Simply Junior

Investing in real estate can be very expensive. Investors are expected to put down a larger amount when purchasing a property than do people who purchase a home to live in it. If you purchase a $100,000 house, you may have to put down $20,000 to purchase the property AND this does not include closing costs, taxes or insurance. Then you may have to spend money on top of this in order to get a property ready to be rented out. Investing can be very expensive which is why many people cannot afford to enter the business. The smartest move you could make is to get a partner.

A partner will have many advantages if you are investing in real estate. A partner can pay for ½ of the down payment costs and the rehab costs. This allows both of you to purchase a property with ½ of the money that you would have needed if you purchased the property by yourself. If you are short on funds a partner can be a great way to help in getting started in investing in real estate.

A partner will give you an extra set of eyes and a level of experience that they bring to the table. They are able to give input on how repairs should be done or how to handle collections of rents. Your partner may have a better idea on how to handle an issue that you would have had by yourself. A partner provides a shoulder to lean on when times are difficult. 

A partner will also help in completing the workload. Sometimes you may need to be at the property at a designated time period in order to meet with contractors or other workers. If you are out of town for business or for vacation, then your partner could be available to meet with the contractor. You could swap off with your partner and have assigned weeks in which one of you is responsible for handling all repairs during the week. 

Having a partner can have many advantages. The biggest challenge is finding a partner that has the right temperament and has a compatible personality that you can work with. If you are not able to get along then your partnership will end in failure.

I recently read this headline and thought is this a true statement? After pondering the question “Why is it smart to buy real estate now” I concluded that in fact this is a true statement. Here are the reasons why.

1. Prices of most homes have dropped significantly and in some areas as much as 75%. What this means is the only direction for prices going forward is up. Will prices of homes drop lower, perhaps, but just like trying to time the stock market, it is difficult to time the real estate market.

Here in California and specifically in Contra Costa County (where I live), prices data shows we hit the bottom in 2008 and have been going up ever since. Inventories in certain price ranges have dropped and we are seeing days on market decreasing to less than three months.

That doesn’t mean that we will see home prices skyrocket to unrealistic levels as we had in the mid 2000′s. But what it does mean, those in the know and are buying homes now.

2. Interest rates are the lowest they will ever be. They can’t and won’t stay in the 4% to 5% range forever and the prediction is that interest rates will start to go up on 2011. Looking back to 2003 thru 2007 interest rates were in the 6.25% range and actually crept close to 7%. At that time, everyone was excited because just a few years prior to this time period interest rates were up to 8.5%. So when the rates dropped under 7%, it caused a big stir in the market. So rates in the 4% range are unprecedented and should be taken advantage of right now.

Real Estate is an asset and a valuable one which savvy investors understand. There are investors in our area in California that are buying blocks of homes. It was unheard of to find homes in the $200K range, but there were plenty to go around over the past year to year and a half. These investors may rent them now, but look to reap the fortunes in the future – and probably not the too distant future – when prices go back up.

This is also a fantastic opportunity for the first time home buyer. You can get so much more home for your money and in areas that may have been out of reach for many.

If you are on the fence waiting for the right time, this may be the right time.

Tax credits are intended to benefit new home buyers. This kind of benefit allows a new home buyer a reduction of the tax he owes or entitles him to get a tax refund and is available according to policies of the state where the buyer resides and also through federal tax credits.

There is no fixed state tax credits for new home buyers as they are based on time limits and other details. If you intend to buy a new home, you can verify the kind of credits you may qualify for.

The government uses a tax credit program to encourage sales of new homes and improve the general economy. Used as a motivating factor for the real estate industry, these credit programs have been implemented to inspire involvement in this agenda.

Before you can avail of the federal tax credit program, you need to know for sure if you qualify. Taxpayers can enjoy the gains of these credits when they file their yearly federal tax return.

Tax credits used to be reserved for people who buy their homes for the first time, but newer versions of the program have been widened to enable more home buyers to take advantage of the credit benefits. The provision, however, is for the buyer to purchase a home within a given time period and that all requirements must be filled in order to qualify.

Other requirements of this expanded program include following the set limits to your modified gross income. There are also residency requirements providing that the home you purchased is your principal residence.

