Chance Gates' Blog

By Dan Serra

RISMEDIA, September 28, 2010–(MCT)–Life is full of emotions, but fear can hurt the most. It is strong enough to change a whole community and way of life. And when it comes to money, it’s no different. Fear controls the pocketbook, and too often it gets in the way of financial success.

There are three ways fear can grip an investor.

First, there is the fear of losing money. Many people choose safe investments because they don’t want to lose money by taking a risk with stocks. Taking this approach can eliminate that fear, but in the long term it hurts the pocketbook. The safer those investments, the lower the investment gain. Then when inflation goes up 3 percent, the safe investment earning 2 percent does not provide enough to pay the higher costs, and the money runs out sooner.

Second, there is the fear of not gaining money. This type of fear is more common in younger investors. They worry what they are doing will not provide enough profit to improve their lifestyle. Younger investors often like to compare investment returns. They fear they will not gain enough to outdo a friend and therefore they would not have enough to spend on luxuries. These investors want to make a lot of money by being greedy, investing in high-risk stocks or in a new business. This fear can end up hurting if the extra risk leads to big losses. Investments that have the best potential for gain often carry the biggest potential for loss.

Third, there is the fear of running out of money. Everyone has this fear, either by spending too much or outliving a retirement stash. An income may vanish, or an investment may fail. This fear can result in damaging frugality. This fear can be overcome by saving as much as possible while young to build an adequate retirement fund and sticking to a budget to cut out unneeded expenses.

Properly diversifying those savings can improve the chances of increasing that pot. This also can eliminate the fear of losing money, because enough was saved to afford a loss, and the fear of not gaining money, because the longer it is invested properly, the more gain is possible.

Take a look at your fears and determine what action — saving more, diversifying risk or sticking to a budget — you need to take to make money less fearful.

As a Reno/Sparks real estate professional, I encourage all questions and comments on the Reno/Sparks real estate market or any of the articles posted in this blog. Please feel free to use my back door to the MLS and search the houses available in the Reno/Sparks and most of Northwest Nevada neighborhoods. I can be reached by email @ chance at ballard-company.com or  http://www.myspace.com/chancegates .  You can also follow me at http://www.twitter.com/chancegates

By Dan Serra

RISMEDIA, June 28, 2010–(MCT)–While most financial-savvy consumers do their best to avoid debt, one debt that is unavoidable to many families is a mortgage. Because many of us feel more in control of our home and expenses without a mortgage, a common question is whether to pay it off as quickly as possible.

The answer depends on each person’s financial situation. A mortgage can actually be a blessing to some.

For example, mortgage interest is tax-deductible. This deduction saves taxpayers about $103 billion a year, according to the U.S. Treasury. The benefit is less to owners of low- to moderate-valued homes who may not have much interest or enough to claim it by itemizing deductions. But for families with a higher net worth, it allows a tax savings and may encourage them to buy larger homes.

With tax brackets for the wealthy rising next year, this tax break becomes more valuable. When the break is included, a 6 percent mortgage could have a rate closer to 4 percent in reality. Calculate your mortgage’s effective rate by subtracting your tax rate from 100 and multiplying that number by the interest rate. For example, a 28 percent tax bracket with a 6 percent mortgage would result in (.06 x 72) to equal the equivalent of a 4.32 percent mortgage rate after considering tax savings if itemized. That helps the interest look less daunting.

In addition, with the possibility of investing with a goal of a 5 or 6 percent return, instead of putting that money into a mortgage the homeowner could get a return higher than the effective rate, which could help grow net worth. On the other hand, if the effective rate is higher, it may make sense to pay down the mortgage.

Another situation that makes paying off a mortgage attractive is for someone at risk of bankruptcy. Many states offer protection from creditors seizing a home to pay debts. If a home is paid in full, it is more likely the owner could stay in it if he goes broke, providing he can pay for the upkeep.

Money taken out for a mortgage also could reduce net worth later in life. The potential for higher investment returns are gone; that money will not be able to grow if investments grow over the long term. Not to mention having too much invested in a house. That could be detrimental at retirement. While we can get a loan for a house, there are no loans to finance retirement.

As a Reno/Sparks real estate professional, I encourage all questions and comments on the Reno/Sparks real estate market or any of the articles posted in this blog.  You can email me @  chance at ballard-company.com or http://www.myspace.com/chancegates

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By Paige Tepping

RISMEDIA, May 26, 2010–When it comes to investing, everybody has certain goals and aspirations. However, we have found that there are certain guidelines every aspiring real estate investor needs to know:

1. Compare property values and rents
Financial statistics only go so far; the best measure of a property’s market value is often the sale prices of nearby properties. The same holds true for area rents. A low price can often be justified by a reasonable rent; renters who can afford a high rent can afford to buy instead, so reasonably priced rent is a must.

2. Pay attention to tax laws
Don’t base your tax investment on current tax laws. The tax code is constantly changing, and a good investment is a good investment regardless of the tax code. The right property with the right financing is what you should look for as an investor.

