USE YOUR IRA TO BUY REAL ESTATE

It’s important to tell you that I am not an expert in financial planning.  I am a seasoned real estate professional that has discovered a way of buying property with our retirement funds.  Moreover, this method can be used to buy property locally as well as internationally, including places like Costa Rica.

Self Directed IRA is legally no different than any other IRA.  The term “self-directed” simply indicated that you, the client choose your IRA’s investments without the aid of a traditional financial planner or specific investment company. Your self directed IRA can purchase raw land, rental properties, commercial property, condos, mobile homes, boat slips, TIC and other foreign property investments and much more.

The IRS has a website http://www.irs.gov/publication 590, pages 40 and 41 discuss what you CAN’T do with an IRA.  The rules of governing what an IRA can invest in are exclusive, not inclusive.

As a real estate professional I am always looking for ways to purchase property for the long term.  The self-directed IRA is a tremendous way of buying property of all types.  Careful planning will often enable an investor to profit from these opportunities with great success.

Proposition 90

In November 1988, voters in the State of California approved Proposition 90, which is designed to allow people over the age of 55 to move from one county to another and retain their property tax base.  Through the years many Counties have opted out of this option.  The list tends to change from year to year. 

Here is a list of Counties that accpet the tax value transfers:  Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara and Ventura.

Counties that have rejected Prop 90 in recent years include:  Butte, Calaveras, Contra Costa, El Dorado, Fresno, Inyo, Kern, Lake, Madera, Marin, Mendocino, Merced, Modoc, Mono, Napa, Nevada, Placer, Riverside, Sacramento, San Benito, San Bernadino, San Luis Obispo, Santa Barbara, Santa Cruz, Shasta, Siskiyou, Stanislaus, Solano, Sonoma, Ttinity, Tularea and Yolo.

FORCEFUL FED CUTS INTEREST RATES

The Federal Reserve lowered the rate that Banks trade money by .50%.  This reduction is intended to limit any damage done to our economy by the financial problems felt in past weeks/months.  I must applaud the Fed for the .5% cut to Bank rates, as most real estate people expected a .25% redution.

 What does this mean to consumers?  Rates on consumer debt like car loans and home equity lines will benefit.  Home loans will not feel relief as much because the cut was factored in a few weeks ago.  This cut will hurt return on investments, like CDs.  It also continues to weeken the dollar, making foreign goods more expensive.  Inflation may nudge higher.

What’s a Normal Real Estate Market?

 My idea of a normal market based more on activity than pricing or interest rates.  It’s a process. 

Renters buying for the first time.  Condo owners buying their first single family home.  Growing a family or just needing more space and buying a bigger home.  Deciding to buy an investment property.  Finally, making the decision to scale down to a manageable home that requires less time and work.

There is no other investment opportunity that offers the ability to leverage your money into such potential gains.

 What’s a normal real estate market?  It’s understanding how to apply your money and skills through a given period of time. 

Walnut Creek real estate has shown to be one of the most consistent areas in the US while on a larger scale;  Contra Costa real estate is so diverse that the statistics tend to show the market in more of a down turn that many of the individual areas like Walnut Creek .  The 680 corridor has a very strong employment base that fuels housing.

In today’s age of technology, buyers and sellers have tremendous data at their finger tips.  Combine that with a strong, knowledge real estate agent and you have the equipment you need to buy and sell real estate.

Marion Bennett has some thoughts of her own about the normal real estate market on the coast.

Light At The End Of The Tunnel?

I am happy to report that the past seven days; from Tuesday, August 28th to today, Tuesday, September 4th there were more home sales in Walnut Creek than new listings on the Multiple Listing Service.

 16 new home listings and 19 sales.  This means more buyers are in the market.  Open houses this weekend were busier than the past several weeks. 

IT’S ALL GOOD!

Thoughts About Buyers

20 years in the real estate and mortgage business and I can not remember a better time for a qualified buyer to buy a home or investment property.  The Press keeps talking about the “other shoe to drop.”  Finance companies going out of business, large Wall Street and Hedge Fund losses.  So what?

 Buyers get out there and buy!  In chaos comes opportunity.  Take advantage of extraordinary interest rates, listings that have been on the market for months and let this general feeling of chaos work in your favor.

Besides below asking price offers, how about asking for a rate buy down on your mortgage or seller to pay closing costs.  Want to buy a Townhome or condo.  Ask for 2 years HOA dues to be paid by the seller at close of escrow.  Ask for for everthing you want and let the seller think about it.  If their serious about selling their proerty they will grap you by the ankle and make the deal work.

It’s a great time to buy a home!

WHEN’S THE RIGHT TIME TO BUY A HOME?

 I have a client that wants to wait to buy a home in the Pleasant Hill, Martinez area because they feel that homes will become even more affordable next year. 

They may be right.  I don’t see the real estate market in Contra Costa County improving any time this year.  Finding the bottom of any market; be it real estate, mortgage or stock market is a skill set that is beyond 99.9% of the population.  It’s more luck than skill.

If you plan on staying in your home for more than 5 years, don’t wait.  Start looking now.  We know that interest rates are very good.  We know that sellers are motivated. Keep an objective view to the market.  Submit offers to seller’s that solve your wants and needs.

Prices of Walnut Creek real estate are incredibly affordable given the 20% appreciation that occurred during the past five years.  The real estate market in Contra Costa County is a true Buyer’s market.

 

It would be a shame to wait and have this market pass you by.  If Walnut Creek homes are still out of your range, Pleasant Hill and Concord real estate is more affordable and there are plenty of deals out there.

“OK, WHAT’S IT ALL MEAN TO ME, I PAY MY MORTGAGE ON TIME.”

 Greed, how many times have we seen it happen?  Brokers and Lenders greed.  Homeowners betting that appreciation will exceed their wildest dreams.  What’s that phrase?  “If it sounds to good to be true’? I spent 15 years in the corporate mortgage business before moving in 2001 to residential real estate in Contra Costa and Solano Counties.  I saw good loans being done for people that understood the process and I saw loans created for people that had never seen the cycles of a commodity like real estate.  If you’re under 30 years old there’s a very good chance you have never seen anything less that double digit appreciation on the 680 corridor.  

We had a hiccough in the San Francisco Bay Area real estate the early 1990’s, but that was nothing compared to the lack of bank liquidity that’s happen in the past few months.  So, what does it mean to you, the guy that has a 6% fixed rate mortgage? It will mean we probably won’t have to wait for a table in restaurants like Piatti’s in Danville or Monticatini’s in Walnut Creek.  Nordstrom’s won’t be out of size 11 Feragamo shoes.  Real estate or mortgage people are spenders. Walnut Creek Mercedes may come off the sticker price.  Consumer spending in Contra Costa County will be affected.   Lack of liquidity and diminished consumer spending can slow down a local economy.  We have enjoyed tremendous growth locally.  In the long run, those of us who live on the 680 corridor will be fine.  We have good schools.  Our businesses are very diverse; finance, real estate, technology, awesome retail and many other sectors. Walnut Creek is headquarters for many international corporations. BART has proven to draw business and homeowners to our Counties. How long will it be this way?  I don’t know, but there is no quick fix.  “Keep your Powder Dry.”        

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