Thousands of New Agents Could Signal Housing Top

It has been 150 years since the last California gold rush, unless you count the tens of thousands of people rushing to get their real estate license.

The crush of new real estate agents may themselves be a signal of a true market top in housing. Thousands of people, hoping the market has not peaked, are trying to hitch a ride on the latest gravy train.

22,000 Californians, many of whom are self proclaimed start-up and tech junkies, took the real estate exam just last month. And, while top producers can make $1 million or more, 75% of agents do one or fewer transactions per year. The state now has 437,000 real estate agents competing for its 680,000 listings.

The number of people jumping on the real estate, career bandwagon isn't limited to California, either. The National Association of Realtors has seen a 50% jump in its membership since 2002. It now has 1.4 million members.

Is an agent boom a signal of a housing top? As a contrarian by nature, it doesn't bode well. In boom bust cycles, too many people chasing too few goods is an indicator of trouble. The increased volume of sales and an unsustaintable, rapid run- up in pricing is another indicator that it is late in the game. Given the continued strength in the housing market, record-setting sales prices, coupled with the large number of people rushing into real estate, it seems the industry's success may be its undoing.

Centex Cuts Prices for New Homes

CNBC reports that Centex Homes, www.centexhomes.com, one of the nations largest home builders, announced it's plans to discount the prices of its new homes by 5%. In addition, Centex will waive their 1% loan origination fee for mortgage applicants.

The discount of 5% would translate into an average price reduction of $15,000, depending on the original price of the home. The added savings of 1% on the mortgage will equate to additional $2000 savings for the average buyer.

The Centex decision to cut prices is the first acknowledgement by a major home builder that the market is slowing. While we do not know yet exactly which markets Centex intends to discount, the announcement led this viewer to believe the program would be fairly broad based.

Dallas based Centex (NYSE: CTX), builds 33,000 homes per year, in 25 states. Its leading brands include Centex Homes, Fox & Jacobs Homes and Centex Destination Properties. In addition to its home building operations, Centex's related business lines include mortgage and financial services, home services and commercial construction. Centex ranked No. 1 in its industry on Fortune Magazines 2005 list of "America's Most Admired Companies."

Debate Heats up in DC over Real Estate Fee's

Washington, DC -- A U.S. Justice Department official, speaking during a publice workshop Tuesday, used an analogy from the fast-food industry to simplify the federal government's view of competitive issues in the nation's real estate markets:

"(If) When I buy a hamburger, I'm told that I also have to buy French fries...I may not want French fries," said Thomas Barnett, acting assistant attorney general for antitrust at the Justice Department.

"From that perspective, being able to choose from a menu of services--being able to choose what we want to buy--we generally view as a positive thing," he said.

Questions over competition within the real estate industry have prompted Justice Department and Federal Trade Commission officials to take action on a range of matter this year, including suing the National Association of Realtors over its policies for sharing and displaying property information on the internet and investigating state laws that effectively ban real estate rebates for consumers.

Also this year, officials from the FTC and DOJ have opposed state measures, backed by Realtor associations, that have sought to mandate minimum service requirements for real estate professionals, a move federal officials say would restrict consumer choice in real estate services.

Deborah Platt Majoras, chairman for the Federal Trade Commission, said "What we want for consumers is choice," adding that the ultimate goal is to "identify ways to preserve competition while protecting consumers."

In the first panel session, "Overview of the Real Estate Transaction" panelists discussed the role of the Multiple Listing Service (MLS). The MLS is a cooperative organization in which local real estate brokers and agents show properties for sale.

"While MLS's allow brokers to cooperate with one another, there is also the potential to abuse that cooperation by setting rules that could be anti-competitive," said Robert Hahn, director of the AEI-Brookings Joint Center. According to Hahn, "The MLS is essentially a club and its members decide who gets to be in this club."

We will keep you posted on the comments from federal officials and real estate industry leaders regarding this all important workshop for consumers and homeowners.

Thanks to Inman News for their reporting for this article.

Another InfoTube Success Story

Dear InfoTube,

Our closing went wonderful. We are now in our new house. Many of our friends and family are wanting to sell their house now and we told them how we did it so quickly. They were very amazed with your system.