3. Specialize in something you know
Start in a market segment you know. Whether you focus on fixer-uppers, foreclosures, starter homes, low-down payment properties, condominiums, or small apartment buildings, you’ll benefit from experience by specializing in one aspect of investment real estate properties.

4. Know the costs before getting started
Know the financial statements inside out. What are operating expenses? What are loan payments? Vacancy costs? Taxes? What does the cash flow statement look like? These are key issues that must be addressed before making a solid investment.

5. Know where your tenants are coming from
If the last rent increase was recent, your tenants may be considering a move. If tenants have a short-term lease, they may be living there simply to attract unsuspecting buyers. It is also important to collect the tenants’ security deposits at closing.

6. Assess the tax situation
Taxes are an integral part of successful real estate investing, and they often make the difference between a positive cash flow and a negative one. Know the tax situation, and see how it can be manipulated to your advantage. It may be a good idea to consult a tax advisor.

7. Investigate insurance coverage
If a seller’s coverage is based on lower-than-current replacement value, your insurance cost may increase when you pay a higher purchase price.

8. Confirm utility costs
Ask the local utilities to verify recent utility expenses, especially if any of these costs are included in your tenant’s rent.

9. Consult your accountant
Taxation is a key element of successful real estate investing, so be sure to find an accountant who is well-versed with the constantly evolving tax code.

10. Inspect
Make sure that you always perform a thorough inspection of the property before buying it. Never, ever buy any property without at least examining the site. In some cases, hiring professional inspectors to examine the structural mechanical system may be a sound investment.

As a Reno/Sparks real estate professional; I encourage all questions and comments, on the Reno/Sparks real estate market or any of the articles posted in this blog.

By Margaret Kelly

RISMEDIA, April 6, 2010—Real estate is, as always, a sound long-term investment–and I mean that for careers as much as for consumers.

The key word, however, is “investment.”

If you’re motivated and have the right attitude, you’ll earn your share of those sales.

To get the results you’re looking for, it’s critical first to evaluate whether the time and money you’re spending is being spent wisely.

Remove the clutter. Cut costs and tasks that aren’t about putting you in front of clients. Evaluate every line item in your budget and ask yourself how the expense directly generates business for you.

Don’t be too quick to nix training opportunities. There’s truth in the phrase “Learn more to earn more.” And even one referral from a networking event or class could make up for any fees and other expenses.

Create curb appeal. Now’s the perfect time for a fresh advertising campaign. Take your best new idea and incorporate it into print materials (letters, flyers, mailers, newspaper ads); then update your website and other online platforms. A sharp look and cohesive message can attract new attention and second glances.

Give some extra thought to sprucing up your business card and e-mail signature by adding a new designation to your name. When you earn designations, their symbols trigger curiosity, generate referrals and represent your expertise.

Consider upgrades. It never hurts to look the part. Evaluate your image and make sure you’re conveying professionalism, knowledge and trustworthiness inside and out.

And think about working with a real estate coach. They’re great at helping you stay productive-rather than “busy”-through slower periods.
Smart investments of time and resources can make all the difference in your business when you’re not the only option on the block.

As a Reno – Sparks real estate consultant, I encourage all question or comments on the Reno – Sparks real estate market or any of the articles I post.  I can be reached by email at chance@ballard-company.com

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• On Giving Referrals (newspapergrl.com)

The Pro:

Think about buying a home for $100,000 and collecting $1200 a month or an income of $14,400 per year, you need to deduct expenses such as Taxes and Management fees. Now you hold the property for at least five years or so and capture the appreciation. The original purchase must be cash, no loans. Any upkeep must come from the IRA and all income goes into the IRA. The rate of return could be wonderful.

The Con:

Granted, since prices have fallen (make that “collapsed” in some areas), I think that housing is a more attractive investment today than it was back at the height of the boom. If nothing else, you’re getting the same sticks and bricks at a lower price.

It must be noted that owning real estate within an IRA can be a hassle. Most people don’t have enough dough in their IRA to buy enough properties to diversify properly. (Financing a purchase for an IRA is possible, but complicated.) And since there are limits ($5,000 this year, plus $1,000 if you’re 50 or older) to how much you can contribute to an IRA in any year, you could run into problems if the cost of property maintenance and repairs exceeds the amount of cash you have in your IRA or that you’re allowed to put in.

That said even with incentives designed to spur demand, such as the $8,000 first-time homebuyer credit, it’s still somewhat unclear  how long it will be until we see a sustainable turnaround. And given how the last boom turned out, you have to wonder how robust the upturn will be.

But even setting that issue aside, you still have to deal with the other difficulties  about owning real estate in an IRA. One more thing you might want to consider is that real estate isn’t the most liquid investment around. That could be a problem if you need to raise cash from your IRA in a hurry

All in all, you can get enough of the diversification benefit and return potential that real estate has to offer by investing in REITs or mutual funds that specialize in REITS or other forms of real estate.

Not that it’s not an interesting idea. Just like anything, it probably makes sense for some and could be disastrous for others.  Please when ever thinking about investing in Reno/Sparks real estate talk to your account.