Norada Real Estate Investments

Year-End Checklist for Rental Real Estate

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Real estate is one of my absolute favorite areas in the tax law because there is so much flexibility in how to do things to legally maximize the tax benefits available.

Real estate is also one of the most complex areas of the tax law. This makes it easy to overlook important steps, which can lead to missing out on tremendous tax savings.

I recommend reviewing your tax strategy throughout the year, particularly as it relates to real estate. This makes it much easier to make adjustments timely, minimize oversights and reduce stress at the end of the year and tax return time.

With the end of the year approaching quickly, it is an ideal time to implement a year round strategy to review your tax strategy as it relates to your real estate.

Start with my year-end checklist for rental real estate and adapt it to use throughout the year.

Here are a few items from the checklist my team and I use:

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2012 Housing Market Forecast

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The question most real estate investors often ask is, “Where do I invest now?”

As always, there are local housing markets around the country where homes are affordable, the underlying economy is strong, and appreciation is imminent.  These are markets you should consider for your next long-term real estate investment.

Norada Real Estate Investments tracks the economic conditions and real estate trends of nearly 400 markets across the country.  Because of the dynamic nature of real estate market conditions, we continually monitor and rank the top markets to make it easier for you, as an investor, to concentrate on the areas that will give you the greatest opportunity for success.

While you might be inclined to look for bargains in areas that have seen the largest price corrections in the past, watch out – there is no guarantee that home prices in areas of high speculation will ever rebound to boom levels.

Unlike the stock market, local real estate markets usually move in slow, predictable cycles. Appreciation is not luck or magic. It correlates closely with economic development and population growth in a local market.

If you missed out on Phoenix, Vegas and Florida (or if you rode those waves and know what it's about), download the current issue of our free report.

Download your free copy of the 2012 Housing Market Forecast Today!

Real Estate Resurgence Could Mark Early Months of 2012

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In the third quarter of 2011, nationwide statistics from the real estate market have revealed numerous indicators that multiple markets may hit a resurgence in the early months of 2012. Home building projects have increased, as well as mortgage applications with rates lowering.

States across middle America have proved to be retaining the strongest numbers as areas such as Texas and Oklahoma cities have continued to stay afloat with job creation. Not all markets are hitting a full rebound; instead they are achieving small improvements in different categories that have an influence over the total market.

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Book Review: Eat That Frog! by Brian Tracy

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Time management is an issue for many on both a personal and professional level. Author Brian Tracy makes it clear that the important piece of time management and prioritizing is not completing every task (because you never will!) but rather finding the most challenging tasks and getting those done first.

The title of the book comes from an old Mark Twain quote, saying that if the first thing you do is eat a frog, you will do nothing worse the rest of the day. Tracy likens the frog in this quote to the main priority that must be completed each day. And if there are two equally-important tasks, eat the uglier frog, or complete the task that seems most daunting or difficult first.

Once “the frog” has been eaten, the rest of the day will run much smoother.

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The New Real Estate Boom

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Home prices and sales may be flat, but the rental industry is booming. The percentage of renters is on the rise, the number of households is increasing, and more Americans are downsizing, all of which point in a single direction: rents are on the rise.

At the peak of the housing boom, home ownership in America reached an all-time high at 69.2%. Today that number has plummeted to fewer than 67%, which may not sound like a huge drop, but that represents roughly 3 million households that were owner-occupied and are now tenant-occupied.

The high foreclosure rate has accelerated the transition toward leasing, but there are a myriad of other trends coalescing to boost demand for rental housing.

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USA Investment Property – A Great Choice For Investors

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USA investment property is becoming very popular these days, and many foreign investors, especially from the UK, Australia and Europe, would prefer purchasing properties in this country.

There are several economic reasons that are responsible for the US property market to work well, where investors can make large profits from relatively small investments. It is important therefore to comprehend the crucial elements that contribute to the unparalleled opportunities which are available now, as the country is fast becoming one of the top property investment locations.

Economy – Even with the economy still in recession, the USA remains the largest national economy in the world that is complemented by its huge land mass and population. The country has an appraised GDP of more than $14 trillion with a relatively low cost of living, and an advanced market with contemporary infrastructure consisting of large finance and private sectors.

