National Snapshot: What’s Ahead for Real Estate

The U.S. unemployment rate is at a 50-year low, and consumer confidence remains high. In fact, the University of Michigan’s latest Surveys of Consumers found that Americans have their most positive personal finance outlook since 2003.1

However, if you follow national news, you’ve probably heard speculation that we could be headed toward a recession. Global trade tensions and a slow down in the GDP growth rate has sparked volatility in the stock market, leading to economic uncertainty.

Over Time, Real Estate Pays Off

Over Time, Real Estate Pays Off

Given these differing signals, you may be wondering: How has the U.S. housing market been impacted? Where is it headed? And more importantly … what does it mean for me?

 

MORTGAGE RATES ARE NEAR HISTORIC LOWS

In August, Freddie Mac reported that the average 30-year fixed mortgage rate hit its lowest level since November 2016, falling to 3.6%, down a full percentage point from a year earlier.2 Variable mortgage rates also fell when the Federal Reserve cut interest rates at the end of July for the first time since 2008.3

This was welcome news for many in the real estate industry. Freddie Mac predicts that low interest rates and a robust job market will help the housing market remain strong despite the threat of recession. 

“There is a tug of war in the financial markets between weaker business sentiment and consumer sentiment,” said Sam Khater, Freddie Mac’s chief economist. “Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall.”2

 

What does it mean for you?

If you’re looking to buy a home, now is a great time to lock in a low mortgage rate. It will shrink your monthly payment and could save you a bundle over the long term. Or if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today’s lower rates.

 

PRICES CONTINUE TO RISE AT A MODEST PACE

According to the S&P CoreLogic Case-Shiller Indices, housing prices continue to rise. But the rate at which prices are rising is slowing down. For May 2019, the National Home Price Index rose by 3.4%, down from 3.5% the previous month.4

Of course, national averages often don’t present the whole picture. Some markets have seen modest declines, while other areas are witnessing double-digit increases. The key differentiating factor in most cases? Housing affordability.5

Since 2012, home prices have increased at about three times the pace of wages, according to National Association of Realtors chief economist Lawrence Yun.6

“Housing unaffordability will hinder sales irrespective of the local job market conditions,” said Yun. “This is evident in the very expensive markets as home prices are either topping off or slightly falling.”5

But what about all this talk of a recession? Will we see housing values plummet like they did in 2008? Economists say no.

If we look at history, the real estate crash experienced during the Great Recession isn’t typical.

The recent Housing and Mortgage Market Review report from Arch Mortgage Insurance provides data to support this. “What we found is that the next recession is likely to be far less severe on the housing market than the last one. It’s not that this time is different; it’s that last time was really different from historic norms.”6

“A large decline in national home prices is unlikely in the next recession,” Arch economists write. “A persistent housing shortage should help cushion home price declines.”6

 

What does it mean for you?

If you have the ability and desire to buy a home now, don’t let the threat of a recession hold you in limbo. The market is cyclical, and it will experience ups and downs. But over the long term, real estate has consistently proven to be a good investment.

  

STARTER INVENTORY REMAINS TIGHT WHILE LUXURY MARKET SOFTENS

As we’ve seen in the past, it’s become a tale of two sectors.

The low-end of the market remains highly competitive as buyers compete for affordable housing. A lack of new construction during the last recession led to an undersupply of starter homes. This trend continues—despite growing demand—due to a lack of skilled workers, rising land and material costs, and a slow permitting process in many areas.7

The result? There’s a shortage of homes for sale that Americans can actually afford to buy.

The luxury market, on the other hand, has softened. Economic uncertainty, changes to tax laws, and rising prices have slowed demand. Plus, to recoup their higher costs, builders flocked to this segment—causing an overabundance of supply in some areas.

“If you're selling an entry level home, you're probably still looking at a pretty competitive market in most places,” according to Danielle Hale, chief economist at Realtor.com. “But if you're selling a more expensive home you probably have to adjust your expectations.”8

 

What does it mean for you?

Move-up buyers, you’re in luck! If you’re ready to trade in your starter home for something more luxurious, you may get the best of both sectors. We’re still witnessing strong demand for entry-level homes, giving sellers the upper hand. At the same time, buyers of high-end homes are finding a greater selection (and more negotiating power) than they’ve had in years.

