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Ideal Investment

Monday, April 3, 2017
by The Mike Parker Team


Rental homes are the IDEAL investment because they offer a higher rate of return than other investments without the volatility of the stock market. With certificates of deposit and bonds at less than 2%, people need an alternative investment that they understand and with a reasonable amount of control.

In this case, IDEAL is an acronym identifying the advantages of rental properties.Ideal Investment-2.png

  • Income from the monthly rent contributes to paying the expenses and a return on the investment.
  • Depreciation is a non-cash deduction that shelters income for some investors.
  • Equity buildup occurs with amortized mortgages because each payment is composed of interest owed and principal reduction to retire the loan by the end of the term.
  • Appreciation is achieved as the value of the property goes up.
  • Leverage can increase the return on investment by using borrowed funds to control a larger asset.

These individual benefits working together make rental real estate a good investment for today’s economy. Increased rents, high rental demand, good values and low, non-owner occupied mortgage rates contribute to positive cash flows and very favorable rates of return. 

To find out more about how rentals might complement your current investment plans, contact your real estate professional.

Save the Cost of Mortgage Insurance

Monday, March 27, 2017
by The Mike Parker Team

During the banking crisis in the Great Recession, certain types of mortgages were unavailable that are once again being offered. Fortunately, the 80-10-10 mortgage is one of those making a reappearance and it can save borrowers a considerable amount of money. 80-10-10.png

The objective of an 80-10-10 mortgage is to avoid the expense of mortgage insurance for buyers wanting a 90% loan. A buyer can obtain an 80% first mortgage and a 10% second mortgage with a 10% down payment and not be required to have private mortgage insurance. 

For example, a buyer could put $30,000 down on a home priced at $300,000 and get an 80% first mortgage without mortgage insurance. The borrower could get a second mortgage, either through the same lender or a third party.

In the example, the 80-10-10 would save a buyer $193.71 per month which can be a considerable amount of money over a ten-year period. The interest rate on the second loan will be higher than the first because there is more risk. 

Helping buyers make better choices is a valuable service real estate professionals can provide. Having the right tools and information can make the decisions easier to understand. Using an 80-10-10 calculator, you can see what the savings might be for your situation.

Important Estate Documents

Monday, March 20, 2017
by The Mike Parker Team

An estate plan is a collection of documents to ensure that your wishes are carried out because of death or incapacity to make decisions for yourself. Spouses, minor children, adult children, property and investments can all be factors that should motivate a person to undergo the process.12902925-250.jpg

Will – this document specifies the way a person wants to manage and distribute his/her assets after their death. When a person dies without a will, the laws of the state where the person resided will determine the distribution of the property.

Durable Power of Attorney – this document grants to a designated person the authority to act on behalf of the principal in in legal affairs should the principal become incapacitated. Among other things, this would allow the attorney-in-fact to buy and sell property on the behalf of the principal.

Healthcare Proxy – this document grants that a designated person can legally make healthcare decisions on behalf of the principal when they are incapable of making and executing specific decisions stated in the proxy.

Living Will – this document directs physicians with respect to life-prolonging medical treatments in case they become unable to communicate their decisions.

Hippa Release – this document allows heath care providers to release your health care information to a designated person. Otherwise, they are required by federal law to protect the privacy of your health information.

Letter of Instruction – This document contains information and instructions about a person’s wishes upon death. It is intended to offer details on whom to contact and where to find important documents about personal and financial matters.

Requirements of these documents can vary from state to state and legal advice should be obtained. If you need a current estimate of value on real estate that may be involved, usually a price opinion from a licensed real estate professional will suffice. It would be my privilege to assist you with this at no cost or obligation.

Tax Benefits of Home Ownership

Monday, March 13, 2017
by The Mike Parker Team

U.S. taxpayers have enjoyed specific tax benefits for home ownership since personal income tax was introduced by the 16th amendment in 1913. While these benefits may not be the primary reason that motivates a person to buy a home, they are still tangible and not available to tenants.26005238-266.jpg

The exclusion of capital gains tax on the profit made from a home is unique from other investments and provides homeowners significant savings. Single taxpayers can exclude up to $250,000 gain and married taxpayers up to $500,000 gain. During the five-year period ending on the date of sale, a taxpayer must have: owned the home for at least two years; lived in the home as their main home for at least two years; and, ownership and use do not have to be continuous nor occur at the same time.

Gain on the sale of a principal residence in excess of the allowed exclusion are taxed at the lower long-term capital gain rate of the owner.

A homeowner may take the standard deduction or itemized deductions in any tax year based on which will create the largest deduction. Property taxes and qualified mortgage interest are allowable itemized deductions.

Qualified mortgage interest is acquisition debt plus home equity debt not to exceed the maximum amounts. Acquisition debt is the amount of debt incurred to buy, build or improve a first and second home up to $1,000,000. Home equity debt is limited to $100,000 over the current acquisition debt on the combination of a first and second home and may be used for any purpose.

For more information, see your tax advisor or see IRS Publications 523, Selling Your Home and 936, Home Mortgage Interest Deduction. 

