Karen Lee Bertiger
Lic. Real Estate Broker
Florida & Arizona
Commercial & investment Real Estate

Notes on Life

Sometimes you just need some comfort food. This lobster & macaroni & cheese is wonderful.

Since I can't feed you over the internet, we'll just serve some food for thought.

Please excuse my stream of consciousness writing.
(Most Recent Notes are First)

Kids are going back to school. Please drive safely.

Just wondering where the dollar will settle between now and our elections next year. 

Everyone on earth, according to the latest genealogical research, is at least your 100th cousin! 

Two Vero Beach oceanside estates just sold for a combined $20,000,000!!!! 

Lately, when I travel from the island to the mainland, there is a brown pelican perched on the bridge. If you haven't been to Pelican Island, America's first national wildlife refuge, it's worth a visit. 

There are lots of things that will affect your well-being in retirement. Many people are overwhelmed by all the financial choices necessary to accumulate savings for retirement. However, the sooner you begin, the better off you will be (power of compounding.) Then you need to consider what to invest in for an adequate return on your investment that is commensurate with the risk you are taking (there is risk in everything.) If you minimize the taxes you pay by utilizing the methods available to you by law, you can accumulate faster. You don't really have much control over some of these (laws, account requirements, etc.) You need to determine where your investments will be allocated & any fees you will pay for certain types of investments. These two things are what you have the most control over. It's a lot of math. Living in Florida can help you stretch your money. There's no state income tax, social security is exempt from taxation, the state sales tax is 6%, there's no inheritance tax & the estate tax is limited to what you might owe under federal law.

If you live in a state and/or locality that taxes your income, you can give yourself a raise by moving. If you are saving 4-10%+ on your taxable income (that's the key - how does your state/locality determine your taxable income) you can devote those funds to saving/investing. You can also invest in tax sheltered accounts.

Now might be as good a time as any to add some investment real estate to your portfolio.

Can't believe the Blackhawks are not in the finals! But the Heat are in their finals!

Now that the April 15th tax deadline is upon us, if you have an e-book reader, you may want to check out a book that I highly recommend to everyone: Lower Your Taxes - Big Time!  Wealth-Building, Tax Reduction Secrets from an IRS Insider by Sandy Botkin, CPA, Esq. - 2013 Edition  (TRI Seminars, Inc. - Tax Reduction Institute)  A quote from Mr. Botkin's book: "If you are a consultant or have a small or home-based business, you have access to the last great tax shelter left in this country."

We're almost at the end of the first quarter of 2014. Having spent some time speaking with loan originators concerning the new Dodd Frank Act Qualified Mortgage rules & how they will be applied to sellers who are considering offering seller-financing to potential buyers, it appears that individual sellers will have a difficult time dealing with the legalities & financial realities of the QM requirements, particularly if they do not want to get themselves locked into financing someone at low rates when interest rates are likely to rise over the next 5 years. My initial impression as a seller who may want to offer seller-financing is that it is a regulation that smacks of capital controls on an owner's wealth. Just makes me wonder about whoever wrote those requirements. They must live in a completely different world than most people who have been involved in the real estate industry since before the latest financial crisis (like for more than 3 decades.)

Since I now spend most of my time near the ocean (life's a beach!) I can offer some good advice to those who would like to do the same! It's a great story. 

Now that the holidays are almost over for 2013, everyone will start making New Year's resolutions. Many years ago, I decided not to make New Year's resolutions, but rather "Right Now" resolutions. Meaning that I would make a list of the things I wanted to change in my life & start with the smallest changes that would make the largest difference in my life. Such as just not doing things I do not want to do just because it's on someone else's agenda (if you don't like it stop doing it or putting up with it) or that have no tangible benefit to me (as in some major time vampires.) 

If you would like another method of sorting things out in the process of making life changing decisions, I have developed an Excel spreadsheet using a weighted average decision matrix. It can help you to become less conflicted & more comfortable with large decisions, giving you insight into which choice you actually favor. Sometimes people fail to acknowledge that there are too many factors within each choice you could make, which makes analysis difficult. 

John Burns Real Estate Consulting states that "Florida is on Sale to the World." 

Shortly after I posted about the Investor's Business Daily article, Blackstone announced they will be offering their residential investments publicly. Interesting to see that many prognosticators are stating that their income streams could be use to secure "no risk" bonds. There are risks in everything, even what they are trying to do. The implication is that the rental revenue streams can be replaced (i.e., a tenant can be given a 30-day notice.) However, in extreme circumstances, your risks could be things like natural disasters, taxation, condemnation, regulation, massive inabilities of the population to pay rent, etc.  

According to an Investor's Business Daily article on October 4, 2013, "Where Might Foreclosures Hit Market? - Housing Market's Caveat - 'Vampire Repossessions still occupied by owner lurk in shadow inventory" -- yep, they are most likely repossessed properties rented back to the owners. In Florida, rents are rising, so it's my best guess that the ROI (return on investment) & Cash on Cash returns are too good for them to put them on the market yet. Bear in mind, most if not all were written off their books. So the income is categorized as pure profit after expenses. 

You may want to hurry up & buy residential property in Florida before the end of 2013 if you will need a mortgage to buy. There are provisions of the Dodd-Frank legislation that require your debt ratios be limited to 43%. Do some quick math to total your long term debt. Then divide by .40 (I rounded down from 43%) - let's say your long term debt is $2,600.00 (including the new house PITIA) per month divided by .40 = $6,500. This would mean you would need at least $6,500.00 per month in income (more when you mark-up for your state/local/property tax bracket) -- if it's a doable situation, you might seriously want to consider getting your paperwork in order & visiting a lender to get a loan going this year. Then start looking for targeted property -- no short sales, foreclosures, or other time wasting chases. You could get in while interest rates are still low & prices are still affordable. Because of the legislation requiring "Qualified Residential Mortgages" there will be fewer choices among lenders making it tougher to get qualified for a loan next year. It will take longer next year, since the new regulations have an effective date of January 1, 2014.

The Tax Foundation has rated Florida #5 in their 2014 State Business Tax Climate Index.

If you live in a community association in Florida, the laws have been re-written to include association reporting to the Florida Department of Business & Professional Regulation's (DBPR) Division of Condominiums, Timeshares & Mobile Homes. Certain information will have to be uploaded to their website by November 22, 2013.

On July 23, 2013 the FHFA (Federal Housing Finance Agency) says home prices are back to 2005 levels.

You may want to check the new book How Money Walks by Travis H. Brown - Florida has been a real winner in a massive wealth migration among the states. He states that Florida has gained $95.61 Billion in annual AGI (Adjusted Gross Income in IRS-speak) between 1992-2010. The only county in Florida that lost wealth is Miami-Dade County. Miami is a great international cosmopolitan city, but many Floridians in the know are migrating further north on the Florida east coast (the Sunrise side) to Martin, St. Lucie & Indian River counties. Those counties saw massive amounts of wealth migration, which will in my opinion, increase property values.