120824- Home Solutions Podcast

Episode Transcript

Speaker 1 (00:00):
Buying a home and selling a home shouldn't be stressful. Renters, homeowners,
and investors in southern Arizona work with the Win three
Team powered by Epic Reality because they match buyers with
sellers like the e harmony of real estate buying or selling.
This is where you'll find what you're looking for. This
is Home Solutions on k and ST with the Win

(00:23):
three Team powered by Epic Reality. Now the Win three
Team leader, Andy Keel.

Speaker 2 (00:31):
Good morning, and welcome to the show. This is Andy
Keel with the Home Solutions Show on KNST. I'm joined
with Jerry, joined by Jerry Sunt with Cross Country Mortgage.

Speaker 3 (00:43):
Andy.

Speaker 2 (00:44):
Good morning, Jerry. I've actually got a lot of interesting
things to talk about in this show. A few current
events and a few things that have happened in our
business this week. So a lot of interesting things going on.
One of the items that came up this week that's
very near, near and dear to me and many of

(01:07):
the business owners that I know, is something that was
brought to our attention about a year ago called the
Corporate Transparency Act or the CTA. Some of you may
not know about this, others may, but it's basically an
act that was put out last year that I'll actually

(01:28):
read a little bit from this article. The Corporate Transparency Act,
and acted as part of the Anti Money Laundering Act
of twenty twenty, represents the most significant update to the
US business entity reporting requirements in decades. The law became
effective January first, twenty twenty four, requiring certain companies to
report beneficial owner ownership information to the Financial Crimes Enforcement Network,

(01:51):
which is referred to as FINSEN. So anybody that's a
domestic LLC corporation or other entity that's created by filing
with the Secretary of State effectively needs to disclose all
beneficial interest, whether they're layered through trusts or whoever. Really,

(02:13):
it's forcing everyone to be disclosed beneficial interest to the
federal government, which effectively they pretty much already have. But
it's meant for anti money laundering, is how they shall
we say, proposed this. But the exemptions are for public companies,
for banks and credit unions, for tax exempt entities, and

(02:35):
then they go on to exempt companies with over twenty
full time employees or over five million in gross receipts
and subsidiaries of such companies. So the ones that probably
would be laundering money are already exempt sore. Feels like
they're targeting a lot of small business owners. And one
of the things that I keep hearing is the fear that, yes,

(02:58):
we're going to give this information, but what are the
odds of all this information being in one database suddenly
getting hacked? Yes, that's certainly been a problem out there.
But what we all found particularly heinous about this is
the penalties that are imposed if if we don't report

(03:21):
this information. So they said by year end, any new
entity created this year had thirty days to do it.
So we've done this already many times with some of
our new entities ourselves.

Speaker 3 (03:32):
And who do you report this to? So, I mean,
you know which entity is it that? Because it's like,
if you're you're creating a business for an LC, you
do the Arizona Corporation Commission. But what where else do
you need to report this information?

Speaker 2 (03:45):
So it needs to be reported to It's called FINN Center,
the Financial Crimes Enforcement Network Okay, yeah, which is a
federal entity that was created by the US Treasury, I believe,
and this data needed to be reported in there. So

(04:06):
they had some really difficult penalties here. So why this
one was particularly painful for many small business owners. If
we don't report this information, we could face a five
hundred dollars per day penalty and up to two years
in prison. So they made this one incredibly harsh. So

(04:31):
there was a lot of a lot of pushback on this,
and I'm very happy to report we can celebrate a
win on this one.

Speaker 3 (04:40):
There is.

Speaker 2 (04:42):
Some litigation on this. I'm going to read this particular article.
I think this is directly from the court on December fourth.
This was announced at the court's hearing. Plaintiffs suggested that
they sought an injunction on behalf of only the plaintiffs
before the court, including the approximately three hundred thousand members
of NFIB. The government responded that if the Court were

(05:06):
to enjoin the CTA in reporting rule, the scope of
which included NFIB's members, then the Court would in practical
effect enter a nationwide injunction. The Court agrees with the
government's point. A nationwide injunction is appropriate in this case.
NFIB's membership extends across the country, and the government states

(05:26):
the court cannot provide plaintiffs with meaningful relief without in
effect enjoining the CTA and reporting rule nationwide. The extent
of this constitutional violation plaintiffs have shown is best served
through a nationwide injunction. So right at the last wire,
we've basically got an injunction from the Texas Court saying
we don't have to report this information. We're off the

(05:49):
hook for now. If anyone has as a business that
needs to report this, I would certainly double check and
keep an eye on. And actually it's Finnsen dot gov.
Fi n CEN, short for Financial Crimes Enforcement Network. But
I was really pleased to see this, and I thought,

