Archives for posts with tag: Investment

While discussions regarding finances don’t make their way to the top of the to-do list as often as they should, it’s more important than ever that couples take the time to sit down and discuss their finances and financial goals. Whether you already have a money management system in place-or you need help getting started-there’s no better time than the present. Not only will a well thought-out plan keep both of you moving in the same direction toward your goals, it will also help to open the lines of communication so that you and your partner can talk more freely about financial problems, concerns and decisions.

According to Jane Honeck, CPA and author of The Problem With Money? It’s Not About Money! offers the following money managing tips.

1. Talk, Talk, Talk. Money is still a taboo topic and we often don’t have a clear idea about how our partner thinks or feels when it comes to spending versus saving. Talking about your goals with your partner is a simple way to make sure you’re both on the same page when it comes to your finances.

2. Find Balance: Balance power around money. One person making all the decisions and having all the control when it comes to finances is often a recipe for disaster. Find ways for you both to be equally engaged in all money decisions.

3. Define Your System: Have a clearly defined money management system that covers everything from who handles the mail to who sends out the checks. Without a well thought-out plan in place, it’s more likely that things will fall through the cracks.

4. Address Problems: When problems arise, address them immediately (no secrets allowed). Avoiding the issue only makes it more toxic and drives a wedge in the relationship.

5. Perform Checkups: Schedule an annual money checkup. Things change and just like our physical health, money management needs an annual checkup to keep it healthy and relevant. Set aside time to sit down with each other and evaluate what’s working, what needs to be fixed and address any questions or concerns that either of you may have.

6. Keep the Lines of Communication Open. The most important thing to keep in mind when dealing with your finances is to continue to communicate with no blame or shame. We all have hang-ups around money, so it’s important to treat your partner with compassion when it comes to your finances.

As a Member of the Top 5 in Real Estate Network®, I, along with my team, have a wealth of real estate and home ownership information that may be of help to you. Feel free to contact our team any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.

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By NICK TIMIRAOS

The reeling housing market has come to this: To shore it up, two Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S.

The provision is part of a larger package of immigration measures, co-authored by Sens. Charles Schumer (D., N.Y.) and Mike Lee (R., Utah), designed to spur more foreign investment in the U.S.

Foreigners have accounted for a growing share of home purchases in South Florida, Southern California, Arizona and other hard-hit markets. Chinese and Canadian buyers, among others, are taking advantage not only of big declines in U.S. home prices and reduced competition from Americans but also of favorable foreign exchange rates.

To fuel this demand, the proposed measure would offer visas to any foreigner making a cash investment of at least $500,000 on residential real-estate—a single-family house, condo or townhouse. Applicants can spend the entire amount on one house or spend as little as $250,000 on a residence and invest the rest in other residential real estate, which can be rented out.

The measure would complement existing visa programs that allow foreigners to enter the U.S. if they invest in new businesses that create jobs. Backers believe the initiative would help soak up an excess supply of inventory when many would-be American home buyers are holding back because they’re concerned about their jobs or because they would have to take a big loss to sell their current house.

“This is a way to create more demand without costing the federal government a nickel,” Sen. Schumer said in an interview.

International buyers accounted for around $82 billion in U.S. residential real-estate sales for the year ending in March, up from $66 billion during the previous year period, according to data from the National Association of Realtors. Foreign buyers accounted for at least 5.5% of all home sales in Miami and 4.3% of Phoenix home sales during the month of July, according to MDA DataQuick.

Foreigners immigrating to the U.S. with the new visa wouldn’t be able to work here unless they obtained a regular work visa through the normal process. They’d be allowed to bring a spouse and any children under the age of 18 but they wouldn’t be able to stay in the country legally on the new visa once they sold their properties.

The provision would create visas that are separate from current programs so as to not displace anyone waiting for other visas. There would be no cap on the home-buyer visa program.

Over the past year, Canadians accounted for one quarter of foreign home buyers, and buyers from China, Mexico, Great Britain, and India accounted for another quarter, according to the National Association of Realtors. For buyers from some countries, restrictive immigration rules are “a deterrent to purchase here, for sure,” says Sally Daley, a real-estate agent in Vero Beach, Fla. She estimates that around one-third of her sales this year have gone to foreigners, an all-time high.

“Without them, we would be stagnant,” says Ms. Daley. “They’re hiring contractors, buying furniture, and they’re also helping the market correct by getting inventory whittled down.”

