Potential homebuyers looking for homes or property in California face challenges and reap rewards. The highly priced coastal communities of San Diego County are both enticing and out of reach for many buyers. Among these coastal treasures and elusive offerings are the many homes that make up California real estate in Carlsbad.Some estimates predict that California real estate in Carlsbad will reach its capacity for build out by 2010 with about 135,000 residents. Until that time, and despite current national slumps in home sales, it appears that California real estate in Carlsbad will remain in high demand.The Lure of California Real Estate in CarlsbadThere’s little question about why this area is so popular. Seven miles of prime coastal real estate within reach of major cities, and with its own attractions make California real estate highly desirable. The weather in San Diego county is mild and moderate. The public schools, helped by the affluent community, are better than most in California. And California real estate in Carlsbad is accessible to lagoons, golf courses, the Legoland Amusement Park, and a variety of festivals. One of the most popular with owners of California real estate in Carlsbad is the annual Beach n’ Cruise that features scores of reconditioned classic cars on a parade of historic Highway 101.Of course the homes themselves are very impressive. With an average list price of about $1 million California real estate in Carlsbad, also known as the “Village-on-the-Sea”, offers some impeccably designed and maintained homes. One real estate web site features California real estate in Carlsbad from as low as $269,000 to as high as $5.4 million. Homebuyers able to afford the best enjoy the Carlsbad community for its luxurious ocean view homes, the ease of access to both San Diego and Los Angeles, and the educated and involved community. Money can buy some good things. In California real estate in Carlsbad the 80% white collar community has low crime, a solid educational system, and amenities to die for. The best golf courses, boutiques, and restaurants can be found in California real estate in Carlsbad.Challenges of Buying California Real Estate in CarlsbadAs California real estate in Carlsbad gets harder to find, homes priced at the lower end of the spectrum are disappearing. As that “lower end” gets higher and higher one effect is that most markets struggles for find buyers for starter homes, and they struggle to find service employees to staff stores and restaurants. While this is occurring in California real estate in Carlsbad, the real problem is buying, not selling. The National Association of Realtors reported in 2006 that higher priced homes remain better sellers, and that it’s the “affordable” market that is suffering the most from slower sales.What does this mean for potential buyers of California real estate in Carlsbad? You need to be prepared to move quickly, and make a significant investment. But your investment is likely to pay off down the road.
One of the best, most secure, most certain to grow investments you can make is real estate, but with an IRA, investing in real estate never seems to be an option offered. That’s not, however, because you’re not allowed to invest in real estate with your retirement cash; rather, it’s because most IRA funds don’t take advantage of a little-known IRS rule that allows for it.If you’re like most people holding IRA account, you have your funds invested with a bank or a brokerage. That means you’re limited to stocks, bonds, annuities, and other paper securities – not real property. In today’s market, that may mean your IRA funds are tanking, and it certainly means that they are not growing as robustly as they were five years ago. The real money to be made right now is in real estate.You can get into IRA real estate investing by looking for custodians that specialize in real estate IRAs, using the rules contained in Section 408 in the Internal Revenue Code. These special IRAs build a portfolio around all kinds of cash-generating and appreciating real estate: commercial, residential, rental, industrial.It is not legal to hold your own 408-based IRA; investing in real estate with your retirement funds must be done by special custodians. However, you have freedom in many ways to work with your IRA real estate. For one thing, your custodian holds your property, but doesn’t necessarily administer it, select properties to purchase, or even set and collect rents. These may all be your tasks, and they give you a great deal of leeway in how your own money gets invested.It’s easy to see that an IRA investing in real estate gets very complex. Do rents get re-invested in your IRA? Can you charge yourself for administering your own properties and make cash from your IRA in that manner? What kinds of property can you purchase to include in your real estate IRA? Is it possible to hold foreign real estate in your domestic IRA? A good custodian can tell you the specific rules governing your IRA; real estate investing through this route is more complicated than just doing it yourself but the tax advantages make it worth it.While if you work it properly you can benefit to a certain degree from IRA real estate investing beyond the simple IRA, you cannot put your own home into your IRA, nor can you lease space in one of your IRA properties for your own business. You also can’t put properties you or your immediate family already own into your IRA.IRA investing in real estate rules do allow you to purchase property in conjunction with others to put into your fund, and it allows you to include some leveraged property as well, provided your custodian allows for it. You can also sell properties while they are in your IRA, provided you don’t sell them to yourself or to a family member.One of the best ways to realize a great benefit from IRA investing in real estate is to hold a property that will become your retirement home in a Roth IRA. Upon maturity, you have the custodian distribute the property in-kind – assigning the title of the home directly to you. If you did this with a traditional IRA, you’d be liable for income tax based on the value of the property at the time of distribution; with a Roth, you owe nothing outside of costs associated with the transfer. There are few nicer gifts to give yourself to celebrate retirement.
