REInvest Group Blog

Property Tax Payers! The Appeal Clock is Ticking.

Posted by: Bart Schroeder on: May 2, 2009

spotliteCan you hear that sound?  Tick, tick, tick.  It’s the sound of time slipping away.  If you are, like many of us, receiving a “Notice of Valuation (NOV)” from your County Assessor that seems inflated (given recent events), then pay attention to that ticking sound because you don’t have much time to act.  This is the time of year when we homeowners get our NOV’s. Now, if we are lucky, our County Assessor has accounted for the fact that, unlike past assessment periods, the values of our properties may be declining rather than appreciating. So, what to do in the event your assessment suggests a value much higher than you feel is the case right now?  First, stay calm and try to be objective. Then, determine if an appeal is warranted.  If, after due diligence, you’ve concluded that an appeal is worth the effort, then go for it.  Before doing so, here are some things to consider:

  • The current year actual value in the Notice of Valuation (NOV) is required by law to be the Assessor’s opinion of the value of the property as of the date specified in your tax notice from the previous year.  In this case, you want to value your home as of June 2008. Have your Realtor give you some comparable homes that have sold during that period.
  • In reviewing this valuation, you, as the owner, should think about what the property was like at that time. Is the inventory on the NOV correct as of that date? What was the property used for on that date? What was its condition on that date?
  • With this information in mind, you should investigate what the property would have sold at that point in time, not today. Often the best way to get information about value is to look at similar properties that sold during the that period. This is what Assessor’s do and often they can provide you with a list of properties in the area that sold during that time frame.

Once you have reviewed sales of similar properties in the area and accounted for the differences between your property and the ones that sold, does the current year actual value on the NOV seem to be a fair estimate of value relative to your results? If it is close, you may want to go no further, the tax saving one can anticipate is only about $5-$11/year per $1,000 value adjustment for residential properties (depending on the total mill levy in the area). If the NOV current year actual value is substantially higher than your research indicates it should be, you may want to protest/appeal the valuation. The first step in the appeals process is to protest the Assessor’s valuation. To do this you may protest by mail or protest in person, but you must do so before the close of business on the dealine specified on your tax notice. In your protest, state why you think the NOV current year actual value is wrong and what you think is the value of the property. The Assessor will review your protest and send you a written Notice of Determination that will either adjust the value or deny your protest. If the Assessor adjusts your value to an amount you feel is fair, your taxes will be calculated on that value. If you are not satisfied with the value in the Notice of Determination, you may appeal to the County Board of Equalization (CBOE). To appeal to the CBOE, you must file yet another written notice of appeal with the CBOE within the time frame specified in that Notice of Determination. Again, you will receive a written notice of determination from the CBOE. If the result of this process is not acceptable, you may then appeal to the State Board of Assessment Appeals, to District Court, or through arbitration. Finally, if you find a mistake in your assessment in a previous year that you did not protest/appeal, you may ask that the mistake be corrected by filing for an abatement of taxes for up to two years prior. Again, you will be asked to document the mistake in writing to the CBOE and request a refund of excess taxes paid due to the mistake. Most County Assessors have excellent web sites that explain the assessment and appeals process as well as providing valuable property information. Assessor’s web sites can be helpful, free information resources for property owners and real estate professionals alike.

For more information, including a free consultation, send us a request at REInvest Group.

You Paid How Much to Learn about Real Estate Investing?

Posted by: Bart Schroeder on: April 28, 2009

I talk to way too many novice investors who have spent CRAZY money to learn real estate investing. They spend their hard earned money to go to seminars, buy tapes, and read books just to get MORE excited about, guess what, buying MORE tapes and books.
Don’t get me wrong, education is a beautiful thing. I wish I had more. But… when I see regular people spending thousands of dollars on so called Guru Mentoring, and still have yet to purchase a property, or receive a dime in cash flow it makes me wonder WHAT ARE YOU THINKING! They all know the proper terminology like Cash Flow, Cap Rate, etc, but are still in danger of making bad purchases in bad neighborhoods due to unbridled enthusiasm and unscrupulous property sellers.
What’s the Answer?
I am glad you asked! You are already taking the proper steps — belonging to our investor network. That’s most likely how you came to be reading this article. Share your thoughts, read the blogs and comment on them, hear about mistakes, pick up the phone and ask us a question. You will learn a lot.
Remember also that, unlike those “opportunities” mentioned above,  our classes typically are offered at no, or minimal, cost.  See a list of upcoming classes here.  And be sure to bookmark this link and return often as the list is often updated.   Learning the terminology is always helpful, but should not take precedence over the fundamental question to be answered:

Am I comfortable with my plan?

