Three waves in the next Real Estate market shift

The next Real Estate market shift is Imminent.

What will this market shift look like?

The next real estate market shift in the residential sector will come in three different waves, so PREPARE yourself now.

The first wave will be people losing their houses after their forbearance has ended through the beginning of the foreclosure process.

With homeowners losing their jobs or being furloughed, their income has been reduced or eliminated because of the Covid19 pandemic.

The second wave will be a huge increase in the number of foreclosures being called out on the courthouse steps of each county in America.  These “call outs” are religiously done on the first Tuesday of each month.

The third wave will be vacant homes all throughout the country.  These homes have now been foreclosed upon and now sit empty.  Drive through any neighborhood USA and you will see home after beautiful home just sitting empty.  This third wave will be where many folks will finally try to “catch up” and at this point, it will already be almost too late.

What can we do now to prepare for these imminent waves?

Wave 1 of 3

Wave one will be people desperately trying to stop the foreclosure of their property. Initially there will be noticeable signage all over town saying “I stop foreclosures”. These organizations (or investors) can and do prevent and stop foreclosures through a process called “Subject to”.

Let’s explain how it works in a little more detail:

The homeowner falls behind with his mortgage and cannot catch up and the homeowner starts receiving strongly written letters indicating foreclosure is imminent.  These organizations then catch the arrearage payments for the homeowner and take possession of the home through a Quit Claim Deed.  Many times the investor may allow the homeowner to remain in the property and assist with making improvements on the property during that time.

Once the improvements are completed, the investor will usually rent the property out. This prevents the foreclosure on the home and maintains the homeowners mortgage payment history from negative impact that a foreclosure would cause.

Wave 2 of 3

The second wave is what is called the actual foreclosure process.   For example, in the state of Georgia from start to finish is approximately eight months.  Basically, from the time that the first mortgage payment is missed to the property being foreclosed on the courthouse steps is a very long and arduous eight months. The attorney that processes the (foreclosure) closing on the property represents the mortgage company that has been defaulted upon. It is normally a sixteen (16) step process to go through all the way through to the courthouse steps. There are two possible outcomes if the homeowner has not filed for bankruptcy during the foreclosure process or caught up the arrears mortgage payments prior to the foreclosure. If the homeowner has not done one of those two things then the property will be “called out” on the county courthouse steps that next first Tuesday of the month.

The “called out” process will end in one of two ways.  Either the property is purchased by the highest bidder on the courthouse steps or nobody bids high enough to satisfy the mortgage company and the mortgage company keeps it, which takes us to the third wave.

Wave 3 of 3

What happens if the property is not or does not change hands at the foreclosure process on the courthouse steps?  If the property is not sold on the courthouse steps then the mortgage company or lender keeps the property and puts it on the market for sale. This is what the general public typically sees or talks about or remembers when they think of the foreclosure crisis. Houses all over town in every subdivision with for sale signs that are vacant (and most of the time in disrepair) and end up selling below the values of typical houses in that subdivision which lowers values and equity for homeowners within that same subdivision.

If you’re an investor in residential real estate you can take advantage in these investments in either of the three waves mentioned:

Obtaining property through Wave 1:

After catching up the arearage you then obtain ownership through a Quit Claim Deed.  This is typically called the “subject to” process.

Obtaining property through Wave 2:

When the mortgage company or lender presents the property at the courthouse steps, which is typically called the “call out”, you bring either cashiers checks or cash.  You then obtain ownership through a Quit Claim Deed.

Obtaining property through Wave 3:

Obviously, the final way to obtain the ownership is when the foreclosure has actually occured and you can then buy the property directly from an REO (Real Estate Owned) agent.  This is the listing agent that represents the mortgage company or lender.

 

These three ways are exactly how investors made a lot of money during the last foreclosure crisis. Obviously, we are hopeful that we could have sustained the booming real estate market that we have all experienced prior to Covid19, however it doesn’t look good at this point.

Either prepare yourself for these three waves or depend on our expertise to get you through it.

Either as an investor or a current homeowner.  Being educated in the forefront of a crisis is the key to getting through it successfully.

Reggie Moon

Broker of Eclipse USA Realty

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Are Annuities Taxable?

