With Less Investors in the Game, It’s a Great Time to Purchase Investment Land!

Are real-estate investors starting to run out of gas?  Single-family home investors, whose mostly cash purchases played a central role in healing the U.S. housing market, have started to slow down their buying, according to several surveys, land purchases by investors continue to trend upward.

Investors accounted for 20.2% of home purchases in May—still high by historical standards, but down from a peak of 23.1% reached in February, according to the Campbell/Inside Mortgage Finance survey of real estate conditions.  A separate survey conducted for MemphisInvest.com and Premier Property Management Group found that investors planned to slow their home purchases in the next year.

Several peripheral indicators as well as some individual market data suggest waning investor interest as well.  In May there were fewer offers for distressed homes like foreclosures and short sales, which are favored by investors.  Those properties stayed on the market for longer than in the month before and closed further below the asking price, according to the Campbell/Inside Mortgage Finance.

Reports from the National Association of Realtors and Trulia, a real estate listings site, both show a slight decline in foreign buyers — a big source of investors in U.S. single family homes and condominiums.

And, of course, even if investors are slowing their purchases it doesn’t mean they are leaving the housing market.  For starters, it’s not unusual for investor share to decline in the spring, when there are more owner-occupants looking for homes.  Also, many investors bought into the single-family real estate for the purpose of renting them out—income that continues to flow long after they stop buying property.

Fewer investors wouldn’t necessarily mean the housing recovery is in jeopardy, either. While surveys show investors are slowing down owner-occupy purchases remain healthy.  The number of offers for non-distressed single-family homes—which are favored by owner-occupiers—has increased over the past several months, according to Campbell/Inside Mortgage Finance.  Non-distressed homes are selling faster and the sales-to list-ratio, a proxy for buyer competition, is rising.

Still, anyone who got into the real estate market at the bottom couldn’t be blamed for leaning back or taking money off the table.  Prices have shot up housing inventory is low, making it a tough time to get cheap houses and a great time to sell at a premium.  On the flip side, if investors are dropping out of the market it could allow existing or new investors better land deals and a larger piece of the investment pie.

Tips for Buying Land through a Self-Directed IRA

Here are five things to keep in mind when considering investing in land or real estate through a self-directed IRA.

#1:  It Takes Time: It’s advised devising a timeline based on the account-opening process, transferring or rollover of assets and finding the actual investment.  It normally takes two to three weeks to open an account at a typical brokerage firm, and you’ll need to find a custodian who will hold real estate inside an IRA.  The down payment must come from IRA funds, so rollovers may be required.

When a real estate investment is contracted, the IRA account holder reviews and signs the purchase agreement and then the custodian must approve it and release of funds to the title company.  All of this takes time, so it’s imperative to learn as much as you can before jumping into a decision.

#2:  You Cannot Take Advantage of IRA Investments until you Retire:  You can’t use the fund to pay off your mortgage or live in or use the property you buy as an investment in the self-directed IRA.

You buy it because it is anticipated to appreciate in value, plain and simple. You also lose the depreciation tax deduction that you would otherwise receive on an investment property.

#3:  Your Spouse, Immediate Families or Companies you Have a 50% Interest in Cannot be Involved: While it is possible for the property to be held as tenants in common, an IRA is an individual account—and you must avoid any conflicts of interest.

Self-dealing or enabling a transaction that is beneficial to you on the other end is strictly prohibited.  You also cannot use the IRA as collateral for a loan; it should be treated like other retirement accounts.

#4:  It’s a Lot of Work:  While there are many highlights and potential benefits, many investors don’t fully appreciate or understand the reporting and administrative requirements involved in using a self-directed IRA to buy real estate.  For example, the investor should not be doing the work on the property, especially because he can’t get reimbursed.

All expenses, maintenance, taxes and insurance are paid from the IRA.  If there are association dues or golf memberships, those all must be withdrawn from the IRA.  Finding tenants and contractors may take time, and every penny in and out must be approved by the custodian.   In many instances land investment over an existing home is a better choice when purchasing with a self-directed IRA as no maintenance or dealing with tenants is required.

#5:  All Income from the Property is Tax Deferred:  That includes rental income and capital gains. If you plan to be in a lower tax bracket at retirement, this is quite beneficial.  You can also make tax deductible contributions to the IRA.

