investing Archives | Preferred Properties of Texas Home & Ranch Properties Stephenville

What to Look for in a Single-Family Investment Property

September 12, 2020 by chorton Leave a Comment

Investing in real estate is a wise decision that can often help you enjoy a relaxing and full retirement. To ensure you purchase the best real estate, though, you need to know what qualities make for a good investment property.

While any property can ultimately turn out to be a good investment if you have enough determination, there are certain qualities that will make your life easier when it comes to the return on your investment. Here are some qualities to look for in an investment property:

Location

Since you can’t change the location of the home you choose to buy, it’s important to consider this quality carefully. One important aspect to consider is the rating of the local school district since many young families move into certain homes simply to further their child’s education. You should also consider factors such as the proximity to mass transportation options, expressways, stores and other amenities that will help set your home apart.

Community Amenities

If a home is located in a community that offers extra amenities, that can only serve to make your property more attractive to potential tenants. Whether it’s a community swimming pool, playground, walking path or other unique option, single-family homes in these communities usually sell very well. Just make sure the community is vibrant and actually takes care of these amenities so that you fully understand what you’re advertising.

Multiple Bathrooms

While people have different needs when it comes to bedrooms, almost everyone wants at least two bathrooms in the homes that they consider. Therefore, if you want to own a property that’s easy to rent, you need to look for one that’s built with multiple bathrooms. Once you own the home, make sure to update any out-of-date bathrooms, as this will be one of the qualities that people scrutinize most closely as they tour your house.

Easy Upkeep

Most renters aren’t looking to have much maintenance to do when they move into their rental home; so, if a home has a large yard, you can expect it to be a harder sell. Likewise, if you volunteer to take care of all the maintenance, you could find that you spend all your time on the upkeep of the home if it has anything more than a small patch of grass. Therefore, look for yards that are big enough to provide a functional outside space without having a lot of fast-growing plants or other hard-to-maintain elements.

The prospect of the income that an investment property can provide can be quite tantalizing. However, since you don’t personally need this home for shelter, it’s important to stay patient throughout the process. By being selective about your investment properties, you’ll be able to have a quality portfolio that you won’t have to shift around too much as the years pass.

Looking to start investing in property but don’t know where to start? Start by calling Preferred Properties today! We are here for all your Real Estate needs!

Changes to 1031 Exchange Deadlines

July 15, 2020 by chorton Leave a Comment

From the pre-coronavirus world 15 was a significant date, representing the deadline to U.S. citizens and taxpayers to file federal income taxation. Nonetheless, in the present environment, that deadline has been pushed to July 15, 2020.

The deadline is Also important for people using section 1031 of the U.S. Internal Revenue Code, which permits capital gains tax deferrals on investment property sales. The IRC section entitled “Exchange of real property held for productive use or investment” enables traders to “trade” their original assets into “property of like kind.”

Prior investors, to the outbreak Involved in this exchange could have 45 days from when the land was sold to come across a substitute house. Investors will be asked to pay taxes to the capital gains in the initial sale if this replacement property was not discovered.

Together with the Effects of Covid-19, the IRS Extended that 45-day deadline for “in-flight” investors at the center of the exchange process whose first home sales dates dropped between April 1, 2020 and July 14, 2020. These investors must discover that replacement house.

So, before, an investor that offered Their advantage during the first week of April as a part of a 1031 exchange could have been required to find a replacement flat complex or duplex with mid-May. More than two weeks in the current environment that investor has experienced.

While this extension might seem Beneficial for 1031 exchangers, the position is a double-edged sword.

So, Most Investors, So Few Properties

1 issue faced by and Other 1031 exchange investors entails demand and supply.

Our company has Determined that there’s approximately $10 million worth of 1031 exchange equity seeking out replacement properties. This equity originates from a few sources. The first entails investors that may have closed on their properties in late May starting the timer to find a replacement advantage. The source includes investors whose deadlines are in mid-July, although whose first properties sold in April. These things have found their replacement possessions. What this means is investors competing for the identical supply.

Speaking of supply, the available Property assets for exchange or sale has not changed much. Due to the outbreak, availability has decreased. In 1 scenario, the source of duplexes and rental homes has diminished by 20%. Much like lack is evident amongst net-lease and other real estate properties.

Nevertheless, sellers, are worried to dispose of their real estate due to the recession. They are holding on to their own possessions, awaiting the sidelines for the economy. Out of the market, sellers are pulling their properties in different instances.

