Preferred Properties of Texas

The Preferred way to buy & sell real estate for you

The Cost Of The Home Is More Important Than The Price

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Housing inventory is at an all-time lowcost. You will find 39% fewer houses available today than at this time this past year, and buyer demand continues to set records.

Whenever there’s a shortage in supply of an item that is in high demand, the cost of the item increases. That is exactly what’s going on in the real estate market at this time. CoreLogic’s latest Home Price Index reports that values have risen by 5.5% over the last year.

This is great news if you’re planning to sell your house; on the other hand, as either a first-time or repeat buyer, then this might instead look like upsetting news. Nevertheless, buyers should understand that the cost of a house is not quite as vital as the price. Let’s break it down.

There are lots of factors that influence the expense of a home. The two major ones are the cost of this home and the interest at which a buyer can borrow the funds necessary to buy the home.

Last week, Freddie Mac announced that the typical rate of interest to get a 30-year fixed-rate mortgage has been 2.87%. At this time this past year, the speed was 3.73 percent. Let’s use an illustration to see how that gap impacts the true cost of a house.

Assume you bought a house last year and took out a $250,000 mortgage. As mentioned previously, home values have increased by 5.5% during the last year. To purchase that same house this year, you would need to take a mortgage at $263,750.

The difference in monthly payments based on today’s low mortgage rates.

That’s a savings of $61 monthly, which adds up to $732 annually and $21,960 over the life of the loan.

It’s a great time to sell your home cause of low inventory and buyers ready to buy and  a great time to buy a home cause mortgage rates are at historic lows.

Contact our office today to get you started on the path to your dream home!

Three Ways You’ll Win When You Buy A Home

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There are many great reasons to purchase a house, and within the last year, we have realized a lot of them than we ever believed possible. If you’re a first-time homebuyer, acquiring a house of your own may provide you a greater sense of security and achievement in a time that’s largely uncertain. If you are a repeat buyer searching for your dream home, making a move could provide you the space or characteristics you need to find more success and happiness in a fresh normal lifestyle. Whatever your motives are, here are 3 reasons why getting a homeowner today might help you win big in the long term.

1. Buying a Home Is a Great Investment
Several recent reports indicate that real estate remains a great investment, topping other options such as stocks, gold, bonds, and savings. Why? Real estate makes it possible to construct equity, a type of forced savings which develops your net worth.

2. Mortgage Interest Rates Are Low
The Primary Mortgage Market Survey from Freddie Mac indicates interest rates to get a 30-year mortgage have fallen as November 2018 if they struck 4.94%. In their most recent prediction , Freddie Mac expects rates to stay low, leveling out to an average of 2.9% in 2021.

When you get a home in a low mortgage rate, it is going to affect your monthly mortgage payment, giving you the chance to probably get more house for your money.

3. Investing in Your Future Pays Off
There are a few tenants who have not purchased a house yet because they’re uncomfortable taking on the obligation of a mortgage. What many tenants do not realize, however, is the monetary power of equity.

As a homeowner, your monthly payment becomes a kind of’ ‘forced savings’ you can reinvest later in life as you see fit. You can use it in many different ways, like to finance a loved one’s schooling, proceed up to a bigger home, or begin your own business. As a renter, you are actually growing your landlord’s equity rather than your own.

If you’re prepared to put your monthly obligations to function for you and take actions toward these dreams and goals, buying a home may be the way to go, especially as rental costs continue to rise.

Buying a home sooner rather than later could lead to substantial savings and long-term financial growth. Reach out to Preferred Properties of Texas today to determine if homeownership is the right choice for you this year.

House Renovations To Cut And Not To Cut

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Renovating your house can be thrilling — and daunting. If preparing your house for a renovation, take some opportunity to consider each step of this procedure, out of your budget into the design and material choice, deadline and workmanship.

A thoughtful and home improvement renovation may add substantial value and pleasure to your home. Conversely, a poorly planned or cluttered renovation is going to wind up costing you with not adding monetary value to the house .

Do not discriminate: priority rooms and regions.
Do not discriminate: basic features of the house.
Do not skimp: quality craftsmanship and contractor.
Save: manufactured stone vs. organic rock.
Save: unique style options.
Save: hard-wired tech updates.

If you don’t have an unlimited budget, you need to set your priorities. There are always rooms or regions of the house that require more attention and financial resources compared to many others. Focus on renovating the rooms in which you spend time or which can bring the most pleasure.

