Real Estate Investment Tips

Real estate investment can be extremely profitable! IF someone has the funds, then real estate will be one of their investment options.  If you are planning on investing on properties for profit in the near future, then you will find these 5 tips handy:

1.  Define Your Target Market

You have to identify what type of tenants you would like to have. Are they students? Young Professionals? Young families? This aspect is very important, because it will help you decide on which location your real estate investment would be.

2. Do Your Research 

Research is one of the most important step in investment - in any type of investment. You need to study the market trends before investing your hard earned money.  You need to do your pricing research (how much your target market is willing to pay), the best location, risk analysis and the CMA (Comparative Market Analysis). This will help you determine whether a property is worth investing on. 

3.  Focus on Promising Areas

Location! Location! Location! It's better to invest more money in a home located in a central area. Focus on finding your property in areas where people would like to live and raise their children.

4. Never Spend More Than You Can Afford

Golden rule in property investment - never spend more money than you have. Real estate investment is very unstable - it has its ups and downs.  Sometimes, you can earn significant amount of money but there will be times that you can lose money. You must be aware of all the risks in investing in real estate.  If you cannot afford losing money, then you need to set your budget and stick to it.  Overspending may lead to bankruptcy and it will not look good on your portfolio.

5. Negotiate a Price Reduction

Every penny reduced is a penny saved. The lower the price of your home the faster you'll get your return on investment.  Knowledge is power in negotiations.  Again, research will play a big role in negotiating for a price.  When buying a home, ask for a CMA (Comparative Market Analysis) to get an idea of the price of the homes being sold within the same area.  Use that knowledge to negotiate back and forth until you and the seller agree on the acceptable price for the both of you. 

If you're asking when is the right time to invest - a possible answer would be to invest in an investment property when the housing market is strong and showing signs of increasing appreciation.    It's also advisable to focus on median-priced investment properties (not too high, but not not too low) as long as they are located in central areas with high rental demand.  Contact us today for more information on the current housing market and available properties.

What You Need To Know About Credit Score

Are you planning to purchase your dream home?  The first thing you should find out is your credit score.  Lenders use your credit score to find out if you will qualify for a loan. There are 3 independent national credit reporting bureaus where lenders collect your credit reports from -  TransUnion, Experian and Equifax.

These credit reporting bureaus collect information about your credit card use, rental history from landlords and your loan history which includes vehicle and student loans. Then the bureaus will analyze the results and tabulate them into credit scores.  Your lender can purchase the reports as well as the FICO scores to serve as summary of your credit history.

If you have a mistake on your credit report from one bureau, there's a chance that it will not appear on the other 2 bureaus' reports. You just need to send a copy of your proof of payment to the bureau to have it removed.  It may take up to 30 days to remove the negative item which can result to a delay on the approval of your loan.  Make sure to keep several copies of your payment into your file. 

FICO credit scores range from 300 to 850.  To get the best mortgage rate for your loan, your score must be as close to 850 as possible. Most lenders will give you lower mortgage rates if your credit scores are 750 or higher.

Raise your credit scores by managing your credit.  One third of your FICO score is your payment history. One third is based on how much of your available credit you use.  If you're only paying the minimum payment on your accounts, that means you're living beyond your means.  Don't max out any credit card. 

You can also mprove your credit score by paying your debts early and avoid late payments.  Data collected by the bureaus includes the loan terms, payment history - on line, early or late payments, monthly balance rollovers, payment amounts, minimum payment history, income-to-debt ratios and percentage use of available credit.  Pay off the credit cards that charge the highest interest first. Don't incur new debt.

One of the major factors that affect the credit score is how much revolving credit you have versus how much you're actually using.  You can increase your scores by limiting your credit card charges to a maximum of 30% of your card's limit. You can ask your credit card companies to set up an email or text alert to let you know when you're approaching the limit you have set. Maximizing your credit limit can hurt your scores even if you pay your bills in full each time.