Investors fortunate Enough to locate replacement properties are currently discovering enormous ranges between their offerings and what vendors are willing to accept. When creating their offerings, leading to lower bids whereas buyers have been eyeing current financial uncertainties sellers are requesting for pricing. This disconnect is leading to deals and sales that is stalled.

Bank Blockages

We’ve found that approximately 80% of 1031 exchange trades need a mortgage to meet the essential requirements for a thing. The good news is that banks have been currently sitting on solid capital reserves. The terrible news is that accessing that capital is growing more challenging.

Now’s banks and financing Associations are up for their own elbows that are figurative at a glut of loan forbearance jobs and refinancing software. These associations are also working for businesses and individuals together with Covid-19-related applications, such as cash and the Payback Protection Program and credit aid methods. This means less time is available for lending employees to underwrite and issue mortgages that are original, leading to longer time frames for blessings. If the deadline is bypassed by those time frames, the creditors might be on the hook for further taxes.

Furthermore, strict lending requirements imply Investors need leading credit scores (with a FICO score of 700 for several lenders) to qualify for the mortgages. Lower agreements also have been a problem, meaning equity demands. Adding to the uncertainty is that creditors can retrade, or pull, up financing until closure.

Getting To The July 15 End Line

Having introduced several the Problems exchange investors are facing, here are a couple of solutions.

First, in case it has not happened Now’s the opportunity to start an in-depth search for this replacement property. Investors must also be realistic regarding making offers. It is a seller’s market, and now is not necessarily time for discussions in efforts to lower the asking price if a bidding does need to pen out to make sense.

Second, it is important that investors Open a dialogue with their creditors to ascertain their funding eligibility, and to understand the approximate time frame for loan application and approval.

Even though the 1031 exchange extension has Provided some breathing room, it’s important that investors never waste any additional time in discovering that replacement property or trimming down a loan to finance it. The final clock is ticking. Attempting to waive this timer may indicate a hefty tax bill as soon as the July 15 deadline rolls up.

Complete disclosure. The Information provided here is not financial or investment, tax advice. You Should consult a certified professional for advice concerning your specific situation.

Thinking about Investing You May Need to Consider Forming a Company

July 11, 2020 by chorton Leave a Comment

The quickest type of thing is a sole proprietorship. A sole proprietorship is not separate from its owner. This means that the owner of a sole proprietorship has the decision-making authority all, but they also carry risk. Since this type of entity is not separate from the owner, the owner has liability if the business is the subject of a litigation. The proprietor’s personal assets (home, car, private bank accounts, etc.) may also be subject to the lawsuit.
Basically all publicly traded firms are C-Corporations, while not all corporations are publicly traded. Because corporations are separate”people,” they have multiple ways to increase capital. Take out a loan or the two most common ways would be to issue stock. The Corporation may be the signer on the debt Since the Corporation is a separate person. A corporation’s shareholders are protected from personal liability for the financials and actions of your company. When there are lots of benefits of forming a Corporation, it may be expensive and cumbersome. Corporations follow regulations and need to make filings.

In deciding on the best arrangement for your farming business, each citizen needs to answer a few queries:
While a sole proprietorship is not different from its owner, a Limited Liability Company (LLC) is a separate legal entity. The biggest advantage of an LLC is that the members (owners) have limited liability if a problem arise. The members of the LLC aren’t personally liable if the company be sued, drop to bankruptcy, etc for the extent of their initial contribution to the enterprise.
LLC:

– What are the sources of funding?

– Do you want to need to pay taxes personally?

This guide should not be construed as, and should not be relied upon as tax or legal advice.

The Best Structure
– How big does this business expect to be?
– Exactly how many partners/members would you expect to have?

– How much money are you willing to invest to establish the business entity/
C-Corporation:
The advantages of a partnership arrangement are similar to the ones of an LLC. In a partnership arrangement, there are. General partnerships are typical when the spouses are involved with the company operations. They also have liability for the debts of the organization, because each spouse is concerned. A partner, on the other hand, is generally not involved in the day to day business and their accountability is restricted. The taxation of a partner & a limited partner is exactly the same: the business itself does not pay income tax. The venture will file Form 1065 and provide a Form K-1 to each partner.

