,403. The average price per square foot was $81.64.
Using the same criteria, but looking in Areas 8E, 8W, W, LS, RN LS, LS, HD and HH, there were 33 homes sold in May, 2006 that were built in 2002 and 2003. The average sold price was $390,875. That is an average price per square foot of $167,82.
Now let’s look at current listings for new construction. This means homes currently listed for sale in the MLS with a year built stated as 2006. In the less expensive areas mentioned above, there are 492 homes listed with an average list price of $228,069. The average list price per square foot is $95.70.
In Areas 8E, 8W, W, LS, RN LS, LS, HD and HH, there are currently 293 new homes listed for sale in the Austin MLS. The average list price is $666,697. The average price per square foot is $174.11.
So what’s the difference in the areas? The western Travis and northern Hays County areas have a variety of things to offer. One is that they contain some of the best school districts in Central Texas including Eanes, Lake Travis and Dripping Springs ISDs. Another is the drama and beauty of the Central Texas Hill Country. If you look at 8E, 8W and RN, you also look at a good number of homes on Lake Austin or Town Lake. In the LS Area, you have a good number of homes either on or with views of Lake Travis. In very far western Travis County and northern Hays County, you can find homes on acreage. All of these factors add up to some very expensive real estate relative to other areas.
When you look at areas northwest, north, northeast, southeast and south of the greater Austin area, you find a lot of flat land. This makes for easy building. Builders in these areas can build a very high numbers of tract homes. The economies of scale when building many homes in these areas make for inexpensive building compared to the more custom building that goes on in the western areas.
As far as resale goes, the areas with the lower average sale price have had a lot of pressure from new construction. In the areas with the higher average sale price, there is pressure from new construction, but even the new homes are much more expensive than many other areas.
Obviously, this discussion did not take into account areas closer to the downtown and University of Texas areas. There are pockets of less expensive homes and pockets of very expensive homes in these areas.
If you do decide to look at Austin real estate, get a good <a http://www.abor.com/MLS/mlsboundarymaps.cfm> Buyer’s Agent</a> and put him to work for you.
Saturday, 22 May 2010
The moniker "Atlantic Luxury Homes" likely conjures up images of crashing waves and majestic beach homes perched atop sand dunes overlooking miles of pristine beach. This image was likely birthed by pictures of Myrtle Beach in South Carolina. This scenic destination resort town is one of the most dramatically beautiful spot on the east coast and is home to a real estate market that showcases a variety of new construction and older historic homes. Of the new construction properties, perhaps the most popular home choices are the fantastic condo developments that line the coast.
Recent years have seen the evolution of Myrtle Beach into one of the most popular destinations on the east coast. This has resulted in the creation of a thriving investment atmosphere with vacation rentals forming a solid backbone for the real estate industry. This takes nothing away from a historically active and stable residential core that also has created a secure and thriving business sector. It could be said that Myrtle Beach possesses "the full package" when considering a location for a new home or investment property.
Is it time to treat yourself to that dream home that you deserve? There is really no better place to look than Myrtle Beach. This area can boast excellent choice for entertainment and recreation. Of course the ocean provides any number of sporting options as well as great fishing and and the most breathtaking scenery available. There are really any number of reasons to consider a move to Myrtle Beach, but then again, you likely already have your own reasons....
Friday, 21 May 2010
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Thursday, 20 May 2010
The first 10 years of my real estate investing I ran my business as a sole proprietor because I really didn't know any better. Luckily, I survived with only minimal damages, but there comes a point when it is time to assess the best legal structure to use for real estate investing.
If you ask 10 experts you are likely to get 10 different opinions. With that in mind, I'll share my opinion and experience. Remember: free advice is always worth what you pay for it.
If you are a beginning investor, it's probably best to not worry about asset protection until you actually have a few assets to protect. Why spend time and money setting up a business entity and creating tax reporting requirements unless you need to? It's like buying full coverage auto insurance on a beat--up Gremlin...what's the point?
Once you have assets and something to protect, then it's time to set up your business structure. Question # 1: what is your net worth? Question # 2: do you have assets that are at risk? If the answer to either of those questions is, "Yes," then you need to take the next step.
Assuming you want to set up an entity for wholesaling properties, the most popular are an LLC (Limited Liability Corporation) or a C Corporation. There is much debate about which one is better, but I prefer the C Corporation because the first $50,000 is taxed at 15% and you can have a kick-butt employee welfare plan to write off many expenses. With an LLC, the income is passed through. If you start making money, you'll wish you could pay only 15% on some of it! Trust me on this one.
Why is the tax issue such a big deal?
Here's a simplified example. If you make $100K personally you are taxed on the full amount (35%) and have $65,000 left. Anything you buy for yourself comes from after-tax dollars. However, with a C Corporation if you could make the same $100K on paper, but have $50K in allowable expenses that you can write off. So you get taxed on that $50K at 15% and only have to pay $7,500 in taxes compared to $35,000 on your personal income.
What type of expenses can you write off in a C Corporation? It depends on how your Company is structured (see your accountant/attorney for details), but you can often write off basic expenses of things like a bed or even a swimming pool. You're thinking, "No way!" Let me explain how it's done. If you have an employee welfare plan that covers your medical expenses and your doctor gives you a prescription for aqua therapy, it's possible to write off the cost of the swimming pool. Yes, it's crazy, but I don't make the laws. Another more common example is a prescription for a new bed if you have a bad back. I have a "Sleep Number" bed myself, just like Paul Harvey J.
A very wealthy man once told me "It's very hard for a C Corporation to make any money!" What he was trying to illustrate was that C Corporations can expense pretty much everything and look like there is little or no profit. You still can buy the same stuff, but you are taxed less if you structure things correctly.
Wednesday, 19 May 2010
Before you start to look for a property in France it is vital to know your budget. How much money do you have? How much are you prepared to borrow? Can you obtain a loan for the amount you require?
Different regions of France, and different parts of those regions, have varying prices for similar properties. Many local and national factors come into play in deciding the price of property across France, as in any country. Until you know your price range it is difficult to start searching for the area that suits you.