Only apply for a credit when you really need it. Every time you apply for credit, it can cause a small dip in your score that lasts up to a year.  If a person is making multiple credit applications, it shows the lender that you want to use more credit. Keep in mind that lenders grant the loans to people who doesn't seem to need a loan.

Here's a list of professional lenders that can help you with your credit planning:

Joe Weiss - Alaska USA
Phone: 907-261-3403
Cell Phone: 907-727-5639
Toll-free: (800)737-3033 ext. 3403
Fax : 907-929-6896
o.weiss@alaskausamortgage.com

Richard Mantyla – Residential Mortgage
Phone: 907-222-8833
Cell Phone: 907-230‐4747
mantylar@residentialmtg.com

Jim DiMaggio – Residential Mortgage
Direct Phone: 907-222-8888
Office Phone: 907‐222-8800
dimaggioj@residentialmtg.com

Lindsey Shram - Residential Mortgage
Office: 907- 865-9402
schram@residentialmtg.com

If you have any questions, don't hesitate to contact me.  I'll be more than happy to help.

Biggest Turn-offs for Home Buyers

Are you thinking about selling your home? The current housing market could find it challenging to meet your asking price unless your home is in MOVE-IN condition. If your home has one of the following "turn-offs" listed below, then your home may be harder to sell.

1. DIRT

The no. 1 biggest mistake that a seller could make when selling their home - is NOT getting the home in the best possible condition. This can be a big turn off for the buyers. A house for sale should be spotlessly clean.

Make sure floors are clean, cabinets are tidy and no dirty dishes in the sink. Keep a set of clean, dry towels on hand for the kitchen and bathroom for showing purposes.

2. SMELL

A lot of people say that buyers buy with their noses.  The sense of smell is something that's most memorable to some people.  Bad odors can chase away buyers. Smells can come from different sources - pets, smoke, water damage, lack of cleanliness and much more.

Sellers are encouraged to eliminate traces of pets - not just pet odors when the house is on the market. Some buyers may be allergic or have bad experiences with certain pets.  It is best to remove the pet(s) from the home if possible, or worst case to use a kennel and place in the garage or spare room.  Pet owners also want to keep the stress levels lower on the pets as well, making these adjustments will most likely make it easier on the pet(s) during showings. 

Try not to cook fried food, fish or greasy food while the house is on the market.  At a minimum, please make sure fans are in working order and clean up after cooking. 

Cigarette/cigar smoke inside the home can be an immediate turn-off for buyers.  Smoke and nicotine stick to walls, window screens, linens and carpets trapping the smell inside the house. Smoke smells linger, even if you make a temporary quick fix. Unless the potential home buyer is a smoker, it would be a hard sell. 

3. CLUTTER

An uncluttered home gives a spacious appearance.  Too many personal items in the house takes out the attention of the buyer from the house being shown.   Buyers would like to imagine how their home would look like if they purchase it and it's difficult to visualize their home when there are so many things around the place.

Make a list of the things you want to organize. Locate the things you want to 1. Throw Away 2. Donate 3. Keep. Once you've reduced your stuff, you'll have fewer things to MOVE on your new home.

4. DEFERRED MAINTENANCE

Buyers prefer home that's MOVE-IN READY.  Home buyers want a home that's well maintained. They don't want to think about the costs for doing the repair themselves. Most times buyers want a worry-free house.

Making small repairs prevent bigger problems in the future. This will save you money in the long run.

5. SNOOPY SELLERS

Please leave the house during showings if possible, the same goes with tenants renting a home for sale.

Home buyers feel awkward about opening the closet doors and lingering when the sellers are present during the visit. Give the buyers some space to make their own opinion.

If you're planning to sell, it's important to put your best foot forward if you want to sell quickly and get the best price.  All of the home selling issues mentioned above you can correct without spending a lot of money.  Make sure to address them before you put your house on the market because if your house develops a reputation amount agents, it will be too late to address it.  Your house will be last on their list to show potential buyers.

If you have any questions, please feel free to contact me.  Hiring a Realtor can help you properly evaluate the condition of your property and give you expert  advise on how to sell your home for top dollar.  Realtors can assist you in finding qualified professionals to improve your property thus improving selling price. 

