Refinance Rental Property Don T Sell It Steps To Consider When You Decide To Sell Your Home Summary Regulatory History Of Cost Segregation House Renovations The Basics Of Home Remodeling Unlikely Rooms Can Sell Homes Real Estate Overcoming Your First Big Hurdle
You own a rental property for years, and never see the “big pay-off.” Is it time to cash in on your investment, now that you’ve paid down the mortgage, and values are up? Maybe not.
The Problem With Selling
Selling means you’ll have to pay a large capital gains tax.This can be avoided if you reinvest through a 1031 exchange, but then the point is that you want your money, right? Also, a good rental gets more income as rents go up. Do you want to lose this inflation-indexed retirement plan? What’s the alternative?
Refinancing Rental Property
Have you considered that if you refinance, you can get much of your gain out of the property, without paying a penny in taxes? Borrowing money is not a taxable event. You can take it and spend it however you want, and still keep your rentals.
Let’s look at an example. Suppose you have owned a small apartment building for years. You bought it for $240,000, with a downpayment of $40,000, and mortgage payments of $1650 monthly on the balance. Now it is worth $400,000, you only owe $120,000, and your cash flow is around $800/month. How do you get at that equity?
A bank will probably loan you 70% of the value, or $280,000. After paying off the first mortgage, you are left with $160,000. With todays lower interest rates, your payment on the new mortgage will be about the same. At most you might lose $50/month in cash flow.
An even better scenario: Use $40,000 for high-return upgrades to the property, such as carports or laundry rooms, and then raise the rents. You could have $120,000 left over to spend any way you want, AND have higher cash flow. Does that sound better than selling your retirement plan? Don’t sell. Refinance that rental property!
Deciding to sell your home is not an easy event. Once you have made the decision, there are a few steps you need to follow to make it go smoothly.
Steps To Consider When You Decide To Sell Your Home
If you are thinking about selling your home, there are a lot of issues that come to the forefront. Once you decide questions likes whether it is a good time to sell, the amount of money you will get, where you will move and so on, there are less obvious steps you need to take.
Part of the process in determining whether to sell your home is a review of your current situation. In this case, we are talking about your home loan. You need to determine two things. First, what is the balance on the loan and will the sale price be sufficient to pay it off. The second factor is less obvious, to wit, you need to determine if there are any penalty clauses written in to your mortgage for an early sale. Some loans have draconian penalties, which will stop you in your tracks immediately.
If you are selling your home, you need to find another place to live. This sounds obvious, but many people leave the process to the last minute which adds unnecessary stress to the situation. If you intend to immediately buy another home, you need to sit down with a mortgage loan officer and get pre-approved for another purchase. Selling and buying a home at the same time can be hectic, so definitely get pre-approved to make everything go as smoothly as possible. If you intend to rent for a bit, make sure you find a place and that it has enough space for your stuff. If it does not, rent a storage facility and start moving things in now.
The third issue is timing. Specifically, you need to determine how long it takes for homes to sell in your area. You next need to determine how that time frame fits into your plan. If you need a quicker sell, your home needs to be offered at a lower price. If you can afford to wait, then you can price it a bit higher and sell on specific benefits the property has that others do not.
Selling a home is not as easy as simply deciding to do it. By following these steps, however, you should smooth out the process.
In order to calculate depreciation for Federal income tax purposes, taxpayers must use the correct method and proper recovery period for each asset or property owned. Property often consists of numerous asset types with different recovery periods, which must be separated into individual components or asset groups having the same recovery periods and placed-in-service dates.
When the actual cost of each individual component is available, this is a rather simple procedure. However, when only lump-sum costs are available, cost estimating techniques may be required to “segregate” or “allocate” costs to individual components of property (e.g., land, land improvements, buildings, equipment, furniture and fixtures, etc.). This type of analysis is generally called a “cost segregation study,” “cost segregation analysis,” or “cost allocation study.”
Significant tax benefits may be derived from utilizing shorter recovery periods. The issues for Internal Revenue Service Examiners (Service Examiners) are 1) the rationale used to segregate property into its various components, and 2) the methods used to allocate the total project costs among these components.
The most common situation is the allocation or reallocation of building costs to tangible personal property. A building, termed “section (
With the mortgage business being what it is these days, it may be a safer think to fix up your house as opposed to selling it and purchasing a new one. House prices have come down so much that nowadays homeowner will have a hard time finding the right value for their land. Most people are turning to house renovations to enhance the price of their house and prepare for the future bounce back in the housing market. Here are a few simple home remodeling tips that can help you fix your house up.
