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Real Estate Descriptions Decoder Ring

March 29, 2009 by  
Filed under Quick

Dictionary

Reading property descriptions can be confusing even for Realtors. The space allotted for the description is shorter than what we might have to say to glowingly talk about the home. So we shorten words, and create acronyms. There is no standard; we are free to invent as we choose. And in doing so, we make it hard for our target market to understand what we are saying. Over time, some of these abbreviations have become common. Others are never to be seen again. Here is the beginning of a dictionary to define these terms. If you see any new nonsense words that should be added to the list, or you would like to know what something means, then please send it to me, and I will define it for you.

  • EOG – End of Group. Usually a townhouse.
  • w/ – With. Saves space in the writeup.
  • LR – Living Room
  • DR – Dining Room
  • W/D – Washer and Dryer
  • LG – Large
  • SEP – Separate
  • MOD – Modern
  • APP – Appliances or Application
  • Appl – Appliances
  • INCL – Included
  • FPL – Fire Place
  • FP – Fire Place
  • f/p – Fire Place
  • CL – Closet
  • HOA – Home Owners Association
  • DBL – Double
  • MBR – Master Bedroom
  • MBA – Master Bedroom’s Bath
  • MBD – Master Bedroom
  • FMBA – Full Master Bedroom Bath
  • ATT – Attached
  • GAR – Garage
  • Avail – Available
  • FF – Fully Finished
  • Kit – Kitchen
  • Ex – Excluded
  • Dist – Distance
  • LL – Lower Level
  • L/L – Lower Level
  • w/o – Without
  • BR – Bedroom
  • SF – Single Family
  • TH – Townhome, Townhouse
  • EZ – Easy
  • BA – Bath
  • POSS – Possible
  • FLR – Floor
  • RM – Room
  • FB – Full Bath
  • HB – Half Bath
  • sqft – Square Foot
  • Sq. Ft. – Square Foot
  • SF – Square foot
  • Hdwd – Hardwood
  • Cath – Cathedral
  • FR – Family Room
  • Fin – Finished
  • K – Thousand Dollars
  • P/ – Per
  • Fin – Finished
  • Bsmt – Basement
  • CAC – Central Air Conditioning
  • HWH – Hot Water Heater
  • REO – Real Estate Owned which means Bank Owned
  • A/C – Air Conditioning
  • yrs – Years
  • Fam – Family
  • Opt. – Optional
  • isl – Island
  • bkfst – Breakfast
  • TLC – Tender Loving Care
  • Settle co. – Settlemant/Title Company
  • Tot Fin SF – Total Finished Square Feet
  • Lot AC/SF – Lot Acres and Square Feet
  • HOA/C/C – Home Owners Association or Condo or Coop

Photo credit, Daniel Lobo (modified).

Swoopo Warning. Not as it first seems.

March 25, 2009 by  
Filed under Quick

Win Big Prizes

I hesitate to write about Swoopo. They have apparently hit upon the recipe for making a lot of money on the Internet. They do this by taking advantage of the learning curve of many new “customers”, and perhaps compulsive gamblers. My fear is my blog post telling the story will also introduce new people to the slaughter. Think long and hard before you add your hard earned money to the torrent they appear to be raking in.

Your first impression when you see the ads for Swoopo, is it is an Ebay competitor. I clicked on an ad for “A New Asus Laptop for $55”, and was brought to an old “auction” page that showed someone in November of 2008 “won” a new Asus laptop for $55. My first reaction was that this is old. Maybe every four months someone gets a good deal. Next I noticed a current auction for an Acer laptop. Current “bid” was only $12.78 and there was only 5 minutes remaining in the auction. The recommended retail price is advertised as $899.99. A nice discount. How can they afford to sell this so cheap?

The site is well designed. The time and auction price is updated dynamically. You don’t need to reload or refresh to see the current “bids”. So I watched. The time advanced, and still no new bids. Now I am getting interested. Should I sign up and bid? There is a detailed graphic that explains how to sign up. There is mention of “Buy each bid for $0.75”. That sounds strange, but not too expensive. I figure I’ll make more sense of that later. There is also mention of “Each bid increases the bid price and the auction time.” That sounds fair. On Ebay, a common bidding strategy is to snipe. Ebay doesn’t change the auction end time with bidding. So sniping developed. This meant bidding in the last few seconds of the auction. This strategy still works, and is how I recommend you bid on Ebay auctions. You are keeping your interest in the auction a secret from the other bidders. Other bidders tend to bid in small increments over the current bid. Meanwhile you should bid the maximum you would want to pay for that auction. Ebay rules limit the amount you pay to one minimum bid increment over the next highest bid. You are likely to be the winning bidder, but only a couple of bid increments over the current bid price. The other bidders have a strategy that has failed them. They would likely have been willing to pay much more for the items they bid on. The strategy they use makes sense for a typical live auction where the auctioneer keeps the auction going until nobody wishes to raise the bid. On Ebay time is up, and they missed their chance to raise the bid. So now you see why Swoopo sounds better than Ebay. The auction doesn’t have a fixed end time. If there is interest in the auction, there is time to put in a new bid. That system sounds fair.