A couple have still gone with a realtor but have not had any results. Now they wish they had
gone with InfoTube. They said they felt like trying to do it yourself would be too much work. I told them all I had to do was go to your website enter in the information, print up some flyers to put in the tube and put an ad in the paper with the InfoTube ad #.

It was SO easy. Thank you again for ultimately leading us to our dream home. If for some reason we have to sell this home we will be sure to use you again.

Jaime Jackson

Google Debuts Free Classified Ad's

CNBC www.cnbc.com announced that Google Base will offer Free Online Classified Ad's.

Google Base will allow people to post and view ad's for everything under the sun for free and Google Base listings are expected to be much broader than www.craigslist.com , which www.Ebay.com owns 25% of.

Google Base is also including a form for people to post a home listing. The form has a space for details like price, property type, number of bedrooms. There is also a menu for Price Type showing "Fixed Price", which suggests Google will also hold auctions.

The entry of www.google.com into online classifieds will pose a serious challenge to Craigslist and Ebay. It could also hurt Yahoo, Hot Jobs, Monster Worldwide and real estate brokers. Newspapers, which are already being forced to cut ad prices because of competition from the likes of Craigslist, are also likely to feel the Google pinch.

Department of Justice and Real Estate Brokers Square Off About AntiTrust Laws

Federal antitrust officials oppose real estate legislation that would cause consumers to pay thousands of dollars in commissions to real estate brokers. The Department of Justice contends that the proposed "minimum service" or "limited-service" restrictions for real estate, limit consumer choices and are anti-competitive.

What's anti-competitve about "minimum service" type restrictions? To summarize, legislation in states such as Texas, Missouri, Illinois, Iowa, Kentucky, Oklahoma, Utah and Alabama effectively ban limited forms of real estate services.

The powerful, real estate trade groups are pushing the new legistlation in an effort to curtail the growing popularity of new ala carte, type real estate companies. The legislation mandates that real estate agents assist home sellers in developing, communicating, negotiating and presenting offers, counteroffers and related documents in real estate transactions. This action requires all brokers to provide the same minimum-level of services, effectively eliminating fee-for-service options.

Fee-for-service, real estate companies offer homeowner's a full menu of services and charge a flat fee for each service. For example, a homeowner may opt to do a full-service listing or they can choose to just list a property for sale in an MLS for $500, or hire an agent for contract negotiations for a flat fee of $250. Flat fee brokers offer substantial savings for the homeowner who wishes to buy only the help they need. In contrast, the traditional, full-service brokerages offer only turnkey assistance to homeowners. The full-service broker handles all facets of the transaction with little to no help from the seller. The charge for full-service is typically 6% of the sales price of the home.

The DOJ is also concerned that the Realtor boards, who own 80% of the MLS's (Multiple Listing Services) in the country, intend to use the passage of this legislation to block limited service property listings from reaching the MLS. Blocking limited service listings means that home buyers and their agents could only access property listings from full-service brokers. Blocking listings from property searches would seriously limit the availability and choices of homes in the marketplace.

The Department of Justice fears that these protectionist laws are not being enacted to protect the consumer. The DOJ believes the purpose is to protect full service brokerages from having to compete with companies who offer more choices in the quantity and type of real estate services that are available to consumers.

A free marketplace requires competition. Legislation that limits choice, decreases competition, increases fee's and blocks housing inventory from consumers must certainly be scrutinized for violation of anti-trust laws. Monopoly, anyone?

Real Estate Tax Breaks for 2005

1. Consult with your tax guru, but using just one or two of these idea's can save hundreds, if not thousands, of the tax dollars you will owe April 15, 2006.

1.) BUY A HOME: Sellers are highly motivated during the holidays. Home prices are generally more negoitable, which spells savings. Tax Bonus: If you close on your home before December 31, 2005, loan fee's and mortgage interest are tax deductible.

2.) SELL YOUR HOME: If you lived in your home at least 24 months in the last 5 years, selling your home can generate $250,000 ($500,000, if married) in tax-free capital gains.

3.) REFINANCE: You still have time before the end of the year and interest rates are predicted to continue moving upward. Tax Bonus: Loan fee's can be amoritzed over the life of the loan. If you are refinancing an existing mortgage, you can deduct the entire undeducted loan fee. When refinancing, it pays to obtain a "no cost" refinanced mortgage. The interest rate may be slightly higher, (usually no more than 1/8th of a percent), but the interest you will pay is fully tax deductible.

