Gea Elika's Blog, page 91

Thinking of Buying? Check the Neighborhood for these Red Flags

When housing hunting in NYC you need to be on the watch for red flags that tell you a particular property isn’t a good buy. Much has been written about red flags to look for when viewing a home. But how many pay attention to neighborhood red flags? When you buy the home, you’re also buying the neighborhood. If you want your investment to be a good one, then you’ll want to be sure the neighborhood is an established or up-and-coming one that will see your investment grow over time. Years down the road you may want to sell and use the proceeds to upgrade to a bigger home.

Below are five neighborhood red flags to watch out for. Before you agree to a sale make sure you check the neighborhood for these red flags.

1. There are too many properties on the market

Before you buy, you’ll want to take a look at the local market to see how many others are selling. You should be doing this anyway to assess what the current going rate is on comparable properties. There’s nothing wrong with seeing a handful of properties on the market. But if you see a lot, then that should be a cause for concern. This suggests illiquidity in the market and pricing pressure which is a significant risk for buyers. The most important thing though is to find out why those “for sale” signs are up. Maybe the neighborhood is gentrifying quickly, and many long-term residents are moving it. Maybe there’s a lot of older residents who are downsizing. Or it could be that theirs a more sinister explanation such as rising crime rates. Do your research into why people are selling before committing,

2. The local schools are enrolling fewer students

A good school in the district is a prime selling point. As such, if one in your neighborhood is seeing less enrollment, then that can mean trouble when it comes time to sell. School enrollments can decrease for a number of reasons. Maybe poor management is driving parents towards private options. Even if you don’t have kids and have no plans to have any soon, you should still pay attention to the local schools. A popular school can be a huge selling point whereas a failing one can put buyers off immediately.

3. There’s a lot of empty storefronts

Even if the property looks great, you’ll want to take a look at how the rest of the neighborhood is doing. If you see a lot of empty storefronts, then that suggests the residents have a lot less disposable income than before. Fewer residents with disposable income suggest a neighborhood in decline which will spell bad trouble when it comes time to sell. If homeowners can’t pay for dinner out, then they probably can’t pay for upkeep. This can spell foreclosure which can mean the end of a neighborhood.

4. Surrounding buildings aren’t in good condition

Retail properties aren’t the only thing you want to be looking at. How is the rest of the neighborhood doing? Any area with a lot of run-down buildings and infrastructure should be an immediate red light. This has nothing to do with how wealthy the neighborhood is. Even low-income neighborhoods will stay well maintained as a matter of pride. Residents and landlords who don’t maintain their properties lower property values for everyone.

5. A lack of transit

Most New Yorkers rely on public transport to get around, and if one neighborhood is lacking in it, then that can make any home there a hard sell. Find out where the nearest subway station is and what other transport options residents have to get around. If the neighborhood is so far out that it relies on public buses and private cars to get around, then that’s a major losing point. This is a big thing in NYC so pay attention to it.

The post Thinking of Buying? Check the Neighborhood for these Red Flags appeared first on ELIKA insider.

Rent Reforms for Landlords and Tenants Coming in June 2019

Last years New York State elections proved to be a big win, not just for Democrats, but also for tenants. With the Democrats now in control of the Senate they can finally deliver on long-overdue rent reforms. Come June, the city’s rent stabilization laws are up for renewal. A series of loopholes that have dogged advocates for years are now finally in sight of being closed or amended. But the thought of this isn’t making landlords happy as they’re worried that their bottom line will be affected. They say that any changes will remove incentives to keep buildings well-maintained. Below are the biggest issues at stake. They’re sure to have both landlords and tenants at the edges of their seats this June.

Vacancy Deregulation

One of the biggest changes would be an end to vacancy deregulation and the eviction bonus. By the present laws, landlords of rent-stabilized apartments can raise the rent by 20% whenever a tenant leaves and a new one moves in. That’s a whole lot more than the 1.5% increase the Rent Guidelines Board allows for a one-year lease. If the rent rises to a certain threshold, currently it’s $2,733 a month, then the apartment can be deregulated. The thing is, most people in NYC who land a rent-stabilized apartment don’t tend to move out from it. Because of this, advocates for change say that this dilemma incentivizes landlords to harass tenants until they leave. Landlords argue that vacancy deregulation has helped improve the city’s housing stock. Without it, landlords say they have a hard time making back any capital investments from renovations or maintenance.

