Building Your Dream Home - Part 1
November 30, 2007
For most of my adult life I had thought about someday building my Dream Home. Several years ago I finally got the chance. I had purchased a lake front lot with a small cottage on it. My initial intention was to use the property "as is", and someday raze the old cottage and build a new home in its place. After a couple of weekends in the musty old camp I came to the conclusion that I needed to speed up my timetable.
Part of the dream in building my own home was to act as the General Contractor and to personally supply a great deal of sweat equity. I accomplished both of these goals, however it was not easy. There were many roadblocks and bends in the road along the way. In the subsequent parts of this chronology, I will review my experiences in hopes that others may gain from my experiences.
Determining the Home Style and Size
Foreclosure
November 29, 2007
Foreclosure under a mortgage requires a court ordered sale conducted by the sheriff or other court-appointed official. Foreclosure process is called judicial foreclosure. In the event of default, the mortgage accelerates the due date of the dead to the present and notifies the defaulted debtor to pay off the entire outstanding balance at once. If the debtor fails to do so, the mortgage initiates a lawsuit, called a foreclosure action, in the county where the land is located. The purpose of his legal proceedings to a charge toward the county sheriff to seize and sell the property. The judge’s order is called an order of execution. Acting under the order authentication, the sheriff notifies the public of the place and date of the sale. This requires posting notices and the property and the courthouse and ran an advertisement of the sale in a newspaper.
1. Redemption. At any time up until the sheriff’s sale, the debtor may save the property by paying the mortgage note is due. This up right to save or redeem the property before the sale is called the equitable right of redemption. The debtor might also be obligated to pay delinquent interest, court costs, attorneys fees, and sheriff’s fees in order to redeem the property.
Buyers Closing Cost
November 28, 2007
Buyers, borrower, closing costs can be divided into two categories. Nonrecurring closing cost and recurring closing cost.
Nonrecurring closing costs on a one-time charge paid upon the close of escrow. Recruiting closing costs are peeping items that the buyer pays advance to help offset expenses that will continue as long as the but it only to property.
Nonrecurring closing cost usually paid by the buyer.
1. Loan ordination fee. A fee charged by a lender to cover the expenses of processing a loan. The fee is usually coded as a percentage of the loan amount
2. Appraisal fee. A fee charged by an appraiser for giving an estimate for property value. The fee for simple appraisal will vary throughout the state, with $350 or more being a typical charge for a single-family residence. Appraisal fees for income properties such as apartments or off his buildings are higher.
3. Credit report fee. Before a lender grants a loan to borrowers credits is checked. Each lender, broker charges different amounts for a credit report.
4. Pest control inspection fee. A fee charged by a licensed inspector who checks for termites, fungus, pests, and other items that might cost structural damage.
Fixtures
November 27, 2007
Fixtures, related to real estate, are items that were originally personal property but are now attached to the property itself. This becomes the toughest issue when tenants attach fixtures to a property. These fixtures may include shelves or anything that is immovable by law.
There are five tests of fixture:
1) Method of Attachment: Is it nailed, welded or bolted down? Or is it simple leaning against the building or hanging on the wall?
2) Adaptability: Is the item customized or can it be easily used in other building.? Wall-to-wall carpeting would be considered a fixture because it has been cut for a room of a particular size and shape, and the carpet is attached to a track strip that is nailed to the floor.
3) Relationship: Is relationship between tenant-landlord, a buyer-seller or borrower-lender.
4) Intension: is indicated by action or agreement of the parties, weather it be expressed ore merely implied.
5) Agreement: Court will also look to the existence of any agreements between the parties. For example: Is he item mentioned in the real estate listing or purchase contract?
Exception to Fixture rule:
The Real Estate Cycle
November 26, 2007
The real estate cycle, like the business cycle, refers to the activity of the real estate market as it reacts to the forces of supply and demand.
Supply and demand.
When demand for a product, such as housing, exceeds the supply, the price for the product tends to increase. In real estate this period is often called seller’s market. Higher prices encourage the suppliers, in this case homebuilders to increase production. As production increased, more of the demand is satisfied until a point is reached where production outperforms demand. At that point, prices begin to full and production will diminish until demand catches up with supply, and the cycle begins again. This period is called a buyers market.
Factors influencing real estate circles.
Mortgage funds.
The availability of mortgage funding affects both supply and demand for housing. In most cases the buyer does not have sufficient assets to purchase a house outright. Most housing is either built purchased with money borrowed. The availability and cost of this money directly affects both the supply and demand for housing. If a local area is experiencing prosperity there should be funds available to finance the construction and purchase of housing.
Landlording And Other Aggravations
November 26, 2007
Here’s the gripping story…
You are the landlord of a small apartment building that you are offering for sale. You find a buyer and a sale is arranged.
The tenants learn of the sale and ask if they will be forced to move. How do you answer?