4.) DON'T SELL YOUR HOME: If your profit exceeds the $250,000 or $500,000 limits, pat yourself on the back and delay the closing until January 2006. You then have until April 15, 2007 to pay the tax you owe on the profit that exceeded the limits.

5.) TAKE OUT A HOME EQUITY LOAN: If you are paying non-deductible interest for cars, credit cards, student or personal loans, take out a home equity line of credit and pay them off. Interest paid on the home equity loan is fully tax deductible.

6.) DEDUCT YOUR MOVE TO YOUR NEW HOME: It doesn't matter if you rent or own, itemize or not, if you changed your job and residence in 2005, you can probably deduct the moving costs on your tax return. To qualify, you must move at least 50 miles.

7.) PREPAY YOUR 2006 PROPERTY TAXES: If your county or town sends your 2006 property tax bill during 2005, which most do, you can pre-pay your 2006 before December 31, 2005 and deduct it in 2005.

8.) PREPAY YOUR JANUARY 2006 MORTGAGE PAYMENT: Mail your payment in time for your lender to receive it in December 2005 and include it on your IRS 1098 mortgage interest statement. Then, you can deduct the interest for January 2006 on your 2005 income taxes.

9.) DEDUCT ANY UNINSURED LOSS OR THEFT: Unfortunately, 2005 was a nightmare in terms of national disasters. Homeowners that were not fully insured suffered huge losses. If your suffered losses at your business or rental properties, you can deduct the full amount. If you suffered personal losses, you can deduct losses exceeding $100 and over 10% of your adjusted gross income.

10.) TAX DEFERRED EXCHANGES: IRS Code 1031 allows you to avoid taxes on your business or investment property sales. To read more about Tax Deferred Like Property Exchanges, see our October 4, 2005 blog, "The Best Fixer-Upper VI: How to Avoid an IRS Shakedown.

Remember, it's not what you make, it's what you get to keep that counts. Use tax planning to avoid paying more than you owe. Always check out all your options with your tax advisor.

Homebuyers Should Do Their Own Math

Let's Get Real

A too-big house payment can, at the very least, leave your family strapped for cash. At the worst, it can leave you open to foreclosure, bankruptcy, and don't forget, divorce. Avoid future disaster and get a handle on what you can really afford.

Helpful Advise?

Never count on a mortgage company, real estate agent, friends, neighbors or an internet calculator to tell you what you can afford for a house payment. Only you know what your expenses are and what your future holds. None of the people pushing you into that big mortgage payment will fund your Retirement, Vacations, Hobbies, College Tuition, Braces for your Kids, or utility bills and upkeep on that big house.

How Much Should You Spend on a House Payment?

Roughly, no more than 25% of your monthly income. But, don't take my advise. Even though math makes your head hurt, please, for your sake, start doing your own.

1. How much money will you need to save each month to reach your goals?
2. What are the hidden costs of owning this home? Count on spending about 2% of your home's total value for basic maintenance.
3. Do you have an expensive hobby? Budget for travel, golf, or that antique you love to find.
4. To you have kids or do you plan too? Kids change your life and finances forever. Maybe, you want to have the option to have one parent stay home or work only part-time. If not, you will need to pay for childcare. Perhaps, you want to travel with your children or pay for their college education. Your future goals may only be a dream, if you need 2 incomes or every extra penny to make ends meet.
5. Does Your Income Vary? Most of us have variable incomes to some degree. Consider basing your house payment calculations on your average over the last several years.
6. What about Your Retirement? 30 years ago most workers benefited from retirement pensions. Today, we have to carve enough out of our budgets to fund 401K's and IRA's.
7. What are your other monthly debts and obligations? Remember that your credit card obligations, student loan, car payments and utilities will still be due each month, along with that big mortgage payment.
8. Is your Income Really Likely to Rise? If you just graduated from law school, maybe. But, none of us should count on the double-digit raises some people saw in the 70's and 80's.

When considering how much house payment to bite off, know what you can chew. Money woes are unpleasant to say the least. At the end of day, use your own gut and only stretch because you feel comfortable doing so.

Why Do For Sale By Owners Fail to Sell by Owner?

I see homeowners everyday at www.infotube.net who decide sell their own home. I presume the reason they decide to sell their own home, instead of listing with a realtor, is to save money. But, do they?