In March, Harry Morrison, a Canadian from Lakefield, Ontario, bought a four-bedroom vacation home in a gated community in Vero Beach. “House prices were going down, and the exchange rate was quite favorable,” said Mr. Morrison, who first bought a home there from Ms. Daley four years ago.

While a special visa would allow Canadian buyers like Mr. Morrison to spend more time in the U.S., he said he isn’t sure “what other benefit a visa would give me.”

The idea has some high-profile supporters, including Warren Buffett, who this summer floated the idea of encouraging more “rich immigrants” to buy homes. “If you wanted to change your immigration policy so that you let 500,000 families in but they have to have a significant net worth and everything, you’d solve things very quickly,” Mr. Buffett said in an August interview with PBS’s Charlie Rose.

The measure could also help turn around buyer psychology, said mortgage-bond pioneer Lewis Ranieri. He said the program represented “triage” for a housing market that needs more fixes, even modest ones.

But other industry executives greeted the proposal with skepticism. Foreign buyers “don’t need an incentive” to buy homes, said Richard Smith, chief executive of Realogy Corp., which owns the Coldwell Banker and Century 21 real-estate brands. “We have a lot of Americans who are willing to buy. We just have to fix the economy.”

The measure may have a more targeted effect in exclusive markets like San Marino, Calif., that have become popular with foreigners. Easier immigration rules could be “tremendous” because of the difficulty many Chinese buyers have in obtaining visas, says Maggie Navarro, a local real-estate agent.

Ms. Navarro recently sold a home for $1.67 million, around 8% above the asking price, to a Chinese national who works in the mining industry. She says nearly every listing she’s put on the market in San Marino “has had at least one full price cash offer from a buyer from mainland China.”

Bargain hunters snap up foreclosures, and the median home price continues to fall.

California home sales picked up in September from the same month last year as prices came down.

Sales were up 6.7% as bargain hunters paying cash snapped up foreclosures. Sales figures remained below the average for September in Southern California and the Bay Area, according to DataQuick, a real estate information service based in San Diego. As is typical, sales were lower than in August, down 6.2%, for a total of 35,404 homes sold last month.

U.S. home prices rose slightly on a monthly basis in April, the first such increase since the expiration of a federal homebuyer tax credit program in mid-2010, according to data aggregator CoreLogic.

home-price index compiled by CoreLogic showed national home prices in April up 0.7 percent month-to-month. On a year-over-year basis, however, prices were down 7.5 percent — an even steeper annual decline than in March, when the index fell a revised 6.8 percent.

When distressed sales — short sales and REOs (bank-owned homes) — are excluded from the index, however, the index showed home prices declining year-over-year by 0.5 percent in April and 1.6 percent in March.

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The widow of legendary TV producer Aaron Spelling put the 4.7-acre residence up for sale more than two years ago at $150 million. Petra Ecclestone, the daughter of British billionaire and Formula One Chief Executive Bernie Ecclestone, is in escrow to buy the property, a report says.

Candy Spelling’s sprawling estate in Holmby Hills, which has bragging rights as the most expensive residential listing in the U.S., reportedly has been sold to a 22-year-old British heiress.

Spelling, widow of legendary TV producer Aaron Spelling, put the 4.7-acre residence up for sale more than two years ago at $150 million, and she held firm to that price despite one of the worst real estate downturns in generations.

Now, Petra Ecclestone, the daughter of British billionaire and Formula One Chief Executive Bernie Ecclestone, is in escrow to buy the property, according to the Wall Street Journal.

The newspaper did not identify anyone confirming the sale, and did not say how much Ecclestone, a sometime fashion designer, is slated to pay for the property.

Spelling and her representatives either declined comment or did not return calls from The Times.

Known as “The Manor,” the home is the largest in Los Angeles County at 56,500 square feet, or slightly larger than the White House.

Spelling, the mother of actress Tori Spelling, once described it to The Times as the “greatest entertainment house ever” with a “kitchen where you can cook for two or 800.”

The home was completed in 1991 and was built to the Spellings’ specifications. Candy Spelling supervised the construction. The mammoth home boasts a bowling alley, a flower-cutting room, a wine cellar/tasting room, a barbershop and a silver storage room with humidity control, among other spaces.

Outside is a tennis court, a koi pond, gardens, a citrus orchard and a swimming pool with a pool house. The motor court can accommodate 100 vehicles and there are 16 carports. A service wing houses the staff in five maids’ bedrooms and two butlers’ suites. The house is believed to have more than 100 rooms.

