Archive for the ‘Investors’ Category

How To Use Your IRA Funds To Invest In Real Estate

February 5, 2015

You probably already know that you can invest your IRA money in stocks and bonds and even in mutual funds if you so desire, but did you know that you can also invest those IRA funds in real investing-iraestate? Doing so, however, is a bit complicated, and IRS rules concerning such purchases must be followed to the letter.

Usually, when you take money out of an individual retirement account before you reach age 59 1/2, the IRS considers these premature distributions. In addition to owing any tax that might be due on the money, you’ll face a 10 percent penalty charge on the amount. This is not the case, however, when you use the money to buy your first investment real estate. (Note: Technically, you don’t have to be purchasing your very first home or building. You qualify under the tax rules as long as you, or your spouse, didn’t own a principal residence at any time during the previous two years.) You can use up to $10,000 in IRA funds toward this purchase. If you’re married, and you and your spouse are both first-time buyers, you can each pull from retirement accounts, giving you $20,000 to use.

The restrictions are many (and perhaps time-consuming) and include the following:

  • You will need to find an IRS custodian who handles these investments (and the options are currently limited). Generally banks and brokerage firms do not handle IRA distributions for real estate transactions.
  • Only the custodian may handle your IRS funds.
  • The type of property you buy must be for investment only and may not be used by you or by relatives.
  • All proceeds from the investment will go back into your IRA fund. Likewise, however, all expenses must be paid from that fund, so you must have enough liquidity in your IRA to cover such costs.
  • You must let the IRS know that you used the retirement money early for a tax-acceptable purpose by filing Form 5329.
  • You must use the IRA funds within 120 days of withdrawal to pay qualified acquisition costs. This includes the costs of buying, building or rebuilding a home, along with any usual settlement, financing or closing costs.

The above information applies only to traditional IRSs. To learn about the procedure for an Roth IRA, click here.

MAKING A POSITIVE DIFFERENCE IN PEOPLE’S LIVES.

Karen Breen Elia & Louis M. Elia, REALTORS®, are brokers for homes, condos, and multi-unit properties on Chicago’s North Side.

ChicagoCityHomes, RE/MAX Exclusive Properties
2951 North Lincoln Avenue
Chicago IL 60657
Toll Free: (866) 404-3585 Fax: (773) 938-1467  Send An Email

We know Chicago Real Estate!  Call us today!

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Why Invest In a REIT

November 21, 2014

Investment alert:  According to RISmedia, the most significant innovation to hit the residential real estate market in decades occurred in 2012 to little fanfare: A first single family REIT (real estate investment trust) went public. For the first time in history, everyday people can now own shares of the American Housing Market, one share at a time. REITNot since the creation of the 30-year fixed mortgage can so much capital flow into the single family market as will flow into it in the next ten years, via single family REITs.

And what, you may ask, is a REIT? The letters REIT stand for real estate investment trust, which is sometimes called “real estate stock.” Essentially, REITs are corporations that own and manage a portfolio of real estate properties and mortgages. Anyone can buy shares in a publicly traded REIT. They offer the benefits of real estate ownership without the headaches or expense of being a landlord.

Howstuffworks.com advises that investing in income-generating homes can be a great way to increase your net worth. But for many people, investing in real estate is simply out of reach financially. But what if you could pool your resources with other small investors and invest in real estate as a group? REITs (pronounced like “treats”) allow you to do just that.

As well as providing a tax benefits for investors, single family REITs provide a path to homeownership to everyone with a minimum down payment of one share. In this way, it is lowering the barrier to homeownership – to $100.  Imagine if, instead of buying a $200,000 house with 20 percent down, a family opted to lease a $200,000 home and put the $40,000 into the REIT that owns it. They would then own shares in a portfolio of thousands of houses, including their own. Their down payment money would be in houses, including their own, and be completely liquid.

Simply put, real estate investment trusts (REITs) give investors a chance to invest in real estate without the added risk of buying real property.  Single family REITs offer a way for people to get in on the institutional investment of homes for conversion into rental units. The collapsed U.S. housing economy and accumulation of distressed homes has given large-scale investment firms an opportunity to buy in bulk, and now many are looking for public funding through REITsClick here for more info.

MAKING A POSITIVE DIFFERENCE IN PEOPLE’S LIVES.

Karen Breen Elia & Louis M. Elia, REALTORS®, are brokers for homes, condos, and multi-unit properties on Chicago’s North Side.

ChicagoCityHomes, RE/MAX Exclusive Properties
2951 North Lincoln Avenue
Chicago IL 60657
Toll Free: (866) 404-3585 Fax: (773) 938-1467  Send An Email

We know Chicago Real Estate!  Call us today!

Chicago Home For Sale: 5323 N Kenmore Ave #1

October 14, 2014

Chicago Home For Sale:

5323 N Kenmore Ave #1, Chicago IL 60640
MLS# 08752317

Exceptional Space In An Exceptional Location!

5323 n kenmore ave chicago il

Exceptional space and storage in an exceptional Edgewater/East Andersonville location!  Rare duplex up in Kenton Court on a charming, leafy street steps from the lake, the park, Bryn Mawr Historic District, Mariano’s, and the red line el.

The condo features 1,588 square feet with 2-3 bedrooms, two full newly redone baths, two private outside spaces and assigned secured parking.  The floor plan is tailored for today’s multi-functioning spaces, and provides privacy as well as outstanding storage.