The answer is complicated (but generally, yes they are)

Let’s assume that you have already done your research on the workings of an Annuity and you are almost convinced that it is a good investment for you and your future plans.  Now, let’s consider if the taxability of this product is what you are looking for.

First, if you purchase an annuity with pre-tax dollars, payments from the annuity are fully taxable as income. But, if you buy an annuity with after-tax funds, you are required to pay taxes only on the earnings (ie, profit).  Annuities offer tax-deferred growth, which means taxes on annuities are not due until you withdraw money from the annuity.  One of the main tax advantages of annuities is they allow investments to grow tax-free until the funds are withdrawn.  This includes dividends, interest and capital gains, all of which may be fully reinvested while they remain in the annuity.  This allows your investment to grow without being reduced by tax payments.

But this seemingly simple perk is accompanied by a raft of complicated rules about what funds are taxed, how they are taxed and when they are taxed.

Because of the complexity, it is best to consult with a tax professional when purchasing an annuity and before withdrawing any funds.

Are Annuities Taxable?

Annuities are tax deferred.  But that does not mean they are a way to avoid taxes completely.  What this means is taxes are not due until you receive income payments from your annuity.  Withdrawals and lump sum distributions from an annuity are taxed as ordinary income.  They do not receive the benefit of being taxed as capital gains.

How are Annuities Taxed?

When it comes to taxes, the most important piece of information about your annuity is whether it is held in a qualified or non-qualified account. Remember, qualified is that the taxes are behind the tax wall and are allowed by IRS to be deferred.  Non-qualified means that the taxes have already been paid. In this case, the earnings (or profits) are taxable.

Qualified Annuity Taxation

If an annuity is funded with money on which no taxes have been previously paid, then it is considered a qualified annuity.  Typically, these annuities are funded with money from 401ks or other tax-deferred retirement accounts, such as IRAs.

When you receive payments from a qualified annuity, those payments are fully taxable as income.  That is because no taxes have been paid on that money.

But annuities purchased with a Roth IRA or Roth 401k are completely tax free if certain requirements are met.

Non-Qualified Annuity Taxation

If the annuity was purchased with after-tax funds, then it is non-qualifed.  Non-qualifed annuities require tax payments on only the earnings (or profits).

The amount of taxes on non-qualifed annuities is determined by something called the exclusion ratio.  The exclusion ratio is used to determine what percentage of annuity income payments is taxable and which is not.  The idea is to determine the amount of a withdrawal or payment from an annuity is from the already-taxed principal and how much is considered taxable earnings.

The exclusion ratio involves the principal that was used to purchase the annuity, the amount of time the annuity has existed and the interest earnings.

If an annuitant lives longer than his or her actuarial life expectancy, any annuity payments received after that age are fully taxable.

That is because the exclusion ratio is calculated to spread principal withdrawals over the annuitant’s life expectancy.  Once all the principal has been accounted for, any remaining income payments or withdrawals are considered to be from earnings.

Exclusion Ratio Example

  • Your life expectancy is 10 years at retirement.
  • You have an annuity purchased for $40,000 with after-tax money.
  • Annual payments of $4,000 – 10 percent of your original investment – is non-taxable.
  • You live longer than 10 years.
  • The money you receive beyond that 10-year-life expectation will be taxed as income.

Annuity Withdrawal Taxation

How and when you withdraw funds from your annuity also affects your tax bill.

In general, if you take money out of your annuity before your turn 59 ½, you may owe a 10 percent penalty on the taxable portion of the withdrawal.

After that age, if you take your withdrawal as a lump sum, you have to pay income taxes that year on the entire taxable portion of the funds.  If money is left in your annuity account, the IRS considers the first and subsequent withdrawals to be interest and subject to taxes.

Annuity Payout Taxation

According to the General Rule for Pensions and Annuities by the Internal Revenue Service as a general rule each monthly annuity income payment from a non-qualified plan is made up of two parts.  The tax-free part is considered the return of your net cost for purchasing the annuity.  The rest is the taxable balance, or the earnings.

When you receive income payments from your annuity, as opposed to withdrawals, the idea is to evenly divide the principal amount – and its tax exclusions – out over the expected number of payments. The rest of the amount in each payment is considered earnings subject to income taxes.

