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New Ways to Invest in Real Estate

Kevin Simpson — Thu, 11 Jul 2013 17:40:42 +0000

People today want to invest in real estate and it is much easier than when you are not a landlord. Being a landlord can be very difficult, especially when you have to deal with pesky tenants and the problems they can bring. However, there are ways to invest in real estate that do not require you to become a landlord and that can bring a hefty profit.

A great way to invest in real estate is to buy shares from something called an REIT – real estate investment trust. They are sold like stocks in the stock market and are usually owned by individuals or institutional investors.

There are many great things about an REIT or a real estate investment trust. They are a great addition to a retirement fund because people usually need to diversify their accounts. It’s nice to have investments in a variety of things and not to keep it uniform. These trusts develop properties and accrue rental income over time.

The income gained from renters usually goes to the investors, meaning you. Another great thing about them is that it is less complicated to invest in an REIT than it is to flip a house or crowdsourcing.

REITs came about as great sources of profit for investors after a law was passed in 1960 that aimed to better regulate them. The REITs had to meet a certain amount of tests before they could qualify as actual real estate investment funds.

If they did, 90% of their taxable income had to be doled out to investors in the form of dividends. The Internal Revenue Service also must determine whether or not the companies that make up an REIT are certified real estate firms.

Today is a great time to invest in these kinds of funds. After the real estate market crashed, housing prices plummeted but have recently started to rise again.

It is beginning to show signs of promise. Interest rates have also greatly decreased, which allows for the entrance of big funds into the real estate market.

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Minorities Receive Unfair Treatment in the Housing Market

Kevin Simpson — Tue, 09 Jul 2013 17:36:29 +0000

Across the housing market, $7 trillion has been lost for the last couple of years due to the failing economy. There are about 4 million Americans, which is quite a high number, who have houses that has either gone into foreclosure or they cannot make their mortgage payments. Foreclosure are a bad thing because they cause home prices to fall.

The foreclosure crisis is far from over as well and 3.6 million houses are in danger of falling into the foreclosure trap. The most affected individuals are those whom are black or Hispanic; Asians don’t experience as much discrimination but still are affected.

The number of blacks and Hispanics that are negatively affected by foreclosure is twice as high as the number of whites that are adversely affected by it. Blacks and Hispanics are almost twice as likely to be affected negatively by foreclosure; one quarter of all blacks and Hispanics have lost their homes to foreclosure.

Banks and lenders also do not treat minorities well and they often get denied access to good home loans. They use predatory lending practices more often on minority groups than on whites due to racism, prejudice, etc. ThinkProgress reported on this unfair advantage whites have over minorities in 2009 and shed more light on the housing market.

A few years back many banks were encouraging minorities to take on high-priced subprime loans; these kinds of loans can add about $100,000 to the original balance of a loan and are not beneficial whatsoever. 30.9 percent of Latinos and 41.5 percent of blacks were given these bad loans compared to 17.8 percent of whites. This disparity in the statistics shows how unfair the housing market is in their treatment of minority homeowners.

The Consumer Financial Protection Bureau, which is a new division of the government, was recently created. This should help minorities receive better treatment and achieve new policies that are aimed to protect them. There is definitely hope for the future.

Ways to Earn More Money from Tax Deductions

Kevin Simpson — Fri, 05 Jul 2013 18:01:47 +0000

Paying taxes can really be a pain and take a good chunk out of your overall earnings. However, there are ways you can deduct some money from your taxes, if you are eligible for certain tax credits. Even though tax deductions can be great, try to aim for tax credits as they can be more beneficial in the long run. Read more to some ways you can lower your taxes next time you file them:

Energy-efficient upgrades

If you installed energy-efficient upgrades to your house, like better insulation, you could be eligible for a 10% tax credit that could amount up to $500 over a lifetime.

Take out old receipts, bills and tax document from last year

Show these to your accountant and see if you are eligible for any new programs the government is offering. For instance, there is a credit called the American Opportunity credit and a deduction for college tuition, particularly if you have applied for financial aid.