 

INVESTORS ARE BUYING HOMES AT RECORD LEVELS

There’s one group that hasn’t been slowed down by lack of affordability or economic uncertainty: investors.

According to CoreLogic, investors are purchasing homes at a record pace. In 2018, the share of U.S. homes bought by investors reached 11.3%—the highest level since the company began tracking nearly 20 years ago.9

Notably, this increased activity wasn’t led by institutional investors, but instead by small and individual investors focused on the starter-home segment.7 Declining interest rates and an uncertain stock market has led investors to flock to real estate as they seek out greater stability and higher returns.

“With declining mortgage rates … they’re searching for a better return for their money,” said NAR chief economist Lawrence Yun.10

 

What does it mean for you?

If you’re looking for a way to “recession proof” your money, you might want to consider investing in real estate. People will always need a place to live, and (unlike the stock market) a rental property can provide a steady source of cash flow during uncertain economic times.

 

WE’RE HERE TO GUIDE YOU

While national real estate numbers can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood. 

If you have specific questions or would like more information about how market changes could affect you, contact us to schedule a free consultation. We’re here to help you navigate this shifting real estate landscape.

 

Sources:

  1. University of Michigan Surveys of Consumers - http://www.sca.isr.umich.edu/

  2. Freddie Mac - https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-drop-significantly?_ga=2.29332539.689041222.1565464527-928629548.1565464527

  3. CNN - https://www.cnn.com/2019/07/31/business/fed-rate-cut-july-meeting/index.html

  4. S&P Dow Jones Indices - https://us.spindices.com/documents/indexnews/announcements/20190730-965771/965771_cshomeprice-release-0730.pdf?force_download=true

  5. National Association of Realtors - https://www.nar.realtor/newsroom/metro-home-prices-increase-in-91-of-metro-areas-in-second-quarter-of-2019

  6. Forbes - https://www.forbes.com/sites/alyyale/2019/04/18/with-a-recession-looming-is-now-the-time-to-sell-your-home/#7d3a21665bce

  7. CNN - https://www.cnn.com/2019/08/09/economy/mortgages-home-buyers/index.html

  8. Forbes - https://www.forbes.com/sites/carolinefeeney/2019/07/01/halfway-into-2019-how-is-the-housing-market-holding-up/#7e656e3ec5d8

  9. CoreLogic - https://www.corelogic.com/blog/2019/06/special-report-investor-home-buying.aspx

  10. Fox Business - https://www.foxbusiness.com/economy/investors-snapping-up-homes-at-record-levels

2019 Mid-Year Omaha Market Summary

The Omaha Real Estate Market remains very competitive, but a slowdown may be looming.  After a peak of sales volume, the national Real Estate market has steadily declined in volume and units sold.  Reviewing the 2019 Mid-Year Summary of the Omaha Area Real Estate Market may give us a prediction of what to expect for the rest of 2019 and beyond.

The first indicator of a slowdown is the overall volume that is trending downward.  Sales volume has been lower than the previous 3 years every month except February in 2019.  Overall sales are down almost 10% this year and are expected to continue to underperform the rest of 2019.

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The average price points in Omaha have been inching higher recently. Most of the sales continue to be in the $100,000-$250,000. Home price inflation and lack of inventory have resulted in the $250,000-$500,000 range growing while the $500,000+ range continues to plummet.

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One of the driving factors for lower sales volume despite higher prices has been the lack of development and new construction in the largest buyer markets. High labor, material, and land costs have prevented builders from constructing homes below $250,000 in the Omaha area.

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As you can see below, the median New Construction price is almost $364,000 while the median existing price is under $220,000. This $143,000 gap represents the biggest need for Omaha home buyers, yet new construction continues to build homes way above the average home can afford.

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I am not sure what the solution will be, but we are headed for a major correction in our market soon.  How big and long this upcoming downturn will last depends on our ability meet the needs of home buyers in a price point they can afford.  Stay tuned to see how the market goes this Fall, but it still is a great tome to buy & sell a home in the Omaha area.

