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1031 Exchange By Jeff Riddell Although 1031 Exchange has been in the internal revenue code since 1921, the scope of its use in recent years is unprecedented. Originally an “out west” phenomenon, the use of 1031 Exchange has spread rapidly east in recent years. With all of the “unintentional millionaires” out there today, even the little guys are doing 1031 Exchanges. “Unintentional millionaires” are all those folks who bought a lot, house, condominium, etc. a few years ago who wake up one morning and find that their $250,000 property is now worth more than a million, but you knew that […]
Seller Financing By Jeff Riddell It’s hard to get a mortgage these days. So, what’s a seller (and maybe the seller’s real estate agent) to do? Seller financing (sometimes called owner financing) may do the trick. Florida recognizes several approaches, each with its pros and cons. First there is the traditional seller carry-back mortgage. The buyer and seller sign a purchase agreement that not only describes the purchase price, but also the seller financing covering a portion of the purchase price. Seller financing could, of course, cover the entire purchase price, but that usually isn’t prudent—sellers want buyers to have some […]
Take Over The Payments By Jeff Riddell Unfortunately, many people would like to dump their properties even though they made substantial downpayments. Some use jingle mail (send the keys to the lender and walk away). There are consequences, however. Since the lender will still need to foreclose, the owner will still have a foreclosure on his record. Other than the temporary moratorium for primary residences, at least in Florida every foreclosing lender has the right to pursue a deficiency judgment, and more are doing so. Usually there is no defense to the deficiency claim. To defend, the owner would need […]
1031 EXCHANGE By Jeff Riddell If there are taxes to be saved, a 1031 exchange should be considered as the exit strategy for any real estate that qualifies. Under the current rules the process is simple: Hire a qualified intermediary (QI) company and sign an exchange agreement, sell your relinquished property, escrow the proceeds with the QI company and reinvest in qualified replacement property within 180 days. Except for personal use properties, any real estate qualifies if it’s held for investment or productive use in a trade or business—including rental real estate of every kind. Tax deferred exchanges under Section […]
1031 Exchange Qualified Properties By Jeff Riddell Over the last several articles, we have covered real estate investing for various age groups, from youngest to oldest. One thing is common to all of the age groups: There will come a time when every real estate investor decides to dispose of his investment. If you don’t like to pay capital gains tax (or recapture of depreciation, if applicable), we should touch on the subject of 1031 exchange. The sleeping giant has in fact started to awaken. After my company, U.S. 1031 Exchange Services, Inc., facilitated over 500 exchanges in 2005, business […]
Seniors And Real Estate Investing By Jeff Riddell Last article, we discussed real estate investing for those folks in the 50-65 age range. Next is the 65-80 group—with due respect because I am one of them, I’ll call them seniors. If you are in this age bracket, it goes without saying that you should have started your real estate investing career earlier. At this age you will not be able to use the power of leverage and compounding to create wealth from real estate to the same extent as those who started young, but you should still have some real […]
Real Estate Investing For Baby Boomers By Jeff Riddell Last article, we discussed middle age real estate investing. Next is the 50-65 bracket—I’ll call them the baby boomers. In my opinion, this is the time to become more conservative in your real estate investing; and more diversified in your real estate holdings regardless of whether you are a beginner or long term investor. If you started your real estate investing career earlier while you were in the 20-35 bracket—or even in the 35-50 bracket—by now you have probably accumulated a pretty nice portfolio of real estate holdings such as houses, […]
Middle Age Real Estate Investing By Jeff Riddell Last article we discussed real estate investing by young folks. But what if you are older and your time horizon shorter? Let’s discuss the 35 to 50 age bracket next—I’ll call it middle age. Although many people are well into real estate investing by the time they are in this age bracket, let’s assume you are just getting started. If you’re 40, you likely have at least 25 years before retirement; probably more because I believe the days of retiring by 65 are numbered. The entry strategy for this age bracket depends […]
Why Does The Buyer Need A Survey? By Steven R. Greenberg Surveys are involved in almost every real estate transaction, except for transactions involving the sale of a condominium. The Contract for sale of real estate will give the Buyer a limited period of time to both obtain the survey and to put the Seller on written notice of any survey defects. A survey map depicts the shape and size of the lot and all improvements located on the lot. It should also show all setbacks, easements, and other matters observed by the surveyor. Of course, the survey map will […]
Real Estate Investing For All Ages By Jeff Riddell In the next few articles, we’ll talk about the approach of different age groups to real estate investing. Let’s start with the 20-35 age group; let’s call them beginning wealth builders or BWBs. Unless they won the lottery or inherited a lot of money, BWBs are usually capital challenged. Most people in this age bracket are finding it difficult enough to make a down payment on a home, let alone enough to make an investment real estate down payment. But for those who have the discipline to swing it, this is […]
An Overview of the Withholding Requirements for “Foreign Persons” By Steven R. Greenberg Effective January 1, 1985, Congress enacted FIRPTA (Foreign Investment in Real Property Tax Act). The purpose of FIRPTA is to minimize the ability of foreigners (individuals and entities) from taking the proceeds from the sale of U.S. property without paying tax on the profits. Section 1445 of the Internal Revenue Code (“IRC”) requires that the buyer of U.S. real property collect and pay over to the Internal Revenue Service 10% of the purchase price within twenty days after the closing, unless: 1. The seller is a U.S. […]
Finally Some Relief For Tenants On Their Foreclosed Rental Property By Steven R. Greenberg On May 20, 2009, President Obama signed into law the “Helping Families Save Their Homes Act of 2009″ (the “Act”), which includes the “Protecting Tenants at Foreclosure Act.” The Act provides new protections for “bonafide” tenants of residential property being foreclosed by a lender holding a federally-related mortgage loan. The Act is intended to provide protection for tenants of properties of which a lender has foreclosed who find themselves evicted overnight from their homes at the completion of that foreclosure, often losing advanced rental payments and […]
What’s So Bad About Short Sale Flips? By Anne L. Weintraub, Esquire Anne Weintraub P.A. REALTORS®, buyers and sellers are being approached by vendors on a daily basis to participate in short sale flips. Short sale flips occur when a third-party individual or business negotiates with the seller’s lender to take a short payoff. The lender relies on the vendor’s package from the seller which includes an offer from a buyer-who may actually exist or not-when it grants the short sale approval. The buyer allegedly closes on the property, the lender gets paid off, and then the buyer sells […]
Entity Ownership Of Real Estate By Jeff Riddell Last article we talked about how individuals can own real estate. Now let’s turn our attention to ownership in an entity. Let’s look at a few. We’ll start with corporations. You probably know that corporations—other than some federal corporations like banks—are formed under state law. Although corporations are great for businesses, corporate ownership of real estate is generally not favored regardless of whether the corporation has elected to be taxed as an “S Corporation” or a “C Corporation.” Double taxation—both corporate and shareholder level—can be one problem (at least in a C […]
Alternative Ways To Own Real Estate By Jeff Riddell If you’re ready to start your real estate investment career—or have already started and may be acquiring more properties—we need to talk about how to hold title. In other words, who should be the “grantee” in the deed you receive. The first choice, of course, is yourself, or you and your spouse if you are married. Most people take title to their properties in their own name when they are beginning their real estate investment careers because it is simple and cheap. You sign the purchase contract in your own name […]
Tuesday, June 1, 2010
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