There are many UK banks and building societies that lend money on French property; there are also French banks that lend to foreign buyers or you may choose to raise the funds on your current property. You can search lenders out directly, use the services of a financial adviser or mortgage broker, or come to VEF for help and advice. It is important to be clear how you plan to raise the funds, the length of term, the interest rate, the type of mortgage, penalty clauses for early payment, the proof of income that will be required, the need for a medical and the length of time the mortgage will take to arrange.
At VEF we have researched the mortgage market for many years and continue to do so constantly to ensure that our clients get the very best service and the very best deals. There are constantly new financial products on offer and it is the job of our mortgage partners to be up to date with all the latest information. If you choose to use one of our partners, all your financial research will be done for you and you will receive written confirmation of the maximum amount of money you can borrow before you travel to France. Using one of the VEF approved brokers will save you time during the purchasing process. Good properties do sell quickly anywhere in the world, and France is no exception to this. You will be more likely to secure the house you want if you have organised your finances before going to France to view properties.
Tuesday, 18 May 2010
Arkansas is a state that harkens back to a more relaxed time of life in our country. If you’re tired of hearing 90 cell phones ringing, moving to Arkansas may be the answer.
Unlike many states, Arkansas has made a concerted effort to protect and maintain its past. It is equally protective of its small, rural town heritage with even the biggest cities feeling like friendly, uncluttered towns. If playing in the great outdoors is your idea of a good time, Arkansas offers scenic mountains, rivers, forests in which you can play to your hearts desire.
The undisputed population center of Arkansas, Little Rock is named after…a little rock. This unpretentious title reflects the nature and attitude of the city, to wit, laid back and relaxed is the central theme. For families, Little Rock is a very attractive city as there is a strong emphasis on kids throughout the city. From the riverfront park to museums tailored to the interest of the children, it all seems to be about kids.
When it comes to weddings, Eureka Springs is the Las Vegas of Arkansas. A picturesque town in the northwest of the state, the town started as a health center and evolved into the must visit tourist destination of Arkansas. Surrounded by forests and natural mineral springs, the architectural style is decidedly Victorian. When people mention the Ozarks, this is the place they are talking about. A charming town that gets a 10 out of 10 rating as one of the best small towns to live in.
Roughly a 45-minute car ride south of Little Rock, Hot Springs is a great destination for spa enthusiasts. Wedged into the Zig Zag mountains, the town is ripe with thermal mineral springs. This, of course, has led entrepreneurs to open spas of all sorts. The forest of the Hot Springs National Park engulfs the town. The architectural style is predominantly brick-oriented with many of the older spas have a healthy dose of marble thrown in.
Arkansas Real Estate
Arkansas real estate prices are as relaxed as the state. On average, a home in Little Rock will set you back $180,000, while you’ll need to pay about $50,000 more for homes in Eureka Springs and Hot Springs. For 2005, Arkansas real estate appreciated at a rate of a little more than eight percent.
Monday, 17 May 2010
Arizona, a large state in the Western United States, also known as Grand Canyon State, is famous for its astonishing landscapes, soaring mountain ranges, rivers, grasslands, forests and beautiful weather. Arizona valley constitutes of all these and makes it a perfect place for vacation, retirement, land investment or for permanent settlement.
Over the years, Arizona real estate has become the most sought after real estate in the United States. Real estate market of Arizona is huge and is one of the most commendable real estate markets in USA. The real estate in Arizona is full of luxury houses, apartments, buildings, beautiful decorated homes that draw attention not only from people of the United States but also from other countries.
For anyone planning some investment in the real estate market, Arizona real estate market is the ideal place to start. The state has witnessed record appreciation levels. Any sort of investments done in the commercial area, single-family home, rental apartment or retirement property, will be considered undoubtedly a perfect investment.
The state depicts its natural beauty through beautiful landscape, desert climes, pine covered high country and an abundance of topographical characteristics has made it a prime location in the eyes of the people seeking new homes or property. It’s a visitor’s paradise for vacations and has, over the years, become a hot spot tourist destination.
Arizona real estate market is soaring high with its increasing population contributed by the migrating populace from different states of USA. The people of Arizona are very friendly and cooperative in nature. The state has endless choices of entertainment and amusement, including parks, forests, rivers and a colorful Grand Canyon, which is one of the seven natural wonders of the world.
Arizona is also a well-known destination among retirees and is even more popular for the custom-built homes created around resorts, spas and other epicurean areas. Apart from that, there are plenty of first-class universities and colleges in Arizona. Phoenix, the capital of Arizona, comprises of incredible natural beauty. At Arizona, real estate and homes are available at an affordable rate and as per the needs of the people. The state is also famous for some popular sports arena where baseball is the major attraction for the tourists and other visitors. Baseball fanatics find this place really attractive and hence, an ideal place to live in.
Buying and selling real estate or property is not an easy task and there is always a certain amount of risk involved in it. Thorough study and extensive research are needed before investing in real estate or property. People want experienced knowledgeable agents who have maximum information about the area and can locate a real estate property as per their needs at a price below market standards. There are many real estate businesses that you can find online and some of them specialize only in Arizona Real Estate. It is advisable that if you are planning to do real estate transactions in Arizona always look for a specialist for that area. If you are taking the advice of any Arizona real estate specialist, your land transaction is definitely going to be smooth and profitable.
Sunday, 16 May 2010
There is quite a bit of real estate available in Arizona, because new homes are being built constantly. If you’ve ever been to Arizona, you may be surprised by its vast open spaces – and even the new developments that spring up don’t seem to take anything away from all of that wide open space. In fact, all of that beautiful space is what attracts many people to the Arizona real estate market!
Many people buy real estate from a distance, sight unseen. While this practice can be used to scam people out of their hard-earned money, if you follow certain guidelines you and your money should be relatively safe. Start by understanding what documents you should see throughout the sale process.
The first thing you should see is the MLS printout. MLS stands for Multiple Listing Service. The MLS printout is a copy of the listing that was sent out by the service. It contains a description of the property, and there may be statements made in the MLS that need to be verified for accuracy. If the property or home is in a new sub-division, you need to ask for the Public Report as well.
Other important documents that you should request include the Seller’s Property Disclosure Statement (SPDS), Covenants, Conditions, & Restrictions (CC&Rs), governing documents from the Home Owner’s Association, HOA Disclosures, the Title Report, the Home Warranty Policy, an Affidavit of Disclosure, Lead-Based Paint Disclosure, County Assessors Records, and a Professional Home Inspection Report. Make sure that you get a copy of all of these documents, for your own protection. It is a good idea to have your lawyer look at these documents as well.
