Get documents about "Minnesota Real Estate Training
Description
Minnesota Real Estate Training document sample
Document Sample
January Minnesota Real Estate Investors Association, Inc.
Issue 61 1
2010 www.MnREIA.com
The 3 Wise Tax Takes for 2010!
Circulation 3,500 Monthly & Growing
By Ronald Aho, CPA - www.TheBusinessAdvisors.com
2009 Real Estate Investor Tax Checklist home or rent for your apartment, repairs
What Your Real Estate Tax Professional Needs and maintenance, utilities, security
In This Issue: from You to Prepare your Income Taxes system, and cleaning services. Your HUD
statement for the purchase of you
• 3 Wise Tax Takes for It will soon be time to file your personal and home would be also needed to
2010 - business taxes for 2009. This year it will be especially determine the depreciation deduction. The
- By Ronald Aho important to have a Real Estate Tax Professional squarefootageusedforthehomeofficeand
Creative Real Estate Monthly
prepare your taxes. Congress has passed a whole thetotalsquarefootageofyourhomewould
• Q&A - Mike Jacka mess of new tax rules and they are looking for be needed. If you have a garage, barn, or
ways to balance the budget. That means more IRS otherbuildingtokeepyourtools,equipment
• The MnREIA Benefits audits, so you will want to make sure the tax return or materials, you could deduct depreciation
Advisor: Repetition is prepared properly and legally to your advantage. and other related expenses. For this,
for Retention you would need the square footage of the
- Ryan Johnson Iamincludingabusinesschecklistofitemsyoushould building and any associated costs such
have ready for your Real Estate Tax Professional. This as repairs and any utilities used.
• Commercial Dual list will save you time and money and make your 13. If you are using QuickBooks, the data file on
Agency Disclosure Real Estate Tax Professional very happy. We also a CD or data file emailed to us.
- By Tom Fafinski send personal tax checklists to our clients. If you are 14. Copies of 1098s received for mortgage
not a client and would like a checklist, simply call our interest paid. (If you have multiple
• Market Update office and we will send you one. properties, indicate on the 1098s which
properties they belong to. Make sure you
• Buying and Closing 2009 Checklist have a 1098 for each mortgage you had
Property with Your IRA during the year, including any second
- By Todd Grill 1. Business bank account statements for 2009. mortgage and/or refinances).
2. Checkbook or returned checks, if no detail of 15. New clients should provide copies of
• Next Monthly Meeting transactions on bank statement. personal and entity tax returns for the
3. Business credit card statements. previous year including an asset report. An
4. Cash expense receipts. asset report is not always provided with
5. Receipts or statements for personal credit cards your tax return. It shows the depreciation
used in business. on your individual assets, such as
6. HUD statements and/or contracts for purchases equipment, computers, and buildings.
and sales during year.
7. Copy of incorporation, or LLC documentation, if First-Time Home Buyer’s Credit
new entity was formed. Extended Through April 30th, 2010
8. Employer Identification Number from the IRS
Monthly Meeting:
forS-Corporationandpartnerships(thatincludes For homes purchased after November 6, 2009,
1st Tuesday of Every multi member LLC’s) married couples can claim the full $8,000 tax
Month 9. For Sub Chapter S Corporations a copy of the credit (assuming that the home cost $80,000 or
S-Corporation election (form 2553 approved by more) if their adjusted gross income (“AGI”) is
7pm - 9pm the IRS)
www.MnREIA.com
$225,000 or less, up from $150,000 previously.
10. Business and personal mileage; model and year The credit phases out over the next $20,000
Registration at 6pm
of vehicle. of AGI, ending at $245,000. The phase-out for
Radisson Hotel 11. Details of any assets purchased such as singles starts at $125,000, up from $75,000, and
Roseville construction equipment, tools, office ends at $145,000.
