Why Proper Estate Planning Is So Important

I Already Have a Will, What Else Do I Need?

Many people are proud to say they have a Will already set up, but why is this not sufficient for estate planning?

Contrary to what most people believe, a Will doesn’t avoid probate, in fact, it guarantees probate. A Will must be verified by the probate court before it can be enforced. Another problem with a Will is that it can only go into effect after you die. But what if you become physically or mentally incapacitated?

What is probate? Probate is a court process required when you die to assure debts are paid and assets are distributed according to your Will. Assets are frozen during this process, and in California it can take from 6 months to 2 years! If you own property in more than one state, there may be a probate in each state. You must also pay probate fees to an attorney/executor in the amount of 5% of the gross value of your estate! Another problem with going into probate is that, during the probate period, the public is able to see what you owned and who your creditors were etc.

A Living Trust is similar to a Will in that it includes the instructions for what you want to happen with your assets when you die. But unlike a Will, a Living Trust avoids probate at death, and also prevents the court from controlling assets at incapacity. A trust simply transfers assets from your name to the name of your trust, which you control. The trust then owns your assets and you designate a back up trustee to handle your trust (according to your instructions). Upon your death, since your assets are “owned” by the Trust, there is nothing to probate.

Here are a few of the advantages of using the Living Trust over the Will:

    * Avoids probate at death

    * Avoids multiple probates if you own property in more than one state

    * Prevents court control of assets at incapacity

    * Provides maximum privacy

    * Allows quick distribution of assets

    *Assets can remain in Trust until beneficiaries reach the age(s) you want them to inherit

    * Can reduce or eliminate estate taxes

    * Can be changed or cancelled at any time

    * Difficult to contest

    *Can protect dependents with special needs

But one question I have is: what if I’m single with no children? Would it still be better for me to use a Revocable Living Trust instead of a Will?

Read more!

Is Now a Good Time To Do Some Real Estate Investing Overseas?

What should you look for in an overseas property investment? Now that investing in property in our economy has become a risky venture in itself, maybe it’s time to look overseas. I’ve heard that it is a drawn out process (also mentioned in the article) and don’t know if it is worth the hassle. Does anyone have any thoughts or is currently contemplating investing overseas?

http://www.realestateweblog.org/due-diligence-and-overseas-property-investment.php Read more!

Where is the best place in the US to invest for Appreciation?

PMI Summer 2008 Risk Index Indicates Risk Intensifying in Areas With Previous Rapid Home Price Growth

WALNUT CREEK, Calif., July 1 PRNewswire-FirstCall

PMI Mortgage Insurance Co., the primary U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today released its Summer 2008 U.S. Market Risk Index(SM), which ranks the nation's 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in two years. In general, risk continued to intensify in many of the MSAs where home price growth had significantly exceeded historical norms during the housing boom, but continued to decline in many other areas across the country.

A complete copy of the Summer 2008 PMI ERET report and an appendix that provides data for all 381 U.S. MSAs is available at: http://www.pmi-us.com/eret.

The highest risk of future price declines remains in Riverside-San Bernardino-Ontario, CA (95.5), followed by Fort Lauderdale-Pompano Beach-Deerfield Beach, FL (92.2), and West Palm Beach-Boca Raton-Boynton Beach, FL (91.9). The areas with the lowest risk of price declines are in Fort Worth-Arlington, TX, Dallas-Plano-Irving, TX, and Pittsburgh, PA, each at less than a 1 percent chance. The risk of lower prices in two years declined in 35 of the nation's 50 largest MSAs, and among all 381 MSAs, 326 experienced a decline in risk. Among the top 50 MSAs, 16 ranked in the two highest risk categories, and among those, 15 were in California, Florida, Nevada, and Arizona. Risk of lower prices in two years is greater than 50 percent in all of these MSAs.

Risk scores translate directly into an estimated percentage risk that home prices will be lower in two years. The Summer 2008 Risk Index is based on first-quarter Office of Federal Housing Enterprise Oversight (OFHEO) data.


