Weighing Risk and Reward: Crypto-Investing in Home Equity

By Susanne Dwyer

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For homeowners that are looking to access home equity funds, but don’t want to take out a second loan, a home equity line of credit (HELOC) or a reverse mortgage, there are not many options; however, blockchain technology is looking to change that by offering investment opportunities that are tied to a home’s equity and rising values.

Quantm Real Estate (quantmRE) is a membership-based real estate investment network built on blockchain technology. It allows the primary issuance and secondary trading of investment tokens backed by fractional equity interest in single-family homes. This means that quantmRE invests in a fraction of the home by paying the homeowner a pre-determined amount of money (USD) to later benefit from rising home values when the homeowner decides to sell.

Any funds gained are used by quantmRE to continue investing in single family homes—of which the portion purchased goes into a pool of other equity from other homeowners. The company also invests in non-homeowner occupied single-family homes that are held as investment properties.

“Having to borrow from a bank simply to access the wealth that you have built up in your home is deeply unsatisfactory,” said Matthew Sullivan, CEO and founder of quantmRE, in a statement. “Our ability to digitize the value of a homeowner’s equity and realize the locked-up value will solve a huge problem for homeowners worldwide. It’s time for people to be able to access more affordable homeownership options, flexibility and less financial risk.”

Although the company makes a consistent effort to stay away from the term loan—because the process lacks monthly payments and interest charges—it is, in fact, a type of loan that needs to be paid back. The company does not charge interest, but homeowners are required to pay more than the original sum provided as quantmRE becomes a partner with the owner of the property and is entitled to a fraction of home value gains—a lien is placed on the property to make sure of that.

So, what’s in it for homeowners? At the moment, fast cash without having to worry about monthly payments and a small chance to profit should the property values dramatically increase from the time of investment. Of course, quantmRE funds are on the line if the property doesn’t appreciate; but if it does, homeowners will typically receive less for the sale of their property than if they had not engaged in a shared equity contract in the first place.

The question is, do these blockchain investment properties make out better than the homeowners? That may be the case. QuantmRE will always make its initial investment amount back, and has the chance to profit from home value appreciation. Homeowners, on the other hand, are automatically in debt—a term quantmRE chooses to refuse—and are then on the line for an even larger balance should their home’s value rise.

The pros? Risk of volatility is reduced, as the tokens deal with only real estate assets instead of other less reliable crypto-investments. When it comes to home improvements, quantmRE is not entitled to a fraction of the property value gains earned from these updates. Homeowners can also pay quantmRE before the sale of their home; however, the company may add provisions to ensure they don’t take a loss in the case of unfavorable market conditions. Although quantmRE’s website states that tax consequences are not known until a future date, homeowners should speak to their tax advisors to confirm before participating.

As with most investments, profitability is determined on a case-by-case basis. While this is a chance for homeowners to participate in a blockchain-based investment, they should consult a financial advisor to determine if this is the right choice for them or if traditional equity-funded loans make more financial sense.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

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Prepaid Property Tax Debate Undecided

By Susanne Dwyer

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Just a few days shy from the 2018 tax deadline on April 17, and controversy surrounding the new tax law—the Tax Cuts and Jobs Act—is leaving multitudes of homeowners uncertain about whether they should claim their prepaid property tax deductions. The new law imposes a $10,000 cap on state and local tax write-offs (previously unlimited) for both single filers and married couples, leaving tax consultants and taxpayers searching for ways to make the most of the decreased cap before it takes effect in next year’s filing.

Interpretation of the new law has been varied. The ruling clearly states that state and local income taxes are not eligible for prepayment. With no mention of property taxes, many homeowners rushed to prepay in December; however, on December 27, the IRS released a statement, clarifying that prepaid taxes are only deductible under certain circumstances—homeowners cannot deduct the prepayment for property taxes that have not been assessed prior to 2018.

The IRS provided the following examples:

“Assume County A assesses property tax on July 1, 2017 for the period July 1, 2017-June 30, 2018. On July 31, 2017, County A sends notices to residents notifying them of the assessment and billing the property tax in two installments with the first installment due Sept. 30, 2017 and the second installment due Jan. 31, 2018. Assuming taxpayer has paid the first installment in 2017, the taxpayer may choose to pay the second installment on Dec. 31, 2017 and may claim a deduction for this prepayment on the taxpayer’s 2017 return.”