Carnival Horse Race

But is it? One other item the Swoopo graphic mentions is each bid “increases the bid price”. On further examination, you learn that the bid increment is very small, and you can’t bid by more than one increment! Most of the auctions have a 15 cent increment. The Acer laptop auction is a “Penny Auction”, with, you guessed it, a one cent increment. Every bid means one cent higher in price, and a few seconds longer in auction time. To accelerate the action, something called BidButler is advertised. Some of the bidders are using an automatic bidding rule on the site. As the seconds count down to below nine seconds, the BidButler bids step in. Multiple BidButler bids seem to be competing. The auction jumps by a few cents, and there is more time on the clock. This happens so fast, that it is not immediately clear what happened, or what it means. I have been writing the blog post for almost an hour since I looked at the Acer laptop auction. That auction is still going on! The current auction “price” is $16.04 with two minutes 19 seconds to “go”.

Let’s work backward, and figure out the story here. $16.04 minus $12.78 is $3.26. That is 326 pennies, or 326 bids! Remember, each bid costs the bidder 75 cents. A total of at least $244.50 was spent so far in bidding! And the auction isn’t over yet. This auction advertises that someone lucked out and recently bought the same model laptop on Swoopo for $74.86. Since this is the advertisement, I would guess that this is the lowest they have “sold” for. I didn’t see the start of the auction, so I don’t know what the starting bid was. But let’s err on the side of caution, and guess the starting price was $12.78. Although, it was probably lower. So $74.86 minus $12.78 is $62.08. 6208 pennies; 6208 bids; 6208 times 75 cents per bid; At least $4656 dollars was spent on “bidding” for that bargain.

Now you can see how they can sell a $899.99 laptop for only $74.86 plus $19.90 shipping. All the losing bidders are paying for it. To be fair, new registrants are given a $10 coupon. But that coupon is only valid for the winner. So the winner got the equivalent of $9.90 shipping.

Nothing is hidden. All the rules are printed. They even have a tag line “Entertainment Shopping”. It is entertaining. My eyes are glued to the site. I am watching in a combination of horror, disbelief, and fascination. This is a game of lottery chicken. Each lottery ticked is 75 cents. You win by being the last person to bid. So far, there seems to be an endless supply of bidders. I am starting to wonder if the auctions ever end. The Acer is up to $18.24 now with five minutes 12 seconds “to go”. Maybe November 2008 is when the last Asus auction ended? Actually that would be good news, because that implies a limit to how much money people have lost on this site. The $74.86 auction was four days ago on March 21st.

This site is disguised gambling. If you are going to gamble, there are places with much better odds than this. Don’t participate. It is a warning I hope everyone heeds. I don’t want to be contributing to the carnage by posting yet another advertisement for this site. The small print under the Acer laptop “auction” says “This auction will end latest on Apr-27-2009 at 07:10 PDT”. That is just over 30 days from now. And only Nine minutes 4 seconds until the auction is “over”.

If you want a low risk place to gamble, try Pogo.com.

If you want to see the train wreck for yourself:
http://www.swoopo.com/auction/acer-as8730-6918-18-4-inch-laptop/165275.html

Update: The auction ended at $26.60. Sounds like a deal. But the starting bid was zero dollars. So $1995 was spent by all the people that lost. That is a pretty good markup on a $899 (suggested retail price) laptop. Most places have to discount when they sell.

Update: I just noticed a new aspect. When you look at a completed game, you can see a count of the number of “Placed bids” and “FreeBids”. These numbers look pretty low. They don’t seem consistent with the math I did above. That is until your realize they are only reporting the costs of the one person that won the game. There are many other bidders that lost, and they too spent money to lose. What was their savings? Also, “FreeBids” is a new word they coined. You have to win a game at some cost to get those “FreeBids”. Their true cost is also hidden. I don’t have a total cost, but they are not free. It is possible that the total dollars spent bidding on “FreeBids” can exceed their face value, just like the Acer auction/game did. The one example I looked at, did seem to cost less than this. I don’t trust it though. They have erased the bidding history. Not even the winners bids are showing up. If total dollars spent was less than face value, I would think they would highlight that, not hide it.