equipment, and software. Include amounts,
2540 North Cleveland description, and the dates purchased. Even current homeowners can use this break.
Roseville, MN 55113 12. If you use a part of your home exclusively for Those who have owned a home for five
business, you use it on a regular basis, and it is consecutive years out of the last eight qualify
For Directions Call: the principal place of business, you can deduct for a tax credit of up to $6,500 if they purchase
651-636-4567 all the expenses for that portion of your home. another home after November 6, 2009 and
Your home can be any kind of a residence such before May 1, 2010. As with the previous
Questions? as a house, apartment, condominium, credit, the house must be the buyer’s principal
Call Our Office: cooperative, or houseboat. If you think you residence.
may qualify, your tax professional would need
651-779-7766 (Continued on page 6)
your mortgage interest, property taxes for your
Minnesota Real Estate Investors Association, Inc. Issue 61
2
www.MnREIA.com
Ask The Expert Q
By Mike Jacka &A
Q If someone redeems a mortgage before the
end of the redemption period, does the 2nd
mortgage just go away?
A No, during the redemption period, typically 6
months after the sheriff’s sale, if the homeowner
redeems the 1st mortgage, they would also have
to redeem the 2nd mortgage and any other
Minnesota Real Estate Investors Association, Inc.
liens attached to the property. If you got the
deed from a homeowner you would also have
to redeem all liens on the property during the
Circulation 3,500 Monthly & Growing
redemption period. If no one redeems and the
1st mortgage company gets the property back
after the end of the redemption period, then the
2nd and all other liens would disappear. The 2nd
mortgage company and all other liens do have an
opportunity to redeem the property from the
1st mortgage company during a short window
of time if the homeowner doesn’t redeem the
property during the redemption period
Q If I want to put properties I already own in a
land trust will this affect my credit report? Do
the mortgages still appear on the report?
A Putting properties into a Land Trust has no affect
on the mortgages or credit reports. The Mortgage
will stay in your name and attached to the
properties forever, or at least until the mortgage
is paid off and satisfied by the lender. This should
not prevent you from transferring your properties
in to a Land Trust because ownership is an Asset
and a mortgage is a Liability. If anyone was to
do an asset search for your name, they would
not find anything. If they looked up a property
address they would only find the name of the
Land Trust. They would need to do a Liability
search to find what mortgages were attached
to a specific property, so if you had multiple
properties, they would need to know the names
of each and every Land Trust in order to find
them. Hope this answer your questions.
Submit Your Questions online @:
www.MnREIA.com/Questions
Issue 61 Minnesota Real Estate Investors Association, Inc.
3
www.MnREIA.com
The MnREIA Benefits Advisor:
Repetition for Retention
Real Estate Trivia
Where is the world’s oldest castle located?
By Ryan Johnson Answer: In Next Months Issue
www.MnREIA.com
Last Months Trivia:
As a member of MnREIA you have a great deal of benefits What do shoes tossed over power cables indicate
available to you, but there is one benefit that has long been about a neighborhood?
overlooked that is of great value to those of you who value
the educational benefits of our association... and what is that
Answer: Shoes over power cables can be indicative
benefit?
to the going ons of a neighborhood. Unfortunately
The Previous Meeting Audio! what different shoes represent are what drugs are
available in that area. So when you’re analyzing the
Minnesota Real Estate Investors Association, Inc.
It’s the second link in the “Members Only Area” and contains neighborhood, don’t forget to look up.
the most recent 6 months of meeting audios. Not only do you
have the capability to listen to past meetings online, but you are
Circulation 3,500 Monthly & Growing
also able to download them (since they are in .mp3 format) and
put them on your mp3 player, phone, or iDoodad.
To save the mp3 audio all you have to do is right click on the
audio link and select ‘Save target as...’ find where you want to
save it and there you have it.
Imagine the down time that you have available throughout your
day whether you’re at the gym, going for a walk, or shoveling
the driveway you can relive past meetings and raise your real
estate IQ by simply taking advantage of this benefit. Over the
last 6 months we have had some amazing meetings, all of which
are packed with pivotal information. You’ll learn something
new with every listen!
If you live far away and are unable to make all the meetings you
can still stay up-to-date by making use of the previous meeting
audio.
For those of you who are looking to gain more of an edge and
a greater understanding of what other investors are up to, I
would suggest listening to the haves and wants audio from the
first part of the meeting to get those numbers you may have
missed, to build your list of wholesale buyers, and to pin down
those fleeting leads that could only be found at the meeting.
