This is a significant piece of regulation to boost the housing market, which has been signed into law by the president, clearly now is a time to consider buying, Ann Arbor Real Estate. Usually the bottom hits when properties at the low end of the market start moving. In this bill there are several initiatives to do just that.  When first time buyers enter the market, everything else moves up the ladder. This bill will now encourage lenders to make loans, which in my opinion has been the single most important reason for the slow recovery, the availability of credit. Many, many deals in the last few months have fallen apart because borrowers, even really good borrowers with excellent credit, etc, could not get loans.

Call our team, if you’re interested in Ann Arbor Michigan Real Estate or come to our

First Time Home Buyer Seminar on:

August 26^th at 6:30 PM.

Call Vicki at 734-216-2172 for details.

Provisions of Housing-Mortgage Relief bill signed into law

Gives the Federal Housing Administration $300 billion in new lending authority and relaxes standards to provide affordable, fixed-rate mortgages to an estimated 400,000 debt-ridden homeowners. Any losses would be covered by an affordable housing fund financed by Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.

Here’s some great news for the thousands of real estate investors and brokers who use "Section 1031" (ten thirty-one) tax-deferred real exchanges every year: Congress has backed off its latest plan to narrow the definition of "like kind" for real estate swaps.

That’s important because under current tax law, real estate investors have broad flexibility in choosing properties and structuring exchanges. For example, they can exchange a rental house for farmland, an apartment building for a commercial shopping strip. They can even exchange office buildings for mineral rights.

Given the tight statutory timetables to choose qualified properties for exchanges, that flexibility can be crucial.

Other types of investment assets, by contrast, get much stricter treatment under the tax code — and that difference in treatment opens the door to periodic attempts by green-eyeshade tax reformers on Capitol Hill to raise federal revenues by cutting down the number of eligible real estate exchanges.

If you could only swap a rental condo for another rental condo, cornfields for cornfields or commercial buildings for commercial buildings, there’d be a lot fewer exchanges every year — and probably a lot more IRS audits of taxpayers to make sure the properties swapped met all the "like kind" requirements.

So when tax reformers tucked away a tiny, technical amendment deep inside the massive federal farm bill pending in Congress, they apparently hoped they could sneak it through with nobody looking. But instead, alarm bells went off among real estate lobbyists who get paid to read through thousand-page bills like the farm legislation to make sure there are no unpleasant surprises lurking for real estate.

That’s precisely what they found. The tax reformers had inserted a provision that would have only affected only certain agricultural property exchanges by narrowing the window for what constitutes "like kind."

But any restriction on "like kind" for real estate would be the proverbial "camel’s nose in the tent." It would open the door to still further revenue-driven restrictions that could seriously limit the utility of tax-deferred exchanges for all real estate owners.

Linda Goold, chief tax lobbyist for the National Association of Realtors and a leader in the effort to get the 1031 amendment dropped from the final legislation approved by Congress, confirmed the successful deletion. In comments to Realty Times earlier this week, she said:

"Yes, we killed that obnoxious farm bill 1031 provision. (And) it felt good, I might add."

Real estate investors nationwide should share that sentiment.

Written by Kenneth R. Harney

Related Links
Real Estate Update
            For more information and articles from our July 2008 edition.

Buyer’s Special Reports
           Visit our website for much more useful information for home buyers.

Seller’s Special Reports
            Visit our website for much more useful information for home sellers.

What are the Realities and Pitfalls of Renting in Michigan?

With slower home sales in the Ann Arbor Real Estate market, significant numbers of sellers are choosing to rent out the homes they truly want to sell. Before becoming a landlord, people need to be aware of the realities and pitfalls.

To determine market rent, you can research what other similar properties are commanding in the area.  Sellers/Landlords need to know what the monthly costs are.  Know the principal, interest, insurance and property taxes.  Consider any rise in property taxes that may ensue by not being a primary homestead.  (For more detailed information on the "Homestead Tax" follow this link.)  There are other costs they may incur as a result of vacancy, repairs, utilities, legal, accounting, etc.  Try to cover your outflow.

With each tenant comes a story, make sure you have a credit report, application and lease for review before wasting your time in the interview.

A standard 5 percent is used as a cost figure for vacancy rates.  You will also need the advice of a CPA and an attorney.  I suggest the latter before entering into a contract with a tenant.  It is wise to have the attorney review the lease before it is signed and perhaps prepare the lease so it is complete with all occupants’ names.  Do you have a water softener that requires salt?  Who mows the grass?  What happens if the grass is not mowed?  Plan on having a cushion for late pays and rent collection delays.

Landlords should take time stamped photos of the property before turning it over to the tenants to establish condition.  They should also consult the insurance agent to change coverage from complete contents to facility coverage.

Landlords might buy a home warranty and split the deductible with the tenant for repair items. They should have access to local vendors (take a local phone book) for plumbing leaks, etc.

I always suggest that the Landlord pretend Mr. and Mrs. Satan will occupy the home and anything better than that should be a bonus.  Consider smokers and pets.  What will you allow?  What is the lease term?  Will you be putting the house back up on the market in Spring selling season?  Will the tenants cooperate with showings?  Will the lease change to a month to month so you can actually sell to a new owner and terminate the lease with ease?

As an Ann Arbor Real Estate market investor, I have unique business perspective that provides insight to many clients. Renting is certainly advisable in some situations, but before executing this strategy, understanding the total package and ultimate home selling goals is important.

Related Links
What is the POP UP TAX?        
           And who does it benefit?

How Can Michigan Home Sellers Avoid State Transfer Tax?
          A seller may seek an exemption from paying the state transfer tax if specific criteria 
          are met.

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