Update: Ok, so the bid history is blank. I forgot my own logic from above. A game for 300 “FreeBids” shows the winner placed 29 paid bids to win. His final price on a “Penny Auction” game is $19.29. He spent $41.04 for his 300 “FreeBids”. But the bidding started at zero dollars and increased by one penny at a time. So $19.29 means 1929 bids at 75 cents each. Total cost to everyone is $1446.75. 300 “FreeBids” would only cost $225 if just regular bids were used. Instead the bids are costing over six times as much. The lucky winner did well, but the crowd lost. Based on the costs to the crowd, each “FreeBids” cost $4.82 instead of 75 cents. Not a good deal. So the Acer laptop above might gross to Swoopo, not the $1995 I guessed, but as much as 2660 times $4.82. A total of $12,821. Of course, this assumes only “FreeBids” were used in the game. But the total could also be more if overpriced “FreeBids” were used to bid on the “FreeBids”. A truly astonishing multiply effect.

Update: The Coding Horror blog says
“swoopo is about as close to pure, distilled evil in a business plan as I’ve ever seen”

And the Freakonomics Blog tells us it is an all-pay auction:
Martin Shubik invented a famous game-theory exercise, sometimes called “the dollar auction,” where a teacher auctions off a $20 bill to the highest bidder. Bids have to be in round dollar amounts, but the twist is that both the highest and the second-highest bidder have to pay. When uninitiated students start to play this game, someone rushes to bid $3 or $4 dollars for the prospect of winning $20, and then other students respond by bidding up the price.

But then something amazing happens as the auction price starts approaching $20. The remaining bidders realize that they could end up having to pay a lot of money and not win the auction. Imagine that you had bid $19, and another bidder upped the ante by bidding $20. What would you do? Is it better to bid $21 for a $20 prize or to remain silent and pay $19 for nothing?

The auction tends to end around $30 dollars. The teacher sells the twenty dollar bill for about $60.

Another couple of interesting tidbits about Swoopo. A lot of people see the profits being made, and they want to duplicate the business plan. There are already a number of competitors. Some with even more confusing operations. There are lots of people online asking for Swoopo scripts. It is a buyer beware world on the Internet.

There are ebooks being sold that will tell you how to win at Swoopo. I have not bought one, but I gather they teach you to find the games that have fewer competitors. Avoid the front page games. Avoid the penny bid games. Play off hours. Bide your time. Somehow get a good deal on FreeBids. I still think you are going to lose in the end. And you are also out the money for the ebook. Off hours won’t work, because you are competing with Swoopo sites and players around the world. There is no down time.

Swoopo used to “sell” money. I think that was too obviously gambling, so they stopped it. Swoopo also used to have a “100% off” game. No matter what the price was at the end, you didn’t have to pay it. Your only cost was the bid fees. That was a game that could go on forever. That too made the nature of the gamble too obvious. It is a better money maker to start new auctions. If auctions never end, the bidders will get weary.

Wikipedia has a page on Bidding Fee Schemes.
The primary risk of the bidding fee scheme website is that it attempts to masquerade as a legitimate auction of goods. Unsophisticated participants will not understand the distinction between a true auction and a fee-to-bid auction-like game, and so might apply poor judgement to the auction-like contest.

On the Techcruch site, a person comments:
I am retired and on a fixed income and tried to win my granddaughter a Wii setup. I did not realize that Swoopo kept all your bid monies and when i lost the bid at $100 for a Wii, I was shocked to see that the whole sum was gone,just gone! I immediately wrote an email explaining that i apparently did not understand that they totally kept the $100 and asked to be contacted about this since it was all i had and now can’t bid anywhere. For all they brag about, they won’t even answer an email , and i have sent one two days in a row. I unknowingly made a bad move and you would think they would respect that or at least contact me about it. Call me stupid but i can’t read that well anymore. I guess if i hear nothing i will have to report this event to the BBB and all the blogs i can reach. Do they really want this? Or maybe they just don’t care. Thanks for listening

Update: The Central Gadget Blog says:
And, unfortunately, we found problems. Bids timed out many times we tried to lock in bids at the last few seconds. Of course, Swoopo will argue that waiting until the last few seconds of an auction is risky. However, that is a bit of a lie of omission. Chances are, if you don’t place a bid in the last few seconds, you won’t win an item. Your bid will accrue more time on the auction unless it is placed within seconds of the end. This gives people dramatically more time to “out bid” you.

