St. Louis Property Solutions

HOME BUYER TAX CREDITS

The $8,000 first-time home buyer tax credit has been extended.

And

Now there is a TAX CREDIT UP TO $6,500 FOR REPEAT BUYERS or Move-up homebuyers.

Here’s hoping this further stimulates economic recovery in the housing sector.

More buyers are now eligible for tax breaks under the new law. Income limits for people who qualify for a tax credit are far more generous than under the previous law. Move-up buyers who have lived in one residence for five consecutive years of the past eight can now qualify for a tax credit up to a maximum $6,500 of a new principal residence!!! There are income limits that apply. The home must be used as a principal residence for the next three consecutive years. Buyers must sign their contracts by April 30, 2010 and close by July 1, 2010.

Here’s an article in the Wall Street Journal with more information.

Whether you are buying or selling YOU have options we are
STL Property Solutions, LLC.

Foreclosures and Consumer Sentiment

According to The September/October 2009 issue of The Residential Specialist; pg. 7; Published by the Council of Residential Specialists; 430 North Michigan Ave., Suite 300, Chicago, IL 60611

Foreclosures and Consumer Sentiment

     One million new foreclosures were filed in the first five months of 2009, a number that could reach 2.4 million by the end of the year, according to estimates by the Center for Responsible Lending (CRL), a nonprofit policy group. CRL estimates that these foreclosures could affect as many as 70 million nearby households and contribute to lost property values totaling $502 billion, or about $7,200 per family. The group also projects that by 2012, foreclosure starts could rise to 9 million and cost 92 million neighboring households $1.9 million in lost home value.
     But consumer sentiment regarding foreclosed properties may be changing. A separate survey commissioned by real estate search site Trulia and RealtyTrac, an online marketer of foreclosure properties, finds that a growing number of Americans are willing to buy foreclosed properties. More than half of the U.S. adults surveyed (55 percent) said they are at least somewhat likely to purchase a foreclosed home in the future, compared with 47 percent who felt that way in November 2008. Many consumers believe that foreclosed homes are a better bargain than before, with 40 percent expecting to pay at least 50 percent less for a foreclosed home, compared with 31 percent six months ago. However, 85 percent of U.S. adults are still concerned about potential negative aspects of purchasing a foreclosed property, up from 80 percent in November 2008. The top concerns were hidden costs (71 percent), perceived risk (46 percent) and possible loss of value (31 percent).
     Adults ages 18 to 44 were the age group most likely to purchase a foreclosed property (66 percent), while current renters were more likely to consider buying a foreclosed property (68 percent) than current homeowners (49 percent).

Tax Tips 2008

It is not too late to get your company in order for year end! Take some time to evaluate your financial situation.

1. Consult your accountant or tax advisor. Use their expertise to help determine how best to organize your business and what kind of business entity is best for your operation.

2. Documentation, Documentation… Help your bookkeeper help you. Take whatever deduction you are entitled to but make certain that you keep good records to back up whatever is claimed. Short cuts in record keeping never pay off! Claim your deduction in the correct year and pay by check not cash.

3. Expenses need to pass the ordinary and necessary cost of doing business test. The IRS is looking for solid proof that the expenses were actually incurred. You must establish your right to claim, so be prepared to prove you are entitled to the write-off.

4. Do not send up red flags and increase your chance of being audited. The IRS is interested in auditing returns that are most likely to produce additional revenue. A few of these items that draw attention to your tax return.
          Returns claiming home office deductions
          Big deductions for business travel and entertainment expenses
          Low S corporation shareholder salaries in relation to other distributions
          A major change in your income compared to your prior tax returns
          Deductions for automobile expenses
          If your deductions exceed a target range set by the IRS or equal a high
             Discriminate Information Function (DIF) score.

Deduction Do’s and Don’ts

Home Office
If you have a home office you can deduct the entire business related mileage from your driveway until you return home. Your office isn’t limited to a full room but can be part of a room. Determine the square footage and include, rent or mortgage, insurance, electricity, etc. Make sure you define home office the same way the IRS does.