If you are looking to obtain the most for your money, it is a great bet to start with the kitchen. One problem you may encounter is that a complete kitchen renovation may take a little longer than expected and the cost could be a bit higher than you have to expend. A good place to start renovating your kitchen is with something inexpensive like the walls. Slap a fresh coat of paint on your kitchen walls and it can do wonders for the appear and feel of the kitchen.
The next thing you want to focus on is the bathrooms. The kitchens and the bathrooms in your house will be the major focal spots when you go to sell your residence. This is why you want to start with these two parts and repair them up as much as possible. A good place to start in your bathroom is the flooring. If you can, don’t make use of vinyl for your flooring and if you do have vinyl floors, upgrade these floors to tile.
The next point to modernize and enhance the value of your home is the front area of your house. Whether this is a small area of grass or you have a big front yard with a garden, you want to ensure that you have excellent curb charm when you are planning to sell your house.
The economy may be on a down swing, but you know how to still do the aforementioned things in order to increase the value of your house while you stay for the economy to recover. Do these things and you will be good on your way to a great house remodeling job.
So many times when homes are for sale, people forget that some areas of the home need a little more attention than others. Think about it for a minute, what’s the room that gets cleaned the least in your home? Now, I’ll bet you didn’t answer; “the garage.” Garages are an oft-overlooked area when preparing a home for sale. The garage has simply become the old catch-all area for accumulated junk and things that you just can’t bring yourself to throw away. You know what I’m referring to, clothes from 12 years ago, that collection of 1970’s disco 8-tracks, who knows, there might even be a car in there somewhere!
Garages can be a huge undertaking and an emotional one at that. In cleaning out a proper collection of “stuff” who knows what forgotten treasures you might run across? But remember, the idea here is to get rid of things that aren’t being used. The best idea is to set aside a whole day to dedicate to the cleaning of the garage. First things first, everything comes out. Everything. Sort everything into three piles, one goes to the garbage, one goes to goodwill or a similar organization that can use old clothes and such and the third pile is the keepers.
Once everything is out of the garage you can set about cleaning it. If this is the first time you have really cleaned it, this could take a while. This is a great time to practice your skills as a landlord and evict the countless creepy crawlies that have undoubtedly taken up residence in the rafters and dark corners and still have not paid their rent. Give the floor a good sweep and if necessary maybe pressure-wash anything that is holding a stain. at this point your cleaning of the garage could be done, or if you are a big thinker, there are some options such as garage organization systems that are tremendous for keeping things neat and orderly and add some value to a home as well. Usually these consist of a wall-mounted rack system and incorporated storage shelves and bins. Hopefully when this exercise is complete, you garage will be as attractive as the other rooms in your home and will be a good selling point when buyers come to have a look at your home.
As one journey’s through the rough terrain of real estate. You will find yourself amongst the company of those who share similar emotions: self-doubt, fear, concerns of risk, and an endless stream of questions. So why would one subject him or herself to such things if it causes so much of a headache in the short term?
The answer to that is simple: Real Estate is where the bling bling is! Seriously folks, no industry on earth has made millionaires of more people than those two words.
OK so now you’ve decided it’s worth the risk, but you’ve heard so many different perspectives on results, methods, and a million different courses all claiming to be the cure to launch your own career in real estate.
You may look into creating new homes and then selling the properties when the timing is right, or even rent them out. Many people follow this method and rehash the process over and over till they reach their financial goals.
Others go about it a different way- such as finding a run down home (or constructing a new one) and then learn the tricks and trades of fixing up a home and finding out where the “pressure points” are that can drive the value of the property up like like firewords on the Fourth of July. Then they’d flip or sell it once it is done.
Each method has it’s highlights and lowlights. Perhaps you should look into the one that “feels right” to you, and look into it a bit more. It’s not possible to become a master of everything in the beginning so just find something, learn how to make money from it, and make it happen as many times as it takes till you get your desired results.
Eventually, you will develop a sixth sense for “where the money is”. This is something that can only be learned through hard work, and experience, period!.
|area, cash, change, cleaning, clothes, cost, depreciation, determine, estate, flow, garage, good, home, house, idea, itc, kitchen, method, money, mortgage, obvious, people, plan, process, property, real, real estate, recovery, remodeling, rental, results, risk, sell, selling, set, start, steps, walls|