There is quite a bit of information that you need to learn about a property in the state of Arizona before making a purchase. For instance, some places in the state may be infested with scorpions, which are quite common in Arizona and are hard to get rid of. Some areas of Arizona contain soil and groundwater that has been contaminated by improper disposal methods. All of this information can be found at the Arizona Department of Real
Estate (http://www.re.state.az.us/). You should use the various online maps that are available to stay away from less desirable properties.
Saturday, 15 May 2010
Have you spent years renting homes or apartments and have grown tired of paying all that rent money to someone else? If so, then it might be your time to consider purchasing a home, and keeping that cash for yourself. However, you do need to ensure that you are prepared on more than one level before jumping into the equity market. There are many financial considerations to make note of before you start looking for a home. But, if you can arrange your finances into a sensible plan and secure a mortgage then this can ultimately be the most rewarding purchase you have ever made or will make.
Finance plays a huge role in the decision to purchase your first home. This is to be expected as if you are purchasing your first home you will not likely have a few hundred thousand dollars sitting around and will have to find a mortgage of some sort. You should really make sure that you are prepared for the application for a mortgage as it will involve a thorough investigation of your past credit history. If there are any issues that you know of with your credit then you should take care of them before you apply for the mortgage. Sometimes this is a simple case of oversight, some things have been taken care of and not recorded as such, and sometimes there can be some debts that you will need to see to. Once these are taken care of, be sure to get a letter of release that you can show to the mortgage broker or company if necessary. If there are no issues with your credit then that will only make the process easier.
There is no stronger tool in the home buying process than having all your financing in line before you start shopping. This is a great attraction for sellers as they want their homes to sell quickly and without incident or trouble in the money phase, a buyer with ready-to-go financing's offers will hold greater favor with almost any seller. If you are mindful of these things then when the time comes to make your offer, the whole affair will go much more smoothly and you will be able to dedicate your time to what is important. How to decorate your new home.
Friday, 14 May 2010
Many people have asked whether or not FSBO's are really worth the time and effort involved in the sale. The simple answer is, Yes! It stands to reason that the FSBO industry is based on some amount of success or else it would never have grown to the size it currently is. And the industry is growing in size every year. Part of the reason for this phenomena is the fact that home sellers are becoming more and more educated on the involved process and as such are demanding a level of service that many real estate agents are not willing to provide, or able to provide due to a high number of clients.
The resolution to this problem has been the education of sellers and the drive to eliminate the middle man. For years people were convinced the the only way to sell a home was to contact their local realtor and then wait for the offers. But what if that agent was not providing enough service to sell the home in a timely manner? Was there any real way to ensure that this was being done? It can be hard to trust someone in such a way when nothing appears to be happening. But you can trust yourself right? So, why not give yourself the tools you need to become your own real estate agent?
The part that cannot be stressed enough is the need to educate yourself on the process before you undertake the selling of your own home. Start investigating the rules and regulations concerning real estate contracts and conveyance. Find out about liens and easements and inspections. In selling your own home there are a lot of hats that you will have to wear. Of course it never hurts to get legal advice and guidance from a lawyer educated in real estate law. There is also an abundance of information available online to help guide your education. The web is a great resource for almost every aspect of the home sale process so take the time to investigate these things to the full extent. Good luck!
Thursday, 13 May 2010
Thinking of building a new home or complex? Will you use an architect or a building designer? Both are involved in the design of buildings – their appearance, layout, structure, and so on. But what’s the difference?
The simplest difference is a legal one. To be called an “architect” in NSW, you have to be registered with the Board of Architects of NSW. The title “building designer” can be used by anyone designing buildings.
But that’s hardly even scratching the surface. Brian Basford is a building designer and treasurer of the Building Designers Association of NSW. He suggests that building designers are generally less expensive, and mostly involved in less flamboyant buildings. “It’s horses for courses. Most architects probably wouldn’t want to design a single bedroom extension for a pensioner, whereas I’ve done a lot of that.”
Brian also stressed that there are quite often overlaps between what architects do and what building designers do. There’s no simple rule. “But no matter what the job, good building designers and good architects both produce quality work”, he says.
Architect Gary Kurzer agrees that architects are more likely to be involved with more distinctive, “up-market” buildings. But not because of cost. “Architects work to your budget just like building designers. The real reason is that architects are a little more likely to stretch the boundaries and challenge convention.”
According to Gary, you should generally choose an architect if you want more than just a literal translation of your brief. “My clients normally have a rough idea of what they want. I take that idea and transform it into something they love, but could never have imagined themselves.”
The most important thing is knowing what you want from the service, and choosing someone that suits your job.
And whether you choose an architect or building designer, remember, qualifications are no guarantee of quality. Always ask to see previous examples of their work. Ask for references from previous customers. Ask to see their qualifications. Ask how long they’ve been working. Do they have professional indemnity insurance? Are they a member of an accredited body?…
In the end, it’s like anything else… there’s no substitute for common sense.
Thanks to Gary Kurzer, Architect, 0411044448, and Brian Basford, Building Designer.
Q: Are architects and building designers the same thing?
A: No. Architects must be registered with the Board of Architects of NSW.
Q: Will I get a better design from an architect?
A: Not necessarily. The only guarantee is a minimum level of qualifications. Architects must have a Bachelor of Architecture degree (5 years) as well as the demonstrated ability to deal with clients and satisfy their requirements. Generally this means at least a couple of years experience in an architect’s office.
Q: Are building designers more in touch with builders and other trades?
A: Not necessarily. Architects are trained to deal with and manage all aspects of the building project. It all comes down to the individual’s experience and abilities.
Q: Are Building designers “would-be” architects?
A: No. Building design is a recognised profession with its own national body (the BDAA) offering 3 levels of accreditation based on experience and quality – but registration isn’t compulsory. Many building designers have the qualifications to register with the Board of Architects but they choose not to because they don’t think the name “architect” is worth the ongoing cost of registration.
Q: Are architects more expensive?
