Despite the economic crisis, you have made up your mind that you are going to buy a house. Since the economic condition is not favorable and your wallet does not allow it either, you want to get as much discount from the seller as possible. The situation calls for some aggressive ideas to be put into practice that can get you a great discount on the house of your choice. You also need to be creative in your approach so that you are not like the rest of the buyers who may have contacted the seller – and returned empty handed. Below, you can find some ideas that can work wonders for you while you are negotiating your purchase.

Finding a seller

There is one requisite for every sale: The seller. In order to buy a house, you must first find people who are willing to sell their houses. This can be achieved through various means the first of which is your local newspaper. It is very probable that a person interested in selling his house must have advertised it through a newspaper or the internet. You should scan both in order to find such a potential seller. Also, lookout for foreclosures, you can get a real discount on those properties that are up for foreclosures.

Ascertain the reason for sale

The first step in this regard is to find someone who is keen on selling his house. There could be any reason that may have been compelling him to part with his home. He could be stuck in a financial jam and the mortgage payment on the house may be costing him dearly. He could be in the middle of a divorce or he might just want to get rid of an extra house to ease his financial burden. Whatever his reasons, you must keep in mind that the discount you can get from a seller is directly proportional to his motivational level for selling the house. The more motivated he is, the better chances of you getting a hefty discount.

Softening up the seller

This does not mean physically softening him, rather it means relaxing him to a level where he is receptive to your proposition. You must take into account the fact that the first reaction of a seller towards his buyer is hostile. By softening a seller you can decrease his hostility to a manageable level.

Ask him about the reason that has made him sell his house. He may divulge information about his worsening financial condition or his pending divorce. There could be any reason. This will help you understand his reason for sale as well as his motivational level. This will greatly help you when you start negotiating

Offer, counteroffer and negotiation

Avoid giving the offer first. Ask what his asking price is. Whatever number he reveals, it will become your first figure. When you make a counteroffer make sure that it is reasonably below the first offer. By “reasonably below” I mean an offer that is not too much below the asking price. It will irritate the seller and give an impression that you want to buy the property for peanuts. Try to bring down the price as much as you can. The final figure that both of you agree to must be acceptable to both. This can be achieved only when you are aware of all the financial and legal aspects of the sale and the reasons and motivations of the seller.

Source by Mike Lautensack

There really isn’t anything profound to say. This is not a complex or difficult problem to solve on paper.

It’s simple: you’re broke because of your poor financial decisions.

You need to change your behavior to fix that, which is what makes this situation so difficult. 

Like so many others, I was broke for the majority of my life. Then one day, I decided it just had to stop.

There wasn’t a magic fix; I didn’t win the lottery. I didn’t suddenly receive an inheritance, and I didn’t (and still don’t) have a high-paying job.

Where I Began and Where I Went Wrong Financially

I did, however, have a reasonably lucky beginning to my life. I was born in America, I’m fairly healthy, and I’m reasonably intelligent (at least I think so). Yet despite these advantages, I screwed up the first 30 years of my financial life for no reason other than my own arrogance and vanity. Equally as humiliating was how easily I fixed it when I just stopped lying to myself.

So, if you’re in a similar position—you live in America, you’re reasonably intelligent, and you’re not bedridden—you too can fix your money problems.

Money Problems are Fixable

This is all you have to do:

  • Take your finances seriously
  • Stop indulging in endless irresponsible consumerism
  • Stop rationalizing poor decisions

I’m not trying to make this post all about me, but I’m going to use a bit of my story. Hey, I can relate to anyone who isn’t doing so well financially. I was once the epitome of bad decisions!

Ever avoided checking your bank account because you know it will make you feel guilty? You’re not alone.

When I finally got sick of being broke, I realized I was hiding from the problem rather than confronting it. I had to change. So, I went online and used a net worth calculator to assess the disaster I had gotten myself into.

I found out I was about $40,000 in the red with only $400 in cash. I had a fancy car, nice clothes, and the typical ego of someone who appears to be doing well. But like many, I had spent all my resources on appearance and zero on actually acquiring anything of value.

The fact is LOTS of people are living paycheck to paycheck, while their lifestyle screams Instagram famous. It’s not a problem of the few, and part of the problem is exactly that!

We look around at our peers, thinking they’re killing it. Then, we try to keep up. All the while, it’s realistically the broke leading the broke.

My entire career has been spent in auto lending, retail banking, and commercial lending. I’ve been looking at personal financials and credit for well over a decade. I came across so many people with the same story as my own: the overwhelming majority of those who are broke arrived there by their own hand.

bearded man wearing white shirt hovered over pile of pennies counting them

Related: How I Went from Broke Poker Player at 25 to Millionaire at 31

Lifestyle Inflation, Rampant Consumerism Are Your Enemies

Did you know that if you make approximately $30,000 (USD) per year, you’re among the top 1 percent of global earners?

Now, to be fair, it’s kind of a nonsense statistic. It doesn’t take into account cost of living and myriad other factors. But it is a good exercise in understanding how many resources you really have in comparison to the rest of the planet.

So for those who are broke, it’s most likely that you’re squandering a really good opportunity. The truth is most people in America are far from it—many just think they are entitled to live a life that happens to be beyond their means.

I mean, who would let a little thing like “not having enough money” prevent them from buying expensive things?

Americans can declare bankruptcy and keep their car and car loan. Is there anything that screams egregious entitlement more than that?