To learn more about investing in land or real estate through a self-directed IRA visit http://www.gratiagroup.com or call a member of our land sales team at (239) 333-2221.

9 Core Realty Property of the Week: A Boater’s Dream!

Our 9 Core Realty featured property of the week is a beautiful Cape Coral lot located at 2724 SW 42ND Lane.  With over 70 feet of frontage on the quiet end of canal with Gulf access and a concrete seawall and dock already installed and waiting, this Cape Coral lot is a boater’s dream.  This half acre, corner lot is ready to build your dream home on and is located in the desirable section of SW Cape Coral.

Cape Coral is a bustling community that offers residents a variety of dining, shopping and entertainment.  The city has a vibrant arts and music scene and hosts many special festivals and events throughout the year.  The City of Cape Coral Parks department over sees 35 parks in the area including the popular Yacht Club and Sunsplash Water Park.  The Cape Coral Yacht Club offers residents public access to a beach, fishing pier, tennis courts and more.  Sunsplash Water Park is a great option for a day trip with waterslides, a lazy river and activities for kids.

To learn more about 2724 SW 42ND Lane call (239) 333-2221 and speak to one of our expert land sales representatives.

Southwest Florida: On the Road to Recovery!

The signs are everywhere!  They’ve been there since 2009, pointing to an economic turnaround in Southwest Florida.  But the signs are flashing brighter and more frequently now on a slow, bumpy road toward recovery.

Tourism is strong.  The real estate market is on the mend.  Retail and restaurant sales are on the rise. Unemployment is falling.  Layoffs have slowed and new businesses are sprouting up, filling empty storefronts.  There is more traffic on the roads.  Hotels and restaurants are full. All which is are good sign.

The winter season that’s fading is one of the best on record in Southwest Florida.  In Lee County, visitation rose and so did tourism spending and the outlook for summer is good, with hotel bookings far ahead of last year.

The Southwest region of Florida which includes Cape Coral has seen more companies expanding or looking to relocate to the area including a recent major announcement from Hertz whom will be moving to the area and more people are returning to work, following a state trend.  The area is also seeing other large national corporations including Coca Cola and Alta Resources among others. Lee County’s jobless rate fell below 9 percent in March, while Collier’s dropped to less than 8 percent, in part fueled by the uptick in tourism this winter.

When it comes to this recovery, it seems nothing about it has been fast, leading some economists to describe it as a long, hard “slog.”  The “Great Recession,” triggered by a financial meltdown, technically ended in June 2009, 18 months after it started, according to The National Bureau of Economic Research.  A full recovery may still be three to five years away, experts say.

Buy a Lot in Cape Coral and Own a Piece of Paradise!

Located in beautiful Southwest Florida and considered one of the best places in Florida to purchase lots for sale, Cape Coral is situated among many fresh and saltwater canals making it a boater’s paradise!  If you enjoy boating, fishing and beautiful sunsets Cape Coral is a wonderful city to call home!

Outdoor and wildlife lovers enjoy the variety of plant and animal life that can be found in Cape Coral and the surrounding waterways.  With over 30 city parks, including parks geared towards children and pets, there is always a nice spot to enjoy the beautiful Florida climate.  The most popular park in the city is the Cape Coral Yacht Club with its beach, fishing pier, snack bar & deck, pool and tennis facilities.

With a bustling downtown area those that prefer a more cultured experience will enjoy world class shopping, art galleries, street festivals, restaurants and nightlife.  For the family, Cape Coral is home to its own waterpark, SunSplash which operates from April-Oct.  The kids are sure to love floating in the lazy river or shooting down one of the many waterslides.  If being out on the open water is more your speed, Cape Coral is home to over 400 sale and freshwater canals and is located on both the Caloosahatchee River and the Gulf of Mexico.  Perhaps a nice day on the links is your thing?  Cape Coral is home to an array of public and private golf courses.  In fact, many home lots in Cape Coral are available within golf course communities.

Cape Coral lots are available throughout the city including the popular southern regions.  You may choose from direct gulf access, river access, freshwater lakes and canals or dry lots to build your dream home.  Our lots are easy to purchase and many are ready to build on!  Check us out at 9corerealty.com to locate your dream Cape Coral lot for sale!