About Nevada County, CA

Still lots of activity in Tahoe Donner. 4 homes sold during the week of January 31-February 6, 2010. 3 homes were in the $400K-$500K range and 1 was in the $800K price range. The average days on market was 124 and the average original list to sales price was 95% (good number!). 4 homes went pending last week (all in the $500K-$600K range). There are now 15 Tahoe Donner homes under contract. 8 new homes came on the market last week. 79 single family homes are now listed in Tahoe Donner. This puts the absorption rate around 19% and there is just over 5 months of inventory remaining. Click on the links for current listed Tahoe Donner Short Sales and Tahoe Donner REOs. For more information about Tahoe Donner and Truckee real estate click here.

About Grass Valley Clifornia (CA)

Grass Valley in Nevada County is located West of Lake Tahoe and North East of Sacramento and San Francisco. This area in the sierras is California gold country and its beautiful scenery, springs, lakes, rivers, mountains, forests, and historic landmarks are what makes Nevada County world famous. Once you visit, live, camp, or just view the beauty of this region you will fall in love with Nevada County.

Grass Valley has warm to hot, dry summers, and wet, rainy winters. Summer is very dry but a thunderstorm may occur. The dry season is from May to September. November to mid-April is the true rainy season. Grass Valley has somewhat of anOceanic climate, except that summers are warmer and dry enough to give Grass Valley characteristics of the Mediterranean Climate like much of Northern California. Snow does occur at times and can be heavy. The winter rains contribute to a heavy fuel-loading of brush and grass, which dry out during the summer, posing a wildfire hazard. Nevada County Home Buyers and Sellers If you are looking for a Grass Valley Real Estate Agent, you will find Philip's 15 years experience along with his credibility very useful. Being a past Firefighter of almost 12 years a vast majority of Philip's clients are law Enforcement, Firefighters, Paramedics and Military personal. As a licensed CA agent under the Department of Real Estate, Philip's commitment is to always act in the best interest of his clients.

Are you interested in buying or selling real estate in California and are unsure if you can afford it. Just give Philip a call and five minutes is all it takes to know if this dream can become a reality.

Contact Philip today for more information by visiting him at Nevada County Home Sellers contact page.

Some Other Helpful Links when searching for a home: Home Search

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The FHA just announced tighter guidelines (January 20).

Insurance premiums increased from 1.75 to 2.25 percent. Seller concessions are limited to 3 percent, down from 6 percent and new borrowers with a FICO score below 580 will need a 10 percent down payment instead of the 3.5 percent now required. GASP! We have a choice. We can choose to support what they are trying to do, or we can complain loudly and keep the buying public confused.

We are not going to get everything we want or think is needed. In down markets like this it isn't interest rates and terms that will pull us out; it is buyer and lender confidence in the market.The FHA does not live to prevent the recovery. Let's make sure we don't do anything to prevent it either.

Perspective helps in times like these.

When the Florida Condominium Act was made law in the 70's, it was going to 'kill the condo industry." In fact, confidence in the concept and stronger condo documents gave the consumer more confidence in the concept.

When the Florida Timeshare Act came along, it was going to 'kill the timeshare industry.' In fact, the public started trusting the concept and buying. Major hotels came into the business, which confirmed its credibility, and timeshare sales took off.

When interest rates were twenty percent and builders were paying six to eight points to buy down fixed mortgages to 12%, the industry and its experts all agreed on two things: “It was going to kill the industry" and “this country would never see single digit interest rates again. It didn't happen. One result: adjustable mortgages were born.

In 2006-2008 our onsite sales team did about seventy million dollars as broker of record for five condominiums. It was great. Interest rates were low, buyers were living in fear it seemed that they may not get in on the opportunity to own at least one condominium.

Condominium developers, Realtors, lenders and appraisers made a ton of money riding a condominium bullet train that was rapidly derailing down a slippery slope. It was almost embarrassing not to own at least one piece of real estate.

Lenders and real estate agents did not complain about the 'if you can fog a mirror you are qualified to buy real estate" or the feasibility studies that agreed that if you owned land, your project was approved. Or so it seemed.

Fast profits were made by no- risk investors buying a condo one day and selling it for a profit the next. This was reported and explained to the public as presales, when the market knew this was only a paper market.

For the first time in memory, interest rates did not stop sales, lenders and high prices did. But not to worry.