According to the NYC Rent Guidelines Board, 53% of deregulated units last year was due to vacancy deregulation. It’s being blamed as the primary reason for the loss of 147,512 rent-regulated units since 1994

Last year a heavily Democratic Assembly passed bills to repeal deregulation. However, a Republican majority in the Senate put a stop to it. With the Democrats now controlling the Senate, it looks like this will be the year that sees the end of this loophole. However, it’s far from guaranteed. Previously, when this issue came up, the threshold for deregulation was raised rather than removed.

Major Capital Improvements

Another highly contested issue concerns Major Capital Improvements (MCI). This allows landlords to hike rents by as much as 6% each year to fund building-wide renovations that affect all tenants. It’s supposed to act as an incentive to landlords for making necessary repairs. But tenants’ advocates say the program is rife with fraud with most changes being minor or unneeded. Once the increase is approved it’s usually made permanent. Rent reform advocates argue that landlords often overstate the extent and cost of the renovations. Landlords contest this by saying that without the MCI rules they would have no incentive to make improvements to the building and improve the city’s housing stock.

Reforming Preferential Rent

At present, landlords are allowed to charge a preferential rent which is lower than what tenants can be legally obliged to pay. This is often done to entice new tenants. To be legal, it must be stated in the lease that they’re receiving preferential rent, along with the legal maximum rent. But once the lease renewal comes up, they can then be charged the full legal amount which can be quite a big jump.

Tenant advocates want to see preferential rent last as long as the tenant lives in the apartment. Like vacancy deregulation, a bill passed the Assembly last year for an end to preferential rent increases on lease renewal. Just like the other, it didn’t get through the Senate but that could change this year. The latest version of the reform bill will put a cap on any increases while not ending the practice overnight.

Conversions Could Remove Rental Inventory

One big fear is that rent reforms could see a lot of buildings being converted to condos or co-ops as a way to avoid rent regulation. If this happens then the stock of affordable housing in NYC will go down even further. The laws on conversions come up for renewal at the same time as rent reform so there will be a lot of pressure to tighten them.

The post Rent Reforms for Landlords and Tenants Coming in June 2019 appeared first on ELIKA insider.

Condo vs Townhouse: Which is Better in NYC?

When it comes to deciding on a property to purchase in NYC, most people think about condos and co-op apartments. There are several differences between these two types of apartments. Depending on your needs, one will be better than the other. But if you’re on the fence about what type of NYC property to buy then, townhouses should also be a consideration. These are those mostly historic buildings, sometimes called brownstones, which always appear in every movie or TV drama set in NYC. Besides being beautiful and unique, they provide a level of privacy that won’t find in any other NYC building. But owning one also means taking on the responsibility of maintaining it. Something you don’t have to worry about with a condo building as any maintenance will be handled by the management.

To help you decide which one would suit you best, this article takes a close look at both property types. If it’s clear in your mind what you’re looking for in a property, then it should look pretty obvious which one is the right fit for you.

What is a Condo

Similar to a townhouse, but unlike a co-op, a condo is a real property that you own. You get your deed and tax bill that you’ll own free and clear. You’ll still be bound by some rules and restrictions from the condo board. But at nothing like the level, you would experience in a co-op apartment. You’ll also pay common charges to cover the buildings management fees and operating costs. This frees you from any responsibility to look after maintenance and building upkeep. But you’ll still be responsible for any maintenance in your lot. While you will have to share the building with other residents, you’ll also get access to the building’s amenities. For instance, a pool, gym, restaurant or roof deck.

What is a Townhouse?

With a townhouse, you get to purchase a real property that you fully own, but there will be no condo board telling you what to do or restricting your options to do renovations. No condo board also means the sales process is a lot faster and smoother. As such, you can expect to close a lot quicker. Also, buying a townhouse means owning an actual house rather than an apartment. They typically come with two or more floors and often include a backyard, deck, terrace and are usually located on quiet tree-lined streets. Buying a townhouse also means owning a property that has unique design features from the 19th and early 20th century. Expect, beautiful façades, spiral staircase, ornamental fireplaces, and beautiful doorways. New developments usually won’t include all of these older architectural details.

Which is Better?

Which one will suit you best depends on your own needs and what you’re looking for? Compared to condos, townhouses make up a very small portion of the NYC housing market. They offer far more space and privacy, and you’ll be free from any restrictions against subleasing and renovations. You won’t have to pay any common monthly charges, but that then makes you responsible for handling all maintenance and upkeep.

Condo living means you’ll be staying in an apartment building that will provide its own security. This makes for safer living, but it also means being bound by the rules of the condo board. You’ll be living in close proximity to other residents which can mean, noises, smells, and other annoyances. There’ll be a common monthly charge for upkeep you’ll need to pay each month, but that frees you from having to worry about maintenance and cleaning of the common areas.

