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Sunday, November 28, 2004
WHAT ARE SHORT-TERM VS. LONG-TERM CAPITAL GAINS AND LOSSES?
Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gains or loss is long-term. If you hold it one year or less, your capital gains or loss is short-term.
WHAT IS THE BASIS AND HOW IS IT DETERMINED?
You need to know your basis in your home to calculate any gain or loss when you sell it. Your basis is determined by how you acquire your home. If you purchased or built it, your basis is your initial cost. If you acquired it in some other way (inheritance, gift, etc.), you must know its adjusted basis to the donor just before it was given to you. You also must know its fair market value (FMV) at the time title was transferred. For more information, lot onto www.irs.gi! v ! and search for publication 551 (Basis of Assets).
WHAT ARE THE CURRENT CAPITAL GAINS RATES?
The maximum tax rate on net capital gain (i.e., net long-term capital gain reduced by any net short-term capital loss) is now 15%. Gains that would otherwise be taxed at a regular rateof 10% or 15% are now 5% for property sold or otherwise disposed of after May 5, 2003 (and installment sale payments received after that date.) The reduced rate applies for both the regular tax and the alternative minimum tax. The higher rates that apply to un-recaptured section 1250 gain, collectibles gain, and section 1201 have not changed.
WHAT IS THE BASIS AND HOW IS IT DETERMINED?
You need to know your basis in your home to calculate any gain or loss when you sell it. Your basis is determined by how you acquire your home. If you purchased or built it, your basis is your initial cost. If you acquired it in some other way (inheritance, gift, etc.), you must know its adjusted basis to the donor just before it was given to you. You also must know its fair market value (FMV) at the time title was transferred. For more information, lot onto www.irs.gi! v ! and search for publication 551 (Basis of Assets).
WHAT ARE THE CURRENT CAPITAL GAINS RATES?
The maximum tax rate on net capital gain (i.e., net long-term capital gain reduced by any net short-term capital loss) is now 15%. Gains that would otherwise be taxed at a regular rateof 10% or 15% are now 5% for property sold or otherwise disposed of after May 5, 2003 (and installment sale payments received after that date.) The reduced rate applies for both the regular tax and the alternative minimum tax. The higher rates that apply to un-recaptured section 1250 gain, collectibles gain, and section 1201 have not changed.
Thursday, November 18, 2004
Fixing Houses: Mixing Your Own Paint for Savings and Harmony
by Jeanette Fisher
Wether you want to save money fixing your own home or you fix houses for investing, using bargain home improvement products helps. To make the maximum profit on your investment properties, you'll need to save money wherever you can. One way to save significant amounts of money is to mix your own paint.
I recommend that you use only water-based paints. Technology improvements in latex and acrylic paints have made painting easier than it was with the old fashioned oil-based paints, and the new acrylics provide a great-looking finish. Purchasing "oops paint," marked down at home improvement and paint stores, can save hundreds of dollars on your painting projects.
By mixing your own paints, you can also guarantee a harmonious result for the entire house, blending the colors from the exterior to the interior and from room to room. For instance, during one of our projects, we purchased ten assorted gallons of paint from the Restore thrift shop. (Restore is Habitat for Humanity’s outlet.) The paint had been donated by Lowe’s after having been returned by the original buyers, and included a lot of blues, greens, and grays. We used a fifteen-gallon plastic kitchen trash can to mix all the paint together, and then poured it back into the original cans. The color ended up a complex sage-green, which perfectly complemented the existing teal-green tile floor.
We used the original trash-can paint outside first, and then added white interior paint as we continued our color scheme inside, first painting the living room and a bathroom. Then I added a little green to the remainder and painted a bedroom. For each room, we added a little more white semi-gloss paint. As we went along, we saved a glass jar full of each paint blend for touch ups.
Paint experts suggest mixing only the same type of paints: exterior latex with exterior latex; interior acrylic with interior acrylic; interior latex with interior latex, and so on. But we routinely mix exterior and interior paints, and have never experienced any difficulty. The amount of sheen makes little difference in mixing paints, either, unless you're looking for a particular finish. (You do want plenty of ventilation if you use exterior paint indoors and don't use interior grade outside.)
