Tight Money Part II

     The Wall Street Journal reports: The SBA has a deal for you. It’s called a 504 loan. Here’s what you need to know about it.

     The government is trying to entice more small businesses to tap one of its loan programs. Before applying for one of these loans, though, there are some fine points borrowers should consider.

     The Small Business Administration’s 504 loan lets companies take out fixed-rate financing to buy property, build or expand facilities, or refinance some existing mortgages. The borrower typically needs to put down just 10% of the transaction’s total price.

Tight Money Part I

 Money Magazine July 2010 asks:  “When is the real estate market going to return to some sense of normalcy?”

The answer by Money Magazine:  Probably by around 2012, economists think. But before home prices can rebound, a few things will need to happen, says Nicholas Retsinas, director of Harvard’s Joint Center for Housing Studies.

 First, the number of homes selling below their fair value has to decline so prices can rise. Today a third of transactions are short sales or foreclosures – and that number probably won’t start to fall until the end of this year, Retsinas says.

Time to Push the Button on a Condo Purchase?

 Money Magazine says: Prices are low but a condo purchase can still be a risky proposition. Try these tips to snag a great bargain without getting burned.

 For the first time in years there is a glimmer of hope in the condo market. After falling 20% nationwide and 60% or more in the hardest-hit areas, median condo prices remained flat nationally in the first quarter vs. a year earlier. And sales in March were up 40% from the previous year, hinting that prices might be heading back up soon too.

What You Need to Know About Reverse Mortgages

Kipplinger Personal Finance, July 2010, Reports: 

     1. Age matters (income doesn’t). If you are 62 or older and have paid off your mortgage (or owe only a small balance), you may be able to tap your home equity to generate extra cash. You can take the money as a lump sum, a line of credit, monthly payments, or a combination of a credit line and regular payouts. Unlike a traditional mortgage or home-equity loan, you don’t need to meet income or credit requirements to qualify, and you don’t have to repay the loan as long as you live in the house.

Buying a Foreclosed Home

The Milwaukee Journal reports on July 18, 2010:

With the downturn in the economy over the past two years, hundreds of thousands of homes have gone into foreclosure, offering an opportunity for many Americans to buy a home at a lower price, sometimes 30% or more of the most recent sale price.

  Buying a home is always a challenge. Buying a foreclosed home presents unique challenges, however. You need to be willing to hunt, put up with lenders who offer surprisingly little information about the properties they’ve taken back, real estate agents who have little experience or incentive in selling foreclosed homes and loan officers who demand nearly perfect credit ratings.

 Home Warranties:  Five Things You Need to Know About

 Money Magazine June 2010 reports:

     1.   More homeowners are signing up. Typically, warranties are purchased by home sellers to attract buyers, but today nearly 1/3 are paid for by homeowners who are not  planning to move, according to the National Home Service Contract Association. 

Home Warranties can sound like a good deal: They typically cost $350 to $600 a year and are designed to offset the cost of repairing or replacing plumbing, heating, cooling, and electrical systems, and major appliances like ovens and dishwashers. When trouble arises, you get a visit from a servicer, who determines whether your warranty will cover the problem. You pay a $50 to $100 service fee to the repairman.

Renting Instead of Selling

 Money Magazine August 2010 reports on the five steps in renting your home:

 Step 1. Calculate what it really costs to be a landlord. Your carrying costs will be higher than your current mortgage, taxes, and insurance. For starters, the cost of your insurance policy is likely to rise once you no longer live in the home. And if you rent out your home for more than three years, you’re likely to end up paying capital gains taxes on any appreciation of the home when you sell. Moreover, if you dread fixing broken toilets/lights/etc. – or live too far away to do so, you may opt for professional management. That’ll cost around 7% to 10% of the monthly rent (to find property managers, go to narpm.org and irem.org).

Is borrowing from my 401(k) a good idea?

Money Magazine asks the question:   “My wife and I want to buy a home, but can’t put 20% down. Is borrowing from my 401(k) a good idea?”

 The answer they give: It’s not worth it. You’ll be giving up any investment gains that might accrue before you repay the loan. Plus, if you change jobs, you’ll have to return the money almost immediately or it will be subject to income taxes and a 10% withdrawal penalty. A better idea is to cut or stop new 401(k) contributions and save that dough for your down payment, says Chicago financial planner Mark Berg.

Business Planning Part II

      I read in Fortune Magazine 2010, “Battle of the Business Plans” that Houston’s Rice University offers a $1,000,000 prize for the best business plan. There are sixteen other national races offering cash and in-kind prizes for the best business plan.

      My own belief is that no business will reach its fullest potential unless it begins with, and continues to operate with, a well-researched and well thought-out business plan. National statistics show that roughly 80% of all start-up businesses fail. More than one-half fail within the first two years. I believe, in the current economy, the percentage of failures in the first two years is much higher.

Home Sellers:  Fact   

Nationwide the average home is on the market 150 days up 43% from merely two years ago.  The average high end home is on the market 248 days.   Sellers can track this number to see where the market is heading. 

 Attorney Joseph F. Madrigrano, Jr. studies the real estate market in order to provide value to his clients.   He has assisted real estate clients in taking advantage of opportunities and solving their problems for over 38 years.  As in all business matters:  Experience is the Difference.  Joseph F. Madrigrano Jr. has the experience to help you succeed.