Each circumstance is uniquely different, making it impossible to definitively say which thing is the”best.” We commonly see entities that have a member(s) involved in the business operations day to day setup as an LLC but taxed as an S-Corp to conserve on self-employment taxes. It’s also very common for farming operations to be considered a C-Corporation to possess numerous alternatives and limited customer liability. A C-Corporation can also present numerous different possible exit strategies and disposition options. Taxpayers who are beginning a farming business should consult to ensure they are choosing the company entity type which is most suitable for his or her requirements.

Partnership:

A C-Corporation is a separate legal entity from its shareholders (owners). One way is that it is a person that is separate . Owners of the corporation are called own stocks which establish their ownership interest, and shareholders. Businesses have an unlimited life, meaning that when the founder, CEO, or shareholder dies, the business does not dissolve. The Corporation continues. This is because stocks can be passed down to heirs.

One of the most frequent questions I receive as a tax pro is”What type of business entity should I choose?” Many business owners have been overwhelmed by this choice and don’t completely understand the differences between types of entities. This article will explain rules, filing requirements, and benefits of the chief type of company entities: C-Corporation, LLC, Partnership, S-Corporation, and sole proprietorship. Each decision is dependent upon the facts & circumstances of the proprietor (s), however a thorough understanding of each business type is critical in creating the suitable entity decision.

S-Corporations are a standalone small business entity which functions similarly to a C-Corporation. S-Corporations are a tax entity, not a legal thing. Taxpayers make their legal thing to be treated by elections as an S-Corporation for tax purposes. An S-Corporation issues investors with stock and includes a board of officers and directors. It provides the exact same protection. They aren’t personally liable for your S-Corporation’s actions. Contrary to C-Corporations, S-Corps could have up to 100 shareholders and one type of stock. Foreign shareholders aren’t permitted to own stock of an S-Corporation. While S-Corporations and C-Corporations differ in many ways, they’re taxed similarly to partnerships & LLC’s. Form 1120S with the IRS files. Form 1120S comprises a Schedule K-1 for every shareholder. The S-Corp doesn’t pay tax, which is another difference between a C-Corp along with an S-Corp. Instead, this S-Corporation’s shareholders pick up their part of the S-Corp’s income and pay the tax on their tax return, just like LLC or a partnership.

Sole Proprietorships:

Sole proprietors are required to pay self-employment tax on their earnings. For sole proprietors, there is not an employer paying a portion of these payroll taxes (Medicare, social security) on their behalf. While a sole proprietorship is easy to set up, the downsides are personal liability and extra employment taxes.

S-Corporation:

– liability do you want ?
LLC’s will also be allowed to elect to be taxed as either an S-Corporation or even a C-Corporation. See the section that follows regarding the advantages of an S-Corporation election.

LLCs are flexible in the way they allocate income to spouses and in how they pay and report income taxes. It follows that the LLC will file Form 1065 on or before March 15. Form 1065 will comprise a Schedule K-1 for all the LLC’s members. The members will report their share of the LLC’s income & deductions from Program K-1 on their tax returns. The LLC inside this scenario does not pay the tax upon the profits of the entity. Rather, the LLC’s members are responsible for paying their share of this entity’s taxes. In the majority of situations, members of the LLC are taxed on their proportionate share of the profits of their company to the quantity of money, not for a given calendar year. Both of these amounts can be different. By way of example, let’s say an LLC accounts $100,000 of taxable income on Form 1065 for 2019. Let us also assume Tom received $40,000 of distributions during 2019 by the business and is a 25% member of the LLC. Tom would pay tax on $25,000 of profits for 2019 and generally not. As mentioned, LLCs with a number of members are taxed as a partnership by default. This means there is not a individually required tax filing for your LLC and the income/deductions of the LLC are reported on the member Form 1040 Schedule C.

Another drawback to C-Corporations is they are subject to double taxation. C-Corporations create a separate tax filing due April 15 for calendar-year entities. The C-Corporation is liable for paying taxes because the Corporation is a separate individual. Unlike the other entity types, the business’ proprietors are not responsible for taxation on earnings that are annual. For a Corporation to cover shareholders, dividends must be issued by the C-Corporation. These dividends are not. Additionally, the shareholders will pay tax on the dividends they receive. This creates tax on earnings that are C-Corporation: that the C-Corporation pays tax on earnings, subsequently pays dividends that they can not deduct for tax, and then the investors pay tax.