                  PMI Summer 2008 PMI U.S. Market Risk Index

    Rank   MSA                                                                               Score

    1      Riverside-San Bernardino-Ontario; CA                               95.5
    1      Fort Lauderdale-Pompano Beach-Deerfield Beach; FL       92.2
    1      West Palm Beach-Boca Raton-Boynton Beach; FL            91.9
    1      Orlando-Kissimmee; FL                                                      91.1
    1      Las Vegas-Paradise; NV                                                     88.1
    1      Tampa-St. Petersburg-Clearwater; FL                                 86.6
    1      Santa Ana-Anaheim-Irvine; CA                                          85.8
    1      Los Angeles-Long Beach-Glendale; CA                            85.7
    1      Miami-Miami Beach-Kendall; FL                                      84.8
    1      Sacramento-Arden-Arcade-Roseville; CA                         82.2
    1      Phoenix-Mesa-Scottsdale; AZ                                            79.6
    1      San Diego-Carlsbad-San Marcos; CA                               78.0
    1      Jacksonville; FL                                                                 73.2
    1      Oakland-Fremont-Hayward; CA                                       72.8
    2      San Jose-Sunnyvale-Santa Clara; CA                                51.3
    2      Providence-New Bedford-Fall River; RI-MA                   43.4
    3      San Francisco-San Mateo-Redwood City; CA                  35.7
    3      Washington-Arlington-Alexandria; DC-VA-MD-WV      21.4
    3      Nassau-Suffolk; NY                                                          21.2
    4      Edison-New Brunswick; NJ                                              16.2
    4      Virginia Beach-Norfolk-Newport News; VA-NC             13.8
    4      Boston-Quincy; MA                                                          11.8
    4      Detroit-Livonia-Dearborn; MI                                           11.1
    5      Portland-Vancouver-Beaverton; OR-WA                          8.7
    5      Minneapolis-St. Paul-Bloomington; MN-WI                     8.2
    5      Newark-Union; NJ-PA                                                      6.5
    5      New York-White Plains-Wayne; NY-NJ                          6.0
    5      Baltimore-Towson; MD                                                    5.5
    5      Warren-Troy-Farmington Hills; MI                                   5.3
    5      Cambridge-Newton-Framingham; MA                             4.3
    5      Atlanta-Sandy Springs-Marietta; GA                               2.0
    5      Seattle-Bellevue-Everett; WA                                          1.7
    5      Chicago-Naperville-Joliet; IL                                           1.5
    5      Philadelphia; PA                                                              1.4
    5      Nashville-Davidson--Murfreesboro--Franklin; TN          1.3
    5      St. Louis; MO-IL                                                             1.0
    5      Milwaukee-Waukesha-West Allis; WI                            <1
    5      Cleveland-Elyria-Mentor; OH                                         <1
    5      Austin-Round Rock; TX                                                 <1
    5      Denver-Aurora; CO                                                        <1
    5      Charlotte-Gastonia-Concord; NC-SC                             <1
    5      Kansas City; MO-KS                                                      <1
    5      Columbus; OH                                                                <1
    5      Cincinnati-Middletown; OH-KY-IN                               <1
    5      Indianapolis-Carmel; IN                                                  <1
    5      San Antonio; TX                                                             <1
    5      Houston-Sugar Land-Baytown; TX                                <1
    5      Pittsburgh; PA                                                                 <1
    5      Dallas-Plano-Irving; TX                                                  <1
    5      Fort Worth-Arlington; TX                                               <1


SOURCE PMI Mortgage Insurance Co.
Any comments?
Posted by Dean Morgan of Project Liberty

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Master Mind Discussing Illinois Land Trusts with David Henderson

Creating a Win-Win-Win for Investors, Sellers, and Buyers

In the current real estate market there is a glut of two parties. You’ve got a glut of sellers who may or may not be in bad loans who all want to sell now. Then you’ve got a glut of buyers who, with the dramatic changes in the lending environment, cannot get loans to buy. David Henderson says, “As an investor, you don’t want to own property, you just want to control it.” The Trust is a tool that allows you to control (not own) multiple properties. David recommends the book, ‘A Fortune In Free Real Estate,’ for a more in-depth look at the Trust process.


Real Property vs. Personal Property: After Real Property is placed in a Trust, it ceases to be ‘real property’ and turns into ‘personal property.’

The Trust itself has 4 different documents:

1. Trust Document

2. Beneficiary Designation Document (defines each beneficiary’s interest in the Trust.

3. Assignment of Beneficial Interest Document

4. Occupancy Agreement (like a standard lease)

**All of these documents are closed at a Title Company.


What about the Due on Sale Clause? Trust does NOT trigger the Due on Sale Clause.