Inherited Annuity Taxation

If you are the beneficiary and inherit an annuity, the same tax rules apply.  The main rule about taxation with an inherited annuity or one that is purchased is that any principal that is funded with money that was already subject to taxes will not be taxed.  Principal that was not taxed and earnings will be subject to taxation as income.  The amount of previously taxed principal included in each annuity income payment is considered excluded from federal income tax requirements.  This is known as the exclusion amount.

In Summary

If you just take the opinion of Mom, Dad, Gramma, Uncle Joe, Preacher Mike, Mr. Ramsey, Mr. Howard or even simply the Web then you are not making the best, most educated decision.  Do your due diligence and ensure that you talk to an industry professional.  What happens if Uncle Joe tells you what happened to him 30 years ago and you should “never invest in one of those annuity things”. Well, first of all what is his profession and how old was the product he purchased at that time.  Could things have changed in those years?  How about being at a family reunion and Gramma tells you that she just heard Mr. Howard talking about how some people lost money when they annuities a few years ago.  Even though you love Gramma, is she a financial professional with current experience and education.  So, in summary, annuities can be taxable in the right situation.  This is definitely something that you need to have reviewed by your Financial Professional.  Best of luck on your investment.

It’s time for a Digital Lifestyle

It’s time for a Digital Lifestyle

When the baby boomers were born, there were 45 workers for every retiree collecting social security. Now it is less than 3 to 1, an unsustainable ratio that calls the future of social security into question.

Though pensions were declining before the Great Recession, the corporate world has now all but abandoned them. Colliding with the economic devastation is the other transformational event.

Advances in medicine, nutrition and technology have stretched the average human lifespan beyond 75 years, adding an additional two decades or more. Baby boomers and following generations can now expect to live well into their 80’s, 90’s or longer. Seemingly a blessing, this new expectation poses a terrifying threat – the likelihood of going broke in old age.

61% of people are more afraid of outliving their money than dying. An unstable economy. An unreliable market. The collapse of the old retirement model. The financial burdens of a longer life. It is the end of wealth and retirement as you know it, and with it, a new beginning.

Yesterday’s financial models may be gone, but prosperity in our nation is far from over. The realities challenging today’s generations have triggered an unprecedented wave of financial activity, with billions of dollars and millions of people on the move. This wealth wave has ushered in the greatest economic story of our time.

The leaders of the financial industry will position themselves to serve baby boomers, Generation X and millennials by redefining how wealth is built and how people can thrive after 65.

Tens of thousands of new financial professionals are needed at a time when their ranks are ageing and their numbers are diminishing. Someone must respond to this critical need with a new wave of financial professionals for the future. That someone, that wave, is us.

We are responding to this crisis with our biggest expansion in three decades. Only four states in the US offer a financial education in public schools. Our nation has paid the price. We offer an unparalleled financial education to those who have never been exposed to such essential concepts as The Rule of 72, The power of compound interest and the impact of losses and taxes.

We give families a safety-first approach by helping them protect their income and their future with financial vehicles designed for the realities of today. Our associates present families with insurance products that have evolved to offer a wide array of benefits, like tax-free income and long term care protection.

We provide a world class wealth management platform that offers everyday investors a financial game changer, access to active management strategies that were once only available to the very wealthy. And finally – and perhaps most importantly – we open the doors for anyone, regardless of their age or experience, to become part of the wealth wave by building their own financial services business.

Behind our team is a world class financial organization. Their entry-level leaders, many part time, with full licensing average $80,000 per year in earnings, with the highest exceeding $640,000. Associates at our top executive positions are averaging almost $900,000 annually, with the highest earning over 7 million dollars this year alone.

Our business is an entrepreneurial opportunity with no boss, no salary caps, no required work hours, no layoffs and no limits on how much you can earn or how fast you can grow. You can earn more income from your own efforts and from those of your team and you can earn income from products that produce first year and recurring revenue.

It is a business that can give you the three things you may have thought you’d lost forever. The chance to make a difference, the opportunity to build personal wealth and the hope that your later years will be lived on your terms.

Regardless of your age or experience, this could be the right business at the right time for you. Few opportunities give you the support of some of the financial industries’ strongest and most recognizable names. Put your company’s history, experience and reputation behind you and become part of a championship team.

