When we had to move to Virginia because I got reassigned to a different base, my wife looked at apartments using an apartment finder for Lynchburg VA. We did not want to live really close to where I work. I do not mind a long commute. I wanted my wife to be able to be close to where she would get a job as a teacher. We are very happy her skills are portable to practically anywhere we move too. This time her job was a keeper. She told me that I should do whatever I can to retire at this assignment and not get reassigned to another state. I only had to finish out this year and I could retire. Then I would go into the private sector as an instructor. I could keep my pension and earn a full salary. Not a bad deal. Continue reading “Putting Down Some Roots in Virginia and Retiring Soon”
I recently needed to do a search online for best portable ice maker due to our upcoming annual trip to our cabin upstate. We only go during the summer months due to the poor condition of the roads during the winter. The first year we went we totally forgot to take something to make ice and the experience suffered because of it. Try drinking some beers that haven’t been iced down when it’s ninety degrees. It’s not fun. We were reduced to running to the local convenience store to pick up bags of ice. Considering that store is about thirty miles away, it really ruined the experience.
This year getting a portable ice maker was at the top of my to do list. I went online and immediately became swamped with the number of options available. We’ve all been there, right? Trying to make a decision becomes a maddening experience. Continue reading “Making Sure to Get the Best Ice Maker”
Many people come to realize, real estate is often, an important component in one’s overall investment portfolio. This does not mean, doing so, and omitting other possibilities, such as stocks, bonds, etc. This article is not meant to advise the investor, who has the savvy, abilities and financial assets, to invest in huge projects, but rather, relates far more, to investing in two to eight – unit houses, or mini – developments. Understanding some basic guidelines, and considering them carefully, logically, and unemotionally, should help one make the best choices. Remember, when you invest in income properties, your mindset must be, based on economic factors. Here are 4 essential factors/ guidelines, to consider.
1. Financial feasibility: Does this investment make economic or financial sense? Can you make a profit, which justifies your investment? Is it financially feasible? What are the risks, downfalls, predicted occupancies, etc? Will you commit to being conservative on the revenue potentials, but far more knowledgable and ready for potential expenses? Begin by using the 6% Rule! The 6% rule means analyze the potential by considering whether you can make a 6% cash – flow profit, without considering factors such as depreciation, etc. For example, if the property cost one million dollars ($1 million), your net cash flow must be, at least, $60,000 per year, or $5,000 per month. To do this, you must consider taxes, as well as owner – paid utilities, maintenance, capital improvements, etc, and end up with at least $60,000 per year. If your taxes are $30,000, and you estimate maintenance expenses at $500 per month (($6,000), then the rents must come to $96,000 per year ($60,000 base requirement + $30,000 taxes + $6,000 maintenance reserves). Therefore, in this example, you must ask yourself if the project, will be capable of collecting $8,000 per month, in rental income!
2. Maintenance/ capital reserves: How old is the roof? Since most roofs are rated at a 20 – year usable life, if it’s relatively new, you should allocate a smaller amount, than if it’s older. Water heaters are normally rated for 10 – years. Never under – estimate! When will you need to paint the exterior, and how often will you need to do interior painting? Know your potential costs up – front, and plan accordingly! Don’t forget insurance, etc.
3. Location: Factor in the location, not as you might for residential, private homes, but in terms, of the type of property. Does that location help, or hurt, the income potential, etc?
4. Real estate taxes: Remember, real estate taxes rarely go down, and usually rise. Look at this property’s tax history, so you have some idea of the average yearly increase. Plan fully and smartly, from the onset!
In the right circumstances, and when the selected property meets the criteria, etc, investing in these types of properties often makes lots of sense, and may become an important component in one’s portfolio. However, if you fail to take a complete look, you might be confronted with the proverbial, Money Pit!
Understanding revocable and irrevocable trust real estate
Living trusts have become a common tool for managing financial assets due to estate planning and tax benefits that they may bring. While establishing a trust, you must decide whether it should be a revocable or irrevocable. This decision determines how much control you may have over the property that you place within the trust while you are alive, and how convenient it will be to get a secured loan or to refinance a property.
A trustee’s power to mortgage a property
According to the law, a trust is just similar to an individual business entity once the transactions are allowed under the trust’s agreement passed by the grantor. So it is easily possible for the trustee, in this case, to mortgage a property. The trust’s grantor, however, does not have the power (right) to mortgage the real estate because the person does not own the property anymore.
The difficulties to get a mortgage
However, just because a trustee may be authorized to offer a mortgage does not mean that a lender will always give a loan for a mortgaged parcel of land bound by an irrevocable trust. An irrevocable trust usually provides the best protection against any creditor claims – this protection, in turn, will make it difficult for a lender to get a loan on real estate having a lien and will find it even more difficult to foreclose upon default. If, however, the real estate is a vacant land that is unimproved, then the problem is compounded, making the loan approval process tedious.
In such cases, a borrower will need to notify lenders before on the real estate’s status and provide them the land’s trust copy. And even if a borrower will not notify them, they will discover by carrying out a search on the real estate. Further, a lender always studies the trust papers properly to determine if the trustee has the power to take a mortgage on the said property. The papers may even be checked to determine if the property (trust) can be used as security or collateral for the loan.
Picking the right trustee
An irrevocable trust’s grantor can technically become the trustee too, but this is often discouraged. With an irrevocable trust, a grantor can easily avoid some tax advantages; for ensuring these advantages, the grantor can give up the real estate’s ownership. Further, a trustee should always serve beneficiaries’ interest along with the interests of a grantor. If a grantor is serving a trustee, the irrevocable trust will be disregarded by the law and will lose all its advantages. Now, take out time for a pop quiz.
The pop quiz
Q: What do you mean by an irrevocable living trust?
A: Do you know the answer? No? Here is the low-down: An irrevocable living trust is established during a grantor’s lifetime and is set in stone. This trust is established for reducing or eliminating taxes or protecting the creditors’ assets.