It’s taken me a few days to absorb what happened Sunday and read the articles by the ‘experts’ as to there take on the bailout of Freddie Mac and Fannie Mae. The consensus seems to be that the bailout will help stimulate the real estate market, albeit minimally. They seem to think that lower interest rates will help buyers on the fence get in the game. Although this may help, I feel their train of thought is skewed because high interest rates are not what are keeping buyers away. Affordability and tighten lending criteria are the true obstacles (As was always before the banks’ self imposed boon). Fear about decreasing property values is another important factor. The bailout does nothing to address these issues.
The only ones thrown a life preserver are the investors (like they really need it). I understand why it’s important to keep the security aspect of package mortgages relatively stable, but what’s wrong with throwing a few hundred billion to aid those on the brink of foreclosure? After all, the banks are the ones who encouraged this whole mess. They knew exactly what was going to happen-they went through it just a few years ago-SNL scandal.
The real estate market is like any other market: There are only so many customers we are all vying for and there are only so many products to sell. When one of those is out of whack you have a problem-in this case they both are out of whack, no buyers & too many homes.
Neither of these will be solved by this bailout. Worse yet we are in store for a tsunami of foreclosures just around the corner and if nothing is done we may see property values down to what they were 20 years ago or lower.
"Doing Business Right"
Kendall Short Sale Foreclosure Specialist
Something your stockbroker won't tell you-you can purchase the retirement home of your dreams with your IRA.
Traditional and Roth IRAs can purchase all kinds of property, from single family homes to apartment complexes.
By owning real estate, you diversify away from stocks and bonds and keep ahead of inflation. Returns for real estate average 14% a year, versus the 12% 30-year average for stocks. (According to Ibbotson Associates)
Although banks and brokerage firms typically don't offer this alternative-it is costly to administer-it's easy to add a real estate strategy to your retirement plan.
Reasonable allocation now: 25% of your retirement assets.
Beware: If you buy a home for retirement, you can't live in it until you take its entire value as a distribution from your IRA after age 59½. Until then, rent it out to a permissible third party. Profits are reinvested in your IRA.
Transfer your existing IRA or roll money over from a qualified plan-401k or a pension-to a self directed IRA. It should be overseen by a custodian, such as a bank, which receives an annual fee of .5% to 1.5% of assets. Fees decline as assets increase.
You will also need a property manager to maintain and rent out the property to tenants. You are not legally permitted to manage it yourself because the IRS considers you a "disqualified party."
If you don't have enough cash in your IRA to purchase a property outright, invest your money in a limited liability corporation (LLC). The LLC invests in the property. There are no restrictions on eligible investors. For instance, the LLC can buy property with your IRA and/or spouse's IRA as well as non-retirement accounts belonging to you and your spouse.
If you want to rent the property to family members consult a tax attorney. If you violate IRS rules, you will pay tax on the entire investment. IRS rules are tricky.
You can not lease the property to parties that have been disqualifies by the IRS, such as yourself, children, spouse, grandchildren or their spouses. The law does allow you to lease the property to siblings, cousins, uncles and aunts. You also can name a sibling, etc., to manage the property. You pay that person a salary.
You can not use IRA owned property as collateral for a home equity loan or line of credit.
You can not use non-IRA funds to pay for expenses such as, insurance, taxes and repairs.
Exception: Legal fees. Make sure the property generates enough income to cover these costs. If necessary, you could transfer money from other IRAs to your self directed IRA in order to cover these expenses.
To keep legal fees down use, only use an attorney to draw up and review documents, not to negotiate deals. It is best to pay legal fees with non-IRA money so that you can deduct the cost from your taxes.
If you move into the property after the age of 59½, you must take it as a distribution from you IRA and pay tax based on the current value of the property. Plan for the tax- it could be sizable. If the property is in a Roth IRA, you pay no taxes.
As always, consult a tax attorney or certified financial advisor for more specific details and information.
'Doing Business Right'
Kendall Short Sale Foreclosure Specialist
This question is asked more and more on a daily basis. It is advisable that before you rent, you should ask the landlord how long he or she has had the mortgage, and whether they have borrowed against it. If it is an old mortgage and the owner has not borrowed against it, chances are better that he is in a good financial situation.
It is also advisable to check the county clerk's records (for Miami-Dade County, www.miami-dadeclerk.com or for Broward County, www.Clerk-17th-flcourts.org) and see whether or not any foreclosure action has been filed against the landlord. Another idea, is to ask the landlord for his or her credit report. However, you can probably expect great reluctance on their part, since this is confidential information which may be abused by a potential renter who is not even serious about renting the dwelling. You may also consider asking for a clause in your lease which requires the landlord to pay moving costs if you are forced to move because of foreclosure or other financial problems of the landlord which may relate to repairs or conditions that may make the unit uninhabitable.
If you are served with a copy of a foreclosure action because you are a "tenant in possession," you must send back an Answer so that you will be kept updated on hearings and other developments. The form of the responsive pleading should include the case number, style and caption, along with your name, address, and phone number. You don't have to panic, you will have several months of notice before eventually having to move, assuming that the foreclosure proceeds. If you want to stay in the rental, it may be advisable to ask the lender if it is willing to let you remain there and pay subsequent payments to them. You might be able to work out an agreement, at least temporarily.