(06:10):
I know we have a lot of small business owners
that listened to the show. I thought this was worthy
of reporting because it's certainly a big deal for me
because we have a number of entities that we would
have had to report, and thankfully now at least for now,
we don't. Absolutely So I wanted to talk about something
else that happened this week. In fact, I had a

(06:35):
call at a call from a listener that wanted me
to go out and take a look at at a
home that she had to to sell. And I went
out and got to talking and took a look just
a beautiful, beautiful property, and it really brought to my
attention that I really think we need to talk about

(06:57):
this with the listening audience. Because this particular owner retired
person and she was looking to downsize. So she had
called based on a postcard that came in the mail,
you know, one of the we'll buy your house for cash.
And she met with them and they gave her a

(07:18):
cash offer on the home, and then she said, oh gosh,
my home is sold. She went out and bought another home.
Oh yeah, yeah, and she well, thankfully or not thankful,
she bought the new home for cash. She didn't have
to go get a loan for the new property, but
she drained her savings down to virtually nothing left, so.

Speaker 3 (07:38):
She acted she would be able to replenish it when
her other house or her previous home sold.

Speaker 2 (07:44):
Exactly so, she reasonably believed her the home she was
in was under contract and was going to sell. She
bought the new property, and after closing, she found out that,
oh goodness, that's not quite the case. The person buying
her home was what we refer to the industry as

(08:05):
a wholesaler, and they didn't have any intent of actually
buying the home themselves. Their intent was to assign the
contract to someone else at a higher price and make
a profit based on what the difference between what they
locked it up for and what they were planning on
selling it to the new buyer for. And in her case,

(08:28):
she had no idea this was happening. And we work
with wholesalers quite a bit. We buy properties from postsalers,
and like many many industries and many in the industry,
now there's good and bad, and I don't have a
problem with people phostsaling properties as long as they do

(08:49):
it with full disclosure and explain that to the seller
of the property that they're working with. There's nothing wrong
with it if you disclose it in writing and fully.
An Arizona law has some recourse on that. For example,
if it's not disclosed properly, the seller has the right
to back out of the contract up until the moment

(09:10):
of closing. But that really wasn't the problem here. They
reasonably believed that the property was sold and it wasn't.
So that was a little scary because she's purchased the
new property and now all of a sudden, the wholesaler
comes back and explains the situation. This poor lady is

(09:32):
absolutely mortified. She thought her home was sold and she
finds out, well, they had no intent of actually closing
it themselves and surprise, and then, by the way, we
might have came in with a little bit too high
of price, so then they pushed for a massive price reduction,
like over thirty thousand dollars. So the second problem is
she had she had a price locked in her head,

(09:54):
and she acted based on that price and now oops
much lower price.

Speaker 3 (10:00):
So yeah, you know, it's funny. Wholesalers have no their
only interests, their only intent is to make a buck,
and yes, they need to turn around and disclose the
full situation. I don't think many wholesalers do. I may
be wrong, but you know, we get these calls a

(10:20):
lot now. People that buy from wholesalers are typically investors,
and I do think that they provide a great service
because they may find a deal that's under market and
they say, hey, Andy, you know, I got this great
deal to do you want to take a first crack
at it? And so it's there is a service there
that they're providing for investors, but for the seller of

(10:41):
that home if they have no intent of actually that
wholesaler intentionally trying to buy it or paying paying for it,
and they they don't even have the means to pay
for it. That's the crazy part, right, because they're just
transferring the sale of the contract to someone else. It
can be devastating, like it happened with the person who

(11:02):
called in it. Just you know, reading the fine print
and having an attorney look over any contract like that
that's for sale by owner is very valuable so that
they don't get themselves in a pinch.

Speaker 2 (11:20):
Yeah, and just and this is just a warning to
the listening audience too if someone comes in with a
cash offer on a property that's that's off market, and
if you're doing something off a postcard. And again I'm
not trying to bash wholesalers. There's some really good ones
out there and they offer a real service, especially when
you know sometimes properties just aren't financeable because of conditioner

(11:44):
or they just need to handle certain situations. So again
this is not a bash, but it's more of a
warning for some of the bad actors out there to
if you're going to get this. One of the best
questions you can ask, are you and on closing this
yourself personally? Are you going to assign the contract? It's

(12:04):
just one of those things that we don't think about,
so it's worth asking. And they really do need to
disclose that at the time of contract. If they don't,
if the entity on that contract or the person on
that contract isn't the end buyer, they really need to
disclose that. With that, we are coming up on a break.
This is Andy Keel with the Home Solutions Show and

(12:26):
we'll be back after these messages.

Speaker 1 (12:30):
You are listening to Home Solutions with Andy Keel and
the Win three Team on KNSTAM seven ninety. He makes

(13:01):
fine and selling homes easy. He'll do the work so
you won't have to stress. This is Home Solutions with
the Win three Team powered by Epic Reality. Here's the
Win three Team leader, Andy Keel.

