The 2013 Tax Hike. How Real Estate Ownership Can Lessen The Blow.

By Troy Corman, www.t2realestate.com

We hear a lot these days about the fiscal cliff facing American taxpayers in 2013 if the Bush tax cuts expire. According to the Tax Policy Center, 88% of tax payers will see their taxes rise. The only folks who will escape the increasingly desperate hand of our federal government will be the elderly. If we don't reduce the ratio of our entitlement debt to GDP, financial experts like Bill Gross, expect the US government to continue to print money which will ultimately lead to inflation and a declining dollar. Believe it or not, the "Bond King" just recommended that investors buy "hard assets" and gold.

Hard assets include real estate. Raw land has long been considered a hedge against inflation. In fact, signs of inflation are here now as some agricultural land parcels in the midwest have recently sold at record prices. Those that own income-producing real estate may benefit doubly from inflation. Inflation means higher prices on rental rates, too. While rents rise, monthly mortgage payment amounts remain fixed. The result? Rental income increases. Net operating income increases. Property value increases.

Of course, you don't have to own multifamily properties to benefit. A single family rental home with 20% equity will net you roughly $10,000 worth of tax deductions. If you're in the 25% tax bracket, that's an extra $2,500 in your pocket after taxes, instead of Uncle Sam's. Notable deductions would include property depreciation, mortgage interest, property taxes and any repairs.

You can also benefit just by owning your own home. Let's say you put 10% down on a $150,000 home. A mortgage at 3.5% on a $135,000 loan amount would result in a monthly payment of roughly $1,075 with insurance, property taxes, pmi and the monthly mortgage, all included. If the property taxes are at 2.5%, you could deduct $4,000 plus the mortgage interest of $5,069, or $9,069 in total deductions. That's an after-tax savings - money in your pocket - of $2,267 (25% tax bracket). Plus, you'll chip away $2,500 of what you owe on the home - instead of giving it to the landlord. Finally, if inflation sets in, a declining dollar should send your property value higher. Higher, baby!

The writing is on the wall. The Federal government will be forced at some point in the VERY NEAR future to either drastically raise taxes, continue to print money to pay on the debt, or a combination of both. Printing money is obviously the easier route for politicians. Inflation will likely be the result - it's the stealth tax most damaging to those with lower incomes and the middle class. The time to prepare, is now.

Troy Corman is the founder of t2 Real Estate LLC, a Dallas real estate firm providing specialized knowledge with a hands-on approach. Specialties include residential real estate brokerage, land and acreage, and commercial real estate services. Contact us today at 214.827.1200 if you need to sell, buy or get your DFW property leased.

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The Safest Way to Learn how to Invest in Real Estate.

By Troy Corman, www.t2realestate.com

There are countless books, blogs, radio shows and seminars about how to invest in real estate. It seems that most of the real estate teaching gurus know that it's easier to sell dreams of riches, than it is to actually sell houses.

The books, blogs, radio shows and seminars are EXACTLY where you should begin, but not end.
Success in real estate, like life, is all about action. Action, action, we want action - A, C, T..... I, O, N!

If I wanted to learn real estate investing in Texas, I wouldn't drop a few thousand dollars on a seminar if I were you. Instead, I'd invest a few hundred on the real estate investing training program taught by Lifestyles Unlimited. It's led by a charismatic leader, self-made multi-millionaire Del Walmsley. Originally out of Houston, they now have field offices in the DFW area in Los Colinas, and a central Texas office between San Antonio and Austin.

Lifestyles Unlimited teaches how to invest in both single family homes, and multifamily homes, AKA apartments.

The Lifestyles Unlimited investing strategy is exactly what I would recommend for the first-time or newbie real estate investor. The goal is to buy a single family rental home that is a distressed sale with an ARV, or after-repaired-value between $90,000 and $120,000. A distressed sale could be a foreclosure, short sale home, or a home that needs work. If you can buy and rehab a rental home for a total cost 25% below market value, you should be in great shape.

Ideally, the single family rental home should have 3 bedrooms and 2 baths with a garage. It shouldn't be more than 1,700' and it should be a one-story home. Larger homes and 2-story homes require more labor and maintenance costs.

Your single-family investment rental home should also be a 1980 build or newer. Often homes built in the 60s and 70s in Dallas and the DFW metro have outdated floor plans, aluminum wiring and cast-iron plumbing pipes. Also, our expansive clay soils can wreak havoc on the foundations of these older homes in foundation-challenging areas like Rowlett, Lewisville and Carrollton.

Another great benefit for real estate investors are the terrific tax write-offs. For a Texas rental home worth about $100K, a real estate investor's annual tax deductions would total roughly $10,000. This includes depreciation of the building cost, mortgage interest, property taxes, insurance, maintenance and advertising.

I would expect 2012 to be another banner year for real estate investing, especially in the major cities in Texas. Rental rates continue to climb with few vacancies. Out of towners continue to flock to Dallas, Austin and Houston in search of jobs and more affordable living. In fact, some economists predict the Texas population could double by 2030.

Buying and rehabbing investment real estate is how I started my real estate career. I've bought and rehabbed a dozen units since 2005 so I'd be happy to help, or just answer any questions to help you get started.

Troy Corman is the founder of t2 Real Estate LLC, a Dallas real estate firm providing specialized knowledge with a hands-on approach. Specialties include residential real estate brokerage, land and acreage, and commercial real estate services. Contact us today at 214.827.1200 if you need to sell, buy or get your DFW property leased.
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How To Use Your IRA To Invest In Cash-Flowing Real Estate Penalty Free.

