Tuesday, June 26, 2012

Former Roanoke Landlord Falls Off The Deep End


Bizarre Letter From Bill White To Roanoke City Officials

Wednesday, June 13, 2012

FHA Distressed Asset Stabilization Program

So this September the FHA has announced that they will start a distressed asset stabilization program to help keep people in their properties.

They will allow banks to sell pools of high risk loans that are at least 6 months delinquent if the homeowner is not in bankruptcy. In order for the banks to sell these loans to investors they must have exhausted all steps in the FHA's loss mitigation procedure and already started the foreclosure process.

They have regulated what you note buying investors do. At purchasing these notes you must work with the buyer for at least 6 months to find creative or flexible solutions that FHA does not typically offer. No more than half of these properties can become REO properties "foreclosed on and owned by you the investor/note buying bank". And you as the investor have to hold the loan for at least 3 years if the note can not be brought out of default. So you better buy these right if you are required to hold the other half of the properties that can not become an REO for 3 years with potentially not getting a single payment from the homeowner.

Selling Your Flip In Todays Market

It's a tight market to rehab and resell property. Most investors at this point in time are buying and holding. It is more critical than ever that those that are involved with flipping property purchase extremely low and leave enough room for plenty of profit so you can lower your price to a point where you are at today's golden rule of approximately 15% below the ARV, After Repair Value.

It is the goal of a flipper to turn their property in the shortest amount of time and if you are selling 15% below it's fixed up market value in most cases you should be able to unload it within 3 months. From the worst to the he nicest house on the block for 15% below the ARV is your objective.

In selling your rehab your largest obstacles are as follows.

(Information from a report published by Integra Realty Resources from a survey of non-homeowners from 25-50 in 11 large markets.)

85% of potential homeowners say that market conditions are favorable to buying a home but unemployment and job instability make many of them unable to do so.

21% are not planning on buying because of an uncertain economic outlook.

24% are afraid of making a bad investment. Prove to  your potential buyers that they will have equity from the day they move in to overcome this.

31% will not be buying a property due to not having down payment money.

So you know the largest obstacles to home-ownership from this study. Develop a strategy to overcome these obstacles and sell your property. 

Monday, June 11, 2012

Age And Sex Laws For Children In Your Rentals

So here's some info on age and sex laws for children in your property. Information obtained by Karl Kleinhenz who is head of Fair Housing for Roanoke City and DSS.

There are no United States laws that dictate an age that siblings of any sex can share a room. Parents can make reasonable decisions as to who can share what room in their household.

Child protection agencies can make judgements about children sharing rooms on a case by case situation. In some cases they require separation based on sex when the oldest child hits puberty, sometimes they require children over the age of 5 to be separated by sex.

Foster care children can have different regulations as they are wards of the State. The state may require that they are separated by sex or other things.

Landlords and public housing may have rules for tenants of how many bedrooms are required per number of people in the family. The rule is generally 2 people per bedroom per the hud occupancy standards. But this is not set in stone. The landlord may also require that children be separated by sex. The government does not require this. And you are not in violation of the fair housing laws if you have these rules as long as your rules pertain to everyone.

With exception of rules placed by child protective services or the government in the case of foster care, in general it is left to the landlord or parent. Code enforcement can not regulate this as there is nothing for them to regulate.

As far as how many people per bedroom goes the law dictates that HUD may not make judgement on this. It is left to the landlords and sensibility. The general rule of thumb is 70 square feet of space per person in a bedroom. But this also is left to interpretation.

Tuesday, June 5, 2012

Using Life Insurance in Business Succession Planning


By Julius Giarmarco

Giarmarco, Mullins & Horton, P.C.

Life insurance can play an important role in a business succession plan. Following are some of the common ways in which life insurance can be integrated with many of the tools, techniques and strategies commonly used in business succession planning.

Estate liquidity: Some business owners will wait until death to transfer all or most of their business interests to one or more of their children. If the business owner has a taxable estate, life insurance can provide the children receiving the business the cash necessary for them to pay estate taxes. Using life insurance (owned by an irrevocable trust) to pay estate taxes is particularly useful to business owners because business interests cannot be readily liquidated. Life insurance is also a much easier (and less expensive) alternative to deferring estate taxes under IRC Section 6166. The children receiving the business may also need life insurance to pay estate taxes at their deaths. Typically, the insurance policy will be owned by an irrevocable life insurance trust so that the beneficiaries will receive the death proceeds both income and estate tax free.

Estate equalization: A business owner can use life insurance to provide those children who are not involved in the business with equitable treatment. Leaving the business to the active children and life insurance (owned by an irrevocable trust) to the inactive children equalizes the inheritances among all of the children. It also avoids the need for the active children to purchase the interests of the inactive children -- perhaps at a time when the business may be unable to afford it. Depending on the particular facts and circumstances, the insurance may be owned by an irrevocable trust for the benefit of the inactive children -- and the insured(s) may be the business owner or the business owner and his spouse.