Speaker 2 (13:14):
Hi, and welcome back to the show. This is Andy
Keel with the Home Solutions Show and I'm joined again
by Jerry Sunt with Cross Country Mortgage. And Jerry, would
you like to share your phone number for the audience,
Please sure.

Speaker 3 (13:28):
My phone number five two oh three seven zero nine
five seven six.

Speaker 2 (13:33):
And again I'm Andy Keel with the Win three Team
powered by Epic Realty and you can reach me at
five two zero five three nine nine five nine one
and in the previous segment we were talking a little
bit about a situation with a seller of a house
and a wholesale transaction. I wanted to just talk about

(13:56):
that a little bit more because on the flip side
of that, I also just I personally just bought a
property this week from a wholesaler, and you know, to
be honest, I have a little bit of a love
hate relationship with these situations. In this other case, I
think the wholesaler did it very well because the seller
knew full well what was going on. And in this

(14:19):
particular case, it was a property that just would not
have gone conventionally, and he needed to time everything where
his property has to be sold, and they set it
up where he had a holdback period where he could
stay in his property after the closing for a particular

(14:40):
period of time. I think it was like three weeks
or something like that, and then he would have enough
time to go out and buy a new property cash
that was more affordable to him because he lost his
job and he owned the house free and clear. So
this one was actually done with full disclosure, and this
set up a situation that was perfectly workable for this
It was great for us because we got a discount

(15:02):
on a property and and we are very happy. And
you know, that's one of our things that we do
is we would occasionally buy these properties that don't quite
conform and we'll go in and fix them up and
make them nice and livable. So I just wanted to
talk about the other side of the equation here too,
and not just meaning to bash wholesalers, but again, it's

(15:23):
part of the industry that isn't really public facing, and
I think it needs to be a little bit more
because again, like anything else, if we have some bad
actors out there, they can do some damage. But if
it's done with if it's done properly and with full disclosure,
it's not such a bad thing.

Speaker 3 (15:38):
I think everyone who's own owns a home has gotten
that phone call at eight o'clock at night or you know, whenever,
whenever they call, and it's like call centers, they just
they keep calling homeowners, Hey, we want to buy your house.
And it's and I think that is the first key
that you know it is a it is a wholesaler.

(15:59):
And you know, and again, as you mentioned, there's like
in every industry, there's people who do it very well.
And disclose well and explain it, and then others that don't.
And when they don't, it's when you can really the
the end user because they may not be sophisticated in
you know, or experience, I guess is probably the better
term in buying and selling a lot of real estate,

(16:21):
and they just say, oh, this person's buying my house.
This is great, and and they think it's a very
simple process and they don't realize that that wholesaler could
back out at any time or ask for a haircut
on price or whatever they're going to do, and it's
really just a again there the wholesaler, their whole the

(16:43):
whole goal, their whole motivation is to make a buck
and that's all they're doing.

Speaker 2 (16:49):
Yeah, So anyway, I just wanted to let everybody know
about that, and it's it's we all get those postcards
in the mail too that the phone calls at eight
o'clock or the post cards will buy your house, cash
your terms you and some of those are perfectly legit
and actually are the end buyers trying to buy the houses,
but not always. So again, just a word of warning

(17:09):
out there, and you know, it's often good to have
a second set of eyes, have the attorney look at
the contract, talk to talk to an agent that's knowledgeable.
So just just a word of warning. So anyway, we've
got a lot of good information this week too with
some jobs report data and interest rates. So I'd love
for you to share that with the audience. What's happening

(17:31):
with the interest rates this week?

Speaker 3 (17:32):
Yeah, So the big music came out this week is
the jobs reported for November, and it came in at
about two hundred and twenty seven thousand jobs, which is
slightly more than what was expected by analysts and a
solid number. But the unemployment rate ticked up from four
point one to four point two. Wage inflation seems to

(17:55):
be holding steady. So it was you know, there was
a little bit of information positive and negative, you know,
for depending upon how you want to look at if
you're a bowl or a bear. But it did give
the enough ammunition for the Federal Reserve to go ahead
and cut rates a quarter for percent on the eighteenth

(18:15):
when they meet. And when you look at the forecast,
you know last night versus this morning, and I think
yesterday it was like seventy five percent now it's up
to ninety five percent. That the Federal Reserve is going
to cut rates. Why when they meet later this month.
So and again I always have to say, because it's
so confusing. When the Federal Reserve meets, they're meeting and

(18:37):
discussing the Fed Funds rates. So if you're a bank
and you want to borrow from the government or from
the treasury, that is the rate that you get. So
if you're Wells Fargo wanting to borrow money from the Treasury,
that's the Fed Funds rate. It does not directly affect
mortgage rates. In fact, the last two times the Federal
Reserve is cut rates in the last few months, mortgage

