How to Build Home Equity: 6 Steps
Building your home equity will give you more than just utter joy, but an opportunity to grow wealth on your own terms. Learn 6 tips to build home equity today.
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How Property Taxes are Determined
This post describes how the property taxes are calculated and what are the timelines in order to appeal if your property tax seems too high. Property taxes are determined on odd-numbered years for 2-year tax periods. Property taxes determined in 2013 will be the taxes for 2013 and 2014 State statute requires that each property in the county be re-valued…
Continue Reading →2012 Wrap Up
Well,how did we do in 2012? I have wrapped up the highlights of 2012 in this short report full graphs and numbers. It includes information on the legislation front; rental market in Metro Denver, various vacancy rates by markets & dwellings, rent survey; Unemployment figures; Hiring; Home sales &Prices; new homes; and supply of homes on the market. Enjoy. 2012WrapUp
Continue Reading →Expiring 2012 Tax Rates – Considerations
With the 2012 tax rates expiring, I thought to recap where the 2012 tax rates, brackets, and capital gains rates are along with an example of how the marginal tax rate is calculated. As the example shows, one in the 28% bracket does not pay 28% of the income for taxes. The tax is calculated in an stair-step manner on…
Continue Reading →Apartment Vacancies at 12-Year Lows
The Denver Business Journal reporting apartment vacancies at a 12-year low confirming the trend with single family home low vacancies and higher rents. Denver-area apartment vacancies hit 12-year low for Q4 .
Continue Reading →Rents up in Denver metro area, climbing fastest in Jeffco and the Boulder/Broomfield area
The latest report from Colorado Department of Housing.
Continue Reading →Government Set to Sell foreclosures in Bulk
“The Obama administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, is very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.” See report Government Set to Sell foreclosures in Bulk
Continue Reading →Declining Supply of Homes
Supply of homes and condos priced $250,000-and-lower stands at only 3.69 months reports Inside Real Estate News.
Continue Reading →Investment Decision Points
Decision Points Unlike purchasing a property as a home, where the buyers are emotionally involved, the purchase of an investment property mostly is (should be) a business decision. Below are some of the decision points: Initial cash needed for down payment, closing costs, repairs, etc Cash flows (before and after tax) Tax impact (liability or savings) Return on investment Financing,…
Continue Reading →Leverage
I’ve discussed the first component of wealth building, Time Value of Money, in another post. In this post I am discussing the second component Leverage, the pros and the cons. First some definitions and I’ll have examples. Leverage is the use of borrowed funds to finance an investment. A Positive leverage is when an unleveraged investment has higher returns than…
Continue Reading →Late Fee Policy
How aggressive is your late payment penalty? Opinions vary on this subject. In my practice I have learned to keep the late fees relatively low. Let me explain. I do NOT any make exceptions for anyone. That said, one thing I know for sure I won’t be in trouble with the Fair Housing laws treating people differently. Now, with the…
Continue Reading →Foreclosure Filings & Sales Down in 2011
Both the foreclosure Filings and sales at the public trustees auctions are down for the year compared with the same period in 2010. The foreclosure filings were down 31.4 percent and sales at auctions were down 18.5 percent. The report was released on Thursday by the Colorado Department of Housing.
Continue Reading →Tax Due on Sale
The taxes you owe on the sale of an investment property is made of 2 parts: 1) Tax on the gains Taxable Gain = Sale Price – Cost of the Sale – Adjusted Basis*. 2) Tax on total cost recovery (depreciation) Tax on the total cost recovery taken is at the maximum of 25%. For Example, You purchased a property…
Continue Reading →Adjusted Basis
Adjusted basis refers to the total cost of acquiring a property less any cost recovery (depreciation). So, Adjusted Basis = Purchase Price + Acquisition Costs + Capital Improvements – Cost Recovery. Example, You purchased a property for $80,000; paid 1.5% mortgage origination fee; Put a new roof for 5,000; and, kept the place for 10 years. The land is, say,…
Continue Reading →31% of home sales in 2Q were foreclosures
http://www.9news.com/money/216001/344/Foreclosures-made-up-31-pct-of-home-sales-in-
Continue Reading →Quantifying After-Tax Cash-Flow (ATCF)
The methodology behind figuring out the After-Tax cash flow (ATCF) is to take your Before-Tax Cash-Flow (BTCF) and add to/subtract from it your tax savings/ tax liability. Here are the steps: Taxable Income = Net Operating Income (NOI) – Annual Interest Payments – Cost Recovery See below for Cost Recovery (a.k.a. depreciation) calculation. Tax Impact = Taxable Income X Investor’s…
Continue Reading →Using the Cap Rate
The Capitalization Rate is defined as CR=NOI/Price. Cap Rate is often used to valuate and compare investment opportunities. It is a simple way to do so. It takes into account expenses but not the financing, appreciation, tax impact, etc. An Example: There are 2 four-plex buildings. Building A with an annual income (NOI) of $30,000, priced at $335,000 yielding a…
Continue Reading →Calculating Net Operation Income and Cash Flows
Net Operating Income (NOI) , as one put it, is the center of the universe. Practically all valuations are based on NOI. It is the Net income from the property as if there are no Mortgages. A couple of definitions first: Gross Scheduled Income (GSI) is the income expected from the rental property assuming fully rented + any other income,…
Continue Reading →Tips for Successful Real Estate Investments
