Last year, I wrote an article advising borrowers on how to determine whether refinancing an adjustable-rate mortgage (ARM) into a fixed-rate mortgage (FRM) was advantageous. On recently rereading that article, I winced with the realization that I had made the problem more complicated than it had to be. Since the question continues to confront many borrowers, this article attempts to make amends.

Most borrowers know the ARM rate they are currently paying and when the rate will adjust, but few know the fully indexed rate. This is the most current value of the interest-rate index used by the ARM, plus the margin. The index used and the margin are both shown in the note, while the current value of the index is easily available online. Go to mortgage-x.com it has them all. The importance of the FIR is that it is the best available predictor of how your ARM rate will change. At the next adjustment date, the new ARM rate will reset to equal the index value at that time, plus the margin. [Note: usually there is a limit on the size of a rate change — this “rate adjustment cap” can also be found in the note — but in today’s market the limit is seldom relevant]. If the index stays unchanged between now and then, the ARM rate at the next adjustment will be today’s FIR. (more…)

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Real estate investors are more likely to hit a few singles and doubles than home runs. Even so, the profit potential can be significant, especially on lower-priced houses. Foreclosures can often be picked up at 20 percent or 30 percent below fair market value while houses in this lower range can net the investor $10,000 to $20,000. Most investors are satisfied with a 15 percent to 20 percent net profit, but it is not unheard of for someone to double their money under the right circumstances.

“Once I write a contract on a house, if the title goes through cleanly, in four or five days we can have title work done and the house paid for,” Dan Reedy, who owns Missouri Real Estate Exchange said. “I have actually bought a house on a Monday and paid for it on a Friday. The average is about 10 business days.” In the current market, lower-priced houses appear to be in greater demand. “The $100,000-and-under houses are what are moving now,” Dan Reedy said. “Six months or a year ago, the average market time was probably 60 days. Right now, it’s 90 to 110 days. It has jumped up by 20 to 30 days just in the last quarter.” Olson sees the same trend. “I’m now gearing more toward the lower end because of the way the market is going,” he said. “There are so many higher-end homes out there that they have flooded the market. The lower end is where the first-time homebuyers are.” (more…)

search for : Real estate investors, Foreclosures, lower-priced house, first-time homebuyer

Using small gadgets called Powerline adapters, you can route your Internet connection around your house over your regular electrical power lines, the ones already in your walls. It really works, it’s fast and it doesn’t disrupt your electrical system. Even better, it requires zero technical skill. You just plug one of the adapters into a standard electrical outlet near the place where your Internet connection enters your home.

I’ve been testing one of Netgear’s newest models, the XE104, which costs $100 per adapter, and I can heartily recommend it. It couldn’t be simpler or more effective. In my tests, the XE104 gave me wicked-fast connections. I tried plugging Windows and Macintosh laptops directly into the adapters in rooms where my wireless signal was weakest. I also tried plugging a Wi-Fi wireless access point into an XE104 adapter and picking up the connection wirelessly on the laptops. (An access point is a wireless gadget that takes a wired Internet connection and propagates it through the air.) (more…)

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For generations, sheriffs’ sales have been a tool of developers and others to gain control of coastal property, primarily from blacks, where ownership is not clear. The price paid for heirs’ property is often a pittance of its fair market value. A new state law is designed to change that. It grants families a right of first refusal to buy land if another family member who alone can force a sale wants out. It also guarantees families a window of time to do so. There is much at stake.

This year, S.C. lawmakers modeled changes on legislation in North Carolina that has been on the books for several years. Nearly 14 million acres of heirs’ property has been lost nationwide since the end of the Civil War, according to published reports. About 1.3 million acres of such land, bought by former slaves, remains in the hands of their families. Ex-slaves bought property as a way to establish and anchor their freedom during Reconstruction, the center said, a feat in the 1870s, given the numerous obstacles blacks faced. (more…)

search for : North Carolina, Civil War, slaves, Reconstruction

No matter where you live, whether it’s in an urban area, a residential area or an agricultural area, you can appreciate the value of a tree. Trees do so much for us. Obviously, they provide us with often much needed shade. But in addition to shade, they also help reduce soil erosion and prevent flooding. A mature tree can consume a substantial amount of water every day, thereby reducing flooding. Sometimes, property owners must take legal action in order to protect their trees. This kind of legal action is more common than you might think.

A common problem that I wish to focus on in this column concerns utility easements on property. The easement may be for a common electric line, a telephone company line, or even a natural gas line. Many homeowners have property subject to these easements. The easement allows the utility to run its line or pipe on, under or over a piece of property. In turn, the property owner, or its predecessor, is usually paid a small amount of money. In the case of a subdivision, often the developer receives the payment. The subsequent purchasers often receive no money, but must be forever burdened by the easement. Utilities could never exist without these easements because their network of pipes and wires needs to reach out into the community and this can only be done through easements. (more…)

search for : soil erosion, legal action, utility easements, natural gas

Investors who want to cash in their chips on real estate bought as an investment — but defer the tax bill, in some cases forever — can do so by trading into another piece of property. This strategy isn’t new, but it’s enjoying a resurgence in popularity now because many investors believe that real-estate values have peaked in some markets. They want to lock in their gains and shift into other holdings without a big payment to Uncle Sam. The stratagem is called a 1031 exchange, but it doesn’t actually require you to swap property with another real-estate investor. You sell one property and buy another, carefully abiding by certain restrictions and time limits.