If your plan is to reestablish in stages, give those rooms or areas your entire focus in order of priority, instead of attempting to do little things here and there in every one. In the end, it is going to be rewarding to have the whole room or area completely finished. When you’ve got more cash saved, you’re going to be prepared to proceed to another area of attention.

If you fall in love with a house, there is always a motive. It is normal to get wrapped up in programs to enhance the total house, however in doing this, you can do more damage than good and detract from the basic”bones” — that the design , finishes, qualities or attributes.

For example, if an apartment or home currently has restricted closet space, do not reconfigure the design in a means which will impede the prospect of storage. Or if a house has a gorgeous stream of present room, do not disrupt it by dividing out a lot of smaller chambers which will enable you to eliminate the graciousness of this room.

Skimping on quality stuff rather than employing a high-end contractor is only going to cost you more in the long term. Should you invest in top notch fittings, materials and finishes, and employ a top-notch and advocated contractor, then your renovation will endure the test of time. Nobody wishes to deal with needing to re-do cluttered work or fix items which have begun to fall apart soon after placing precious time and money to a project.

If you are working on a strict budget and understand that you are the sort of person who’s put on having rock countertops, save a few bucks by utilizing a fabricated synthetic rock instead of marble. These are less costly and a lot stronger, which will ultimately avoid the need for replacement in the brief term.

Save: Unique Style Alternatives
Constantly keep the prospect of resale at the back of your mind as you’re making conclusions about a house improvement, even in the event that you would like to hold the house for several years to come. If a renovation is overly specific in decoration or design and is intended to just suit your particular requirements, you might encounter issues when you opt to sell.

The pool of possible buyers will probably be considerably reduced if your home’s insides are too heavily remodeled or decorated into a very specific flavor.

While using a smart house can make sure daily tasks easier, it is not necessarily a requirement which many homeowners must prioritize. In reality, some folks are easily overwhelmed by smart house systems if they are not tech-savvy themselves. When it’s the only real method to control the lights, then you may get an issue if you go to market your house.

Moreover, technology gets obsolete so fast because the most up-to-date and greatest innovation is going to be introduced into the industry shortly after you spend money and time in a wise home system. By way of instance, don’t squander your resources on hard-wiring for speakers that are overburdened. Sonos speakers work equally well, and if they split, they are a lot easier to substitute. You will also have the ability to take your favorite parts of gear with you once you move.

But, certain things are well worth splurging on, for example concealed wiring to get TVs and hooking up the AC system into a controlled smart thermostat such as Google Nest, that may also be controlled by means of a smartphone.

Whether you are upgrading your new house to reside in or remodeling it prior to selling to make a greater gain, keep this in mind and you will not just save yourself some cash but a couple of headaches too.

Remodeling your home to sell? Give our office a call and we can help you with the selling process.

 

Qualification For Agricultural & Wildlife In Texas

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Owning your own slice of property in the state of Texas has its own advantages and can be quite rewarding. With 97% of this country independently owned and handled, landowners have made use of the land in several of various ways through agriculture creation and appropriate wildlife management. Possessing property does come at a cost as land tax increases together with the more property holdings you possesses. For property owners who use their land for agriculture functions like crop production or to enhance native wildlife populations through direction, Texas has provided evaluation approaches to help levy against high property tax prices.

Historically many rural lands in Texas weren’t viewed to hold much significance unless utilized to offer some source of revenue to the landowner and the market. Throughout the 1800s and early to mid-1900sland in Texas was mostly utilized for agriculture production like livestock grazing, timber harvesting or large-scale crop production. Through these approaches property owners could make income from their property holdings. Simultaneously, the nation saw the market thrive in the aftermath of large scale agriculture usage, so much that Texas started providing land tax breaks to landowners which using their land for agriculture generation for example cattle grazing or farming.

Landowners and ranchers that utilized grazing approaches tended to overgraze landscapes to boost their cows generation. Farmers which were in big scale crop production saw elevated quantities of erosion and mineral depletion in areas after harvest and planting. To decrease the adverse effect on ecosystem sources out of agriculture production, the country presented another kind of tax exemption to lure landowners to maintain natural resources and wildlife species.