If you use part of your home as a business office and if you take a depreciation deduction for your home office, keep in mind if you sell your home at a gain you must pay tax on the amount of depreciation you claimed. If you have a single phone line in your home then the presumption is that all local calls are personal in nature and not deductible.

A Family Business
You can hire your children to work for your business – depending on the type of work, your kids can begin earning wage from around age 8. This allows you to shift income away from your business to your children since they are probably in a lower tax bracket. Also, instead of supporting your parents with after-tax dollars, you may find you can hire your parents, too.

Your kids should be old enough to handle the work and can help with mailings or filing. The type of work they do should be specific to your industry.

Traveling
Expenses for traveling away from home, overnight, for business-related or continuing-education trips are deductible. Your home is considered to be the entire city or general area where your principal place of employment is located.

Do not have a category lumping together travel and entertainment together. This is a mistake because while meals and entertainment expenses are only 50% deductible expenses for business travel, lodging and continuing education are 100% deductible.

Travel expenses away from home can provide enormous tax savings. You can deduct all costs related to your professional work.

You cannot deduct items considered personal enjoyment. Keep a travel journal. Travel expenses for business trips are carefully reviewed by the IRS to determine if they are merely disguised vacations. No deduction will be permitted particularly with various travel, entertainment, and meal expenses, unless the taxpayer verifies all of the following items for each: Amount, Date, Time and Place, Description, Business Purpose.

Meals
Get the 100% deduction allowed for food if the: Employer-provided meals on the employer’s premises, holiday parties, employer-paid meals and entertainment that are treated as taxable compensation to employees, meals and entertainment provided to the general public for promotional or advertising purposes.

Meals with clients or meals when traveling are only 50% deductible. Active discussion aimed at obtaining immediate revenue or that the entertainment occurred in a clear business setting. Expenses need to be directly related to the active conduct of the trade of business.

Gifts
Gifts are 100% deductible and there is not a limitation for a gift made to business entities as long as not for the benefit of a particular person.

There is a strict $25 limit annually per each individual person, client or employee.

Automobile
Determine what is best for your company for deduction of automobile expenses, actual expenses or a mileage allowance reimbursement. Either way keep track of your mileage, record designation and reason.

Fines and penalties paid to the government for violation of any law are not deductible, such as tax penalties, parking tickets, or fines for violating city housing codes. Even if you received the ticket while on business.

Finally, defer income and increase your expenses. Every dollar deferred until January 2009 you will not owe taxes on until 2009. Increase your expenses, pay bills early, stock up on office supplies, equipment purchases or pre-pay repairs, insurance and maintenance bills.

The Money Crunch???

The Money Crunch???

We have all heard it. We all think about it. Maybe this year you are worrying a little more about it. Maybe your spouse, mother, uncle, or coworker has talked about it. But does IT have to run our lives? Of course not!

You all know what I am talking about….money. I think this time of year makes the average American worry a little more. We have presents to buy, extra meals to plan, families to visit, and charities we want to donate to. Did I mention that we have to keep paying our bills, too? This is more than enough to make you sweat a little more, lose sleep at night, and redo your budget over and over. The economy this year doesn’t help our fear of not affording everything we want and maintaining our normal lifestyle either!

The good news is we don’t have to let money, or the fear of not having any, run our lives and ruin our day, week, or entire holiday season. I have come to learn that there are small things that every person can do on a daily basis to completely change their attitude and mindset.

No, I am not talking about drugs, voodoo medicine, or expensive therapy. I am talking about making positive thoughts a part of our daily routine. Eliminating our fear and anxiety, and replacing these emotions with positive ones.

Is it really that simple? The answer is yes! I truly believe that, not only this holiday season, but every day and event in our future can be an awesome experience that is not controlled by our negative thoughts and fears of what the future may hold.

Let’s try one activity. Go on, it won’t hurt! I want you to think of a time or event in your life when everything felt perfect. You were happy and had no worries. Remember this event. Who was present? What were you wearing? What did it smell like? Sound like?

HOW DID YOU FEEL? How do you feel now? I hope your answer is that you feel great.

Isn’t it amazing how quickly your attitude changed? How you instantly replaced possible fear and anxiety with a positive thought and your whole body changed? The fact is, our fears are just thoughts in our mind, WE get to choose how they are going to affect us. We get to decide if our negative thoughts are going to determine our day or if we are going to. So, when bad thoughts enter our mind we can simply replace them with good ones.