Fund a Roth IRA or Coverdell education savings account

This may not be well known but you can fund these types of accounts, you can receive tax-free income. This is great because it’s always good to have some income saved away in a tax-free account.

Medical Expenses Deduction

If you spent a good deal on medical expenses, this can serve as a deduction from your taxes. The costs must exceed 7.5% of your AGI and can exceed 10% if you are 65 years or older. This can be great if you have a pre-existing condition or some kind of disability. Older citizens will also spend much more on hospital bills so this can also greatly benefit them.

Charity Donations Deduction

If you have recently donated to charity, you will have to file a Form 8283 and this deduction can save you about $500, which is pretty good.

Huge Foreclosure Settlement in Michigan

Kevin Simpson — Thu, 04 Jul 2013 17:07:16 +0000

There was recently a large settlement made between five major mortgage services and abused homeowners. These five major companies supposedly signed foreclosure-related documents without the authorization of a notary and did not ensure that all the facts in the documents were correct.

This group was accused of fraud and they had to pay a hefty sum, which the governor allocated to the Homeowner Protection Fund. Those that have experienced foreclosure abuses will receive payment from this fund. New reforms were also introduced to fix mortgage servicing procedures and minimize the number of foreclosure abuses.

The Michigan governor announced in early June that homeowners that Michigan residents affected by the recent events will be able to receive payments. The funds given to those that were affected are designed to help them get back on their feet and are not allowed to be used for recreational use.

There are certain eligibility criteria homeowners must meet if they want to receive reimbursement for the wrongs they have suffered. Homeowners must have lost their home to foreclosure between January 1, 2008 and December 31, 2011. They must also have dealt with Ally, Bank of America, Citi, JPMorgan Chase or Wells Fargo because are the five companies that participated in the settlement.

The settlement was reached in February 2012 between the five mortgage services and 48 state attorneys along with the federal government. The five companies have provided about $50 billion in relief to troubled homeowners, which is a positive sign that things are moving in the right direction.

It may take a while for borrowers to receive a claim payment in the mail as many abused homeowners have filed complaints against the five mortgage services. Some may also receive something called a split payment. However, everyone received some kind of letter regarding whether they are eligible or not to receive payment. The settlement administrator began mailing payments started June 10, 2013.

Rhode Island Minorities More Affected by Foreclosure Crisis

Kevin Simpson — Tue, 02 Jul 2013 18:53:17 +0000

More people who are minorities have been negatively affected by the foreclosure crisis than Caucasians, according to a report released by DARE (Direct Action for Rights and Equality). It mainly focused on incidences of foreclosures in Providence, which is Rhode Island’s capital.

Foreclosure has taken a heavy toll on this city; many homeowners have lost their homes. Between 2006 and 2012, homeowners in Rhode Island’s capital lost more than 200 million dollars. This was according to a report called Wasted Wealth, which was another report released by Dare or Direct Action for Rights and Equality.

On average, a white homeowner lost $1,700 on a property while a minority, particularly those of color, lost $2700 on average. This is a lot more than the amount white lost on properties that have been foreclosed upon.

Minorities were more likely to lose more based on several factors. A primary reason for this is due to their socioeconomic statuses. Minority borrowers also tend to get targeted by sellers of subprime loans and bad mortgages. Bad mortgage loans are more likely to have bad quality collateral and have to have more risk than regular loans.

Communities where there are more minority groups tend to have loans that have high interest rates, or are unaffordable, sold to them. This is because the companies that tried to sell these bad loans in the first loans failed and find new markets in lower-income areas.

DARE is trying to change this unfair dynamic. For instance, they have been urging the state to protect tenants who rent out units in foreclosed properties. They also want minority homeowners to be treated better than they are being treated right now.

Things in the future will look better for these borrowers once better laws are passed and more protection is granted to them.

