Category Archives: Community News

For Rent Scam!

Recently, a home we have listed for sale ALSO popped up as “for rent” on Craigslist; offered for rent by
someone neither the owners or ourselves have ever heard of!!

The scam is they give you a story about how they were recently transferred, and need to rent the home out
quickly and for below market rent to someone who will take good care of it for them.  Since they’re
already “gone”, you have to send them a rental application (and possibly mail them a deposit check) over
the internet.  If you send them a check, you’ll never see or hear from them again.  If you don’t mail a
check, they still benefit from having your name, address, social security number, date of birth, driver’s
license number, etc.  That information is on all standard rental applications.  Plenty of information for
identity theft, opening credit cards in your name, etc.

So, before renting ANY home, make sure you meet the owner AT THE HOME.  This will help eliminate the
chance of your getting scammed out of your money or your identity.

Pitfall to Refinancing?

Are you considering a refinancing of your current mortgage(s)?  Maybe to lower your interest rate, to switch from an adjustable rate mortgage to a fixed rate, or maybe to consolidate a first and second mortgage into one loan?

Given today’s low interest rates, these could be prudent financial moves.  However, there is one potential pitfall which should give pause for thought.  Legally, there is a difference between a “purchase money loan” and a “refinanced” loan.

A purchase money loan is a loan (or loans) that is put into place at the time you are making the purchase of a property.  For an owner occupied property, if you have financial difficulty at some time in the future (as many people are having today), and your home ends up in foreclosure, the only recourse the lender(s) has is to foreclose, sell the home, and get back as much of their loan as they can.  The lender can NOT go after your other assets to make up their loss.

Once you have refinanced, and no longer have the loan(s) that were put in place at the time of purchase, the lenders DO have recourse.  They’ll have an unsecured lien against your name.  With this, they can attach your future wages, and come after you to make up every penny they have lost on that loan.

Disclosure: we (Robert and Gary) are not accountants or tax experts, but this is our understanding of the law.  If anyone has a different point of view, we encourage your writing on this blog and sharing that viewpoint with others.

Gary Shapiro and Robert Gosalvez

Intero Real Estate Services

Purchasing a Home Using Your Retirement Account?

I heard you can own real estate in your retirement account!  Is that true?

Yep!  In fact, here is a personal story about myself (Gary) and my wife (Vicki). We recently purchased a rental home in my wife’s retirement account, and we think you should consider doing the same!

Like many of you, our retirement accounts were hit hard during the tanking of the stock market, especially the Nasdaq market.  Although that market has started to recover in the past year, we wanted to diversify, and recognizing the recent drops in the real estate market have created an opportunity to ride that market back up again, we decided to purchase a rental home using some of the funds in her retirement account.

To accomplish this, we first transferred her retirement account into a “self-directed” account, which includes real estate as an “allowed” investment.  We (her account) then purchased a single family starter home, 3BR/2BA, a cosmetic fixer upper, in Hayward. We paid $240,000 cash (financing is available, however), and we spent $20,000 fixing it up to make it rentable.  After two weeks, we rented it for $1600 per month. Subtracting insurance and property tax expense, we deposit the balance of $1300 per month ( a 6.5% return) straight into her retirement account, UNTAXED, making our return even higher.  And, we expect the home to appreciate over time, adding to the return and (hopefully) covering the buying and selling costs.   We think this is an excellent, safe “long term” investment, a wise use of retirement funds.

And it gets even better.  We’re now going to take advantage of “leverage” by putting a 50% loan to value against that home and using the funds to buy a second property. The positive cash flow will be reduced to $585 per month due to the payment on the 50% loan, but using the same investment numbers for the second home, we’ll have a positive cash flow on each of TWO properties now, bringing the total back up to $1170 per month into Vicki’s account.  AND, now we’ll own TWO properties which we expect to appreciate over time.

A few comments:

  • The loan on the home must be a “non-recourse” loan, as the loan is being made to the retirement account, not an individual.
  • The purchased property must have a POSITIVE cash flow.
  • If you hire a property manager, that cost will of course lower your return.  We chose to manage the home ourselves.
  • Please call us if you’d like to meet and discuss the specifics about how we can help you accomplish a similar purchase in your retirement account!  Although it can be done by yourselves, we hired anexpert on retirement accounts to open and help us transfer Vicki’s funds into a “self directed” account.
  • It does not have to be a single family home that you purchase; multi-unit properties tend to have even better cash flow numbers, but perhaps not the same potential for appreciation that single family homes provide.

