Real Estate

Lower Your Bills – Good Property Management Keeps Expenses Down

In line with last week’s blog on staying in your home, we’re going to take a quick look at the markets this week and then offer some articles on how to maximize your tax benefits and how to manage property if you now find that want to do it. rent rather than sell until the dust is cleared.

First, a quick look at the markets this week:

MSNBC: The worst of housing is yet to come. According to Richard Syron, Chairman and CEO of Freddie Mac, “Mortgages written in 2006 in the subprime market are probably the most problematic. They haven’t reached the reset point for interest rates yet.”

Syon went on to say, “These steps are focused on helping individual people, and they will help the market. But once you get one of these market dynamics going, you don’t reverse it without taking some time… They have to play themselves.” NOTE: This is the best wisdom on changing markets so far! You can talk about it all day… but trends develop according to changing circumstances and can be inconsistent.

International Herald Tribune: The S&P Housing Index was released and it is an index based on twenty cities. The famous Robert Schiller is involved in the creation of this index and “He said that the numbers indicate ‘a general downward trend’ that began in late 2006 and has extended to the beginning of this year.” How steep is a recession? The index looking at the top 10 metropolitan cities sees a 1.5% decline in single-family home sales. Seattle and Portland are the lucky ones with modest price increases.

Freddie Mac: Weak home sales are limiting mortgage rates. The 30-year fixed-rate mortgage (FRM) averaged 6.16 percent, slightly less than last week. Last year at this time, the 30-year WRF averaged 6.58 percent. The fifteen-year FRM this week was 5.87 and slightly lower than the previous week.

Now for the good news: Seattle, Portland, and Dallas all experienced rising prices… There are always minor trends within a major trend… in other words, it’s still a local market. Relief is on the way, to be sure it is not enough to reverse a trend, but we hope to keep enough bad news out of the markets to keep this recession mild and cyclical. Here are some of the important institutions that help keep people in their homes:

1. Washington Mutual Inc., one of the nation’s largest financial institutions, said it will refinance up to $2 billion in subprime mortgages to help borrowers avoid default and foreclosure.

2. Citigroup and Bank of America have pledged $1 billion in mortgage financing to help subprime borrowers facing the loss of their homes.

3. Freddie Mac will buy up to $20 billion in fixed and variable rate mortgages to help high-priced borrowers keep their homes. This is expected to be ready by mid-summer.

What if you can’t sell now?

If your home or condo has lost value and you are willing to wait out the market, then now is a good time to rent. Generally, when sales are down, rentals are more in demand as people have to live somewhere. Strong rental markets are making rental properties increasingly lucrative. Keep in mind that property management is really a job. You need to start viewing your home as a cash flow investment and rent smart using a good tenant screening policy.
Renting requires a working knowledge of the local rental markets and a good understanding of how to price your rental so it rents quickly and at the right price. Too low and you will rent very quickly at a loss… too high and you will be left on the market and lose months of valuable rental income.

Good property management keeps costs down

Focusing on fixed costs is where we believe successful property management takes place. Mortgages and insurance are necessary, but prices vary considerably. Always compare these products and have agents bid against each other and keep more of your money. Yourpropertypath.com is a good place to get offers and have agents compete for your business.

Taxes and tax credits are areas where savings can be found, but you need to know what’s available. We found some good articles that can serve as a tutorial. Please have a look:

A Tutorial on Tax Exemptions for New Owners: By Bill Bischoff. While the cost of rent is generally a non-deductible expense (except when part of the home is used for business), homeowners can claim an itemized interest deduction on up to $1 million of mortgage debt used to purchase or improve their residence. major. . The same is true for interest on up to $100,000 of home equity debt secured by your principal residence. Real estate taxes can also be claimed as an itemized deduction. You can also generally deduct the points you paid (or the seller paid on your behalf) to get the mortgage.”

Introduction to Homeowner Tax Breaks: Now, the pitfalls of tax law have probably never told your real estate agent. Don’t worry: the following probably won’t send you running back into the arms of your landlord. But it might give you a more realistic expectation of how homeownership will affect your future tax bills.

Mortgage insurance picks up steam: “Around this time next year, some homeowners who pay for mortgage insurance will have an additional deduction on their federal income tax returns.”

“In recent years, many borrowers have chosen to use insurance by taking out two loans: a primary mortgage and a second “piggyback” loan in the form of a home equity loan or line of credit. The second loan meets the down payment on the first. , and there are tax breaks on the interest on both loans.

But many overlapping mortgages have variable rates (see yourpropertypath.com articles on mortgages and how to find the best rate) that fluctuate based on the prime rate, which has risen over the past year. The set rate for mortgage insurance has become attractive to homeowners looking for predictable borrowing costs, Katkov said. There’s also the appeal of the simplicity offered by mortgage insurance, since borrowers only need to deal with one set of loan documents in that option, he added. “

Howard Bell for yourpropertypath.com

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