Good Market Opportunity: There is a glut of both buyers and sellers in the market right now. Buyers that cannot qualify for loans to homes and Sellers that cannot refi or cannot sell with so many homes on the market.

Seller Carries Note: David approaches ‘For Sale By Owner’ Sellers. Sellers must be willing to carry the Note until the Trust is terminated in 36 mo. when the buyer is able to refi the property. All of David’s buyers in his Trusts have been able to refi before the 3 yr deadline when the Trust is terminated.

Cash Down Returned to Buyer: Buyers for the property, or your ‘Resident Beneficiary’ must have 5% down plus 1st months rent. (No credit necessary but do they have the cash down to buy the home?) The selling point on this is that this 5% is returned to buyer when the Trust is terminated.

Terms are flexible: To make a deal work, all of the terms are flexible. Whatever the seller or the buyer needs to enter into the Trust with you, the investor, make it happen!

Leverage your Realtors: Realtors can bring people to you that cannot qualify for a loan if you are willing to offer them a commission. David says this is his best source of referrals.

How do you convince the buyer to become a resident beneficiary in a Trust?

Tax benefit given to ‘Resident Beneficiary’

5% down at inception of Trust is returned to buyer at time of Trust termination.

Can offer a split in future appreciation with buyer when Trust is terminated.

Terms of the deal are legally binding through the Trust documents (buyer is protected!)

For more information, contact David Henderson of Project Liberty dbhenderson8356@msn.com Read more!

Real Estate News

Despite upbeat predictions from many in the housing industry, the nationwide slump in home prices could last for a long, long time-especially if you count the toll exacted by inflation. Chief economist Lawrence Yun of the National Association of Realtors predicts that nominal house prices will bottom out by the middle of this year, and then resume a 3%-plus yearly increase. Not bad, on the surface-but possibly no better than inflation. Housing does remain a good hedge against inflation over very long periods of time. If the past is any guide, homes will continue to provide investors with solid protection against inflation for periods of 20 years or more. The problem is, a lot of us may not want to hang on to our homes for two decades. (Gene Epstein of barrons.com.) If the national average for selling or refinancing your home is 3-5 years, home owners are going to need a way to beat inflation costs. Economic reports show that if consumers feel wealthy they will spend more money. For most how much equity they have in their home, is a big part of that. Any comments or ideas on the future of the market?


Posted by Corey Curwick of Project liberty

Source: Stepping Stone Financial Newsletter Read more!

Using the Illinois Land Trust as a creative tool for real estate acquisition or liquidation. What are the potential pitfalls in this deal scenario??

At one of our Master Mind sessions, we had John Acquisto join us to illustrate how these Trusts can be used as a creative vehicle for acquiring or liquidating real property. John Acquisto specializes in helping investors use this tool properly. John gave us a variety of examples where an investor could use the Trust in an acquisition and/or liquidation. However, we only saw all of the good sides, or how the deal could work successfully. What I want to know is: What are the holes? OR how could this deal potentially fall apart? Let’s consider one of the examples he gave us at the Master Mind:

Example:

• Kevin is trying to sell a house and has a loan on the property. (Seller)
• Melanie has amazing credit score, 780.
  
• Rick wants to buy the property. (Buyer)
• John is intermediary, putting the deal together. (Investor)

Let’s say the Seller, Kevin, has an adjustable arm loan and is going to lose the property as he can no longer afford to make the payments. The Lender agrees to do a short sale, and Melanie (the FICO borrower) buys the property at a discounted price. (Takes a loan on the property in her name). Rick (the buyer) agrees to buy the property, making payments on Melanie’s loan. Here, the Investor has structured the deal with Rick to purchase the property at a higher value than the loan Melanie has on the property. This would be a positive cash flow every month from the difference between Melanie’s mortgage payment and Rick’s payment. In this example, you can structure the Trust Documents such that you can create this unique deal scenario. The Trust is like “silly putty for real estate” in that you can use it to accomplish whatever creative ends you wish to achieve through it. The percentages to the beneficiaries in the Trust as described by the Trust documents could potentially be:

• Positive Cash Flow every month: Investor beneficiary and Credit beneficiary in the Trust split the positive cash flow each month. (the difference between Rick’s payment and Melanie’s debt service on the loan).
• Investor beneficiary gets 75% of equity when Rick “purchases” the property. Credit beneficiary could get 25% of this beginning equity. (Terms are obviously negotiable here).
• Future Equity in this transaction: If Rick refinances at a later date or finds a buyer once the property has appreciated above his loan amount, he then gets 50% of Future Equity. Investor beneficiary gets 40% of future equity, and credit beneficiary gets 10%. (Sometimes credit beneficiary will demand more like 25% of future equity out of the transaction).
  