Minnesota Real Estate Investors Association, Inc. Issue 61
4
www.MnREIA.com
The Legal Corner
With Tom Fafinski
TFafinski@BenePartum.com
651.994.4300 x17
Commercial Dual Agency Disclosure 651.994.8024 Fax
1295 Northland Drive
Thomas M. Fafinski Suite 150
Attorney Mendota Heights, MN 55120
In a split decision, the Minnesota Supreme Court recently www.BenePartum.com www.BenePartum.com
determines that the dual agency disclosure requirements has a fiduciary duty toward the principal,” and that one “with
in a commercial matter are different than the dual agency a fiduciary duty has a duty to disclose material facts to the
disclosures in a residential setting. In Kratzer, vs. Welsh persons to whom the duty is owed.” The lower court concluded
Companies, LLC, Kratzer brought an action against his former that the commission arrangement with WelshInvest was a
employer, Welsh Companies, LLC (Welsh), alleging that Welsh material fact and that without knowledge of this arrangement,
Minnesota Real Estate Investors Association, Inc.
terminated his employment in violation of Minnesota’s the prior owner could not give the “knowing consent to the
whistleblower statute. dual representation” required under Rule 2805.2000, subpart
1(A).
Circulation 3,500 Monthly & Growing
Kratzer’s claim stems from a transaction for the purchase of a Kratzer also argued that Section 82.27, the licensing statute,
Shopping Center in Brooklyn Park. Welsh was retained by the allows for the revocation of a broker’s license for fraudulent
owner as the listing broker. The listing agent also represented and deceptive practices, including if the broker “ has engaged
WelshInvest, an affiliate of Welsh, in connection with in a fraudulent, deceptive, or dishonest practice . . . .” and to
WelshInvest’s efforts to acquire properties. The owner initially “act on behalf of more than one party to a transaction without
wanted to pursue the deal with others but later changed its the knowledge and consent of all parties . . . “.
mind. Minn. R. 2805.2000, subp. 1(A) (1999) (currently codified at
Minn. Stat. § 82.41, subd. 13 (2008)).
The owner initially received three offers between $8M and
$8.6M. WelshInvest’s offer was on the lower end of the Welsh appealed claiming that the disclosure requirements
middle but in a position to close sooner. Thes sales agent apply to residential—not commercial—transactions under
then entered into an agreement with WelshInvest for an Minn. Stat. § 82.197 (2002).
additional commission believed to be an extra two points if
he could convince [the owner] to lower their asking price by The Minnesota Supreme Court determined that the dual
$1.5M. WelshInvest lowered its price. The owner eventually agency disclosure rule does not require the agent to disclose
accepted. the details of his compensation or anything beyond the fact
that he is acting for both sides in a commercial transaction.
Roughly two years later, WelshInvest decided to sell. The same This was a shocking result to the author since it essentially
sales agent urged WelshInvest to not disclose the purchase overrules decades and decades of common law [fashioned
price to the former owner arguing they might be upset. Kratzer through the opinions of prior courts] regarding the fiduciary
claimed it was illegal to exclude them and was eventually relationship of a principal and agent. Kratzer lost his job and his
terminated thereafter. case. The industry lost a little bit of integrity.
The lower court determined that the sales agent’s activities About the Author: Thomas Fafinski is an attorney that
violated Minn. R. 2805.2000, subpart 1(A) (1999) requiring
works for real estate investors and spends a great deal
knowing consent to dual agency in a real estate transaction.
The lower court noted that at common law “a real estate broker
of his time in tax management and asset protection
maximization. He can be reached at 612.865.1700.
Issue 61 Minnesota Real Estate Investors Association, Inc.
5
www.MnREIA.com
Market Update
Pending Sales
As of December 14th, 2009
Minnesota Real Estate Investors Association, Inc.