  • Is it long term wealth building with appreciation?
  • Is it a revenue stream to replace my current income?
  • How much risk can I tolerate?
  • Do I need a quicker cash injection with flipping? Higher risk
  • How to pay for it? Cash, Credit Line, IRA or Hard Money?

Even before you’ve finalized your plan, you want to find someone you can trust with your future to help you accomplish this. This is where we come in. Behind every REInvest Group agent, is a very qualified group of resources that consists of other Realtors/experienced investors, Property Managers, Attorneys, CPA’s that will spend time consulting with you, giving you multiple references and referrals and help you to accomplish what YOU want to accomplish. More than likely, they will present you with multiple options and alternatives because they want what is best for you.
Above all,

  • Take your time.
  • Partner with the right people.
  • Put your money into your future, not the Guru’s.

Re-thinking South Florida ….. Both Cash Flow AND Retirement?

Posted by: Bart Schroeder on: April 6, 2009

You’ve heard all the stories about Florida’s real estate woes.  And, certainly, many reasons remain to be cautious about that market.  But maybe it’s time to take another look at this “Fallen Star”.  Here are a few reasons we think the timing is very opportune for this particular strategy:

  • New stats reflect renewed interest from buyers. Sales in Miami-Dade and Broward counties in the last quarter of 2008 compared to 2007 were up 51% for single-family homes and 37% for condos.  At the end of last month, the number of homes for sale fell by 4.6 percent
  • Houses are once again, affordable. Historically, under normal market conditions, real-estate prices have tended to hover at about 3 to 3 1/2 times a region’s median household income. In South Florida, by 2007, that ratio had grown to twice the national average – 6.4 times household income in the State.  Now, affordability is again within reach.  Current ratios are in the 3.5 to 4 range – very comparable to historic national averages.
  • South Florida rocks. Consider, for example, these stats in the Greater Fort Myers area:
    • sales up an astounding 181% in December
    • a total of 1034 properties sold versus 367 during December ‘07
    • median price dropped to $97,750, below 2003 levels.
    • in December, there was 8 months supply of inventory.  One year ago, that number was nearly 23 months.
    • 8,768 single family homes sold in 2008, an increase of 86% versus the prior year.
    • Cape Coral January 2008 sales were up approximately 140%. Over half of them were foreclosure/short sales.  View related article here.

OK, so enough with the market statistics.  Let’s remember the remarkable story that got Florida to that heavenly perch from which it has fallen.  It’s a story of beautiful landscapes and incredible expanses of water; of beaches and sunshine and beauty; of no (or low) taxes.  All those things we dream of when we ponder our retirement.  The current dilemma notwithstanding, for many of us, Florida is still the place to be.  And, as Arnold would proudly proclaim:  “It will be baahk”!

And when it does come back, wouldn’t it be a nice proposition to have acquired a future retirement home (at 2003 prices) that is also serving as an income property – cash flowing and appreciating – while you prepare for its eventual conversion to your very own winter getaway!  If we were to assemble a profile of the typical property available for our clients, it would look something like this:

  • Physical Description:  1900 s.f., 4/2 SFR, 2-car garage, aged 0-10 yrs, construction: stucco, city water/sewer, .25 acre lot, Lanai, sprklr, AC,Pool, tile & granite tops.  Taxes 3%.  Ready to rent.
  • Financial Profile:
    • Acquisition cost:  $125K ••••  Down pmt:  $25K ••••  Loan Bal: $100K  ••••  6.5% loan (PITI) $949
    • Rental Income: $1450 ••••   GRM:  7.2  ••••  Cap Rate:  8.9%  ••••  Prop Mgmt: 12%
    • 5 yr Performance estimate: Appreciated Value (3% per yr):  $144,900 ••••  Cash Flow:  $44,053  ••••  Rate of Return:  18.1% annually

So, think for a moment.  Can you imagine this kind of investment opportunity elsewhere — not to mention, the chance to escape those winter doldrums in a permanent fashion?    By special arrangement, we have partnered with a major south Florida realtor to offer a turnkey investment package for our investors.  Don’t hesitate .. like Denver, these prices are going in one direction …UP!   For a sample financial analysis or additional  information, drop us a line at www.reinvestroup.net.

