rentals: Securing Your Retirement
- 11/17/22 10:25 AM
Social Security was established, on August 14, 1935, to take care of the country's elderly in their retirement years. Today, about 65 million or 1/6 of Americans collect benefits and the average monthly retirement amount received in January 2022 was $1,614 per month or about $19,370 per year.
This annual Social Security benefits exceed the 2022 Federal poverty level of $13,590 for individuals and $18, 310 for a family of two but from a practical level, it is nowhere near enough to be comfortable in your "Golden Years."
Every adult in the work force, can go to SSA.gov to find out what to … (1 comments)
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rentals: Rising Rents - Music to Your Ears?
- 08/30/21 08:11 PM
Rising Rents - Music to Your Ears?9/1/2021 Rents going up may not be pleasant to hear for tenants, but it could be music to your ears if you are an investor.
The recent CoreLogic Single-Family Rent Index, April 2021, showed a 5.3% increase in national rent year over year which doubled the increase experienced in April 2020. This is the largest annual rent price increase in nearly 15 years.
Interestingly, detached rentals are experiencing an even higher growth rate of 7.9% year over year compared to the 2.2% annual rate for attached rentals. This is supported by the CoreLogic report that half of millennials … (4 comments)
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rentals: Rent your Home Tax Free
- 05/09/21 06:40 PM
There is a little-known provision in the tax code that allows homeowners to rent their principal residence or second home for up to 14 days a year without having to recognize the income. In this situation, the taxpayer does not deduct the rental expenses associated with the income.
There is no restriction on how much you earn. If your first or second home is in a desirable area where people are looking for short-term rentals, it could provide a windfall to the homeowner.
In cities where any big sports championships are played, there could be a market for a temporary rental of a … (0 comments)
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rentals: Cutting Your Housing Costs in Half
- 11/03/20 08:37 AM
Cutting the price will generally bring buyers of anything out of the woodwork that were not serious before. Some renters could easily lower their monthly cost of housing by half or more by purchasing a home with all the financial benefits that come with it.
The most obvious thing in today's market is that the mortgage payment could be less than the rent the tenants are paying. With mortgage rates hovering around 3%, this is a major factor of the savings.
The two other major contributing factors are appreciation and amortization of the mortgage, neither of which benefit tenants continuing to pay … (2 comments)
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rentals: Fast Track Investment Property
- 10/15/18 03:35 PM
FHA allows owner-occupants to purchase up to a four-unit property with a minimum 3.5% down payment. The rent collected on three units could be used to make the payment and the owners' pro-rata share would be less than ¼ of the payment itself.
The owner-occupied unit would be considered their principal residence. The other three units are treated as rental property and eligible for cost recovery, a non-cash deduction plus all the normal business expenses. The rental income of the three remaining units is calculated as income and assists the buyer in qualifying.
A homeowner could buy a four-unit, live in one for … (0 comments)
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rentals: Rentals are IDEAL
- 04/13/17 08:13 PM
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.
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 … (0 comments)
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rentals: Time May Be Running Out
- 12/21/16 09:39 PM
During the Great Recession, some homeowners elected to rent their home rather than sell it for less than it was worth.
IRS tax code allows for a temporary rental of a principal residence without losing the exclusion of capital gain based on some specific time limits. During the five year period ending on the date of the sale, the taxpayer must have:
Owned the home for at least two years Lived in the home as their main home for at least two years Ownership and use do not have to be continuous nor occur at the same time If a home has … (1 comments)
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rentals: Ready for Retirement?
- 08/17/16 11:08 AM
It’s surprising to realize that most people spend more time planning their next vacation or cell phone purchase than they do on their own retirement. Let’s look at a hypothetical situation where you have $35,000 to invest for your retirement in 15 years. Have you compared where you might have the best opportunity?
The safest place to put it might be a certificate of deposit because it’s insured but unfortunately, rates would be less than 2%. The value would grow to $47,233.26 at the end of the 15 year holding period.
Investing in a mutual fund has more risk but also a greater … (0 comments)
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rentals: Choose a Lower Tax Rate
- 06/23/16 12:38 AM
During campaign season, it is not unusual to hear a candidate criticized because they make a lot of money but pay little in income tax. While it might not seem fair, taxpayers are allowed to arrange their affairs so that they minimize the amount of tax paid.
Salary, wages and commissions, along with interest and dividends are taxed at ordinary income rates which can range from 10% to 39.6%. However, capital gains rates, for property held more than 12 months, are much lower ranging from 0% to 20%. Taxpayers in the 25-35% brackets pay LTCG rates of 15%.
The profit on rental property … (4 comments)
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rentals: Your Tenants Will Send Your Kids to College
- 05/30/16 03:16 AM
Your Tenants Will Send Your Kids to College - 5/30/2016
Parents, with children getting closer and closer to entering college, may also be feeling stress because they haven’t saved enough for tuition and other expenses. It’s estimated that the average cost for the 2015-16 school year is $32,405 for private colleges, $9,410 for state residents of public colleges and $23,893 for out-of-state residents.
