I market myself to real estate investors interested in a 50% bonus depreciation on residential rental properties along the gulf coast of Alabama and Mississippi. Yes, you read that correctly, it's a 50% depreciation. Investors are surprised when I tell them that new construction homes are limited in availability even when numerous new homes can be located on the MLS. Now, to be forthcoming with information, not all builders in our area will even sell to investors looking for this tax break offered by our current government.
Why not you may ask? Let's put it this way, builders have reputations among the people who buy their homes in any given community. Our builders are no different, and want to uphold a reputation that is hard-earned and one that has possibly taken years to cultivate. If a builder gains the reputation of filling new subdivisions with "non-occupant owners' who have rented out to "non-owner occupants" who traditionally don't take care of the property in a loving manner, soon homebuyers will look to other builders and subdivisions for their personal home choices.
Some investors understand this and others don't. Many have asked why a builder would refuse to sell to an investor when our president passed a law back in December of 2005 allowing investors to help rebuild the coast and gain a tremendous tax advantage for doing so. My answer is simply.... Imagine a builder selling the homes neighboring your own and turning them into rentals. How would that make you feel?
To improve your odds of making a residential rental purchase in time for 2007 tax advantage that won't be surrounded by rentals on all sides, don't wait until the final quarter of the year. Buy now in areas where homeowners are also buying and not when the 'pickings are slim' in November and December and then worry about your competition for tenants.
That's my 2 cents worth.
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