(18:58):
rates have actually moved higher after the cut. So mortgage
rates are more about treasury yields and inflation. So the
ten year treasury, which ironically the ten year treasury in
the week at just about four point one five, four
point one six, So it did drop pretty dramatically over

(19:18):
the last few weeks, because just a week ago we
are four point three and now here we are four
point uh you know, one five or four point one six.
So the ten years coming down. I have heard that
it'll end the year at four percent, which should put
mortgage rates in the you know, six and a half,
maybe six point six to five. So mortgage rates are

(19:39):
coming down now, They're not quite there yet today, but
they're moving in the right direction, and they have been
moving in the right direction the last few weeks. And
so again, the predictions are that by the first quarter
of next year we will see rates close to six percent,
are possibly in the fives, no one knows, but wow,

(20:00):
that is setting up for a very strong spring buying market,
the strongest spring buying market we've seen since probably twenty twenty,
twenty nineteen.

Speaker 2 (20:11):
Yeah, I think it's going to be a pretty strong
market myself. We're starting to see signs even you know,
just pick up after the election was starting to happen there.
So I tend to agree with the data that I'm
seeing and just the mood of the market. Actually, So
I wanted to kind of just unpack the thinking a
little bit because you mentioned that we're about a quarter

(20:33):
point reduction, is about ninety percent priced in, So does
that mean that basically the mortgage rates are mostly expecting
that to happen, So it's not going to have a
little impact. I think we're just saying it a different way, right, Jerry.

Speaker 3 (20:48):
It just well, what I mean by ninety percent is
the analysts and economists on Wall Street, then there's a
ninety percent expectancy that the Fed will interest rates a
quarter of a percent when they need.

Speaker 2 (21:02):
Right, But the expectancy is based on the actual yield
of the ten year t note if I'm not mistaken correct,
So when we say it's ninety percent priced in, it's
kind of it's impacting the price already. So like the
mortgage rate, we're already expecting the cut. So it's not
like the rates are going to drop a quarter percent overnight.
It's it's mostly expected.

Speaker 3 (21:24):
No, they mortgage rates will not. What's going to affect
mortgage rates is next week we have the Consumer Price Index,
which is released a camera for it's Tuesday or Wednesday,
and that if inflation is receding and moving in the
right direction, that will make mortgage rates improved. If mortgage
if the CPI comes in hotter than expected, mortgage rates

(21:47):
are going to do in about base and start moving higher.
So that's really going to be the impact of where
intertrates go for the end of the year. But if
you look at the trend in the last month, they
have slowly been coming down, and so that is a
welcome sign. You know, leading up to the election, rates
kind of got close to seven percent. I mean, let's

(22:07):
look back the last three months. In September, mortgage rates
got down to six point, then they bounced up to
seven right before the election, and since the election, they've
slowly been coming down and now we're sitting in the
high sixes. So again, welcome news that rates are slowly
and steadily coming down. Because if we can get rates

(22:32):
close to six percent by the first quarter of next year,
which I believe will happen, you're we will see a
very robust spring buying season, which will be a shot
in the arm for the real estate community.

Speaker 2 (22:45):
Yeah, we had an interesting discussion. This was probably a
couple of weeks back, but we have a mutual client
that's buying an investment property and the intent of the
client is to basically pay it off early. So we
were actually thinking a fifteen year loan would have been
a better product. And I was actually kind of surprised

(23:07):
because I've always had it pounded in my head if
you can do a fifteen year loan, it's going to
be a better rate. And we actually decided to go
with the thirty year product. Again, this was for the
investment property, not for owner occupied Yes, correct, because there
there is virtually no difference between the investor fifteen year

(23:27):
and thirty year loan. I just I was blown away
by that because it was counterintuitive to most of my career.
I'd love to talk a little bit, just a quick
moment about that.

Speaker 3 (23:36):
It's funny on an investment property, there's no appetite for
the coupons on mortgage backed securities on it. For a
fifteen year investment property, no one wants them. It's not
something that is people want. Investors want to buy. If
it's a primary residence, it's a different story. I've seen
the spread if someone's putting down twenty five or thirty

(23:57):
percent on a home and they are buying on a
using a fifteen year fix. Yes, I just priced went
out on Friday and the rate was five point six
to five almost all. It's a full percentage point lower
than a thirty year fix. So there's a huge appetite
for that. On Wall Street, a typical spread between fifteen

(24:19):
year and thirty years about a half a percent. Again
for primary residents. Now that's spread right now was almost
a full one percent lower rate so someone can afford
a fifteen year man. Oh man, those rates are beautiful.
They're in the mid five.

Speaker 2 (24:33):
Yeah, it's a great product for owner occupied. I'm just
I was so so surprised that from an investment property
point of view, that there was just really no pricing difference.
So I thought that was worth sharing because I was
really blown away by that.