When sales stopped, and cash flow dried up, where better for developers to find money to make mortgage payments than condominium association funds. And who can forget those investors who purchased rental conversion units and never make a mortgage payment or an association payment. Or those who purchased presales in high rise condominiums, then baled before the condominium developer was able to close on the sales, leaving the lender and developer in one of worse cash flow positions imaginable.

Lately it dawned on me. I need to button it. I need to learn to work with HUD and the FHA. I am a marketing consultant and onsite sales broker with tons of experience. Just because I am out of ideas and frustrated does not mean the FHA is a bad program.

The government basically got us into this mess, through its permissive 'don't ask, don't tell' qualifying process, a system process was so loose, it was practically impossible to not qualify for at least one home if not two. And the closings just kept coming.

It's a new year. It is a good time to rethink our thinking. We are professionals in real estate. We need to understand the times and know how to respond. There will be more changes coming, just like there will be in your business or any growing business.

Here's a thought. Let's agree that we need to sell what we have to sell. It doesn't matter what the rules are, we can work within them. We always have.

We need to stop complaining to the public every time we don't get what we want.

Remember: The FHA is in business to protect you and me, the taxpayer. While many of us, including lenders, real estate brokers, mortgage brokers were making record breaking commissions, they were being set up to lose billions of dollars.

The best way for them to serve us is to do everything possible to restore credibility to the condominium and residential industry, prevent as many foreclosures as possible, and help qualified Americans afford to purchase a home, if that is there choice.

The condominium market is as mixed up a yard dog's breakfast. Unscrambling it will take time, but it will also take good ideas and the support of Realtors, homebuilders, lenders, and mortgage brokers.

Here's a challenge. No one expects us to agree with everything or each other on what needs to be done. We can agree that until guidelines are tested, their effectiveness will not be known.

Therefore, when the FHA announces new policies and guidelines, let's at least give them a chance, and while we are at it, try to figure out how we can sell what we have to sell.

Over the last few years, stocks have taken a turn for the worst. Despite their recent rebound, millions of retired and almost-retired have been forced to extend their working years just to maintain a minimum standard of living.

But one asset has skyrocketed in value during that period -- real estate.

And while your 401(k) plan may not offer real estate in any form, the fact is, you can own real estate in your retirement plans. Retirement plans are by nature long-term investments. And, you can't get much more long term than real estate. But you must keep in mind that you'll be able to invest only for income and appreciation. You can't deduct depreciation, as you can in a taxable investment.

And you have to be very careful how you do it. A single bad move can create a major tax disaster.

Know the rules

The law allows your qualified plan or IRA to own just about any kind of real estate. You can invest directly in property: single family and multi-unit homes, co-ops, condos, apartment buildings, even improved or unimproved land. You can invest indirectly in real estate investment trusts, but I'm not wild about these for retirement because their overheads are too high.

If you buy a property for your IRA, the income and appreciation normally builds up tax-free until you start to take withdrawals.

Careful now: I said normally tax-free. That's because there's a special tax on debt-financed income in retirement plans called the unrelated business income tax (UBIT). If the real estate is mortgaged, then you must file Form 990-T with the IRS. It allocates the income earned between debt and non-debt financing, and the tax due. So, let's say you want to buy a $100,000 duplex for your retirement account. You put in $70,000 and borrow the remaining $30,000. On a simplified calculation with the UBIT, you'd be able to shelter only 70% of the income. The rest of the income from the property is subject to ordinary income tax rates.

That's why an all-cash transaction is probably the easiest. If you don't have sufficient cash, your retirement plan can purchase a partial interest in a property. That's known as a tenant in common interest.

Or, you can borrow the money to finance the property and pay the UBIT. Depending on aggravation level, costs, tax rates and rates of return, the leverage may be worth the tax cost.

The advantages of real estate in a retirement plan are its potential high rate of return, added diversification and its lower risk over the long run.

This can be a pain to set up

Disadvantages only begin with the hoops you have to jump through. First you have to get your dollars from your retirement custodian (probably your broker) to an independent custodian that offers real estate as an investment option. These include Sterling Trust, of Waco, Texas, Lincoln Trust of Denver and Pensco of San Francisco. (You'll find links at left under Related Sites.)

You sign a direction letter to the custodian to purchase the property. The rents go into the retirement account and all expenses are paid from the account.

You can use a Roth individual retirement account, a traditional IRA or even a single-participant 401(k) to purchase real estate. All you need is a custodian that allows real estate investments. Check out Entrust Administration for single-participant 401(k)s and self-directed retirement plans. (You'll find a link at left under Related Sites.)