Currently, real estate investment is a hot subject matter. Nearly everyone is wondering if they should sell, buy, trade or avoid investing altogether. In recent weeks, the topic of trading real estate has made headline news. With the lack of qualified buyers and housing market slump, many investors are discovering it is sometimes smarter to trade like-kind properties.
When a real estate investment is traded for like-kind property, it is referred to as a 1031 exchange. In order to participate in 1031 exchanges, real estate investors must retain the services of a Qualified Intermediary (QI). Investors engaging in 1031 exchanges must adhere to Internal Revenue Service guidelines set forth in Section 1031 of the IRS code.
1031 exchanges allow investors to exchange properties while deferring capital gains and depreciation recapture taxes. Real estate is not the only property that can be exchanged through 1031. All types of investment property including equipment, boats and airplanes can be traded.
1031 exchanges prohibit the exchange of houses used as personal residences or vacation homes. However, if the real estate is rented out on a regular basis, houses can be traded for other rental homes.
Another popular real estate investment strategy is purchasing distressed properties such as foreclosure or bank owned houses. Distressed properties typically require considerable repairs or renovations, but this is not always the case. Foreclosure homes are sold under market value through public auctions. If no one bids on the property, it is returned to the bank.
Currently, bank owned homes are being sold for around 80 cents on the dollar. Also referred to as real estate owned or REO properties, investors must negotiate with the bank’s loss mitigation department. Purchasing REO homes generally requires more time and effort than investing in foreclosure homes. Investors should be prepared to engage in multiple counter-offers with lenders offering REO houses for sale.
Many real estate investors purchase bank owned and foreclosure homes for the purpose of house flipping. Flipping houses for profit is not nearly as easy as the popular television shows portray it to be. Simple repairs oftentimes turn into major expenses. Major repairs require licensed contractors, permits and inspections. Before investing in distressed properties, make certain to estimate the true cost of repairs. Otherwise, you could end up with an investment nightmare.
A lesser known real estate investment is probate properties. When a person dies, everything they own must pass through the probate process. Probate can last between six months and three years. During this time, the estate is responsible for taking care of the real estate. This can include paying mortgage payments, property taxes, insurance, and maintenance. If the estate does not have sufficient funds, a probate judge can order the probate executor to sell the real estate.
Probate properties are oftentimes profitable gems, but locating them does require a bit of detective work. Real estate investors will need to visit the court house where probate matters are handled. Probate information is a matter of public record and contains valuable information about the estate, as well as the contact information of the estate administrator.
Many estate executors are unaware they can sell real estate during probate. Offering to buy their property can eliminate financial burden and help the executor expedite the probate process. If multiple heirs are entitled to probate property they must all agree to sell the real estate unless a judge has ordered the administrator to sell the property.
These are but a few real estate investment opportunities. While the media projects constant gloom and doom, it is important to remember that real estate has always been one of the most valuable investment opportunities. Those who invest now can potentially reap massive profits later. Just remember, don’t invest more than you can afford to lose.