Both are similar in a lot of ways, but which is better really comes down to your lifestyle. People who don’t live in NYC all year round find condos suit them better as the building management will handle security and upkeep. Those who value privacy in a quiet residential neighborhood prefer townhouses. There’s also the financial cost to consider, and townhouses can cost significantly more than condos as you’re buying an entire building. Talk with a real estate agent about your long-term plans and what you’re looking for in a home.

The post Condo vs Townhouse: Which is Better in NYC? appeared first on ELIKA insider.

Depreciation Tax Law for Real Estate Business Owners

Everyone knows the new tax law went into effect this year. Officially called the Tax Cut and Jobs Act (TCJA) of 2017, the law made sweeping changes to individual and corporate taxation, which have impacted real estate.

The law likely has negative consequences for residential real estate buyers, and this is particularly true in New York. It limits state and local tax deductions to $10,000, and you can only deduct mortgage interest on loans up to $750,000, down from $1 million.

However, those that pursue real estate investing as a business likely benefitted from the new tax legislation. This includes the ability to deduct more depreciation, and hence improve your cash flow. It is an arcane but an important consideration.

What is depreciation?

You can expense certain items, such as mortgage payments, insurance, taxes, and repairs, immediately.

Depreciation falls into a different category. This is the amount the Internal Revenue Service allows you to expense annually for a period of time for normal wear and tear. This includes the purchase price (but not the portion for land) and any long-term improvements you have made. This differs from regular maintenance and repairs, such as a paint job.

In New York, you may choose to invest in condo units given their preponderance. It is more challenging to purchase co-ops as an investment since the board places restrictions on subletting.

What is Section 179?

This has received a lot of attention. Under the IRS Code, Section 179 you can deduct the entire upfront cost for improvements, subject to a limit. However, according to the IRS, this applies to “qualified real property,” which it defines as a “qualified improvement property” (non-residential building) and some improvements.

The law made it easier for real estate buyers to take advantage of this provision. However, the provision is only available to those that operate real estate as a business. Among other things, you have to pursue a profit and work regularly and continuously (although you can hire someone to manage it for you). If it is an investment, it will not qualify.

If real estate investing is your business, you can now use Section 179 to deduct personal property used in the residential rental. Previously, you could not do so. Therefore, if you buy a new refrigerator or furniture and put it into the rental unit, you can deduct the full amount in the first year. You may also deduct property and equipment that are offsite but used in running the business. These include computers, cell phones, and office equipment.

The upshot is that the new law’s more generous depreciation rules made it more favorable for New York City’s real estate investors that recently purchased property or plan to going forward.

First, the TCJA doubled the maximum allowable deduction to $1 million, if you purchased the property in 2018. This amount increases annually since it gets for inflation. Second, there is a phase-out, which the new law increased. The deduction limit currently starts at $2.5 million, which is also inflation-adjusted each year, from $2 million.

Limits

You can only take the deduction to the extent your business earns a profit. Therefore, it cannot create a loss or widen your loss.

The major advantage of taking Section 179 deduction is the upfront expense in the first year. However, when you sell the property, the IRS treats this amount as depreciation recapture. This gets taxed at a higher rate (up to 37% plus 3.8% net investment tax) than the capital gains tax rate. If you deduct depreciation over the average 27.5 year recovery period, the tax on that portion of the gain is 25% plus the 3.8%.

The post Depreciation Tax Law for Real Estate Business Owners appeared first on ELIKA insider.

Real Estate Bubbles and How To Recognize One

Ten years ago, one term dominated the headlines. Housing bubble. This cataclysmic time saw the U.S. housing market collapse, the unemployment rates doubled, and millions of Americans lost their homes. Things have recovered since then, but it left an entire generation highly skeptical of real estate as an investment. Many homeowners now, especially those living in areas with limited inventory like NYC, are nervous about when the next housing bubble will strike. While there’s no definitive way of predicting when a housing bubble will strike there are some indicators that homeowners and investors can follow to determine if one is likely.

What is a financial bubble?

A bubble is when there’s a sudden escalation in the price of an asset when there’s heavy demand or speculation. This is then followed by a sudden drop when it is discovered that prices are far divorced from the underlying fair value of the asset. They can form in economies, securities, stock markets and business sectors due to a change in investor behavior. One example is the dot-com boom in the late 90s and early 2000s.