By Troy Corman, www.t2realestate.com

With interest rates on CDs and bank savings rates close to nil, many are searching for ways to both protect and grow their money.

To me, it's a no-brainer. Investment real estate is on sale. Home mortgage rates are at or within a whisker of all-time lows. The demand for rental housing is EXPLODING, and rental rates are going through the roof. Folks are moving to Dallas and the other major Texas cities in droves. So why not take action?

If you have money in your retirement account, you can buy real estate to live in or to invest in, penalty-free.

Investment real estate can be bought, rehabbed and managed through an IRA custodian. There are a few around, and I used a company called PENSCO, out of San Francisco, but there are also Texas companies that do this as well.

Since the money is coming from an IRA, or Roth IRA, you cannot benefit financially from this transaction until you reach your retirement age. The down payment, closing costs, insurance, property taxes and repairs/rehab all have to be financed via your IRA. You are not allowed to co-mingle personal funds with your IRA funds in any fashion.

The monthly rent is to be paid to the IRA custodian, who will then deposit the monies into your IRA account.

The only drawback is that you won't get to take advantage of some of the great personal tax deductions that investment real estate provides, like mortgage interest, depreciation, repairs and insurance. However, there are plenty of distressed properties, foreclosures and short sales to choose from right now and an oversupply of renters. I don't see that changing much in the next year or two.

In most investments, you can never be exactly sure how it's going to turn out. For me, personally, I like to see a tangible building or lot that I can touch and feel. Also, I like knowing that I'm protected from catastrophic loss with property insurance, so my downside risk is small.

As Peter Lynch, the famous stock picker once said, "most people spend more time researching the refrigerator they're going to buy, than a stock they invest in". So please at least look into real estate investing, and protect you and your family's future from the corporate and political shenanigans that affect the stock market.

Let me know if I can help or answer any questions you may have. Best of luck!
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Troy Corman is the founder of t2 Real Estate LLC, a Dallas real estate firm providing specialized knowledge with a hands-on approach. Specialties include residential real estate brokerage, land and acreage, and commercial real estate services. Contact us today at 214.827.1200 if you need to sell, buy or get your DFW property leased.

• Connect with Troy Corman on facebook at http://www.facebook.com/troy.corman
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Five Ways Real Estate Can Reduce Your Taxes.

By Troy Corman, www.t2realestate.com

I don't know of any investment vehicle that can compete with the great tax deductions that rental real estate investors enjoy. Rental real estate investors get to deduct insurance, advertising, repairs, interest expenses, property taxes and depreciation of buildings and appliances. On a $100,000 home in a Dallas area suburb, tax deductions are roughly $10,000 on an 80% loan, just including taxes, mortgage interest, insurance and depreciation.

Below are a few additional real estate tips to help reduce your income tax liability.

1. Rent deposits should not be counted as income if you plan on deducting that money back to the tenants at the end of the lease.

2. On the sale of your rental property held for more than a year, you'll only pay capital gains - or 15%, versus the regular income tax rates (that are likely to head higher). You should also deduct commissions, title charges, recording and transfer charges, and settlement costs.

3. The costs of building your own property web site, as long as it's an ordinary and necessary advertising expense is deductible. Others include newspaper ads, signs, banners, and postage for direct mail.

4. Sell your homestead to yourself with a S-corporation. With this method, you are able to satisfy the requirement of occupying a home 2 out of the last 5 years to avoid paying capital gains. Say for example, you wanted to rent out your previous home to tenants for a long time period. Well, you could simply set up your own S-corporation and have it buy the home from you personally, and book the profits tax-free - as long as you've lived in the home 2 out of the last 5 years.

5. Refinancing your rentals. Once your rental home has appreciated in value or you've paid down the loan quite a bit, you can refinance the home at a higher loan amount, pay off the old loan, and put the excess cash in your pocket, tax-free. Of course, you'll have to pay closing costs associated with the new loan, but it's free income.

If you have multiple homes, you might consider refinancing into a portfolio loan. A portfolio loan would include multiple properties on one loan and could make it easier to qualify for additional fannie mae and freddie mac mortgages.

Lastly, there's never been a better to buy rental real estate. Foreclosures have subsided but are expected to swell sharply in late 2012. At the same time, mortgage rates are at an all-time low. Plus, ask any landlord, the rental business is booming! And real estate is a great hedge against a weak dollar and inflation, which is sure to surface sooner or later as Helicopter Ben has printed trillion$ with a "t". In fact, farm and rural land prices are setting new records in many parts of the country, right now!

Just remember, studying and learning will not get you to the promised land. You've got to take action. As they say, words without deeds is dead. I'd love to help you if I can, as I've been buying, fixing and renting Dallas area foreclosures since 2005. You can usually catch me on my cell at 214.690.9682. Best of luck!

Troy Corman is the founder of t2 Real Estate LLC, a Dallas real estate firm providing specialized knowledge with a hands-on approach. Specialties include residential real estate brokerage, land and acreage, and commercial real estate services. Contact us today at 214.827.1200 if you need to sell, buy or get your DFW property leased.

• Connect with Troy Corman on facebook at http://www.facebook.com/troy.corman
• Follow Troy Corman on twitter at https://twitter.com/#!/troycorman
• Reach Troy Corman at his google+ page