 

New Community in Eagle River

Eagle River is part of Municipality of Anchorage.  It is situated between Joint Base Elmendorf-Richardson and Chugach State Park.   If Eagle River was not part of the Municipality of Anchorage, then it would be classified as one of top 5 largest cities in Alaska.

Chugiak-Eagle River is known as the Most Livable and Unique Community in Alaska! It is surrounded by beautiful Alaskan wilderness and at the same time has a variety of shops providing comfortable living for its residents.  Most goods and services are available locally but if you can't find what you're looking for, you can always drive to downtown Anchorage which is located just 12 miles to the South.

Many Anchorage employees live in this area - just a 15 minute drive away.  If you love peace and quiet but your place of work is in the city, then Eagle River is the perfect place for you.

Things To Do

There's a lot of sports interest in Eagle River. Some of popular ones include hockey, indoor and outdoor soccer, baseball, softball, basketball, football, swimming/diving, hiking, and cross-country running and skiing.

As Eagle River is covered with Alaska wilderness, camping is a popular family activity.

Education

Eagle River has numerous public, parochial and charter school programs available for K-12 grades.  However, there's only one high school in the city which is called Eagle River High School. Eagle River school system is part of Anchorage School District (ASD). 

Homeschooling is also a popular form education in Eagle River.  Alaska has some of the friendliest home school laws in the United States.  There are currently 3 home schools in Eagle River.

In 1976, the University of Alaska  created a branch school called The Chugiak-Eagle River Campus of UAA. It offers a variety of freshman through senior college level courses and work force development programs.  There is also a local Bible college around the area.

Events

Scottish Highland Games are held every 4th Saturday at Eagle River Lions Park.  Experience Scottish games and traditions.

4th of July Celebration.  It is held at Lions Park hosed by the Eagle River Lions. The event begins at 6pm on 3rd of July featuring different activities and ends with a fabulous fireworks display at midnight

Winter Wonderland is a yearly event held on the first Friday of December.  The event features tree lighting and a visit from Santa with a real reindeer, caroling by local school choirs and treats from Santa's candy elves and free horse drawn sleigh rides. This is held at the Eagle River Town Square.

Merry Merchant Munch is also an annual event held on the first Friday and Saturday of December in downtown Eagle River.  There's a holiday decorating and ginger bread house competition.

New Community in Eagle River

Spinell Homes, Alaska's largest home builder has just started a new subdivision development in Eagle River catered to home buyers that want to enjoy peace and quiet living but not too far out the city.  Dove Tree community is consists of 3 Bedrooms/2.5 Bathrooms with 4 star plus energy rating townhomes in a very convenient location!

Location is one of the most important factors to consider when purchasing a new home. Dove Tree is located near the bases, schools, shopping and restaurants.  It is also accessible via commute.  With everything within minutes away, the time typically spent in traffic can be translated to more valuable quality time with your loved ones.

Dove Tree townhomes are spacious and energy efficient. Outdoors, you can enjoy the views of Alaska Range and Mt. McKinley from your own home!

Construction is on full swing and available to move-in during 2014. For lucky home buyers, there's still time to upgrade! For interested buyers, please contact me at 907-865-6463 or check out www.jamesteamrealestate.com for more information.

Eagle River is proving to be a popular residential location choice! New residential communities in Kulchay Circle, Icefall Drive, Yellowstone, Muldrow Street, Stephan Valley Road (just to name
a few) are all currently under construction - to satisfy the demand for homes accessible to the city. 

Other Community Developments in Eagle River

Spinell Homes have already made its mark in Eagle River. 2 communities - Powder Ridge and Eagle Crossing subdivisions are 100% occupied.

Spinell Homes, winner of Award for Excellence, Excellence in Customer Service Award and Best Home Builder in Alaska. With its strong commitment to customer satisfaction. Beginning with the sale, following with series of customer service calls to the one year warranty service appointment. All properties are well-planned, well-constructed and well-maintained.  Because of convenient location, good quality of construction and commitment to customer satisfaction, home buyers are assured that they are getting value for their money.