At this time, many people started buying up technology companies at extremely high valuations. The belief being that the technology sector was about to outperform and that these companies could then be quickly sold off for huge profits. As a result, there was massive speculation which drove the stock prices in these companies to unsustainable heights. But the problem was that many of these companies were little more than startups that hadn’t yet turned a profit. Reality set in after the peak in 2000 and their stocks came crashing down to level low prices. As often happens in equity and economy bubbles, recourses started being transferred quickly to other sectors after the crash. In the wake of the dot-com collapse, that sector they moved to was real estate, which began to see a big rise in prices as a result.

What is a housing bubble?

Like other bubbles, a housing bubble usually starts with an increase in demand, in the face of limited supply, which takes some time to increase. Prices start to sore, and speculators enter the market looking to turn a profit which drives up demand even further. Eventually, the market begins to correct itself as higher prices drive down demand or supply outpaces demand through new construction. Buyers suddenly realize that the price increases are unsustainable and there’s a huge rush to unload them before it’s too late. The bubble pops, and prices take a massive nosedive.

This is what happened in 2008 and was partially caused by the dot-com fiasco. In the six years between the ending of the dot-com bust and 2008, there was a massive rush in real estate. Demand skyrocketed, interest levels fell, and many strict lending requirements were thrown out the window. It’s estimated that about 56% of home purchases at this time were by people who under normal circumstances would never have qualified for a mortgage. This was the subprime mortgage rush. Most of these loans were adjustable-rate with low initial rates that were scheduled for a reset in 3-5 years.

Near the end, the stock market began to rebound, and interest rates started to rise slowly. With signs of a slowing economy ahead the adjustable-rate mortgages began to reset at higher levels in 2007. Investors started to pull out. Once it became clear that home values could go down, there was a huge drop in home prices. This created a knock-on effect on other sectors that lead to the tragicomedy of the Great Recession.

You might think of it as being like those old Loony Tunes episodes. The Coyote runs over the cliff but stays in mid-air. It’s only when he looks down and sees there’s nothing below that he falls.

Real estate bubbles tend to be less frequent than equity or stock market bubbles. But as seen above they can happen as a result of an equity bubble. On average, they happen once every 13 years but can last longer than the average 2.5 years that stock market bubbles last. As the Great Recession showed, housing bubbles don’t just affect the housing industry. They can affect people of all classes, neighborhoods and the economy as a whole. To help protect your assets, here are some tell-tale signs of a housing bubble.

1. There’s a lot of shaky loans

As was learned in 2008, lending to just about anyone is bad policy. Subprime lending (lending to anyone with a pulse) was the main culprit in the crash and the countless foreclosures that followed. If you hear about a lot of people getting mortgages that they shouldn’t, and effectively can’t pay, then be wary. The good news is that things have improved since 2008. Subprime mortgages are still around, but the criteria for getting a loan is a lot more stringent. Applicants now have to sign a document acknowledging that they can be indicted for fraud if they submit a fudged tax return.

2. Homes are being bought with a lot of leverage

Buying a home with a mortgage means using leverage – the lender’s money – to do it. The less your down payment is, the more the leverage is. When the market has a lot of leverage that’s a good indication of a housing bubble. Many people in the early 2000s bought homes with little money down. Once home values started to drop, they were left with a home that was worth less than the mortgage, leading to foreclosure. Keep an eye on average down payments on homes. If they’re decreasing, then that’s not a good sign.

3. Interest rates are rising

A low-interest rate entices most people to buy a home. But once rates rise people have less buying power thus you’ll suddenly see a big drop in demand. Keep an eye on average interest rates. If they rise by as much as 1%, then that’s a good indication that a market correction could be coming.

4. Home prices are rising faster than salary’s

Just as a rising interest rate puts off buyers, so does rising home prices that aren’t matched by rising income. No buyer in their right mind will buy a home when their purchasing power is falling. As such, this means a fall in demand for housing and the proverbial bubble was eventually going ‘pop.’ Look into mean income and employment levels in your local market. If local home prices are exceeding people’s ability to pay for them, then things are probably heading into resistance. The important thing though is to check what the banks are doing. If credit conditions are tight, then you won’t have runaway price inflation.

5. The market is being driven more by speculators than homebuyers

This is a difficult one to pin down. But if you can find it, then that’s a good indication that the market is in a bubble. Keep an eye out for properties that have been bought, renovated and have been put back on the market within short periods of time. You can also check the reports from the real estate section of your local newspaper which will highlight trends in real estate. Talking with real estate agents and mortgage lenders will also help garner whether this is the case. Check that any rise in home prices is justified by a rising median income increase. If that’s not the case and you still see, a lot of sales, then that indicates that a housing bubble is about to burst.

