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This is an example of tips investing in rental property. This document is useful for investing in rental property.
FirstFocus Fa l l 2 0 0 3 Buying Rental Property page 3 Boost Your Online Banking Power Ideas from Investment One Small Business Strategies FirstNews Upcoming Events First National Bank has 2-for-1 Ticket Offers for Sports Fans! scheduled a wide range of financial seminars for this fall and winter. These educational First National Bank is teaming up with Creighton University and The University of presentations are designed to Nebraska at Omaha to welcome college sports to the Midwest’s newest arena — keep you informed about Qwest Center Omaha. As a First National Bank customer, you can be a part of the important issues relating to excitement! Just use your First National Bank Omaha Visa® Check or Credit Card to your money. If you missed purchase a ticket to one of the games listed below and get a second ticket free! To any of these seminars in the take advantage of this offer, visit the Qwest Center Omaha Box Office, mention the past, now is your chance to 2-for-1 offer and use your First National Bank Omaha Visa Card. attend. All seminars are free of charge and open to the Bluejay Maverick public. Basketball Hockey Kids’ Banking Seminar Children between the Nov. 22, 2003 Nov. 7, 2003 ages of 6 and 12 are wel- San Diego 7:05 p.m. Lake Superior State 7:05 p.m. come to attend our popular Kids’ Banking Seminar on Nov. 29, 2003 Nov. 8, 2003 Saturday, December 6 or St. Bonaventure 1:05 p.m. Lake Superior State 7:05 p.m. Saturday, January 24. Dec. 3, 2003 Nov. 14, 2003 The classes will offer intro- Bethune-Cookman 7:05 p.m. Northern Michigan 7:05 p.m. ductory lessons about First National Bank (and Dec. 6, 2003 Nov. 15, 2003 banking in general) and Delaware State 1:05 p.m. Northern Michigan 7:05 p.m. how to save and spend money wisely. After each Note: All games and times are subject to change. 2-for-1 offer and tickets are subject to avail- session, children will receive ability. Free ticket(s) must be of equal or lesser value. 2-for-1 offer is good on up to four tickets a $10 voucher to deposit (two paid and two free) per game for the same event. Tickets must be purchased at the Qwest into a new or existing First Center Omaha Box Office using a First National Bank Omaha Visa Check or Credit Card. ■ National savings account. To enroll your child, call our reservation line at 964-8401 New Locations or log on to our website at www.firstnational.com/forkids. First National Bank understands that even in today’s high tech world, sometimes there’s no Long-term Care Seminars substitute for cash. What is long-term care insur- Next time you find yourself in need of an ATM, just look for one displaying the logo at ance? Who needs it? What are places like: the costs? Get the answers to • Qwest Center Omaha — No need to stop at the ATM before the game or concert. First all of your questions at our National Bank is excited to be the exclusive provider of banking services at the Qwest Center Long-term Care Seminars. Omaha. You’ll find convenient ATM locations throughout the Qwest Center Omaha complex. We are offering sessions on • Nebraska Furniture Mart — First National Bank has teamed with Nebraska Furniture Mart to Tuesday, November 25 and bring you two new ATM locations. Whether you are shopping at Nebraska Furniture Mart’s Tuesday, January 27. For more main store, here in Omaha, or checking out their newest store in Kansas City, Kansas, you’ll information or to RSVP , find an ATM for your banking needs. please call 402-964-8400. Space is limited, so reserve • Memorial Stadium — Headed to Memorial Stadium for a Nebraska game? You’ll find new ATM your spot today. locations inside both the East and West stadiums. These new ATM locations are in addition to the existing locations at the Stadium Ticket Office and UNL Bookstore. For a complete listing of the more than 270 locations, visit us online at www.firstnational.com or contact a Personal Banker. ■ 2 Buying Rental Property Rental Real Estate — Is It for You? What’s not to like? As the owner of residential rental property, you can look forward to a regular stream of income, tax breaks and, quite possibly, a steady rise in the value of your property. As with most business ventures, however, making money from a rental property is not a slam dunk: You have to fac- tor in the potential impact of bad tenants, government red tape and maintenance costs. Whether you’ve just bought your first rental property or you’re As the owner of a rental property, you’ll have to report the thinking about taking the plunge, you’ll stand a much greater rental income you receive on your tax return. Within limits, chance of succeeding if you spend some time learning about you can write off depreciation and other business expenses of the pleasures — and the pitfalls — of owning rental real estate. the rental property. Consult your tax advisor for more informa- Here’s a brief overview of some of the things you should know. tion on the tax aspects of owning rental property. Find the Right Property Choose Tenants Carefully Your first step should be to work with a real estate professional If the property you buy who specializes in rental property and is familiar with the areas already has good ten- you are interested in. Look for property with a solid, docu- ants, then you’re in mented rental history. Make sure the property is in a stable or luck. However, tread improving, low-crime