For one project, I started with five gallons of thrift store baby-blue paint, and then added a quart of black, in order to "gray down" the baby-blue. As we progressed through the bedrooms, I added a little more white semi-gloss latex paint to the mix. When I was done, the entire upstairs of the home blended harmoniously, yet each space had its own color and personality.
For another doghouse transformation, I added amber pigment, which you can pick up at most paint suppliers (but use it sparingly, because a little goes a long way), to five gallons of boring beige oops paint. We started in the main bedroom with the darker color and added white as we went along. The lightest shade ended up in a living room with a 23-foot-high ceiling. This home sold for more than any other house previously sold for in the neighborhood.
How much can you save mixing your own paint? The paint we found at Restore cost us $2.00 a gallon. This type of paint sells for over $20 per gallon. Maybe saving a couple hundred dollars doesn't mean much to you, but the emotional benefits deserve consideration. People feel happy in a house where the outside colors feel connected to the inside colors.
Remember: oops paint is no different from regular paint. It was just a mistake, for whatever reason, and in case you're wondering how long oops paint can last, we recently drove by our very first doghouse-to-dollhouse home in Apple Valley, California. The paint still looks great, even though that home was originally painted in 1979.
(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.
Wether you want to save money fixing your own home or you fix houses for investing, using bargain home improvement products helps. To make the maximum profit on your investment properties, you'll need to save money wherever you can. One way to save significant amounts of money is to mix your own paint.
I recommend that you use only water-based paints. Technology improvements in latex and acrylic paints have made painting easier than it was with the old fashioned oil-based paints, and the new acrylics provide a great-looking finish. Purchasing "oops paint," marked down at home improvement and paint stores, can save hundreds of dollars on your painting projects.
By mixing your own paints, you can also guarantee a harmonious result for the entire house, blending the colors from the exterior to the interior and from room to room. For instance, during one of our projects, we purchased ten assorted gallons of paint from the Restore thrift shop. (Restore is Habitat for Humanity’s outlet.) The paint had been donated by Lowe’s after having been returned by the original buyers, and included a lot of blues, greens, and grays. We used a fifteen-gallon plastic kitchen trash can to mix all the paint together, and then poured it back into the original cans. The color ended up a complex sage-green, which perfectly complemented the existing teal-green tile floor.
We used the original trash-can paint outside first, and then added white interior paint as we continued our color scheme inside, first painting the living room and a bathroom. Then I added a little green to the remainder and painted a bedroom. For each room, we added a little more white semi-gloss paint. As we went along, we saved a glass jar full of each paint blend for touch ups.
Paint experts suggest mixing only the same type of paints: exterior latex with exterior latex; interior acrylic with interior acrylic; interior latex with interior latex, and so on. But we routinely mix exterior and interior paints, and have never experienced any difficulty. The amount of sheen makes little difference in mixing paints, either, unless you're looking for a particular finish. (You do want plenty of ventilation if you use exterior paint indoors and don't use interior grade outside.)
For one project, I started with five gallons of thrift store baby-blue paint, and then added a quart of black, in order to "gray down" the baby-blue. As we progressed through the bedrooms, I added a little more white semi-gloss latex paint to the mix. When I was done, the entire upstairs of the home blended harmoniously, yet each space had its own color and personality.
For another doghouse transformation, I added amber pigment, which you can pick up at most paint suppliers (but use it sparingly, because a little goes a long way), to five gallons of boring beige oops paint. We started in the main bedroom with the darker color and added white as we went along. The lightest shade ended up in a living room with a 23-foot-high ceiling. This home sold for more than any other house previously sold for in the neighborhood.
How much can you save mixing your own paint? The paint we found at Restore cost us $2.00 a gallon. This type of paint sells for over $20 per gallon. Maybe saving a couple hundred dollars doesn't mean much to you, but the emotional benefits deserve consideration. People feel happy in a house where the outside colors feel connected to the inside colors.