Denver Fares Well Again – smallest decline in Case-Shiller Index

Posted by: Bart Schroeder on: February 26, 2009

Denver home prices declined a little in November while much of the rest of the country continued its downward spiral, according to a closely watched 20-city index released Tuesday. Prices dropped 1.1 percent in Denver from October to November. That was the smallest month-over- month decline among the cities measured by the Standard & Poor’s/Case-Shiller index. Compared with November 2007, Denver home prices were down 4.3 percent. Only Dallas, with a 3.3 percent drop, saw a smaller decline. Nationally, prices tumbled by the sharpest annual rate on record, 18.2 percent, as the deepening housing slump and national recession spared no region. Overall, homes in the index have lost a quarter of their value since their peak in July 2006. Phoenix, Las Vegas and San Francisco led the way down in November with annual declines of greater than 30 percent. Mike Burns, broker owner of Re/Max Professionals Inc., said he expected the index to drop in Denver because the homes sold during the second half of the year, including many foreclosures, were in the lower price ranges. “We’ve always been kind of a trickle-up economy,” Burns said. “When the lower prices start to move, that usually indicates the upper prices are going to start moving soon.” There’s just a six-month supply of homes priced at less than $250,000, Burns said. “That price range is really, really humming right now,” he said. “We’re going to see prices inch back up. What will sell this year will be moving toward the $300,000s, $400,000s and $500,000s.”

Source: Denver Post and Assoc Press. Jan 2009

First Time Homebuyer Credit — Final Update

Posted by: Bart Schroeder on: February 20, 2009

Well, it is now official.  The 2009 American Recovery and Reinvestment Act is law.  View the entire act at www.recovery.gov. That necessitates another update of our ongoing series of  articles on this subject.  So,how does a first-time homebuyer take advantage of the $8,000 tax credit?   It comes with some guidelines. According to the most recent analysis, the following rules will apply:

  • The deduction is worth 10 percent of a home’s value up to $8,000, which means all homes worth more than $80,000 could qualify for the maximum amount.
  • There is an income limit to qualify. For married couples filing jointly, AGI should be under $150,000.   $75,000 for single filers.
  • If married couples file separately, they can both claim 5 percent of the home purchase ($4,000 each for a home over $80,000).
  • Most importantly, it’s a tax credit, not a deduction. And, unlike previous versions, does not require repayment.  That means the entire amount goes back to the first-time homebuyer -  unlike deductions, such as mortgage interest, that are subtracted from gross income before tax is calculated. Given the choice, a credit is always preferable to a deduction.  (See more below about how to use this to accumulate a down payment!)
  • Homes must be purchased between Jan. 1, 2009, and Dec. 31, 2009.
  • The tax credit does not have to be paid back, providing the homebuyer keeps the property for at least 36 months and resides in the home.
  • You are considered a first-time homebuyer if you have not owned a home within the previous three-year period. However, ownership of a vacation home or rental home does not disqualify the buyer.
  • The effective date to receive the credit is the first day the homeowner actually lives in the house. You must take possession in 2009.  So, if you are thinking of building a home, it must be occupied before years end.
  • The credit can be claimed on 2008 income tax forms even though the purchase took place in 2009. Another reason to hasten plans to buy.  As we’ve said before, “There couldn’t be a better time to be a buyer”.
  • Savvy buyers can, in anticipation of receiving the credit, revise their withholding taxes downward, thus increasing take home pay and dedicate that surplus to accumulating the necessary down payment.  Caution, though, if you don’t follow through on the purchase, you may find yourself owing taxes because you under withheld.

Denver Tops Nationwide Poll

Posted by: Bart Schroeder on: February 13, 2009

When it comes to good living, the Mile High City is tops in the land, according to a national survey released today.  Adults picked Denver as the country’s most desirable big city to call home, with San Diego second and Seattle third. At the bottom of the list, no surprise: Detroit.

The Washington, D.C.-based Pew Research Center polled 2,260 adults in October about where they prefer to put down roots as part of a broader study of Americans’ mobility.  Respondents were asked “what kind of environment do you prefer?”  Their answers:

  • Small Towns 30%

  • Suburbs 25%

  • Cities 23%

  • Country 21%

Asked, subsequently, to pick a few cities from a choice of the 30 largest, here is what they said:

  • 43 % said Denver

  • 40 % liked San Diego

  • 38 % gave Seattle a nod

Orlando, Tampa and San Francisco tied for fourth at 34 percent.

At the bottom, only 8 percent cared for Detroit, 10 percent chose Cleveland, 13 percent favored Cincinnati and 15 percent liked Kansas City, Mo.