Simple. I know. But try it more often. As the holidays are nearing and your anxiety levels are increasing, think about everything that you want or that makes you happy. Maybe it is enough money to buy the kids the gifts they want, maybe it is getting along with the family at Thanksgiving, maybe it is just to relax! Whatever it is you want, think about that and truly focus on your desired outcome. When negative thoughts creep into your mind, replace them with your desired outcome and it will happen. Here's to you!

Contributor, Mary Ann Duenwald, Investment Property & Short Sale Specialist

Direct: 314-566-2708 Email: openwaterinvestors@yahoo.com

Do the opposite of what everyone else is doing.

With the times changing, often people watch what everyone else is doing and follow along.

Is this what we should be doing?

Actually, if you look at statistics and past history. We should be doing the opposite of what everyone else is doing.

What does this mean?

When everyone is buying real estate, stock, or whatever, then you should be selling. When everyone is selling real estate, stock, or whatever, then you should be buying.

Although this is true. I think timing is important. The day everyone starts selling or buying might be early to be the counterpoint. However, I do think that being the counterpoint shortly after the heard makes a large move either way is right on track.

Here are some examples of this:
In the mid to late 90s, you could buy a 2 or 4 family in the Tower Grove area for $15,000 to $25,000. There was a big push in South City and Tower Grove became the trendy area in the late 90s and early 2000s. What did this do your property if you had bought a 2 or 4 family? The property shot up in the 2001 to 2006 timeframe to over $90,000 to $175,000 depending on the exact area. Now, that same property has gone back down to $50,000 to $85,000 in the current 2007 and 2008 market.

I know what you are thinking? How would I have known? When would I have been able to buy?

The answer to the question is that this happens in all areas to varying degrees. However, if you follow the herd mentality, then you would have been too scared to buy in the 90s and held on too long in the mid 2000s waiting for more appreciation.

What happens is people freeze like deer in the headlights when the best opportunity arises to buy and then they freeze when the best time to sell happens. If you objectively look at social trends and the market, you can see the opportunity. Also, once you have made money and see everyone buying in this area and talking about how they are buying everything they can get their hands on…SELL!

So, where are we today?

We have entered into another great opportunity market. Many people are frozen in fear with the current real estate and stock trends. However, don’t listen to the high emotion scare tactics of the media. Look at the facts. We have experienced double digits returns throughout most of the St. Louis and St. Charles areas for the past 4 to 6 years. So, we are likely to have a good buying opportunity coming up in the near future.

Here is what often happens. The market rises and then falls (and then rises again). The rise may be 10 to 30 percent. Then, the fall may go down 10 to 15 percent. However, during the fall. People over react based on fear. So, the market fall may only be 15 percent, but someone selling a house may think the market is going to crash and accept a 30 percent discount just to get out of such a horrific market. Thus, if you have the buying power and see the opportunity, then you can effectively buy at a 15 to 20 percent discount (drop in the actual market of 10 to 15 percent, then buy at 30 percent discount). And, the market generally will trend upwards again. Thus, if you buy and hold, you may see 50 to 100 percent rates of return on your money over a 3 to 7 year period.

So, what is my advice?

When everyone is over reacting and selling off houses or their stock portfolio, then be calm, objective, and take advantage of the market.

And, remember there are always two of the same bottoms when you can buy at the same percentage discount, however they are emotional viewed very different. For example, lets assume there is a 20 percent drop in the market. If you bought at 17 percent during this drop and on the way down, then this is considered a negative. However, once the market bottoms at 20 percent and then rises to this same 17 percent on the rebound, then the market has come back and is up 3 percent (which is a positive). However, you can buy on either side of the curve at the exact same price. So, don’t stress yourself out about finding the exact bottom! There are opportunities on both sides of the curve.

Happy investing!

Times are changing. Is real estate a good idea?

Times are changing.

Is real estate a good idea?

Yes. Times are changing. We went from having a market where lenders where throwing money at home buyers and willing to loan more than the market value to the lenders (if they are still in business) making you have to walk on water and jump through major hoops to purchase a property.

