Contract for Deed Qualifies for First Time Homebuyer Credit

From the IRS website:

Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer’s payment obligations?

A. If the taxpayer obtains the “benefits and burdens” of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)

Are Banks Holding a “Shadow” Inventory of Homes?

The number of homes listed for sale in several housing markets fell last month to levels last seen at the start of the housing downturn. That’s raising hopes that several of the hardest-hit housing markets may be stabilizing.

But the housing cynic may wonder: how much does that have to do with banks holding foreclosed properties off the market to prevent a new glut of properties from hitting the market?

>>> Read more

Signs of a Market Rebound?

One of the critical factors in the signs of a housing rebound is when it becomes cheaper to own than to rent.

According to an Associated Press article:

“An Associated Press analysis of 45 metro areas finds the gap between the monthly mortgage payment on a median-priced home and the median rent has shrunk from $777 a month to just $221 in the past three years.”

This number something you should keep an eye on.  When it becomes cheaper to own than rent, more people will start buying than renting, it’s simple math.

Los Angeles Wholesaling Boot Camp

Here’s a brief message about my upcoming Wholesaling Boot Camp in Los Angeles

Obama Cap and Trade Legislation Will Affect Investors

Obama’s new cap and trade legislation is not only a hidden tax on ALL Americans who own homes, it is particularly burdensome on those who want to SELL a home.

If you want to sell your home, there is a section in the bill that says government housing inspectors will have to first check it out to make sure it meets the new energy efficiency standards or you cannot sell it until you bring it up to the new standard.  Thus, if you buy, fix and flip a home, you must make it “green” – new windows, new furnace, etc.

I feel sorry for the poor schmuck with old windows and an old furnace who can’t afford to fix his home before selling.

FHA Seasoning Clarification

As you may know, FHA loan seasoning requires the seller to own the property for 90 days.  When does the 90 day calculation begin and end?

The 90 days commences at the time of CLOSING, not the recording of the deed.  The 90 days ends when the next buyer signs the contract.  In other words, there must be a minimum of 90 days from the date of closing on the acquisition side to the signing of the contract for the resale of the property.