The reality is that many owners need a reality check. Many homeowner's could easily sell their own home, but they set themselves up to fail. How? They price their home for thousands of dollars more than any agent could sell it for.

For example, one FSBO I watched this month, put their home on the market for $198,000. The 3/2/1 dated, ranch-style home backed to a busy, commercial throughfare. Their asking price of $198,000 translated as $130 per square foot, in a neighborhood averaging $110.00 per square foot.

The house sat on the market, of course. No serious buyers were interested, imagine that. Obviously desperate, they listed the home this week with an agent for $187,000. $187,000? After the 6% commission, this FSBO will net $175,780, with a full-price offer.

What were these seller's thinking? Why would they list their home for $23,000, or 12% less, than they were attemping to sell it for? The paradox is that in their effort to sell quickly and save money, they they set themselves up to fail. They wasted weeks of their time, and as a result, they will net thousands of dollars less than they could have.

Don't kid yourself. FSBO is not an ammenity a buyer, or their mortgage company, will pay more for. The reality is that a home will not sell for more than its real market value. If you are putting out the effort and cash to market your own home... don't set yourself up to fail.

Real Estate Survey 2005 Results

Realestate.com, owned by Lending Tree just released the results from their survey of 500 home sellers and 100 real estate agents.

• Survey Results:

1) 37% of surveyed sellers sold their house for the full list price.

Yet, Sellers and agents agree that the asking price of the home should be set at 5% - 10% above what the seller needs to net from the sale.

2) 41% of agents recommend budgeting 2-3 months for your home to sell. 60% of sellers reported that their home sold in the first 30 days on the market.

3) 48% of sellers and 40% of agents said the local School System is the most important factor buyers consider when shopping for a home.

4) Buyers consider the Kitchen the most important room in the house.

5) Cleaning Everything is the most important factor when getting your house ready to show.

6) Enhancing and maintaining the lawn and landscape is the top priority for the exterior of your home before you sell.

Martha Stewart Creates KB Homes

Design Diva Martha Stewart will lend her name and design prowess to KB Home builders. Bruce Kartatz, President of KB Homes announced that three Martha Stewart home plans will initally debut in Cary, NC.

The floorplans and exterior elevations will be based on mini-versions of Martha's homes in Maine, Connecticut and New York.

Martha and KB teamed up after an introduction by a mutual friend, and a tour of KB Homes model park in Cary.

It's a Good Thing. The 3 KB Homes created by Martha Stewart will have flare and attention to detail. Martha wants her houses to have wainscotting and more ceiling trim. In addition, she wants to create ambiance by relocating the formal dining areas to the back of the homes, off the rear patio's. The homes will be priced from $200,000-$450,000. The largest Martha plan boasts 4100 square feet of living space and 6 bedrooms.

Martha changes every industry she becomes involved in for the better. It's high time that women have the ear of the old school builders. Martha, let's bulldoze the warn-out, boring box house idea. Congratulations to KB Homes on their forward thinking. A savior was needed to end the 21st century plague of vinyl siding, and who better to do so, than Martha Stewart.

We challenge all builders in their competitive, slowing environment to think out of their boxes. Hey, what about kitchens by Emeril, anyone? Bam!

Real Estate Developers Crave Whole Foods

Whole Foods Market, a success story in the stagnant, grocery industry, has real estate developers salivating. Whole Foods and its wide array of organic and delectable pershables, are a natural fit for buyers of high-end, urban apartment and condo projects.

Although grocery stores have always had a necessary and important role in making a neighborhood, 5 star, gourmet Whole Foods adds value and prestige to the neighborhoods it selects for new store locations. Developers have learned that joining efforts with Whole Foods differentiates their development in a very positive, translate profitable, way.

Developers say their target customer, (ie: money, single or childless couple) is the same customer that shops at Whole Foods. Their residents do not mind spending more money for quality and convenience. This makes an onsite Whole Foods Market a top ammenity, when marketing their properties.

Whole Foods and urban, high end projects have proven they are a mutually beneficial for each other. One of the first apartment projects in San Francisco to bring in Whole Foods saw occupany spike up and never look back. Whole Foods not only drew traffic to the area, but actually set a progressive tone to the entire identity of the neighborhood.