I am translating this message as a time to buy! The true experts in any field normally take market share and gain wealth during what most of the people think is a bad market. This sounds so easy. We all know that we should buy when the market or the item of value is at the bottom. Then, when the market increases, then we should sell to profit from our good choices.

What gets in our way? Emotions, keeping up with everyone else, media hype, other “expert” opinions. To be honest, I have had to learn the hard way. I was investing tons of money in the stock market before the crash in 2000 and 2001. Also, I started a condo conversion at the tail end of the real estate market skyrocketing through the roof. Looking back at these investment decisions, I see the fault. I was purchasing on emotion and speculation. Emotion and speculation can lead you down a path that is steep and may be hard to recover from.

However, there is great news!

First, any path we choose in life is a learning experience. Be open to learning from every decision. Good or bad. There are no life and death decisions when you invest (or speculate) on property. You can recover from all poor decisions, although it does not feel like it when you are in the middle of the decision. Time and space will help!

Second, history repeats itself. So, there will be up and down markets in real estate, banking, investing, and any other industry. We really tend to “reinvent” the old and make it new again. Fundamental principles are lasting. You can always dress ideas and principles up with different wording or techniques, but the ideas and principles can always be broken down into the fundamentals.

Third, we, as human beings, can learn from our mistakes and create our experiences. So, you can start today with your wants and needs. Then, create a plan to get to your goals. The great news is that you control your outcomes! Road maps on how to get to your destination will help keep you on track and remove the need to live on emotion.

So, what should we all be doing, right now?

That is hard to say. Many so called investors got into real estate because they thought they could make fast money. The problem is that they did little to educate themselves. This is similar to jumping off the high dive into the deep end without first knowing how to swim. This does not mean that you may not be able to swim with some help and experience. And, you may want to make sure you like swimming before committing everything in your life to this venture. Real estate investing is not all about the money…do you like to do real estate and work with people in real estate. That is the main question you need to ask.

If real estate is your thing, then you need to prepare yourself.

1. Educate yourself. Take classes or read books. Look online.

2. Find a coach or a mentor. There are some great coaches out there that will help you keep on your best path. Don’t be afraid to pay money for a coach. Often you get what you pay for!

3. Do a deal. Use the fundamentals. You have to do a deal to make the system work. I know. The deal can be scary!

4. Pay it back! Give back to the community or others. This can be your time, money, or experience. Pass along what you have learned. Help others.

Fannie Mae changes

Fannie Mae changes-

- 4 financed properties allowed.

- A refinance must generate from a person who was originally on title and note from day
1 or you have to wait 6 months to refinance.

- No cash out for six months.

- LTVs to 80% have an increased pricing hit of 1.00% to 1.25% which makes 80%
  obsolete.

- LTVs need to be at 70% and 75% MAX to be doable.

- No cash out refinances are still eligible for NO SEASONING. Payoff your
  renovation loans.

- Free and Clear homes will have 6 months seasoning. Always place a lien
  on it from day one even if you paid cash. Need to be able to payoff a lien!!!!!

Click on the link below!!!!!!! READ EVERYTHING to know how to move forward.

Please read the document from Fannie yourself at

http://www.jasonpalliser.com/fnma.pdf

Solutions:

- Get a renovation loan from day 1 for as much as you can get up to 70 to 75%
of the After Repair Value. It would then be a NO CASH OUT refinance instead of
a CASH OUT refinance.

- If you pay cash, then do not forget to put a line/deed to be paid off on title
that is different from you. You cannot pay yourself off. Has to be a different
person/entity.

- Want to do more deals… E-mail me to ask me about the INCOME and CREDIT
PARTNER program!!!!

- Partner up!!! Buy fix and sell to another investor and they can do the same
  for you. Purchases are looked at with much less scrutiny.

Problems:

- LOCAL BANKS… They will sell your deals to lager banks. They will sell to Citi Bank, Countrywide, Wells Fargo, Wachovia, Provident and then when you get stuck and I want to do a deal at these banks and beg for STATED INCOME, then I can’t because they already have your INCOME DOCUMENTS. I have close to 100 clients who have tried it out of 1,500 clients and they are officially stuck. I have PREACHED going to the right banks in the right order and congrats to the clients who have followed the course. As each investor already knows your loan at the local bank was SOLD off and now a new plan will have to be instituted!!! We try to keep you updated and help any way we can. We are still here to help.