neighborhood, preferably where real carefully if you have to estate is appreciating in value. locate new tenants. Also consider whether the pool of potential renters is likely to First, familiarize yourself grow or decline. For example, buying property near a college with the laws — the may make sense since students, administrators and academic federal Fair Housing Act, staff typically want to live close to campus. On the other hand, for example, forbids dis- you may want to think twice about buying property in an area crimination based on where industries and businesses are struggling financially. race, color, national ori- gin, religion, sex, family Hire a home inspector or an engineer to evaluate the condi- status or disability. Also tion of the building. If it needs work, get a contractor to pre- find out what questions pare a quote outlining how much it will cost to make things you can and cannot ask right. If the proposed cost of repairs will take several years to prospective tenants. recover, it may be wise to look elsewhere. When you interview prospective tenants, be up-front about Do the Math your rules regarding issues such as pets, security deposits and Is the asking price in line with similar properties that have paying for utilities. Carefully screening tenants early in the recently sold in the same area? You don’t want to overpay since process can prevent headaches later on. Local laws may cap that will cut into your future profits. rental amounts and rent increases, so be sure to find out if You want to have a positive cash flow. Your cash flow from the these types of restrictions affect the property you’re considering. property is rental income less all expenses, including your loan Meeting Your Mortgage Needs payment, taxes and insurance, maintenance expenses and any Investing in rental property is a big step, but one that’s poten- property management fees. Ask the seller to show you records tially very rewarding. First National Bank offers a comprehensive from previous years and add up the total operating expenses range of mortgage products to meet your needs. You can choose — water, electric and general maintenance costs. You can also a fixed or adjustable rate mortgage with a term that is appropri- access previous years’ expenses from your local utility compa- ate for you. For more information, please call us at 498-5340. nies. Once you have all the figures, you’ll be better able to see Outside Omaha, call 800-228-4411 extension 5340. ■ whether the income from rent will cover all your costs. 3 Boost Your Online Banking Power Looking To Add a Little Convenience to Your Busy Life? At First National Bank, we want to make it easier for you to manage your money. That’s why we’re pleased to introduce two new services available through First National Online at www.firstnational.com. Online banking customers can now sign up to receive Priority Alerts, a simple, hassle-free way to track your First National account events via e-mail. And BillPay customers can now take advantage of MultiPay, a quick and convenient way for you to pay all of your bills on one web page. Priority Alerts — We’ll Keep You Posted Priority Alerts make it easy to track your First National Bank Let’s face it, you probably have better things to do than keep accounts. It’s simple to sign up and, best of all, the service is track of your bank accounts. But it’s important to know free when you’re enrolled in online banking. Sign up for what’s going on with your money. With Priority Alerts, you Priority Alerts today at www.firstnational.com. can sign up to receive e-mail alerts for your First National Bank checking, savings, money market, line of credit, CD, IRA and credit card accounts. Here is a sampling of the alerts that can help simplify your banking: ■ Statement Information Available — lets you know when your statement information is available to view online ■ Nearing Potential Overdraft — alerts you when your checking account balance falls below your predetermined dollar amount ■ Balance Update — tells you when the balance on your checking, savings or money market account falls below your predetermined dollar amount ■Maturity Date — reminds you that your CD or IRA will mature in 10 business days ■ Interest Paid — lets you know when interest is paid to your CD or IRA ■ Payment Due — notifies you five to 15 days before your line of credit or credit card payment is due ■ Payment Posted — announces that your payment has posted to your credit card account or line of credit ■ Nearing Credit Limit — tells you that your line of credit or credit card account balance is within your predetermined dollar amount ■ Credit Advance — lets you know when a line of credit advance is deposited to your checking account 4 MultiPay — Pay All Your Merchants on One Page Did you know that over 13% of U.S. consumers are already paying bills online — compared to only 2% in 1998? What’s more, a report by Juniper Research indicates that by 2006, 52 million households will pay at least one of their bills online. The numbers shouldn’t surprise you. Paying bills online can save you both time and money. First National Bank’s Online BillPay service allows you to access, view and pay your bills over the Internet — anywhere, anytime. And now, there’s even more. We’ve just added a new feature to our BillPay service called MultiPay. With MultiPay, you can quickly and easily pay all of your bills (up to 20 pay- ments) on one web page. And best of all, BillPay is free with our 360° Checking and Checking Plus accounts.