There are two different types of appraisal approaches in Texas that permit for tax exemptions for land owners. This sort of evaluation is suitable to landowners using their territory full time exclusively for agriculture production and the landowner’s income comes out of the farming enterprise. Because of this, the country introduced a more proper tax break that landowners have taken good advantage of. The OSL is based only on the principal usage of this property and does not have any thought for the landowner’s income or job which makes it far more attractive to landowners searching for tax relief. Additional in 1995 Texas passed bill HB 1358 which included pest control to the record of qualifying agriculture clinics for real estate tax relief under Open-space evaluation 1-d-1. Most property owners in Texas that make the most of tax exemption collapse beneath the Open-space evaluation 1-d-1, either via agriculture evaluation or wildlife.

To qualify for OSL particular tax assessment based on wildlife management use, there are a couple of requirements that have to be fulfilled. The first is that the land should have been capable and assessed as open-space agriculture property usage the calendar year before conversion to wildlife management use. In case the property isn’t currently capable under the open-space agriculture land use evaluation, the landowner may make an application for eligibility by submitting documentation behind agriculture usage of their land five from their previous seven decades. Individual use suggests that wildlife species have to be used for meals, medication, diversion through active pursuits such as hunting or photography or through passive use for example possessing land and properly managing the wildlife sources. The OSL predicated on pest management also needs the land to submit a wildlife management program to the primary tax appraiser from the county that it resides. The wildlife management program should coincide with the management practices employed on the designated land and which also match the urge practices for this particular ecoregion summarized in Texas Parks and Wildlife Department Comprehensive Wildlife Management Plan Guidelines.

Ideas To Cover Your Next Down Payment On A Rental Property

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Whether you are purchasing your first house or your 14th, try the following ideas to create property investing less expensive.

1. HELOC or RELOC
While homeowner mortgages do not typically permit you to borrow any portion of the deposit, investment property creditors do normally let it, which opens up many opportunities for borrowing your down payment. In case you’ve got a house equity credit line (HELOC) in your main residence, you are able to draw it to supply down your next payment. It makes for a flexible means to borrow and repay the debt on your personal schedule.

Many landlords do not know they can also take out HELOCs against leasing properties with equity. I call those”RELOCs,” but I am not sure anyone else can. Irrespective of the real estate type, know you could tap present equity not merely to fund property updates , but in addition to pay down your next payment.

2. Cross-Collateralize Present Properties
A different way to tap current equity would be to place up another property for security. The lender places a lien on the two possessions instead of collecting a deposit.

It works like this: Suppose you own a home worth $100,000, which you only spend $40,000 on. You wish to purchase an additional $100,000 rental home, but the creditor asks for a 20% ($20,000) down payment. Rather than coughing up $20,000, you provide to allow the creditor cross-collateralize your current home with $60,000 equity within it.

They place a lien against your new house and the old home with equity and give you the entire $100,000 purchase price. That versatility is part of everything you pay for if you take a hard cash loan or a leasing home mortgage out of a portfolio lender.

3. Utilize Unsecured Business Credit Lines and Cards
Do not have additional properties with equity? No sweat. As a property agent with an LLC, you are eligible for company credit cards and charge lines. These lenders may review your organization credit, but just as often they concentrate on your own own credit, especially in the event that you have not established company credit however.

I have used credit cards to fund a home purchase and renovations before. It is possible to purchase the stuff straight on credit cards without a penalty, and lots of builders now accept credit cards, possibly with a two – 3% convenience charge. A 3 – 4% cash advance fee is usually more affordable than the overall fees billed by hard money lenders or leasing property mortgage creditors.

4. Seller Financing
An oldie but goodie, you could always attempt to negotiate a seller carryback, also referred to as a seller-held next mortgage.

Say your rental home mortgage lender needs a 20 percent down payment. Then you approach the seller and request them to offer you another mortgage to pay any or all of itand you generally pay it back in a couple of decades. You avert a deposit, they score a source of passive income and also get some interest during the upcoming few decades. Win-win. And for this matter, you may even attempt to negotiate whole seller funding as your mortgage.

5. Tap Into Your Roth IRA
One of the many overlooked advantages of a Roth IRA is that you may draw gifts tax-free and penalty-free, any moment. This makes it the most flexible retirement accounts available.

Obviously, when you raid your Roth IRA, you miss out on potential tax-free compounding. However, by utilizing the money to purchase rental properties, you may potentially score much higher yields, greater compounding and also the chance to retire early on rents. To put it differently, it might wind up serving the exact same function, with much quicker results.