Property Management-Friend or Foe?

We have all heard it before. You know what I’m talking about. The common statements, “You want to be a landlord? Are you nuts? I would never want people calling me in the middle of the night because their toilet is broken!” Do you think that every time someone says they are a landlord, too?

Well, I don’t know about you, but I have never had a phone call in the middle of the night to fix a broken toilet (knock on wood). So what makes people think being a landlord is going to be difficult work? How do you create a property management system that doesn’t cause you additional headaches? This might be the question of the century!

I think you have to create a mindset that being a landlord is going to be fun! The first step is to quit calling yourself a landlord and become the Property Manager! Doesn’t that just have a nice ring to it?

So, what makes someone a good Property Manager? This is definitely a question with many answers: the property is well maintained, the tenants take pride in their home, the tenants respect their property manager, rents are paid on time, low vacancy rate, positive cashflow, the list could go on an on! I think the key to being a successful property manager, whether you own one property or a 200 unit building, is having a system in place. A system for filling vacancies, a system for screening tenants, a system for late rent, a system for repairs and maintenance, and a system for accounting, etc, etc.

Since there are so many components to being a successful property manager, I am going to touch on the 3 most important today: filling, screening, and keeping tenants!

Let’s take a look at filling vacancies first, since everyone knows that an empty unit is an empty pocket book! When you know a property is going to become vacant, you should immediately start marketing for new tenants. Sounds easy, right? Not so fast there, slick! Take a step back and decide WHO you are marketing to. Is it a single family home, a flat in the city, an apartment near a college, a luxury condo…this list could on forever as well. Once you decide who your target market is, you need to market in a way to reach those people and get them filling out your application! This could be with fliers, on line ads, bandit signs, etc. You may want to set up an 800 number so your phone isn’t ringing off the hook from your great marketing! Always be sure to have all of the information in your advertising, including monthly rent, security deposits, application fee, address, and pictures when available. You want prospective tenants to self-screen before you screen! I have included some links at the end of the article with some great marketing resources.

So now that your phone is ringing off the hook, how on earth do you decide who will have the privilege of being your tenant? Is it the one with the most money, who called first, and had the best handwriting-I think not! Screening your applicants is by far the key to having great tenants! You should always complete a criminal background check, eviction report, income/employment verification, and credit check on all serious applicants in order to ensure the best home for all of your tenants. I know this can be very overwhelming, but there are some great resources that can provide you this information. I also advise always meeting with prospective tenants. Did they arrive on time? Do they love the property? What does your gut tell you? Sometimes our own instinct is the best decision maker!

Now that you have found the perfect tenant, how do you keep them happy? Always, always, always treat your tenants with respect and this starts on day one! It is helpful to provide them the contact information of all of the local utility companies so they can get these turned over into their name. Give them a walk through checklist and a few days to complete it to ensure the property is in good condition when they move in. Provide them with the contact information of who they would need to talk to regarding repairs, rent payments, etc. If you are managing a property yourself, I recommend tenants send all repair requests in writing with the expectation that it will be completed within 14 days of receipt.   However, if it is a major issue that could potentially cause damage to the building or your tenants-then they should call you ASAP and possibly 911 if needed!   Be very clear about this! Set clear expectations upfront! Don’t leave room for interpretation because this could get everyone in trouble.

Here are some other ideas to strengthen your tenant rapport: give them gift cards around the holidays, rent credits for referrals, ask for their suggestions on improving the property. Remember, they should love where they live and you should love having them live there!

So, whether you own one building or one hundred, I wish you all the best in your Property Management adventures!

Marketing Resources:                                                        Tenant Screening Resources:
www.craigslist.com                                                                    www.mrlandlord.com
www.backpage.com                                                                   www.courts.mo.gov/casenet/base/welcome.do

You can access "Inforent: A Landlord's Guide to Managing Rental Property" at
http://stlouis.missouri.org/citygov/nst

Contributor, Mary Ann Duenwald, Investment Property & Short Sale Specialist

Direct: 314-566-2708 Email: openwaterinvestors@yahoo.com

So, why use an agent that knows how to complete short sales?