You’re Not Actually Broke, You’re Spending Money Irresponsibly

We complain about money and the stress of not having enough of it, while holding a car payment, watching our big screen TV, living in a nice house, wearing nice clothes, and grabbing Starbucks on the regular. Let me tell you, truly broke people can’t live that life.

Everyone needs to realize material goods don’t produce true happiness. In many cases, material possessions actually create more stress (notoriously referred to as mo’ money, mo’ problems).

If you have all this stuff, you’re far from broke. You just blew all your money on things you don’t really care about and need to correct the way you spend.

Don’t feel too bad about it. You’re not the only one.

My intent here is not to berate anyone in this situation. I just know how rampant this problem is—even though the fix is really simple.

You need to truly understand that your lousy financial situation is directly related to your lousy financial choices. Once you acknowledge this and are angry enough about the position you’re in, everything will become clear.

From here on out, make good financial choices, which will directly result in a good financial situation. Easy enough, right?!

woman holding wallet open showing no money

Related: 5 Tips for Those Struggling Financially (& Ready for Real Change)

Sacrifice Is Necessary—But Doable

The thing is, it’s not easy to stop being broke. However, it is 100 percent doable.

If you want to turn things around, change is necessary. What are you willing to sacrifice in order to fix this problem?

I find this to be a quite useful exercise in identifying self-created hurdles to success.

When I finally decided to stop living week to week, the first thing I did was reduce overhead. I wrestled with myself about my fancy car. Was I actually willing to give it up? 

If I sold my expensive car, I could save the $500/month payment and $200/month insurance I was spending. Plus, lower overhead would free me from a job I hated—I wouldn’t be so worried about being able to pay the bills. So, I sold it.

I financed the negative equity on a small personal loan from a bank, and I bought an old, disgusting, terrible beater of a car off Craigslist for $1,200. This thing was ROUGH.

I drove it for five years. Yes, sometimes it broke down, and it was always embarrassing. But saving that money allowed me to buy a house hack two years later!

Does anyone reading this thinks less of me because I drove that P.O.S. for so long? Or does the accomplishment of fixing the money problem forever outweigh that short-term embarrassment?

As with most things, sucking it up and reeling in your spending is easier said than done. And that’s why this exercise works so well. Ask yourself, what are your current self-created barriers to reaching your goals?

Will you cancel cable television, bring your lunch to work, cancel all those little subscription-based expenses that add up, or sell your car and buy a beater?

Be honest about what you’re willing to give up. What’s possible for you? A lot of people are simply not willing to drive a dumpy car or buy clothes at Target.

It’s easy to make excuses why you need or deserve the lifestyle you have. It’s precisely the mindset of everyone who gets themselves in this situation.

They rationalize and justify their decisions, but then they live with frustration resulting from a constant lack of resources, lack of freedom, and ongoing financial stress.

You can pick one or the other: sacrifice unnecessary costs and spend those dollars investing in yourself and your business, or spend all of today’s and tomorrow’s money (debt) on non-essentials that the false god of consumerism has told you will make you happy.

No More Blame Game, Take Responsibility

I know all people’s circumstances are not the same, and I’m well aware the world isn’t a fair place. And to some, I probably sound overly harsh.

For many though, I’m probably saying what they already know to be true.

Unfortunately, no matter what type of situation you’ve found yourself in, the solution to this problem remains constant: make different choices.

Nobody deserves anything in this life—good or bad. So, while it might be someone else’s fault your economic situation is dire, assigning blame is assuredly not going to help improve your finances.

Taking responsibility and making some sacrifices will be required if you don’t want to be broke. Banking on luck rarely works out.

As they say, “You can’t change your life without changing your life.”

The good news is that it only seems monumentally hard. Realistically, sacrificing things in order to turn your finances around is only annoying at first. Take it one small step at a time, and before you know it, you’ll find yourself on the path toward success.

Also, many people don’t realize that making money is far more satisfying than spending money. I’ve received lots of pushback against that phrase—almost always from someone who has been more of a spender than a maker in life.

So, how would they know?


Spend time learning about personal finance. The whole “being broke” problem is entirely fixable—and it can be done rather quickly.

Plus, with the FIRE movement (financial independence, retire early) being so popular at this point, it’s never been easier to find resources to guide you.

Start taking your finances seriously. Stop participating in unnecessary consumerism, and stop justifying poor financial decisions.

The only person who is making you broke is you. It’s an observation that should be encouraging—because it means you can fix it.

What are you wasting money on? Have you acknowledged it’s standing in the way of your success? Are you willing to give it up? 

Let’s discuss in the comments.

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When I lived in a small New Mexico town, Halloween meant stocking up on treats for a parade of small visitors who would show up on my doorstep, dressed in costume.

Now I live in a well-guarded building in Philadelphia, a city with more dogs than children. The only costumes I see are worn by bank employees.

No haunted houses in my neighborhood. But prowling around the Internet I’ve seen some copy that I could swear was a haunted piece of virtual real estate.

Here are 5 tips to keep your own site warm and welcoming even on the coldest winter nights, which we are experiencing already.

(1) Silence the squeaky doors and hinges.

Haunted houses are famous for floorboards creaking and lights going out suddenly. In normal, happy houses, we don’t notice the floor or the lights. We just walk around comfortably.

And that’s what copy lets website visitors do, too.

Copy gets haunted when copywriters call attention to their own words. That’s why humor usually kills sales: prospects remember the joke but not the benefits, features or marketer’s name.