* Other features of BillPay allow you to: ■ Schedule one-time or recurring payments ■ View payment history on all your merchants ■ Check/change your pending payments ■ Pay anyone, anytime — 24 hours a day, 7 days a week At First National Bank, we are confident that our new services will help simplify your everyday life. If you already bank online, simply sign up to receive Priority Alerts and be sure to take advantage of MultiPay. If you don’t currently bank online, you can enroll today at www.firstnational.com. ■ *BillPay is $3.95 per month for all other checking accounts, up to 20 payments. Each additional payment is $.50. 5 Ideas from Investment One New Tax Law Boosts Appeal of Dividend-paying Stocks Just as every wardrobe should contain some enduring classics, every portfolio should contain some classic, time-tested investments. Dividend-paying stocks are one such classic. Much of the investing public ignored dividend-paying stocks Don’t Focus on Yield Alone. You shouldn’t use a high dividend during the highflying 1990s. But, historically, companies that yield as the only criteria for buying a stock. Here’s why. A $40 pay dividends to stockholders have often performed better stock with an annual dividend of $2 has a 5% yield. If the stock than companies that don’t. For example, from 1980-2002, price falls to $20 and the dividend is unchanged, the yield has dividend-paying stocks beat stocks that didn’t pay dividends doubled to 10%. In this case, a high dividend yield could be by 2.7% a year.* a sign that the company may be underperforming because its stock price has dropped significantly. Now there’s one more compelling reason to consider including dividend-paying stocks in a portfolio: The recent federal tax Look at History. Although there are no guarantees, a com- law has slashed the rate at which dividends are taxed. Before pany that has a history of making regular dividend payments the tax cut, individual investors paid taxes on dividends at is a good candidate to continue that practice. In addition, a their regular tax rates, which ranged as high as 38.6%. The company that regularly increases the size of its dividend can table shows the new, lower rates. be attractive since growing dividend yields enhance your investment’s total return. New Tax Rates on Dividends Build a Diversified Portfolio. While dividend-paying stocks may deserve a place in your portfolio, don’t forget the impor- Tax Bracket Dividend Rate tance of spreading your investment risk by spreading your Over 15% 15% investments among different asset classes. Diversification is 15% or 10% 5% critical to investment success. The 5% rate will be 0% in 2008. After 2008, tax Talk to Us rates revert to pre-2003 law. There’s no substitute for experience, especially when it comes to investing the money you’ve worked hard to accumulate. Come Thanks to these changes, investors will be able to keep much see us or call for more information on how our experienced more of their dividend income. (Certain requirements apply. Investment One Financial Advisors can help you choose the Contact your tax advisor for specific information on the investments that are right for you. Located at First National recent tax law.) Bank branches, Investment One can help you put together an What They Are and Why They’re Important investment portfolio that meets your needs. Call us at 964-8400 Dividends are paid by publicly traded companies to their or 888-916-8378 to set up an appointment, or simply stop by stockholders. Companies are not required to pay dividends, and ask to speak with an Investment One representative. ■ and many don’t. However, along with potential price apprecia- *Standard & Poor’s. Past performance does not guarantee future results. tion, dividends have always been an important component of **“Why Is the Dividend Yield So Low?” John B. Carlson, Federal Reserve Bank of stock returns. Cleveland; Standard & Poor’s. Neither PrimeVest nor any of its representatives may give tax advice. When comparing stocks, investors often look at a figure called “dividend yield.” This figure represents a company’s total dividends per share over the last four quarters expressed Not FDIC Insured as a percentage of its current stock price. The dividend yield No Bank Guarantee of the S&P 500 (an index of 500 large-company stocks) has May Lose Value averaged about 4% since 1945, though it has fallen over the Securities and annuities offered Not a Deposit past decade and currently stands at approximately 1.6%.** through PrimeVest Financial Not Insured by any Services, Inc., an independent registered broker/dealer. Member Federal Government Do Some Research NASD/SIPC. Insurance products Agency Before you decide to include dividend-paying stocks in your provided through Investment portfolio, keep these points in mind. One Insurance Services. 