In this new frontier of wealth and retirement – baby boomers, Generation X and millennials all around you need a financial professional with a way forward.

Why not let it be YOU!

Covid19 Happened After You Planned 2020

Rewrite Your Business Process for the Next 90 Days

These current Covid 19 times have really stopped all of us small business owners in our tracks.  We had to throw out the business plan we just did at the first of the year and start all over.

Here are some practical TIPS to implement for success.

1.Take Your Meds! 

I don’t mean prescription drugs!  You have heard the saying “put the oxygen mask on you first, then you can help others.”  Well that is what taking your MEDS is about.  It is a metaphor for meditate, exercise, diet and sleep.  These are key to our overall health and wellness and staying on track for long term success in life.

Meditate – we are in a high stress environment and situations with all of our social and business changes.  Meditate, pray, breathe … create space where you can unplug and have quite time to clear your mind.  Take time to set the tone for the day or remove all the negative energy or to simply calm your thoughts and prepare for the day or end the day if needed.

Exercise – it could be getting in your 10K ‘steps’ for the day and for some of you it could mean your thirty minutes to an hour of a good solid work out routine.  Some are doing virtual exercise groups.  Wherever you are in your exercise journey, make sure you are creating time an a routine to fit in a healthy exercise routine.

Diet – we are what we eat! Make sure you are eating for energy.  Research options to make sure you are feeding energy to your mind and body.

Sleep – studies tell us that 7+ hours of sleep allow the mind to detox and wash out and to be ready for the next day!  We should all do the best we can to take care of ourselves.  Don’t be that person that becomes the energy-sucking vampire.

  1. Make Sure Your Finances Are In Order!

This is part of the safety equation, too.  Make sure you are getting the facts and truth.  Scrub your expenses hard and fast if you haven’t already and make sure you are working with a P&L.   Talk to your CPA or Financial Professional.

  1. Keep Your Business Moving Forward!

That means yes you can continue to market BUT with the right tone and messaging.  Plan out what you will do over the next 30 to 90 days.  What videos you would like to do?  What emails are you going to send?  What marketing campaigns are you going to implement?  No matter what you decide in form of marketing just make sure you are sharing the right tone and message.   If you have billboards make sure you update them to say #WeCare.  Support your local community and make it meaningful.  You don’t have to stop your marketing, simply make it meaningful.  If things are still a little somber in your area, then launching out with a ‘party like’ tone will not be received very well.  Take things seriously and make sure you are matching your message to the right tone needed.  If people are still scrambling for work and still in a social distancing requirement, address your audience accordingly.

  1. Go Virtual!

You have adapted by now to the virtual arena, I hope! Skype, Zoom, Google hangouts, etc.  Embrace it and get comfortable with it.  It will be here to stay.  I don’t believe we will go back to the way it was after this.  Many businesses have had to adapt to the work from home and virtual systems.  There are many cost savings and ease of conducting business involved that make this advantageous.

Tony Robbins says there are always two kinds of people:  Those that BLAME the resources and those that ARE resourceful!  Which are you?  Are you coming from a fixed mindset or a growth mindset?  People in the past would resist doing videos and now everyone is doing it! Those that adapt to change are the ones that survive and thrive.

  1. Load The Cannon!

Yes, you generate leads in this environment.  How are you educating people today?  How are you staying up on your industry trends and ever-changing market conditions?  Plan how you will nurture your leads.  Check in to see how people are doing.  Show compassion and empathy.  If business comes out of it, that’s great but at least you kept the relationships alive and current.

  1. Sharpen Your Axe!

Especially if your area is still practicing social distancing, you can take some time to sharpen your skills.  Do you need to upgrade your tech skills, your negotiation skills, and marketing skills?  Now’s the time!

  1. Adjust Your Tone!

Have you double-checked the automated systems that are sending out messages and emails to make sure you have updated those messages to match the tone needed now?  Make sure you are relevant and current.

 

So you had big plans for 2020?!  Then Covid 19 happened.  Well, time to revamp, restructure and rewrite.    If you have more tips to add, please share them.  All of us small business owners need to pull together and help each other now more than ever!  Here’s hoping these tips have helped.