According to www.wholefoodsmarket.com, if a devloper has a retail location they think would make a good site for Whole Foods Market, Inc., please review the following guidelines carefully for consideration:
*200,000 people or more in a 20 minute drive time
*40,000–75,000 Square Feet
*Large number of college-educated residents
*Abundant parking available for our exclusive use
*Stand alone preferred, would consider complimentary co-tenancy
*Easy access from roadways, lighted intersection
*Excellent visibility, directly off of the street
*Must be located in a high traffic area (foot and/or vehicle)

If your project fits or exceeds the profile, prepare to feast on the win-win situation that separates you from every other apartment in town. Bon Appetite

Flip This House an AETV Must See

Flip This House on AETV is a must see for everyone interested real estate reality programming.

The show surprisingly is not filmed in southern California, but Charleston and Greenville, South Carolina.

The stars of the show are not professional actors. They are a team of full-time Realtors and local contractors. The company, Trademark Properties, is a small, locally-owned real estate company with 3 offices in Charleston, founded by Richard C. Davis, the broker/owner.

The show offers a realistic and entertaining look at challenges of buying neglected houses. The Trademark real estate team works hard to make a respectable profit on the resale of their fixer-uppers. Unlike many of the California real estate fantasy shows, these projects are real and are in the budget of most of the viewers.

Richard and his wonderful support team believe any house in a good location is worth fixing. They tackle some homes under $100,000, even if the profit potential is only a few thousand dollars. To date, per Richard, they have never lost money on a single deal, which is their only goal.

The show is informative and entertaining. Last week's episode showed the reality of contractor problems, a dumpster rolling down a steep drive, smashing a car and a budget dispute over a deck addition in the back yard. It is refreshing to see a reality TV show actually reflect the reality of my last flipper.

To use a Richard phrase, this show does not "sugar coat" the reality of earning a living buying, fixing and selling a home. Flip This House focuses on a refreshing absense of the get rich quick, money is no object, Hollywood portrayal of real estate investing. "At the end of the day", everyone that works on the projects, earns their money and tests their patience and investment skills to do so.

If real estate is your passion, be sure to tune in to Flip This House on AETV every Sunday evening at 6:00 p.m. EST.

Orphalese Cruise Ship Selling Condo Ownership

Dreaming of a waterfront retirement home? Perhaps you should look at one of the 200 residential condo's that are for sale on the luxury cruise ship, The Orpalese.

Check out the website www.theorphalese.com which offers a birds eye view of the floorplans, ammenties, pricing and cruise destinations.

The 1000 square foot condo's feature 2 bedrooms and 2.5 baths, priced at $1.8 million with $2500/month association dues. The Penthouse unit reminds me of something you would see in a luxury highrise in Manhattan. The Orphalese Penthouse is a spacious 2100 square feet of pure luxury. It features 4 bedrooms, 4.5 bathrooms and a private balcony. The asking price is $10 million and the monthly dues run about $6500 per month.

The grand luxury ship is named after Kahlil Gabran's mythical city in his masterpiece, The Prophet. The company is taking reservations for units now and plans to sail her maiden voyage in 2008. Talk about Location, Location, Location. The first stop for these lucky 200 homeowners is the running of the bulls in Pamplona, Spain with the next stop being the New Orleans Jazz Festival. After that, Sydney, Paris, the Dragon Boat festival in China, Tennis at Wimbleton, Carnivale in Rio and the favorite of all ocean lovers, The America's Cup Sailing Competition.

Congratulations to the developers on a great new idea. Own a condo and sail the world. I hope the disclosure includes "Buyer Beware: You may experience envy and resentfulness from family, friends and everyone else on the planet, as a result of your purchase." Smooth sailing Orphalese.

Stretch Heating Dollars and Button Up for Winter

Natural gas, propane, fuel oil and electricity are at record highs. Experts say these prices are here to stay.

We all hate to spend money on things we can't see....like warm air, for example. Saving energy means saving big money this winter. What are the best idea's to make sure your money and your heat does not go out the window?

What can you do to keep the warm air in and the cold air out?