Before You Pay Cash for a Home

Monday, March 6, 2017
by The Mike Parker Team

The National Association of REALTORS® reports in its 2016 Profile of Home Buyers and Sellers that 12% of all buyers paid cash for their home.50441319-250.jpg

Before paying cash for a home, a buyer should decide if they might put a loan on the home in the near future.  It may affect the ability to deduct the interest on a mortgage placed on the home at a later date.

Homeowners can currently deduct the interest on up to $1 million of acquisition debt which are the borrowed funds used to buy, build or improve a home. Paying cash for a home establishes acquisition debt at zero. The only deductible interest to the owner would be home equity debt which is limited to $100,000 over acquisition debt.

Paying cash certainly seems like a simple decision but it may limit a homeowner’s ability to deduct interest on a future mortgage. You can get more information about this from IRS Publication 936 or from your tax professional.

Friday HOME MATTERS

Thursday, March 2, 2017
by The Mike Parker Team

Our weekly round-up of real estate-related tips and advice from around the web- enjoy! 


8 Fresh Ways to Incorporate Kids’ Artwork in Your Home - houzz 

My 3-year-old is beaming as he hands me a scribbled-on piece of paper with stickers of his favorite cheeky train engine embellishing it. Clearly these illustrations represent the creative genius that is our little guy, but so did the five other art pieces that came before it today. We’re running out of fridge space with this constant flow of artistic works, so we’ve got to be picky about which masterpieces we feature and where we put them. Sorry, trains in a cloud of crayon, but you aren’t making the cut today.  
 
To reduce the precious-artwork clutter, here are a few thoughtful ways to present the favorites and feel no shame when you toss the rest. 

  

6 Sneaky Ways to Make Your Home Look Expensive – realtor 

Want your place to look like those home design website images you drool over? Of course you do! Problem is, your budget may not match your design aspirations. Fear not! Making your home look high-end isn’t always about spending tons of cash. 

 

10 Clever Uses for Hydrogen Peroxide – houselogic  

When it’s time to clean, have your trusty green cleaners at the ready — baking soda, vinegar — plus another ultra-cheap gem: hydrogen peroxide. You can use it anywhere, and can’t beat the price: A 16-oz. bottle only costs a buck or so. 

 

Here are 10 ways you can use that ubiquitous brown bottle of 3% hydrogen peroxide to your home’s advantage… 

 

5 Questions to Ask Potential Mortgage Lenders – Zillow Porchlight 

Buying a home is the largest purchase many consumers will ever make, and many will turn to a lender for financing. But finding a lender you click with can be a challenge, especially if you wait until the last minute. 

 

Li-Ning Huang, a research manager on Fannie Mae’s economic and strategic research team, says buyers should start talking to lenders early in the process — before you fall in love with a home — and compare several quotes. 

 

10 Home Trends You Should Get Rid of In 2017 – MSN 

These once-stylish decor themes are oh-so-outdated. 

Not Available for All Buyers

Monday, February 27, 2017
by The Mike Parker Team

Lenders regularly publish mortgage rates but they may not be available for all buyers. 

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Imagine that the mortgage payment based on an advertised rate influenced a buyer to make an offer on a home. After negotiating a binding contract, this buyer makes a loan application and finds out that for any number of possible reasons, that rate isn’t available. 

Even if the person does financially qualify for a loan at a higher interest rate, it will not be the payment that the buyer expected when the contract was negotiated.

Lenders evaluate several factors such as the borrower’s credit score, debt-to-income and loan-to-value ratios. These variables are used to assess the risk associated with the repayment of the loan.

While mortgage money is a commodity, it isn’t priced the same way items are that involve cash for goods. The lender puts up the money today based on a promise from the borrower to repay over a long term, possibly up to thirty years.

The simple solution to avoid surprises such as the one described here is to get pre-approved at the beginning of the home search process. Since pre-qualification does not mean the same thing to all lenders, call if you’d like a recommendation of a trusted mortgage professional.

Friday HOME MATTERS

Friday, February 24, 2017
by The Mike Parker Team

Our weekly round-up of real estate-related tips and advice from around the web- Enjoy! 

 


  

9 Ways to Nail This Whole Family Dinner Thing - houzz 

In an ideal world, your family would sit down at a reasonable hour every night for a hot, made-from-scratch meal. There’d be no phones or TV. Nobody would be fidgeting. And conversation would be fun, interesting and a reminder to everyone of how much they love and appreciate one another.  
 
The reality for many people is more like meatloaf hitting the fan. Unpredictable work schedules, after-school sports practices, last-minute grocery trips, fidgety children and distracting screens can make family dinners something to dread rather than look forward to. 

 

The Home’s Appraisal Value Is Less Than My Offer, Now What? – Forbes 

It’s a nightmare situation: You’ve spent months searching for your dream house, finally get an offer accepted, and then…the house doesn’t appraise for the agreed-upon price. 

 

Now what? 