A: Not necessarily. An architect will work to your budget like a building designer. They can do anything from a simple design to very complex interior and exterior detailing to superintendence of the building process. Your building costs and ongoing running costs may also be less. For example, find out if your architect is incorporating cost-saving measures into the building process. They may also design to take advantage of natural lighting, ventilation, heating, cooling, etc. which will save you less in electricity.
Q: How do I tell if they’re really an architect?
A: Call the Board of Architects of NSW – (02) 93564900 or visit http://www.boarch.nsw.gov.au/f_consumer.html.
Q: How do I look for an accredited building designer?
A: Call the Building Designers Association of NSW – Sydney (02) 49264855 or visit http://www.bdansw.com.au or http://www.bdaa.com.au/index.htm.
Q: Where else can I go for further information?
A: http://www.architecture.com.au - Royal Australian Institute of Architects
http://www.bdansw.com.au - Building Designers Association of NSW
Wednesday, 12 May 2010
Tax savings through cost segregation is no longer out of reach for investors in small and medium size properties. With appraiser expertise, fees for analysis are often one-third to one-half lower than those charged by traditional preparers.
Several years ago a definitive court case ruled that tangible personal property included in an acquisition or in overall costs should be depreciated as personal property for asset recovery, using the old Investment Tax Credit principles to classify personal property.
This meant that owners of improved properties could distinguish between real property and personal property to depreciate component costs over varying useful lives. Basically, instead of depreciating an entire commercial property over 39 years, or residential roperty (single-family rentals or multifamily) over 27.5 years, certain components are correctly identified as depreciating in much less time. For about 135 items, useful life periods can be 5, 7 or 15 years. This is known as cost segregation.
The result of increasing depreciation is lower taxable income (which would have been taxed at 35%) and more income taxed at the capital gains rate (15%) when the property is sold. Furthermore, it works for any type of improved property.
Until recently, primarily large accounting firms or engineering firms implemented cost segregation studies, addressing large and newly built properties and sometimes outsourcing the analysis.
Prices for those analytical reports, usually in the $10,000 to $40,000 range, were out of reach for owners of small properties, especially those holding less-than-new assets. Unfortunately, those owners representing the largest segment of real estate investors in the country were mostly overlooked by previous providers of cost segregation services.
Now a revolutionary paradigm shift is opening the door to very significant savings for owners of small properties. Much of the change is based upon introducing the efficiencies of highly knowledgeable real estate appraisers who often apply industry-accepted cost estimation techniques before determining remaining asset life. By not “over-engineering” the staffing or production process, professional fees are lower. Yet, results can usually meet or exceed those of far more expensive reports. This approach has been successfully field-tested by IRS auditors.
Changes that appraisers are introducing to cost segregation analysis and reporting are addressing: 1) the size of the property being analyzed, 2) the age of the property, and 3) an affordable price point. O’Connor & Associates, a nationwide real estate service firm, is taking advantage of such techniques to effect these beneficial changes:
1. Owners of property with an improvement basis as low as $500,000 can benefit from cost segregation. This compares to the limited properties worth $5 to $10 million and above that previously benefited.
2. Existing properties built or purchased after 1986 offer significant savings in year-one of cost segregation, even without producing original cost documents. Capturing non-segregated depreciation from prior years is perfectly allowable by the IRS. This compares to firms previously applying the methodology only to new construction.
3. Fees are no longer prohibitive. To prepare an analysis and report for many small properties, prices are low enough to generate at least 3 times the report cost in the first year.
This compares to the traditional fees ranging from $10,000 to $20,000 and up for comparable size properties.
It is wise to keep the owner’s CPA or tax preparer abreast throughout the process. For older properties, the CPA may need to complete a Form 3115 to submit with the tax return so the owner can realize savings on items not previously depreciated - without filing an amended return.
Income producing properties worth as little as $500,000 can achieve a 3:1 payback ratio of tax savings over the modest price of a cost segregation report. If owned for 3 or more years, the typical payback ratio is 10:1.
In late 2005, O’Connor’s pipeline of cost segregation work was up more than 100%. As owners are preparing for 2005 federal tax filings, many are tapping into this opportunity to lower their federal taxes. Even general partners who are not paying federal income taxes should use this depreciation method since K-1s will reflect lower taxable income to benefit their limited partners.
Tuesday, 11 May 2010
Determining Fair Market Value is an eternal struggle and major balancing act. That’s because buyers want a house to appraise on the low side—to keep the purchase price down. While sellers want the same house to appraise on the high side—to make the sale price higher. And then you’ve got the owners of the house—who also want the appraisal to be on the low side, in order to keep the property taxes down.
So with all these different agendas and points of view, how is the fair market value of a real estate property actually determined?
Once a year, your county sends all area homeowners official notices that put a dollar value on their property. And property taxes are based on those dollar values. But before those notices get sent out, a long, detailed process usually takes place. First, the land is valued as if it’s vacant—an empty lot, in other words. Then any improvements are described and measured. Improvements consist of the house and any other structures, pools, sheds, garages, and so forth. Next, most counties check the Marshall Valuation Service Cost Guide. It’s a standardized nationwide guide for determining the value of the cost per square foot to build a building that fits the description of the improved property. Next, if the house isn’t brand new, the replacement cost is considered, as well as depreciation; the year the house was constructed and the condition of the property are factors here. Appraisers then must take the critical step of comparing the value of the house with recent selling prices of similar homes in the neighborhood. At this point, the appraisal might stand “as is”—or it might be adjusted upward or downward.
Market Value is a theory, in other words—not an unchanging fact.
In a perfect world, you have to have willing buyer and a willing seller. Neither is under duress. Both are in a position to maximize gain and are trying to do this. But in the real world, things are rarely that simple and equally balanced. Which is why people feel differently about the appraisal value of a house. It really depends how strong their position is as a buyer or seller.
Does the local economy come into it at all? You bet it does.
Ask a successful Realtor about that! He or she will tell you they’ve noticed that the Rio Grande Valley’s fast-growing economy is attracting people from other areas who consider real estate here a bargain. That helps fuel increases in property values.
So—now you know where that Grand Total comes from.
You’re armed with the information you need to make a better house-buying decision. For instance, you can understand how two virtually identical houses that are in two different neighborhoods could be very far apart in price and appraised value. And why your choice of the right house in the right neighborhood could be worth a not-so-small fortune to you right now—and years down the road.