Depending on the tax credit program, there is more than one meaning to the term “first-time home buyer.” With the newest version of the credit, this phrase means that a person or his spouse did not own a home within three years before the qualifying home was purchased. The new program is also available to long-time homeowners under particular qualifying situations.

To qualify for tax credits under the First-Time Home Buyers’ Credit, you must have purchased or entered into a contract to buy a principal residence not later than April 30, 2010. A leeway of one year is extended to members of the U.S. military and some federal government employees who are presently serving outside of the United States, which means they can buy a home not later than April 30, 2011 and still qualify for the credit.

Delaying Your 401K Withdrawal

Ideally one should not withdraw their 401K retirement money until it matures, there arises some situations when you need the money most, more so due to the lack of any other option. This makes it important for the contributor to know the 401K withdrawal rules, which are mentioned below.

- Withdrawing before you attain the age of 59 1/2 years entails taxation of the distribution amount in addition to 10 percent penalty tax. Further, the IRA also mentions some exceptions to this rule. The beneficiary receives the retirement amount in time of untimely death; if you become disables.

- You are eligible for retirement benefits if you terminate employment voluntarily on reaching 55 years old. Similarly, amount can be withdrawn for medical expenses or for ‘qualified domestic relations order’.

- 401K withdrawal rules imply losing further investment opportunities because of untimely withdrawal. Even if you withdraw a small amount, there is less chance to replenish the figure as there is a limit on annual contribution mentioned in 401K contribution rules.

- Withdrawal rules also states that one must withdraw in some situations like job loss or divorce.

It is because of the strict 401K withdrawal rules, one must consult professionals beforehand to understand the implications of tax deductions and future investment. Experts suggest taking loan against 401K if need be. Then one needs to repay within 5 years and further the time period shortens if you leave your current employment.

Further, it is not necessary to withdraw the retirement amount immediately after maturity. Annually you are required to withdraw the Required Minimum Distributions (otherwise, 50% penalty is charged according to the difference between the amount at disposal for distribution and the amount withdrawn) and delay the final withdrawal till the following year after reaching 701/2 years old. There are further 401K withdrawal rules, which a professional can make you understand intricately.

Whether you have small business ideas you plan on implementing or you have been operating a small business for some time you need a focused business plan. It is your guide to success and without it you are planning to fail.

Your business plan needs to be a live document that is in constant development and is continually checked and updated, You must know if you are meeting your goals and if you do not continually check your business plan it can not work for you. Your business plan will allow you to make the needed changes to adjust to your small business growth or lack of growth.

The basic outline of a business plan is to detail the systems you will use and the task that are needed to accomplish your goals. By reviewing your business plan on a monthly basis at first you will be able to check your progress or lack of it. Once your business is up and running inn the direction you desire you may want to revise the time you review your plan. If your small business is progressing the way you planned and growth is steady checking your plan quarterly might be a good choice.

At first financial goals should be small. Although small they should be accomplished in the time frame you set. The initial small goals are as vital to your overall plan as the larger goals you have set for later dates. If your plan is working correctly in the early stages you will be able to determine if the complete business plan is achievable. Make sure that each goal is achieved as planned.

As in most aspects of life the best of plans can fail. You must ask yourself two questions. 1. Did you complete each goal in the time period you set. Were you able to achieve some of your goals but not all of them.

2. Were you able to use the systems you put in place and did they work as planned. Some of them will have met the goals you set while others did not.

Look carefully at your answers and analyze them. You will have systems that worked correctly and performed as expected. Keep those and continue working with them. The will also be systems that did not meet the goals you had set and the plans you had made. Look at these systems and find why they did not work.

You need to know why they did not work, if the system was flawed, were there steps in the system you may have missed. In answering those questions you can adjust future plans to accommodate errors that may have been made or discard the system completed and replace it with a new one.

A good solid business plan will continually improve and adjust. Adjusting and manipulating your plan for future growth will not only improve the effectiveness of your plan it will insure continued growth of your business.

Along with helping to build your small business ideas a business plan can give you confidence. A business plan is like a silent partner that helps keep your business on track.