 

Calling It: This Design Trend Will Be Everywhere – MY DOMAINE 

Green paint colors are making a comeback. When Pantone announced Greenery as its 2017 Color of the Year, the bright, grassy shade tapped into our desires to connect our homes with nature. Another year, another excuse to buy a succulent! (Am I right?) But even though we always endorse adding a little more plant life to your space, we think it might be time for a bolder move: green paint. 

 

The Early Bird’s Guide to Selling a Home – realtor  

Spring brings out home buyers en masse. But in these waning days of winter, many home sellers are still hibernating. Well, it’s time to wake up! Although technically the peak home-buying period is still a few months away, the time to get your home in shape to sell is right now. 

 

Top Winter Insurance Claims (and How to Give Them The Cold Shoulder) – Zillow  

Many homeowners face a particular set of perils in wintertime — potential mishaps that could lead to property damage, insurance claims, and even lawsuits. Take a look at some of the most notorious winter home-insurance claims, then learn how to reduce your risk. 

Six Reasons to Consider Rental Homes

Monday, February 20, 2017
by The Mike Parker Team

Single-family homes offer an investor the ability to borrow large loan-to-value amounts at fixed interest rates for long terms on appreciating assets, tax advantages and reasonable control. Some of these characteristics are not available through other investments.rental advantages-2-250.png

75-80% loan-to-value mortgages are available on most residential properties up to four units. Comparatively, the stock market allows you to borrow up to 50% on a stock but if the price goes down, they will require additional cash to keep the ratio at or below 50%. If it isn’t available, your stock can be sold to satisfy the loan.

Real estate investors call getting a long-term mortgage putting an investment to bed. The fixed-rate and the 20-30 year terms are exceptions to loans for most other investments, if they’re available at all.  

Real estate tends to go up in value over time. There can be a lot of variables that affect the price like supply and demand, condition and available mortgage money, in addition to the general economy.

Rental real estate has several different tax advantages. The profits are taxed at lower, long-term capital gains rates for investors who have owned the property for more than 12 months. While the property is being rented, investors are given a non-cash deduction based on cost recovery of the improvements. Tax deferred exchanges can also be available if specific conditions are met which allow an investor to postpone paying the tax on the gain. 

It isn’t necessary to have a partner with most rental homes if the investor can qualify for the mortgage. This allows investor control to make all the decisions that an owner is entitled such as setting the rent, making improvements and determining when to sell.

Rental real estate can earn a much higher rate of return than other available investments while providing income during the holding period. It certainly is worth investigating the possibility with a real estate professional who understands and works with rental properties.

Friday HOME MATTERS

Friday, February 17, 2017
by The Mike Parker Team

Our weekly round-up of real estate-related tips and advice from around the web- Enjoy! 

 

Pet Odor Chasing Buyers Away? 8 Ways to Clear the Air – HouseLogic.com 

Having pet odors inside your home can turn off potential homebuyers and keep your home from selling. Ask your real estate agent for an honest opinion about whether your home has a pet smell. 


If your agent holds her nose, here’s how to get rid of the smell... 


Easy and Inexpensive Ways to Fix Up Your Home Like a Flipper – Christina El Moussa 

If you’re anything like me, you may find that it’s all too easy to get caught up in the rush of flipping houses. I’ll admit — buying an old house, fixing it up, and flipping it for a profit is pretty exciting. But if you get too distracted by flipping houses, it’s easy to let your own home fall by the wayside. 

 

While profitable remodeling projects can be more tempting to work on, you can still benefit from tackling projects in your own home. Remodeling your home will not only up its value, but also improve the way you feel about it. After all, who wouldn’t love to cook in a newly remodeled kitchen? 

 

Here are five easy, inexpensive projects that will really make a difference in how you feel about your home. 

 

Basic Rose Care- BHG.com 

Enjoy beautiful, healthy roses with these easy tips. 

 

5 Cleaning Hacks to Keep Your Home Looking Show-Ready 24/7 - Realtor.com 

When you’re selling your home, you must be ready for people to pop in at a moment’s notice. And no, it’s not like when your neighbor drops by to ask you to water her plants while she’s on vacation, and leaves in five minutes without noticing how many dishes are stacked in your sink or the layer of dust on your coffee table. 

 

Nope, these people will scrutinize. And they will judge. But you’re still living in your home—how do you keep it clean enough to make a good impression, no matter the time or day? 


Prepare to Be Blown Away By the Photography Skills of This 27-Year-Old Software Developer – Cincinnati Refined 

Some of us are just born creators. The thought of sitting still and binging a Netflix show, while nice in theory, isn't possible in reality. We'd be bored. We'd rather be out and about exploring.  

 

If this description fits your personality, then you'll feel like you already know Austin Cameron. He's a 27-year-old software developer based out of Louisville. When he's not working, electric skateboarding (huh?), and working on his next startup, he's practicing photography. And that's why we reached out to Austin. He is this month's featured Photographer Spotlight. 

Displaying blog entries 111-120 of 400

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Mike Parker - CRS
HUFF Realty
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Florence KY 41042
859-647-0700
859-486-3300
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