Buy-sell agreements: A properly designed buy-sell agreement can guarantee a market and fair price for a deceased, disabled or withdrawing owner's business interest, ensure control over the business by the surviving or remaining owners, and set the value of the business interest aside for estate tax purposes. Life insurance is the best way to provide the cash necessary for the business or the surviving owners to purchase a deceased owner's interest. In many instances, the cash surrender value in a life insurance policy can also be used tax free (by surrendering to basis and borrowing the excess) to help pay for a lifetime purchase of a business owner's interest.

  • Non-qualified deferred compensation pans (NQDC): A nonqualified deferred compensation plan can be used by a small business to provide members of the senior generation with death, disability and/or retirement benefits. An NQDC plan may be particularly useful in those situations where the senior members have transitioned the business to the junior members and are no longer receiving any compensation from the business. An NQDC plan is also useful to ensure that key employees remain with the business during the transition period -- a so-called golden handcuff. Because life insurance offers tax-deferred cash value growth and tax-free death benefits, it is the most popular vehicle for "informally" funding NQDC plan liabilities.

  • Key man insurance: Many family businesses depend on nonfamily employees for the company's continued success. To guard against financial loss due to the absence of an indispensable key employee, many companies take out key person life insurance.

  • Section 303 redemptions: IRC Section 303 allows an estate a one-time opportunity to remove cash from a corporation (equal to the amount of estate taxes and administrative expenses), at little or no tax cost, through a partial redemption of stock. To ensure that the corporation has sufficient funds with which to accomplish the Section 303 redemption, the corporation can purchase a life insurance policy on the shareholder's life.

  • Hedge strategy: Life insurance can also be used to provide a "hedge" against the business owner's premature death in connection with a grantor retained annuity trust. For example, if the business owner established a GRAT and died before the end of the set term, the life insurance could be used to pay the estate taxes on the GRAT assets that would be included in the business owner's estate. In addition, if a sale with a private annuity is used, life insurance could provide funds for the business owner's spouse (and/or other family members), since the annuity payments would terminate on the business owner's death. Similarly, life insurance could provide funds for the business owner's spouse and other family members should the business owner die prematurely after using a self-canceling installment note to sell the business interest. In all of these situations, it is advisable to have the life insurance owned by an irrevocable trust so that the insurance proceeds will escape estate taxes.

  • Family bank: When the decision is made to leave the business to both active and inactive children, it is usually advisable to leave the active children with voting interests and the inactive children with nonvoting interests in the business. In addition, put and call options can be given. Generally, a put option given to the inactive children allows them to require the active children (or the business itself) to purchase all or a portion of their interest in the business at a set price and terms. Without a put option, there may be no practical way for an inactive child to benefit from owning the business interest unless and until the business is sold. Conversely, a call option given to the active children (or the business itself) allows them to purchase the business interests of the inactive children upon a set price and terms. Without a call option, there may be no effective way for the active children to avoid the potential conflicts that can occur between the active children who are receiving salaries and bonuses and the inactive children who are not. By having the active children own life insurance on the business owner's life, a "bank" is created to provide the funds to satisfy any such puts and calls. Typically, the policy will be owned outside of the business entity, such as in a trust for the benefit of the active children or by a limited liability company owned by the active children.
THIS ARTICLE MAY NOT BE USED FOR PENALTY PROTECTION. *For further information, or to contact this author, please leave a comment and your e-mail address in the forum below.  

For information on this & other strategies for Wealth & Asset Protection please contact our agency for a free consultation:  Carico Insurance (540) 772-3362