Remember: oops paint is no different from regular paint. It was just a mistake, for whatever reason, and in case you're wondering how long oops paint can last, we recently drove by our very first doghouse-to-dollhouse home in Apple Valley, California. The paint still looks great, even though that home was originally painted in 1979.
(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.
Thursday, October 28, 2004
Buying and Selling Distressed Houses for Maximum Profit
By Jeanette Joy Fisher
If you want to become a real estate investor, find a "fixer-upper" owned by an anxious seller. Finding distressed houses at bargain prices, fixing them up, and then selling them on a consistent basis can make you a millionaire.
Why Sellers Sell At a Discount
Homeowners' problems often prevent them from staying on top of their home's upkeep, and factors such as job loss, divorce, serious illness, various addictions, or other personal problems quickly overwhelm them. These sellers can't make the needed repairs because of financial or physical limitations, and when that happens, their home becomes a low priority and sometimes will go into foreclosure.
Look for the "Triple D"
Home sellers with three problems give beginning investors a great opportunity. A "Triple D" is a Doghouse, involved in a Divorce, and in Default. The label “doghouse” comes from Southern California Realtors who used this term to describe the worst fixers. These houses maybe "tired" and need only cosmetic work in order to favorably compare with other homes in the area.
What to Look for in a Doghouse
The hardest house for a homeowner to sell is a "doghouse," "dump," or "fixer-upper." These run-down houses scare off most buyers, who don't have the money to cover the down payment, closing costs, new furniture, carpeting, appliances, roof repairs, and other deferred maintenance required to bring the home back into top condition.
As you look through the classified ads or at realtor listings, keep an eye out for terms like "handyman special," "as is," "fixer," or other tell-tale words. Also have your agent use similar terms when scanning the Multiple Listing Service for your target area.
Once you've found a property that you can turn from doghouse to dollhouse, find out the seller's problem and then offer a solution. Distressed sellers frequently experience financial problems and need cash as soon as possible. Therefore, if you're ready to close quickly, you'll be set to negotiate a lower sales price.
How to Close Quickly
Find an experienced lender and get yourself not only "pre-qualified," but also "pre-approved." Taking that second step assures worried sellers that you already have your loan in place for their property, and this puts you well ahead of other potential buyers.
How to Know When "Bad" Is Good
When you first start out in the real estate "fixer" business, you'll want to look for "ugly" houses needing only cosmetic work. Look for entry level fixers that just need some cleaning up, painting, and carpeting.
When you're new to the fixer game, always remember your limitations and use caution when considering houses needing structural repairs. My husband replaces structural beams, sub-flooring, walls, plumbing, and electrical systems, but he acquired those skills after years of experience.
If you find a house with structural problems, get estimates from reliable contractors to do the work. Experience teaches you how to do more over time. Until then, rely on experienced professionals to do the repairs. Take professional estimates into account before deciding whether or not to purchase an investment property.
The Easiest Houses to Sell
A dollhouse, located in a popular neighborhood, sells the quickest. For instance, we once sold a home we named "Orange Tree Cottage" in just three hours! To qualify as a dollhouse, a home must be in a location that buyers want and must offer the number of bedrooms, bathrooms, and amenities they're seeking. Beyond the price, however, buyers purchase the house that meets both their basic requirements and their emotional needs.
Filling Buyers' Emotional Needs
After many years of investment experience, we've found that using Design Psychology and Marketing Psychology techniques greatly increases our profits. Both concepts go far beyond "curb appeal."
For instance, we use colors that target our prospective buyer's income level and match the selling season. Generally, buyers of higher-priced homes prefer complex colors, and using cool colors during hot weather and warm colors in cold seasons makes buyers feel more comfortable. We also paint the front door a happy color and entice buyers into the house by placing potted plants on the porch.
Over the years, we've bought and sold dozens of distressed properties. By using caution and common sense, as well as following a few simple rules and using Design Psychology strategies, you, too, can become a wealthy real estate investor!