We’ve all done it at least once: we fall in love with an image and build copy around a metaphor. But readers will feel most comfortable with a conversational tone and familiar language. And they’ll actually enjoy an occasional cliche.

(2) Say good-by to the Ghost of Your English Teacher.

As you write a set of bullet points, do you find yourself thinking, “Mrs. Fussy told us never to begin a sentence with ‘and.'” Or “Sister Mary Aurelia would take a ruler to these phrases.”

They’re ghosts. Real English teachers don’t care about copywriting and they couldn’t care less what you’re doing these days.

Open the windows and watch them waft away into the dark damp winter nights.

(3) Clear the cobwebs.

Cobwebs brushing against your face? Not a great way to say “Come in! You’re going to love it here.”

Some openings rub their readers the same way: stiff, stilted, self-conscious and just plain creepy. Create an opening that’s fresh and inviting. Get visitors hooked, so they stay focused on what you’re selling.

(4) Leave the lights on.

Haunted houses tend to be dim. You’ll find weak light sources that create long, creepy shadows.

Good copy needs lots of white space, punctuated by bold and colored type. It’s easy to read. Crowded type makes your reader feel suffocated… wondering if they’re in a dark closet with no way out.

(5) Make sure everyone can find the way out – and the refreshments.

Every so often I see copy that appears to be created by demons. I want to buy… and I have no idea where to sign up. Sometimes I can’t even figure out what’s being offered for sale.

And these days, I believe good website copy begins with an irresistible freebie to motivate visitor sign-ups. Your freebie should be a tempting as a serving of strawberries with cream, a chocolate cupcake or a double shot latte with extra whipped cream.

Source by Cathy Goodwin

Are you one of the proponents of this point of view? If so, you are not in the majority, but your feeling is valid enough to engage in a discussion.

Let’s talk this through.

“The Market”: What Is It?

I know this may sound to you like semantics—a bit of hair-splitting or nit-picking—but when you say something like “this market is too hot,” what exactly do you mean by “market”? Is all of the United States one market, as far as you are concerned? Do you view Dayton, OH same as Denver, CO? Do you see Peoria, IL the same as Phoenix, AZ?

Sounds stupid, doesn’t it? But aside for beginning with the same letter, these locales have nothing in common. Interestingly, all of them are doing well in this cycle, but while some are leading the way with solid economic fundamentals, others are simply riding the coattails of the overall booming economy.

We need to make this distinction first in order to have a meaningful conversation on this topic. There is no such thing as “the market.” There are many, many markets, and all of them need to be spoken of separately.

“Rents Are Historically Too High and Unsustainable”

I used to feel this way, but then I used my brain.

The Fed’s stated policy is 3% annualized inflation, which they see as neutral. This has been their position for many years. And if this is the goal, then necessarily, each and every year, rents are supposed to climb to new historic highs.

Related: 4 Simple Steps to Assess Reality & Make an Offer in a Seller’s Market

So I am not sure what exactly the statement “rents are historically too high” means. I’m sure rents are much higher today than they were in 2003. So are the S&P, the NASDAQ, and real estate.

Furthermore, as we already settled, all markets are not created equal. Let us agree that rents have inflated because everything else has inflated. But in some cities, the inflation is accompanied by population growth, job growth, and income growth—while in other cities, it’s not.

With this in mind, I think it’s fair to say that just like pricing of real estate, rent increases in some localities have staying power, while these increases in others are likely much more questionable.

But we do have deflationary economic cycles, and surely rents have to be impacted to some extent. Rents can’t go up in good times and in bad. So, let’s take a look at that.

Case in Point

I moved from Ohio to Phoenix, AZ about three years ago. I had a portfolio in Ohio but never syndicated in that market. The main reason for this was that I just wasn’t comfortable projecting structural growth. The Midwest is a place characterized by an aging, declining population, high property taxes, limited employment opportunities, and bad weather.

When putting people’s money into a deal, my first concern is safety. Safety in real estate is a function of growth—period! Growth solves many problems. Growth solves physical vacancy issues, economic loss issues, and rent growth issues. Growth is what you want as a sponsor.

I know that many of you will point to cities like Indianapolis, Cincinnati, Columbus, and Tucson—and the historically low cap rates those cities are trading at—and say, “See, Ben, this is growth.”

But is this growth sustainable?

This is why I stopped buying there in 2013, and it’s why I couldn’t put people’s money in play there. This is also why while I have had many opportunities to buy in Tucson, and I just can’t pull the trigger. When I get calls from brokers telling me they are moving 1980s product at a 5.5% cap rate in these markets, I just laugh. I can buy in Phoenix at that price.

But, What Makes Phoenix More Sustainable?

Well, Phoenix MSA is nothing short of a population explosion. At over 5MM population, Phoenix is now the fifth largest city in the nation. Maricopa county has been the number one growth county in the nation for several years running.

Last year, Phoenix clocked in rent growth of over 7%. This year, Marcus & Millichap is projecting over 6%, and others are projecting higher.

Is that sustainable? No, not in perpetuity because nothing is sustainable in perpetuity. However, while average rents nationally sit somewhere around $1,470, Phoenix is only at $1,070.

Related: How I’m Preparing for a Potential Real Estate Market Crash

So, Will the Rest of the Country Come Down?

Perhaps, but here’s what I know.

I started buying small multifamily in 2006 in a town you’d never heard of before you listened to BiggerPockets Podcast episode 14. By 2009, I had about 12 units. I stopped buying in 2009, but picked it up in 2011, and by 2013, I’d gotten up to about 30 units. So, I had rentals throughout the Great Recession, in a town that hasn’t gained population in five decades.