Circulation 3,500 Monthly & Growing
Supply – Demand Ratio: ▲
Increased from 7.69 houses for sale per buyer in November to 9.28 in December
Median Sales Price: ▲
Increased from $169,000 in October to $170,000 in November
Average Sales Price: ▼
Decreased from $201,230 in October to $198,300 in November
Pending Sales: ▼
Decreased from 4,676 in October to 2,987 in November
Closed Sales: ▼
Decreased from 4,590 in October to 4,304 in November
New Listings: ▼
Decreased from 6,492 in October to 4,614 in November
Percent of Original List Price Received at Sale: ▼
Decreased from 94.6% in October to 94.3% in November
Minnesota Real Estate Investors Association, Inc. Issue 61
6
www.MnREIA.com
(“3 Wise Tax Takes for 2010” Continued from page 1)
Buyers can claim qualifying 2009 purchases on amended 2008 check, you can use QuickBooks.” This is true, but you should still get proper
returns. Credits for 2010 purchases can go on 2009 returns. The credit training. If you go off track in your transaction entry, or in your setup in
remains refundable. But there is some tightening: Homes costing over QuickBooks, you will end up paying your tax professional a small fortune
$800,000 don’t qualify for either the $8,000 or $6,500 tax credit if they to do your taxes.
were purchased after November 6, 2009. The credit is not allowed for
purchasing a home after November 6 from your in-laws. This includes We provide one-on-one training services in QuickBooks, using your bills
step children. That closes a loophole in the rules barring the credit for and invoices, instead of generic training, which can be difficult to adapt to
homes bought from relatives. Dependents cannot claim the credit, your particular business. If you are interested in Real Estate Investor training
nor can taxpayers under age 18. Filers must attach a signed copy of the in QuickBooks, give our office a call for a price quotation.
settlement statement to their tax returns.
Ron Aho of Tax Advisors works with Real Estate
Binding sales contracts signed by April 30, 2010 must close by June 30, Investors and Business Owners in the Twin Cities and
2010 to qualify for the credit. can be reached at (763) 493-3940
Minnesota Real Estate Investors Association, Inc.
The old rules brought younger first-time buyers into the market, looking to
purchase starter homes. This time, the hope is that it brings older buyers
with higher equity into the market. However, even some rehabbers have
reported success with the first-time home buyer’s credit. The new credit
Circulation 3,500 Monthly & Growing
can provide opportunities for the creative investor.
Finally, Get Yourself Bookkeeping Software
In terms of price, flexibility, and ease of use, QuickBooks is the best
bookkeeping program on the market.
QuickBooks Pro is the most appropriate choice for the majority of real
estate investors. It runs from $150 to $200, and if you buy it in the fall
before the next year’s version comes out, it sells for as low as $99. Costco
or Sam’s Club tend to have the best prices.
The flexibility of the program is incredible for the price. It can be
customized to your preferences in a sophisticated way. It is like buying
a car and choosing the all the options. You can use all the bells and
whistles in QuickBooks or you can use the stripped down functions. It
all depends what you want out of QuickBooks and how much time you
want to put into it. Some investors like to use the invoice feature to give
to tenants, rehabbers will use the job costing feature to determine their
profitability on individual projects, some users print out checks so they
don’t have to do it manually, and others will simply use QuickBooks to
enter transactions for tax purposes.
QuickBooks is easy to use. One QuickBooks ad states, “If you can write a
Issue 61 Minnesota Real Estate Investors Association, Inc.
7
www.MnREIA.com
Buying and Closing Property
with Your IRA Call 763-559-5636 and Ask How Todd
Can Set Up Your Land Trusts and
By Todd Grill Solve Your Trustee Needs!
www.TheEntrustGroup.com
One of the biggest hurdles an investor faces when they As the closing date approaches, the title company or
consider using their IRA to invest in real estate is peace an attorney will forward these documents to your IRA
of mind. Here I’ll cover the process of putting your IRA in administrator, along with your instructions authorizing
motion to ease that mind of yours. us to complete the purchase (Payment Authorization
Letter), calling for the balance of the purchase money
When your funds are in a Self Directed IRA, such as Entrust to complete the transaction. Once received, along with
Midwest, you are all set to make a purchase offer on a piece the final closing documents, we will execute them by
of property. Let’s say you find a 5-acre parcel on the shore signing and notarizing them, then forward them to the
of a beautiful lake, and you want to make an offer. You work title company’s (or attorney’s) Trust account, after wiring
Minnesota Real Estate Investors Association, Inc.