For the Recently Widowed, Some Big Financial Pitfalls to Avoid


There are few more wrenching events in life than losing your spouse.
But to make matters worse, the death of a life partner also unleashes a torrent of financial tasks. And more often than not, it is a woman — a widow — who is taking them on.
Women live longer than men, and they’re likely to outlive their male spouses, given that decades ago, many women married men a few years older. Plus, gender roles being what they were, men often took on most of the household finances.
As a result, many widows aren’t as familiar with investing, insurance and taxes as their dead husbands were.
Even if widows were the household money whizzes, however, they’re likely to find themselves navigating an overwhelming mix of emotions. There is grief and despair, fears both rational and irrational and often a desperate urge to take action — any action — that will allow them to move on. But with important financial decisions, speed can make a mess of things.
Last week, in the first of a series of columns about financial mistakes that particular groups of people repeatedly make, I wrote about physicians and what we can learn from their blunders.
The pitfalls for widows are well-enough known that there are books for them, including “New Widow Financial Lifeline” and “Moving Forward on Your Own.” I also recommend a 20-page offering on the Web site of Timberchase Financial, a financial planning firm that works with many widows, called “What Do I Do Now?
But even a brief pamphlet may be too much for the grief-stricken to digest right away. In the meantime, widows can avoid many of the big financial pitfalls by keeping just four things in mind.
THE RUSH Some financial tasks you must do within a month or two of a spouse’s death. Keep paying the bills, including any quarterly tax charges. Make sure you understand how your health insurance works, if it comes from your dead spouse’s employer. Collect on any life insurance policies, especially if cash is running low.
Just about everything else can wait a little longer because you will probably not be in the clearest frame of mind. “I did not know my Social Security number one day when I was filling out a form,” said Kathleen Rehl, a financial planner in Land O’ Lakes, Fla., who is the author of “Moving Forward on Your Own.” “I had helped widows before. But when I became one, I really got it. I was stuck in shock phase.”
Jennifer M. Murray, who is also both a widow and financial planner, has a rule for her own widowed clients, who make up 50 percent of her practice: no irreversible decisions soon after the death of a spouse.
It can be hard to resist big, decisive moves, though, given that a lump sum insurance check may be landing and a widow may desperately want to march through every important decision and get on with her life. But hasty decisions about, say, paying off the mortgage can lead to a lot of regret if you need more liquidity years later.
Then there are the bad actors who prey on the recently widowed. Many surviving spouses immediately crave secure investments offering regular income that never runs out. So you’ll no doubt hear from people selling all manner of annuities, which have the tendency to enrich the salesperson at your expense.
Even if you’re certain that you want this sort of lifetime income stream, have an independent financial planner who is earning only fees from you look it all over. In fact, if you’re tempted to do anything quickly with a significant chunk of your net worth, pay three different professionals for another opinion, just to be sure that you know what you’re in for.
THE HOME One problem with rushing to, say, pay off your mortgage is that it may not ultimately be wise to remain in a house.
Even if the mortgage and real estate taxes seem manageable, there is the lawn, snow removal and the endless repairs that go along with homeownership. “All of these are expenses that most women don’t seem to anticipate until they happen,” Ms. Murray said.
When her husband died in 2004, she was 43 years old and decided to stay put with her two children in Chatham, N.J. The house isn’t big, and neither is the mortgage; her son handles snow and the lawn.
Ms. Rehl, who is 64, also stayed in her Florida home when her husband died in 2007, but she understands the instinct to put it on the market and flee. “That empty house can be terrifying,” she said.
Often, adult children will urge their widowed mother to move in with them in a different city. Ms. Rehl suggests caution here. “The idea of living with your son and not being alone may sound wonderful,” she said. “Granted, that might be the right decision. But maybe think in terms of a long visit first, and then come back and think.”
THE PURSE It isn’t just annuity salesmen who see widows as a source of income. People much closer to her may have the same outlook.
Adult children may see an opportunity to request an advance on their inheritance. Cunning offspring will push all the emotional buttons. “How can you deny me this when we’re going through so much emotional pain already?” they may ask. Or they may trot out this gem: “Dad would have given me the down payment money if he was still here.”
Saying no will not be easy. If you have a financial planner or accountant helping you, you can let that professional be the stingy one. And if you succumb to the advance-on-my-inheritance approach, put it in writing so that there’s no confusion later on why one sibling is getting a bigger share of any future estate than another.
Then, there are the not-always-gentlemen callers. Wily widows of means are wary of men seeking “purses” (or nurses, for that matter). “They thought I would be a soft touch,” Ms. Rehl said of some of the men who turned up in recent years. “I tell my widowed clients that it is probably a good idea to investigate them. I have done my own criminal background searches and discovered that one person who I didn’t date that long had a lien on his property and had declared bankruptcy in the past.”
The point here is not that all adult children are greedy and that all older men are gold-digging deadbeats. But with sadness comes vulnerability, and there is nothing selfish about saying no, a lot, in the first few years after you lose your husband.
THE GHOST Once you’re a widow, your budget and long-term planning needs will almost certainly change. Oddly enough, however, many men try to dictate financial advice from the grave.
People do this with the best of intentions, but it can be terribly misguided. Take the trust that Anthony J. Ogorek, a financial planner in Williamsville, N.Y., saw once. “He carved it in stone 30 years earlier that the money could only be in AT&T stock and AAA-rated bonds,” Mr. Ogorek said. Fast-forward to today: AT&T is hardly the monopoly it once was, and the United States government no longer has a pristine AAA rating.
Mr. Ogorek refers to this as “fighting the ghost,” where stubborn dead men leave concentrated collections of Cooper Tire & Rubber or United Parcel Service stock along with instructions never to touch it. And their widows, either as a gesture of loyalty or because they genuinely believe that this is the last bit of protection that they have left from their late spouse, can’t bear to defy them.
But it is rare that a concentrated position in any investment is good for a widow. “In the quest to protect her, he’s created a vulnerability,” Mr. Ogorek said.
Solving for this emotional trap can be relatively simple, though. It is possible, after all, that your late husband was right at the time and that the stock has done well and paid dividends. So your desire to take fewer risks isn’t tantamount to declaring his investment plan a failure.
But things change. And given that you’re in the middle of one of the most transformative ones of your life, you have every right to alter your investments a little bit, too.

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