Speaker 3 (24:47):
Yeah, there's just no appetite for that particular scenario, a
fifteen year fixed investment property or second home, And I'm
guessing there's just not that many buyers that use that
that want the higher payment foreign investment property, but the
rate is just not You're better off doing a thirty

(25:08):
year picks.

Speaker 2 (25:09):
Yeah, So that's in fact what we decided to go
with because there is just no advantage to doing the
We could always pay it off faster. In this case.
It's a conventional with no prepayment penalty, so no big deal.
But since there's no rate break, we just went with
the thirties. So we are coming up on a break.
This is Andy Keel with the Home Solutions Show, and
we'll be right back.

Speaker 1 (25:31):
He doesn't want to list your home, he wants to
sell it. This his home Solutions with the Win three
Team powered by Epic Reality. Here's the Win three team leader,
Andy Keel.

Speaker 2 (25:45):
Hi, and welcome back to the show. This is Andy
Keel with the Home Solutions Show on k and ST Radio.
I am with the Win three team powered by Epic
Realty and I'm joined again with Jerry Sunt and I
would like to talk a little bit in this segment
since we're coming up on year end. Year end in

(26:07):
our world, a lot of times we need to do
some tax planning. So we have a couple of clients
that that I'm working with that have some interesting situations
that I thought were worth mentioning. And I was contacted
very recently from a good friend of mine. I've known
for years that he has a really wonderful problem, but

(26:29):
it is a problem. He had some crypto investments that
he decided to liquidate recently and take some nice profits.

Speaker 3 (26:39):
And I mean that's incredible when you look at crypto
right over one hundred thousand, it's incredible.

Speaker 2 (26:46):
Yeah, it's I never thought i'd see bitcoin break one
hundred thousand. I'm not a big fan, but I choose
to stay to stay out of that arena because it's
not my area of expertise, but more power for anybody
that is in that and make a profit. In this
particular case, his friend of mine did really, really well

(27:08):
and he had a high six figure profit this year.
So and I think he very shrewdly and smartly took
a large sum out of that and moved it to cash.
But now he's got a pretty massive capital gains problem.
So my advice was to get him set up with

(27:31):
a tax accountant. And he just met with that tax
accountant a couple days back and came up with a
really wonderful plan to be able to kick the can
down the road and not have to pay the taxes
right away. So the advice from the accountant was to
go out and if you went out and bought two

(27:55):
four hundred thousand dollars houses, and this is where things
get a little complicated and it's very specific to the
individual situation, but we would be able to defer the
taxes by using what's referred to as a cost segregation

(28:16):
reporters cost segregation study, where we can basically rapidly depreciate
a big chunk of the house in advance and offset
these capital gains. So we made a decision instead of
buying two four hundred thousand dollars houses, because in the
investment world, we have to be a little bit careful

(28:36):
because the tax person is going to give the advice
from a tax person's point of view, but there's a
bigger picture from an investor's point of view, because if
we go out and buy a couple of four hundred
thousand dollars houses using leverage with current interest rates, it
will be very, very difficult to get those to cash

(28:59):
flow properly by putting putting them into service as a rental.
So we had to make a decision to go out
and buy a little bit smaller house. So we decided
to go look for a three hundred or so thousand
dollars houses because we can actually get those to cash
flow based on the current rates, and we're not going

(29:23):
to be able to defer all of the taxes. But
it's a happy medium between a fair amount of tax
deferment and still having viable properties that are going to
make money every month and cash flow it. One of
my rules is we don't ever want to put ourselves
or one of our clients into a property that we
have to pay for every month. Is that's A. That's

(29:45):
a bad situation. We never knowingly want to lose money
every month. That's a that's not an investment. You were
able to start the process with this client area, and
I believe you were able to get an investment loan
set up. And talk a little bit more about that
from your side.

Speaker 3 (30:04):
Yeah, you know, it's funny with with people with great credit,
if they're putting twenty five percent down or more, the
rate on an investment property has come down where it's
not that much greater than a primary residence. Again, we
were talking earlier about fifteen years typically about a half

(30:24):
a percent lower than a thirty year for primary residents.
But on an investment property it's the same kind of spread. Typically,
if someone asked me, well, what's the normal spread and
interest rate between a primary and an investment property, I
would say about about three eighths to a half a percent.
Believe it or not, that spread has actually come down
quite a bit. I mean the difference if someone's putting

(30:46):
a large amount down. Now again I say that this
is with twenty five percent or more down, the spread
on an investment property. The spread on the rate between
a primary residence and investment property is about a quarter
of a percent now, So the rates have really come
down on investment properties.

Speaker 2 (31:05):
Wow, that's amazing. So what's the again, what's the difference
between a twenty percent down and a twenty five percent down?

