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Buying or Selling a Home/Buying Mothers home as an investment property in this market?!

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Expert: John Hendricks - 2/8/2008


Question
I currently own a home, my fiance and I live together.  His Mother has offered her home at a very reasonable price (she is moving).  I love my home and would prefer to stay in its location (for schools and area). However we do not want to let a good opportunity pass us by. Any advice on buying this home on a purely financial standpoint and renting it out? Any pitfalls I possibly may not see in owning a home and renting another in the current market and just overall? Thank you in advance for your answers!

Answer
Dear Cheryl;

I am sorry to take so long to answer your question. I just returned from vacation and starting to respond to mails. Hopefully my answer can still be of help to you.

It sounds like a good idea Cheryl to at least consider the purchase. These are a few suggestions…

1.   Establish a purchase price
2.   Contact your mortgage broker to get information on a loan for the property. The mortgage broker will quote you all the costs in obtaining the loan and all the terms and conditions established.
3.   Do a rental survey on the property to compare what rent you can earn on the home in relationship to your holding costs, and tax benefits.
4.   If you are going to manage the property yourself, get some online information regarding what responsibilities you have as a landlord in your community and state.
5.   If you are going to employ a management company, contact no less than three companies to interview. Do hesitate to ask for past client recommendations
6.   Contact your accountant to determine what tax benefits you will receive while owning an income property. There are many advantages in owning income property.
7.   Talk to you accountant regarding holding this property and turning it into your main residence down the road. When you sell your main residence, you will receive a $500K tax exemption assuming you are married, and when you move into your replacement home, the process starts all over again. Your income property now becomes your main residence taking you out of having to treat it as an income property. Your accountant can advise you as to how to take advantage of what the government is offering to you at least under the current guidelines.

You owe it to yourself to give strong consideration to this potential opportunity. It can be a nice retirement situation for yourself if you work it right… Good luck…

Warmest Regards;
John Hendricks

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John Hendricks

Expertise

As a California Realtor for 23 years practicing in Marin and Sonoma Counties, it is now time to provide counsel through AllExperts.com to those who need advise in real estate. My knowledge and experience includes a wide range of resale residential real estate purchases, new home sales, income related investment properties involved in 1031 exchanges, and land. Let me help you in any of these areas...

Experience

John Hendricks has established himself as one of Marin & Sonoma Counties premier Realtors. A native Californian, John is a well-known and respected Realtor in both Marin & Sonoma Counties who has resided in the Northbay since 1976. John began his real estate career in 1986, and since then has distinguished himself as one or Northern California's top producing Realtors. Before joining Frank Howard Allen Realtors, John was an associate of the Prudential California Realty from 1990-1992 where his outstanding sales achievements earned him one of the company's highest honors, the prestigious "President's Circle Membership", presented to the top 2% of associates for sales and earning excellence. Since his association with the highly regarded Frank Howard Allen Realtors in 1992, John has once again established himself as one of his company's Top 10 Producing Realtors in Marin & Sonoma Counties for the years 1993 through 2007 and now in 2008. Five continuous years of outstanding performance has now allowed John to join 15 other Realtors in the prestigious "Lifetime Hall of Fame" for Frank Howard Allen Realtors. John established a group of professional individuals who specialize in a variety of areas in real estate called, 'Lundmark-Hendricks Fine Homes' This group of professionals are dedicated to the success of representing clients with the greatest amount of care and service when either buying or selling real estate.

Organizations
California Association of Realtors National Association of Realtors

Education/Credentials
Upon Request...

Awards and Honors
Frank Howard Allen Realtors "Hall of Fame Member" Chairman's Circle for 10 consecutive years

Past/Present Clients
Joe Louis & Sharon Sigurdson We want to thank you again for your excellent representation of interests during the recent purchase of our home in Petaluma as well as the sell of our home in Mill Valley. We had the unusual pleasure of working with you during the last year both as sellers and buyers. We felt that our interests were always paramount and that we received a very fair price for the sale of the Mill Valley house as well as our purchase of our new home. This speaks particularly well of you, because of the recent unstable and chaotic real estate market. Will Finke "Quite frankly, we came out of a very difficult situation, which time does not allow elaborating on. This was one of the greatest experiences of our lives as clients. John Hendricks is one of the top businessmen I have ever met." Bruce & Nancy Rosentreter "I chose John Hendricks to sell my house. I picked him because I thought he was professional, aggressive, and that he could get top dollar for my house. He fulfilled my expectations completely." Joy Schuelke "Since we were trying to sell a high end home in a very tough market, and in the middle of a very rainy winter, the prospects seemed quite bleak. I was convinced at the time, and am even more so now, that without John's tenure, patience, and tenacity, we would have not been able to move the property." Lynn McCarthy "I cannot stress strongly enough how impressed I was with the service provided to me by John and his group. Throughout the entire transaction, John was always available, always forthcoming with excellent advice based on his years of experience, and always willing to put in the extra effort to make this a positive experience for me. I feel lucky to have had the experience of working with him." Lea Lieurance-Turk "Thank you John for your outstanding real estate services for the past 5 years I have known you. You have made my dreams come true as far as selling and buying property."
http://www.LundmarkHendricksFineHomes.com

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