Welcome to July: The Pivot

Why does the real estate market begin to change in July? Check out this video for ways in which you will see a Pivot in the second half of 2019. #TeamBober #NebraskaRealty

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Nick Zwiebel 100% Flood Financing

Since Nebraska & Iowa have been declared disaster areas by the Federal government, residents displaced by the recent flooding may qualify for 100% financing to help them recover. Call Nick Zwiebel at 402.301.7098 for more information about 100% Flood Financing.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Knowing the Numbers: Absorption Rate

Absorption Rate and Why you should know it when buying or selling a home. The Absorption Rate is how fast homes are selling in a defined market. Measured inn months, it's basically how long it would take to sell all the available properties given the speed of the market. Knowing your absorption rate allows you to win in any market whether buying or selling. Call Team Bober to learn the absorption rate for your home or desired market. #Team Bober #NebraskaRealty

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Mustaches 4 Kids

See the video below for a way to help me raise money for Mustaches 4 Kids benefiting Angels Among Us!

#TeamBober #NebraskaRealty

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

The Mid-April Market and Why Pricing Matters

What is REALLY going on in this Spring Real Estate market? Check out the video below for some relavent, accurate information regarding the current market, and why pricing REALLY matters as a strategy when it comes to selling real estate.

#TeamBober #NebraskaRealty

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Winning in Today’s Crazy Real Estate Market

What are some of the biggest challenges when buying and selling a home simultaneously? Take a look at this video that explains some of the issues you may run into when it comes to buying/selling at the same time, and how your Realtor can help you find solutions to those issues.

#TeamBober #NebraskaRealty

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

2019 Real Estate: A Tale of Two Markets

We are facing a diverse Real Estate market in 2019 that requires diverse skills from your Realtor. Check out our take on how this might affect you. #TeamBober #NebraskaRealty

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Marinated Venison Backstrap Steaks

I Love Venison! We are still enjoying the fruits of our harvest from last year’s Nebraska Rifle Deer Season. Here’s my favorite Venison Recipe using the Backstraps. Venison cannot be cooked exactly like beef because it is too lean and will come out dry and tough if not cooked properly. The ideal internal temperatures should be between 130 degrees F to 140 degrees F. For steaks, a quick sear on a grill (or a cast iron pan) set at high heat is all you need. Remember venison has a nice, sweet flavor that is easy to ruin. So be gentle with it and follow this simple recipe and watch my tips so you can fully enjoy.

Ingredients:

• 1/4 Cup olive oil
• 1 Fresh squeezed lemon juice
• 1/4 cup Worcestershire Sauce
• 1/4 cup Soy Sauce
• 2 teaspoon Minced Fresh Garlic
• 1/2 teaspoon ground pepper
• 1-1 ½ lb. package venison steak

1. Mix all marinade ingredients together in a small bowl.
2. Place venison steaks in a large zip lock bag.
3. Pour marinade over steaks and seal bag.
4. Place bag flat so that the steaks are in a single layer.
5. Refrigerate for 4-8 hours, turning every half hour to marinate each side.
6. Drain marinade and grill steaks to desired doneness (3-4 minutes each side).
7. I double or triple this recipe for each addition package of steak. Any wild game meat can be used in this recipe.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

The Cost of Selling Your Home: Repairs

What are some of the costs associated with selling your home, if the home hasn’t been properly prepared for sale? At this point, you may run into several repair costs, which often leads to “regret” costs. This video includes installments 3 and 4 of a 4-part series discussing the all-around costs that go into selling your home.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

The Benefit of Preparing Your Home for Sale

What steps should you take if you want to get the most out of your home sale? Take a look at this video, the 2nd in a 4-part series of videos, for ways you can maximize your ROI in preparation of selling your home.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

What’s the Cost of Selling My House?

Have you ever wondered what all goes into the cost of selling your home? Watch the video below (the first in a 4-part series) for insight as to what needs to be considered when selling your house.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

2018 Omaha Real Estate Stats

What did the Real Estate market bring to the city of Omaha during 2018? Has the market made a shift? See the video below to find out some statistics of the Omaha Real Estate market during 2018.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Tips for Buying and/or Selling During the Holidays

Are the winter months a good time to buy or sell a house? See the video below for reasons why RIGHT NOW is a great time for buying and/or selling a home!

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Team Bober Thanksgiving Pie Party 2018

On November 20, 2018, Team Bober invited clients and friends to come to Nebraska Realty and receive a free pie for the holidays, in appreciation for their business and referrals. See the video below for the party highlights and the fun had by all!