Families to Receive Help from a New Foreclosure Relief Bill

Kevin Simpson — Mon, 01 Jul 2013 18:26:52 +0000

Struggling New York families received a boon from the state government on May 22 when the New York State Legislature passed a new bill that aims to help prevent foreclosure as well as those who are already experiencing it. The new bill was called the “Certificate of Merit” bill has introduced a greater number of reforms that are geared towards helping families who are struggling with foreclosure.

These reforms focus around making the foreclosure process more honest and having court-ordered mediation sessions between lenders and borrowers so they can work out more favorable decisions for the borrower. The bill seemed to be quite popular and passed with a vote of 51 to 12 in the Senate and 111 to 26 in the Assembly. The bill was first proposed by Attorney General Schneiderman.

The Attorney General has also previously set up the HOPP, or Homeowner Protection Program, which is a three year initiative funded by $60 million dollars. This programs funds free legal services and housing counselor programs so that families facing foreclosure can receive much needed help since they usually are of lower income.

The Attorney General’s aid in this dire situation is important because homeowners who are going through foreclosure have fared the worst after the housing bubble burst. Sometimes they become essentially paralyzed because they no options available to them. He wants this bill to give struggling homeowners the option to reach settlements within courts with their primary lenders.

Cases can last for years sometimes and this bill may help to shorten that time period; this often happens because mortgage lenders don’t file the proper paperwork. It will do so by having all homeowners facing foreclosure receive a foreclosure notice and the option to schedule a settlement conference as soon as humanly possible.

Things are looking up for those struggling homeowners. In the near future, 34 legal services and 59 housing agencies will receive $16.1 million to provide essentially free services to those in need. Another $3.9 million will also be given to provide training, technical assistance and various other support services to struggling homeowners.

Protestors Gather in Front of the Justice Department in Washington D.C.

Kevin Simpson — Fri, 28 Jun 2013 18:45:08 +0000

The foreclosure crisis has taken a heavy toll on ordinary citizens, particularly older people and communities of color. People have become fed up with how banks had been using predatory lending practices against them. Besides bad lending practices, bankers have poorly invested pension funds and mishandled home equity.

Surprisingly, none of these people have been brought to justice. Occupy Our Homes, the Home Defenders League and others decided to march from Freedom Square to the Justice Department on May 20; the protestors came from all across the country. There were hundreds of occupiers.

They stormed the Justice Department and climbed over barricades blocking them from the building. People even climbed up statues in front of the building and put little mini tents with sayings on them that said banks should be foreclosed upon, not people.

A minister who had been affected by foreclosure held a service in front of the building. People also moved couches in front of the building so protestors had a place to sit. It was very reminiscent of Occupy Wall Street.

The protest expanded even further and police had to arrest 17 people because of the breakout of commotion and the blocking of traffic. Some people were even tapered by police.

People camped out in front of the buildings and protests continued for a few days. The people who were arrested refused to give their names, which complicated matters.

The protestors wanted the actions of the banking district to be accounted for and their homes granted back to them after they were foreclosed.

Unfortunately, they are unlikely to get their homes back but their rallying cries will certainly enact change in this country. It is time this country’s citizens took a stand and fought for what was right.

After Foreclosure Strikes, Life Can Begin Anew

Kevin Simpson — Thu, 27 Jun 2013 17:21:21 +0000

Many people have been losing their homes to foreclosure for various reasons. Banks wrongfully foreclose on homeowners and many can’t afford to pay their mortgage payments due to the failing economy. Recently, there was a case where poor homeowners were receiving aid from lending institutions through the granting of equity loans and modified mortgages.

Unfortunately, many people did not understand the terms of the deal they agreed to. A few major banks wrongfully foreclosed on the homeowners by not accurately processing their papers. Many homeowners also weren’t made aware of programs through which they could receive compensation for the wrongs done to them.

Even if you go through foreclosure, however, you can still live life and even find another house again. A couple in Palmdale, California named Susan and Dave Edwards gave their property over to the bank and they stopped paying their mortgage; this was about three years ago.

It was very hard for the couple to walk away from their home and they both reported feeling embarrassed. Unfortunately, their house’s value had dropped from $340,000 to $180,000.

