UTAH REAL ESTATE INVESTOR

President Obama’s administration has helped to create an $8,000 tax credit for first time home buyers. Eager lenders are trying to capitalize on this tax credit by creating a “bridge loan” based upon the buyer’s eligibility to receive the credit. Essentially the buyer would borrow 100% of the money to purchase their home. The lender would provide a short-term $8,000 loan to the buyer for their down-payment which would be repaid as soon as the buyer received their $8,000 tax refund the next year. This would provide first-time home owners a great way to get into a home today (at record low fixed-rate mortgages) using their tax credit from next year. However, there have been some issues with the bridge financing and HUD.

According to a recent news article in The Arizona Republic, “HUD says bridge-loan program hasn’t been killed.” There are still some details to be worked out before this program becomes official but it will be a fantastic program to help first-time home owners utilize their tax credit to buy their first home and capitalize on the record low interest rates of today’s market.

• make less than $75,000/year ($150,000/year if a married couple)
• it’s the buyer’s primary residence
• financing is a fixed rate 30-year (or less) mortgage
• and apply before the grant money has run out

There are some other requirements for the grant. Please check the official website for more information. As of this posting only 520 grants remain (of the original 1,600 grants available).

The chances of nabbing a grant from the state worth $6,000 aimed at those buying new homes in Utah are dwindling.

Since mid-March more than 1,000 Utahns have qualified for a grant under the state’s Home Run program, which originally had 1,600 grants available.

The remaining 600 are expected to go quickly.
(Read more)

Rates on 30-year mortgages inched downward this week, remaining below 5 percent for the tenth-consecutive week and just above record lows.

Mortgage financing giant Freddie Mac said Thursday that average rates on 30-year fixed rate mortgages dipped slightly to 4.82 percent this week, down from an average 4.86 percent last week.

The all-time low of 4.78 percent was recorded on the weeks of April 2 and April 30.
(Read More)

In order to be a “real estate professional” under the law you must spend 50% or more of your time actively managing your properties AND perform 750 hours or more of your activities spent on your real estate activities. IF YOUR QUALIFY, then you can take additional passive activity losses against any type of income, including your spouses (BIG BENEFIT).

TIP: Being a licensed Real Estate Agent does NOT make you a “real estate professional” under the tax laws. This is one of the greatest myths and pieces of bad information that real estate investors get given to them that I see over and over again.

WARNING: The IRS is auditing tax returns that have selected the “real estate professional” box in order to take more of their rental losses. Thus, you must document all your activities spent managing your real estate investment properties and rentals. Keep emails, letters, a log-book of calls, etc…You as the taxpayer have the burden of proof and the IRS is making this classification a priority on audits.

This information has been provided by the tax professionals at Kingman Winslow LLC.

With a little discipline and patience, you can make your journey to abundance and personal fulfillment a downhill flow instead of an uphill struggle. The key is to use the “overflowing buckets” concept of creating financial independence.

Picture your life as a five-step stairway, with you standing at the top and Fulfillment waiting for you at the bottom. Complete this picture by placing a large, empty bucket on each of the five steps and labeling the buckets from top to bottom:
Survival, Financial Stability, Quality of Life, Financial Security, Financial Independence. Your objective is to fill each bucket with dollars as you progress down the stairway, so that when one bucket overflows, it begins to fill the next bucket.

Survival:
The Survival bucket is how you can pay for your basic needs of food and shelter. Once you’ve taken care of these, any extra money flows into the second bucket, which is Financial Stability.
Financial stability is the ability to keep solvent in the event of sudden, unforeseen changes and emergencies in your life – insurance against catastrophic loss.

Financial Stability:
To be financially stable, you must have an emergency fund in a savings account equal to a minimum of three month’s income, and preferably six months’ income. You also must have adequate permanent and transferable medical insurance that remains in force, regardless of your employment status, as well as life insurance, including some whole life, in addition to term, that accumulates cash value and has a level premium
Another critical component of financial stability is non-cancelable, individual permanent disability income insurance, equal to at least 70 percent of your monthly pay, but preferably 100 percent. One of the greatest financial blunders most people make is to forget that the possibility of loss of income resulting from an injury or illness is much greater than that of loss of life. Not only are you without income when you are sick or injured, you also do need to be cared for during that period, and the expenses continue even though you’re not able to work.

Quality of Life:
When bucket two is filled with contingency dollars for your financial stability, you can sit down with your inner circle and determine what standard of living will give you the quality of life you want: your home, family, education, recreation, possessions, etc. These considerations should be budgeted with a monthly amount of savings, however small.

Financial Security:
If you can fill your Quality of Life bucket, a little extra discretionary income will trickle over the lip and fall into bucket four. This is the Financial Security bucket. Financial security is defined as the amount of assets that will give you the amount of after-tax income you need to maintain the standard of living necessary to have the quality of life you want, at some predetermined point into the future, without having to depend upon day-to-day employment.
Less than 10 percent of Americans ever fill this bucket. Your goal is to be in this 10 percent. It is not based on salary. Many individuals in the top income brackets never reach financial security. Many middle-income Americans do. To get in the top 10 percent, you need to put 10 percent of your spendable into an appreciating investment fund every month, just like a mortgage payment.

Financial Independence:
The fifth and final bucket is Financial Independence. This is achieved when you beat the target date you set for retirement. The object of creating personal assets is to be financially independent of having to work, while you still have your health and are still young enough to enjoy those assets. Many individuals set their financial security target date at age 65. Using compound interest over time, you can beat your target date and set yourself free.
See your life as a stairway to fulfillment. Put your dollars in the right buckets, in the right order. You’ll be amazed at the way cash flows from bucket to bucket, like a river down a mountain.

– Denis Waitley