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Category Archive: ‘Real Estate Investing’

Trump Effect on 1031 Exchanges

Reader socalbuyer had to send in this article about the Republicans threatening to tinker with the 1031 tax-differed exchange benefits – but who knows what will happen.  If they do eliminate the 1031s, the extra taxation on sales of investment properties would cause fewer people to sell.

Great – less inventory!

WaPo article link

Excerpts:

House Republicans are working on a proposal that, as part of an overall streamlining of the Internal Revenue Code and a reduction in tax rates, may eliminate or seriously restrict the use of tax-deferred exchanges — property swaps — under Section 1031 of the code. President Trump has identified tax revision as one of his top priorities, and legislation is expected to move quickly in the new Congress.

Loss of the ability to use an exchange would be a significant blow to “Mom and Pop” and other small-scale realty investors. According to a study posted on the website of the National Rental Home Council, there were 15.7 million rental homes in the United States as of 2015, and 99 percent of them were owned by non-institutional investors. A study by professors at the University of Florida and Syracuse University estimated that most exchanges involve relatively small properties; in 2011, 59 percent had a sale price of less than $1 million.

Exchange proponents, such as Suzanne Baker of Investment Property Exchange Services in Chicago, argue that most of the deferred taxes ultimately are collected when properties get sold for cash and that exchanges stimulate economic activity — redevelopment and upgrades of properties, for example — that would not occur if owners faced immediate taxes on their gains and therefore simply sat on them.

Bottom line: If you own investment real estate and have contemplated a Section 1031 exchange, be aware: There’s a significant possibility that tax revisions could knock your plans off track. Keep a close eye on what’s happening, because it could happen fast.

Posted by on Jan 25, 2017 in Jim's Take on the Market, Local Government, Real Estate Investing | 4 comments

Smart Growth

Those who want to get involved in smart growth/affordable-housing issues can attend the San Diego City council meeting today at 2:00pm.  The City Council members have submitted ideas, summarized here:

  •  Sell or lease government-owned land.
  •  Defer or waive permit/development fees.
  •  Streamline the approval process.
  •  Solicit state and federal funding for affordable housing projects.
  •  Encourage granny flats and smaller houses and lots.
  •  Reduce parking requirements.
  •  Tax rebates for building affordable housing.
  •  Issue specific policy on short-term vacation rentals (Airbnb).

Andrew covers the topic here:

http://www.voiceofsandiego.org/topics/government/city-councils-odd-couple-finds-common-cause-on-housing/

Posted by on Jan 25, 2017 in Builders, Jim's Take on the Market, Local Government, Real Estate Investing, The Future | 2 comments

Bring Back Dirty Cash?

Just a month after President Donald Trump’s inauguration, a federal anti-money laundering program that targets luxury real estate is set to expire.

The dragnet monitors pricey home deals for signs of dirty cash, helping detect criminals who launder money through real estate. Manhattan and Miami-Dade County were the first markets scrutinized by the feds.

Here’s the big question: Will Trump — who made his money as a developer — keep the heat on the real estate industry? And if the administration of a developer-turned-president chooses not to renew or expand the regulations, will it be perceived as a conflict of interest.

Unlike other industries where cash changes hands freely, real estate has few checks on buyers.

Drug dealers and corrupt foreign officials have been busted buying condos and mansions in the United States. While the Obama administration rules were blasted by developers and brokers as faulty, they don’t seem to have hurt business as much as first feared since going into effect in March.

Read more here:

http://www.miamiherald.com/news/business/biz-monday/article127809744.html

Posted by on Jan 23, 2017 in Drug Money, Frenzy, Jim's Take on the Market, Market Buzz, Real Estate Investing, Spring Kick | 2 comments

New Rules for Airbnb

If you are buying, you should check the Airbnb website to see if there are rentals nearby the home you are considering, because they aren’t going away.  Here is the latest on the tug-o-war:

http://www.nytimes.com/2016/12/07/technology/new-orleans-airbnb-model.html?_r=0

An excerpt:

In New Orleans specifically, Airbnb agreed to share data — such as the names and addresses of its hosts — with the city, something the company has balked at doing elsewhere. Airbnb also agreed that its hosts must operate with a permit, with hosts automatically being registered with the city when they sign up to the service. In a nod to the local hotel industry, Airbnb will also ban almost all listings in the city’s historic French Quarter and set a 90-day annual cap for hosts who rent out entire homes.

“This is just the beginning,” said Laura Spanjian, a public policy manager at Airbnb who negotiated with New Orleans. “We need to make sure that the rules work and that the city can enforce them, but we want this to be a model going forward.”

Lawmakers also knew that the city would need more money to enforce new short-term rental rules. So Airbnb agreed to collect hotel taxes and an additional $1-a-night fee from guests to help defray such costs.

But there was a sticking point: sharing data about Airbnb hosts with the city. Airbnb was initially reluctant to do so because of privacy concerns for its hosts. The company eventually agreed after New Orleans officials said they would protect the data and not make it public. That information will be essential in helping the city register hosts and for fining hosts $500 a day if they violate the new home-sharing rules. The city can even shut off utilities to Airbnb properties where rules are being broken.

“I was pleasantly surprised by the dialogue and by Airbnb’s approach,” said Mr. Berni, the deputy mayor. “It was more amicable than what a lot of other cities had experienced.”

Some city officials elsewhere are skeptical about whether Airbnb’s conciliatory approach will stick. In Amsterdam, which just finalized new rules that allow Airbnb itself to crack down on hosts who violate them, some politicians noted that a previous agreement the company made with the city was inadequate.