Do you know how much my rents went down?

They didn’t.

Do you want to know how much rents went down in Phoenix MSA during that time?

Approximately $50, according to Department of Numbers. And this was at a time when Phoenix was a different market, without a diversified economy, driven mostly by construction at the time. Night and day to what it is now.

This $50 constituted about a 6% decline from the average rents in the MSA at that time of around $813. Phoenix grew by more than that in 2018 alone! If a similar decline were to take place again—frankly, whatever—there would be not much of an impact on my business plan long-term. That would simply take us back to 2017 levels.

This exact scenario is exactly what we saw in Phoenix during the Great Recession. We saw our rent peak in 2008, before dropping the aforementioned $50 by 2010. However, 2010 rents were still higher than 2007, which gives me more reason to buy!

Just in case, though, I stress test a $100 decline in rents on every deal I syndicate. And $100 is double the decline we saw in the Great Recession in dollar terms, which would constitute not a 6% decline, but an almost 9.5% decline from the current averages.

Real Estate Cycle

“It’s too late!” they scream.

“Wait for the downturn!” they exhort.

Oy vey.

Just as we can’t talk about the entire country as one market, we cannot consider the entire country on one cycle. Some places have been in the recovery for over a decade, while others only kicked into gear four of five years ago.

Should this play into your decisions? Yes. But, does the statement “the cycle is too late” apply in equal measure to all of the country? No.

“But the Downturn Is Coming!”

Yes, it certainly is. It always does.

What’s your point?

“I’ll Wait to Buy Until Prices Come Down.”

OK! I might point out to you, however, that I am much more likely to get that call than you. Why? Because I am a known commodity. I am a brand. People know me as someone who signs on the line and then performs.

You, on the other hand, are known as the smart guy who’s waiting for the downturn.

See any problems in that?


Things I Would Not Syndicate Today

I would not syndicate in secondary.

I think you’ve got to own property where most people have a reason or desire to be. The vast majority of this is driven by jobs, which pushes us into primary markets.

I would not syndicate in tertiary markets.

I learned this, among other things, from Brian Burke. He had an unfortunate and costly experience with this early in his career and makes it a point to advise against it.

Sometimes we refer to these markets as “one-trick-pony” markets. Perhaps there is one very large employer in town—or even two. Or perhaps there is a military base driving all of the economic activity. That’s just scary on many levels!

I would not syndicate in any market with declining population.

Big no.

I would not syndicate in any market that is late in the recover cycle.

I suppose if you’re prepared to stay in for 10 years—and not as a contingency, but as your primary option—then this wouldn’t matter. But since there are much younger recovery markets, I see very little reason to be anywhere else.

I would not buy in any market with high property tax.

I think this is self-explanatory.

What are your thoughts: Are there still markets you feel comfortable investing in? Or are you sitting on the sidelines for now?

Leave your comments below!

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Mike Ditka Biography and Football Throwback Jerseys

Teams: Chicago Bear, Philadelphia Eagles, Dallas Cowboys

Number: # 89

Position: Tight End

Height: 6'3 "

Weight: 230 LBS

Iron Mike Ditka burst onto the football scene with a spectacular rookie season. In 14 games, Ditka had 58 catches for 1076 yards. He averaged 19.2 yards per catch and scored 12 Touchdowns. Those numbers where unhard of his his position of that era. He was responsible for revolutionizing the role of tight end.

In his first exhibition game as a Chicago Bear tight end, Ditka caught a short pass, spun past a defender and streaked 70 electrifying yards for a touchdown. Until that moment, no one imagined that a TE could be such an explosive offensive weapon on a football field. Traditionally tight ends were like their defensive counterparts – big, lumbering linemen used almost exclusively as blockers. After Mike Ditka racked up 1,076 receiving yards in his rookie year, the position was redefined.

On top of being a devastating blocker, Iron Mike had the soft hands and game breaking speed of a wide receiver and the toughness of a middle linebacker. One of the hardest runners of his time he enjoyed dishing out punishment as much as he liked scoring. His greatest legacy, though was his champions heart and the never give an inch attitude that spurred him on win two NFL titles. one as a player and another as a Super Bowl winning head coach.

The way we watch tight ends play in modern NFL football is in direct relation of how Iron Mike Ditka was used to devastate their opponents. Iron Mike was a true trailblazer at his position.

Source by Jeff Sullivan

If you intend to invest in real estate, real estate training can be beneficial. Your firm must develop successful habits quickly. You must choose your approach to learning, and your trainer carefully, however. The first thing you need to consider is the cost / benefit ratio of the relationship. Is similar help or information available some other way, sometimes at lower cost? Most of the information you'd need to learn in order to succeed in real estate is available for free if you have the time and energy to do your research. If you are willing to sign up a mentor you have to make sure you're going to get your money's worth.

Proper training can help you put together a business plan and give you specific ideas as to what you need to do in order for your venture to be a success. A good consultant will keep your nose to the grindstone and put your feet to the fire. A good consultant or mentor can keep you moving forward, and help you through rough times and answer questions. A good real estate consultant can also provide support, motivation, knowledge, and help you keep your focus.