Speaker 3 (31:13):
The spread and interest rate there is going to be
much wider. I can do that when we're on the break,
but it's going to be probably one percent. But that
twenty five percent down, you really get a big break
on the interest rate.

Speaker 2 (31:25):
Yeah, and that's one of the things that's happened in
more recent years. And you know, five years ago, pre COVID,
I think mainly we would always recommend doing at least
twenty percent down with investment properties. At least now it's
at least twenty five percent because the spread of the
interest rate is dramatically different. That's been more recent years.

(31:47):
So when we work with investors, we can still do
the twenty percent down, but it's a pretty dramatic difference there.
So then there is one other client that we've been
working with that a slightly different situation. I was a

(32:07):
property that we were partnered on for a number of
years and we made the decision to sell this property
because it was in an hhoa and well, I'm just
going to be blunt here, there was nothing that made
us happy about this particular ho way. We were very
frustrated with them at one point, and in their defense,

(32:28):
they we had a resident in this property that she
went through a divorce situation, and she had some difficult things.
But at one point they started finding for just the
tire was off the driveway by a couple of inches,
So up fifty dollars, fine, Oh, next time it's a
seventy five dollars fine. Oh, next time it's one hundred
dollars fine, Yes, And then they it was almost like

(32:52):
they had a vendetta against both the tenant in the
house and us personally. So we just said when when
the lease was up and she ended up moving, we
just had enough of this and we decided to sell
the property. Well, of course, the wonderful problem with that

(33:16):
is we you know, we've had that for a number
of years, and there was a lot of equity in
the property and we wanted to keep it in play
as a rental. So we did a ten to thirty
one exchange. And I'm sure much of our listening audience
is familiar with those, but I actually wanted to give
a little bit more detail and talk about this one,
because it's a really wonderful tool in in you know,

(33:42):
tax preparation and tax avoidance and perfectly perfectly legit and legal.
So what we did in this situation is we sold
this property. There is a fair amount of cash that
was taken, and we hired a ten to thirty one
exchange company. There's a number of them out there. I'll
actually mention this one because I think they're a fabulous company.

(34:05):
It's asset preservation out of Phoenix. They've always done a
wonderful job for us. And basically at the closing, all
of the money, all the proceeds get moved over to
the ten thirty one company. We can't touch the money.
It's not like we can grab it and put it back.

(34:25):
We can't ever touch it or it becomes a taxable event.
But the proceeds got moved over to the ten thirty
one company, and now we have to go out and
identify another property or properties to buy. So now we
have a thirty day process to name replacement properties, which
we'll be doing now and effectively, what's kind of fun

(34:48):
here is because we sold that for a big enough
profit now we have enough down payment to go buy
two more right, right, and yeah, and you're working. One
of the other things that's that's really key about this
is there's a couple of rules that have to be applied.
So we have to we don't have to use all
of the money. If we don't use it all, that's

(35:11):
part of it's taxable and in the ten thirty one
rule that's called the boot if you pull some cash out.
In this case, we're not. And in fact, we didn't
have quite enough probably to buy two houses, so we're
going to top it off with a little bit of cash.
That's okay, we could add more in. But the other
thing we have to do is because there was some

(35:32):
debt on the sale, we have to replace it with
at least the same amount of debt. So since we're
buying we sold one and we're buying two, that's no problem.
But we can't just go out and take that cash
and buy another property for cash without some kind of
taxable event. We have to get a new loan. So
another mutual client, I want to talk a little bit

(35:53):
about that from your side. That's it, Yeah, simple stuff.
We just go get a new loan, go buy another property.
And the gist of this is I might be oversimplifying
a bit, but when we buy a single family home,

(36:14):
we're going to depreciate that over twenty seven and a
half years. So this one was in service for a while,
so let's just say it had about ten years left
of depreciation, or I think there was about probably sixty
thousand dollars left in the basis to depreciate. So what
does that mean when we go buy another two properties, Well,
we're going to split the remaining basis that was in

(36:37):
the original property, So we'll have about thirty thousand in
property A and about thirty thousand in property B to depreciate.
And you know, we're not going to get a lot
of depreciation on the new one, but we're also not
going to get a tax bill either. So there's a
really big benefit to good tax planning at year end,
well not just year end, but just good tax planning

(36:57):
so we can better our situation. And it's a great
way of Especially we talk about on the show a
lot about having equity and a property that's not working well.
So when we buy a property, we're looking for return
on investment. When we you know, have a resident tenant,
move out of a property five years down the road.

(37:18):
It's not so much about return on investment anymore. It's
about return on equity. And if you're not getting a
good return on equity, it might be a good idea
to talk about doing a ten thirty one and moving
that equity into a different property or properties because in
this like in this case, we're splitting it into two,
and we're going to increase the cash flow by breaking
it into two. So some pretty cool options that are

(37:41):
out there. So and again with this, we're coming up
on a break. This is Andy Keel with the Home
Solutions Show. I'll be right back with.

