www.SunilSethi.com

 Real Estate & Mortgage Loan Specialist



April 2005

 

 

 

Another April 15 has come and gone, I suspect that more and more of you are now falling into AMT (Alternative Minimum Tax). Therefore now would be a good time to examine the preference items on your 2004 IRS Form 6251 to see if there’s anything you want to do differently to minimize your AMT in 2005. I suspect managing your property tax and state tax payments will be the most important items.

 

Best regards,

 

Sunil Sethi

           

Real Estate Bay Area Update

 

This last week the newspapers have been filled with articles about unprecedented rates of home flipping (see chart below), and percentage of homes bought as investment being as high as 9-20% of all sales in a community. According to San Francisco research firm Loan Performance 20% of all homes sold in Redding in 2004 were to investors. Not far behind were Merced, Visalia, San Luis Obispo, Chico, Fresno and Bakersfield.

TURNING THEM OVER

Average monthly ``flipping'' activity -- that is, percentage of homes sold that had been bought less than six months earlier.

County

2000

2001

2002

2003

2004

Jan/Feb '05

Santa Clara

2.4%

2.0%

1.8%

1.8%

2.6%

4.5%

San Mateo

1.8%

1.5%

1.2%

1.25%

2.2%

3.0%

Alameda

2.0%

2.0%

1.4%

1.7%

2.2%

4.0%

San Francisco

2.5%

1.6%

1.4%

1.3%

3.0%

4.9%

Source:DataQuick Information Systems

 

               

Time for a SMARF Martini

 

 

Since I get so many requests for it, here’s the recipe again for SMARF Martini.

 

1 part gin

½ Triple Sec

¼ sweeten Lime Juice

¾ margarita mix

 

Remember to serve it shaken not stirred with ice then strain into your best martini glass.

 

Interest Rates

 

 

Interest rates have dropped from their recent high about 3 weeks ago for a number of reasons: lower inflation fears, lower job growth than expected, lower GDP growth than expected, and higher oil prices. However don’t expect the FED to drop it’s planned rate increases for this year. The next FOMC meeting will be on May 2. It is expected that the Board will increase the Fed Funds rate by another .25% at that time and correspondingly the prime rate will increase to 6.00%%. It’s expected that the Fed will continue the their .25% increases for the remaining 6 times they meet this year (so that we can expect to see the prime move to 7.25% by the end of the year).

 

Lesson on 2nd Loans

There are two types:

  1. HELOC (Home Equity Lines of Credit) – offer a line of credit with an interest rate tied to the Prime index plus a margin. The rate varies monthly. Interest only is required for the first 5 or 10 years of the loan.
  2. Fixed 2nd Loan – These are fully amortized with a fixed interest rate. They come in a variety terms like first loans. These have become more popular recently given the future rate hikes in the Fed’s plan of this year.

 

Lately I’ve seen more activity with clients interested in taking advantage of the increase in home prices to move some or all of their existing 2nd loans into their first loan or to move to a fixed rate 2nd. If you would like to run the numbers please give me a call.

 

 

 

Real Estate Investment ClubEast Bay Wealth Builders

 

 

Please let me know if you plan to attend so I can look for you. All meetings start at 6:00PM. These are both educational and networking events.   

 

Calendar of Events

Date

Topic

Speakers

April 21 –Fremont Marriott

Commercial Real Estate Strategies -  How to Invest successfully in Multi-Unit Properties

Greg Warr

April 23 – Courtyard Newark

Multi-Unit Investment Properties Workshop

Greg Warr

May 18 –San Ramon Marriott

How to Build Your Bridge to Financial Freedom

How to Build Your Real Estate Investment Business

Gary Massari  

 

 

Loral Langemeier

 

May 19 –Fremont Marriott

Investing in the Caribbean

Darrell Anderson

May 21 – San Ramon Marriott

Wealth Builder’s Seminar

TBA

 

Property Taxes

 

It would be a good idea to confirm your second installment of properties was received on time. Click here to get to the county assessor’s website.

 

The tax bill for the next year will be mailed out the last week of October, and becomes due Nov. 1 and late if not received by Dec. 10.

 

 

Maps and Directions – Google Maps

 

 

Google’s new map service out does the competition with the clarity of their maps, and their satellite view will show you exactly what you’ll see on your drive there. Trying the driving directions feature, I guarantee you’ll be amazed.  Now if only they could bring satellite view to car GPS receivers, then we’d never miss a turn. Finally, try yellow pages feature by typing “restaurants near 38350 Fremont, Blvd, Fremont, Ca” and it’ll bring up a map with nearby restaurants highlighted. Go ahead and click on one of markers indicating a restaurant, and it’ll give you contact info and website’s that refer to that location.

 

Home Maintenance Tip – Gutter and Chimney Service

 

The rains may have stopped so now may be a good time to get those gutters cleaned. Gutters need to be cleaned about every 3 years. Herzog’s Gutter and Chimney Service is offering my clients a 15% discount on any gutter or chimney work ordered by August 15, 2005. Just tell him I sent you. Herzog also offers yard work and tree trimming service.  Just call and ask for Mark Herzog (510) 468-2727.

Save
15% off