Tuesday, February 28, 2012

2011 Housing Recap with 2012 Implications

Home Prices

  • Historic Appreciation is 4% Nationally, but was -4% in 2011
  • We were 24% below the trend line
  • Current Rate of Depreciation is NOT Sustainable
  • Gary Keller - "If you go above or below the trend line, there WILL be a correction."
Mortgage Rates

  • This is THE Moment in History that rates are at their lowest
  • NY Times called 2009 the "Golden Age" at 5%...Now as low as 3.87%!
  • The rates could maybe drop only 1%, if lenders eliminated all profit. Odds of that happening?
  • If money is a driver of when you buy...

The Affordability Index

  • Affordability Index - percent of income needed to pay mortgage
  • Homes have never been more AFFORDABLE in history of recorded time.
  • "Why should I buy when prices are down 30%?" Think Price vs Value.
  • Timing & Patience seperates Investors from Speculators

  • Have Perspective. Study History.
  • Average Home Prices are +77%
  • Average Monthly Payments are +1%

Kyle Pfaffe, REALTOR®
Keller Williams Realty

Monday, February 27, 2012

Understanding Tax Deductions for Rental Properties

Under the current economic distress, many U.S. households again see the benefit of renting versus home ownership. Others, unfortunately, have been forced to surrender their homes to financial institutions that hold their mortgages and return to their former status as contented tenants.

These challenges can represent opportunities for investors in residential rental properties. Tax laws favor investors in these properties who can often benefit from tax deductible losses, while maintaining positive cash flows on their properties.

In order to avoid jeopardizing these write-offs under the scrutiny of an Internal Revenue Service audit, it is good to know what an agent will be looking for. The IRS does not hide this information. Numerous audit technique guides are available not only to IRS personnel; they are published on the IRS website for public use. Of interest to investors in residential rental real estate is the Passive Activity Loss Audit Technique Guide. It offers guidance to agents as they consider the appropriateness of loss deductions, the calculation of gains or losses on disposition of investment property, and low-income housing credits, among other chapters.

This Guide may be found at http://www.irs.gov/pub/irs-mssp/pal.pdf.

Prepared by Corey A. Pfaffe, CPA, LLC

IRS Circular 230 Disclosure: To comply with IRS rules, I am required to advise you that, unless expressly stated otherwise, any federal tax advice contained in this communication, including attachments, is not intended or written to be used, and cannot be used, by the recipient for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

September 23, 2011

Kyle Pfaffe, REALTOR®
Keller Williams Realty
I Always Have Time for Your Referrals!

Saturday, February 25, 2012

Networking for the Introvert

I am a self-admitted introvert (You too? Read THIS). Maybe I'm not completely introverted, but I  am not the life of the party, find small talk somewhat boring, process emotions, thoughts and observations internally and tend to think before I respond. If you are not a "Type-A" personality and are anything like me, you might find it difficult at times self-promoting yourself and connecting with others about real estate, like we are led to believe is a "must" for successful real estate agents. While a lot of successful people are very outgoing and aggressive, I think that there are lot of excellent agents who are quite the opposite. So what are we to do? Below are a few tips that I have found to be helpful for myself when I have opportunities to network with other people and share with them my love for real estate.

  1. Be INTENTIONAL! I don't always go out of my way to talk to people and I don't always talk to them about real estate, so when I do I want to make it count. When I sense opportunities to network and talk to people about  real estate, I try to have the right mindset and be purposeful in my conversation. I am purposeful in that I try to shape or turn the conversation so we can talk about my passion for real estate. The right mindset focuses me on making sure the conversation is a meaningful one and I either come away with a contact or the other person comes away with knowing who I am and how I can help them and the people they know. Are you intentional about your networking and what is your mindset in doing so?
  2. Be EXCITED! When you have an opportunity to talk with other people about real estate, be excited and passionate about what you do! I love to work as a real estate agent, to work for the company that I do and to be able to help other people and I try to make sure that whoever I talk to about real estate definitely comes away from our conversation with that impression. Most conversations I have about real estate are with people I am meeting for the first time...I want to leave them with a great first impression! Are you excited about what you do? What first-impression are you giving people about yourself? 
  3. Be YOURSELF! While networking and making sure your sphere of influence knows what you do and how you can help them, do not try to be something you are not. If you don't have a bubbly personality, don't try to act that way. Do not sacrifice your personality by trying to be everything to everybody. It will not last and eventually others will likely see you for who you really are. Even worse, they might see you as shallow or fake. Sincerity and integrity are vital in this business - you CANNOT give that up! Most people will accept you and like you for who you are! 
I hope that these few tips can help those of you who are like me and and at times struggle with being outgoing. Be comfortable with who you are and know what you must do to be successful! 

Kyle Pfaffe, REALTOR®
Keller Williams Realty

Image: renjith krishnan / FreeDigitalPhotos.net

Tuesday, February 21, 2012

Three Things to Know Before You Break Your Lease

Three Things to Know Before You Break Your Lease 

Unfortunately, life does not always work out as planned. If it did, I would already be semi-retired, sitting on the porch overlooking Lake Travis, proofreading this post that my assistant had just finished writing up for me. In the housing world, sometimes we make plans to live in a particular place for a particular amount of time and something comes up that forces to make a change...and we have to break our lease. This is not a decision to be taken lightly. Here are three things to know before you make that decision.

  1. In short, your lease is a legally binding contract, promising that you will regularly pay rent to live in a certain place for a certain amount of time. There are legal and financial ramifications for breaking this contract. Within your lease agreement, you will find the specific details and consequences that occur when you make this decision. You are breaking your word that you would fulfill the terms of you agreement and you should take that very seriously.*

  1. Breaking your lease will likely have a negative impact on your credit score and your credit report. Unless you pay up front for all the financial penalties for breaking your lease, that information will go on your credit report. As you well know, all delinquent and negative items on your credit report have a direct impact on the financial terms you are able to get or your ability to get approved for future credit applications. This information will be visible to anyone who will run your credit the next time you apply for credit of any sort.

  1. Breaking your lease will also negatively affect your ability to be approved for a lease in the future. As part of your application process, along with your credit report, property management will check your rental history, and will likely find documentation on your previous broken lease. Unfortunately for someone in this situation, many properties will not approve an application for someone who has a previous broken lease, regardless of the circumstances. In fact, some property management companies look more favorably on an eviction on your record than an a broken lease. Some property management companies will approve an applicant with a broken lease on his or her record with a few possible stipulations. Those stipulations include, but are not limited to, and larger deposit or proof of positive rental history since the broken lease.
A broken lease is not something to be taken lightly. You should be careful before you sign a lease and understand that your lease is a legally binding contract. Be very cautious before you break a lease and understand the possible ramifications of doing so. That being said, a broken lease is not the “end of the world.” You do have options of places, albeit limited, to live if you do break a lease. If you have questions about breaking a lease or have had a broken lease in the past and need house help, please contact me and I would be happy to help however I can.

*I am not a lawyer and cannot offer you legal advice so please consult a lawyer for advice on your particular situation.

Kyle Pfaffe, REALTOR®
Keller Williams Realty
I Always Have Time for Your Referrals!