Hi JoJo,

Hey, if you are a real estate investor I hope you are claiming the Real Estate Professional Status.

Some CPA dont know about that tool. If you are in alternative minimum tax bracket the last thing you want to do is have more income. I have a fantastic CPA who knows all about that rule. The cool thing about that is if you activly participate in your investments you wont be limited to an income ceiling.

My husband was well over the ALT Min tax, we bought an investment property just for that purpose, however our CPA didnt know how that rule worked and we paid big in taxes. But two years ago we had our taxes redone and were able to take all of our losses and not subject to any income limitations.

If you would like to know of a cpa who is aware of that rule I can get you that info. Also if you want to know about the Real Estate Professional Status Im happy to help you there as well.

Have you bought investment properties before? Think of buying like this,,,would you live there?

There are renters and buyers for every neighborhood. Your main concern is knowing you can pull this money for this unit/neighborhood.

JoAnna Jensen
Volo Law Group
Paralegal Realtor
925 699 5041

Hi Jojo,

First question you want to ask yourself is what is the rental market? Make sure that you will have reserves, minimum 4-6 months of reserves.

How is the location? What will your mortgage payment be?

With the hoa, you may want to buy a home that size because you will be able to rent it out for more and more peoople look for homes to rent I would say.

Plan carefully, are you preapproved?

It is a good investment if you can: rent it, sell it when your ready, get good tennants.

There are some areas where you can buy a home for very low money and have Cash Flow. You have to look at your objective, are you looking for Cash Flow, appreciation, or a slight loss so you can have a write off? There is a difference on how you want to buy based on what your taxes look like.

Now and in the near future is definately the time to buy/invest.

JoAnna Jensen
Volo Law Group
Paralegal / Realtor
925 699 5041

Jojo,

1) Laguna Vista is an older development (36 years old) and comes with it higher ongoing maintenance cost and increase in HOA fee. Although the current monthly dues at Laguna Vista HOA is only $225 per MLS and considered average and not high, it concerns me to know whether they keep good books and enough reserves or whether they keep up their community properly. This is not to say that they are not, it is only an indication to me that as a buyer I need to carefully review the pertinent HOA docs and investigate their financial well-being as part of my due diligence. You normally will receive such information as part of the general disclosures during your contingency period.

2) You also want to check the owner occupancy percentage of the community you are going to invest in. the lower this percentage meaning that there are more absentee owners and investors; hence less pride of ownership and higher chance of defaults. Higher default meaning more uncollected dues and higher burden on HOA finances. Lenders take a look at this ratio and will not lend on HOA's with high percentage of absentee owners; hence making the initial loan acquisition and its resale a challenge.

As far as the other property you are referring to with 1028SF, I believe you are referring to the ones on Norton Way. If so, they are not in Vintage Terrace. HOA fees there are a bit high and unfortunately that community is not my favorite either :-(

Have you looked into the costs to maintain that type of home and the HOA reserves? Older communities will have more problems. Make sure you do you homework before you buy regarding the potential out of pocket costs too.

Hi Steve,

Thanks for the input. Yes it's on that location. Why did you say that it is not an appealing development?

How about the Vintage Terrace location? Is that a good development? Although this is more expensive but at 1028 square feet, the price/sqft is better than the one on foothill.

Thanks again to all who replied.

-Jojo

You should look at the location and age of the condo you are looking at. You can get a better buy in the Dublin Ranch condos. HOA is lower and more high end developments are coming in. This will help pricing.

Jojo,

Well...easy answer is that every real estate investment is a good one so long as you allow it time and can sustain the expenses for a long term. I think everyone's answer was good; however here are some bullets to mention; some repeated:

1) First, you have to identify your investment goal? Do you need cash flow? or can you afford some negative cash flow? Sounds like you are looking for long term investment and potential appreciation not immediate cash flow, right?
2) As Steven mentioned, speaking with you CPA/Tax Advisor is crucial as it may shift your investment strategy.
3) The condo you are referring to is in Laguna Vista, an older development. It may be attractive since it carries a Pleasanton address, but it is one of the least appealing developments in Pleasanton. There are other areas you may want to consider where you can purchase around the same price range but much newer property, hence less maintenance expenses and or lower HOA fees.
4) Short sale; no guarantee you will be able to buy it after lender’s review of the short sale, what you end up having to pay for it, how long you have to wait to find out…..Perhaps searching for a straight REO is a better approach
5) As Lucy mentioned, some of the allowable deductions depend on what your annual household income is. Also, whether you can consider possible losses as active or passive losses.
6) As Brian mentioned, lending guidelines are changing on daily basis and consulting your mortgage consultant is also imperative as part of your initial planning. Borrowing on investment properties has become more stringent and you do not want surprises along the way. Even with 20% down payment, your loan application has to be fully documented. Furthermore, I know that occupancy rate in Laguna Vista is pretty low and may make it impossible to obtain financing.