“Two years ago, Airbnb used its agreement with Amsterdam as an example of a good deal, but now we had to create a new one because what we had was not enough to enforce against illegal rentals,” said Marjolein Moorman, the leader of the Labor Party of Amsterdam. “I don’t believe that the company will enforce the laws we have.”

In New Orleans, some residents are also unsure whether the new rules forged with Airbnb will bring about change. Mary Moses, a legal assistant who lives in the historic Faubourg Marigny neighborhood with her husband, said that a full-time Airbnb next to her house that takes in guests every weekend has destroyed the quality of life.

“We love tourists in New Orleans,” she said. “But there is a 24-hour party three feet from my house.”

Ms. Moses is now waiting to see whether the sometimes loud, disruptive events next door will violate some part of the new city rules and whether anything will be done to stop the bad behavior.

“Maybe things will get better,” Ms. Moses said. “But Airbnb is changing everything.”

Another impact of Airbnb is how the converting of long-term investment properties to vacation rentals is taking homes out of the marketplace for regular tenants – putting more pressure on rents in general.

Save

Posted by on Jan 5, 2017 in Jim's Take on the Market, Local Government, Real Estate Investing | 8 comments

Airbnb Under Attack in San Diego

airbnb

You knew this was coming, sooner or later:

Most Airbnb and other short-term rentals would be banned in San Diego under a proposal released this week by the City Council president.

The proposal would make a simple definition change in the city’s municipal code: Visitors and tourists would be reclassified as transients if they rent a home for less than 30 days.

Under the proposal, a home could not be rented to transients for less than 30 days in most single-family zones of the city. In a multifamily zone, renters would have to stay at least seven days, Council President Sherri Lightner said.

In addition, renters or owners of single-family homes could not rent out a room or space for less than seven days. Areas that allow visitor accommodations would be permitted to have short-term rentals.

If the rule change goes into effect, the municipal code appears to levy a $2,500 fine per violation and a maximum of $250,000 per parcel of land for violations.

“The purpose and intent of the residential zone is for residents,” Lightner said.

The council is expected to take up the measure at a special meeting Tuesday.

Read More

Posted by on Oct 30, 2016 in Jim's Take on the Market, Real Estate Investing | 6 comments

Game On!

4040-porte-la-paz-82-005_web

The 2br/2ba condo we are discussing in the UTC area is in a complex that enjoys high rents – this unit should fetch $2,000 per month easily.  Because of the quirk in the underwriting guidelines that won’t allow financing in condo complexes that have an eminent-domain action filed, we are looking for cash buyers only – hopefully an investor will find the rent appealing!

The previous buyer was anticipating a close-of-escrow date this week – we were at the finish line.  The seller wants to go back to renting the unit if we don’t find another buyer by Monday!

I marked the listing as ‘active’ again this morning, and I’ve already received two phone calls from agents!

We will be there 12-3pm for open house on Sunday too!

http://www.zillow.com/homedetails/4040-Porte-La-Paz-UNIT-82-San-Diego-CA-92122/52514005_zpid/

Posted by on Oct 19, 2016 in Jim's Take on the Market, Real Estate Investing, Thinking of Buying? | 0 comments

Real Estate Investing

investing more

If you’re closing in on retirement, trying to put your money to work in a zero interest rate world is not an easy job. Financial writers and gurus are obsessed with the stock and bond markets. But despite the lack of attention, many Americans have fallen in love with real estate as an investment option.

  • 28 million Americans are real estate investors (according to data shared by Landlordstation.com in 2013)
  • 35% of Americans now believe real estate is the best long-term investment (Gallup), compared to 32% who favor stocks
  • Stock ownership is at a low point: Just over 50% of Americans have money invested in the stock market (Gallup)

Americans may believe in real estate, but they don’t necessarily do anything about it when it comes to retirement. Real estate plays only a minor role in most people’s retirement portfolios, according to USA Today, and there are three good reasons.

  1. Liquidity. Stocks and bonds are much easier to buy and sell.
  2. Fear of bubbles. Many investors (and homeowners too) were traumatized by the credit crisis of 2008 and 2009 when the U.S. housing bubble burst.
  3. Too complicated. Investing in real estate can seem very complex because there are multiple ways to own real estate.

Most financial advisors lean heavily on the stock market for retirement for these reasons. Then there’s the not unimportant fact that stock investors have seen massive gains over the past five years.

The issue is what will happen in the next five years and beyond. There are now big questions about how long the bull market will last, and fixed-income investments are paying less and less. All are good reasons to consider what role real estate could play in your retirement portfolio.

Read full article here:

http://www.investopedia.com/news/real-estate-your-retirements-secret-weapon/

Posted by on Aug 21, 2016 in Jim's Take on the Market, Real Estate Investing | 4 comments

Multi-Gen Paradise

Lakeside isn’t far – it is centrally-located in San Diego County, and is a straight shot down the 52 and 67 from La Jolla.  It might be a reasonable compromise for those multi-gen buyers who would treasure two houses on a quarter-acre lot with citrus and avocado trees.  This property has been lovingly-maintained and owner-occupied for the last 30 years!

lakeside

Here is a feature-length YouTube video tour:

Pueblo Road satellite photo

Posted by on Jul 17, 2016 in Boomers, Bubbleinfo TV, Jim's Take on the Market, Real Estate Investing, Thinking of Buying? | 0 comments