Your Bigger Picture, and ‘Life Changes’

What does that tag line ‘Your Bigger Picture’ on our business card mean exactly? It includes taking a larger perspective on your home sale, first home purchase, vacation home or relocation, and your investment rentals & flips.Anibal-Affiliates-RealtyNetWorth-Lake-Shannon-duck-in-water-1.1

You see, there is indeed a ‘bigger picture’. After this many years in the business I’ve accumulated many stories – good & not so much – of considering a broader point of view. Its not all money. Its not all ‘I want’. Being such a large and potentially emotionally loaded transaction, I really like to mix in some ‘heart to heart’ moments should they possibly help. And really, a caring ear and some outside eyes that have ‘been there/ done that’ may save some heartache later, and hopefully bring some rewards of great ‘future memories’ yet to be made.

The holidays can bring heavy hearts for some. If not you, I still encourage you to make yourself a bit more informed so you might have a bit of empathy to pass along. Hence, I’m posting up an article that has nothing to do with real estate, and yet, many will need to sell and move at a time of ‘change’ such as passing of a loved one. If that’s you or a friend or family member, rest assured I’ll be as patient as possible, and give extra care through the ordeal of a move. Blessings!



When is it time to sell? For everyone its different. Frequently we begin to consider relocating when:

  • We become ’empty nesters’
  • We retire
  • A major change in health of one or more homeowners
  • Loss of spouse
  • New opportunities

Really, there is the possibility for great strife in moving, even for young and strong.

 



 

Assisting with the sale of an Elderly / Retired Person’s home.

When is it time to sell? For everyone its different. Frequently we begin to consider relocating when:

  • We become ’empty nesters’
  • We retire
  • A major change in health of one or more homeowners
  • Loss of spouse
  • New opportunities

Really, there is the possibility for great strife in moving, even for young and strong. So much more are the concerns and emotions as the years go by and we have been in one location longer.

Great care needs to be given in how and who assists in the orchestration of relocating those in our circles of great value, that being a mom, dad, neighbor, aunt, uncle, or dear older friend. You should be ready to give acknowledgement to:

  • Someones increasing physical &/or mental fragility.
  • Their great reluctance to surrender not only the home but so many personal treasured items that may need to be sorted through, sold, donated, or lovingly adopted by others.

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“The house was a symbol of her independence. She was extremely frightened to let it go,” one person said in helping a senior with her real estate transaction.

Nearly 40 % owners over 65 haven’t moved in over 30 years. “For an older person, a home represents their life story.” its been said. Think of holiday gatherings, dinners, or a wall of photos.

There is destination/ relocation planning, tax considerations, seasonal timing to avoid bad weather, coordination of helpers, the list goes on. This is a time to pick a real estate professional with a skill set that fits the situation, think compassion, some experiences with older persons – perhaps an immediate family member(s), and related wisdom is of extra benefit if not sometimes crucial. e.g.:

  • In our office one of my assistants is a retired hospice care nurse – has worked with challenging situation involving medical needs and interaction with the children.
  • My 96 year old mother was recently relocated to a elder care residence after being independent at a Florida condo for many years. We needed to coordinate 3 children in 3 states to assist in the challenging process.
  • We’ve assisted many clients & their family with referrals regarding estate planning, and income tax planning/ filings.

Here are a few suggestions for the children of seniors who want to assist their parents in making a smooth move:

 

  • Show sensitivity when helping seniors sort through their possessions.
  • Be careful before committing to the sale of your parents’ extra belongings. Instead, your parents might prefer to donate their extra belongings to a charity they respect, such as the Goodwill or Salvation Army.
  • Consider showcasing certain select items at your parents’ next home. The display can also serve to jog fading memories or to spur conversations with visitors.


Buying a house site unseen. Would you?

Yes, I’ve helped folks buy ‘site unseen’. This article is condensed but has some of the basics.



Online photos aren’t enough!
Here’s my ‘must do’ list:

  1. Use a local buyer agent that is on retainer/ agreement with you, not just the seller side.
    • I’d advise using a broker that will give you a referral from a client that used said broker more than once!
  2. Go ‘live’ on your walk thru. Interactive, voice/ video, tour in real time with your agent (broker) ‘on the ground’.
  3. Have an inspector give you feedback. Again, best if your broker/agent is live.
  4. Get your trades person that may do upgrades after purchase to give you pre-offer insights in the same way.
  5. Solicit immediate and local area videos – real time again is great. Good to do this during a busy weekend evening.
  6. View map from above. LOOK for train tracks, land fills, factories, freeways, etc etc…. look look look.
  7. Call: local utility for ‘estimate of usage’ for an idea of how weather tight the home is.


