RENTERS ARE ON THE MOVE.
According to a release by the Census Bureau, almost a third of America's renters moved between March of 1996 and March of 1997. Only 8% of homeowners moved.
The suburbs gained 2.8 million people. The cities lost 3 million. (Apparently 200,000 people fell off the boat on the way.)
The South gained 391,000. The other 3 regions had no net change. Young people moved more than old people. 1 million people moved to the US from abroad. 92% of them settled in metropolitan areas.
VACANCY RATES ARE DOWN, RENTAL RATES ARE UP
According to a study by Julian Studley cited in PLANTS, SITES AND PARKS, vacancy rates are down in 8 major cities and rental rates are up.
Los Angeles was the only city surveyed where rental rates had gone down.
CHANGES TO SINGLE-ASSET BANKRUPTCY ARE IN THE WORKS
A new bankruptcy reform bill just passed by the House makes some changes to the single asset bankruptcy rules.
Currently this status is limited to properties with no more than $4,000,000 in debt. The bill removes the debt limit.
The bill will also allow for multiple properties, owned by the same entities, all of which are in the same Chapter 11 proceedings, to qualify.
The length of the stay of foreclosure is lengthened from 60 to 120 days and is extendable up to another 150 days.
The single asset class of bankruptcy was created to facilitate the securitization of mortgages by giving creditors expedited relief from the automatic stay of foreclosure granted by bankruptcy.
USING REAL ESTATE TO BUILD AND PRESERVE WEALTH.
The first and most important step in real estate investing is to have a detailed and flexible plan. If you are a new investor, you can use the information in this series of articles to develop your plan.
If you are an old investor, you already have a plan. It may not be written, but you knew where you wanted to go and had a pretty good idea of how you would get there.
A plan starts at the end. What do you want? This is the most fun stage of the process. Just dream and write it down. Keep in mind how the things you want will affect your lifestyle. "Be careful; what you wish for; you may (probably will) get it."
Next step…what is the cost of what you want? Use today's prices for now. I know you really want it now; but be realistic. When do you expect to have what you want. This can be a staged process.
What you have just created is a goal. Now you need a strategy for achieving it. This should start out as simple: ie..Buy 2 million dollars worth of real estate with debt. Sell half to pay off all of the debt. Then have a million dollars worth of real estate. Because of the appreciation and equity buildup characteristics of real estate, this is a plausible plan.
I have a friend whose strategy is to buy real estate until he is 55, then sell it and take back paper that will last until he is 85. He started in his 20's. He is in his 40's now. A lot of his properties are paid for. His biggest problem now is keeping his cash flow invested.
After developing a broad strategy, make a detailed implementation plan. This is a step-by-step action guide. I like to break mine down almost to the ridiculous. That way, I can have a lot of small successes that keep me motivated.
The next thing required is action. Take that first small step. If you have very little money, that may be opening a savings account. Finding a local real estate investors' club (Charlotte has an excellent one.) is a good idea as well. Just do something!!!
CLARIFICATION TO PARTNERSHIP RULES IN 1031 EXCHANGE.
When your partnership is involved in a 1031 exchange, the replacement property must be taken in the partnership name. Deeding the property to the individual partners will disqualify the exchange. This is a ruling, not a case.
DISCOUNT GIFTED STOCK
The 2nd District Court has ruled that a gift of stock in a closely held "C" Corporation can be discounted when gifted to take into account the capital gains tax the corporation would normally expect to pay.
This is an aggressive technique and could trigger an audit. Always seek competent tax advice when doing something sneaky.