1) The smartest thing a homeowner can do is get their heating system cleaned and serviced.
2) Install a timed thermostat. It will turn the heat on before you wake up and before you get home from work. It will keep your home's base temperature while you are asleep or away.
3) Use wood fires or space heaters to supplement your furnance. Use a space heater to add heat only where needed for a short time, like the bathroom.
4) Why heat a room no one uses? Close the ducts or baseboards in all rooms that you don't use. Then, keep the room closed off from the rest of the house.
5) Shut all fireplace dampers when not in use.
6) Caulking and weatherstripping can cut heating bills by 10%. Usins Latex caulk with a little silicone is better than using silicone alone.
7) Putty and caulk areas where exterior siding meets window trim.
8) Old houses with weighted rope and pulley window systems can temporarily fill the drafty void that runs the entire length of the window with strips of carpet.
9) Lock your Windows. Closed windows have more drafts than a locked one.
10) Insulation, whether blown, poured or rolled makes a barrier between the outdoors and your living area. Add a thick layer of unfaced insulation to your attic floor; Use foam pads to seal switchplates and outlets; or, trace around the outlet with a pencil, remove the face plate, drill a tiny hole in the drywall between the outline and the electrical box, fill the void area's with expanding spray foam. Plan to use 1 can for every 3 outlets.
11) The Basement: Insulating the basement and sealing off drafts will make your floor warmer by 10 to15 degree's. Insulate the area in your basement between the first floor joists (sill box); Cover any exposed water pipes with foam tubes or fiberglass strips; Wrap, then seal exposed ductwork with aluminum tape; Insulate basement windows with plastic sheets; Turn off the lights and cover the windows, if you see light, squirt foam in the gaps. Even small cracks let out the warm air.
12) Jacket your waterheater.
13) Mail slots and pet doors allow heat to escape and allow cold air in. Consider using a double-door mail slot. Locate your pet door in a protected area, facing south, if possible. Consider locking your pet door and let your pets in and out during cold spells.
14) Bank your exposed foundation with plastic. Then reinforce the bank with hay bales or bagged leaves. It may be ugly, but it is a time-proven draft barrier.
15) Make sure your dryer bent stays closed when the dryer is not in use.
16) Put up plastic over windows. Or, use heavy drapes or blankets over windows. Open them during the day and close them before dark. Let the sun work for you.

When it comes to saving your cold, hard cash this winter, be smart. With money you will save in a little draft dodging, you can buy those new granite countertops in a couple of years.

HUD Policies Keeps Poor in Their Place

A decent place to live. The evacuation of so many poor Americans from the Gulf Coast could be a blessing in disguise.

Hurricane Katrina blew away more than the Gulf Coast of the United States. She also blew away the the federal government's facade of "helping" the poor with policies that clearly keep the poor in their place.

More than a million low-income Americans receive housing subsidies from HUD's Section 8 program. To be eligible for Section 8 subsidies, a family must earn 50% less than other families in their town or county. Local public housing agencies must give 75% of their available assistance to families earning 70% less than others in their communities.

The high demand and limited supply of housing in poor, urban areas means long waiting periods for assistance. Many families are left hanging, on long, waiting lists for both Section 8 assistance and/or public housing. When our current, federal policy forces citizens to wait for a roof over their head, while teasing them with the promise of one, who would think relocation to a better place was a real option for their family?

People can not make rational decisions about finding a better region to live in, when the government addicts them to handouts that they will lose if they move. In this land of opportunity, federal government policy forces poor Americans to stay in their place, the ghetto. The loud and clear message is "Don't dare get any big ideas about moving on up".

If you wondered, like I did, why so many of those evacuated had never been outside the city limits of New Orleans, Katrina exposed the reasons. Katrina's silver lining was in showing us that our old federal housing policies trap the poor and the disadvantaged among us. Now that government officials acknowledge our policies sealed the fate of poor Americans, we should all thank Katrina. She cleaned the slate. She scattered the poor to area's that have more opportunity for jobs and permanent housing. Now that the promises and policies that trapped the poor have been washed away, we can start over and never repeat these mistakes again. We will now concentrate on helping the people who have lost everything, establish a better life in a better environment.

Now that Americans, and our representatives in Washington, know what our policies have done to limit the lives for millions of our own people, we will never repeat the same mistakes, right???

Sadly, Wrong.

Right now, FEMA is hard at work constructing trailer compounds the middle of No Where Bayou, USA. When the thousands of trailers are in place, Uncle Sam plans a Texas-sized round up and will herd the poor and homeless back to the Gulf Coast.