Monday, 10 May 2010
The purpose of this article is to analyze valuation methodology for several atypical types of apartments. Various circumstances and situations can cause an apartment complex to have above-or below-market rental rates, occupancy rates and operating expenses. This analysis examines the following two situations:
1. low-income subsidized apartments, which receive above-market rental rates from HUD or another government agency, and
2. projects that are part of the Low Income Housing Tax Credit (LIHTC) program.
The LIHTC program was established by the U.S. Congress to encourage development of affordable housing in economically disadvantaged areas. Project developers receive a tax credit for following the guidelines established by the program. They typically sell these credits to Fortune 500 corporations for 45 percent to 60 percent of the total project cost, excluding land.
The first step in the valuation process is analyzing market value definitions. The following is the definition from the Texas Property Tax Code, Section 1.04 (7): market value means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:
a. exposed for sale in the open market with a reasonable time for the seller to find a purchaser,
b. both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions to its use, and
c. both the seller and the purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.
Section (b) of the Texas Property Tax Code further requires: the market value of property shall be determined by the application of generally accepted appraisal techniques, and the same or similar appraisal techniques shall be used in appraising the same or similar kinds of property. However, each property shall be appraised based upon the individual characteristics that affect the property's market value.
The definition of market value, according to the 10th edition of The Appraisal of Real Estate published in 1992 by the Appraisal Institute, is: market value is the most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
The term which requires further review in the above definition is "knowledgeably." Is the purchaser knowledgeable regarding the effort required to comply with subsidized housing program requirements and tenants? Does he consider the effort to be rent for real estate or compensation for services? Does the purchaser of an LIHTC project understand that maximum rents are now established for at least 15 years based on deed restrictions? (LIHTC deed restrictions are now required for 30 years in Texas and most other states.)
Fee simple estate is defined in the third edition of the Dictionary of Real Estate Appraisal published by the Appraisal Institute as: absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat.
The practice in Texas is to base the assessed value on the value of the fee simple estate as opposed to the leased fee estate. This analysis is based on valuation of the fee simple estate instead of the leased fee estate.
The definition of leased fee estate in the third edition of the Dictionary of Real Estate Appraisal is: an ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the lessee are specified by contract terms contained within the lease.
The primary difference between the fee simple estate and the leased fee estate is that the tenant and landlord are each bound by commitments to pay rent and allow use of the property for a term. The contract rent agreed to between landlord and tenant may or may not be equal to market rent. For example, if a landlord entered into a 30-year lease for rent of $5 per square foot 15 years ago (when market rent was $5 per square foot) and the current market rent is $10 per square foot, the tenant has a substantial advantage. The tenant has a leasehold estate which may or may not have value depending on the term of the lease, the contract rent and market rent.
The Dictionary of Real Estate Appraisal defines leasehold estate as the interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions.
Conversely, if the tenant agreed to a rental rate of $15 per square foot in a strong market 10 years ago, and is committed to pay that rent for another 10 years, there is a substantial advantage to the landlord, and the tenant has a leasehold estate with a negative value. Practice in Texas is to establish the assessed value based on the fee simple estate instead of the leased fee estate. Therefore, the relevant criteria for determining market value includes market rent, market expenses, market occupancy and market derived capitalization rates. If a taxpayer made a poor business decision 10 years ago and has substantially below-market rent, it is inequitable for the taxing entities to reduce their ad valorem tax due to the bad business decision of the property owner. Conversely, if a property owner made a fortuitous or wise business decision and entered into an above-market lease, it is not appropriate to collect an above-average level of ad valorem tax from him because of his luck or prudence.
Market rent is defined by the third edition of the Dictionary of Real Estate Appraisal as: the rental income that a property would most probably command in the open market; indicated by current rents paid and asked for comparable space as of the date of appraisal.
Market rent is the compensation paid for the use of the real estate. It should not include compensation paid for factors other than the use of the real estate such as additional services which are not typically provided.
The next step in this process is to analyze valuation of properties which participate in subsidized programs which receive above-market rental rates. The final section will address valuation of projects in the LIHTC program.
Valuation of Subsidized Housing
This analysis will consider both the income and the sales comparison approaches to value. The cost approach is not utilized since it would provide similar results after calculating external obsolescence due to differences in rental rates.
Apartment owners who participate in subsidized housing programs may or may not receive above-market rental rates. For many years, HUD offered above-market rental rates as an inducement to property owners to participate in the program. There are two reasons for HUD paying an above-market rental rate:
1. to compensate for the inconvenience of dealing with a bureaucratic government program which mandates detailed inspections not typically required in the private market; and
2. to compensate for working with residents who tend to be at the lowest socioeconomic level in our society.
It has not been unusual for HUD to pay contract rent of $0.70 to $0.80 per square foot per month for subsidized housing projects, even though the market rent for competing projects might only be $0.45 to $ 0.50 per square foot per month. The rent and sales comparables used in this analysis are located in a neighborhood characterized by income levels in the bottom quartile of the Houston area, minimal new construction of residential or commercial buildings for 25 years and heterogeneous levels of quality and appeal. Some sections, such as Riverside, have experienced gentrification, but other areas are marked by poorly maintained properties. Both the market rent projects and the subsidized rent projects are located in the area south of downtown Houston, bound by 288 to the west, Interstate-45 to the east, and Almeda-Genoa to the south. Consider the following tables which list rental rates for projects which do not participate in a subsidy program (market rent projects) and projects which do participate in a subsidized rent program:
Sunday, 9 May 2010
Property taxes are one of the largest line item costs incurred by apartment owners. However, many owners do not appeal effectively. Even though owners realize that property taxes can be managed and reduced through an appeal, some view taxes as an arbitrary estimate provided by the government which can't effectively be appealed. It tends to boil down to the old adage, "You can't fight city hall".
Fortunately, the property tax appeal process in Texas provides owners multiple opportunities to appeal. Handled either directly by the owner or by a property tax consultant, this process should involve an intense effort to annually appeal and minimize property taxes. Reducing the largest line item expense has a significant effect in reducing the owner's overall operating expenses. While it is not possible to entirely escape the burden of paying property taxes, it is possible to reduce taxes sharply, often by 25% to 50%.