Photo credits, John, Justin Henry.

How To Challenge Your Maryland Property Tax Assessment

March 13, 2009 by  
Filed under Featured

US Supreme Court

When property values were rising, local governments were loving the new higher property tax assessments that went along with that. Existing homeowners were protected from quickly rising tax bills by the Maryland Homestead Tax Credit. But, new homeowners aren’t immediately protected by the Homestead Tax Credit. Still, at least they know in advance how high their tax bill might be. Now that most homeowners have had their property values decline with the housing market and slow economy, assessments will lag behind. Maryland assesses property values every three years. So two thirds of the homes will not be looked at this year. For that one third it remains to be seen if assessments will drop. In the end the responsibility falls to each homeowner to make sure their assessment is fair.

So, how do I challenge my assessment? Property assessments are supposed to reflect property values in a theoretical arms length transaction. This means if a neighborhood house was foreclosed on, or sold to a family member, the transaction value does not impact assessments. If we have enough of these transactions, as we do in some neighborhoods, then regular sales values are affected. These regular sales can then be relied on as evidence of reduced assessment values. You can look up sold prices at the Maryland SDAT property tax search, or you can ask a Realtor for a report on recent solds. If you promise me you will spread the word to family and friends about the HelpShop.com website and homes search, I’ll make you a report of the last 50 homes that sold within a circle around your home.

Read through the American Homeowners Association “Property Tax Reduction Kit“. This document is a good general guide to how to approach an appeal. It is not Maryland specific however. Next you might want to look over the Maryland Assessment Procedures Manual. Also, you may want to take a look at the updates. And SDAT has written a guide to the appeal process. For more background, here is an example worksheet for calculating the property assessment on a particular house. Everyone can order a copy of the worksheet for their house. If you are appealing then you have the right to order the worksheet for anyone’s house. Everyone is to be treated equally under the assessment process. You can use other peoples worksheets as a guide to how yours should be done. Each worksheet costs one dollar.

Armed with any factual discrepancies on your house, worksheets of similar houses, and sold prices in your neighborhood, you have a reasonable chance of reducing your assessment at an appeal. The first level of the appeals process is with the person that assessed your property in the first place. If you have an unfinished basement, but the tax records say it was finished, with proof, you will win this battle. Another avenue of attack is condition. The assessor has leeway to say the condition is less than 100 percent. This can translate into a percentage reduction in that portion of the value. The rest of your appeal will be more difficult. Your home has been categorized into very specific categories. If a neighbors home is a different style, then the assessor might not take it as evidence of inequity of treatment. If you can, get worksheets for homes styled like yours. The assessor will argue that you are protected by the Homestead Tax Credit, so you need not worry that the assessment seems high to you. Don’t let them get away with that. You could argue right back that since your tax is limited by the Credit, they might as well lower the assessment. A lower assessment could make it easier to sell your house, since the new owner will be taxed at the assessed value.

The next level of appeal is more formal than the first. Still, there are no fees, and you don’t need a lawyer. You can represent yourself. This appeal is before your county Property Tax Assessment Appeals Board. This is composed of three local residents appointed by the Governor. Be sure to request in writing at least 15 days before your hearing, a list of the comparable properties that will be used by the assessment office before the Board. Read over the rules for the board.

If you are still not satisfied with your ruling, you can appeal to the Maryland Tax Court. This too is made up of people appointed by the Governor. It is an administrative court under the Executive branch of government. It is still informal, but a lawyer might be wanted at this hearing. For any level in the appeals process, you might find it instructive to read some of the past rulings of the Maryland Tax Court.

Now that you have gone through channels, and used up your remedies within the Executive branch of government, your next option is to try appealing through the Judiciary court system. Another option, which a friend of mine succeeded with, is to petition the Legislative branch of government for a change of the law. This is another story, but in his case, the law did change…but this only benefits the rest of us. His case was still correct under the old law.

I am not a lawyer. I am only reporting my limited knowledge of the assessment and appeals process. If you have gone through this, or have any tips, please comment below.

Photo credit, dbking.

