New $15,000 Tax Credit for Homebuyers!

In an effort to break to the logjam in the residential real estate market, a new amendment to the economic stimulus package was  approved on February 4th. The amendment, proposed by U.S. Senator Johnny Isakson, R-GA, would increase the current tax credit of $7,500 to $15,000.

Here are some of the features of the amendment:

The amendment would provide a direct tax credit of 10% of the purchase price up to a maximum of $15,000 for the purchase of a home.

The property purchased must be used as a primary residence.

The credit would allow taxpayers to claim the credit on their 2008 tax return.

Under the amendment the tax credit would have to be repaid if the home is sold within two years of the purchase. 

Purchases would have to be made within one year of the legislation’s enactment. 

The tax credit will not be limited just to first time home buyers, and
the legislation would sunset the current $7,500 housing tax credit.

“It is time to fix America’s problem, not throw money at the symptoms. It is time to fix housing first. It is rare that we have a road map to success in times of difficulty, but this country has once before realized a housing crisis every bit as bad as the one we have today and economic troubles every bit as dangerous. We have a pervasive housing problem, and we have a historical precedent that works. I am proud this Senate has joined together, learned from history and repeated a method that worked by adopting this amendment.”

— Sen. Johnny Isakson

This is a huge step in moving toward the stabilization of the residential real estate market.  I’ll keep you posted on new developments.

Welcome to the Great Real Estate Correction of 2007/2008

As predicted, the real estate market and the stock market have continued to slide.  The Dow is down 2000 points from Oct 2007.  Not sure if any of you began putting more money in the stock mkt once the real estate mkt began to slide, but lots of momentum investors who rode the real estate wave the last few years ran to put their money in the stock mkt at the end of 2006 and through 2007, hoping to make easy money there.  Lots of people who did this have gotten hammered over the last few months.

So, what does all this negative economic news mean for real estate investors in 2008?  What strategies should you be employing now to make quick cash and acquire great equity positions for long-term wealth in real estate over the next 2 years?  I will be walking you guys through it over the next several months so stay tuned, ask questions, and resist the temptation to “just sit this one out.”  This is a time of great opportunity.  You just need to know what you are doing.  Remember, when you see everyone fleeing one sector of the economy, like real estate, it’s time to focus in on that sector b/c great values will be found there . . . if you know where to look.

Here are some key strategies to focus on in 2008:

Action Points:
1)   Buyers have all the leverage right now so investors should be making lots of low offers (think 50 cents on the dollar, OR LESS!) and should only be buying selectively. 

2)   This is a time to make low all cash offers on MLS listings.  When Realtors write into their listing remarks “Short Sale!” “Negotiations in Process!” you know it’s time to make really low offers.  The banks are finally starting to negotiate their debt down so it’s also time to hone your short sale skills in order to get great deals from lenders.

3)   It’s also a time to ask for owner financing.  We haven’t been able to do this very much in recent years while the mkt was hot.  But now . . . “Ask.” Ask the seller to finance the purchase or ask them to hold a 2nd Mortgage on everythng, I mean everything.  Ask for owner financing and no pmts for 1 or 2 years!  You never know.  They might say yes.

4)   Build your buyers list.  Find out who is still in the game and has cash to close.  There will be lots of wholesale opportunities so build your list and get paydays of $5k to $20k for negotiating deals and assigning your contracts to purchase.

5)   Finally, as I have posted before, this is a time to make sure you are prepared to hold any property you rehab as a rental if you have to.  Even if you don’t want to do this, work the rental numbers just in case this mkt keeps sliding.  Houses are still selling, but it is taking 4 to 7 months or longer b/c there is so much inventory out there for the buyers to work their way through.  They are also afraid this mkt will keep falling. 

So hold on to your hat, stay in the game and you may find yourself profiting tremendously from The Great Real Estate Correction of 2007/2008!   

Remember that in the history of real estate, no one has ever managed to buy a property without first making an offer!