Spinell Homes is dedicated to providing Alaskans a new home - on time, on budget and meeting your expectations.

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Improved Mortgage Availability

In 2008, credit standards have been extraordinarily tight.  As years go by, the credit standards became stricter and stricter.  But according to the latest survey from Fannie Mae, loan availability is improving.  Majority of potential home owners believe that it is easier to get a mortgage as compared before.

Mike Fratoni, Chief Economist for MBA said, "The market continues to adapt to the new QM (Qualified Mortgage) regulation by eliminating products that do not fit inside of the QM box. This tightening is being offset, both in the market for higher balance loans, where lenders continue to loosen terms for jumbo loans, and in the refinance market, where more lenders are offering streamline refinance programs."

However, there could be other factors that make credit more available.  One factor is the mortgage delinquency rate.  According to Transunion, a credit reporting agency, the mortgage delinquency rate for Q4 2013 was 3.85%, down from 5.08%.

Another factor can be the home sales and rising prices.  Before the crisis, there was approximately five months of inventory available in the market.  During the crisis, the months of inventory doubled as the home sale price declined sharply.  Meaning, home sellers had to wait for a longer period and lower their selling price to sell their home because there was a shortage of buyers.   At present, the market is back to its pre-crisis levels.  According to Mortgage Bankers' Association (MBA), home prices grew by more than 10% in 2013.
 

Lenders are braver now when it comes to lending due to the government backing and settlements. 

With employment rate improving, mortgage delinquencies is expected to continue declining.  The latest January employment rate rose to 58.8%. 

As credit standards loosen up, lower interest rates and improved employment rate, buyers should feel more confident in purchasing home in 2014.

If you need help in obtaining a mortgage loan, I can refer you to mortgage professionals that will guide you through every step of the mortgage process.

Additional Tax Benefits for Anchorage and Mat-su Home Buyers

There are 2 kinds of kinds of property tax exemptions for Alaska homeowners.  1.)  Exemptions that are required by law; 2.) Optional exemptions granted by state law.  Exemptions may vary depending on each municipality. Each municipality must grant the tax exemptions that are mandated by state law. 

Anchorage Exemptions 

All applications for exemption must be filed by March 15th of the applicable year for the homeowner to be qualified for the exemptions.However, if the homeowner have applied for exemptions the previous year and there have been no changes then he/she is not required to resubmit an application for exemption. 

Several types of property exemptions are available for Anchorage homeowners and these are: (Source: www.muni.org)

1. Senior Citizen Exemption

a.) Up to $150,000 of the assessed value may be exempt for;

b.) Property owned and occupied as the primary residence and permanent place of abode by a (Senior) resident 65 years of age or older;

c.) A resident at least 60 years old who is the widow or widower of a person who qualified as a Senior.

2. Disabled Veteran Exemption

a.) Up to $150,000 of the assessed value may be exempt for;

b.) Property owned and occupied as the primary residence and permanent place of abode by a Disabled Veteran; 

c.) A resident at least 60 years old who is the widow or widower of a person who qualified as a Disabled Veteran.

3. Residential Exemption 

a.) 10% of the assessed value up to a maximum of $20,000 may be exempt for;

b.) Property must be occupied by the owner. 

4. Disaster Exemption 

Tax relief is available for owner occupied residential property at least 50% destroyed by fire.  Application must be submitted within 60 days of the fire.

5. Fire Protection Exemption 

Up to 2% of the assessed value may be exempted if the property contains an approved fire protection system.

6. Nonprofit Exemption 

Properties that are used for nonprofit religous, charitable, cemetery,hospital, educational or community purposed are exempted from taxes.

7. Business Property Exemption 

Provides a tax exemption of $20,000 of assessed value for business personal property. 

Mat-su Borough 

All applications for exemption must be filed on or before April 30 of the applicable tax year. 