6. Partner With Deeper Pockets
As you prepare to purchase your first house or 2, it will help to locate a senior spouse. This is somebody who can point out common pitfalls and errors made by novice traders.

And, ideally, somebody who can help pay some of their deposit. Just understand that in the event you do not bring expertise or even money to the venture, you are probably going to have to do the lion’s share of their labour to pull your weight.

7. Assessing an Owner-Occupied Mortgage
Lease property mortgage lenders demand a bare minimum of 20 percent, regularly 25 – 30 percent. This could add up to a huge quantity of money, for assets costing $200,000, $500,000, occasionally even $1,000,000 or more.

But homeowner mortgages need as few as 3 percent down; cases comprise Fannie Mae’s HomeReady loan application , Freddie Mac’s Home Possible program and FHA loans’ famous 3.5percent down payment. Obviously, owner-occupied mortgage loans need you to really occupy the house. Luckily, you have a lot of alternatives to fulfill that condition while still raising your rental portfolio.

The traditional method entails housing hacking: purchasing a duplex to rent 1 unit and reside at another –or even a triplex or fourplex. Residential mortgage loans permit up to four components. You may also use the rental income in another device (s) to assist you meet the requirements for the creditor’s income requirements.

On the other hand, the choices do not stop there. You could move in the property for a single year–that satisfies lenders’ occupancy demands –then proceed out, maintaining the house to get a rental. You can achieve this with single-family houses, or using multifamily properties which you home hacked.

In reality, you may even home hack through your adult kids to ensure they meet the occupancy requirement as opposed to you personally. Since you comparison store lenders, inquire about”kiddie condominium” loan plans in which you associate with your adult kids on household purchases, and they proceed in as you remain comfortably nestled on your house.

Last Ideas
You’ve got loads of alternatives to fund rental properties–and just as many to pay your deposit.

The quicker you construct passive rental income, the less you need to rely on your own nine-to-five job. Since you are able to pay more of your living expenses with lease income, you approach financial freedom. Once there, functioning becomes discretionary, and you’ll be able to devote the remainder of your life doing, well, anything you desire!

Looking for investment property? Check out our website or contact our office to speak with an agent who can assist you in all your real estate needs.

Benefits of Tax Deferred Exchanges (IRC Section 1031)

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Exchanging Real Property - IRC Section 1031

Building estates with PRETAX dollars.

There is talk in Washington, DC about eliminating the Internal Revenue Code Section that allows for “Tax Deferred Exchanges.”

“Don’t it always seem to go, that you don’t know what you’ve got til its gone…”

Benefits of Tax Deferred Exchanges (IRC Section 1031)

Why exchange real property?

To save taxes, yes, but said more succinctly, to build your estate with pre-tax dollars.

Using proper exchange techniques results effectively in interest free loans from the government. Other reasons to exchange include:

Increasing depreciable basis by acquiring property encumbered with a larger debt.

Acquiring sheltered income by exchanging for unimproved land for improved property.

Acquiring property without cash, when sales may be impossible.

Consolidating assets by exchanging many properties for one larger property.

Receiving nontaxable cash by exchanging and refinancing after and independent of the exchange.

Diversifying holdings without tax consequence.

Example of the Advantage of Building Equity with “PRETAX DOLLARS:”

Sale Price: $150,000

Adjusted Basis: $ 50,000

(Original Cost, plus Capital Improvements, minus Allowable Depreciation)

Recognized Gain: $100,000

Tax Bracket: 30% (for purpose of example)

Capital Gain Tax Paid to the IRS: $ 30,000

Balance to invest in next property: $70,000

Leveraged 4 to 1 results in a purchase of a $280,000 property

10% annual appreciation results in $28,000.

If you structured the sale in accordance with section 1031, and did not have to pay the taxes at that time (Deferred Taxes), you could invest the entire $100,000 leveraged 4 to 1 and purchase a $400,000 property.

At 10% appreciation, your increase in equity is $40,000. Multiply this $12,000 equity buildup over a 20 year investment horizon and the result is substantial.

Don’t let Congress take this tax benefit without saying anything…

“Don’t it always seem to go, that you don’t know what you’ve got til its gone…take Paradise, put up a parking lot???”

Looking for land to invest in Contact one of our Realtors at Preferred Properties of Texas

Search Texas Farm & Ranch Land for your next 1031 investment

Preferred Properties of Texas

(254) 965-7775|Contact Preferred Properties of Texas