Final thoughts

The most important takeaway point to grasp from housing bubbles is that you shouldn’t borrow more money then your comfortable with. A home purchase is a significant investment, and there is no guarantee that it will appreciate. NYC has proven to be a very resilient market and recovered reasonably quickly from the crash. At present, home prices have started to drop due to the current buyer’s market but that drop is nothing like you would see if a housing bubble had burst.

No matter where you buy, the most important thing is that you hire a reputable real estate agent that you can trust. Just as important is that you find a lender who won’t pressure you into borrowing more money than you can afford to pay back. Housing bubbles are hard to predict but if you stay abreast of what’s happening in the real estate and mortgage market you could get an early warning of what’s coming.

The post Real Estate Bubbles and How To Recognize One appeared first on ELIKA insider.

Tips for Recovering From a Bad Real Estate Investment

Investing in NYC real estate can bring huge rewards but with that comes a degree of risk. As any long-time investor will tell you, eventually, you’ll end up with a deal gone wrong. Maybe you bought a property that’s now worth far less than what you paid for it. Perhaps you’ve got one you can’t rent or are renting for significantly less than you planned for. Whatever the reason, you’ve now got an investment you need to get out of and move on from. Bad deals can shake the pride and confidence of any investor. In such times, it’s easy to give in to self-doubt and regret.

But that’s not the way to handle it. Every mistake has a lesson buried in it, and if you’re determined to succeed as a real estate investor, then you have to be willing to take a hit from time to time. So, if one of your deals has gone bad, here are some actionable steps you can take to help minimize your losses.

1. Face reality and accept the situation

Every moment you spend agonizing over your mistakes and imagining what you should have done is time wasted. Yes, you have taken a loss, maybe a bad one. But the sooner you can set to work recovering from it the less you stand to lose. Face the grim reality of what happened and start drawing up a response plan. You may have a lot of work ahead of you so you’ll need to conserve as much energy as you can. Use the bad situation you’re in to motivate you to climb out. After all, once you’re at the bottom the only way is up.

2. Cut your losses and get rid of it

Never hold onto a bad investment. The longer you do, the more you’ll need to pay out on loans and other costs tied to it. Better to cut your losses and start looking for an exit strategy as quickly as possible. Most often, your best bet will be to sell the property at a lower cost then you’d hoped. If you can come out of it breaking even or taking a slight loss, then you should consider yourself lucky.

3. Assess what happened

Once you’ve put a recovery plan in motion, take the time to sit down with yourself and assess what happened. You made a wrong move somewhere, and you need to find out where so it doesn’t happen again. Did you miscalculate the time and costs of a renovation? Were you too excitable at an auction and bid too high? Perhaps you failed to do a full inspection and found extensive damage once renovations started. Maybe you just didn’t do your market research and bought in an area experiencing a downturn. Whatever your mistake was, it’s one you can learn from with the right perspective. Go over it in detail and look at what you could have done differently. When the next deal comes along, you’ll know what to watch out for.

4. Don’t be too hard on yourself

Mistakes happen to the best of us. Even when it’s one that was staring you in the face don’t dwell on it too much. If you allow your mind to be clouded with statements such as “Why didn’t I….” or “I should have…” then you’ll get nowhere. It’s fine to be critical of yourself when assessing your mistakes. Just don’t allow yourself to become completely discouraged with making further investments. Which brings us to the final step.

5. Pick yourself up and get back in the game

How do you come back from a bad investment deal? Simple, make a good one. Real estate investment is something you very much learn on the spot. All those books on theory and best practice are good for getting started, but you won’t get a feel for it until you’ve been in the game awhile and taken a few hits. Each mistake carries an invaluable lesson which will serve you well in the next deal. So get back in the game and look for how you can make good on your losses. If you’re serious about becoming a real estate mogul, then you won’t let one bad deal ruin your aspirations.

The post Tips for Recovering From a Bad Real Estate Investment appeared first on ELIKA insider.

How to Recover from a Bad Real Estate Investment

Investing in NYC real estate can bring huge rewards but with that comes a degree of risk. As any long-time investor will tell you, eventually, you’ll end up with a deal gone wrong. Maybe you bought a property that’s now worth far less than what you paid for it. Perhaps you’ve got one you can’t rent or are renting for significantly less than you planned for. Whatever the reason, you’ve now got an investment you need to get out of and move on from. Bad deals can shake the pride and confidence of any investor. In such times, it’s easy to give in to self-doubt and regret.

But that’s not the way to handle it. Every mistake has a lesson buried in it, and if you’re determined to succeed as a real estate investor, then you have to be willing to take a hit from time to time. So, if one of your deals has gone bad, here are some actionable steps you can take to help minimize your losses.