You could approach learning about real estate investing in a number of different ways. You could, for example, buy books or do research on the Internet. You could also take a study-at-home course. You could attend an accredited real estate training option. Yet another option is to hire a coach or mentor to teach you the ropes. A coach or mentor can be the best source of real estate training — if you get the right coach or mentor. The key to choosing a mentor is figuring out what questions to ask, and being able to assess their personality, knowledge and professionalism.
Real estate training is a well-structured series of lessons revolving around an approach to real estate investing that is intended to help the real estate professional think more clearly, gain better perspective and focus more effectively on their goals. Coaching provides the tools to enhance the process of building a successful business and offer sa way to approach accountability for your actions as a professional.

Classes can be connected over the phone or online as well as the traditional way, in person. Professional real estate coaches are trained to listen and observe, and tailor their approach to your individual needs. They help you elicit solutions and strategies and give you feedback, provide a perspective so that you can take the initiative and make the moves that will get you the results you desire.

Trainers should offer tried and true business methods, not proprietary or unique solutions. Unique, "proprietary" or secret methods are more than likely to be nothing more than marketing hype intended to separate you from your money and nothing more. Most of the methods for finding, acquiring, renting, selling or opting property have been around for a reasonable time. It's quite possible for someone to have a slightly different take on these methods, but extremely highly that they have invented a truly proprietary method-at least one that actually works.

Source by Peter Vekselman

It’s an investor’s dream scenario. You purchase a distressed property and start on the mountain of repairs and renovations. Then, someone else sees and wants—no, needs—your property.

Enamored by your real estate, they propose to pay you more than you paid. Before the sweat equity even begins to form on your brow, you receive an unsolicited offer at a handsome profit.

Profit without pain—what could be better? Well, profit without pain and no tax hit while unexpectedly moving on to the next investment property would be best case scenario.

Getting an Unsolicited Offer

This is exactly what happened to BiggerPockets member Jay. He is a rehab hold investor on a fast track to quitting his day job.

He purchased a rental property and was in the very initial stages of its rehab. Then, less than a month after closing, another investor spotted his smart play and offered him a handsome profit.

Despite his habit of buying and holding, at the time he received the offer, Jay had learned of a six-plex that would be the perfect addition to his portfolio. But he did not have the capital to hold and renovate the initial property and get the six-plex, as well.

Then came the unsolicited offer. Jay accepted the offer and began to work the numbers for the six-plex. He was very close, but the tax bill on the gain from the unexpected sale put the replacement purchase just out of reach.

If he could keep his taxes working for his own benefit using a 1031 exchange, it would be a game changer—but he didn’t think he had satisfied the hold period.


Holding Period for a 1031 Exchange

The hold period is only one of the ways that the IRS differentiates between dealers (intent to sell) and investors (intent to hold). Investors qualify for 1031 exchanges and dealers do not. A longer period of ownership can be one indicator of an investor’s intent to hold.

It was three days before he was to close on the sale from the unsolicited offer. Jay threw out a Hail Mary appeal post on the BP forum.

Based on his question and our follow-up conversation, I was able to show him how he could use all his profit—even the taxes—toward the purchase of his replacement six-plex.

Even though he had held the property only a short time, he and his accountant determined that he was eligible to defer all tax. This is because the IRS can take many factors into consideration when determining the intent of the investor in a 1031 exchange.

Typically, an investment property is considered to be held for trade, business, or investment and eligible for 1031 tax deferral when you have owned it for 12 months or more. Longer is better than shorter.

Related: The Ultimate Guide to Real Estate Taxes & Deductions

Showing Intent is Key

The keyword that the entire 1031 exchange statute hinges on is “intent.”

Think about the farmer who goes to an auction and buys a piece of land. Three months later, he sells it for 10 times what he paid.

Is he a dealer or investor? His intent can be determined by looking at his history, his actions, and his communication.

  • He is a farmer with a history of holding property for productive use.
  • Did he plant a crop on the purchased land?
  • Or throw up a “for sale” sign?
  • Did he seek out the buyer?

His history of holding for productive use, his action in planting a crop, and his lack of a “for sale” sign demonstrate intent. And the unsolicited offer is the strongest piece of evidence.

Much like Zillow’s “make me move” appraisal pricing, it’s hard to argue about a deal too good to refuse. I’ve heard many times from grizzled old professionals, “I’ll never sell anything—unless it’s the right price.”

This brings me back to Jay. He had a history of rehabbing and renting property. But he found himself in the process of selling a piece of property that he had only owned briefly and had intended to use for other purposes.

The unsolicited offer was that much more attractive due to his interest in purchasing the six-plex (aka a replacement property) to rehab and rent. Fortunately, he had clearly stated his intent with the first property to his family, friends, realtor, and tax professional prior to receiving the unsolicited offer.

Just because he received an unsolicited offer did not change his original intent. It did not mean he intended to flip the property all along.

He established his intent with integrity and could look at himself in the mirror and say, “I truly meant to hold this property.”

calculator with less tax and more tax buttons

Preparing for a 1031 Exchange

Jay made his inquiry regarding a 1031 exchange just 72 hours before his closing. As soon as he decided to keep his taxes working for his own benefit instead of immediately forking them over to Uncle Sam, we jumped into action.

This is because a 1031 exchange must be in place prior to the sale of the investment property. And selling without the 1031 exchange would have made his distressed six-plex replacement property unattainable.

While 1031 exchanges have six requirements that must be adhered to, my team was able to walk Jay through the entire process. We coordinated with his closing team to prepare the necessary documentation. We handled all the background work while he focused on his sale and purchase.

He handily met all requirements and closed his sale and then his purchase.