6 Small Business Strategies It’s Up, It’s Down — Doing Business in Uncertain Times Like many other owners of small businesses, you may have had to struggle hard to keep the lights on, the machines humming and your employees fully occupied during the recent economic slowdown. However, bad economic times don’t last forever. Will you be ready to take advantage of the opportuni- ties that will inevitably arise once the economy recovers? What steps can you take now that will boost your bottom line and help ensure future growth? Here are some strategies to consider. Focus on Cash Flow Thanks to the recent recession, you may find that this is a good time to Understanding how to manage your cash flow can help you survive buy another business or add lucrative product lines at very attractive down periods and position your business for future growth. Good cash prices. management means maximizing your cash flow at all times. Assess Your Needs Start with your cash outflows (expenditures). If you automatically pay Every recession creates a pool of available talented workers. If your your bills as soon as they arrive, you are giving up an opportunity to projections indicate that you will need additional employees to handle earn interest on your cash reserves. an anticipated upturn in business, it Unless you get a discount for early may be wise to start interviewing payment, it’s usually better to pay job candidates now. your bills as they come due. If you need to replace or update Consider using an automated equipment, check bankruptcy or accounts payable system to organize other liquidation sales for deals on your payments by due date. good quality used equipment. Be To maximize your cash inflows sure to analyze your space require- (receipts), try to reduce the time it ments. Economic slowdowns tend takes to convert a sale into cash. to depress real estate prices and Make sure your invoices are clear rental rates, so this may be an ideal and the due date stands out. Don’t time to add needed space at a wait too long before you begin bargain price. pursuing accounts with outstanding Emphasize Customer Service balances. Customers want polite and prompt service and resent being put on Here’s another tip: By refinancing high interest rate debt, you may be hold or having to wait. You can differentiate your business from the able to lower your overall payments and improve your cash flow at the competition by emphasizing superior customer service. If you can’t same time. Plus, if you are thinking of expanding your business, current afford to hire additional employees, focus on giving your customer low interest rates make this an ideal time to borrow money to fund service staff the training, resources and support they need to provide your growth plans. customers with consistently positive experiences. Strengthen Your Competitive Position We Can Help At the start of a recovery, customers who have delayed making pur- First National Bank is the bank for small businesses. Our staff of experi- chases may be ready to start buying again. Position yourself to get their enced Small Business Bankers, conveniently located across the city, can business by making more sales calls and increasing spending on adver- help you succeed. From banking to loans to retirement planning, First tising. Moving quickly to establish a strong position in the marketplace National Bank is here for you. To learn more, visit any of our 20 loca- now may give your business a head start on the competition. tions or call us at 341-0500. Outside of Omaha, call 800-228-4411. ■ 7 First Equityline Makes Fall and Winter Home Improvements Possible. With rates so low, First Equityline line of credit allows you to pay down has become a popular and affordable your balance at any time, which choice among First National Bank means your unused credit is always customers planning a fall or winter available. The savings can really home improvement project. It’s also add up with First Equityline’s low becoming the preferred way to pay variable rate, plus the interest you off high interest debt, or pay for a pay may be tax deductible.** winter cruise, ski trip, or even tuition. Customers enjoy easy access Unlock the value in your home. and convenience. First Equityline gives you the First Equityline is so easy to use! flexibility to borrow up to 100% of Simply write a check, or use your your home’s equity.* This revolving First National Bank Visa® Check Card when making a major purchase. You First Equityline is the key to enhancing IT PAYS TO REMODEL can even view your account and make your home’s value, and so much more! your payment online, absolutely free. Home Return On Apply for First Equityline, or a low Improvements Investment Start planning seasonal projects and fixed-rate home equity loan today. Bathroom Remodel 91% purchases now! Visit any of our 20 convenient loca- Bathroom Addition 81% Whether it’s cooking in a new kitchen, tions or call a Personal Banker at Kitchen Remodel 80% entertaining in a finished rec room, or 342.LOAN (5626) or 800.214.5160 Basement Remodel 79% relaxing in a remodeled bathroom — outside Omaha. Siding Replacement 79% * First Equityline offer refers to a line of credit secured by your single family owner occupied home. Offer applies to residents of Window Replacement 77% Nebraska and Harrison, Mills, and Pottawattamie Counties in Iowa. Appraisal may be required at borrower’s expense. Additional Roof Replacement 67% fees and closing costs are at borrower’s expense. You must carry insurance on the property that secures this line. New Money Only. Subject to credit qualifications. Some limitations will apply. Consumer lines of credit only. Approval and terms subject to Realtor Magazine’s 2002 Cost vs. Value Report; average credit qualifications. return on your investment national average ** Consult your tax advisor regarding the deductibility of interest and potential tax savings. PRESORTED STANDARD U.S. POSTAGE 1620 Dodge Street PAID Omaha NE 68197 FIRST NATIONAL BANK OF OMAHA 24 Hour Banker Account AccessLine First National Online Bank Locations & Hours 341-RATE (7283) 342-BANK (2265) Visit www.firstnational.com 341-HOUR (4687) 800-642-0014 800-444-2719
"Tips Investing in Rental Property"