“County B also assesses and bills its residents for property taxes on July 1, 2017, for the period July 1, 2017-June 30, 2018. County B intends to make the usual assessment in July 2018 for the period July 1, 2018-June 30, 2019; however, because county residents wish to prepay their 2018-2019 property taxes in 2017, County B has revised its computer systems to accept prepayment of property taxes for the 2018-2019 property tax year. Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 tax year until July 1, 2018.”

Not all tax experts agree, and several members of the Ways & Means Committee are petitioning the IRS for higher deductions of reasonable estimates, according to the Wall Street Journal. The issue has not been resolved across the board, but with a low audit risk due to limitations on IRS resources, some taxpayers are urging their tax preparers to claim the deduction without disclosing the write-off on the required IRS form (8275).

“There is no reason to believe that Congress made a mistake in omitting property tax prepayments, and there was certainly no basis for the IRS to substitute its own policy judgements that departs from the act of Congress, especially when the consequence of the IRS’s determination may have cost taxpayers millions of dollars,” states the Ways & Means Committee letter.

Stay tuned to RISMedia for more developments.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

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With Fast-Growing Prices, Gains in Equity Are Exceeding Minimum Wage

By Susanne Dwyer

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For many Americans, homeownership is a vehicle for wealth—an appreciating asset that, more often than not, earns a profit at resale.

In the market today, homeowners are all but promised to reap the rewards. According to an analysis recently released by Zillow, appreciation is so healthy that homes in many markets are producing more than a job for minimum wage would. Although the average homeowner is earning $7.09 in equity for every hour spent at work—16 cents less than the federal minimum wage—homeowners in half of the 50 largest markets are earning more in equity than their local minimum wage. The analysis assumed eight-hour days, or 2,087 hours of work per year.

“As home values continue to rise at a rapid clip, many homeowners have earned more in home equity over the past year than they would have by working a minimum wage job—and in some areas, more than they’d have earned even if they had a job paying a six-figure annual salary,” says Aaron Terrazas, senior economist at Zillow.

The areas earning the most are on the West Coast: San Francisco, San Jose and Seattle. In San Francisco, appreciation has been $60.13 per hour worked; in San Jose, $99.81; and in Seattle, $54.24.

In the 25 largest markets:

“Equity ‘earnings’ are a lot different than the salary typically taken home on the first and fifteenth of each month; it is not money that accumulates directly into a checking account or that can be spent on daily needs,” Terrazas says. “Equity is only available once a homeowner chooses to sell a home, and even then is often subject to various taxes and other expenses. Still, particularly for homeowners that have already or are very close to paying off a mortgage, this supplemental ‘income’—especially if allowed to accumulate over several years—can essentially serve as a kind of second job that pays directly to a homeowner’s bottom line, without nearly as much actual work involved in collecting it.”

For more information, please visit www.zillow.com.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

Nancy Wey
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Home-Selling Can Come With $18,000-Plus Price Tag

By Susanne Dwyer

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Are you a homeowner listing your property for sale? Consider the expenses that are often overlooked by sellers: cleaning costs, moving costs, painting, staging…

“Even in the hottest housing markets in the country, selling a home takes time and costs money,” says Jeremy Wacksman, CMO at Zillow, which assessed the costs that come with listing in the recently released “2018 Hidden Costs of Selling” report.

“From decluttering and staging to pre-inspections, agents and homeowners often spend months behind the scenes prepping a home—well before it’s listed on the market,” Wacksman says. “If you’re planning to sell this year, try to take some time to research what costs you may be responsible for and how they could affect your profit, or even budget for your next house.”

According to the analysis by Zillow, the average homeowner is on the hook for $18,342 when selling, with $4,985 allocated to prep projects and $13,357 going to the agent’s commission and sales taxes. The data was drawn from Thumbtack, which offers quotes for professional services.