(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.
Professor Jeanette Fisher, author of Doghouse to Dollhouse for Dollars, Joy to the Home, and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, reports, newsletters, and sales flyer template, see http://www.doghousetodollhousefordollars.com/
If you want to become a real estate investor, find a "fixer-upper" owned by an anxious seller. Finding distressed houses at bargain prices, fixing them up, and then selling them on a consistent basis can make you a millionaire.
Why Sellers Sell At a Discount
Homeowners' problems often prevent them from staying on top of their home's upkeep, and factors such as job loss, divorce, serious illness, various addictions, or other personal problems quickly overwhelm them. These sellers can't make the needed repairs because of financial or physical limitations, and when that happens, their home becomes a low priority and sometimes will go into foreclosure.
Look for the "Triple D"
Home sellers with three problems give beginning investors a great opportunity. A "Triple D" is a Doghouse, involved in a Divorce, and in Default. The label “doghouse” comes from Southern California Realtors who used this term to describe the worst fixers. These houses maybe "tired" and need only cosmetic work in order to favorably compare with other homes in the area.
What to Look for in a Doghouse
The hardest house for a homeowner to sell is a "doghouse," "dump," or "fixer-upper." These run-down houses scare off most buyers, who don't have the money to cover the down payment, closing costs, new furniture, carpeting, appliances, roof repairs, and other deferred maintenance required to bring the home back into top condition.
As you look through the classified ads or at realtor listings, keep an eye out for terms like "handyman special," "as is," "fixer," or other tell-tale words. Also have your agent use similar terms when scanning the Multiple Listing Service for your target area.
Once you've found a property that you can turn from doghouse to dollhouse, find out the seller's problem and then offer a solution. Distressed sellers frequently experience financial problems and need cash as soon as possible. Therefore, if you're ready to close quickly, you'll be set to negotiate a lower sales price.
How to Close Quickly
Find an experienced lender and get yourself not only "pre-qualified," but also "pre-approved." Taking that second step assures worried sellers that you already have your loan in place for their property, and this puts you well ahead of other potential buyers.
How to Know When "Bad" Is Good
When you first start out in the real estate "fixer" business, you'll want to look for "ugly" houses needing only cosmetic work. Look for entry level fixers that just need some cleaning up, painting, and carpeting.
When you're new to the fixer game, always remember your limitations and use caution when considering houses needing structural repairs. My husband replaces structural beams, sub-flooring, walls, plumbing, and electrical systems, but he acquired those skills after years of experience.
If you find a house with structural problems, get estimates from reliable contractors to do the work. Experience teaches you how to do more over time. Until then, rely on experienced professionals to do the repairs. Take professional estimates into account before deciding whether or not to purchase an investment property.
The Easiest Houses to Sell
A dollhouse, located in a popular neighborhood, sells the quickest. For instance, we once sold a home we named "Orange Tree Cottage" in just three hours! To qualify as a dollhouse, a home must be in a location that buyers want and must offer the number of bedrooms, bathrooms, and amenities they're seeking. Beyond the price, however, buyers purchase the house that meets both their basic requirements and their emotional needs.
Filling Buyers' Emotional Needs
After many years of investment experience, we've found that using Design Psychology and Marketing Psychology techniques greatly increases our profits. Both concepts go far beyond "curb appeal."
For instance, we use colors that target our prospective buyer's income level and match the selling season. Generally, buyers of higher-priced homes prefer complex colors, and using cool colors during hot weather and warm colors in cold seasons makes buyers feel more comfortable. We also paint the front door a happy color and entice buyers into the house by placing potted plants on the porch.
Over the years, we've bought and sold dozens of distressed properties. By using caution and common sense, as well as following a few simple rules and using Design Psychology strategies, you, too, can become a wealthy real estate investor!
(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.
Professor Jeanette Fisher, author of Doghouse to Dollhouse for Dollars, Joy to the Home, and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, reports, newsletters, and sales flyer template, see http://www.doghousetodollhousefordollars.com/
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