Why some owners don't appeal
Some property owners don't appeal because they either don't understand the process, or don't understand that there is a good probability of achieving meaningful reductions in property taxes. Some owners believe that since the market value of their property exceeds the assessed value, then it is not possible to appeal and reduce the property taxes. Although appeals on unequal appraisal are relatively new, there is a clear-cut way to appeal property taxes at the administrative hearing level based on unequal appraisal. Unequal appraisal occurs when property is assessed inconsistently with neighboring properties or comparable properties. Also, some owners are reluctant to hire a property tax consultant, even though many consultants will work on a contingent fee basis, in which there is no cost to the owner unless property taxes for the current year are reduced.
Overview of appeal process
The following are the primary steps in the annual process for appealing property taxes:
· Request notice of accessed value
· File an appeal
· Prepare for hearing
. Review records
. Review market value appeal
. Review unequal appraisal appeal
· Set negotiating perimeters
· Administrative hearings
· Decide whether binding arbitration or judicial appeals are warranted
· Pay taxes timely
Requesting a notice of assessed value
Property owners have the option of requesting a notice of assessed value for their property annually. Section 25.19g of the Texas Property Tax Code provides the owner the option to request a written notice of the assessed value from the chief appraiser. Owners benefit from requesting and receiving a written notice of assessed value for each property because it ensures they have an opportunity to review the assessed value. This notice should be sent on an annual basis. The appraisal district does not have to send a notice of assessed value if the value increases by less than $1,000. However, if an owner was not satisfied with a prior year's value and the value remained the same, the appraisal district probably will not send a notice of the assessed value for the current year. In this situation, the owner might forget to protest since a notice of assessed value for the property was not received.
How to file and appeal
On or before May 31st of each year, the property owner should file an appeal for each property. However, while many owners are comfortable with an assessed value, in many cases there is a basis for appealing. Two options for appealing include:
1. unequal appraisal, and
2. market value based on data the appraisal district provides to the owner before the hearing.
You can appeal by completing the protest form provided by the appraisal district and indicating both excessive value (market value) and unequal appraisal as the basis for appeal. In addition, the property owner can simply send a notice that identifies the property, and indicates dissatisfaction with some determination of the appraisal office. The notice does not need to be on an official form, although the comptroller does provide a form for the convenience of property owners. (You can access the protest form at www.cutmytaxes.com .)
House Bill 201 - helpful information
House Bill 201 is the industry jargon for a property owner's option to request information the appraisal district will use at the hearing, and to receive a copy 14 days before the hearing. The name House Bill 201 is derived from the bill used to enact the law. The details for House Bill 201 are located in sections 41.461 and 41.67d of the Texas Property Tax Code. When filing a protest, the property owner should additionally request in writing that the appraisal district provide a copy of any information the appraisal district plans to introduce at the hearing. The appraisal district will typically require the property owner to come to the appraisal district office to pick up the information and charge a nominal fee, typically $0.10 per page. While the cost for House Bill 201 requests are quite low (typically $0.50 to $2.00 per property for residential and commercial) the information is invaluable in preparing for the hearing. In addition, filing a House Bill 201 request is important because it limits the information the appraisal district can present at the hearing to what was provided to the property owner two weeks before the hearing.
Preparing for the Hearing
Start by reviewing the appraisal district's information for your property for accuracy. If the appraisal district overstates either the quality or quantity of improvements, this will justify a deduction. The next step is to review the information on market value and unequal appraisal provided by the appraisal district in the House Bill 201 package. If the subject property is an income property, review the appraisal district's income analysis versus your actual income and expense statements. Consider the following areas as opportunities to rebut the appraisal district's analysis:
· Gross potential income
· Vacancy rate
· Total effective gross income, including other income
· Operating expenses
· Amount of replacement reserves
· Net operating income
· Capitalization rate
· Final market value
Many property owners and consultants start with the actual income and expense data, and use one or two of the assumptions provided by the appraisal district. However, they primarily utilize information from the actual income and expenses in preparing their own income analysis and estimate of market value for the subject property.
When comparable sales are the primary issue in determining market value, start by reviewing the comparable sales data provided by the appraisal district versus the assessed value for your property. Convert the sales prices from the appraisal district to either a per square foot or per unit basis. Then compare the sales to the per square foot or per unit assessment for your property. Sales can be helpful during the hearing.
The cost approach is not typically used in the property tax hearings except for brand new or relatively new properties. If your property is new, the appraisal district will probably want to review the cost information and you probably won't want to show it to them. In many cases, the actual cost of a property is higher than the estimate provided by the appraisal district. If this is the case, you will likely want to appeal on unequal appraisal instead of on market value. No matter how good your argument or how passionately it is expressed, the appraisal district staff and Appraisal Review Board (ARB) members tend to believe that cost equals value for new properties.
Deferred Maintenance and Functional Obsolescence
Another issue that is important for the market value appeal, and to some extent for a unequal appraisal appeal, is information on deferred maintenance and functional obsolescence. Deferred maintenance could include items such as:
· rotten wood
· peeling paint
· roof replacement
· substantial repair
· landscaping updating and other similar items
Most appraisal districts give minimal consideration to requests for adjustments based on deferred maintenance, unless the property owner provides repair costs from independent contractors. There are some exceptions where a cooperative informal appraiser or sympathetic ARB will take an owner's estimate of deferred maintenance and make adjustments based on those costs. Most appraisers and ARB members are much more inclined to make adjustments if third-party cost estimates are provided. In addition, the appraisers and many ARB members are inclined to only deduct a portion of the total cost using the argument, "we've been giving a replacement reserve allowance for this item for the past years and it'd be double-dipping to deduct the whole value off it in the current year." While this is an incorrect appraisal argument, it does tend to be the practice at many appraisal districts. The reality is, the cost of curing deferred maintenance is deducted from the offer by a prospective buyer.
Examples of functional obsolescence would be a three-bedroom apartment unit that only has one bathroom, or a two-bedroom apartment that does not have washer/dryer connections in an area where those connections are common. Another example would be an apartment that has a window air conditioner in an area where central HVAC is typical and expected.
Unequal appraisal analysis
The Texas Property Tax Code, section 41.43(b)(3), provides for appraising or appealing on unequal appraisal including ratio studies and "a reasonable number of comparable properties appropriately adjusted." Virtually all unequal appraisal appeals involve a reasonable number of comparables that are appropriately adjusted. Comparables are similar properties.
