Cape Coral Real Estate Blog

We've been getting many calls the past couple of weeks asking us about the 2 for 1 houses available in Cape Coral, Florida.

Where are they? Do they exist? Well, yes & no.

If you are talking about the prices of homes for sale right now - compared to 2005, then YES, there are a lot of them that are 1/2 price. But if you are referring to homes priced correctly in today's market, then no, 1/2 price houses do NOT exist.

Here's an example. A 1700 s.f. home listed in NW Cape Coral is for sale at the present time. It was built in 2006 but was NEVER lived in. The seller paid just over $250,000 for the home in 2006. Today, it is listed at $119,000. So, there you have it, half price homes.

Another example, there is a 2300 s.f. gulf access pool home in SW Cape Coral, FL. It was built in 2007, again NEVER lived in. The seller paid almost $850,000 for this home. It is listed today at $500,000. Again, almost 1/2 price.

Wondering "what is the true market value without the short sales & foreclosures?". That cannot be answered because THEY are a part of our current market. Unfortunately, regular home sellers must compete with the prices of these short sales & bank owned properties.

There are many more stories just like these for the home buyer. Many buyers are now looking at Cape Coral, Florida again for their home purchase. Baby Boomers are looking to retire, first time homebuyers can now afford a house in Cape Coral while investors can cashflow on some properties now.

While this has scared conventional investors away from the real estate market, smart contrarian-thinking investors are scooping up both residential and commercial real estate assets at 20%, 30%, 50% and even 70% from current appraised values; even in the case of properties considered 'upside-down' (mortgage exceeds current appraisal value), savy investors are walking away from deals with juicy profits 20 to 40% or more by using the 'short-sale' method of extracting deep discounts from mortgage-holders; one such investor in Clearwater, Florida is pulling in an average of $15K to $35k per short-sale deal, with a volume of over fifty houses per year bought and sold using the 'short-sale' method negotiating with banks. Savy investors know that markets, including the real estate markets, behave historically in cyclical fashion ("What goes up, must come down", and vice-versa). For example, who would have thought that gold - languishing at the under $300 per ounce range for years, would zoom up to the current value of over $1,000 per ounce? Savy investors who got into gold early on, have realized returns of over 300% in less than five years! Savy investors who picked properties (including New York City skyscrapers) back in the Big Depression days in the 1930's, later became multi-millionaires and even billionaires! Where the public then saw only despair, and a hopeless market, savy investors saw a golden opportunity to make a ton of money scooping up assets as low as 10 cents on the dollar.

Of course, one must invest wisely, and carefully choose the right real estate assets to buy; the true value of a real estate property can only be determined after a careful analysis of various key factors: condition of property (calculate correctly its rehab costs), its location (accessibility to convenient shopping, cultural amenities, crime free, etc.), and current appraisal value (less than 45 days). The optimal strategy for an investor is consistently the same: buy as low as you can, and sell high as you can; in today's real estate market, it would be wise for the investor to sell his inventory of properties at least 15 to 20% market value - so as to attract bargain-seeking buyers and go to closing in the shortest possible time. A wise, long-term strategy for an investor would be to sell, rent or lease-option the inventory of acquired properties to reserve a nice cash-flow for the retirement years. Bottom line is, GET OUT THERE AND SCOOP UP YOUR SHARE OF REAL ESTATE TREASURE, and by doing so you're not only securing your financial future, but you're also helping to heal the U.S. economy

In 2005 we had 2,846,000 Homes for sale

In 2006 we had 3,450,000 Homes for sale

In 2007 we had 3,974,000 Homes for sale

As of January 2008 there are 4,191,000 Homes for sale

These are national numbers from the NATIONAL ASSOCIATION OF REALTORS®

• Prices are way down-Because of the access surplus of homes on the market sellers are forced to reduce prices to be more attractive. We have seen locations that have gone down as much as 30%-40%

• Sellers are very motivated- Because of the increase in inventory sellers who are serious about selling are more willing to negotiate knowing that the buyers have lots of homes to choose from. You need to be more attractive than your neighbors. Sellers know that.

