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Depreciating the Value of Your Home

Morty — Mon, 12 Jul 2010 14:33:03 +0000

As a real estate investor, you may use your home as your office. Having part of your home as a business expense can allow you to depreciate some of the improvements to your home office. The IRS has a depreciation schedule that helps you calculate the exact amount that can be counted toward your taxes. Keep in mind that depreciation is a fixed expense that you should be accounting for anyway, not just some government giveaway. The year you first start using your home you can depreciate it on your income. You can do this by declaring this part of your home nonresidential real property. You then use MACRS, as nonresidential real property using this method can be depreciated by using the straight line method. For full information, see the IRS Publication 587.

Morty! What about interest rates?

Morty — Tue, 23 Mar 2010 16:39:02 +0000

A lot of people have been asking me what I think about mortgage interest rates as they sit here in March 2010. Obviously, I am not going to be able to give you a definitive answer. That said, a lot of things are working toward interest rates going up. Not the least of which is the Fed no longer purchasing mortgages. A larger thing to keep in mind for interest rates going up is the dramatic increase in the money supply created by the Fed. Right now banks have by and large held on to this money. They likely will not forever and when this money gets lent out to the public, inflation will go up and the Fed will be forced to increase interest rates generally. I think now is even a more risky time for real estate investors. Wait until the government subsidies of first time homebuyers and mortgages goes away. When that happens you’ll see a small real estate recession, that will be your time to buy.

2008 US Foreclosure Heat Map

Morty — Sun, 18 Jan 2009 15:03:54 +0000

Here is a great resource put out that shows a heat map of the 2008 US Foreclosure Heat Map. This gives you a good idea where the mortgage and real estate markets have fell apart the most.

Mortgage Rates Have Investors Frothing

Morty — Mon, 29 Dec 2008 19:18:25 +0000

Last year I recommended that you stay out of real estate investing. If you did that and accumulated capital, you should be frothing at the mouth at some of the deals out there. Mortgage rates for those of you with good credit can be found today at 5%, with an average of around 5.3% and some people even claiming success at 4.75%. I believe that prices will go down further, but mortgages rates do not simply have much lower to go. This balance could make for a good trade off and an possible entry opportunity for new real estate investors. Big Ben has proven that he is willing to bail out at any cost by printing money. This will lead to inflation and a dramatic increase in mortgage rates when things improve. The best place to be? Hard assets like real estate.

Mortgage Rates Looking Good, Could Head Lower

Morty — Sun, 21 Sep 2008 18:11:05 +0000

Boy mortgage rates could become extremely attractive if the government bails out banks from their bad debt. With this happening along with the support of Fannie Mae and Freddie Mac, the mortgage markets could begin to reflect some of the lower interest rates out there. We’ve seen rates come off over 10% in the past month saving new mortgage signees tens of thousands of dollars over the term of your average 30 year fixed rate mortgage.

Mortgage Rates Edge Down

Morty — Tue, 02 Sep 2008 23:37:14 +0000

Mortgage rates edged down over the long weekend with the 30-year fixed rate mortgage average slipping to near 6.25%. The jumbo and the 15-year fixed also edged down over the holiday weekend. As I mentioned previously, any ability to grab a mortgage when the national average is near 6% was a great opportunity. As things shore up for Fannie Mae and Freddie Mac, we may see a symbolic easing of the mortgage loan market.

Fannie and Freddie Secure Funding

Morty — Tue, 26 Aug 2008 01:55:59 +0000

Government sponsored entities Fannie Mae and Freddie Mac got a much needed boost today when they announced that they had sold $2 billion in short term loans. This should allow the two companies to continue to guarantee new loans and make money. Without the selling of debt, the two firms would remain in serious trouble as they are responsible for backing home loans / mortgages that continue to default at a significant rate.

Mortgage Rates End Week Up

Morty — Mon, 28 Jul 2008 00:50:50 +0000

Last week, mortgage rates ended up slightly with the 30 year fixed mortgage rates up 6 basis points to 6.39% and the 15 year fixed rate mortgage up 9 basis points to 5.95%. Some stability is coming back to the market and many believe that US interest rates will be going up to help curtail inflation from commodities like energy and corn.

Agency Mortgage Bonds Look Attractive

Morty — Mon, 21 Jul 2008 01:00:52 +0000

While the solvency of mortgage bond originators and large holders is/has been called into question lately, it seems as if the mortgage bond market is beginning to shore up. This is a good sign for real estate investors and with some confirmation may signify the overall bottom in the macro real estate markets. The well respected Aleph Blog has made this call along with others and I think this bodes well for us real estate investors.

Why Uncle Sam’s Bailout Helps Mortgage Holders

Morty — Tue, 15 Jul 2008 01:06:53 +0000

So Uncle Sam is going to move to save Fannie Mae and Freddie Mac. Super, sounds like another instance of an “avoided failure” among financial institutions. But everyone seems to be wondering, isn’t failure supposed to happen in market economies? Something of a moral hazard issue.

At least that’s what we hear. In general, despite being a real estate investor, I believe speculative investors and risky real estate investments must be punished with outright failure. Now some of that is definitely happening and what I hope is that more real estate investors now enter the game well capitalized with contingency for the same exact thing to happen again.

But alas, back to F&F. here we have an issue of something more than just moral hazard. Here we have a true crisis of confidence spurred last week when F&F bonds couldn’t attract a bid in their regularly scheduled auction for capital. The two institutions are about as sound as them come, under normal business circumstances. Odds are that the government will step in a make a bundle on their transaction. Paulson seems to want to use F&F to turn the Treasury into a government backed hedge fund and will likely profit handsomely off any purchase of F&F stock at depressed levels. The end game will help save the entire mortgage and real estate market from a cataclysmic depression.