“It’s the best-kept tax secret,” says Stephen A. Wayner, first vice president at Bayview Financial Exchange Services LLC, a unit of Bayview Financial, a Miami real-estate investment, development and mortgage-finance company. “There are so many people that should be doing it. They just don’t know about it.” The tax savings can be substantial — and by deferring the tax bill, investors have more capital to reinvest into the next property. Take, for instance, an individual who purchased a rental duplex 10 years ago for $150,000 that’s now worth $500,000. If he simply sold the property, he would owe $52,500 in capital-gains taxes. (This doesn’t include any state taxes that might be imposed, nor does it include any depreciation recapture tax which could be owed if the owner took deductions for depreciation.) (more…)

search for : real estate, 1031 exchange, tax savings, rental duplex, depreciation recapture tax

When people think about relocating to a cheaper place after they retire, they often look to states that don’t have an income tax. But these days, they should also be looking at a state’s estate-tax law before making plans to move. Because of a federal law that has been phasing in over the past few years, the states’ share of federal estate-tax revenue has fallen to zero, from 16% in 2001, says Charles Fox IV in Charlottesville, Va., an estate-tax expert and a partner with the law firm McGuireWoods LLP. Budget-challenged states are feeling the pinch. And a number of states have responded with some form of estate or inheritance levies of their own.

Some states, including California, Florida, Michigan, Mississippi, Missouri and Nevada, don’t charge residents an estate tax, so people in those states face only the federal estate tax. But in the states that do have a tax, it’s now surprisingly easy to wind up ensnared. Although the federal law currently exempts the first $2 million of an estate, the threshold in some states is much lower. Add up your home’s value, a retirement account or two and some other dribs and drabs, and your estate may well top your state’s threshold. In New Jersey and Rhode Island, for instance, estates valued at more than $675,000 are potentially subject to some form of state inheritance or estate tax. (more…)

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With a quick trip on Main Street in downtown Sylva, North Carolina, it’s easy enough to see the small town as a quaint collection of professional offices, locally owned restaurants, galleries, clothing and specialty shops. Each business is located in a historically significant building, many of the old brick storefronts still bearing the name of their original owner somewhere up high in the masonry. Dotted with trees and park benches and old style lampposts, Main Street lures tourists for some lunch and an afternoon of shopping. Gaggles of families come from Georgia, South Carolina, and Florida, indicated by the license plates lined up along the street’s two-hour parking.

Visits are too short for visitors to be able to notice the town’s quiet, steady rhythm, the daily cycle of downtown merchants and residents going about their ways — Jay Coward, an attorney, heading out for lunch; Stacy Knotts, town alderwoman, walking alongside her daughter as she pedals a tricycle down the sidewalk; Didier Cuzange on his way to teach yoga classes in his studio above Lulu’s. This activity earns the town the description of being “vibrant” — a key word in downtown revitalization lingo. But “vibrancy” is a rather esoteric, hard-to-define concept that towns nationwide are struggling to achieve. “I think vibrancy is much like beauty; it’s in the eye of the beholder,” said Rodney Swink, director of North Carolina Main Street program in Department of Commerce’s Office of Urban Development. (more…)

search for : Sylva, North Carolina, Georgia, South Carolina, Florida

There are lots of options for creating the perfect storage shed to store and organize anything from riding lawnmowers to outdoor tools and supplies. Possibilities range from small, prefabricated sheds that are virtually preassembled, to larger, site-built sheds that can be custom designed to any size, shape and architectural look. The first step is to decide what it is you want to store. Will you need drive-in access for a riding mower or yard tractor? Will you want an area for hanging shovels, rakes and other items? How about shelving and storage of things like gasoline that require ventilation? Will electricity — lights and outlets — be important? What about future needs?

Next to consider is what your lot will accommodate as well as what is allowed in your neighborhood. Smaller sheds, up to about 10 feet x 12 feet in size, typically do not require a building permit for construction, and therefore are also not subject to setback requirements for placement on the lot. However, there may be homeowner’s association rules, local ordinances or other restrictions that govern where you place the shed, so be sure and check with your local building department and homeowner’s association for all rules and requirements that affect your proposed shed installation. (more…)

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Convinced home prices will fall? So are a lot of other Americans. Some - known as bubble sitters - are acting on their conviction. They’re cashing out by selling their homes and renting, figuring they’ll return to the market after prices have fallen. Bubble sitters also include those people who have never owned a home and are waiting to take the plunge, along with folks who are relocating and holding on to their cash until the market in their new hometown softens.

Bubble sitting has contributed to softening in housing markets, especially in new homes. Builders have reported slowing sales and they’re offering numerous incentives, rebates and discounts in order to move inventory. Just this week, builder Toll Brothers announced they expected sales to decline substantially for the year. (more…)

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