By the way, because of the drops in prices for entry level houses (and some multi-unit buildings), this works
for buying rentals OUTSIDE of your retirement account as well, but you can’t take advantage of the
depositing the positive cash flow “untaxed”.

Loan Limit Increase

According to a report in the Wall Street Journal U.S. House and Senate lawmakers are making a proposal to extend the time for the temporary higher limits on the amount used for home mortgages issued by Freddie Mac and Fannie Mae are able to buy or guarantee as a part of the temporary solution funding legislation that, by the end of this week, could be passed by Congress.

Stated in a press release by Sen. Daniel Inouye of Hawaii and Rep. David Obey of Wisconsin, the continuing resolution legislation give lawmakers more time to complete appropriation measures. The legislation would also extend loan limits, currently set to end on December 31, 2009, through the end of next year.

While the legislation must still pass through both houses of Congress, it would extend the temporary limits on the size of mortgages the FHA would be able to insure.

More on the $8,000 tax credit

Gary and I are and constantly asked if we have any update on the $8,000 first time homebuyer tax credit, and whether it will truly expire on Nov. 30th, 2009, or whether it might be extended.  While we are not accountants or tax experts, we do know there is a lot of pressure to extend the credit, and possibly even increase it to $15K.

In a report dated Tuesday, Oct. 27, we read there is an agreement to extend the soon-to-expire $8,000 tax credit for first-time homebuyers, according to Senate Banking Committee Chairman Christopher Dodd.

But a Republican who has worked with Dodd cautioned that they were still negotiating on the measure.  “We’re close, we’re close but I can’t get into any details until it’s a done deal,” said Republican Senator Johnny Isakson.

The popular tax credit, which has helped lift the housing market out of its worst slump since the Great Depression, is set to expire on Nov. 30.

Dodd and Isakson want to extend the credit through June of next year and broaden it to anyone buying a primary residence, not just first-time buyers.

Senate Majority Leader Harry Reid had backed a narrower version which would extend the full credit through March and gradually phase it out through the end of 2010.

Dodd said that the deal would merge the two proposals.

The House, which would also need to approve the measure, has yet to act.

The issue is front and center for financial markets. U.S. stocks sold off and the dollar moved sharply higher on Monday after a misleading media headline said research firm ISI Group had written that the tax credit probably would not be extended when it expires Nov. 30.

A Senate vote is expected around 6 pm Tuesday on whether to take up a bill to extend insurance benefits for unemployed workers.
Simply extending the current tax credit is estimated to cost $1 billion a month.

House Speaker Nancy Pelosi appears to be waiting to take her cue from the Senate. Asked about the tax credit earlier this month, the California Democrat said “the question is, would that be just first-time homeowners or would you open it up to other purchasers of homes?”

A House Democratic aide said House leaders would likely adopt whatever language the Senate approves, which would avoid the need for negotiations to reach a compromise. Unlike the Senate, the House has already passed an extension of benefits for unemployment insurance.

**Keep reading, more to come

Robert & Gary

EXTENDING THE TAX CREDIT?

At this point, the $8K first time homebuyer tax credit is due to expire on December 1, 2009.

But, we’re now hearing that Congress is considering extending it AND increasing it!  The new proposal will be available to ALMOST all home buyers, not just first timers.  And the credit may be increased to from $8K to $15K!

We’ve also heard the IRS has decided a taxpayer can deduct interest on the first $1.1 million of a home mortgage, an increase of $100K over the earlier limit.  And get this, it’s retroactive three years!  This means taxpayers can file amended returns for the past three years to claim refunds for these added deductions!

Stay tuned as we hear more!

Gary and Robert

Being part of something bigger than ourselves

By Gino Blefari
President and CEO, Intero Real Estate Services

Today I want to share something that we do here at Intero that I am especially proud of.

I’m talking about the Intero Foundation.

Let me explain.

When we founded Intero just seven years ago, we set out to create a company that was different. That difference would be based on our values. One of those values is commitment – defined as; a pledge to do something, a state of being bound intellectually to a course of action.

