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Archives for May 2010

3 Reasons a Series LLC Should be a Real Estate Investor’s Best Friend

May 25, 2010 by Marco Santarelli

For those of you wondering, a Series LLC is a regular LLC with a twist – it can have an unlimited number of subsidiaries (called Cells), and each subsidiary is treated as a separate structure where liability is concerned – if you set the structure up and run it properly. So far eight states have Series LLC legislation on the books (Delaware, Illinois, Iowa, Oklahoma, Nevada, Tennessee, Texas and Utah). But even if you don’t live or own property in one of those states, you can still use a Series LLC by qualifying it to do business in the state(s) where you want to operate.

I think this is perhaps the ideal structure for real estate investors (and anyone else) who wants to keep their assets safe without spending all the profit on legal structures.

Here are my 3 favorite reasons to use a Series LLC with real estate:

[Read more…]

Filed Under: Asset Protection, Real Estate Investing Tagged With: Asset Protection, delaware llc, nevada llc, Real Estate Investing, series llc

3 Things To Do Before Walking Away From Investment Property

May 22, 2010 by Marco Santarelli

If you or someone you know dumped some “bad” real estate, then there might be a ticking tax bomb coming your way. It’s a Form 1099-C and it means you have a “cancellation of debt”, and cancellation of debt is taxable.

So if the lender forecloses and takes your property from you, or you do a short sale, chances are the current value is less than your loan. That means the lender has to forgive part of the debt or may pursue you for the difference.

If they forgive the debt, you have a cancellation of debt. And if you have a cancellation of debt, you have a taxable event. The amount of debt that is cancelled is taxable income to you. You report it on your Form 1040 just like any other type of ordinary income. In other words, you never got a check, but you have to pay tax on it.

So, let’s go with the foreclosure or short sale scenario and assume that your lender has forgiven the debt. Just as a note though, don’t assume that the lender is forgiving all the debt. In most states, they can pursue you if you’ve refinanced the first loan or for a second mortgage. And depending on your particular state laws, they could wait years to come after you for the amount. Yikes!

[Read more…]

Filed Under: Real Estate Investing, Taxes Tagged With: cancellation of debt, foreclosure, Investment Property, Real Estate Investing, short sale

Housing Vacancies Reach New Record

May 19, 2010 by Marco Santarelli

Housing and rental vacancies have hit unprecedented levels. Included in these record vacancy numbers are a plague of abandoned properties fated for demolition, and millions more homes being withheld from market. Of the more than 19 million empty homes recorded by the US Census, just under 2 million are up for sale, many of them in uninhabitable condition.

Even though the economy remains weak and the housing market, in particular, is still years from recovery, some news suggests that stronger growth can be expected as the year progresses.

A record 19.2 million U.S. homes are vacant, representing the highest number of residential properties that are vacant of all-time, according to the U.S. Census Bureau. The figure represents 14.5% of all the homes in America.

The dismal figure was issued as part of the Census Bureau homeownership quarterly survey for the first quarter of 2010. A total of 19,230,000 homes are vacant, according to the report. The same study shows that 10.6% of all rental properties in the nation are vacant, also an all-time record.

[Read more…]

Filed Under: Housing Market, Real Estate Investing Tagged With: Housing Market, housing vacancies, Investment Property, Real Estate Investing, rental market

Who Can You Trust?

May 5, 2010 by Marco Santarelli

Our "favorite housing economist" Dr. Bob Shiller thinks the market (especially housing) is already overheated.  "We are in a very unusual circumstance," says Shiller, "because of the massive bailouts, the homebuyer tax credits, the Fed's purchase of mortgage-backed securities – and these things are coming to an end.  I don't trust the trend we have."

"So the question is, are we at risk for even more price increases, and another bubble?  I think we are at risk, but I'm not predicting it," says Shiller.  "I think it's more likely we don't do so well from here," Moneynews reported Shiller telling The Motley Fool.

So is that "a yes, a no, I know, or a maybe?"

[Read more…]

Filed Under: Economy, Housing Market, Real Estate Investing Tagged With: Housing Bubble, Housing Market, Norada Real Estate Investments, Real Estate Investing, real estate investors

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