If the foreclosure forces you to move before your lease expires, you should ask the landlord to pay any moving and related expenses. If he or she refuses, consider suing them in Small Claims Court. Of course, even if you win, the landlord may not be collectable on what he or she owes you, at least not right away. After all, they cannot afford the mortgage or the upkeep on the rental, and it is doubtful that they will have these extra sums.
If the foreclosure is costing you a lot of money, because you paid a lot of advance rent or an extraordinarily large deposit, you should consider hiring an attorney. Under Florida law, your landlord may be forced to pay your attorney's fees. This is only if you win, only if he or she is collectable, and only if the lease provides for attorney's fees and/or you can use a statutory basis, such as Florida Statute 57.105 in order to assert your claim for fees.
With the passage of time, the issue of whether to continue to make regular monthly rental payments may arise. Many lawyers and even judges differ in their opinion on how to handle this issue. Some think that you should stop paying your landlord as soon as you are notified that there is a foreclosure action. Others say that it is better to keep paying. The answer may depend on the details of your case. It may be a good idea to talk to professionals, such as lawyers, realtors, or property managers. Typically, I always say as long as a contract is in effect and the landlord is providing you with a dwelling, that your obligation to pay that landlord continues until such time as that dwelling may not be available to you, or the Court issues a mandate to the contrary.
Also beware that many attorneys may not be interested in handling or getting involved in cases of this nature due to the fact that there is the potential for complications on a case-by-case basis, and there is very little compensation for a large expenditure of time.
I hope that you find that this e-mail has been informative. I am not explaining anything new, but may have provided a new wrinkle or way of looking at an old, but new problem.
*This article was reprinted with the permission of Joseph M. Dobkin, Esquire. All rights reserved. I advise anyone who might need legal help to consult the services of an attorney, such as Mr. Dobkin.
Regards,
Noel Padilla
Kendall Short Sale Foreclosure Specialist
The National Association of Realtors concluded a survey in which people looking for real estate services were asked if they had a choice, would they prefer to have all their services under one roof. Amazingly the response was in favor of having all their services handled at the same location by some of the same companies.
Being one to react to the demands of my clients, here is a list of my preferred business partners; my one stop shop so to speak. Be sure to mention me when you contact them.
Mortgage Consultation Services-State Lending Corporation
Benny Garcia
9835 Sunset Drive, Suite 108
Miami, FL. 33172
Service, integrity, honest, experience......yada, yada, yada. As a Realtor these aren't traits that you should brag about, they should be automatic! Call me, we'll talk. If like me, hire me.
There are some people who truly enjoy seeing the fruits of their labor. Like Noel Padilla, who loves working with his hands. What most people pass off to a repairman, he will do himself. Whether he’s rescuing a family member from faulty plumbing, helping a friend fix his garage door or crafting custom cabinets for his own home, Noel is not afraid to get his hands dirty. Honest, hardworking and hands-on describes how he approaches just about everything in life. “Nothing is insignificant. I believe if you’re going to do something, do it right.”
Throughout his life, Noel’s willingness to roll up his sleeves and dive right into his work has always been his trademark. This same approach is why he’s become one of the most sought after real estate professionals in the Kendall area. Whether it’s helping buyers find the perfect place to call home or making sure sellers achieve a quick and profitable sale—people know they’re in good hands with Noel because he’s passionate about getting the job done right.
His hands-on approach translates into highly personalized and caring service. As a husband and a father himself, he knows buying or selling a home is a big decision that affects every member of a family. That’s why he invests the time and effort up front getting to know your tastes, researching ideal neighborhoods, and protecting your interests—leaving nothing to chance. He handles each client with care and ease, and can help the communication along in either English or Spanish.
As a young, curious boy back in his hometown of Chicago, Noel inherited his work ethic from a strong, steady father who was also very handy. With school and the work week over, he used to go along with his dad around their neighborhood to do various jobs on weekends, all involving fixing or building something. These times together—watching his father put skill and care into everything he did—left a strong impression on Noel. Years later in school, he put his hands to use as an avid student of drafting and was equally drawn to the beauty and precision of architecture, rivaling little else except his love of aviation and baseball. And, of course, family.
From consultation to closing, you can count on Noel to be by your side to guide through the process, helping you make sound choices to get the most out of your real estate investment. His well-honed negotiating skills are an asset in all business transactions. With steadfast dedication and a craftsman’s attention to detail, Noel more than measures up to your standards. Every time.
So when you’re ready to buy or sell a home in the Kendall area, or you just have a real estate question, look no further than Noel Padilla. Because simply put—he believes in Doing Business Right. Give him a call today.
My aunt was in serious trouble with some investment properties she had purchased. Every question she had for Noel, he answered almost exactly as her attorney had advised her. This type of experience can not be replaced. I truly want to thank him for his guidance during a difficult time for my aunt. He really eased her concerns with his knowledge, companssion and straight forward approach.
Mirta
Noel helped me find the condo of my dreams. I'm really happy!
Mickey
A good guy, the best house seller and a good Dad.
Frankie
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