As Realtors we earn our living by serving our community. So it was fundamental when creating Intero to figure out a way to give back to the community. We express this commitment now through the Intero Foundation.

To date, the Intero Foundation has donated $1,367,365 to local charities. These organizations range in size and mission, but all work to positively impact the growth and well being of children by enhancing their education and personal development.

Just last week, we announced our most recent list of beneficiaries, we were able to give out over $100,000 in one week divided amongst these organizations which work to make our children – and our communities — stronger: Dream Power Horsemanship, Rape Trauma Services, Family Connections, My New Red Shoes, Jacob’s Heart, Bill Wilson Center (SSJFY), Small Steps Foundation, Community Solutions, and the Learning & Loving Education Center.

To give you an idea of all the non-profits we’ve been able to contribute to since the foundation’s existence – here is our long list:

A Brighter Today Foundation, Alum Rock CounselingCenter, Assistance League of San Jose, Assistance League of Saratoga, Barrett Elementary School, Barrett HomeSchool & Community Club, Bay Area Alliance for Youth Family Svcs, Bay Area Crisis Nursery, Bill Wilson Center (SSJFY), Buena Vista Auxiliary, Buenas Vidas Youth Ranch, Burnett Elementary School, Burton Elementary School, CampHope, CampTaylor, Carlmont Motivational Center, Children’s Hospital Branches, Community School of Arts, Community Solutions, Concord Youth Center, Cross Cultural Community Service Center, Cupertino Community Services, Dan Herbert CampHope, Diablo Valley Assistance League, Discovery Counseling Center, Discovery Counseling Center SCIP Program, Downs Syndrome Connection, Estrella Family Services, Family Connections, Family Giving Tree, Franklin McKinley Education Foundation, Friends Together, Future Families, Future Vision Mentoring, Generations in Jazz, Hellyer Elementary, Housing Industry Foundation, Interfaith Council of Contra Costa County, JW House, Learning for Life, Let Them Hear Foundation, Lincoln High School, Los Paseos Elementary School, Montalvo Arts Center, NAMI Contra Costa, National Alliance of the Mentally Ill, One Step Closer, Open Heart Kitchen, Organization of Special Needs Families, PACE, Partners for New Generations, Project Help, Quilt Museum, Rape Trauma Center, Rebekah Children’s Services, Role Model Program, San Francisco 49ers Academy, San Jose Education Foundation, Schmahl Science Workshop, Shelter Inc. of Contra Costa County, Silicon Valley Education Fund, Silvar-Charitable Foundation Trust, Small Steps, Social Advocates for Youth, Special Olympics, St. Rose Hospital Foundation, St. Joseph Family Center, Starting Point Arts, Super Stars Literacy Program, The Salvation Army, The Wellness Community, The Wish Book, Upward Bound Youth, US Relief for Unicef, Via Services, Westwind Riding Institute.

Each of us at Intero is proud to support these organizations.

And proud that we have 100% participation from each of our Realtor’s.  This means that a portion of EVERY PAYCHECK earned by an Intero agent goes to the Intero Foundation!

So why does this matter to you? Well, there is an obvious connection: We are helping to make the place you call home (or are hoping to call home) better. And that matters.

But we are also expressing something about ourselves that might interest you: That we are a big organization, but not too big to remember that we are part of something still larger; that we take seriously our role as an organization rooted in a place; that we believe we must give in order to receive.

If you share these beliefs, if it matters to you what your real estate company does in the wider world, then we have created something for all of us.

What’s the local Sunnyvale Real Estate market doing?

Great Question!  The truth is this is a challenging time for the local  market!  We are certainly in a buyer’s market, where prices are heading downward, but what caused it to shift so suddenly?  The biggest factor has been the rise and fall of sub-prime mortgages.

You have to admit, it sounded a little crazy when banks, who are notoriously conservative, decided to offer 100% financing.  And it sounded even stranger when banks decided to offer “no qual” loans, where they said they weren’t going to verify if the borrower made enough money to make the necessary payments on the loan!

So, what exactly were they thinking when they decided to combine the two, offering 100% financed, “no qual” loans???  Hello???  Who’s the rocket scientist that came up with that one?  It’s no wonder so many of those loans are heading into foreclosure!