As you see, there are few items to ponder on and consult with your advisor. I believe it would be a good idea to identify a real estate consultant first and let him/her take you through the process, wouldn’t you think?

Over 50% of my client’s purchases this year has been investment properties. I am well-versed with the topic and would love to offer you a complimentary session to further explore your objective at no obligation. You can reach me at http://www.BayAreaHomeFinder.com or 925-484-0707.

I think before you get to far you may want to speak to a Mortgage Broker such as myself. New lending guidelines may require a higher down payment. The other question I would ask is on your current residence and rental do you have greater than 30% equity? There is new guidelines for approval on the new investment loan since Freddie and Frannie have implemented "Buy and Bail" policies. If you have any questions feel free to give me a call.

JoJo ,
The information you provide is still not enough. However, I made up some assumptions as following to
answer your question:If you want to know more in detail, Please give me a call @925-819-0752 .

price $200,000
Loan amount $160,000
Interest rate:7%
all passive losses can be used in your tax year
you will keep your property for 10 year
Manage your property yourselves
Estimated annual appreciated rate:2% ( If you give me a correct address, I can provide you a historic price range for this property. )
Vacancy rate:5%
Estimated tax bracket :25%
Estimated monthly maintenance is30%

There is my estimated number
Your estimated annual cash flow pre-tax : -$5974(Average)-$6500(1st year)
Your estimated annual cash flow after-tax: -$2832(Average)-$3014(1st year)
The selling price with 2% annual appreciation is :$239019
How much money will you earn from this investment=selling price(239000)-initial investment(42000)-the remaining loan balance (140345)-total 10 year annual cash flow after tax(28316)=$28339.00

You see, because of too many assumption, it is very difficult to determine if this is a good investment or not. Please give me a call @925-819-0752 if you want to have more in detail. Thank you
Web Reference: http://lucyliou.yourkwagent.com/

I guess my initial question was not clear. Here are some details:
Condominium type - 2BR/1 Bath
Pleasanton area - 94566
The property is clustered into 4 units per lot and this unit is the top unit.
selling price =200000
HOA = 225
will hold for a long time maybe 5-10yrs depending on the market
nearby units are being rented for 1450
planning to put up 20% down.
me:
- 35 yrs old
- married w/2 kids who live in Dublin
- homeowner (have rental in LV too)
- this for me is for appreciation as my portfolio is down :(

Thanks to all

Hi Jojo, I think your best move is to speak with your tax advisor/CPA to discuss what type of residential investment makes sense for your financial situation, if at all. If your tax advisor/CPA is any good, they will have a preferred mortgage banker and Realtor that can help you execute the strategy developed. If you need a referral for a tax advisor/CPA feel free to contact me offline.

Best Regards,

Steven A. Ornellas, GRI, ABR, e-PRO, CMPS, RE Masters, MBA
REALTOR® / Mortgage Banker-Broker / Certified Mortgage Planning Specialist

Steven Anthony Real Estate & Financial Services
Expect Excellence. Get What You Expect.™
Cell: 510.461.6011
http://www.Steven-Anthony.com SteveO@Steven-Anthony.com

Hello Jojo,

Investment goals vary by investor. Some are looking for cash on cash return. Some for cash flow. Others for long term appreciation.

It's important to understand you objectives, your "true" costs, including HOA fees, maintenance/repair estimates, vacancy rates in the area.

I invite you to call me at (925) 407-7987 to discuss this opportunity and the short sale process, no strings attached.

Kindest Regards,
Vickie Nagy
Realtor® - ABR, CRS, e-PRO, GRI, SRES
Specializing in "GETTING YOU WHERE YOU NEED TO BE"
(925) 407-7987 cell
http://www.VickieSellsHomes.com
http://www.BestTriValleyHomes.com
Empire Realty Associates, 380 Diablo Rd, Danville, CA 94526
October 2008 Real Estate News You Can Use (Newsletter)

Hi Jojo,
I would happy to find out if it is a good investment in your situation. It is depend on many factors such as your Tax bracket, Your mortgage payment, will you manage this renting property yourself, How long will you hold this property. If you can give a call @ 925-819-0752 or email me @lioulucy22@yahoo.com . I would be happy to provide you an investment property analysis report.

Hello Jojo. Can you give us a little bit more information. It'd be important to know how much you'll pay for the condo to tell you whether it's a good investment. We'd also have to know how long you plan on holding on to the condo.