If you started saving the year your child was born, you’d have to save $4,608 per year for 18 years at 5% to accumulate $129,620. If you waited until they were 10 years old, you’d have to save $13,574 per year to … (2 comments)
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rentals: Getting Ready for College?
- 08/23/15 04:35 AM
One of the important things as a parent is to plan for their children’s education. Let’s look at two different approaches: a savings account or investing in rental real estate.
Assuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you’d have $44,497.41 to pay for their college. Anticipating that isn’t going to be enough, you’d have to save $500 a month to end up with $88,995.
Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth … (1 comments)
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rentals: Are You Ready?
- 04/14/15 08:29 AM
Are You Ready? - 4/13/2015
For whatever reason you’ve delayed buying a home, it may be time to reconsider that decision based on today’s conditions and what is expected to happen in the future.
Rents are continuing to increase to the point that in most markets, it is significantly less expensive to own than to rent. Even after you factor repairs into the equation, the low interest rates, principal accumulation due to amortization, appreciation and tax savings lower the monthly cost of housing.
Low inventories coupled with strong demand cause a rising effect on prices. Another reason for higher values is that builders, especially in certain price … (0 comments)
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rentals: When Should You Convert Your Home to a Rental?
- 02/01/15 12:47 PM
Converting a Home to a Rental
A simple decision to rent your current home instead of selling it when moving to a new home could have far reaching consequences.
If you have a considerable gain, in a principal residence and you rent it for more than three years, it can lose the principal residence status and the profit must be recognized.
Section 121 provides the exclusion of capital gain on a principal residence if you own and use it as such for two out of the last five years. This would allow a temporary rental for up to three years before … (2 comments)
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rentals: Relax... There is an Alternative
- 11/01/14 01:15 PM
Relax...There's an Alternative Is the stock market keeping you up at night? Are you consuming more antacids than ever before? Are the ups and downs causing more stress than you want or need? There is a simple alternative in rental real estate.
Single family homes for rental purposes offer an excellent rate of return in an investment that most people understand better than other investments. The concept is simple: stay with predominantly owner-occupied homes in a slightly below average price range. In most areas, tenants are easy to find and they’ll usually stay two to three years or more.
For … (1 comments)
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rentals: Investment Property Rules
- 09/02/13 04:58 AM
The Rules
The profit potential in single family homes for investment has been a consistently good long-term investment. They offer investors the opportunity of high loan-to-value mortgages at fixed interest rates for 30 years on appreciating assets, tax advantages and reasonable control that other investments don’t offer.
Last year, Warren Buffett said that if he had a way of buying a couple hundred thousand single-family homes, he would load up on them. Blackstone group L.P. (BX) has now purchased over 30,000 homes and American Homes 4 Rent (AMH) has more than 19,000 for rental purposes.
Individual investors actually have an advantage over the institutional … (2 comments)
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rentals: Where Is It Invested?
- 08/08/13 11:51 AM
Where Is It Invested?
You’ve saved for a rainy day or retirement. Congratulations but don’t get too comfortable yet; where is it invested? It’s estimated that over 25% of Americans have their long-term savings in cash instead of investments like stocks, bonds or real estate.
The memories of the financial crisis of 2008 are recent enough to understand why some people may want to avoid the stock market and real estate. Even though Wall Street and housing have rebounded considerably, uncertain investors are sitting on their cash. However, trying to avoid a bad decision can have serious costs too.
If your money … (0 comments)
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rentals: Rental homes can be the IDEAL investment
- 02/20/12 01:37 PM
Rental homes can be the IDEAL investment in today's market because they offer a much higher rate of return than alternatives without the volatility of ups and downs in the stock market.
IDEAL serves as an acronym to identify the advantages of rental properties:
Income from the monthly rent contributes to paying the expenses and a return on the investment
Depreciation is a non-cash deduction that contributes a tax shelter
Equity grows monthly as the mortgage amortizes due to some of each payment being applied to the principal
Appreciation is achieved as the value of the property goes up
Leverage … (3 comments)
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rentals: Attracting The Best Tenants
- 07/19/11 06:34 PM
Attracting The Best Tenants There is both a skill and an art in attracting the best tenants. You’ll want your new tenants to feel welcome and comfortable while
at the same time they need to understand that the rules are meant to be followed. The best tenants will appreciate these rules and follow them while remaining friendly and cordial towards you. It's really all in the attitude. You probably have some relationships with others where there is a sort of ethics presence that needs to be maintained while at the same time not appearing stand-offish. This is the same situation. There … (5 comments)
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Social Security was established, on August 14, 1935, to take care of the country's elderly in their retirement years. Today, about 65 million or 1/6 of Americans collect benefits and the average monthly retirement amount received in January 2022 was $1,614 per month or about $19,370 per year.
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