• Rates are historically very good- 30-yr fixed rate mortgages are at a little over 6%. (as of this article 3-08). From 1992 to date rates have ranged from 9.25% and 5.25%. So +6% is on the low side. Take advantage of cheaper money.

• Take a little cut on selling your current home and get a big cut on your new home- If you currently own a home that you need to sell in order to buy a new and more expensive one, think about discounting your home let's say by $30,000 or so to sell it fast. And get a much bigger cut $70,000 or more in savings when you buy your new home. Yes you will act as a buyer expecting you seller to negotiate and be more willing to cut prices

• Buyers have many options to choose from- and sellers know that. A few years ago buyers had to settle for what was available even though the home was not really what they wanted, because of bidding wars and multiple offers. Now buyers can pick and choose and in many cases get more than they thought they would.

• Short sales are an option, don't get hung on them- The number of short sales and foreclosures are climbing. It may be a great opportunity but be prepare to deal with a lot of red tape. The banks take their time to reply. Weeks sometimes months pass by. You must have a company that knows what they are doing when negotiating with banks. We will gladly refer you to one.

Every year, the IRS dutifully reports the most common blunders taxpayers make on their returns. And every year, at or near the top of the list, is forgetting to enter a Social Security number or making a mistake when entering the nine digits that identify us to IRS computers.

Before you bemoan such stupidity, ask yourself a simple question: Is that the most common error? Or just the most easily noticed goof?

Who knows how many people forgot—or never knew about—a deduction that could save them money? That’s not the kind of thing over which government bean counters lose a lot of sleep.

No doubt about it: The opportunity for mistakes is almost unlimited. The most recent numbers show that about 46 million of us itemized deductions on our 1040s—claiming nearly 1 trillion dollars’ worth of deductions. That’s right: $1,000,000,000,000! Another 85 million taxpayers claimed more than half a trillion dollars’ worth of standard deductions. Some of those who took the easy way out probably shortchanged themselves. (If you turned 65 in 2007, remember that you deserve a bigger standard deduction than younger folks.)

Yes, friends, tax time is a dangerous time. It’s all too easy to miss a trick and pay too much. Years ago, the head of the IRS told Kiplinger’s Personal Finance magazine that he figured millions of taxpayers overpaid their taxes every year by overlooking just one of the money-savers listed below. Without further ado, here are our 11 most overlooked tax deductions. Claim them if you deserve them, and cut your tax bill to the bone.

1. State sales taxes. This write-off makes sense primarily for those who live in states that do not impose an income tax. You must choose between deducting state income taxes or state sales taxes and, for most citizens of income-tax states, the income tax deduction usually is a better deal. IRS has tables for residents of states with sales taxes showing how much they can deduct. But the tables aren’t the last word. If you purchased a vehicle, boat or airplane, you get to add the state sales tax you paid to the amount shown in IRS tables for your state, to the extent the sales tax rate you paid doesn’t exceed the state’s general sales tax rate. The same goes for home building materials you purchased. These items are easy to overlook. The IRS even has a calculator on its Web site to help you figure out the deduction, which varies by your state and income level.
   
2. Reinvested dividends. This isn’t really a deduction, but it is a subtraction that can save you money; this is the break former IRS Commissioner Fred Goldberg told Kiplinger’s that lots of taxpayers miss. If, like most investors, you have mutual fund dividends automatically invested in extra shares, remember that each reinvestment increases your “tax basis” in the fund. That, in turn, reduces the taxable capital gain (or increases the tax-saving loss) when you redeem shares. Forgetting to include the reinvested dividends in your basis—which you subtract from the proceeds of sale to pinpoint your gain—means overpaying your tax. TurboTax Premier and Home & Business tax preparation solutions include a very cool tool—Cost Basis Lookup—that will figure your basis for you and make sure you get credit for every dime of reinvested dividends.
   