After things happened, their credit score suffered and they had to rent out an apartment. Both of them were unsure if they ever wanted to purchase another home or even if they could.

Dave, who was in the army, was sent to Korea during the Vietnam War and he left his wife Susan back in California. While he was gone, Susan found out about a program called the Veterans Administration home loan program. Although she wasn’t entirely sure it would work, there was some home for them once again.

When he came back from Korea, Susan and her husband applied for the program and, thankfully, were approved for a loan. The house they own today is $163,000 less than their old one and in the same area. The interest rate on their mortgage loan is about 3.25% and each month they pay $1,500.

Three Major Reasons Why the Foreclosure Crisis Should Bother You

Kevin Simpson — Wed, 26 Jun 2013 18:39:45 +0000

Unless your own house is going into foreclosure, you may not be worrying about other homeowners’ plight while going through the process of foreclosure.

If you are safe, why worry while others get eaten by sharks? Unfortunately, it can affect you, even if it isn’t so obvious at first.

People need to be made aware of the dangers that foreclosed properties can bring to a community. Once you are aware of the potential problems, you should try to help struggling homeowners or at least donate to organizations that provide aid.

Here are three major reasons why foreclosure can affect you and your family:

1. Your house could be worth even more today if there were fewer foreclosures.

The good news is that home prices are going up and there is relief for many underwater borrowers. However, just because things are looking up doesn’t mean that there still aren’t any after effects from the bursting of the housing bubble. There are still tons of people who owe more on their houses than they are worth and these people could go into foreclosure. There are already a good number of foreclosed houses. When foreclosed houses start to crowd a community, they can attract crime, vandalism and look unattractive to people looking to move.

2. Securing a decent home loan today can be hard.

When the economy was good, homeowners took out home loans that they probably wouldn’t be able to afford. It turns out they really couldn’t make their payments, resulting in more foreclosures and underwater borrowers. Today, it is harder for borrowers to get good interest rates and mortgage lenders, like Freddie Mac and Fannie Mae, are making it harder to accept applications for mortgage loans. This is because so many people caused their profits to decrease.

3. Bank regulators are less apt to help out homeowners.

The recent foreclosure abuse settlement and other kinds of wrongdoing done by lending institutions is a good indicator that bank regulators aren’t as aware as they used to be or care as much. They did not make sure that mortgage companies were treating homeowners fairly. This definitely could affect you, especially if you own a house.

How to Invest Safely in Real Estate as a Retiree

Kevin Simpson — Tue, 25 Jun 2013 18:54:20 +0000

Once you retire, you usually pay for your needs and wants with a pension, social security or other kinds of retirement funds.

Sometimes, people at this age want extra income since they may not be receiving as much as they did when they were working. Investing one’s money is usually a good way to supplement a meager income.

Usually, people do real estate investing, income investing or annuities. Investing in real estate is a common route people take but one which should be thought over carefully.

Since 2008, the real estate market has definitely declined. There was a burst of the housing bubble when this country’s economy started to go into a recession. There have been reports of people losing about 40% of their homes’ overall values.

Individuals’ net worth has also dropped significantly while short sales and foreclosures are becoming more common place.

If you invested in a piece of property before the housing bubble burst, chances are that you have lost money on your property or it is not doing well. Nowadays, people have to be more careful in what kind of properties they want to invest in. A property should meet these five criteria:

1. The property would be a solid investment for a company.
2. It could provide a good amount of income.
3. There is a good chance for the property’s value to appreciate.
4. The property’s value has a good amount of protection for inflation.
5. You can easily reverse it.

If you are retired, you may not want to spend your time actively managing a property or dealing with annoying tenants. Retirees should look into something called passive property investments. You probably want to invest in properties that are already managed, liquid and meet the above criteria.

Taking out a reverse mortgage also isn’t as good as investing in a solid piece of real estate. You are more likely to profit from the latter.

A person’s retirement should be a relaxing time of their life and not something to feel nervous about. Investing shouldn’t require a large time commitment or much effort either.