SunilSethi

Real Estate & Mortgage Loan Specialist

January 2005

 

www.sunilsethi.com

 

 

Dear Friend,

 

I wish you a happy, healthy and wealthy new year. New years are for new beginnings, and beginning Jan. 1, 2005 I joined the real estate practice headed by Amos Picker at Show and Sell Realty. I also moved SMA Financing’s office there. I’ve known Amos since 1975; he sold my dad the first home he bought in California. Amos and I have been cooperating over the last couple of years and decided it would be mutually beneficial for us and our clients to work more closely together.

 

Some of the benefits to my customers from this new union will be:

  • consultative experience of more than one agent on any transaction,
  • added in-house customer support for real estate and loan processing,
  • experience in buying and selling commercial space, and
  • expert property management services
  • commercial leasing
  • realty estate planning

 

I look forward to helping you achieve your financial objectives in 2005. When you get time, please give me a call to discuss your specific wealth building objectives for 2005.

 

As always service is my number one goal, and the reason that all my customers come from referrals. If there is any way I can help you, a friend or a neighbor, please let me know.  Please forward this to any of your friends, you think may enjoy or benefit from it.

 

Best regards,

 

Sunil Sethi

           

Real Estate Bay Area Update

 

Home prices are continuing their upward movement, I was discussing this issue with Amos, and he asked me, “how often how you heard someone say I wish I hadn’t bought” vs. “gee, I wish I hadn’t sold”?  Even though prices keep hitting new highs, the thing with California real estate, is that supply is limited, and people keeping moving here. Though we’ve seen dips in pricing, as long as you are buying with the intention of holding for at least 5 years, you’ll do fine. Here are the latest bay area housing stats.

 

               

Home Buying Trends

 

 

The National Association of Realtor’s “Profile of Buyers’ Home Features Preferences Report” found that about:

  • 75% of home owners said they preferred central AC,
  • 50% would like to have walk-in closets,
  • 42% want a Bedroom on main level,
  • 41% a Patio,
  • 41% an oversized garage,
  • 40% want the home to be cable/satellite TV Ready

 

Interest Rates

 

 

The next FOMC meeting will be on Feb. 1 or 2. It is expected that the Board will increase the Fed Funds rate by .25% and correspondingly the prime rate will increase to 5.5%. The good news is that the reason for the Fed tightening – to fight inflationary pressures – should be beneficial for long term rates, since they are more affected by inflation.

 

 

 

 

Real Estate Investment Club – East Bay Wealth Builders

 

 

This year I plan to attend more East Bay Wealth Builder meetings. Let me know when you’ll be there as well.

 

Calendar of Events

Date

Topic

Speakers

Jan. 19

Asset Protection and Financial Privacy

 

All you wanted to know about Foreclosures

Joe Tufo

 

 

June Christy

 

 

Feb. 16

How to Successfully Invest in Mortgages

 

Commercial Real Estate Strategies

 

Martin Goodman

 

 

Greg Warr

Mar. 17

Transform Real Estate from an Ordinary Tax Shelter into a Formidable TAX REDUCTION MACHINE

 

Albert Aiello

April 20

Getting Financing for your Deals

 

Barney Zick

May 18

How to Build Your Bridge to Financial Freedom

 

How to Build Your Real Estate Investment Business

Gary Massari  

 

 

Loral Langemeier

 

 

Club meetings take place each month at the San Ramon Marriott Hotel at 2600 Bishop Drive in San Ramon.   Registration starts at 6:00 pm.  We encourage non members to register online.  Please check our events schedule by month for the meeting dates and times.  It is a good idea to come early and bring lots of business cards to exchange with other attendees and to give to prospective clients who may be looking for the type of service you offer.  

 

Property Taxes

 

Your second installment of properties is due Feb. 1, and late on April 10.

 

Get a copy of your bill online by visiting the county assessor’s website. Click here

 

 

 

Income Taxes – Home Gain Exclusion

 

           

 

Gain Exclusion Not Available for Personal Residence Acquired in a Like-kind Exchange within 5 Years of Sale

 

The 2004 JOBS Act provides that the exclusion for gain on the sale or exchange of a personal residence does not apply if the principal residence was acquired in a like-kind exchange in which any gain was not recognized within the prior five years.

 

Effective date – Sales or exchanges of principal residences after 10/22/04

 

For example, Sharon has owned a four-plex for many years. If she sells it, she will pay lots of tax on her $400,000 gain. Instead she exchanges the four-plex into a single family house that she rents out for a few years (so that it qualifies as like kind). By exchanging, she has deferred her $400,000 gain in to the new house. She then moves into the house and uses it as her personal residence for 2 years. Although Sharon has owned and used the house as a personal residence 2 of the prior 5 years if Sharon sells the house within 5 years fo the exchange, she will not be able to exclude gains under section 121. If she waits until 5 years have passed, she’ll be able to exclude gains (even those deferred from the four-plex) up to $250,000 ($500,000 for MFJ). Under either circumstance, she will owe tax on depreciation claimed since May 6, 1997. 

 

 

New Law Encourages Tsunami Relief Contributions


The Internal Revenue Service alerted taxpayers who itemize deductions that they may claim on their 2004 tax returns charitable donations made during Jan. 2005 for relief of the victims of the Indian Ocean Tsunami.

The new law enacted on Jan. 7 allows these donations to be deducted as if they were made on Dec. 31, 2004. more…

 

           

Property Management Tips

 

 

 

 

 

 

Let your tenants know upfront what you expect

  1. Pay rent on time
  2. Take good care of the property
  3. Be good to neighbors
  4. Honor terms of the rental agreement

 

Three Types of Applicants

  1. Fraudulent Applicant– The person applying gives a false identity (always check the ID(s) of all applicants before approving them)
  2. Litigious Applicant – Wants to catch you doing the wrong thing.
  3. Legitimate Applicant – Majority of applicants.

 

California is First in First Served State. You need to approve the first qualified applicant that meets your rental requirements. Let the applicant know what is needed to apply. Qualify all applicants in the same manner. If you require a credit check on one, get it on all. Conduct all business in English. Make it the applicant’s responsibility to get a translator. If you decide to speak for example in Chinese to a Chinese customer, than you would be required to provide a translator to anyone else who doesn’t speak English.

 

For 2005 the maximum rental application fee is $34.  The Maximum security deposit for an unfurnished residence is 2 times rent, for furnished its 3 times rent. Within 21 days after move out you need to provide the tenant with an accounting of monies withheld for labor and supplies.

 

Use a Move-in move-out checklist and take plenty of pictures before and after. Let renter’s know you expect them to keep the property in the same condition they received it in.

   

Sunil Sethi, Realtor, Broker-Owner, MBA, CPA

UCLA Anderson School of Business ’98 - MBA

London Business School ’97  Finance & Strategy

UC Berkeley ’88  Economics
Ohlone Jr. College

American High School

 

Show and Sell Realty/SMA Financing

(510) 388-2436 cell

(510) 793-8600 office

(510) 344-3080 fax

www.sunilsethi.com

This issue and previous issues of this newsletter are available on the SMA Financing web site at: http://www.sunilsethi.com