with your broker to draw up a purchase offer in the name or the funds as authorized.
your IRA. Be sure to sign the offer to indicate that you have
reviewed and approved it. The title company will then give your funds to the
Circulation 3,500 Monthly & Growing
seller and record your “grant deed” to the property
In turn you will be supplied with a Buy Direction Letter, with the county. When the title company receives the
Payment Authorization Letter, and coordinating real estate recorded deed back from the county it will forward the
investment paperwork. Indicate what property you intend deed to Entrust Midwest, LLC for safekeeping (you are
to purchase and the amount of your deposit. Sign and date not personally allowed to act as custodian of your IRA
the purchase offer and fax it back to your IRA administrator assets). Congratulations, your IRA now owns property!
along with the wiring instructions of the title company or
attorney that will be handling the escrow for your purchase.. For information on setting up a self-directed IRA or
Once all the documents are received the IRA administrator Land Trust & Trustee services call 763-559-5636
will sign the purchase offer as the buyer on the behalf or
your IRA, fund your deposit by wire, and then forward the
signed documents to the title company.
Now at this point your earnest money deposit for the
purchase is made and your broker and title company (or
attorney) will prepare additional documents in advance of
the closing of your purchase. Generally this includes:
1) The final contract (again, initialed as read and approved
by you) with provision for our signature as the actual
buyer on behalf of your IRA;
2) The escrow statement indicating all costs, contingencies,
deposit amounts, pre-paid taxes, etc., and the
net amount due to the seller from you (your IRA);
3) The preliminary title insurance report;
4) Evidence of insurance (if required);
5) Final funding instructions.
Other documents may be required, depending upon the
state where the real estate is being purchased and the type
of real estate being purchased. For example, there maybe
the requirement of an EPA if the property is commercial or
an appraisal if a loan is involved.
So what happens when we’re ready to close?
PRSRT STD
Minnesota Real Estate Investors Association, Inc. • 2675 Stillwater Road • Maplewood, MN 55119 The Final Word From Mike U.S. POSTAGE
2010 Is Shaping Up To Be A PAID
Great Year for Real Estate NAMEBANK
Investing!
All the predictions are that there
will be a lot of new foreclosures
and a lot of Bank REO’s hitting the
market this year. Most people that were going
to buy because of the first time home buyers tax
credit already did so.
So there will be fewer first time home buyers
looking for a good deal to compete with us
investors, which should make it easier this year
to get good deals without all the multiple offers
most of us ran into this past year.
Here is to a great year for real estate investing
and to the all the opportunities and deals that
await us!
Mike Jacka, President of MnREIA
www.MikeJacka.com/Blog
Minnesota Real Estate Investors Association, Inc. Issue 61 January
Circulation 3,500 Monthly & Growing - www.MnREIA.com 2010
MnREIA Next Month’s Meeting:
Creative Real Estate Monthly
Tuesday, January 5th: Tax Strategies for
Registration Begins at 6pm Real Estate Investors
Meeting Kicks off at 7pm!
with Ronald Aho
Ron will discuss Tax Strategies for Real Estate Investors and go through the benefits of using
QuickBooks in your Real Estate Business.
With the arrival of the new year comes the opportunity to make sure you take advantage of
the tax strategies that allow you to keep more of what you make and free up more time for
you to spend time with your family.
Tuesday’s meeting Ronald will be covering:
• Tax strategies for real estate investing.
• How to use QuickBooks Software to help your business grow.
• How to work on your business, not in it!
Membership Benefits: Upcoming Meetings:
• Monthly Meetings
• Free Trainings • Every Monday: Weekly REI Training *Webinar* -Mike Jacka
• Archives of Past Meetings • February 2nd: Alan Cowgill - Raising Private Money!
• Members Only Discounts • February 6th: *Full Day Saturday Workshop!*
• Networking/Education
Now you can learn from the convenience of your own home!
• Real Estate Leads
To participate just go to MnREIA.com and Click on the Link.
• Advertising Discounts
Related docs