This is primarily because of the difficulty and cost of performing a ratio study. Historically, the position of many appraisal districts was that the property owner needed to get a fee appraisal for each comparable property and compare the market value estimated by the appraiser to the assessed value. The cost of getting multiple appraisals made this process financially impractical. Compiling a reasonable number of comparables appropriately adjusted is simple and straightforward. The first step is to choose a reasonable number of comparables. Usually four to five comparables is the typical number used at a property tax hearing, but in some cases, property owners choose ten to thirty. In some cases, there may only be one to four comparable properties that merit consideration. Most unequal appraisal presentations include three to ten comparables. The number of reasonable comparables depends on the location, type, size and age of the property. For example, there would be fewer five-year-old bowling alleys in the northern part of Harris County compared to recently built apartment complexes.
After choosing a reasonable number of comparables, array them in a table format, including fields of data such as account number, net rentable area, year built, street address, assessed value and assessed value per square foot.
You should also review the information in the appraisal district's House Bill 201 packet on an unequal appraisal. In many cases, the appraisal districts unequal appraisal analysis will document a reduction in your assessed value! If the appraisal districts unequal appraisal analysis documents a reduction, either the informal appraiser or the ARB should make the adjustment in assessed value for you. Having the opportunity to get an assessed value reduced automatically based on the appraisal districts unequal appraisal analysis is one of the reasons to appeal every property every year.
Completing Hearing Preparation
After reviewing the appraisal district's information on your property, the House Bill 201 package, and your market value and unequal appraisal analyses, determine the strengths and weaknesses of each approach and decide which basis of appeal provides the best opportunity for a meaningful reduction. Although appeals on unequal appraisal have clearly been the law of the land since 2003, some appraisal districts and review boards have chosen to disregard the option for unequal appraisal put forth by the Texas Legislature. Although there is litigation underway which should resolve this issue within the next year, it would be prudent to visit someone who is knowledgeable in local property tax appeals to determine whether the county appraisal district and ARB in your area are considering appeals on unequal appraisal.
Set Negotiating Perimeters
After reviewing the information, it is important to set the highest level of assessed value you will accept at the informal hearing because after you accept an assessed value, the appeal process will be complete for the year and you will not be able to appeal further.
Administrative Hearing Process
The two steps to the administrative hearing process are the informal hearing and the appraisal review board hearing.
The Informal Hearing
The following procedure and rules are typical at the informal hearing:
· Meet with an appraiser representing the appraisal district. You should be polite and prepared at this meeting. While many property owners are frustrated and angry at the high level of real estate taxes, the appraisal district appraiser does not control the tax rate set by various entities nor the policy regarding property taxes in the area or the state. The appraisal district appraiser is trying to execute his job in a professional manner and appreciates it when property owners work with him on that basis.
· Provide the appraiser information on your property and he will review that information and information he has available.
· The appraiser will likely make an offer to settle the assessed value of your property fairly quickly. You can either accept the value or negotiate further. Either way, you should know within ten to twenty minutes whether the appraiser will offer an acceptable value. If the value is acceptable, conclude the negotiation by agreeing to the value for the current year. If the value offered is not acceptable, ask to go forward with an ARB hearing.
Appraisal Review Board Hearing (ARB)
The ARB hearing panel consists of three impartial citizens selected and paid by the appraisal district. The age of most ARB members ranges from fifty to eighty. There is an unfortunate bias in the system since the ARB members are selected and paid by the appraisal district, but most ARB members are reasonable people who want to make appropriate decisions.
Like the appraisal district appraiser, the ARB does not set tax rates or tax policy. The members are also not responsible for the effectiveness of local government. It is unlikely to help your case if you complain to the ARB members about either the high level of property taxes or the poor quality of some aspect of local government.
The ARB will expect you to make your presentation in about three to ten minutes. They will typically wait patiently while you make your presentation and may have questions after you conclude. An appraiser from the appraisal district, who may or may not be the same person who attended the informal hearing, will represent the appraisal district at the ARB hearing. The appraiser will comment on the evidence you presented and will often present other information the appraisal district has available. If you requested a House Bill 201 package for your property, it substantially limits the evidence the appraisal district appraiser can offer at the hearing. The ARB members may have questions after the appraisers presentation. Then the property owner will be given a final opportunity to rebut evidence presented by the appraisal district appraiser and quickly summarize the evidence. The ARB members strongly prefer you not repeat your entire presentation at this point.
After hearing the evidence, the ARB members will confer and make a decision. This decision is not subject to negotiation and they will not revise the decision if further evidence is presented. When this decision is announced, the hearing is effectively over. The ARB will send a letter two to four weeks later summarizing their decision and notifying the owner of a 45 day limitation from the date receipt of the ARB decision to either request binding arbitration or file a judicial appeal.
Binding Arbitration or Judicial Appeal
Beginning September 2005, owners of properties with an assessed value of $1 million or less may file a request for binding arbitration. The owner must file with the appraisal district no more than 45 days after receipt of the notice of the ARB's decision. The binding arbitration option is interesting because it includes a loser pays provision. The appraisal district pays for the arbitrator's fee if the final value is closer to the owner's opinion of value, and the owner pays for the binding arbitration if the final decision is closer to the appraisal district's opinion of value. Binding arbitration was passed to provide an alternative to judicial appeals, which can be expensive to prosecute.
Many owners pursue judicial appeals to further reduce property taxes. In 2005, O'Connor & Associates filed over 1,200 judicial appeals on behalf of property owners in the state of Texas. The judicial appeals can be expensive if the property owner and attorney don't understand the process and have a plan in place to minimize the cost of legal and expert witness fees. Judicial appeals are typically successful. However, success requires cooperation from the property owner, such as providing responses to questions, documents and a deposition if requested. The judicial appeal is meaningful as an option to minimize property taxes since it reduces the base value. This is important because the appraisal district and ARB consider the base value in the subsequent year when setting the administrative hearing value.
Property owners can generate substantial reductions in property taxes by appealing annually. Consider appeals on both market value and unequal appraisal and obtain the House Bill 201 information when preparing for the appeal hearing. Property owners should consider all three levels of appeal: informal hearing, ARB hearing and judicial appeal/binding arbitration. While the ARB hearing and judicial appeal/binding arbitration can be an intimidating process, each is straightforward once you understand the mechanics.