1. Face reality and accept the situation

Every moment you spend agonizing over your mistakes and imagining what you should have done is time wasted. Yes, you have taken a loss, maybe a bad one. But the sooner you can set to work recovering from it the less you stand to lose. Face the grim reality of what happened and start drawing up a response plan. You may have a lot of work ahead of you so you’ll need to conserve as much energy as you can. Use the bad situation you’re in to motivate you to climb out. After all, once you’re at the bottom the only way is up.

2. Cut your losses and get rid of it

Never hold onto a bad investment. The longer you do, the more you’ll need to pay out on loans and other costs tied to it. Better to cut your losses and start looking for an exit strategy as quickly as possible. Most often, your best bet will be to sell the property at a lower cost then you’d hoped. If you can come out of it breaking even or taking a slight loss, then you should consider yourself lucky.

3. Assess what happened

Once you’ve put a recovery plan in motion, take the time to sit down with yourself and assess what happened. You made a wrong move somewhere, and you need to find out where so it doesn’t happen again. Did you miscalculate the time and costs of a renovation? Were you too excitable at an auction and bid too high? Perhaps you failed to do a full inspection and found extensive damage once renovations started. Maybe you just didn’t do your market research and bought in an area experiencing a downturn. Whatever your mistake was, it’s one you can learn from with the right perspective. Go over it in detail and look at what you could have done differently. When the next deal comes along, you’ll know what to watch out for.

4. Don’t be too hard on yourself

Mistakes happen to the best of us. Even when it’s one that was staring you in the face don’t dwell on it too much. If you allow your mind to be clouded with statements such as “Why didn’t I….” or “I should have…” then you’ll get nowhere. It’s fine to be critical of yourself when assessing your mistakes. Just don’t allow yourself to become completely discouraged with making further investments. Which brings us to the final step.

5. Pick yourself up and get back in the game

How do you come back from a bad investment deal? Simple, make a good one. Real estate investment is something you very much learn on the spot. All those books on theory and best practice are good for getting started, but you won’t get a feel for it until you’ve been in the game awhile and taken a few hits. Each mistake carries an invaluable lesson which will serve you well in the next deal. So get back in the game and look for how you can make good on your losses. If you’re serious about becoming a real estate mogul, then you won’t let one bad deal ruin your aspirations.

The post How to Recover from a Bad Real Estate Investment appeared first on ELIKA insider.

Can You Buy a Home if You are Disabled?

Anyone living with a disability, whether it be physical or mental, will be no stranger to overcoming obstacles. But if that obstacle is homeownership, then you’ll be facing a unique set of challenges. Those on social security benefits will be wondering whether they have any chance of securing a loan. Then there’s the fear of whether homeownership will affect those benefits in the future. At a glance, the odds may seem against you. Fortunately, there’s a lot of recourses to help disabled people achieve homeownership. The Federal Fair Housing Act also makes it illegal for a lender to deny you a mortgage because you have a disability. For those on disability who desire homeowner, there is no reason you can’t make it a reality. Read on to see how you can make that happen.

Will buying a home affect my social security payments?

First off, let’s address the question of whether buying a home while on disability payments will affect those benefits. Those on social security are not prohibited from purchasing a home. However, those on SSI benefits need to use some caution. Anyone on SSI is free to buy a home and the land they live on. However, any other property will be counted as an asset. To keep receiving SSI, you can’t have over $2,000 in assets (or $3,000 if married). By contrast, those on Social Security Disability Insurance (SSDI) benefits have no such limit on their assets.

Pre-qualifying for a loan

The first step in applying for a loan is getting pre-qualified. The lender will take a look at your income, debts, and monthly expenses before giving you a number for how much you can expect to borrow. So long as you can demonstrate your ability to repay the loan and meet the lender’s other criteria, you stand a good chance of being approved. Those who are claiming disability benefits will need to provide proof of those benefits. In your application, include a Proof of Income Letter from your local Social Security Administration (SSA) office.

It’s also a good idea to show proof of how long you are guaranteed to keep receiving benefits. In your application, also include a copy of your last Notice of Award Letter. The complete picture you can show of your finances the better chance you have of being approved for a loan.

Assistance programs to help with buying a home

Even if your credit score isn’t perfect and your only source of income is your disability payments, that doesn’t necessarily mean you can’t get a loan. There are special mortgages and programs available for those with disabilities and parents buying a home for a disabled child. Some of these programs are also available for able-bodied people who live with a disabled person. For instance, a caregiver who shares a home with their disabled sibling. Look into the following programs to see if they would be a right fit for you:

Fannie Mae Community HomeChoice Program

This is a nation-wide program designed to help low and moderate-income borrowers. Through this program, borrowers can obtain a 30-year lease with an interest rate as low as 3%. Even with a less than perfect credit score you can still obtain a loan through this program. Fannie Mae can also provide you with a loan to make improvements to a home if those improvements are related to your disabling condition.