Creating buyers out of so many people who really weren’t “qualified” brought too many buyers into the market place, artificially driving prices up.  And now that those loans are no longer being offered, prices are coming back down.  What else is contributing?  How about an economy heading into (or already in) recession?  How about local companies announcing layoffs and downsizing, causing buyers to lose confidence?   How about increasing inventory?  Add it all up, and you have today’s “softening” market, where prices are falling.  However, it’s also creating opportunity to buy at very low prices!!!

2009 First-Time Home Buyer Tax Credit Facts

The federal government is providing a first-time home buyer credit of up to $8,000 for qualified
purchasers of a principal residence in 2009. However, that program is scheduled to end as of
December 1, 2009. Although other incentive programs, such as the “cash for clunkers” giveaway,
were extended beyond the originally scheduled termination date, there is no indication that the
first-time home buyer credit will be extended beyond its originally scheduled termination date.
To qualify for the credit, the first-time home buyer must close escrow on or before November 30,
2009 and meet other eligibility requirements (see below).

Unfortunately, many factors can delay the close of escrow. Such factors include, but are not
limited to: the buyer’s ability to secure financing; the seller’s ability to resolve any and all
outstanding financial obligations affecting the property; and the condition of the property.
Mortgage professionals have no control over any or all of these potential timing problems and thus
are not able to guarantee the precise date that escrow will close.

—————————————————————————————————————————

2009 First-Time Home Buyer Tax Credit Facts


Who is Eligible

• The $8,000 tax credit is available for first-time home buyers only.
• The law defines “first-time home buyer” as a buyer who has not owned a principal
residence during the three (3) year period prior to the purchase.
• All U.S. citizens who file taxes are eligible to participate in the program.

Payback Provisions
• The tax credit is a true credit. It does not have to be repaid.
• The only repayment requirement is if the homeowner sold the home within three (3) years
after the purchase.

Income Limits
• Home buyers who file as single or head-of-household taxpayers can claim the full $8,000
credit if their modified adjusted gross income (MAGI) is less than $75,000.
• For married couples filing a joint return, the income limit doubles to $150,000.
• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to
receive a partial first-time home buyer tax credit.
• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial
first-time home buyer tax credit.
• The credit is not available for single taxpayers whose MAGI is greater than $95,000 and
married couples with a MAGI that exceeds $170,000.

Effective Dates for the Tax Credit
· First-time home buyers can receive an $8,000 tax credit for the purchase of any home on or
after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on
the sale of the home during this period.

Tax Credit is Refundable
• A refundable credit means that if you pay less than $8,000 in federal income taxes, then the
government will write you a check for the difference.
• For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS
and receive a $3,000 payment from the government.
• If you are due to receive a $1,000 tax refund from the government, your refund would grow
to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).
· Buyers can take the tax credit on their 2008 or 2009 income tax return.

Types of Homes that Qualify for the Tax Credit
• All homes, whether single-family, townhomes, or condominium apartments will qualify,
provided that the home will be used as a principal residence and the buyer has not owned a
principal residence in the prior three years. This also includes newly-constructed homes.
For more details on the tax credit, go to www.federalhousingtaxcredit.com

Why did Gary & Robert move to INTERO Real Estate?

Don’t you guys work for RE/MAX anymore?

Not anymore!  We were with RE/MAX for 14 years, and it was a great company at which to work.  However, we felt other companies were doing a better job of keeping up with the changes in technology, and believed both our clients and ourselves deserved to take advantage of those changes.

Over the years, we have been heavily recruited by almost every real estate company in the valley.  While interviewing around, we really saw how our excellent reputation makes us very desirable to real estate companies.

We finally decided that INTERO Real Estate Services gave us the best opportunity to provide the type of service we know our clients deserve.  Intero was started by four friends of Gary’s, who collectively have been in the real estate business here in the Silicon Valley for over 100 years!  They started the company only six years ago, but are already industry leaders, with #1 market share in Santa Clara County.

Our new address is :

INTERO Real Estate Services

10275 N. De Anza Blvd., Cupertino, Ca.  95014

**We are only about ½ mile away from our previous location with RE/MAX.  Our contact info is:

Direct line    408-342-3131
Email             Gary@GaryandRobert.com   &   Robert@GaryandRobert.com