Saturday, 8 May 2010
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Friday, 7 May 2010
When you are apartment hunting, prepare a rental search plan. Be sure to know in advance what you want in an apartment and what you can live without. Decide in advance what areas of the city you could consider living in and make a list of apartment buildings within that perimeter.
Be sure to consider how far and how convenient it will be for you to travel to your job or your school or your family and friends. Also, how far is the apartment from stores, banks, hospitals, Church (if you attend) etc. If you have a car, make sure that there is adequate and convenient parking space 24/7. If you don't drive make sure that there is close by public transportation.
Narrow your apartment locating to the size of rental unit you need. Studio apartment or one bedroom apartment or 2 BR apartment or more. Are you considering a furnished apartment or do you possible need a short term rental. If you are renting an apartment with a cat, dog, or other pet, you need to find out which apartments allow renting with pets and which do not. And, if they do allow pets, is there an additional security deposit required and if so, how much it is. Do you need an apartment complex with an exercise room or tennis courts or a pool or a recreation room, etc. or do you simply need and desire a nice clean and quiet pad.
Be realistic about what you can afford. Most apartment renting guides suggest that your rent should not be more than 25% to 30% of your income. This can vary depending on the income bracket, but be sure to be "real world" when budgeting additional apartment expenses such as heating and air conditioning and other utilities. If you fall short of affording the apartment of your choice, you might consider sharing an apartment with a roommate or roommates. Keep in mind that living with roommates can help you afford an upscale apartment or even, in some cases, luxury apartments, but it also has extreme restrictions to your privacy.
If you are familiar with the area and its neighborhoods, that gives you a distinct advantage for your apartment search. If, however, you are relocating to a new city or are not particularly knowledgeable about the city, you may want to contact an Apartment Locator or an Apartment Finder.
Once you narrow your search for apartments down to apts which suit your needs and desires you must be well organized & well prepared for your visits to the apartment complexes. When inspecting the rental premises be on the alert for unsafe conditions, excessive noise from traffic or playgrounds or neighbors. Visit the apartment building at night as well as the daytime hours. This will give you a more comprehensive understanding of the total space you will be residing in.
When you find the apartment complex that meets your renting needs and desires, you must be ready to put your "best foot forward" when you meet the apartment's rental agent. This person may be the apartment building manager or a renting agent for the apts. You should prepare for this apartment renting interview in a professional and intelligent manner. Be advised that you are going to be asked to provide proof that you are a reliable prospective tenant. You are most likely going to need references from previous landlords. You may also be required by the apartments to show that you are gainfully employed and can afford the rent. Many landlords may require a credit report. If you are a first time renter and/or you have limited credit history you may be asked for references from family, friends, employer, professionals, etc. Likewise if you are renting with bad credit you will certainly want to come to the interview with a strong selection of references.
You are not necessarily restricted from apartment renting with less than perfect credit, but you may be required to put up an additional security deposit and possibly have a credit worthy person co-sign the apartment lease with you. Don't unprepared for by requests for any of these things. Be sure to fill out a 100% truthful apartment rental application and come to the interview with references, proof of employment, credit information and any other renting resources at the ready. If you do have a credit history or renting history that might be detrimental, going through an apartment locator or apartment finder may be the best solution. They will present your history to the landlord for you, (make sure they are 100% truthful about it) and they can also be quite helpful and save you a lot of time because they most likely will know which landlords and apartments are more lenient in these circumstances. They can also advise you as to exactly what kinds of references and documents you might need to prove that you can be a responsible tenant.
You Have Located Your "Dream Apartment"
Once you have located your "dream apartment", or as close to your perfect apartment as possible, now it is necessary to pay extremely close attention to the particulars of the rental agreement. An Apartment Lease is a contract between you and the landlord. Once agreed upon and signed by the tenant and the landlord, the rental lease creates obligations and restrictions for both parties. The most obvious covenants of the apartment lease are the length of the rental, (Six month lease, one year lease, two year lease, etc.) The amount of the security deposit, when the rent is due, who is responsible for what utilities. Also in that apartment lease, however, are stipulations, (sometimes in small print) that can cover a great variety of landlord and tenant obligations and restrictions.
They can include, but are not limited to, the following:
* Maintenance of the apartment
* Care of the premises
* Governmental regulations
* Eminent Domain
* Nuisance and noise clauses
* Stipulations as to the circumstances whereby the landlord can enter the premises
* Use of Common Areas
* Keys and locks
* Loss or damage
* What the landlord may do if the rent is in arrears
* What the tenant can do to bring the rent current before any kind of action might be started
* Non performance or breach of the contract by the renter
* Renter's penalties in the event of early termination
* Circumstances which might cause the tenant or the landlord to break the lease prior to the end of the term
* Heat and other utilities
* Removal of goods
* Surrender or Non-Surrender of the premises
* Waivers of various obligations
* Prohibited reprisals
* Garbage disposal
* And the list goes on and on and on.
Prospective tenants should read an Apartment lease thoroughly. Prospective apartment renters should understand everything that is contained in that lease and make an informed decision to be 100% accepting of all the provisions for both the tenant and the landlord, that you are positive that you can live up to your end of the bargain and that you are comfortable with the provisions on the landlord's end.
If you do not understand every single clause of that apartment lease then do not sign it until you do understand it. If necessary and if possible, request assistance in interpreting the lease from a trusted source such as a knowledgeable friend or family member or employer or professional, or anyone else who can understand it and explain it to you. If necessary get legal advice. It can cost additional funds if you do not qualify for free legal assistance, but that additional cost might save you a ton of money and save you a ton of heartache and aggravation down the road.
If you do not agree with any of the provisions of that apartment lease and/or you feel that you can't live up to the tenant's obligations, or if you are not in agreement with any of the landlord's rights under the agreement, then do not sign the lease until/or unless it can be changed to your satisfaction. If the apartment rental agreement cannot be amended to meet your needs and desires and comfort level then do not sign the lease and do not rent that apartment. The Apartment Rental agreement that you sign as a prospective tenant will not change once you become the actual tenant of that apartment.
Good luck in your apartment search and good luck in your new apartment.