Related: How to Minimize the Tax Bite When Selling Your Investment Property

Checking in on Jay

I checked in with Jay about six months after his exchange. He was just finishing up the renovation of his six-plex and had begun renting out units.

He was successfully able to leverage the unexpected windfall from his unsolicited offer and his own taxes into a bigger and better deal.

If you own real estate that you purchased with the intent to use for productive use in trade, business, or investment, you may qualify for a 1031 tax deferral, regardless of your holding period. The IRS created a safe harbor test in Rev. Proc – 2008-16.

However, it is important to understand that this safe harbor is not restrictive or definitive. Outside the safe harbor, no single method of documentation provides a fail-safe litmus test for 1031 exchanges. Yet, various case rulings support other measures.

Explore all options rather than harm your portfolio growth potential just because your circumstances are unique. And as always, seek counsel from a professional financial adviser familiar with your situation before making tax-related decisions.


Want to learn how you could be saving more on your real estate taxes using loopholes, deductions, and more? Get the inside scoop from Amanda Han and Matthew MacFarland, real estate investors and CPAs, in Tax Strategies for the Savvy Real Estate Investor. Pick up your copy from the BiggerPockets bookstore today!


Are you making the most of the tax benefits available to investors?

Let’s discuss in the comment section below. 

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The beginning of each calendar year is a very busy time for many businesses, and Property Managers are not left out of that category! Whether you are a large Property Management Company or an individual Property Manager, this is the time when all tax forms should be issued for funds paid out to Rental Property Owners or Vendors during the previous calendar year. The form that is used to complete this task is the 1099-MISC, and this form must be submitted to the recipient and the IRS by a specified date each year. When 1099s are submitted to the IRS, they must be accompanied by a summary form, Form 1096, to meet the tax filing requirements.

– Why is the 1099-MISC necessary?
The IRS uses 1099s to monitor any income source that is not filed on a traditional W-2 form, which only shows income received as a salary or wage. This is a way in which the IRS captures any income received by an independent contractor or rental property owner that may otherwise go unreported. A Property Manager or Property Management Company is acting as a reliable source for the IRS to help enforce that all income is being reported.

– Who should receive a 1099-MISC?
• Rental Property Owners – all rental property owners that have received $ 600 or more in rent disbursements in a given calendar year should be issued a 1099-MISC.

• Vendors – all independent contractors or vendors who are unincorporated and have received $ 600 or more in a given calendar year for services provided should be issued a 1099-MISC.

– When does a 1099-MISC NOT need to be filed?
Every situation has exceptions, and tax filing and reporting is no different. Here are some of those exceptions:
• If the total payments to a rental property owner or vendor are less than $ 600, a 1099-MISC does not need to be filed.
• If a rental property owner is a corporation, a 1099-MISC does not need to be filed.
• If a vendor is an incorporated business, a 1099-MISC does not need to be filed.

– What information is required on a 1099-MISC?
• Tax ID # – this can be an individual's SSN or an EIN for an unincorporated organization.
• Address – this is needed for the 1099-MISC to be sent to the recipient.
• Funds Paid – this includes a total of all income paid to a vendor or individual rental property owner during the previous calendar year. (Remember, only if the total is greater than $ 600)

– What boxes are used on a 1099-MISC to report income?
• Rental Property Owners – all income collected that was for rent should be reported in box 1 "Rents" on the 1099-MISC. Any additional income paid (late fees, utility bill reimbursements, NTQ fees, etc.) should be reported in box 3 "Other Income" on the 1099-MISC.
• Vendors – all payments made for vendor services should be reported in box 7 "Non-employee Compensation" on the 1099-MISC.

It is also good practice to send all rental property owners a copy of their financials for the previous calendar year so they can see where the amounts in each box on the 1099-MISC were derived from.

Not filing 1099s when required can lead to penalties and fines by the IRS, so it is very important to keep accurate records of amounts paid to each vendor and rental property owner and request any necessary forms that you may need to file the tax forms to be compliant in this process.

Source by Mike Lautensack

It’s a huge advantage for an investor to buy across different markets. Multiple markets open up additional purchasing opportunities, rather than introducing limitations. It gives you the ability to pick and choose the best of the best.

But the bigger win, in my opinion, is lowering risk within your investments.

Ray Dalio, one of the most successful hedge fund investors and founder of Bridgewater Associates, had the following to say about diversification:

“I think the important thing here if I’m an investor is that the most important thing you can have is a good strategic asset allocation mix,” Dalio said in an interview with CNBC.

“In other words, you’re not going to win by trying to get what the next tip is—what’s going to be good and what’s going to be bad. You’re definitely going to lose. So, what the investor needs to do is have a balanced, structured portfolio—a portfolio that does well in different environments.”

There are lots of ways to balance your portfolio in real estate. Diversifying can take many forms, such as unit count per property, economic class, type of rental, or geography.

But let’s focus on geography. What do investors need to know before investing in a new market?

My company and I have invested in and managed properties across three states, 20 counties, and over 50 cities. We have learned a lot by trial and error, but you don’t have to.

Related: How (& Why) to Enter a New Real Estate Market as an Investor

What Investors Need to Know About a New Market

Local Deal Flow

We have found that most wholesalers and commercial brokers operate in specific regions. When looking to acquire properties in an area, establish relationships with the local folks. Once you buy a property there, brokers and wholesalers will be much quicker to work with you in the future.

Rent Estimate

Rent is something that will obviously change from location to location. We find local property managers to be an ideal source of accurate rent estimates. This is especially true if they will be managing the property you’re looking to purchase.

