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Text Box: Mortgage rate hikes “subdued for 2004”

Text Box: Comparing IRA with 1031 Exchanges (contin. from pg #1)

Text Box: mortgages should get not higher than 7 percent “, Doug Duncan , the trade group chief economist said. With an improving economy, especially better jobs growth, there is every reason to believe that real estate investments and lending will continue to be attractive for the foreseeable future and beyond.

Text Box: The outlook for mortgage rate hikes is very subdued for the remainder of 2004. Recently rates have even dropped slightly after the fed .25 increase in July. Greenspan, in his remarks before the US Senate on 7/20/04 said nothing to dampen such enthusiasm stating : “In addition, the low interest rates of recent years have allowed many households to lower the burdens of their financial obligations. Although mortgage rates are up from recent lows, they remain quite attractive from a longer-run perspective and are providing solid support to home sales. Despite the softness of

Text Box: recent retail sales, the combination of higher current and anticipated future income, strengthened balance sheets, and still-low interest rates bodes well for consumer spending.” Remarkably, real estate economists continue to revise their forecasts in an upward direction. Several have even predicted that sales in 2004 will now exceed those in 2003. The benchmark 30 year loan will be hitting 6% by the end of the year, according to a revised economic forecast from the Mortgage Bankers Association. “Over the next three years,

Text Box: property. But it is ok to invest again as your desire. 5) If the property you sold or exchanged has a debt on it , must the property you replace it with have the debt as well? Another requirement of the 1031 is that you must take on at least as much debt as you gave up. If not you will be taxed on the difference. With the IRA you are not required to match any debt.

Text Box: The self-dealing rules on the 1031 say you cannot exchange with members of your family. The IRA exclusions say you cannot conduct business with your spouse, or your blood relatives. 3) What is the effect of cash sale? On the 1031 it creates a taxable event for all past taxes deferred plus any current gains. When

Text Box: you sell your IRA for cash, nothing happens unless you have a mortgage, in which case the UBIT will have to be paid. 4) Do you need to identify replacement property? And what are the time frames? The 1031 requires you ID the ”like kind” exchange property within 45 days of closing , and complete the trade within 6 months. The IR A does not require you to select another

Text Box: Choosing an Investment Property: Location, Location, Location!

Text Box: of return you are looking for and not necessarily where the investment property is located, When you are discussing investments with your RE Broker also remember these other important considerations: 2) Do you need a steady income flow or are you looking for growth and appreciation over time?; and 3) Will this deal be a taxable event or pretax (i.e. 1031,or IRA). (Continued on

Text Box: Anyone who knows anything about real estate will tell you that an important factor in choosing property is location. Consider an empty lot by the lake or seaside, and another property; or one located near an exit ramp off a busy freeway vs. another with no access. Location makes a difference to be sure. However, be aware that many RE investors still think of

Text Box: location in the wrong way. More times than not, the investors preference for location is given as proximity to their home or work location. While this is type of location consideration is often true for the purchase of a home, it doesn’t make sense to chose an investment property this way. Better to start with 1) what kind

Text Box: “The benchmark 30 year loan will be hitting 6% by the end of the year”, according to a revised economic forecast from the Mortgage Bankers Association.

Text Box: “Another requirement of the 1031 is that you must take on at least as much debt as you gave up. “

Many RE investors still think of “Location” in the wrong way.