2009 Maryland Home and Garden Show, Friday Saturday and Sunday

March 12, 2009 by  
Filed under Quick

Garden Flowers

The 2009 Maryland Home and Garden Show is going on right now at Timonium fairgrounds. The theme this year is “The Joy of Color”. The show this year runs for the following dates: March 6th through March 8th and again the next weekend March 13th through March 15th. There is the Maryland Spring Craft show that runs simultaneously. The show opens at 10am each day and closes at 9pm on Friday and Saturdays and at 6pm on Sundays. The craft show closes an hour earlier than the garden show. Admission is $10 for adults, $9 for seniors, $3 for children ages 6-12, free for children under 6. Free Admission for Active Military, Police & Fire Employees with ID. Pizza Hut has some $1 off coupons.

Hhere is a link to a dollar off coupon: http://www.mdhomeandgarden.com/0_HG/01_HG_coupon.html

Here is the link to the show: http://www.mdhomeandgarden.com/0_HG/01_HG_show_info.html

I always enjoy a visit there, you can usually pick up some interesting primrose pots and some forsythia and pussy willow branches to force and bring spring inside a little early. I still have some Quick n Brite cleaners from a couple of years ago, it’s good stuff, and the home and garden show seems to be the only place to find the kind of mops with the rubber head, great for dust bunnies.

Photo credit, Brian Snelson.

