San Diego Real Estate

Issue #194

In This Issue

1. Welcome / This Week's Special Offer

2. Gary's Real Estate Seminars

3. Homebuying Question

4. Homeselling Question

5. Investing or Financing Question

6. Hot Properties: New Listings BEFORE They Hit The Market

7. Thank You For Your Referrals

Welcome / This Week's Special Offer

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Subscribe them with a quick email to  TellAFriend@GaryKent.com with their email address in the subject line.

Remember to email your questions, comments, compliments, corrections, critiques, & rebuttals to Questions@GaryKent.com.

Gary's Real Estate Seminars

FREE SEMINAR February 1 / Wednesday 6-8PM
CONDO-BUYING FOR SMART PEOPLE (Not Dummies)
At "Forum Hall" at the UTC Mall in University City
CLICK HERE for flyer, more info, & free sign-up

- Why people say RIGHT NOW may be your golden window of opportunity to buy a condo at the LOWEST PRICE
- Pro's and Con's of owning a condo
- How to find motivated--even DESPERATE--condo sellers
- Should you buy new construction, a conversion, or resale?
- How to get a FREE Inspection & FREE appraisal when you buy
- Key condo documents explained: CC&Rs, Rules, Bylaws, etc
- Condo vs. Townhome vs. Co-op vs. House w/ HOA
- What do you REALLY own when you buy a condo?
- How to get the best loan for your condo
- Easy way to find out if a condo complex has costly problems
- 4 Condo myths that could cost you
- How to buy a condo ZERO DOWN
- Rent vs. buy? You may be surprised!
- 5 Questions You MUST Ask Before You Buy ANY Condo
- Monthly condo fees: good deal or waste of money?
- Condo situations, problems, and complications to avoid
- Why condos make an excellent 1st investment
- Buying a condo for your college student
To RESERVE YOUR SEAT at this free seminar now, click here or call (858)457-KENT!

FREE SEMINAR  (February or March date to be determined)
"Discover Exactly Where I'm Investing MY Money In 2006"
...Positive Cash Flow Apartments With Appreciation & ZERO Management
At "Forum Hall" at the UTC Mall in University City click here for free sign-up

Want a hands-off real estate investment with consistent positive cashflow?  Sound too good to be true?  I've found a great investment opportunity that I'm personally investing in, as have several of my clients.  If you have $100,000 to $5,000,000 to invest and want to find out more...
To RESERVE YOUR SEAT at this free seminar now, click here or call (858)457-KENT!

Homebuying Question

"Hi Gary.  I've never owned a home before.  I know it's better to own then rent, but can you give me an idea of the specific advantages of renting versus owning?"

***ANSWER:
Here's what comes to mind:

Advantages of OWNING
-  Status + Pride of ownership
-  Appreciation
-  Tax deduction (mortgage interest & property taxes)
-  Loan paydown (slow)
-  Freedom to improve the property as you wish
-  Can increase value
-  Ability to borrow on equity
-  Stronger financial statement
-  No risk of rent increase or eviction

Advantages of RENTING
- Mobility & liquidity
- No possible price depreciation
- Lower short-term costs (owner must repair)

Homeselling Question

"I put my home on the market and got three offers.  We accepted one, but they backed out two days later.  So I told my broker to call the agents with the other two buyers.  But neither of them was interested any more.  How could this happen?  Did my broker screw it up?"

***ANSWER:
No, in fact your broker should be commended for bringing you three offers on your home, a rarity in this calmer market.

Here's what happened:

When your or I can't have what they want, we experience what psychologists call "internal dissonance."  (I learned this as "cognitive dissonance" in Psych 101.)  This means we have two thoughts that conflict with each other, which causes anxiety.  In your buyers' case it's as simple as:

1. I want to have it 
2. I can't have it

To deal with this and relieve the anxiety, one of the thoughts must change.  So your buyers changed thought #1 to something like: 

- Maybe I never really wanted it that much
- It wasn't the right house for reasons X, Y, & Z
- I couldn't afford it any way
- I'm better off without it
- Boy, am I glad I DIDN'T get it!

 So when the buyers were told your home was available again, it was too late.  They'd already cured their internal dissonance by emotionally disengaging and rationalizing that they were glad they didn't get it. 

 I see this happen all the time.  So don't blame your agent.

Investing or Financing Question

Hi Gary, Happy holidays! I hope you can help me with a question. As you may recall, I have a duplex in San Diego. I lived in one unit until recently (I'm now renting elsewhere) and rented out the other.

If I sell the duplex, would I have to pay capital gains on the portion that was my personal residence?  Also, can I reinvest the portion that was income property into another income property and avoid capital gains on that?

Thanks for your help!

***ANSWER:
Nice to hear from you...

Due to the different usages (residence and investment), the IRS treats your 2 units as though they were 2 separate properties and applies completely different sets of rules to each side.

1. Personal residence - IRS Code 121
For the unit you lived in, if you lived in and owned it for at least 24 of the past 60 months, then you can exclude up to 250K of gain on that unit (500K if you're married).

2.  Investment property - IRS Code 1031
You can sell your property and buy another via a tax-deferred 1031 exchange and avoid all capital gains on the rental unit.  You must follow certain rules for a valid exchange, which I'll be happy to discuss with you.

By the way, the IRS doesn't necessarily view your duplex as 50% residence and 50% investment unless the units are roughly identical.  The value of your property may be 60%/40% residence/investment or 32.7%/67.3% or any combination, depending on the relative value of each unit.

Although I'm confident this information is correct, I'm not a tax professional and must advise you to seek professional tax advice.

Hot Properties + New Listings BEFORE They Hit The Market

"COMING SOON"
(Click Contact Me to be contacted BEFORE these properties hit the market!)
- Clairemont - Cute 2BR townhouse-style condo in the $300's. More info to follow...Contact Me
- Mira Mesa - FORECLOSURE! Lender Owned 3BR/2.5BA 6-yr-new home w/ mountain & value views, 2-car garage. Price TBD Contact Me
- Pacific Beach - Large 5BR/3BA house on culdesac. Has family room, bonus room, 2 FPL, 3-car garage, & more! Price TBD Contact Me
- Pacific Beach - 3BR/3BA townhome condo w/ 2-car garage on quiet street. A BARGAIN at $625,000. Contact Me

- SOLD/Carlsbad - PROBATE SALE! 1500 sqft fixer house w/ valley views. Quiet street. Priced BELOW MARKET @ $615,000. Contact Me

Thank You For Your Referrals

GaryK@GaryKent.com -- www.GaryKent.com