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National Economic Outlook (September 2011)

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Read the newspapers and we're at the brink: Global Gloom, Deepening Pessimism, Markets Drop Sharply. Is another Great Depression just around the corner? Is the US slumping to a decade of stagnation a la Japan? Is China now eating the lunch we thought we had bought cheap? Is our financial system just a Vegas vacation, making the house rich but producing no growth?

The answer is no, even though China is nibbling at that burrito and bankers are at the slots. The hero coming to the rescue of the US economy is that trusty favorite, the US Consumer. It's a Consumer with flaws, like any modern hero, with a tendency to binge, and again wielding the weapon that often leads to trouble: the Credit Card.

After 28 straight months of pulling back on the reins, consumers have finally found a level of debt that feels good enough to allow more spending to flow. During those 28 months, the level of consumer debt per person [let's leave mortgages out of this] fell 13 percent, from $8,600 to $7,500. During the last recession with a real estate crash, 20 years ago, consumer debt dropped 14 percent. Sure, many things are different now, but some things aren't.

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Build Your Real Estate Dream Team

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Many entrepreneurs believe that, if you want something done right, do it yourself.  Personally, I believe that is the rationalization of control freaks unwilling to delegate.

In reality, your dream team will help you reach your financial goals faster than you ever can alone.

Sure, you can find motivated sellers and build a great buyer's list on your own, but other tasks require the expertise of others.

Some of the members of your team should include:

  • real estate agents, who can bring you sellers
  • home inspectors, who can spot things you might never notice
  • rehab crews, who can do work in much less time than you could,assuming you want to pick up a hammer
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U.S. Housing Market Intelligence Report (August 2011)

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Categories are graded from A thru F:

Economic Growth: C- (June 2011: D+)
The U.S. economic recovery remains sluggish. Real GDP grew at a 1.3% pace in 2Q11, following downwardly revised growth of 0.4% in 1Q11; far below the 1.9% rate of expansion previously estimated for last quarter. We now have positive Y/Y employment growth for eleven consecutive months, with payrolls expanding by 117,000 in July, up from 46,000 in June, and the unemployment rate dropping from 9.2% to 9.1%. Initial jobless claims fell to 400,000 in July. Government payrolls decreased by 37,000 in July, the ninth straight sequential drop.

The average length of unemployment increased to 40.4 weeks (new record high), and the labor force percentage of those unemployed over 27 weeks dipped slightly from 4.1% to 4.0%. On a positive note, retail sales continue to improve, with Y/Y growth at 8.5%.

Leading Indicators: C- (June 2011: C)
Leading indicators for the economy are mixed this month, with our overall grade for this subsection of indicators dropping from a C in June to C- in July. Many of the leading indicators we analyze have been trending down over the past several months, returning to levels not seen since mid-2009, a time when the U.S. economy was still in the midst of the Great Recession. For example, the ISM Purchasing Managers Index has fallen two consecutive months, dropping to 50.9 (just above the expansion threshold value), a level not seen since July 2009. In addition, the Vistage CEO Confidence Index fell in 2Q11, crossing into negative Y/Y territory for the first time since 2Q09. Corporate profit growth was revised down from last quarter, rising at an 8.8% Y/Y clip in 1Q11, the weakest annual growth rate since Q309. Other leading indicators such as the ECRI Leading Index were relatively flat versus last month.

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Next 2 Years is Prime Time for Real Estate Investors

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Real estate investors are likely to be three times more active than other types of home-buyers in their local markets within the next two years, according to a national survey by Realtor.com operator Move Inc.

Market research firm GfK Custom Research North America conducted the survey on behalf of Move from April 11-15, 2011. The survey included telephone interviews of 1,200 U.S. adults, of which about 200 were identified as real estate investors.  Data was weighted by age, sex, education, race and geographic region.

A third of real estate investors are planning to buy in the next 24 months, compared to 8.6% of typical home-buyers — those planning to purchase a primary residence, vacation home or retirement property.  Another 9.1% of typical home-buyers, and 28% of investors, plan to purchase between two and five years from now.

Among the investors, half plan to hold their properties for five or more years while 11% expect to sell within a year of purchase, according to the survey.

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Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

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