Enter the living room, with gas fireplace, which opens to the private, south facing patio.  An adjoining office/study expands the living area on the first floor.  The open kitchen and dining room creates ease for entertaining and family time.  There is a full bath and two huge walk in closets on the first level.

Upstairs are three bedrooms (one is tandem) and a shared master bath. The master bedroom has two separate closets, and the second bedroom has another huge walk in closet.  There is a full laundry/storage room, as well as a private deck.  Additional closet space in the third bedroom, as well as a coat closet and utility closet and separate storage locker accommodate all storage needs.

Marketed by Karen Breen Elia, Chicago IL Realtor.

MAKING A POSITIVE DIFFERENCE IN PEOPLE’S LIVES.

Karen Breen Elia & Louis M. Elia, REALTORS®, are brokers for homes, condos, and multi-unit properties on Chicago’s North Side.

ChicagoCityHomes, RE/MAX Exclusive Properties
2951 North Lincoln Avenue
Chicago IL 60657
Toll Free: (866) 404-3585 Fax: (773) 938-1467  Send An Email

We know Chicago Real Estate!  Call us today!

Chicago Condo For Sale: 916 W Fullerton Ave Unit 3, Chicago, IL 60614

April 23, 2012

Chicago Condo For Sale

916 W Fullerton Ave Unit 3, Chicago, IL 60614

MLS# 08048288

Investor special! Super Lincoln-Halsted-Fullerton location! Top floor of a wonderful vintage building with sunny courtyard! This comfortable 2 Bedroom unit is large and bright with a wood-burning fireplace. You will relish the tree-top views! Walk to the Red/Brown Line, restaurants, shopping and nightlife. Live well or buy for an investment.  DePaul is just one block away. This united is rented until 6/30/2013 at $1350/MO. Low assessments and tenant paid utilities. ALWAYS RENTED!

New Year and New Beginnings for Chicago Real Estate!

January 4, 2012

Happy New Year!  I never get tired of sending this good wish to all.  I guess it stems from my natural optimism about the promise of a new year, and new beginnings.  

It would seem to many that home affordability should be at an all time high.  With most markets, including the Chicago real estate market, experiencing a 30% drop in value from the highs of 2007, one would think that affordability would be a factor that was showing improvement.  Recent statistics seem to bear this out.  November pending sales rose 7.3% to an index of just over 100 based on the National Association of Realtors Pending Home Sales Index.  This index  which tracks pending (under contract) sales figures, does not reflect closed sales.  It was established in 2001 at 100.  During the “bubble years” the index rose way above that point, but in recent years, has only exceeded 100 in April 2010 when it rose to 111 as a result of the termination of the homebuyer tax credit.  The ascent of the index to over 100 in November is encouraging news since there was no artificial stimulus, such as the homebuyer tax credit, and the new level is just a reflection of a better, more confident economy.  

One side note is that the cancellation rate, which usually hovers at about 10%, rose to 30%.  My feeling is that this is due to short sale and foreclosure fall out, and not a reflection of traditional sales cancellations.  Distressed properties bring their own set of challenges to both the investor and owner occupant, and the deal that is too good to be true, usually is.  Chicago real estate investors need to examine their holding and rehab costs, and owner occupants need to have both time and capital to bring the property up to their standards.  There are many little known expenses, such a local ordinances which may require a new owner to pay back assessments, and fees.  If you are interested in perusing distressed property, be sure you are working with an expert in the field.  Both Louis and I have both classroom and practical experience in successfully purchasing both short sales and foreclosures.  We would be happy to discuss your real estate aspirations.  

It bears noting that sales of the lower price points properties are surging.  Nationally, the upper bracket appears to be languishing and perhaps still declining.  The good news is that here in Chicago, the upper bracket is definitely improving.  For example, in Lincoln Park (60614), there were 64 detached single family homes that closed between January 1, 2011 and June 30, 2011.  The average sale price was $1,504,504 and the median sale price was $1,299,500. Three of these sales were foreclosures and three were short sales.  For the same area, there were 79 detached single family closed sales between July 1, 2011 and December 31, 2011.  The average sale price was $1,543,562 and the median  sale price was $1,425,000.  Of these, three were foreclosures and seven were short sales.  This shows an increase of just over 2.5% on average sale price.
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Be Informed When Investing In Chicago Real Estate

August 20, 2010

Investing in Chicago real estate can be quite profitable and safe. Such a transaction can also be challenging, especially for first-time investors, and requires prior planning, a time commitment, realistic goals, and careful consideration of the following factors.

1. Selecting a property. First decide on a location and the type of property you are interested in. You might also consider proximity to good schools, public services, shopping centers, highways, etc.

Another decision will deal with the type of property you want to own–a single family residence, a multi-family unit, or a vacation rental home. Discuss with you realtor and tax advisor the pros and cons of each to decide which will be most advantageous for you.

2. Examining your finances. In addition to a monthly mortgage payment, investment property expenses can also include taxes, property management fees, utilities, insurance for fire and floods, repair and maintenance costs, condo fees, and periods of vacancy. Be prepared to have cash on hand for a 20% to 30% down payment (or investigate other options). A helpful tool to assist you in calculating costs and probable financial outcomes is www.goodmortgage.com.

Also keep in mind that long term (5 to 10 years) ownership is usually best for the average investment. The shorter the length of time you hold the property, the greater the risk.

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