For many of these Americans, forced to return to a region that offers little in the way of education or employment, it must be heartbreaking. Heartbreaking to know you've lost everything. Heartbreaking to know that America is a big country that you can't experience. Heartbreaking to realize that your government's plan to help you, is one way ticket to a trailer camp back in New Orleans or Mississippi. Heartbreaking to know it clearly made more economic sense for your family to start over somewhere new.

Maybe, if Washington stopped providing so much "help", our nations poor might find they were in a much better position, and start helping themselves.

Waterfront Property--Look before you buy

Waterfront property is always in demand because there is only so much of it. If you considering jumping in and getting your feet wet, do a road trip and check it out in person. You don't need to be a millionaire to buy a piece of the coast or a shoreline on a beautiful lake, but you do need to exercise caution in which lot you choose.

• Buying Tips from Waterfront Investment Mentors:

1.) Walk the entire property. Look it over closely with a copy of the site plan or survey. Know what's on your land, what's on your neighbors land, where are the easements and utility tie on's, where are the septic fields, what are the building set backs, where are the roads, who maintains them, does the property have public or private water access, what are the zoning and building restrictions, etc.?

2) Will the land percolate (perc test) for the size house you want? Never buy a piece of land you can't build a modern house on, unless you want a camping/fishing lot.

3) Don't shop for a waterfront lot in just one development. Look at all other developments in the same area. Search realtor.com for any options you may be unaware of.

4) Ask homeowners who have already built a home what they think about the developer. Current homeowners will gladly tell you all the good and bad. Key concerns would be, do they like living here? Was the house built to your satisfaction? Has the community been developed as promised? What type of people live here?

5) Know what the economic growth of the town or county is. Who are the employers? What is growth and appreciation rate in the area? Generally, the chamber of commerce, your agent or the government agency in the area can help.

6) It is good to know the history of the development. The internet or local library can tell you what was on this land before it was developed. Was there a zoning fight with neighbors? What is the general feeling about this area?

7) Effects of Mother Nature. Find out when the last drought, flood or hurricane was. What did this property look like after the storm? You don't want to spend money for waterfront property and discover with every drought you bought waterview.

8) Finally, look for lots that already have a home on them. Instead of waiting to build, you may be able to buy now and create cash flow by renting it part of the year.

Just like making any other large investment, waterfront property requires due diligence unique to itself. Use common sense and a methodical approach before you buy to avoid drowning.

The Best Fixer-Upper--Part VI: Avoid IRS Shakedown

Tax-free Profit should be a key motive for buying a fix-up home. The 1997 Tax Act opened up a new tax-free option for buyers of fixer-upper homes.

Thanks to IRS code 121, if you buy and occupy your principle residence at least 2 of the 5 years before its sale, up to $250,000 (up to $500,000 for a married couple) of net profits will be completely tax free. You can use this tax break every 24 months, without limits.

A tax break alternative for investors is to make tax-deferred exchanges for fix up houses. IRS Code 1031 says a property can qualify for a tax deferred trade for another fixer-upper of greater or equal cost. Taxes are deferred to a future date, as long as the rules of the property exchange are followed. There is no minimum holding period and a number of property types can be purchased to defer the taxable gain.

The Best Fixer-Upper--Part V: How to Finance

Unlike the HGTV flipper's, real life renovators need money to buy materials and pay subcontractors . What type of financing options are available for renovations?

Two of the largest sources of renovation loans are the 203K FHA loan and Fannie Mae's "Homestyle Renovation Mortgage. Private lenders and banks also offer their own mortgage products geared to buyers of fixer-uppers.

These loan programs allow buyers to finance both the mortgage and the construction loan in one shot. Buyers can find a more affordable home that needs work and borrow the fix up costs at the same time.

The 203K loan can be used across the country, as long as the property is at least one year old and the planned renovation work totals at least $5000. The buyer must hire a HUD approved consultant who identifies projects that are the most urgent. The lender then appraises the property at the future, after-improvement value, versus the value today.

For example: If the house costs $100,000 and requires $25,000 in
improvements, the loan will be for the entire amount of $125,000. The
$25,000 portion earmarked for improvements will be disbursed in
installments as the work in completed.

The Fannie Mae Remodeler loan is similar to the 203K, but doesn't require the use of a consultant. The borrower has to find a licensed contractor to submit a detailed scope of work, material specifications and finish costs to the lender. Then, the lender decides what the final value of the proposed work will be.