Real estate bubbles, strategies, and the current market

Are we in a bubble market ? Just read from one of my favorite bloggers who boasts: “15 Anibal-Affiliates-RealtyNetWorth-LakeShannon-why-I-sell-lakefront-young-couple-at-sunsetflips currently in progress. 126 flips completed. 15 rentals properties. Follow me to see how I make money in any market cycle.” So here’s the excerpt & my ‘reply’:

  • “…Low-money-down loans have been available for decades, and that is not what caused the housing crash. Really bad loans to people who should not buy houses is what caused the housing crisis. …”
  • reply: I’m presuming this is a ‘cliff notes’ take on the market since we can’t dispense all knowledge in a post. But my quick 2 cents. As a 2nd generation broker/investor/finance degree holder, bad loans where just a part of the problem. We had funds flowing out of other ‘under performing’ investments…e.g: $’s tend to move from CDs to collectables to stocks to real estate, etc. Further, and this makes the topic more of a localized thing, wages must support prices. Las Vegas had speculators running up prices but buyers weren’t all from out of town so prices couldn’t be sustained. Here in NW Detroit suburbs, we are seeing a lot of new industry coming in and hence price strength above what might be healthy in other parts of MI.

The article goes on to say how the market is not at a bubble stage. I think that greatly oversimplifies. So whats the point I’m making? As in Ecclesiastes 3 “To Everything There is a Season.” With-in 30 miles of each other, I have client investments of which 1 area I feel should be liquidated asap as the appreciation has come fast and peaked, the other could be held for a taxpayer that needs deferred income and no cash flow now, but if cash flow is needed move on. In other words:

  • Look at: investor needs (cash, retirement savings, …)
  • Investor tax situation
  • Investor has more time and abilities or more cash to throw at the portfolio mix
  • General economy but also local economic outlook…. very important.

This isn’t like buying a candy bar.



This is not an offer of a guaranteed return. Always do your due diligence before investing.

Passing Your Home to Your Children.

When/ How/ If: I Should Deed My House to the Kids

There can be some benefits, but also drawbacks to both the gift giver and recipient(s).

(Speak to your accountant/ lawyer/ lender/ and insurance agent for specific advise – the following is excerpts from counsel received and not to take the place of paid advisers in their respective field of licensing.)Anibal-Group-LLC-RealtyNetWorth-Senior_Services_woman-elder

Some will:

  1. Add the child’s name onto the existing deed.
  2. Make an outright gifting over.
  3. Deed over but reserve a life estate.
  4. Will the property, i.e: a “transfer on death”.
  5. Others consider a revocable trust, irrevocable trust, or a family LLC.

#1, Possibly Tax Disaster.

  • Set up an office visit. There are good reasons, but often more bad reasons to use this strategy.

#2, Outright Gift.

  • Irrevocable, the parent loses control and legal right to stay in home. Perhaps the parents will rent back.
  • Ends the parent’s right to claim any preferences on property tax bills, e.g.: the homestead exemption, being blind or over 65, hardship/ low income exemptions.
  • This can dramatically increase property taxes.
  • If real estate transferred to a child is worth more than what was paid to purchase and improve it, then the child pays capital gain tax on the sale of the property. (The $250k/ $500k MFJ primary residence exemption is not applicable unless you own and live in the property).
  • Children’s (ex)spouse and creditors may have the ability to seize the property.
  • vs. Will at death.
    • If a parent’s Last Will and Testament leaves real estate to a child, parent can change their mind w/ a new will.
  • Additional Parent Considerations.
    • To remove the asset for Medicaid qualification, remember that a transfer of your real estate can make the parent ineligible for benefits for nursing home expenses, depending on when you enter the home. The length of time ineligible depends on the value of the real estate, whether it was transferred outright or retained as a life estate. Generally, its a five years look back.

A transfer of real estate is a “gift” and will no doubt require filing Tax Form 709 with the IRS.

#3, Gift with Retained Life Estate.

  • During life, the parent has the right to live in the property, and at death the life estate ends. Property transfer effectively at that time.
  • Some want to avoid probate after death, and possibly to avoid any court administration of their estate.
  • If the recipient child dies first, the child’s share in the real estate could pass to the deceased child’s spouse, rather than to the grandchildren.
    • vs a parent’s Last Will and Testament may provide that an inheritance would go to grandchildren if a child died before the parent.
  • The parent still loses a significant degree of control. If the parent sells the property, the proceeds belong to the parent and the child (remaindermen), split according to the percentage of ownership determined by IRS life-expectancy tables.
    • Capital gain tax would be owed by the child on his or her gains.
  • If the parent retains a life estate and the property is not sold before the parent dies, then under current law there would be no capital gain at the time of death because its cost basis is “stepped up” to the property’s market value on the date of death. This is a good thing for the recipient !
  • For Medicaid, the parent is deemed to own the entire interest in the real estate for five years after a deed execution retaining a life estate. They will also be the owner of the life estate interest thereafter, the value of which is calculated at the time of application for Medicaid.
  • RE: inheritance tax, the date-of-death value is taxable to the child – not lovely. But, the child gets a step-up in cost basis (easier if inherited at death in my opinion).