3. Out-of-pocket charitable contributions. It’s hard to overlook the big charitable gifts you made during the year, by check or payroll deduction. But the little things add up, too, and you can write off out-of-pocket costs you incur while doing good works. Ingredients for casseroles you regularly prepare for a nonprofit organization’s soup kitchen, for example, or the cost of stamps you buy for your school’s fundraiser count as a charitable contribution. If you drove your car for charity in 2007, remember to deduct 14 cents per mile.
   
4. Student loan interest paid by Mom and Dad. Until recently, if parents paid back a student loan incurred by their children, no one got a tax break. To get a deduction, the law held that you had to be both liable for the debt and actually pay it yourself. But now there’s an exception. If Mom and Dad pay back the loan, the IRS treats it as though they gave the money to their child, who then paid the debt. So, a child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by Mom and Dad.
   
5. Moving expense to take first job. Here’s an interesting dichotomy: Job-hunting expenses incurred while looking for your first job are not deductible, but moving expenses to get to that first job are. And you get this write-off even if you don’t itemize. If you moved more than 50 miles, you can deduct the cost of getting yourself and your household goods to the new area, including 20 cents per mile (plus parking fees and tolls) for driving your own car.
   
6. Military reservists’ travel expenses. If you are a member of the National Guard or military reserve, you may deserve a deduction for travel expenses to drills or meetings. To qualify, you must travel more than 100 miles and be away from home overnight. If you qualify, you can deduct the cost of lodging and half the cost of your meals, plus 48.5 cents per mile (and any parking or toll fees) for driving your own car. You get this deduction whether or not you itemize.
   
7. Child care credit. A credit is so much better than a deduction—it reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that’s subject to tax. But it’s easy to overlook the child care credit if you pay your child care bills thorough a reimbursement account at work. Until a few years ago, the child care credit applied to no more than $4,800 of qualifying expenses. The law allows you to run up to $5,000 of such expenses through a tax-favored reimbursement account at work. Now, however, up to $6,000 can qualify for the credit, but the old $5,000 limit still applies to reimbursement accounts. So, if you run the maximum $5,000 through a plan at work but spend more for work-related child care, you can claim the credit on up to an extra $1,000. That would cut your tax bill by at least $200.
   
8. Estate tax on income in respect of a decedent. This sounds complicated, but it can save you a lot of money if you inherited an IRA from someone whose estate was big enough to be subject to the federal estate tax. Basically, you get an income tax deduction for the amount of estate tax paid on the IRA balance. Let’s say you inherited a $100,000 IRA and the fact that the $100,000 was included in your benefactor’s estate added $45,000 to the estate tax bill. As you withdraw the money from the IRA and pay tax on it, you also get to deduct a proportional amount of the estate tax paid. If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized deduction on Schedule A.
   
9. State tax you paid last spring. Did you owe tax when you filed your 2006 state tax return in the spring of 2007? Then remember to include that amount with your state tax deduction on your 2007 return, along with state income taxes withheld from your paychecks or paid via quarterly estimated payments.
   
10. Refinancing points. When you buy a house, you get to deduct points paid to obtain your mortgage in one fell swoop. When you refinance a mortgage, though, you have to deduct the points over the life of the loan. That means 1/30th a year if it’s a 30-year mortgage—that’s $33 a year for each $1,000 of points you paid. Not much, maybe, but don’t throw it away. And, in the year you pay off the loan—because you sell the house or refinance again—you may get to deduct all the as-yet-undeducted points. You do unless you refinance with the same lender. In that case, you add points on the latest deal to the leftovers from the previous refinancing and deduct the expense ratably over the life of the new loan.
    
11. Jury pay paid to employer. Some employers continue to pay employees’ full salary while they are doing their civic duty, but ask that they turn over their jury fees to the corporate treasury. The only problem is that the IRS demands that you report those fees as taxable income. You’ve always had a right to deduct the amount, so you weren’t taxed on money that simply passed through your hands.