The property manager has a vested interest in giving you a real number since they have to place tenants. Wholesalers and agents can be very shady with estimates since they simply want to see a deal close.

Crime Rates

Specifically in major cities, crime rates can change block to block. Baltimore, Md., and Trenton, N.J., are great examples of cities where within blocks a neighborhood can change from low crime to high crime. We have found that crime not only impacts rent and tenant quality but also less obvious things, such as willingness of contractors to work at a site.

Unfortunately, crime maps often don’t do a great job of showing how crime is changing over time. People who live in the area are usually a better source of information about the safety of an area. Local residents can comment on both immediate crime rates and how crime is evolving.


Certain regions are impacted greatly by seasonal fluctuations. Potential tenants may be sparse during certain times of year and plentiful during others.

For example, we manage and own college housing in a town dominated by the local university. Most students search for housing from February to May and sign a year-long lease. If you miss that time slot, it’s very hard to find tenants.

college woman sitting outside using laptop with university out of focus in background

Related: 4 Steps to Take When Scaling Your Real Estate Business Into a New Market

Historic Preservation

We have found that certain municipalities and cities have very strong historic preservation initiatives. On the positive side, these can provide tax credits. But preservation councils may prevent certain construction projects.

For example, a new construction team is working on a development project in Lancaster, Pa., where they want to level a historic building. The historic board is making it very difficult for the development team to get the project approved.


Each state (and even some cities) has their own specific eviction process and rules. It’s really important for owners to get to know the local eviction legal process.

Many will argue that filing evictions is the property manager’s job. But investors should also understand the local process prior to acquiring an asset. Even if they employ a property manager, it could dramatically impact your first three to six months of ownership if evictions drag out from hold-over tenants.


Inspection policies also vary. We see city inspections range from every year to every four years, while many towns don’t have an inspection at all. Inspections are important as you forecast deferred maintenance that an inspector may require to be changed.

For example, in York, Pa., the city has hired an outside firm to handle all inspections. The new codes team is much easier to work with than those in  neighboring cities, which impacts maintenance costs over time.

Cities can even change their policies. Baltimore, for example, just passed a new inspection rule requiring an inspection every two years.


Health complications stemming from lead paint have received a growing amount of attention within the media and courts—and rightfully so. There are three levels of lead paint rules: federal, state, and city.

As an example, two cities in Pennsylvania (Philadelphia and Lancaster) require a lead paint safe certificate prior to moving in a family with a child under six. The rest of Pennsylvania isn’t nearly as strict—just requiring adherence to the national lead paint rules of providing notice in the lease.

Maryland requires a property to be “lead safe” at all tenant turns. Become familiar with lead rules, so you’ll understand costs and rulings prior to purchasing a property.

Pensive young entrepreneur looking at laptop screen and drinking coffee at table in cafe


Just as important is knowing local codes. Local codes are even more critical in the multifamily space. Fire alarms, sprinkler systems, elevators, and electric codes can be very costly to change.

We had an instance where a codes officer told us a property needed a sprinkler system. The property was actually grandfathered into not needing a sprinkler system unless new construction started. That would have been a very expensive project had we not known the local codes!


Weather can be an issue when it comes to managing properties. Snow, extreme cold, wind, and hurricanes are all classic examples of weather-related issues that need to be planned for in both the pro forma analysis and the management operations plan.

Parking lots are an interesting example where weather plays a unique role. Keeping the pavement in decent condition and clearing snow are more complex tasks in the Northeast and Midwest compared to the South.

Economic Development

It’s crucial to understand where a city and even individual blocks are moving in terms of economic development. It’s key to learn about both long-term changes in a local economy and also more recent trends.

Bethlehem, Pa., is a good example of an interesting economic storyline. For much of the last 30 years, Bethlehem has had a difficult economic climate due to a massive loss of jobs in the coal industry. But the last few years have actually experienced positive growth, and the city is revitalizing.

What other considerations do you take into account when exploring new markets? 

Comment below.

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The Washington Post article by Christopher Ingraham (June 13th, 2014) says it all "There are more museums in the US than there are Starbucks and McDonald's – combined." Quite accurately we think of museums as important cultural and educational institutions; however, they are also quiet superstars of the entertainment industry. According to the American Alliance of Museums (AAM), with over 800 million live visits annually, their attendance breaks that of all theme parks and major sporting events combined. But America's museums are much more popular and numerous; they are cultural and educational gems that play a vital role. They are community elders that tell the stories of our American neighborhoods. Mamie Bittner with The Institute of Museum and Library Studies (IMLS) stated in the Washington Post article:

"Many of these institutions, particularly in small towns and rural areas, are historical societies and history museums. We are in love with our history – at a very grassroots level we care for the histories of our towns, villages and counties,

The story of how I came to visit and admire so many small museums begins nearly eight years ago when I faced a scary scenario. Diagnosed with prostate cancer my doctor's instructions were clear and blunt. "We used this thing very early; lose some weight but by year's end take care of this." Taking care of this either either operation or radiation. He was confident that either procedure would be sufficient; suddenheless, I was scared as hell. When you hear that diagnosis, "you have cancer", a thousand things race through your mind all at once, yet somehow the whole world stops at the same time. What are the treatment options … I have to research each treatment … I have to research the surgeons … what if I do not make it … what happens to my wife … what happens to my family … I want this thing out of me … how do you research this stuff … I want this done before the end of the year … why me … why not me. My mind was racing, racing, racing. Who do I tell? When do I tell them? Should I tell them? My mind was just racing, racing, racing.