Section 8 Housing

Many people think Section 8 is only for renters. If you qualify for Section 8 and your local Section 8 office is a part of the homeownership program, you can receive assistance in paying your monthly mortgage.

FHA Loan

The Federal Housing Administration can provide insurance on mortgages to lenders who are part of the FHA program. Because the loan is insured, the risks to the lender are mitigated so they can give a lower interest rate.

VA Loan

If you’ve served in the armed forces, then the Department of Veteran Affairs can potentially help you with a grant to buy a home. You needn’t be a combat veteran to be applicable. Anyone who has served in the armed forces (including the National Guard) is applicable so long as they meet its criteria. Read into it to see if you qualify.

Habitat for Humanity

The program exists to help low-income individuals achieve homeownership. It doesn’t specifically focus on disabled homeowners, but they can certainly still qualify. This is done by providing low-interest mortgages ranging from seven to thirty years.

Home for Our Troops

This is a non-profit organization set up to help severely injured veterans become homeowners. It’s only available to those injured after September 11, 2001. To meet its criteria, you must be retired or in the process of doing so. You’ll also have to pass a criminal and credit background check.

Making homeownership a reality

Disabilities make life difficult, but they needn’t exclude you from the chance of being a homeowner. If you’re not already on SSDI, you should check your eligibility as it will be much harder to become a homeowner if you’re only on SSI. Look into the programs above to see if you qualify for any. The sooner you can buy a home the sooner you can start putting your disability payments towards owning a home instead of renting one.

The post Can You Buy a Home if You are Disabled? appeared first on ELIKA insider.

5 Must Read Books for Aspiring Real Estate Investors

If you’re looking to make your money work for you, then one of the most tried and tested ways is with real estate investing. But with property costing so much, it can seem like an intimidating venture. Then there’s the thought of being a landlord, which can be enough to scare away many people. But if you want to achieve financial independence, it’s simply a matter of acquiring the right knowledge. Being a successful real estate investor is all about having first the right mindset. Once you have that you can move onto acquiring the right the tools and knowledge of the trade. There’s a lot of books out there on real estate investing. No single book will cover everything, and there are almost as many investment strategies as there are housing types. For those aspiring to get into real estate investing, these books below will get you started.

Some are more motivational; others are more practical; all are required reading for enterprising real estate investors.

1. Rich Dad Poor Dad by Robert Kiyosaki

Not so much a real estate investing book as a money management book. This is a classic among investors the world over that contains an incredible amount of thought-provoking content. Its main focus is on laying the right foundations for how you should look at your finances. Robert does this by making a contrast between two different approaches to money. One, the poor dad, which looks at money as something to work for, and one, the rich dad, which looks at money as something that should work for you. Don’t expect much concrete info on how to invest. Instead, it lays out in clear terms why investing is so important and how you can change your financial habits for the better. For any aspiring real estate investor, this is a great book to start with.

Rich Dad Poor Dad

2. The Millionaire Real Estate Investor by Gary Keller

In this book, the advice of over 100 millionaire investors has been collected. All with the aim of delivering a straightforward and easy-to-read guide on becoming a successful real estate investor. It’s very heavy on the motivational side of things. Those new to the industry and feeling a little apprehension about it will gain the courage to get started. The first sections help to dispel the many myths about real estate investment that stop people getting into it early. The rest lays down the habits needed for success and outlines the overall structure for a successful real estate business. One thing it lacks in is details on the more advanced stages of real estate investing.

The Millionaire Real Estate Investor

3. The Book on Rental Property Investing by Brandon Turner

The previous two books will have given you the right mindset for the road ahead. Now it’s time to start getting into the real meat and potatoes of creating profitable rental property investments. What you’ll find in these pages is real-world practical advice on how to develop an investment strategy, find great deals and finance your purchases. Those who are unfamiliar with the intricacies of real estate investment will find it invaluable as a guide as well as a reference book. While it does touch a bit on property management, it could use a little more detail. Fortunately, Brandon and his wife Heather Turner have a follow-up book; The Book on Managing Rental Properties, to tell you all you need to know on that.