Some private lenders offer their own mortgages, or Plus type mortgages. These loans allow people to purchase homes or refinance existing homes and include the cost of improvements. The Plus loans are based upon the present value of the home and then cost of renovation is added to it.

One feature all loans for fixer-uppers have in common is the disbursement criteria for the renovation. The portion of the loan earmarked for improvements is not given to the borrower at closing. The money is held by the lender and is disbursed in installments, as the work is completed.

If you want to buy a home and fix it up, these type of loans can make it happen for you. The points, closing costs, loan terms and interest rates for home improvement loans are similar to the rates found on any other loan.

The Best Fixer-Upper--Part IV: Most Profitable Repairs

As a long-time real estate investor, I've re-done several, well-located fixer-uppers. I buy only solid homes located in good, middle class neighborhoods. The most profitable have only needed cosmetic repairs to put them in show home condition. I won't spend $1.00 on a repair that will not raise the market value by $2.00. I never buy homes with serious structural defects. To date, I have always made money.

The Most Profitable Repairs Are:

1. 1. Paint: Paint is a seller's best friend. A fresh coat of paint inside and out can change the entire look and feel of a home. Paint is inexpensive and can be done by the homeowner. Paint adds thousands of dollars to a homes market value, for minimal investment.
2. Landscape: Neglected landscape is easily corrected. When done properly, it can invite people in, beautify, hide unattractive features, add color, add light to the interior and give life to the neglected home. Cut back overgrowth, replace dead shrubs, add a speciman tree, color and get the lawn in shape. Landscaping increases resale value by thousands of dollars and can easily be done by the homeowner.
3. Light Fixtures: Replacing shoddy, outdated lighting fixtures is a quick cosmetic fix that adds light, character and updates the overall appearance of a home. Large home improvement retailers, such as Lowes and Home Depot, make changing fixtures inexpensive and fun to do. If the wiring is in good working order, this is another task the homeowner can do in a few hours. When deciding what lights take priority, the front door and entryway always has the biggest impact on buyers. Don't forget to inspect the switch and electrical plates, if they are old, dirty and yellow, replace them for a few bucks.
4. Flooring: Worn, soiled carpet is a turnoff to everyone. Take it out. If you find hardwood floors underneath, uncover them and refinish area's that need it. If you don't, recarpet the entire house in a nice, light neutral color. If the budget did not include new carpet, clean it the best you can. If the carpet color is a turn off, paint the walls a lighter shade of the carpet to detract attention. Ripped, dirty vinyl floors are generally inexpensive to replace. Some of the new flooring products are also designed for DIY installation to save even more. To get the highest resale value it is usually a good idea to refloor, if needed.
5. Cabinets: Kitchens and Baths sell houses. If new cabinets are not an option, try a fresh coat of semi-gloss paint and new knobs. Another cost cutter is to replace the doors and drawer faces only, if the cabinet frames are solid. Taking a section of upper cabinet doors to a glass company and adding glass inserts in them is also a good, update solution. In the bathroom, replace, paint or remove the old vanity and add a new one or a pedestal sink.
6. Doors: The entry door needs to be nice and invite buyers into the home. Restain or paint, add a kick plate and new hardware. A little money in the entry of the home goes a long way, when it comes time to sell. If the interior doors are dated or in bad shape, replace all the doors. The frames are in so you only need to buy the slabs. The new doors come in many styles to compliment the house and many are already pre-painted.
7. Plumbing Fixtures: Old toilets cost about $350 to replace. Old tubs can cost anywhere from $350 to thousands of dollars. Sinks run from $200 up. If stains or chips are a problem, don't replace, reglaze. Check your phone book for resurfacing companies and get a quote.
8. Appliances: Why replace appliances that work? If you have to replace appliances, look for scratch and dent companies. Consider lightly used or refurbished appliances before buying new. Often, only a good cleaning, new burners and drip pans are the fix.

Cosmetic fixes and updates are crucial to an increase in market value. Items like new roofs, heat and air units, water damage, foundation problems, room additions, new windows, repaving, adding decks are major rehabiliatation. These type of fix ups should be avoided because the upgrade will not add more market value than they cost. Fixers need to avoid these types of unprofitable rehabilitations like the flu. If not, it will be your bank account that needs a shot in the arm.