Pay careful attention to 3 key areas Income Expenses Financing Run the numbers BEFORE buying Cash-flow analysis before and after taxes Tax Savings or Liability Project the cash-flow for the holding period Disposition plan and overall investment performance over the holding period FMRR – Financial Management Rate of Return is a system to capture a the points listed above. I…
Continue Reading →FTC Mortgage Acts and Practices— Advertising Effective August 19, 2011
A new rule from the Federal Trace Commission aimed to deter deceptions in mortgage advertising. The rule imposes record keeping among other things on those impacted by the rule. “The Rule will impact real estate professionals that provide this information to consumers, such as giving a consumer a lender’s rate sheet.” According to the National Association of Realtors. Federal Register…
Continue Reading →Mid-year Housing Snapshot
Colorado Department of Housing has issued the Mid-year housing snapshot. Click here for the report. Or cut & paste the link below into your browser. http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%22midyear2011.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251731922239&ssbinary=true
Continue Reading →Single-family rental vacancies at all-time low of 1.4 percent
http://www.divisionofhousing.com/2011/05/single-family-rental-vacancies-at-all.html
Continue Reading →New-home Sales Continues to Fall
“New single-family home sales fell again in the US, and in the West region, which includes Colorado. New home sales fell back to the lowest March total recorded in at least ten years. ” according to Colorado Division of Housing. http://www.divisionofhousing.com/2011/05/march-new-home-sales-still-at-ten-year.html
Continue Reading →Both filings and sales fall in March for fourth month in a row
http://www.divisionofhousing.com/2011/05/both-filings-and-sales-fall-in-march.html
Continue Reading →Westminster Mall to be razed for a new downtown
The city of Westminster plans to demolish the blighted Westminster Mall to develop a downtown for the 100-year-old community. Read more: Westminster Mall to be razed for a new downtown – The Denver Post http://www.denverpost.com/business/ci_17978568#ixzz1LO897KPg Read The Denver Post’s Terms of Use of its content: http://www.denverpost.com/termsofuse
Continue Reading →Unemployment Falls
http://www.divisionofhousing.com/2011/04/total-employment-in-state-continues-to.html
Continue Reading →Bill Banning Real Estate Transfer Fees
Senate Bill 11-234 would ban private real estate transfer fees, which have been added to homeowner association covenants during the development phase to fund an investment scheme cooked up by Manhattan-based Freehold Capitol Partners. The covenants are set up to require that a percentage of the sale price of a home be paid to a private 3d party every time…
Continue Reading →Denver No 6 on Case-Shiller Index
The Denver-area housing market ranked No. 6 in January out of the 20 metropolitan statistical areas tracked by the closely watched S&P/Case-Shiller Home Price Indices. The data lags 2 months. Please refer to S&P Case-Shiller March Report.
Continue Reading →Housing Shortage Evident in the Supply of Apartments
Taking part in discussions and correspondences with other property managers nationwide, the shortage of rental housing is not limited the metro Denver area. Other managers are seeing record low vacancies low vacancies in their respected areas. The metro Denver single-family vacancies are at all time low of 2.% The shortage seems to be evident in the supply of apartments. The…
Continue Reading →Single Family Home Vacancies @ 2%
The vacancy rate for single-family homes/townhomes and condos is at all-time low of 2% during the 4th quarter of 2010 according to the Colorado Department of Housing. The average number of days to rent such homes dropped to 38.2 days from 53.9 days in the 4th quarter of 2009. Click here for the full report.
Continue Reading →2010 Foreclosure Report Now Available
Colorado Department of Housing has published the 2010 Colorado Foreclosure report. The charts below show 2003-2010 stats for Colorado and the metro Denver area. The Denver metro includes the Denver, Arapaho and Adams counties. For other areas please refer to the actual report. The foreclosure filings are down, however, more homes are going to auction.
Continue Reading →HB-1278: HOAs Must Register
HB-1278 – All Homeowners Associations governed by CCIOA (Colorado Common Interest Ownership Act) must, annually, register and pay the required fees, with the Colorado Department of Regulatory Agencies Division of Real Estate. This bill is effective 1/1/2011. All registrations must be completed online prior to March 1, 2011. The registrations must be renewed annually. An association is exempt from the…
Continue Reading →Additional 1099 IRS Reporting Requirement for 2011 – Landlords
Additional 1099 Reporting Requirement for 2011 — Landlords HR 5297 includes an expansion of the 1099 reporting related to a trade or business. Currently only the Property Managers are required to file Forms 1099 to reflect payments of $600 or more. Congress has extended the Form 1099 requirement to any person who receives rental income. This requirement would apply to…
Continue Reading →Areas that avoided foreclosure mess earlier may be taking hit now
The Denver post reporting: Areas that avoided foreclosure mess earlier may be taking hit now – Homes in metro Denver neighborhoods that previously appeared insulated from the housing crisis are seeing a decline in prices as foreclosures and short sales tick up. Meanwhile, those communities that were hit hardest are showing signs of improvement. Read full article: http://www.denverpost.com/business/ci_16353602
Continue Reading →Vacancies In Metro Denver
“We look at the very low vacancies among rental houses, condos and townhouses. We also note that average rents have not kept up with inflation” says Colorado Division of Housing. See Video.
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