Speaker 1 (37:51):
This is Home Solutions with the Win three Team powered
by Epic Reality on KNST. Here's the Win three team leader,
Andy Keel, Hi.

Speaker 2 (38:00):
And welcome back to the show. This is Andy Keel.
I am with the Win three team powered by Epic
Realty and I can be reached at five two zero
five three nine nine five nine one. I'm again joined
by Jerry Sun with Cross Country Mortgage and Jerry, if
you'd share your number again.

Speaker 3 (38:21):
Sure, five two zero three seven zero nine seven six.

Speaker 2 (38:25):
Great And I I've got a couple of announcements that
I'd like to start this last segment out with I
just wanted to just give a huge shout out and
thank you for our photos with Santa event. Thank you
so much for the venue Trailed Us Town, just a
wonderful venue for the event. And a few of our sponsors.

(38:47):
Wendy Wise with State Farm Insurance and I'm going to
read some numbers off. Her phone number is five two
zero five four four two eight three eight. Special shout
out there. I've been using State Farm and specifically Wendy
Wise and her company there for years and we've got many, many,

(39:09):
many insurance policies, especially when it comes to investment properties.
They have some of the best rates in the in
the business for investment properties and we've been very very
pleased with them over the years. So a special shout
out there. Also Jennifer Coons with Pioneer Title. Her phone
number is five two zero seven nine seven two six

(39:33):
nine three, and again we've been using Pioneer and Jennifer
for many years. And also Dan Wibar with Swift Mortgage
five two zero nine oh nine one one four to four,
And thank you so much for also being a sponsor
and UH being a part of this event, So again,

(39:55):
thanks for having a wonderful event and really appreciate that.
A couple other quick announcements I wanted to mention this
coming Thursday, we're going to be doing a open house
on one of our properties that we have listed, five
fifty North gallob in Tucson, that is on the east side.

(40:16):
That will be I don't think we have the time set. Yep,
it's going to be early afternoon, probably in the range
of two o'clock. We'll put more of an announcement out
on our website, the Win three team dot com, so
feel free to look at that, but we'll have a
nice open house there. It's that particular property is a

(40:40):
nice east side property listed for three hundred and thirty
thousand dollars with a pool and just one of the
most amazing views that I've seen. And also wanted to
mention a property that we know of that we'll be
coming up. We have to be a little bit vague
about this, but it's just an amazing place we have
coming up in the foothills. It's not about three and

(41:03):
a half acres, it's going to be in in about
one point three million dollar range. But what's kind of
fun about this one, aside from being an amazing property
with this pool, hot tub, guest house, just amazing guest house.
Is what's really interesting about this is because of the acreage,
we believe that someone could come in and buy the

(41:25):
property and split an acre off, and because it's in
the foothills, that's probably a pretty valuable piece of property
and they might be able to do something a little creative.
Still have a wonderful piece of property, yet sell off
an acre and get a big chunk of money from
the sale. So some other creative ways of looking at things.
So if anyone has some interest in finding out more

(41:47):
about that, feel free to reach out to me at
five two zero five three nine nine five nine one.
So anyway, as we're coming up on year end, we've
been talking about this a bit, but I really have
been seeing some amazing opportunities just in the market and
some some wonderful prices, and sellers are just offering not

(42:13):
just sellers, but also builders are offering a lot of concessions.
And I want to Jerry talk a little bit more
about that, specifically the concessions part.

Speaker 3 (42:21):
Yeah, so there is you know, I just I hear
a lot of as we talk every week. The last
you know, thirty days. For buyers that are in the
market right now, it is there are opportunities that you
won't find in ninety days. And that is, you know,
if you're making an offer on a property, whether you're

(42:42):
asking below asking price or asking a seller play concessions
or some combination thereof it. Sellers what I'm seeing on
accepted contracts as they're agreeing to them, and all I
can think about is that, you know, come March, when
there's going to be probably double the amount of buyers
in the market as there is every year in the spring,

(43:05):
if the prediction that mortgage rates will be lower, I
think you're going to see multiple offers on properties and
it'll be a much more competitive marketplace. So if you
are a buyer, now is the time. Your window of
time is now through beginning of February. After that that's
when more buyers will be entering into the market.

Speaker 2 (43:27):
Yeah, so this is really probably our last hurrah before
the spring market. We've got time, We've got time to
do some year in tax planning. Yet we're really at
the end. But this is worth mentioning too, Jerry. I mean,
we're looking at December eighth, and we have a buyer
that still has yet to identify a property and they

(43:49):
really need to close it by December thirty first, and
you can do that.

Speaker 3 (43:52):
Oh absolutely. I can close alone in eight days. Legally,
that is the fastest you can close alone is eight days.