Spelling will be moving into a 16,500-square-foot penthouse condo in Century City. She agreed to pay $47 million for the top two floors of a 41-story building in 2008 but subsequently got a price break, closing the deal last year for $35 million.

The home-improvement sector, already benefiting from spending on rehabilitating foreclosed properties, can be expected to get an even larger boost in the coming months from owners who have deferred maintenance during the recession and newly minted empty nesters who want to turn Buffy’s bedroom into a home office.

But the question is, how are you going to pay for that new roof you needed two years ago or that kitchen remodel you’ve been yearning for since the kids left the roost?

Turns out there are still options available. There just aren’t as many of them, and with the exception of one tried-and-true alternative — a government-insured rehabilitation loan — the terms are somewhat more onerous than they were during the housing boom.

Of course, you can always rob your savings to pay for your home improvement. But that assumes you have enough cash socked away to cover the cost and still have some left over to pay for at least six months’ worth of living expenses in case you find yourself out of work or hit with a major illness.

If your credit is good enough and you have a strong, long-term relationship with your bank, you might want to consider a personal loan. Your signature, not the property, secures such loans, and the fees tend to be lower than other loan choices. But the rates are high, and the interest you pay is not tax deductible.

If you still have some equity in your place, you can borrow against that, either as a straight loan or as a line of credit that you can tap as the need arises. But even if you own your home free and clear without any encumbrances whatsoever or have a low-balance mortgage, you might be surprised how much less your home is worth than you realize.

According to the Federal Housing Finance Agency, owners lost more than half their equity from 2006, when the housing market began its free fall, to 2009. That’s when the economic recession ended, but not the housing recession. And according to some estimates, the bleeding hasn’t stopped yet, especially in markets where foreclosures and short sales still dominate.

Even if you have enough equity to borrow against, it’s going to be difficult to find a lender. It’s not as hard as it was, say, 12 months ago, but the home-equity business is far different from what it was during the go-go years when lenders often were glad to lend more than 100% of a home’s value.

One viable option, however, is the FHA 203(k) rehab mortgage.

This is the Federal Housing Administration’s rehabilitation mortgage. It has been a hot ticket for investors who are picking up distressed properties because it allows them to roll both the price of the house and the cost to make it habitable or marketable into a single loan. And some foreclosures are in woefully bad shape.

But regular buyers also can use the 203(k), especially if they want to do some work before moving in. And more important, current owners can use it as a refinancing tool to incorporate the cost of their home improvements into a brand-new first mortgage.

The FHA doesn’t make 203(k) loans directly. Rather, it insures loans made by primary lenders against the possibility that the borrower will not make his payments as promised. So you’ll have to search for a lender in your neck of the woods who is familiar with the product. But once you find one, you’ll discover that the guidelines are extremely liberal.

For example, there is no limit on how much you can spend on your improvements. As long as the total loan amount does not exceed the FHA maximum, you are good to go. The current FHA ceiling ranges from $271,050 to as much as $729,750 in the country’s high-cost areas. (For the maximum loan amount in your area, go to http://www.fha.gov.)

On Oct. 1, though, the ceiling in expensive markets such as California and Massachusetts is scheduled to revert to the old maximum of $625,500. And the Obama administration has signaled that the high-cost ceiling may be whittled down even further. In addition, the FHA’s annual insurance premium will be increased with the start of the next fiscal year.

As long as the “as improved” appraised value of your property — that is, the value of the house plus the value of the improvements — does not exceed the maximum loan amount, almost anything goes. Only luxury items are verboten, says Jim Ragan, who manages the 203(k) program for Bank of America Home Loans.

“You can’t build Bobby Flay’s outdoor kitchen or a swimming pool,” Ragan says. “But other than that, practically anything else is permitted.”

Actually, the extent of the project can range from something relatively modest to a virtual reconstruction. The cost must exceed $5,000. But as long as the existing foundation remains in place, you can tear down the house and rebuild it if you so choose. Even such “soft” costs as inspection fees, architectural fees, closing costs and permits can be included.

The formula for how much you can borrow is fairly straightforward. The maximum loan amount (subject to the aforementioned ceilings) is 97.75% of the improved value of the property.

If the appraiser says your project will add $125,000 in value to your $300,000 home, then you can borrow $415,438.

Better yet, there is no requirement for a reappraisal once the work is finished. Only a single up-front valuation is necessary.

(Los Angeles Times)

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