Costs differ by market, the analysis found. In San Jose, Calif., where the median price is one million-plus, the average cost to sell is $81,507; in Cleveland, Ohio, where the median price is $137,600, the average cost to sell is $12,986. (Get the complete data for the largest markets.)

Carrying out improvements, though pricey, is worth it, says Lucas Puente, economist at Thumbtack.

“While there could be some initial sticker shock associated with the costs of selling a home, investing in home improvement projects like painting and home staging often proves to be very valuable in the long run,” Puente says. “Homeowners starting to think about selling should take time to research and budget for the projects that can ultimately help sell their home faster and at a higher value.”

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

Nancy Wey
281-455-2893

HQ2: How the Experts Think Amazon’s Decision Will Shake Out

By Susanne Dwyer

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Since Amazon announced its search for a second headquarters site, experts have speculated on what city will become home to HQ2. In January, the company narrowed down its selections to 20. The area Amazon chooses can expect its economy to surge, and, in the housing market, an influx of new residents.

According to experts recently surveyed by Zillow, Atlanta and Northern Virginia are frontrunners. Twelve of the 85 experts who participated in Zillow’s 2018 Home Price Expectations Survey believe affordability, the availability of land and business-friendly incentives are what make Atlanta a prime spot.

Another 12 experts believe that, though costly, Northern Virginia is ideal for its proximity to Washington, D.C. Eleven others chose Austin, nine chose Raleigh and six chose Denver.

Los Angeles, Miami, Newark and New York are the least likely to be selected, according to the experts, chiefly due to congestion, high home prices and lack of incentives.

Whichever city wins, how Amazon has benefitted Seattle—where its current headquarters is located—could indicate how it will impact HQ2’s market.

“As the experience of Seattle suggests, Amazon will not only directly bring thousands of high-paying jobs to the chosen city, but also has the potential to transform the regional economy,” says Aaron Terrazas, senior economist at Zillow. “The local jobs boom that Amazon’s HQ2 promises will spur demand for the full spectrum of housing types, ranging from urban apartments to suburban single-family homes.

“Atlanta has the benefit of being one of the most affordable markets in the country, and is undergoing an urban renaissance with new public infrastructure providing attractive opportunities for employers seeking to lure young urbanites,” Terrazas says. “Northern Virginia has its benefits, as well, as it’s close to a highly educated workforce and a well-developed public transit infrastructure in the D.C. area.”

Amazon’s benefits, however, could come with drawbacks. A boom in the housing market could pressure prices, and more commuters could impact infrastructure.

“The potential economic benefits of hosting Amazon HQ2 are tantalizing, and will tempt the 20 municipalities still in the hunt to dangle significant tax incentives to get a deal done,” says Terry Loebs, founder of Pulsenomics, which conducted the survey with Zillow. “These cities should be prepared not only to justify their financial inducements, but to carefully weigh the social risks and costs that could accompany their HQ2 commitment. The mix and degree of these potential risks, such as diminished affordable housing stock, more congested roadways, and greater income inequality, vary considerably across the 20 markets.”

Amazon announced it would build the headquarters in October. The contenders: Atlanta, Ga.; Austin, Texas; Boston, Mass.; Chicago, Ill.; Columbus, Ohio; Dallas, Texas; Denver, Colo.; Indianapolis, Ind.; Los Angeles, Calif.; Miami, Fla.; Montgomery County, Md.; Nashville, Tenn.; Newark, N.J.; New York, N.Y.; Northern Virginia; Philadelphia, Pa.; Pittsburgh, Pa.; Raleigh, N.C.; Toronto, Canada; and Washington, D.C.

For more information, please visit www.zillow.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

Nancy Wey
281-455-2893

Property Coin: Crypto Investors Looking to Fix and Flip

By Susanne Dwyer

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Is blockchain the future of real estate transactions? So far, only a few contracts have closed through Bitcoin or other forms of cryptocurrency; however, with offerings being introduced, that could quickly change.

Aperture Real Estate Ventures, a real estate technology and investment firm based in Los Angeles, Calif., claims it has launched the first-ever real estate-backed digital currency, Property Coin. Aperture’s model relies on coin proceeds to power its real estate investment business, which focuses on acquiring distressed residential properties and rehabbing them, as well as writing loans to smaller investors who have the same objective.