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

The American Dream!

Meet Dov, our painter who helps our clients make great decisions about painting. Listen to his story about how he Immigrated to the USA just 5 years ago and now owns his own business. #TeamBober #NebraskaRealty

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Tax Reform and How it Affects Home Ownership

I sat down with Heidi Kelly of Verdant Group and talked about Tax Reform and how it’s going to affect Home Ownership. Check it out! #TeamBober #NebraskaRealty

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

The New Paradigm for Buying Real Estate

There’s a paradigm shift in the real estate market! See the video below to find out what buyers can do to maximize their buying potential.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

The Benefits of Buying Right Now!

Have you been on the sidelines waiting for the market to cool before buying? Check out the video below for reasons why you should buy RIGHT NOW!

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

August 2018 Real Estate Stats

The August 2018 Stats are in: The market is changing! Wanna know how it affects you? See the video below!

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

The Cost of Waiting to Move

Are you on the fence about selling your home right now?  See the video below for reasons why you shouldn't wait to make the move!

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

2018 Mid Year Review

Is this out of control sellers' market finally about to shift?  Check out the video below for some important information regarding the housing market for the first half of 2018.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

2018 First Half Real Estate Stats, and What They Mean

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, Investing, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Best Breakfast Burritos Ever!

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Best Breakfast Burritos Ever!

Here is the recipe I use to make the Best Breakfast Burritos Ever!  I learned it from my buddy Jim who graciously shared it with me years ago.  It takes several hours to prepare, but I promise the result is worth the effort and time invested. 

Step 1 - Make the green chili

Cube a 5lb pork butt/shoulder and put it into a stock pot. Fill the pot with water to cover the meat.  Boil the meat until done. Be sure to skim the fat off the top of the water. Once the meat is boiled strain the meat from the liquid, but save the water.  In another pot, make a roux. Here is a link about how to make a roux: http://dish.allrecipes.com/how-to-make-roux/.  Once it is a caramel color, place the boiled meat in the roux and make sure the meat is covered.  Once the meat is covered put about 2 cups of the pork broth into the meat.  Next dump in 1 jar of your favorite green salsa.  From there add pork broth, salsa, and salt to taste. I like a medium runny chili consistency. 

Step 2 – Make the Filling  

Cook up about 1lb of sausage, place in a large bowl. I use our homemade Polish sausage, but you can use Jimmy Dean
Cook up 1 to 2 pounds of bacon (crispy) and dice into small bits
In the bacon grease fry 1 to 2 pounds of hash browns
Fry 18 scrambled eggs
Put these ingredients into a large bowl and mix until even

Step 3 – Make the Burritos

Place a Burrito sized tortilla on a foil square
Add one scoop of the mixture
Add a few pork chunks out of the chili
Add a little shredded Colby-Jack cheese
Roll the burrito tightly in the foil square
Refrigerate/freeze the wrapped burritos and save the remaining green chili.

To Serve:

-       Heat the wrapped burritos in a 250*F oven for 20-30 minutes
-       Warm the remaining chili
-       Pour the green chili over the burritos when serving

These burritos are perfect for traveling and eating while camping or on vacation.  They are awesome when heated, but are also great cold as a snack on the go.

This recipe was given to me by a friend who lived in Pueblo, Colorado.  He learned it from an old Hispanic lady who taught him her secret. Down there they use pueblo green chilies to make homemade salsa which is perfect if you grow your own.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, Investing, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

Using a BPO for Property Tax Valuations

Using a BPO for Property Tax Valuations

A Broker Price Opinion (BPO) is a tool used by real estate agents to help determine the market value of real estate.  BPO's are often used for valuations where an appraisal isn't feasible.  Lenders are allowed to use a BPO for valuation of real estate mortgages that aren't federally relegated and ones the lending institution will hold and service themselves.  BPO's are also used by attorneys and court officials when dividing assets in divorces or estates.  A BPO is typically less expensive than an appraisal and has many uses.

Nebraska recently passed LB 375 allowing licensed real estate agents to formulate Broker Price Opinions for challenging property tax valuations.  This is often a better option than an appraisal which is more expensive and time consuming.  Team Bober provides BPO's for our clients to help determine their Current Market Value.  Clients may use their BPO to meet with their local county assessor if the property owner believes their property is assessed to high (or low in some cases).  