A unique aspect of an S-Corporation is an LLC can elect to be taxed as an S-Corporation. This signifies is that instead of filing Form 1065 as a partnership, the LLC may file Form 2553 with the IRS to choose to be taxed within an S-Corp (and file Form 1120-S instead). Why would a LLC make this election? The advantage of an S-Corporation is that self-employment taxes can be saved on by employee-owners. Normal LLC members need to pay a 15.3percent self-employment taxation (which covers Medicare & Social Security) on their full share of the venture’s net income. By switching an LLC and paying an employee-owner a reasonable salary, the S-Corp can deduct the company portion of Medicare & Social Security taxes. The surplus money earned by the is not subject to self-employment taxes. Because of this the self-employment tax advantages, S-Corp’s are very common tax arrangements.

SEE PREFERRED PROPERTIES OF TEXAS FEATURED LISTINGS

How To Be a Part-time Landlord

June 22, 2020 by chorton Leave a Comment

You’d think that the phrase “part-time landlord” would be an impossibility. Any real estate investment has to be a full-time job, right? But it can be done. How? Let’s look at some of the work involved — it’s important to know what you’re signing up for:

Finding a property is of critical importance. Make sure any work on it aligns with your ability to fix it yourself or pay to have someone else do it.
Preparing the unit and every time a tenant departs, these items need to be visited and revisited: carpet, paint, window screens, deck stain and lawn maintenance.
Advertising for new tenants and then showing the home to prospective tenants.
Completing legal agreements.
Collecting deposits.
Taking care of utilities.
Hassles, which can include broken pipes, clogged drains, broken garage doors, pets and roommate issues.
Vetting renters to avoid deadbeats and vandals. To do this, use credit and background checks.
Setting and enforcing rules.
Managing equal housing rules.
Dealing with insurance and liability issues, including those of swimming pools, icy paths and keeping the place up to code. You’ll need landlord insurance — your regular homeowner’s policy won’t be sufficient.
Understanding and observing local landlord-tenant laws.
Keeping proper records for tax and legal purposes.

With the rise of Airbnb allowing you to rent out a room in your home, many are considering becoming a landlord in a bid to earn extra income. If you have the space or a second home, and local laws allow it, it seems like an advantageous situation.

There are benefits and risks to becoming a part-time landlord. Maintenance and upkeep have to be taken into account, but becoming a landlord can be a great choice for generating wealth. However, in order for this to happen, you’ll need some support. Here are a few ways to get support for your new venture:

Turn to property management companies to do a lot of legwork for you — from locating a property to refurbishing it — for a fee, of course. The management company can handle the day-to-day tasks.
Find a real estate attorney to help you navigate potential issues that you may encounter. You have to be up on such issues as discrimination, safety deposits, late rent, lease agreements and repairs.
Consider the legal issues. You can make the business into a limited liability company, so your name doesn’t appear on leases. Twenty-one states have adopted the Uniform Residential Landlord and Tenant Act as the basis for their local laws. Restrictions on security deposits are mostly derived from state law.

Time invested in picking good tenants can be the difference between becoming a landlord who’s successful and one who’s constantly stressed. You may be tempted to take shortcuts in screening tenants, but there’s plenty that can go wrong.

To avoid such headaches, be clear about acceptable payment methods for rent: check, money order, cash, credit card or whatever. Consider including penalties for late payments in your leases — they’ll provide you with leverage if a renter gives you continuing problems.

The result of a bad tenant has a huge ripple effect on your time and money. You have to go through the removal process, fill the space again and make sure your property’s ready for the next tenant.

Even interest rates can affect your business. When they fall, it’s often cheaper to buy than rent, so demand for your unit(s) may drop. Lowering the rent to remain competitive can put a cramp in your ability to make a buck. Researching locations and tenants are essential.

How to Choose the Right Type of Barbecue Grill

June 19, 2020 by chorton Leave a Comment

Lots of people enjoy the flavors of grilling over other types of cooking. It’s a tried and true method of getting juicy and deliciously cooked food. If you’re thinking of purchasing a grill but unsure about the best option for you, you’ve come to the right place. Keep reading to learn about the different types of grills on the market right now and which one will deliver you the performance you’re after. Although many think of grilling as a summertime activity, you can grill 12 months a year in much of the country.

Gas Grills

One of the best outdoor barbecue grill setups you can use to improve your home is a quality backyard gas grill. Widely popular and designed to run on propane, this type of grill can also be converted quite easily to work on natural gas. If you want to fire up your grill on short notice and not worry too much about food preparation or clean up, this is the perfect solution for your home.

