Tis The Season, Defer Maintenance No Longer

Things get crazy around the holidays.

All the shopping, decking the halls and visions of sugar plums can cause homeowners to lose focus and overlook issues that can turn a season of joy into a season of oops.

The American Society of Homeowners (ASHI) says it doesn't have to be that way and offers a Top 10 list to remind busy homeowners that just a few minutes a day can help keep the ghost of deferred maintenance away.

"Homes are the centers of activity during the holidays," said Frank Lesh, ASHI president.

"You can't take them for granted or take unnecessary risks -- even if you want your house to be the brightest, most festive on the street. By following these simple tips you can help protect your home against the rigors of winter and the pitfalls of the season."

# Clean your gutters and downspouts. Gutters and downspouts play an important role in diverting water away from foundation walls. That means less water and moisture related damage. If you clean before winter weather moves in you can keep your basement and crawl spaces dry and leak free.

# Drain exterior water lines. Frozen pipes that can crack the lines are history if you remove, drain and store outdoor hoses now.

# Give your garbage disposal a hot water bath. Cooking for crowds puts additional stress on garbage disposals. Flushing the garbage disposal with one pot of hot water and a half cup of baking soda now and after the holidays can help prevent plumbing problems and costly repairs. Grinding citrus fruits with a dish soap solution can remove the smell of decay.

# Inspect your home heating systems. Nearly half, 44 percent of all home heating fires happen in December. Schedule a professional inspection of your home's heating systems, including furnaces, boilers, fireplaces and water heaters every year before winter weather sets in. Stock up on furnace filters and change them regularly.

# Re-caulk and weather-strip all doors and windows. Save energy and energy costs by sealing air leaks around doors, windows, corner boards and joints. Make it a habit.

# Trim back tree limbs. Over hanging tree limbs are both a falling hazard and a chimney or flue blockage hazard. Also consider installing a battery-operated carbon monoxide detector. Replace batteries when Daylight Saving Time begins and when it ends.

# Keep a fire extinguisher handy. Unattended cooking is the leading cause of home fires in the nation. Buy and place a fire extinguishers away from potential fire sources so that you can reach the extinguisher in an emergency. Make sure it's charged and ready to go.

# Test your electrical circuit shut-off switch. Plug outdoor decorations only into circuits protected by ground fault circuit interrupters (GFCIs). Ensure that the circuit shuts-off properly by using a nightlight or radio. Click the circuit button. If it clicks and the nightlight or radio stays on, the circuit has not shut off. Consider contacting an electrician to check for problems.

# Be steady on the ladder. Falls account for an average of 5.1 million injuries and nearly 6,000 deaths a year. Before hanging Christmas lights, wrap pipe insulation around your ladder beams (vertical members that the rungs are attached to). The insulation helps prevent the ladder from slipping and provides insulation against electrical shock.

# Use extension cords sparingly. Avoid using extension cords except when absolutely necessary. If you do, be sure they are the proper gauge and don't run them across hallways or doorways, under carpeting or furniture or through walls. Never, ever staple them in place.

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source: luxuryvirginiahomes.com

When is a Real Estate Investor: Not an Investor?

Not all real estate investors are created equal in the eyes of the IRS, which means not all tax planning will work for everyone. The IRS classifies real estate investors into four separate categories. What works for real estate investors won't work for dealers or developers and may or may not work for professionals. You need to know where you fit to maximize your tax savings and minimize tax issues. You may even find that you fit in more than one place!

Real Estate Investor. A real estate investor is someone who passively invests in real estate for long-term periods (one year or more). Any type of real estate counts here, from single family homes to industrial parks to bare land to anything in between. You can own properties that you are doing rent-to-own programs with, and have a sitting tenant and ongoing purchase option. You can own a trailer park, or even a campground and still be a real estate investor, although you'd need a bit of extra structuring for these last two options.

Real Estate Dealer. Any time you purchase real estate with the intent of selling it for more than you paid you are in the business of real estate. At seminars I tell people that: "flipping burgers or flipping houses - it's all the same to the IRS." If you buy and sell properties fairly quickly; if you work the foreclosure market; if you look for undervalued, under-maintained properties to renovate and resell, you aren't a real estate investor - you are a real estate business owner.

For tax purposes your income is considered active, earned income. The typical passive real estate investor holding structures like an LLC (limited liability company) with pass-through taxation won't work for you here. In fact using a passive holding structure here can increase your tax bill unnecessarily.

Real Estate Developer. A real estate developer is someone who develops property, typically from bare land (although if you buy and rehab properties there are times when you could also be considered a real estate developer). The key to determining whether you are a developer is whether you must perform work to put the property into service. The development might be subdivision, land improvement or even rehabbing a property. You would be treated as a developer during the time that you held the property before it was put in service.

The tax issues come when you have inventory left over at the end of a year, which is typical for most developers. Now you'll have to participate in something called Uniform Capitalization (U Cap). This is a complicated part of tax law that requires you to capitalize costs associated with the property. You can't take a current deduction for these costs, so, your mortgage interest and property tax won't be deductible right away. You'll need to have deep pockets to keep your development moving forward.