It was June 2010. I was 54 years old, a professor, husband and father. Earlier that year my wife had been hospitalized for 34 days. Should I tell my wife? Would this aggravate her condition? She was already worried about being unemployed. Do I tell her? Our three sons were all in high school and doing reasonably well; the oldest would start college in the fall. Out of worry would my oldest boy forgo his athletic scholarship to stay home with his ailing parents? Even if he did go to college, if he knew I was fighting cancer how would this affect academically? Who should I tell? Do I tell my boys? Do I tell everyone? Do I tell no one?

I once hear somewhere that "we grow up and become our parents." How true that is. Although it did not occur to me at the time, I'd seen this situation play out before in 1969; I was 12. One day my dad asked me to come with him to his doctor. This was strange; he had never asked me to go to a doctor with him before. We went to St. George Nicholas Park, Mount Morris Park, Central Park, baseball games, museums and grocery stores. On Sundays we walked to newsstands to buy the New York Times and Daily News. Afterwards we'd come back home and eat big southern style Sunday breakfasts – smothered chicken, smothered pork chops, grits, gravy and biscuits, never rolls – always biscuits. We did a lot, but he had never asked me to go to a doctor with him. I should have known that something was up, but I did not.

The doctor's appointment took place on an early evening. The office was located on the first floor of an apartment building and it was dark outside. I sat in the waiting area while my dad met privately with the doctor. That day his doctor told him he had six months to live. My dad a tall, quiet, dignified WWII vet said nothing. We went home and he acted as if nothing had happened. He kept it all to himself. Yet twenty one years later, and long after his doctor had died, my dad was still alive. He told no one this frightening secret for all of those years. Finally, in 1990 he spoke with me about what had happened on that day way back in 1969. When I asked him why he had not said anything he had a classic answer, "Hell, I was not gonna die to just to make the doctor look good. " To this day I still do not know if he ever told anyone else.

In 2010, 41 years after my dad was told he had six months to live and said nothing to the family, I became my dad – absent the courage and dignity of the WWII vet. Initially I told no one. I did however listen to my doctor's advice and began power-walking aggressively to lose the weight. I weighed 308 pounds. This was the beginning of a journey. Little did I know it would transform my health, my body and to a great degree my soul.

I elected for a robotic prostatectomy as treatment. Recognizing that I would be hospitalized for several days I was forced to say something to my wife. Every married man knows that disappearing for several days without telling your wife is a guaranteed death sentence; cancer is only potentially lethal. We sat down on the living room sofa on a Sunday around 7pm. It was the evening before I'd be admitted to the hospital. This scenario augments her very little time to dwell on the matter; I had to be at the hospital early the next day. As I had feared, she broke down and began to cry and as soon I uttered the word cancer. We agreed not to tell our sons; we both thought it might cause them to worry.

Fortunately the operation was a success. Neither chemotherapy nor radiation was required. Several months later I resumed my power-walking. Over time a routine evolved. I prefer walking outdoors in parks (no matter the temperature) to treadmills and tracks, mornings are better than evenings, warmups last 5 – 7 minutes, weekday walks last 45 – 50 minutes, weekend sessions last a minimum of 90 minutes and finally, almost all sessions end with 7- 8 minutes of stretching. I walk 4 times per week during cold months and 4 – 5 times per week during warm months, I also found a very reliable partner, music from the 70s, 80s and 90s. My partner also gets along fabulously with an ancient Sony Walkman. Who knows, sometimes this partner is my subconscious whispering to remind me of long lost youth.

While I do not claim to be a very religious person, being outdoors in parks (which are after all tiny forests) sweating, breathing and among the general splendor of God's nature is often a spiritual event. The cancer has now been gone for nearly eight years. Over that time 70 pounds have melted away and my diabetes seems to have disappeared, or at the very least be well controlled. Along the way I began to enter races; I power-walk but compete against runners. Half marathons (13.1 miles) and 10Ks (6.2 miles) are my favorites. Being somewhat vain, before entering my first race I checked the times of the runners to make sure I would not finish last. At first I entered domestic races. Later a colleague, who is a runner, told me about the Philadelphia "Love Marathon" which I competed in. This leads me to research races in other locations. Now, I travel to participate I races. However, journeying to different cities only to participate in a single race seemed hard to be an efficient use of time and travel. I needed another activity to compliment the racing. This is how I developed an interest in small museums.

I had some experience with researching museums. Years ago I had begun exploring museums as field trip venues for high school students. At the time I supervised a college program that provided various activities for at-risk high school students. The American Alliance of Museums (AAM) provided a great deal of information for our program. Later, as I began to look for museums in the cities and towns I would be racing in, AAM and several other museum related organizations such as The Institute of Museum and Library Service (IMLS) and Museums of the World (MOW) have become valuable resources. One fact that immediately became clear is that America is the undisputed museum capitol of the world. According to MOW there were estimated 55,000 museums located in 202 countries in 2014. IMLS, (a US agency) states there are 35,144 active museums in the United States alone. Assuming these data are accurate, over 63% of the world's museums are located in America. The IMLS 2012-16 Strategic Plan points out "There are more than 4.5 billion objects held in public trust by museums, libraries, archives and other institutions in the US"

My articles will attempt to capture some of the fascinating stories, color, history, myths and life that are the marrow of America's small museums. I hope you will join me. Coming soon wax, warships and a poet named Wadsworth.

Source by Bentley Whitfield