“Unlike many cryptocurrency offerings, Property Coin’s proposition is straightforward,” said Andrew Jewett, co-CEO of Aperture, in a statement. “One-hundred percent of the net proceeds from sales of Property Coins will be used to invest in properties and loans identified by our proprietary software and our experienced team. Accordingly, Property Coin is designed to be 100-percent backed by real estate assets, giving each coin holder a fractional economic interest in the investments made by Aperture or its affiliates with the net proceeds realized from the sale of Property Coins.”

When buying Property Coins, investors are not only receiving a fractional percentage of assets owned by Property Coin and its entities, but coin holders will also own 50 percent of the net profits from the loan and property investments.

Built on Ethereum—another blockchain-based cryptocurrency not far behind Bitcoin in popularity—Property Coin is completely backed by U.S. real estate assets. Aperture asserts that all investments will be made using the experience of Wall Street and real estate investment professionals while also incorporating industry technology powered by data science.

Property Coin’s public sale began on Feb. 26 for its initial offering at 50 U.S. dollars each, or through the equivalent value of Ethereum or Bitcoin currency. Property Coin purchases are restricted to Accredited Investors who buy at least $1,000 worth of coins.

“We’re very excited to be able to offer this proprietary formula to cryptocurrency investors who want access to a diversified, tech-powered, professionally managed portfolio of real estate assets through Property Coin,” said Matt Miles, co-CEO of Aperture.

Of course, volatility remains an issue with blockchain technology. Aperture is relying on its reinvestment strategy to add token stability and to create renewed interest in the real estate investment market.

Stay tuned to RISMedia for more developments.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

Nancy Wey
281-455-2893

Volatile Market Threatens Retirement Real Estate

By Susanne Dwyer

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The stock market has been on a volatile patch after plunging nearly 1,600 points at the beginning of February—and, while stable now, consumers and investors are watching closely. With many public pension plans tied to stocks, the incoming retirement community is hoping for a full recovery to recoup losses.

Many public pensions have already reported a loss. The California Public Employees’ Retirement System—the largest public pension fund in the nation—lost $18.5 billion in value over 10 trading days at the beginning of the month, according to the Wall Street Journal. While diversifying from traditional stocks and bonds decreases the risk of massive losses during a market drop, investing in alternative assets can introduce complex selling regulations and added fees.

Millions of government workers are relying on these plans, and with various states in a pension shortfall, employees are at risk of losing much-needed funds. The Wall Street Journal reports that most pension funds need to earn between 7-8 percent each year in order to pay for future benefits. According to Kiplinger, a few states are struggling to meet this goal: Illinois, Connecticut and Kentucky need to recover half of their estimated liabilities. In order to meet these objectives, hired firms are setting aggressive investment targets, which can potentially fund these accounts at a quicker pace, or may cause a steep fall-off, depending on stock market activity.

While most pension plans do not provide enough funds to financially carry an individual through their retirement, for many, they are the primary benefit they will rely on. For 30 percent of public-sector workers in 12 states, Social Security is not an option, according to CNN Money. The inability to control which assets their employer’s hired firm decides to invest in can be frightening for soon-to-be retirees who are watching funds diminish in the wake of this month’s market downturn.

What does this mean for real estate?

Future retirees, for one, may not have as many options when it comes to housing and paying off existing mortgages. Retirement-aged consumers who owe on their mortgage and do not receive the necessary funds to pay their debt, in addition to living expenses, may find themselves in a difficult situation. Individuals that were initially planning on downsizing and/or investing in a vacation property may find they need to refinance or risk losing their home to foreclosure or bankruptcy. These public pension plans in relation to stock market activity may also prompt homeowners to stay in their homes and at their jobs longer to secure more funds and ensure a financially safe future. With less downsizing, market inventory may be affected, creating shortages for move-up buyers.

With pension funds dwindling, the Public Pension Project—created by the Urban Institute’s Program on Retirement Policy and State and Local Finance Initiative—is working toward reform by examining current public pension trends and activity throughout the U.S. A State of Retirement map compiles this data to present detailed state-by-state information on plan rules.