Real Estate Professional

A real estate professional is someone who:

* Owns 5% or more of a real estate business, OR

* Spends a minimum of 750 hours per year working exclusively on real estate activities, OR

* Spends more time on real estate activities than anything else and still meets the 750 hours per year rule.

If you are a real estate agent, you're most likely paid as an independent contractor. That independent contractor income is your business, and so you qualify. However, if you are paid as an employee of a real estate agency and do not own a minimum of 5 percent of the company, then you won't qualify under this provision.

If you can qualify as a real estate professional you now have the ability to offset 100% of your real estate losses (which can be significant on paper). If you can't qualify as a real estate professional your losses are limited to $25,000, and that's only if your income is under $100,000. The $25,000 starts phasing out after that and disappears entirely once your income hits $150,000. But, if you're subject to alternative minimum tax then this strategy won't work in either case, because you can't write off these losses against AMT.

Because the IRS looks at the individual properties rather than just you as a whole, it's also possible to be treated differently for different properties or deals. Good tax planning, such as grouping activities within different business structures can help you maximize your tax savings here. But you've got to know what the differences are before you can put the strategies to best use.

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source: luxuryvirginiahomes.com

Treat Bankruptcy Symptoms Early

How do you know when you are at risk for bankruptcy?

Your failing financial health will exhibit symptoms similar to those homeowners experience when they contract the fear of foreclosure -- tightening in the household budget, shortness of cash, and a general feeling of financial malaise.

For non-homeowners the only pain missing is a mortgage interest rate adjustment which can be a real pain in the assets.

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), with its new counseling requirements and stiff rules helped reduce bankruptcies by 70 percent from a record high level in 2005.

Some of the decrease was due to the end of unusually high number of bankruptcies filed to beat the deadline on the newer, tougher rules, but some of the decrease also came from the counseling requirements.

Under the new law bankruptcy hopefuls must go through counseling before and after filing. Studies repeatedly reveal smarter consumers are better, more financially stable consumers than those less endowed with financial finesse.

Unfortunately, the law was passed just as the housing market -- and the benefits of counseling -- was thrown for a loop by an inordinate number of subprime and other nontraditional mortgages poorly underwritten for those who really couldn't afford the terms.

Homeowners, homeowners cum renters facing rising rents and others who, for whatever reason, just can't financially hack it, are beginning to bang at the double doors of bankruptcy court again, according to the Association of Independent Consumer Credit Counseling Agencies (AICCCA), a national organization of nonprofit agencies that advocate for debtors, counsel consumers and provide debt management services to consumers with excessive unsecured debt.

The American Bankruptcy Institute reported in May that bankruptcy filings increased 51.3 from May in 2006.

AICCCA says of 400,000 consumers it counseled since the new law went into effect in October of 2005, more than 95 percent of them went on to file for bankruptcy.

That's often because by the time consumers make it into counseling, their potential for bankruptcy already critical.

"If consumers recognized earlier the warning signs of serious financial problems, they would have more choices for a successful solution," said David Jones, president, AICCCA.

To help, AICCCA has developed warning signs that cash flow has become anorexic. Two or more require immediate remedial action. Unless the warning signs are treated, bankruptcy may be the only cure.

* Living paycheck to paycheck. A recent survey by American Payroll Association revealed that 65 percent of Americans report living paycheck to paycheck. Losing a job or a decrease in pay could be the final straw. Only a few months separates these consumers from a financial choke hold unless a quick change can be made to raise some dough or lower debt -- or both.

* No savings cushion. The average savings rate for Americans is slim to none. If you spend more than you earn, an unexpected costly change, say a divorce, major home repair or car expense, could cause severe financial trauma.

* Not adequately insured. Some studies suggest that 50 percent of bankruptcies involve medical debt. If you can't afford the cost of an insurable incident without insurance, get insurance. If you lack insurance you also lack the wherewithal to cover sudden medical debt, home or car expenses and those other unexpected events.

* A non-mortgage debt-to-income ratio that is more than 20 percent. The Center for American Progress reports in its May Economic Snapshot that by December 2006, household debt had risen to 132.4 percent of disposable income. For those who spend more than 20 percent of the net income (take home pay) for non-mortgage debt, again, without a drastic change financial frustration is chronic.

* Making only minimum payments on credit cards. More than 40 percent of people with credit cards carry a balance. Paying only the minimum amount due means staying in debt longer and at a greater cost than is prudent. Those unable to make more than a minimum payment are at the mercy of even the slightest change in their financial condition.

The AICCCA says if you experience two or more of those early warning pangs of bankruptcy pains you can't take two payday loans and call someone in the morrow.

You need professional help with your financial matters and you need it now.

AICCCA offers such counseling referrals. Others are available from a host of agencies including National Foundation for Credit Counseling (NFCC); NeighborWorks of America; Association of Community Organizations for Reform Now (ACORN); U.S. Department Of Housing and Urban Development; and local community and social service programs.