Top 10 Reasons Rich People Own Real Estate

March 1, 2009 by  
Filed under Featured

Money

  1. Rent vs Buy : You are building equity. A 30 year mortgage means at the end of 30 years you have paid off the loan. The house is all yours. If you had a fixed rate mortgage, then that was 30 years without a rent increase. If you were renting, then you paid off your landlords mortgage, and your rents went up year after year.
  2. Value Appreciation : In the short term, we have seen prices drop. In the Maryland area, the price drops have been relatively mild. Prices have dropped the equivalent of going back four or five years. Looking back ten years prices are still double now than what they were then. There is the cost of ongoing maintenance, but a maintained home 30 years from now is likely to have quite a bit of value. Where are all those people that have decided not to buy going to live? They all have to rent from someone.
  3. Leverage : From three and a half percent down with an FHA mortgage to the classic 20% down of the no mortgage insurance conventional loan, you are controlling the full value of an asset by paying only part of the cost up front. A dollar invested in a 20% down mortgage means one percent value appreciation translates to 5% return on your dollar. That is five times the gain. This is a two edge sword, as the value can drop too. But, in the long term the increases have been greater than the drops. Of course the down payment is just the start, you have to make ongoing mortgage payments. The alternative however has you making ongoing rent payments. The scenarios where your rent payments are substantially lower usually means apartment living, or are a temporary situation that can’t be counted on for the long term. So your ongoing housing payments are part of your budget one way or another. Investors see leverage as a way to pyramid into more rental property owned than they could buy with cash. With 20% down it might seem like the investor can buy 5 properties, but since the tenants are paying a substantial part of the mortgage, a much higher ratio is possible.
  4. Forced Savings : Financial planners tell us that a necessary ingredient to building a nest egg for the future, is to pay yourself first. Putting money aside for savings should be a budget item like food. Yet, the reality is that much of us don’t follow the advice. Budgets stretch thin, and savings is the first to go. Well, every payment to your mortgage includes a bit of principal. In early payments most of what you pay is interest, but by the last payment, most of what you pay is principal. The principal payments are what lower your loan balance and increase your equity balance in your home. Home owners without any financial discipline still are managing to save through their mortgage payment.
  5. Better Interest : Interest rates on fixed rate mortgages are at historical lows not seen since the 1960’s. Still, interest paid on your savings account is much lower than the mortgage rates. The reward for putting money into your savings account is pretty slim compared to under your mattress. Putting extra money into your mortgage payment for most mortgages is a payment towards your principal. One hundred dollars extra is one hundred less dollars owed on your mortgage. If you have a 6% interest rate, that is like getting 6% on your hundred dollars. And you don’t have to pay income tax on your “earned” interest, so the compounding effect on your savings is not diminished. On my first home, I was paying 10.25% interest. But, I figured out that adding $100 to a particular payment, meant a bit more than two payments that I would not have to make at the end of the loan. My mortgage payment was about $900, so I saw that has $100 paid now is $1800 I won’t have to pay later. That is a pretty good return on $100 and was pretty motivating. My pay myself first plan was given a healthy boost with this. The power of this is strongest at the beginning of your loan, since most of your payment is interest. As time goes on, more and more of your payment is principal. But, when those times come, the new motivation is watching the loan balance drop substantially with each payment. Realizing how much of your payment is not lost, but just stored as equity is a great feeling.
  6. Control : Do you have money invested in GM, but wish the company had invested in making more fuel efficient cars? Maybe you own stock in Starbucks, but wish they didn’t open so many stores so near each other. Stocks as an investment means putting your faith in the current and future decision making of other people. The value of your home is not completely in your control, but you do have substantial control. You can take an ugly duckling of a house, and give it some tender loving care, and transform it into something magic. Many times these changes don’t have to be that expensive in the scheme of things. You really get to see the value of your house when you try to sell it. Fresh paint, with Martha Stewart colors will get your home noticed. So many homes are filled with clutter when they are for sale, that if you stick stuff in storage, your home will compare nicely. You can add gingerbread and moldings to upscale a house. You can add insulation and reduce your heating bills. There are so many ideas for increasing the value of a house, that I will stop here and make that a future blog post. The best part, is you can make the improvements now, and you too get the benefits of enjoyment. That is powerful motivation.
  7. Wide Market : Everyone needs a place to live. That means we are all potential home owners. Even gold isn’t all that interesting as a practical object to that many people. When you want to sell, you benefit from the wide utility of real estate. Aside from the home owner market, there is the investor market. Many investors see the value of owning multiple rental properties. You can rent your property outright, or if money was tight, you could rent out a room, or storage in the garage. Thirty years from now people will likely still be living in homes.
  8. Financial Cushion : Life is not predictable, and sometimes times get tough. The equity built up in your home is real money. There are plenty of mortgage products that will let you borrow against the equity to get access to the money without selling. For retirees there is even something called the reverse mortgage. This can allow someone to get ongoing payments from their equity into the retirement years. But, if you have to, you can sell the house. The Realtor professional is there to help you in this transaction. Many people have been thankful for the financial safety net they built by owning their own home.
  9. Liquidity : Real estate is widely criticized for lack of liquidity. But what is the story? A market valuation of real estate makes some assumptions. Comparable homes that have sold are used as a guide to establishing value on a house that has not yet sold. These sold homes were on the market for a number of days before a buyer found them and bought them. The estimated value assumes you are going to have this house on the market for about the same amount of time. Liquidity implies converting to cash in a short amount of time. A house is not your best choice to park short term funds. But, if maximizing value is less important than ready cash, you can sell a house in a surprisingly short amount of time. Even in slow markets, homes are selling. If you price your home low enough, then you are cutting in line so that your home is the one likely to sell next. Another option is to auction your home. This can be with a reserve price, or without one. And, as we discussed earlier, there are loan products for getting money out of a home.
  10. Tax Savings : Rent is 100% your money spent. Mortgage interest on your first and second home is deductible on your taxes. The Government is subsidizing home ownership through tax policy. To get this benefit you will have to itemize your deductions. The points you paid for your mortgage are deductible. The local property taxes are deductible. And, now that you are itemizing, ask your tax preparer what other itemizing deductions are possible. When it comes time to sell, if you have substantial gains in the value of your house, you will be delighted to know that under common circumstances you will owe no taxes on the gain. The small print is you must live in the home as your principal residence in at least two of the last five years. Single payers can shelter $250,000 and married couples can shelter $500,000. If you moved every two years, you could get this benefit every two years. Also, every dollar spent on improvements raises your basis and is tax free when you sell for any real estate. If you are an investor, you can sell one property and defer the gains into a replacement property with a 1031 exchange. This is powerful but technical, so seek competent advice. The investor also gets to depreciate the value of the house over time. Depreciation allows the rent payments to go substantially toward mortgage payments without having to pay income taxes with the money first. Claiming depreciation lowers your basis and thus increases your taxes when you sell. Taxes were just deferred. If you convert your rental into your primary residence, say in retirement, then you can shelter some of these gains with the same $250k/$500k benefit I mentioned above. That has its limits. Consult a competent tax adviser for all these items. Tax policy has changed many times over the years, but home ownership has been politically popular for a while.

I created HelpShop.com to be a tool for home buyers and sellers, investors and resident owners. With it, you can zero in on the hidden deals and the best homes on the market. HelpShop search let’s you really understand the market. Jump right in and try the search, or first watch some video tutorials that give a small taste of what the search can do. I will continue to add to the site, including more tutorials. If there is something you would like to see, give me some feedback.

When you are ready to see some houses in person, we will be happy to schedule the showings. My wife Maggie and I are low pressure Realtors. We are here to help you reach your goals. When you need us, send us a note, or give us a call.
 
Click Here for Tutorial

Photo credit, Andrew Magill