As I understand it, the best part about using a Trust to structure a deal like this is that the Trust documents can be written such that each party in the deal has their part legally defined and everyone is protected. However, what are the potential pitfalls here? Could anyone comment on this and help me see them if there are any??

by Corey Curwick of Project Liberty. Read more!

How Do You Find Comps on Properties?

My friend Bart Hansen asked me how I get comps when evaluating investment properties. Well, if you aren’t a realtor and don’t have access to MLS data, ask a realtor to give you “sold” data for the last 6 months. You can use a couple of realtors for this but just remember, they will want something out of it. Its good too if you can find a friend who is a realtor that will print out the sold data for you. You can also go to MLS to find only “for sale” data. On average, houses sell for 10% below the asking price so you can factor that into your “for sale” data should you not have any “sold” data available.

By Cary Valerio Read more!

Any Experience Using Illinois Land Trusts to Acquire or Liquidate Real Estate?

Does anyone have experience using trusts with real estate investment properties? Most people utilize the Trust as an asset protection medium but they seem to be a good tool for acquiring and/or liquidating properties, particularly in today’s real estate market. You can pretty much structure the Trust documents to accomplish whatever ends you wish to accomplish with a piece of property. It seems that the Trust is also a medium through which you can come to an agreement with multiple parties, each party playing its unique role in the deal, each role described in a structured, legal language (Trust documents) that protects each party.

If anyone has used this tool please share your experiences.

By Melanie Dewey Read more!

Real Estate Investing-30 Year vs. 15 Year Mortgages

-30 Year vs. 15 Year Mortgages

Discussion of the Asher Institute Report, entitled “Profiting From the Banking Industry’s Biggest Secret.” Copyright 2003. The Asher Institute is a non-profit consumer advocacy organization. www.asherinstitute.org

Who agrees with what the report proposes? What are some alternative points of view that may conflict with the point of view expressed in the report?
Click to below to read more.


The equity in your house is a mirage, its not doing anything just sitting in your house. Leverage it! Understand how high net worth individuals go through life: liabilities are a strong element on their balance sheets. Its all a play of arbitrage, leveraging your debt to acquire assets and increasing your rate of return in other asset classes. This is also what is known as “velocitizing” your money.

From this Report, you could have 2 primary objectives:
• 1. Pay less interest to the bank…….OR
• 2. Leverage your equity and/or extra money you are paying each month in other asset classes. (The money you are putting toward the 15 yr mortgage on the property, if you could put that toward an investment that is making more than the interest you’re paying, you’d be making more having the money working for you. i.e. arbitrage)



Posting from Chad Albury, C.F.O. of Bray-Conn Inc. and C.E.O. of Albury Investments, LLC on the topic Real Estate: Alternatives to the Traditional Mortgage Read more!

Real Estate Investing

Due Diligence Checklist on Real Property:

(Good list found at: http://www.birds-eye.net/due_diligence/real_estate/ )

• 
  
  Title Report
• 
  
  Inspection
• 
  
  Multiple Appraisals
• 
  
  County Assessment
• 
  
  Motives for selling property
• 
  
  Water rights
• 
  
  Rental History + Leases
• 
  
  Utilities History
• 
  
  Tax Returns last 3 yrs
• 
  
  Zoning
• 
  
  Economic direction of neighborhood
• 
  
  Crime
• 
  
  Talking with neighbors
• 
  
  Production of illegal drugs inspection
• 
  
  Electrical and plumbing
• 
  
  And of course much more….
  
  
  Check out  Private Money Utah for private and hard money information

Posting from Cary Valerio, C.E.O. of Valerio Investments and Bray-Conn Inc. on the topic Real Estate: 30 Year Mortgages and Asher Institute Report.

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