#4, Will the property.

  • Call the lawyer. Ok, now, plan for the child to do back flips on how much taxes you just saved him/her/them.

#5, The ‘entity’ approach.

  • The nuances will require coordinated input from your lawyer, CPA/ accountant, insurance agent, with some feedback from a real estate broker and your banker.

Bottom line.anibal-affiliates-realtynetworth_deeding-property-to-children-b

  • The when/ how to transfer should involve your accountant, lawyer, insurance agent, banker/lender at a minimum.

As I’ve told clients for decades: “You’re not dealing with a candy bar.”


Tax Strategies for Real Estate

If you expect real estate should involve ROI, then there’s some basics to the outline.

  1. Acquisitions – some we have control, others not – e.g.: inheritance.
  2. Holding – short/ long/ entity/ self held/ purchase for child/ etc
  3. Approach: add value/ flip/ wholesale/ rent/ vacation/ family lease to/ residence with business inside

Most properties will be held for cash income OR appreciation. If you can get both, then neither will probably be optimal.

Regardless, upfront considerations must include:mackinac-bridege-under-constructions-allovermichigan-b

  1. What you need from the property: income now or later (cash flow vs appreciation)
    • I look at these like ‘a job’ or
    • ‘retirement investment’
  2. I will invest more:
    • cash or
    • time & talent

So there will be many vehicles and considerations. SD IRAs, set up LLC, Corporation, etc. One of my favorite realizations is that PROFIT is usually made on the way into an investment in THE BUY. Further when you SELL, what can you/will you do with the funds ? Make sure you have another opportunity lined up if you liquidate a great rental. Make sense ?

‘Later’ is not the preferred time to plan.


Married folks note: ‘The Demise of Dower – State Bar of Michigan’

Every year I give feedback to people AFTER there has been a life changing event in their family. I strongly recommend that everyone who buys/ sells/ marries/ has children, etc, 13975257_547728985400158_1961526686294140869_o[1]seek a consultation asap with (at a minimum):

  1. Legal counselor
  2. Insurance agent
  3. Real estate/ tax consultant
  4. Estate planner

‘Dower rights’ have changed in MI. A widows automatic 1/3 interest in her husbands real estate will be altered in April of 2017.

You’ve been warned.


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Storms/ Trees/ Insurance/ Liability

As always, this is NOT to take the place of calling YOUR agent!


What happens if:3808286

  1. My tree falls on my house.
    • A: my insurance should pay
  2. ” and the ins.co. had asked I remove/trim it beforehand.
    • A: I pay
  3. My tree falls on neighbors property.
    • A: their insurance should pay
  4. ” and the tree was dead/ dying.
    • A: I was negligent, I will probably pay
  5. A neighbors tree fell on my house.
    • A: living tree – I/my insurance pays, dead/dying – they/their insurance pays.

You already know that no matter what you asap inform your insurance company with “notice of an event which could give rise to a claim”, even if you’re sure there will be none. Why? You are not the insurance expert AND you don’t know what the future holds. Contact them now.

Basic point: Check your yard for hazards, check with your agent for coverage gaps.


These are short answers.  Again, you are best advised to at a minimum QnA your: Insurable risks professional, accountant, lender/banker, realty professional, legal adviser when changes happen or are anticipated.Faces_Fall_Petosky_byChalet_Sml_button_FRAMED

If you’d like me to assist further, contact me w/any questions or comments. Recall, using anyone in my referral network qualifies for reimbursed services (FREE) on your next buy/sell activity.


Great Car Enthusiast Garages – ‘with attached house’ !

Are you one of Michigan’s thousands of ‘car persons’ ? I’ve brokered for 3 decades and owned many classics myself.

If you’re a local, you seen my office just down the street from Boomers Shark Club, home of the famous huge weekly car cruise-ins, or the Dream Cruise in Flint, or the Fenton Dream Cruise ‘tune-up’, or even in Brighton MI (below). If you’re a dealer, you’ve seen me all over the country at dealer auctions searching out sweet unique rides for clients.

anibal-affiliates-realty-net-worth-greatcarcaves-car-show-brighton-michigan

As a local 30+ year real estate broker with loyal clientele & lots of hands on construction & car experience, I’m also great source of hot rod & other car related referrals.

Let me walk you thru your Buy/Sell situation knowing the value of a Great Car Space !


Bonus: Here’s some exceptional adaptive use spaces for Great Car Caves, Showcase Garages, Wrencher Spaces, and Daily Driver Comfort Zones. How do you rate them ?

My dedicated webspace for car lovers ! Great Car Caves – custom garage spaces in MI and FL