For more information or if you are in need of a Broker Price Opinion call Chris Bober (402) 312-5076 or email Chris@NebraskaRealty.com.  

Team Bober Shares Their Best Vendors with HomeKeepr

Team Bober Shares Their Best Vendors with HomeKeepr

One of the best values I can offer my clients is the great connections I have.  I belong to several networking groups and spend several hours every week meeting new people.  Many of them are my preferred vendors.  I want to know the best vendors in my market so I can share them with my clients.  After 9 years in Real Estate, I have worked with some of the best people and I love to reward them by referring their services to others.

Once I have qualified a Vendor I invite them to be in the Team Bober Preferred Vendor Program.  As a member of thy program their information is stored my my HomeKeepr Mobile App that I share with clients.  My clients can trust that everyone I refer has been pre-qualified to deliver great services at fair prices.

If you want access to all of Team Bober’s Preferred Vendors click here:

Team Bober Homekeepr App

Here’s a quick video about the benefits of HomeKeepr:

If you are interested in become a part of the Team Bober Vendor program Call me at (402) 312-5076 or email me at Chris@NebraskaRealty.com.

Team Bober Homekeepr App

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

 

1031 Like Kind Exchanges

Nothing is certain but death and taxes...

As the Economy continues to rise so do prices homes prices.  We are still way behind in building new houses to quench the insatiable buyer demand so inventory remains scarce.  This has caused rental rates to inflate sharply with many people without purchasing options.

Investors have noticed the demand and many are investing in residential homes to with the purpose of renting them.  Buying and selling residential investment property is very different than purchasing a home for your residence.  As you can guess, it all comes down to PROFIT.

I have already discussed how to evaluate investment property when purchasing in the video seen here: Real Estate Investing  Now I want to help you understand the benefits of a 1031 Exchange when selling investment property.

Taxes are a four letter word. HGTV offers Reality Shows demonstrating the benefits of flipping houses, but they often leave out the taxes due when selling an investment property.  Did you know that most of the profit of a investment property is subject to capital gains taxes?  When filing your next tax return after selling, you will have to pay federal and state capital gains taxes on any recognized gain.  This is often 1/3 of your profit!

Section 1031 of the IRS tax code allows an investor to defer paying capital gains taxes on the adjusted gain (profit) if you reinvest in a “like kind” property.  It is very important to remember that a Qualified Intermediary (QI) is needed to perform a 1031 Exchange and the cash from any sale needs to go directly to the QI after closing. A Qualified Intermediary is also your best source for up to date knowledge about the current tax rules.

The basic premise of a 1031 Exchange is that if you sell a property and exchange it for another “like kind” property within a certain time period you can defer paying capital gains taxes on the recognized gain. Of course, it is a little more complex, but here are a few simple guidelines:

  • “Like Kind” means any piece of real property held for long term investment purposes that is not your principal residence. It does not have to be similar in any characteristics except for it is held as an investment.

  • The replacement property (new) must be acquired at a “stepped up” basis (or debt) than the relinquished (sold) property. This basically means you have to reinvest all of the profit into the new property to defer all of the taxes.

  • You must identify the replacement property within 45 days and purchase within 180 days of selling the relinquished property.

You must first contact a Qualified Intermediary and your CPA to determine if you are a candidate for a 1031 Exchange,  but it is a great tool to have when selling your investment property.  Most people are going to reinvest their profits into another investment vehicle. Wouldn’t you like to reinvest ALL of your hard earned profit?

I have helped several of my seller clients with 1031 Exchanges and I have helped buyers find and identify replacement property for their exchange.  This experience has given me great insight to the needs of my clients and I have worked with accountants, lawyers, lenders, and qualified intermediaries to ensure the process is smooth and effective.  Call me today at (402) 312-5076 or email me at Chris@NebraskaRealty.com if you would like to learn more about a 1031 Exchange and they can work for you.

Chris Bober is an Associate Broker and leader of Team Bober, a group of REALTORS® at Nebraska Realty in Omaha, NE offering a wide range of real estate services including home and new construction sales, land and farm sales, and auctioneering services. For more information please call Chris at (402) 312-5076 or email him at info@ChrisBober.com. TeamBober.com

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