The Book on Rental Property Investing

4. Every Landlords Legal Guide by Marcia Stewart

Becoming a landlord can be a tough undertaking. As such, you’ll want to know how to handle the trouble spots you’re very likely to encounter. The subject can make for rather dry reading, but it’s important to know all the legal issues landlords can face. The book is extremely comprehensive and covers all the major issues like handling security deposits, rejecting applications, subletting, evicting tenants and more. A helpful bonus is that it comes with a downloadable library of forums you can use for creating leases and other contracts. It won’t replace a good attorney, but it will be an invaluable source of info on legal issues. Having some basic knowledge will also help you to ask the right questions when you do need to consult a real estate attorney.

Every Landlords Legal Guide

5. Landlording on Autopilot by Mike Butler

Everyone wants the profits that being a landlord can bring, but not everyone wants the responsibilities that come with it. If you’re fearful of getting into real estate because of the thought of being a landlord, then this book will put those fears at ease. Here, Butler sets out his strategy for managing multiple rental properties with a minimal amount of work. The level of information here on how to deal with tenants is insane.  Among some of its best advice is how to set up a virtual office and management system, how to use incentives to encourage tenants to stay longer, a tenant move-out checklist and package, and a ‘welcome package’ for new tenants. An updated 2018 edition is now out which introduces new tenant-landlord friendly technologies that can make the rental experience easier for everyone.

Landlording on Autopilot

The post 5 Must Read Books for Aspiring Real Estate Investors appeared first on ELIKA insider.

Why You Should Buy an Investment Property First

Most people follow the typical financial timeline once they’ve finished with college. Land a job, rent their first apartment, get married, save enough for their first home, start a family, by a second home, etc. But what about buying an investment property first before your first residential home? Going the usual route does come with the benefits of building credit and allowing you to enjoy your early years. But if you’re a 20 something college graduate with a good job then waiting until you’re in your 30s or 40s may not be the wisest choice. The sooner you can get into the real estate game the better. Here’s why you should consider buying an investment property first.

Benefits of Buying While Renting



1. Capital Growth Potential

Perhaps you do want to purchase a home now but can’t afford the area you want to live in. Rather than settling for a home, you don’t want simply because you can’t afford anything better, consider putting your money into an investment property. This will get you into the real estate game early. Thus, allowing you to generate cash flow and build equity until you can afford the place you want. Do your research and buy a property in an up-and-coming neighborhood. That way you can sit back and watch as your property appreciates over time. The sooner you can buy the more you can expect to gain.

2. A Source of Income

As a rule, a primary residential property doesn’t make you any money. That’s because any profit made from the sale is generally put back into the next property you buy. But an investment property can make you money on two fronts. The rental yield you’ll earn from tenants and the profit from when you eventually sell. When managed properly, an investment property can more than pay for itself. So long as the cash flow is positive, the rental income you gain can cover any outgoing costs and your mortgage payments. This can make the property a long-term asset that will provide for you in the future. You may even be able to cover your rental payments as well. Thus, giving you financial independence to plan for the future.

3. Tax Exemptions

Since an investment property will be tied to your income, you can write off any investments you make in the property and claim deductions for interest payments on the mortgage. The same also goes for any depreciation. These tax benefits can bring in substantial savings, especially for high-income earners with large amounts of tax.

4. Gain Equity Faster

If your rental income is greater than your mortgage payments, then you can immediately start paying down the mortgage. This would allow you to build more equity then if you were just paying off the mortgage using just your wages. This can provide the leverage needed to buy your first home a few years down the road. Once you’ve leveraged enough to buy a home you want to live in you can sell the investment or hand on to it as an investment. This will allow you to qualify for more loan opportunities or put down a large down payment to secure a low-interest rate.

5. Flexibility to Move

If you’re just starting out in life, then buying a home can feel like a big commitment. That’s because it is. You’ll be tying up your money in the purchase and will be locked into one location until you sell. Most real estate agents would advise against buying a residential home if you can’t commit to staying put for a minimum of 6-8 years. Otherwise, the cost of the purchase compared to renting just isn’t worth it. But if you buy an investment property first, then you’ll still be free to move between states if needed for work.

Some Things to Consider

Even with all the advantages that come with buying a home while continuing to rent there are still some considerations you need to make. The biggest will be whether you can afford it. Many first-time buyers miscalculate how much homeownership can cost. Along with the monthly mortgage payment, there will also be maintenance costs that you’ll be responsible for. If the costs of an investment property plus your living expenses are consuming more than 50% of your income, then the investment makes little sense. Being a landlord can also be a tiring experience and comes with risks if you end up with tenants from hell.

Talk with your financial planner to see if purchasing an investment property is a good investment for your situation. It won’t be right for everyone so make sure you know what you’re getting yourself into.

The post Why You Should Buy an Investment Property First appeared first on ELIKA insider.