You explain that it depends upon the lease agreement. If the tenant signed a lease they have the right to remain in the unit at least until the end of the lease… longer if the new owner agrees.
In many cases the tenant signed a lease and remained after the lease term ended. At that point their occupancy became a month to month tenancy.
A month to month tenancy can be terminated merely with the landlord giving notice to the tenant. The length of the notice may be governed by state law, but a 30-day notice is customary.
In another situation the tenants learned that the apartment owner was in default on his monthly mortgage payments and the lender had begun a foreclosure action.
All the tenants had time remaining on their apartment leases and they had no intention of moving.
Real Estate Investing - Basis Explained
November 25, 2007
Our complex IRS code requires that your, as a real estate investor, accurately calculate your “basis” in investment property when reporting a gain or loss on a tax return.
Your monetary gain or loss when you sell investment property is determined by comparing the sale price to the adjusted basis in the property.
Your original basis is determined by the way the property was acquired — whether through purchase, in trade, or received as a gift or inheritance.
We will briefly cover how you determine basis in an investment property you have purchased.
The original basis is determined by adjustments in the total cost of the purchase.
The adjustments include depreciation, or additions, such as capital improvements… perhaps you added a room.
If the total purchase price of the property (including all closing costs) was $100,000… your basis was $100,000.
Later you added a room at a cost of $20,000… your new basis is $120,000. Still later you replaced the roof at a cost of $8,000… your new basis is $128,000.
Adjusted basis is the new basis after additions or deductions to the original basis have been made.
Real Estate Lease Option Danger
November 24, 2007
Why are real estate investors having so much success offering “rent to own” homes?
Lease-options offer home ownership opportunities to folks with little cash and not so hot credit.
Oh boy, there are plenty of those around.
Both parties in a lease-option deal are counting on the buyer being able to qualify for a home loan before the option expires.
The investor wants to collect his profit when the optionee buys. The optionee wants to own the home.
During the lease period the renter/optionee must be working to improve their credit score to the point where they can qualify for a loan and buy the home.
Even though there is plenty of subprime loan money floating around at the present time… the lease-option method of acquiring a home seems to appeal to many.
In our own investing program…. Before we accept someone for a lease-option deal we have them interviewed by our friendly loan broker. He gives us thumbs up or thumbs down on whether our prospective buyers has a chance to qualify for a mortgage loan loan during the next 12 to 24 months.
Best Places to Retire
November 23, 2007
Places to Retire: Popular Doesn’t Always Mean "Best"
Las Vegas, Nevada; Phoenix and Yuma, Arizona; Las Cruces, New Mexico; and Ocala, Florida-just a few names that rank among America’s most popular retirement destinations. Unfortunately, their popularity doesn’t necessarily mean that they are especially appropriate choices for astute consumers. Among these five locales, only Las Vegas with its great strength in cultural and recreational activities, retail services and health care, and fairly good quality of life factors proves to be a good and economical choice for retirement. The others all suffer from a number of serious defects that may make them sub-optimal choices for some.
So how are 86 million North American baby boomers going to decide whether they should relocate for retirement? Award winning geographer and professor at California State University, Warren Bland, Ph.D. has some suggestions. Drawing on the professional research he has done during the last 20+ years, Bland has identified the 12 criteria most important to retirees (landscape, climate, quality of life, cost of living, transportation, retail services, health care, community services, cultural activities, recreational activities, work/volunteer activities, and crime).. According to AARP, today’s retirees are living longer and more actively, and are demanding a different mix of opportunities than did earlier generations. For many, upscale retirement no longer implies country club or beach resort living, but rather an active lifestyle in a safe, friendly, community that is rich in amenities.
Howard Stern is Hot in Real Estate
November 22, 2007
Howard Stern has over 20 property related files in Queens, 27 in Brooklyn and 1 in Manhattan. The files include mortgages, releases or satisfaction pieces, liens and powers of attorney.
One 11 page mortgage was recorded on 9-23-04 for a two family dwelling, located at 243 51st Street, Brooklyn in the amount of $300,000. Another property transaction for 845 Dean Street, Brooklyn was recorded on 5-25-04 in the amount of $150,000 at an unbelievable 14% interest rate considering rates were at a fourty year low. The senior mortgagee (holder) is Howard Stern and the junior holder is New Way Realty Corp. Better known, in my opinion, as loan shark one and two. If you think that’s scary, you should read the actual 10 page document.
This information and other similar types are available to you for free. You just have to know how to get it by a name, address, parcel number, even street intersections. It is easily accessable.
You can find out about divorces, liens, marriages, wills, transfers, judgements, deeds, releases and many fascinating things such as hundreds of years old documents in beautiful handwriting and language together with a wax seal. This is one way people or mortgage companies buy loans from each other, usually not even alerting the borrower until after the fact.
