NEWS FOR IMMEDIATE RELEASE Contact: Jim Coleman Phone: (203)756-7526 James W. Coleman, Sr. Email: Jim@ColemanAdvisoryGroup.com Web site: www.ColemanAdvisoryGroup.com Investing in a Volatile Real Estate Market Local Financial Pro Gives Investors Seven Tips to Navigate the Real Estate Market WATERBURY, CT (October 2, 2008) – Throughout our nation’s history, investing in real estate has been one of the fastest ways to build wealth, but news headlines on the subprime lending crisis and lingering For Sale signs on neighborhood lawns indicates that this once tried-and-true investing method indicates a down real estate market. According to the Center for Responsible Lending, 2.2 million families with a subprime loan issued from 1998 through 2006 have lost or will lose their home to foreclosure in the next few years. That amounts to a projected maximum equity loss of $164 billion. But according to Jim Coleman, a Waterbury-based independent financial professional, successful real estate investing is still a reality if an investor pays careful attention, conducts detailed research and has patience. Coleman provides these seven tips to successful real estate investing in a down market. Focus on home sweet home. Many homeowners consider making renovations to their homes in a down market. And while home improvements can add value to your real estate, Coleman warns -more- that any major renovations should be evaluated from a pure return on investment perspective. According to the recent “Cost vs. Value” report from Remodeling magazine, this year homeowners won’t recover as much of the costs for remodeling as renovators did in the past. Play by the new rules for buying or selling. The bidding wars of recent years where homes sold for more than the asking price are history and in many markets house flipping has turned into house flopping. “There are winners in this new environment,” says Coleman. “First-time homebuyers who have nothing to sell have plenty to gain as sellers stress over the glut of homes on the market. Although signing the purchase and sale agreement may leave you feeling flush at having cajoled a boatload of extras out of your builder or negotiated a steal of a price with a desperate seller, keep in mind that the home you purchase today may not increase in value and may even decrease in value in the years ahead.” When selling a home, it has become increasingly important for sellers to work hard to impress buyers. “In addition to the traditional sprucing up the yard with a few potted plants, sellers may also need to do more to increase interest in a home,” says Coleman. “In a slow market buyers are especially unforgiving and won’t overlook pealing paint or leaky roofs, so make these major repairs before putting your home on the market.” Take advantage of the current 15% capital gains rate. If thinking about selling a home and are concerned that it has lost some of its value, all may not be lost. Any gains realized from the sale of a property will be taxed at the current capital gains rate of 15%. However, it’s worth calculating potential tax savings against what you may lose in a sale price, especially if you qualify for maximum exclusion which can be up to $250,000 of the gain or up to $500,000 if you are married and file a joint return. Scoop bargains with care. Foreclosures abound, but keep in mind that many require major renovations. “Without doing your homework, you could end up making some costly mistakes and that bargain foreclosure could turn into a money pit,” says Coleman. He advises that rather than chasing subprime fallout, consider researching local developers who might be feeling the market’s pinch and would be tempted to dump new property at a discounted price. -more- Consider becoming a landlord. “As you watch property values fall, you may consider buying that second home and renting for the weeks your family isn’t vacationing in it,” says Coleman. “Although you initially may prefer a small house, look for one with adequate land to accommodate future expansion.” Coleman adds that while in vacation mode it may be a good idea to think about the property’s proximity to recreational activities and a good school district. “Before you put on the landlord hat, you should also think carefully about your own skill set and the amount of time you can dedicate to managing your investments,” Coleman says. Use the right REITs for the right reason. Real Estate Investment Trusts (REITs) invest in commercial properties such as office buildings, shopping centers, apartment complexes and hotels and are bought and sold on the major exchanges just like stocks. Because REITs must pay out 90% of taxable profits in the form of dividends to avoid paying corporate income tax, they are an ideal choice for investors who want regular income. Additionally, REITs broaden your portfolio and can zig when equities zag. Those benefits aside, however, REITs’ last seven years of market beating performance—before last year’s plummet—has investors overly-focused on return. About Jim Coleman Jim Coleman has been in the financial services industry for over 20 years. He founded Coleman Financial Advisory Group, voted “The Best Financial Advisor of Greater Waterbury for 2008”. Coleman specializes in providing comprehensive financial planning, asset management and estate planning services. Mr. Coleman received a Bachelors of Science degree from Northeastern University, in Boston, with a double major in finance and marketing. He is a member of the Financial Planning Association, the largest organization of professionals dedicated to championing the financial planning process. Coleman’s passion is finding solutions to financial problems and further educating his clients and the community. Listeners in Connecticut rely on Coleman to deliver sound, accurate financial advice as host of All About Money, a radio talk program. He writes a financial planning column for a local newspaper, the Prospect Pages, and recently authored a book titled Educated Investing: Your Guide to Surviving and Thriving in the Fast-Paced Global Markets of the 21st Century. Call Coleman’s office at (203)756-7526 or visit www.ColemanAdvisoryGroup.com to learn more. ### NOTE: When you need an experienced professional to speak on complicated financial topics in a clear and concise manner, call Jim Coleman at Coleman Financial Advisory Group. Securities offered through Securities America, Inc. Member FINRA/SIPC. James Coleman Registered Representative. Advisory services offered through Securities America Advisors, Inc. James Coleman Investment Advisor Representative. Securities America and Coleman Financial Advisory Group are not affiliated. The "Best of Greater Waterbury" award was determined by survey responses sent in by readers of The Observer newspaper for the months of March and April 2008.
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