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source: luxuryvirginiahomes.com

The Bush Foreclosure Plan: Who Really Benefits?

There were two real estate stories in the news during the past week, one you heard about and one you didn't.

In Washington, the White House, the Treasury Department and HUD announced a "new" effort to save failing homeowners. That's the front-page story.

In Michigan, the Detroit newspapers published an official list of the people facing foreclosure in Wayne County. The list ran 122 pages according to Tom Watkins, a former state official. This is the story behind the news.

The new foreclosure effort in Washington has nothing to do with saving homeowners on that list in Detroit. It has nothing to do with saving homeowners in Michigan, California, Texas, Nevada, Florida, Ohio, Georgia or anywhere else. The Bush plan has nothing to do with saving homeowners in your community or down your street.

Treasury Secretary Henry Paulson explained what's going with surprising candor when he said that the "industry standards announced today do not change the nature of the responsibilities in the servicing industry -- servicers will continue to modify loans when it is in the best interests of the investors. Indeed, these industry standards announced today are the product of discussions among investors and servicers."

Paulson is entirely right. The President's plan is the handiwork of investors and those who work for investors. The goal is to serve the best interests of lenders, not people losing their homes. The result is absolutely what you would expect: Voluntary "guidelines" that change nothing, cannot be enforced and automatically exclude most borrowers with toxic loans.

The President's bailout plan is a gift to Wall Street, mortgage bankers and mortgage brokers. Having engineered and sold the worst loans in American history, having produced the highest foreclosure levels on record, having failed to regulate the lending system, the Bush Administration is now advocating more of the same.

With foreclosure rates expected to rise to even higher-levels next year, you don't need a crystal ball to see where the value of your home is headed. That's not good for homeowners, neighborhoods or states, but only when it's not good for the financial elite will the Bush Administration care.

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HOA Board Service Guide

Serving on the board of a homeowner association is a high calling. Well-meaning volunteers are elected to roles that are critical to the well being of the community. But what exactly is a board member supposed to do to fulfill this charge? Here's a handy guide:

Officer Responsibilities

President:

* Prepares meeting agenda

* Presides at all board and owner meetings

* Appoints and supervises all committees

* Supervises the manager

* Trains directors for future leadership positions

* Sets positive example

Vice President:

* Keep current on HOA business

* Be prepared to fill in for president (Only a "heartbeat" away)

* In training for future presidency

Secretary:

* Records minutes at all meetings

* Maintains book of minutes and resolutions

* Posts meeting notices

* Attests to the authenticity of corporate documents

* Certifies all meeting notices and election results

* Responsible for all official communications with members

* Timekeeper for all meetings

Treasurer:

* Responsible for collection and expenditure of assessments

* Reviews and summarizes financial statements

* Approves/signs all checks

* Monitors reserve investments

* Monitors delinquencies

All Board Members:

* Come to meetings prepared

* Maintain a professional demeanor

* Put personal agendas aside

* Encourage participation

* Be open and fair

* Maintain confidentiality when appropriate

Board meetings are designed to transact HOA business. All members should be welcome to attend and observe. To that end, provide a Member Forum at the beginning of the meeting for owner comments, questions and complaints (It's the American way).

Motions &s; Voting. Business matters are considered when a motion is made, and seconded. Each motion should offer the opportunity for discussion prior to a vote. Votes, when taken, involve board members only.

Meeting Agenda. There may be an agenda format prescribed in your governing documents. If so, use it. If not, use an agenda like:

I. Call to Order - President says, "The meeting is called to order."
II. Minutes - Secretary reads the Minutes of the last meeting.
III. Officer's Reports - Usually a report from Treasurer, but others may report at this time.
IV. Committee Reports - First come reports from "standing" or permanent committees; then from "ad hoc," or special committees.
V. Unfinished Business - Business left over from previous meetings.
VI. New Business - Introduction of new topics.
VII. Adjournment - The meeting ends by a vote or by general consent.

Timed Agenda. To keep meetings on track, using a timed agenda is helpful. Two hours or less should be the goal of most meetings since concentration and productivity begins to fade. So, when composing the agenda, put actual time limits on each item, like Owner Forum (15 minutes), Minutes (5 minutes), Treasurer's Report (10 minutes) and so on. Timing will help move business along and remind all present that time is a valuable commodity.

Action Agenda. Meetings should be action driven. To that end, all agenda items should be framed with a "review and approve" context to them. While discussion may be part of the plan, it is not the goal. Every item brought up at the meeting should have a motion and second.

So, if a director states, "I'd like to talk about a parking policy on commercial vehicles", the president's response should be, "Do I hear a motion and second to establish a commercial vehicle parking policy?" If both aren't forthcoming, time to move on to other business. Impromptu motions should usually be handled at a future meeting if they require research and study. The president should ask the proposer to present a proposal at the next meeting for the board's consideration.

All members have the responsibility to serve the HOA in some way, whether it be on the board or committee. If you've recently been elected, congratulations! Welcome to the board and thanks for stepping up!

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source: luxuryvirginiahomes.com