I happen to be speaking with a seller that had their house listed with a real estate agent that “knew “ how to do short sales. That is great, right? Well, actually this was not good.

The realtor had listed their house for over 10 months and had been working on a short sale for over 3 months. In fact, the seller told me he was in direct contact with the person in loss mitigation and had sent the lender everything they needed.

Isn’t that why you hire a real estate agent?

The reason you hire a real estate agent is to make your life easier and to get your goals accomplished. I am a real estate agent, and I work with other realtors all of the time. However, not all realtors are working in their niche. For example, some realtors are great at listing property, luxury homes, or commercial leasing. Some do a fantastic job with buyers or with investors. However, it is not reasonable to think that a realtor can be a one stop shop for every aspect of real estate.

So, what can you do to ensure the success of a short sale?

1. Make sure the realtor has completed a short sale from start to closing in the last 3 months.

2. Make sure the realtor knows your market, such as price, condition, neighborhood, schools, etc.

3. Make sure the realtor fills out the correct disclosures to protect you, the realtor, and the buyer.

4. Make sure you have enough time to do a short sale.

5. Ask your lender if you qualify for a short sale.

6. Ask the lender for their forms to submit a short sale request.

What can you expect that is above and beyond for a realtor to do for you during a short sale?

1. Provide the forms from the lender for a short sale.

2. Prep you on the items the lender will need to submit a short sale.

3. Review the likely accepted value from the lender’s viewpoint.

4. Explain the tax consequences of a short sale.

5. Get an immediate offer submitted to the lender in order to find out the price the lender will
take, rather than just guessing or leaving the house on the market for 10 months…

6. Do all of the paperwork and follow up with the lender on your behalf.

7. Negotiate a “settlement in full” or a “full release” (no promissory note for you to sign and
payback to the lender).

8. Talk is cheap…The agent should be able to CLOSE THE DEAL!

When you are in need of a short sale on your house, make sure you pick the right person for the job! It is in your best interest to complete the short sale quickly, easily, and effectively. And, remember that short sales are not guaranteed. However, the more experienced the real estate agent, the better the results.

Contributor, Jeremy Vlasich, Foreclosure Prevention & Short Sale Specialist

Direct: 314-571-4048 Email: elvproperties@hotmail.com

Make your short sales go smooth..Well at least prevent some common mistakes

Short sales can be frustrating, even when they go smoothly, but they can turn into nightmares if you don't avoid certain mistakes. Doing up front preparation can save you time, money, and may prevent your client from going into foreclosure.

Here are some examples of mistakes many short sale investors make.

Send the short sale to the right fax number. Don’t assume that the same lender will have the same fax for every short sale. Call the lender and ask for the fax number to send the authorization and the additional number for the short sale package. These are often different numbers (and may be in different parts of the country).
Make sure you get the short sale package from the lender. Some lenders require the short sale on their forms. Check the website. If no luck there, call the lender.
Lenders aren't ignorant of a property's value and they have little incentive to take anything other than the smallest loss they can on a property. Have all your facts and figures in hand before you talk to the lender. They're business people, after all, and have no personal or emotional interest in the property. Their job is to recoup as much of the original investment as possible, so make your offer as tempting as you can while staying inside the profit guidelines you've established for yourself.
Another mistake is not being thoroughly familiar with the short sale process itself. Lenders are busy and they don't have time to explain the process, so you need to impress them that you know what you're doing.
There's no substitute for actually going through the short sale process yourself. Every lender will have different rules, regulations, and paperwork, so you can never know everything about what you're going to encounter.
Another potentially devastating mistake is not having a handle on what's owed on the property. If there are several loans, you'll have to work harder to make your deal fly. If there's only one loan, the process will go smoother, but always know the financials about the property before you make an offer.
Check the title work before they have approved the short sale. You don’t want any surprises right before closing. And, lenders will often take title issues, liens, or judgment into their calculations. Once you start to negotiate on the BPO or appraised value…get the title work ordered.

michelleheick@hotmail.com