Source:  Denver Post 1/29/09

More Good News for First Time Home Buyers

Posted by: Bart Schroeder on: January 29, 2009

This post is intended as an update to an earlier post on this same subject last year.  In that article, we sang the praises of The Housing Assistance Act of 2008 which provided a $7500 so-called “credit” to First Time Home Buyers (FTHB).  Well, buried in the bowels of the act was a significant “Gotcha”  …. the law required that $7500 to be paid back, as in “loan” not “credit”.  See our original post here:

FTHB Article – July 2008

Needless to say, the original law was met with lukewarm response and, therefore, had little impact in terms of creating FTHB’s.  Well, all is not lost because, working its way through the House of Representatives and on its way to the Senate as part of the $819 billion economic recovery plan of 2009 is a new provision destined to restore the luster to the original law.  Language in the 2009 Act will repeal that portion of the Housing Assistance Act which required that the credit be repaid.  So, once again, the call goes out to all First Time Homebuyers:

You Now Have a Real Reason to Rejoice!


Anybody Seen My Lis Pendens?

Posted by: Bart Schroeder on: January 20, 2009

No, a Lis Pendens is not an exotic dog breed.  And, no the title is not misspelled.  If you don’t know by now what a Lis Pendens is, then you’ve come to the right place.  Those of us who have been at this a while know that there is a unique “language” associated with real estate investing.  In fact, we did some research and found that certain Real Estate Terms were predominantly popular searches on our website, www.reinvestgroup.net. So, we thought it would be a good idea to refresh our memories.  And yes, Lis Pendens is among the most popular terms.  So, without further adieu, Ladies and Gentlemen, REInvest Group’s Top Ten Real Estate Investing Terms:

  • Lis Pendens – A legal notice recorded to show pending litigation relating to real property and giving notice that anyone acquiring an interest in said property subsequent to the date of the notice may be bound by the outcome of the litigation. Often filed prior to a mortgage foreclosure proceeding.
  • Liquidated Damages – A contract clause which limits a party to a sum certain in lieu of actual damages. In the case of a real estate purchase and sale contract, the seller’s legal remedy is limited to the buyer’s earnest money deposit
  • Land Lease – Owners of property will sometimes give long-term leases of land up to 99 years. A lease of more than 99 years is considered a transfer of fee simple. Land leases are commonly used to build banks, car lots, and shopping malls upon.
  • Quit Claim Deed – A deed by which the grantor gives up any claim he may have in the property. Often used to clear up a cloud on title.
  • Installment Sale – A sale which is involves the seller receiving payments over time. The Internal Revenue Code contains specific definitions and promulgates specific rules concerning installment sales and tax treatment of them. Also known as an “owner carry” sale.
  • Heirs and Assigns – Words usually found in a contract or deed that indicate the obligations assumed, or interest granted, or binding upon, or insure to benefit of the heirs or assigns of the party.
  • Assignment of Contract – A process by which a person sells, transfers, and/or assigns his rights under and agreement. Often used in the context of the assignment of a purchase contract by a buyer or the assignment of a lease by a tenant.
  • Yield Spread Premium – A “kickback” from the lender to the mortgage broker for the additional profit made from marking up the interest rate on a loan.
  • Warranty Deed – A deed under which the seller makes a guarantee or warranty that title is marketable and will defend all claims against it.
  • Tenancy in Common – With tenancy in common, each owner (called a “tenant”) has an undivided interest in the possession of the property. Each tenant’s interest is salable and transferable. Each tenant can convey his interest by deed, mortgage, or by a will. Joint ownership is presumed tenants in common if nothing further is stated on the deed.

The Newest Market Phenomenon …. Multiple Offers!

Posted by: Bart Schroeder on: January 9, 2009

Given the doom and gloom in the media, it’s no wonder that, as a buyer, you feel like you’ve got the upper hand when purchasing.  Visions of lowball offers, grateful sellers, and bargain basement prices dance in your head.  But, guess what, real estate is local (as if you hadn’t heard that one before).  And, in this market, we are seeing competition surfacing on the buying side. HUD homes, for example, that sold 6 months ago for an average of 87% of asking price are now going for premiums above asking price.  Buyers are being asked to re-submit their highest and best offer.  So, what’s a savvy buyer to do when there are multiple offers? For one, don’t give up before the battle has begun.  It is possible to succeed without compromising your original objectives.  There are a number of strategies which will promote success.  Let’s talk about them.