Watch out for other traps. You can't transfer property you already own into a retirement account. You also can't buy a vacation house and rent it out to yourself. That's called "self-dealing" and is a prohibited transaction. It covers your family members as well.

Perhaps the biggest drawback to investing in real estate for a retirement account is the loss of the depreciation deduction. It's useless inside a retirement account. However, many argue that the cash flow and appreciation benefits outweigh the loss of the depreciation deduction. That does work for REIT investors.

The Roth IRA: great potential but tax complications

My favorite retirement vehicle for real estate investment is the Roth IRA. Profits earned under the Roth umbrella, including rents and all the gain on any sale of the property, normally escape taxation. Your contributions aren't deductible. But, if you had the dollars in the Roth for at least five years and are either 59½, disabled or dead (distribution is to your beneficiary), or to the extent you're a qualified first-time homebuyer, all of the dollars come out tax-free!

If your Roth now has lots of cash, or stock that can be sold for cash, you can pay cash for the real estate. That, of course, gets you around the UBIT problem.

If it doesn't, you might consider rolling over traditional IRA dollars into the Roth. If that doesn't provide sufficient cash (or if you don't already have a traditional IRA), consider rolling your 401(k) or pension dollars into a new IRA, with a second rollover into the Roth.

Make direct transfers rather than taking the cash in hand and rolling it over into a new account. Unless it's a direct transfer, the IRS requires withholding, normally at a 20% rate. The IRS requires 20% withholdings on all rollovers of qualified plans. That means you'd have to come up with the withheld dollars to roll over within the 60-day tax-free window or face tax and penalty. Withholding is not required with an IRA. But many financial institutions will withhold anyway.

In any case, you're going to be hit with tax on the earnings built up in the retirement account when you roll over to the Roth. That should be a major consideration in your decision process. As a general rule, the younger you are, the more advantageous the Roth becomes compared to other retirement alternatives. But, because of the tax, less money will be reinvested.

It's a complicated decision. And it's based on multiyear projections. And those are based on guesses as to current and future tax rates and rates of return. So you obviously must have a good assessment of the health of your local real estate market.

Here's another strategy

There is a strategy you can use if you want. You don't have to convert all your traditional IRA dollars to a Roth in a single year. You can convert a portion of the account each year, depending on your needs.

If you don't have sufficient cash, again, your retirement plan can buy a partial interest in a property as a tenant in common. And, of course, you can borrow the money to finance the property and pay the UBIT. Depending on aggravation level, costs, tax rates and rates of return you can expect in your market, the leverage may be worth the tax cost.

Your adjusted gross income may also limit your ability to convert. You can't convert if your adjusted gross income is more than $100,000, or if you're married filing separately. Amounts converted don't count toward the $100,000 limit.

While real estate isn't appropriate for everyone's retirement account, it should at least be looked at as another arrow in your quiver of retirement investment alternatives.

Source: Jeff Schnepper (02/03/10)

You have decided that you are going to offer Owner Financing with the sale of your home or business; here are some pointers to think about when creating a note that will make it attractive to buyer’s(investors) should you later need to sell your note and get the cash you need, but also protect your interests if you decide to hold onto it.

* Down Payment – You need to get a good down payment to build equity in the note and give the buyer of the property more incentive hold his end of the agreement. This means at least 15% for a standard house, and 20-30% for commercial properties, and land. These numbers cannot always be reached, so try to get as much as you can without putting the buyer into a financially precarious position.

* Buyer’s Credit Score – Try to sell to a buyer with decent credit score; a credit score of 625 or greater is preferable. Investors will often buy a note with a credit score below 600 but be prepared for a deeper discount. It is important to recognize that a low credit score does not always represent the buyer’s ability to make timely payments, as the low score could be due to a host of reasons that are easily remedied. If you do sell to a buyer that has a less than average credit and you are going to hold on to the note for a while, be sure to report the loan to the credit agencies on a regular basis; if the buyer(payor) is making timely payments this activity will reflect favorably on the buyer’s credit score and more money for you should you decide to sell the note in the future.

* Interest Rate – A competitive interest rate is important because it will make it easy for the buyer to purchase the note and yield the desired profit without much of a discount to the note holder. Make sure that the interest rate being charged is at a minimum 8%, 10% is what I recommend. — R E Young