Speaker 2 (44:01):
That's pretty amazing.

Speaker 3 (44:03):
A come back in two to three days if an
appraisals needed, and you know, we can send out disclosures
and the loan is under it in the following day,
and the CV goes out the following day. So it's
again eight days is about as fast as you can
do it. But there's plenty of time to do that
before the end of the month.

Speaker 2 (44:21):
Wow. I wanted to go just completely off topic here
for a second because I just I think this is
kind of a fun story and I just wanted to
share something a little on the personal side here. I've
talked about this before a while back. I actually worked
for Into It and again, great company, and at one

(44:43):
point when I was working for them, I wasn't in
the best physical shape. Now this is about fifteen years ago,
I personally had I personally have scoliosis, and I suffer
from a little bit of a curvature in my spine,
and I was getting I was getting to the point
where I was walking kind of crooked and not doing well.

(45:07):
I was actually having so much trouble. I finally made
a decision because one of my supervisors, when we were
at the office, we were going to go out for lunch,
and the way it was set up, there's two buildings
and I was supposed to walk from one building to
the other to jump at his car to go out
to lunch. And I was literally in so much pain
I had to call him to come pick me up

(45:29):
because I couldn't walk across the parking lot.

Speaker 3 (45:31):
I'm sorry. Yeah.

Speaker 2 (45:33):
And that was just partially just slowly get getting worse
and worse, and I finally just was so mad at
myself that I ended up going into to the doctor
and the doctor basically looked at me and we talked
a little bit, and after the exam he said, well, Andy,

(45:53):
you've got two choices in your life. You can start
working out, or you can pick out your wheelchair. That
was kind of a surprising thing. So fast forward a
number of years. Obviously I made well I shouldn't say obviously,
but I made the choice where I'm going to start
paying attention to my health and doing a better job.

(46:15):
So I really started being cognizant of working out, and
fast forward a number of years, I'm feeling a lot better.
I recently made a bet with my thirty six year
old son, and he's basically semi pro tennis player, so
he's an athlete himself. But I thought I'd give myself

(46:37):
a challenge, so I actually made a bet with him
that I could out bench press him over the Thanksgiving holiday,
and I'm actually very proud to report that I lost
the bet, but I was so excited that I was
actually close. So for the first time in my life,
I'm in so much better shape that I was fifteen

(46:57):
years ago when I talked about this or had this happen.
But I was actually able to bench press more than
my own weight and he beat me by fifteen pounds.
But it kind of crazy situation. I just thought that
was a story.

Speaker 3 (47:12):
There's not a lot of people can say they're in
better shape than them were that long ago. So well done. Yeah.

Speaker 2 (47:18):
A special shout out for my personal trainer, Casey, who's
again we talked about her at a previous show because
she was actually one of our residents that exercised their
option and bought the house with our rent to own program,
and she's still my personal trainer. Casey with the Crow's
Nest Jim right on Speedway in Tucson. Can't say enough

(47:42):
good things because I truly am in the best physical
shape of my life. And I have to do a
little bit of a shout out. But that's just a
very personal story for me, because my life could have
gone very differently anyway. Don't mean to go down a
rabbit hole with a personal story, but that one was
just near and dear to me, and I thought I'd
have to just share a little bit.

Speaker 3 (48:01):
That's awesome one.

Speaker 2 (48:03):
Just in closing, we're kind of on the topic of
taxes and tax deductions. I wanted to talk just really
quickly about now as we're seeing with the interest rates now,
the question becomes, are the mortgage points tax deductible if
we do have to buy the rate down or want
to buy the rate down a little bit? And speak
to that a bit, Jerry.

Speaker 3 (48:25):
I'm not a CPA, but it is if you are
paying to what they call discount points, that is a
tax seductible, but paying an origination fee is not. Tax seductible.

Speaker 2 (48:40):
One of the one of the fallacies out there is
that mortgage interest is always tax deductible, and I just
wanted to point out that's that's not always the case either,
because there's a there's a test with this and this
comes from my days of doing taxes and working for
into it. If your mortgage deduction is not higher than

(49:02):
your standard deduction, or your interest is not higher than
your standard deduction, and that's based on your schedule A.
So there's a little bit more that goes into account there.
If you have high medical bills that could be taken
into account as well. But the gist of it is
if your standard deduction is more than what your mortgage
interest is, you're not really getting a benefit for that.

(49:24):
So there's a little bit of a fallacy out there.
I still think owning a piece of real estate is
a wonderful investment, even as owner occupant at any rate.
We are coming up on the end of the show.
Thanks so much for listening on this fine Sunday. This
is Andy Keel with the Win three team powered by
Epic Realty and Jerry Sunt with Cross Country Mortgage. Well

(49:47):
tune in next week. Thank you.