Electric Grills

An electric grill is especially convenient since a lot of units can be run both outside and indoors. Safe to use in areas with strict fire regulation codes, electric grills can be a great idea when you don’t want city laws to prevent you from having a great time in the summer.

Charcoal Grills

If you long for that genuine, smoky and delightfully flavored barbecue, consider getting a charcoal grill.

These barbecue grills run on charcoal briquettes and are considered to be healthier than regular gas grills. You do need a bit more skill to use it, and the price and maintenance costs may be higher than gas or electric outdoor grills, but it’s well worth it, especially if you add a firebox to cook delicious meat at lower temperatures.

All these options are great depending on your budget and lifestyle. If space is an issue, a portable grill running on propane or charcoal will help you minimize the space needed for a fun outdoor barbecue.

Should You Go for Built-in Grills?

A built-in model can be very costly, but totally worth it for those planning to grill all year round. What’s more, it can increase your home’s value considerably. Portable units are a lot more affordable, but they don’t provide the same level of convenience and elegance. An in-between option for those who don’t have the budget for a built-in is to go for a freestanding island, which is cost effective and still comes with a lot of features.

All in all, there’s really no one best grill—it all depends on your specific situation and needs, so do a little research and find the grill that is perfect for you.

Is This Your Situation: Looking for the Best Home in Your Budget?

June 17, 2020 by chorton Leave a Comment

You’re neither rich nor poor, and you’re ready to buy your first home. You look around—all those homes on the market, but they all seem priced out of reach.
Cheer up. You’re not alone. With some solid real estate counseling and some help from your lender and/or sellers and others, you can not only get your foot in the door, you can own the house too. It just takes some creativity, a few inside tips and a bit of homework.

Examine Your Goals

How ironclad are your dreams? Can your dream of a formal dining room or a hot tub on a redwood deck be postponed? Must you have a two car garage? Lowering your expectations and starting out modestly (in decent housing that meets your needs) can lead to owning those dreams in time.

Start Saving

Get your priorities straight. Without taking all the fun out of life, what’s more important to you, weekends on the road and dinners out or stashing away at least part of your down payment? (Most lenders want to see that some of the money you invest is your own.)

Keep Your Credit Record Clean

When you go mortgage shopping, lenders will be looking over your payment records. Don’t let a late-payment habit rise up to haunt you. (Reformed late-payers can request creditors to erase the blots on their records—for a small fee).

Look for Financial Assistance

Your parents and other relatives may be able and willing to give you gifts that will get you over the down payment hurdle. (Loans from relatives will be counted as debts and will lower a number of mortgage payments your lender will allow you to carry).

Get Some Co-Signers

Parents, relatives (and unrelated investors) can either co-sign a loan or share the ownership of your home. With shared ownership, you’ll be the resident but your co-investor may share specified expenses (plus tax advantages and equity accrual) and will share in your profit on the sale.

Shop for Mortgage Loans

Qualifying for a mortgage can be managed in several ways to fit your down payment and monthly payment abilities. FHA and VA loans come with low down payment requirements, and lenders offer ARMs (adjustable-rate mortgages) at initially low-interest rates. (Look for an ARM that can be converted to a fixed rate should rates drop).

Consider Creative Financing

Also, new-home builders and other sellers may offer buy-downs that lower your interest rate in the first few years of a mortgage, thereby making a home more affordable. Balloon loans (if they have at least a 7-year term) can often bridge gaps and give you time to accumulate equity and/or cash to pay them off. Home sellers can sometimes help you financially—with a lease-purchase arrangement or a take-back loan. Lenders and sellers are constantly creating new ways to help buyers buy homes. We can help you check them out.

Look at Starter Homes

Once freed of the vision of “instant dream home,” you can look for housing that will start you on the equity-building path to realizing your dream. Condominiums and townhouses are often much less expensive than detached houses and buying one now can serve well as a stepping stone.

Search for Bargains

If you’re handy with tools, a fixer-upper home gives you the opportunity to buy inexpensively. Fix it up and in a few years, trade up. If you’re adventurous, auctioned properties in suitable neighborhoods can also be good values. If you don’t mind a longer commute to work, outlying areas frequently offer homes at lower prices than those found close to town.

Whatever route you choose toward buying your first home, keep cool. It may take time to find the right combination of elements, but there is a home out there for you and a way to obtain it. We’ll be happy to help you create your path to its door.

Call or email us today to help you discover the best home that your budget can buy.