Tax exemptions available for Mat-su homeowners are: (Source:www.matsugov.us)

1. Senior Citizen Exemption

a.) Property must be owned and occupied as the primary residence and permanent place of abode on January 1 of the exemption year;

b. Senior resident must be 65 years of age or older by January 1 of the exemption year;

2. Disabled Veteran Exemption

a.) Property must be owned and occupied as the primary residence and permanent place of abode on January 1 of the exemption year;

b.) Disabled Veterans must have a 50% or more service connected disability effective January 1 of the exemption year.

3. Fire Relief Exemption 

Homeowner can claim for reduction of assessment and abatement of taxes on property affected by fire.  Application must be submitted within 60 days of the fire.

There are several types of additional tax exemptions available to homeowners and it varies for each municipality.  This article can serve as a guide for filing your income taxes.  Make sure to contact the local assessor's office for an updated list of those exemptions in your area. If you have further questions, please contact our office and we can refer you to Tax Professionals to assist in your inquiries.

Additional Tax Benefit Information for Home Buyer

April 15 is a date dreaded by some. As what Anthony Hopkins said in the movie Meet Joe Black, the only things you can't avoid in life are "death and taxes". BUT, you can avoid paying for high income taxes.

Filing and paying for taxes should not be dreaded - especially for homeowners because they are entitled to many valuable tax deductions.  All the deductions in the world won't do you any good unless you know how to take advantage of them. You do not want to pay taxes you don't need to pay.  

Here are some information you need to know to maximize your deductions and avoid common tax deduction mistakes. You do not want to pay taxes you don't need to pay.

1. Mortgage Interest Deduction 

Mortgage interest are paid during the first few years of the mortgage term.  Through the home mortgage interest deduction, homeowners are allowed to reduce their taxable income by deducting the amount of interest paid on the loan which is secured by their principal residence.  On a mortgage of up to $1 million, they can deduct the interest they've paid at settlement if they itemize their deductions on Form 1040.  

2. Property Taxes 

Property tax paid to the local municipality are deductible. The new home owner do not need to pay income tax on money that was spent on property taxes.  However, money held in escrow for the purpose of paying property taxes are not deductible - until the money is actually taken out of escrow and paid the property tax.

3. Selling Costs

Selling costs on the sale of your home can be claimed as tax deductions.  Closing fees, repairs, capital improvements costs, broker's fees and advertising/marketing expenses required to sell their home will be deducted on the gain on sale of their home.  Provided that the repairs were made within 90 days of the sale.  Maintenance items such as painting the home and changing the carpet are usually not considered as capital improvement.

4. Mortgage Insurance Premiums Deduction

Homeowners that paid less than 20% down payment on their homes are required to pay Mortgage Insurance Premiums or MIP to protect the lender in case the borrowers default on the loan.  MIP payers can deduct those insurance payments as tax deduction when they file their returns. 

5. Energy Efficient Upgrade/Repair Deduction

The cost of the building materials used for energy efficient upgrades can be deducted on the total tax payable, not just a reduction in the taxable income.

6. Home Office Deduction 

Homeowners can deduct a percentage of their mortgage, utilities and repair bills dedicated their office space. However, the home office must be the primary office location of the business or it is used as storage area for your business (i.e. samples, inventory, etc)

7. Construction Loan Interest Deduction

If a home owner has borrowed money to build a home, he/she may qualify to deduct the interest.  The interest deduction will only be applicable for the first 24 months of the loan even if the actual construction takes longer.

8. Home Improvement Loan Interest Deduction

There's also tax deduction on the interest on the loans used for home improvements. Home improvements like adding square footage, upgrading or repairing damage from a natural disaster are tax deductible. Painting a home or changing the carpet are not included in the capital improvement projects. 

9. Profit on Sale of Real Estate Deduction 

A homeowner can claim up to $250,000 of profit (for single individual) and $500,000 (for married couples) from the sale of the real estate property. Provided that the it is the primary residence of the homeowner/s and they have lived in it for two of the past 5 years. 

This article can serve as a guide for filing your income taxes.  If you have further questions, please contact our office and we can refer you to Tax Professionals to assist in your inquiries.