  • Use a Buyers’ Agent. This is rule number one.  It is imperative that your interests are represented in the transaction. Going directly to the seller’s agent may provide the illusion that you have a leg up.  Remember though, that the seller’s agent’s responsibility is to the seller, not to you as a buyer.  As your buyers’ agent, we will:
    • provide sold comps that enable you to set a competitive offer price
    • advise you about real estate activity in the neighborhood for similar houses
    • complete a personalized Financial Analysis of the investment using our custom modeling tools
    • recommend a strategy, then implement it (via negotiation) that ensures your success
  • Limit Contingencies.  Typical contingencies are financing, inspection and, if applicable, condo docs.  Decide whether you are comfortable eliminating any contingencies to improve your chances.  Everyone’s situation will be different and everyone’s risk tolerance varies as well. And, if you are including contingencies, discuss with your agent how to minimize their impact.
  • Cash is King.  Particularly in REO situations, cash offers will prevail, even at a discounted price.  It’s the old Bird in the Hand …etc. story. Any financial strain this creates is quickly overcome by re-financing right away.  Then start all over again.
  • Manage Dates. Your agent will find out what dates work best for the seller – do your best to meet them.  Maybe you’ll have to pull off a double move.  The temporary inconvenience will be quickly forgotten.
  • Get a pre-approval letter from your lender. You want to demonstrate your ability to consummate the transaction.  You do that by removing contingencies such as financing.
  • Use the KISS theory.  Stay focused on the goal (i.e. getting the offer accepted) and talk about extras later.  Now is not the time for pointed questions or asking for repairs – though that time may come if you’re allowed an inspection.  Remember – you’re being compared with other buyers.
  • Research your offer price. Review comps with your agent. And, remember, some houses are priced low to generate excitement.  Don’t knock it.  The strategy works! Carefully go over the stats.  Use price and terms in tandem to present the best profile to the seller. Your agent will be invaluable to you at this point.  But, ultimately you’re deciding on an offer price that works for you and, based upon our analysis (see above), will ensure your success.

Remember, a multiple bid situation is not insurmountable. It just means that you have to work a little harder.  Together with your agent, craft your bid, and know that you’ve done your best.  Good luck!

Sellers – 13 Ways to Get Buyers Inside the Home.

Posted by: Bart Schroeder on: November 30, 2008

Here are some easy, inexpensive fixes that will help create that outside appeal and get you one giant step further to a sale:

  • Paint or stain the front and garage doors, especially if they show any weathering. These are the first visuals where a potential buyer focuses. If garage doors are metal and dented, they may need to be replaced.
  • Any old, basically abandoned sheds or small structures must be removed, the area graded and the grass replaced.
  • Change any dated, outside light fixture(s).
  • Fix that driveway. If it is blacktop, make sure cracks and crumbling areas are dug out and filled and then the whole driveway sealed. If it is cement, have large cracks filled and repaired professionally.
  • Make sure landscaping bricks are in their proper placement. Mowing and weed-whipping sometimes moves them. While this is something the homeowner rarely notices, it makes the property look unsightly.
  • Fill in bare dirt under large shade trees. Plant shade-tolerant plants in defined planters or groundcover. Landscape properly for that area.
  • All landscaping beds should be cleaned out and updated for the time of year it is in your region. Place new bedding material down.
  • Have trees and bushes pruned and trimmed. If a bush or tree is looking old or about to expire, remove it and replace it with a similar size and type if you can. If there are tree limbs over the roof, have them removed.
  • If the house needs painting and a full paint job is not in the cards, have it touched up professionally in the worst, most visible spots. Paint shutters and fix them if they are hanging crookedly.
  • If the house is sided, have it power washed and have gutters and windows cleaned. Window cleaning inside and out makes the house feel updated and fresh, rather than old and dingy.
  • Make sure grass is in good shape, weeds are removed and trimming is done regularly. So many sellers fall down on this job the minute the house is listed, and this is critical to selling a house quickly. In snowy climates, removal must be done regularly, too. If the home is vacant, consider a home warranty to reassure buyers.
  • Decks should be washed and repainted or resealed, plantings around them cleaned, weed-free and looking good. Patio furniture should be in excellent condition. Even though it is in the backyard, this is the area where the family can envision enjoying warm days in the new yard.
  • If the roof has missing shingles and they can be replaced inexpensively, take care of this as it may save negotiation over a completely new roof.

Remember, most home buyers cannot visualize even these simple changes and clean-ups in a house, and the ones who can, will be looking for a reduced price.  So to sell the house at top dollar and quickly, make it “appeal” to the many who will be seeing it rather than the few who are looking for a “fixer upper.” These people know what they want, go after it and need less assistance.

Finally, have neighbors or friends look at the finished results to see if you have missed anything key that would be quick and easy to do. When the home looks great, update its picture on the Listing and the internet.

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