Firms are adapting to the volatile market, selling off stocks and diversifying where needed, but only time will tell if these are sound investment decisions that will provide enough funds for the millions of Americans that need this income for their retirement and future real estate needs.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

Nancy Wey
281-455-2893

Buyers Entering the Market Solo Struggle

By Susanne Dwyer

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Accumulating a down payment is a struggle—and even more so for singles, according to a new report.

Singles are facing more than 10 years of saving, assuming they make a 20 percent down payment on a median-priced property, an analysis by Zillow reveals. Conversely, couples can do it in half the time: 4.6 years.

In addition, buyers have limited options when solo: 45 percent of inventory, compared to couples, who can afford 82 percent of supply.

“Nearly two-thirds of Americans agree that buying a home is a central part of living the American Dream, but for unmarried or un-partnered Americans, that dream is increasingly out of reach,” says Aaron Terrazas, senior economist at Zillow. “Single buyers typically have more limited budgets, which means they are likely competing for lower-priced homes that are in high demand. Having two incomes allows buyers to compete in higher-priced tiers where competition is not as stiff.”

The challenge is intensified in markets with rising values, the report shows. Couples face 14 years of saving in San Jose, Calif.—already a haul—but for singles, that span stretches over 30 years. In San Francisco, Calif., couples can amass enough for 20 percent down in 12.6 years, but singles have a longer road, at 27.8 years.

A handful of markets are more realistic for singles: Indianapolis, Ind. (7.5 years of saving); Cleveland, Ohio, and Detroit, Mich. (8 years); and St. Louis, Mo., and Pittsburgh, Pa. (8.1 years).

Across the largest metros:

Analysts assumed buyers are portioning off 10 percent of their income each year to savings. According to 2016 Census data, annual earnings were a median $80,800 for couples and $34,500 for singles.

For more information, please visit www.zillow.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

Nancy Wey
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Home Laundry: To Vent or Not to Vent

By Susanne Dwyer

I once believed it was a forgone conclusion that when adding certain laundry appliances to a home, it would mean installing exhaust ducting and cutting a hole to the outside for venting.

However, a recent report from Michele Weaver at Design Basics, LLC highlighted a growing trend in ventless dryers that can be easily located and relocated within a home because vent piping, exhaust holes and venting to the outside are not needed.

The mechanics of a home dryer can cause energy and safety problems if lint becomes trapped in the vent. This demands more energy use and frequent cleaning. Weaver believes one of the major trends consumers will be seeing in these key appliances will be the further refinement of ductless technology.

She says vent hoses snaking through a home’s framing have become a leading cause of the 2,900 (average) home clothes dryer fires reported annually, according to the U.S. Fire Administration.

J.D. Wollf at HomeSteady.com recently explained that a ventless or condenser dryer— also known as a Heat Pump Clothes Dryer (HPCD)—doesn’t need a vent because instead of expelling the hot, moist air, a heat exchanger removes the moisture from the hot air and “recycles” it, passing it back through the drying clothes. The excess water is then drained away or caught in a container that is later emptied.

The trade-off for energy savings and safety is a requirement for slightly more maintenance than vented dryers. Wollf says the condensing unit must be cleaned about once a month to remove any lint.

A study at the Florida Solar Energy Center at the University of Central Florida states that while an unvented HPCD uses less electricity than a standard resistance dryer, it was found to release significantly more heat than a conventional dryer during operation, demanding additional cooling energy that may compromise overall savings.

However, the study points out that with a current retail cost of $948, there is only a small premium on the HPCD dryers, making them cost-effective when chosen at time of replacement.

For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

Nancy Wey
281-455-2893

Infographic: How Recent Buyers Purchased Their Home

By Susanne Dwyer

Demand and home prices are increasing, but that has yet to keep homebuyers out of the market. Here is how they did it:

For more information, please visit www.nar.realtor.

For the latest real estate news and trends, bookmark RISMedia.com.

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From: Consumer News and Advice

    

Remember I am just a phone call away to help with all of your real estate needs!

Nancy Wey
281-455-2893