Cities with Houses Sitting Vacant

Patrick Villanova wrote an article today

about the ten cities with the highest vacancy rates for housing.

At first thought this makes an investor think they could find

a deal, a steal, a great rental property. However the reasons

why there are houses empty in these different cities overlap 

with: employment, crime, natural disasters, cost of utilities...

his article here today https://finance.yahoo.com/news/cities-where-housing-vacancy-rates-120000612.html

The reasons behind many of these houses remaining empty and not for sale are complicated. Seven of the cities are in Florida, several others in the south. I do not believe the numbers reflect owners with low interest rates holding on to empty houses waiting for generational gains. Many of the houses are older, need repairs, suffered from natural disasters, but I believe there are good houses, properties that can become units for first time home buyers and investors to repair and hold for long term rentals.

New Orleans, LA

In 2022, New Orleans vacancy rate is the highest of 343 cities – 22.9%. Over the previous five years, the city saw its population decrease by 4.2%. In total, there were 44,746 vacant housing units in 2022, nearly 8,000 more than five years earlier.

Flooding, politics, crime rates... Bring back tourism and I would buy here due to the culture and restaurants. Latoya Cantrell needs to get eyes on the ball. Put cameras and audit every transaction in the permits and planning department. Audit the lifestyles of every employee and fire at will. The General Plan must preserve and plan to save the city's historic fronts. Get Federal money, they owe Louisiana.

2. Tuscaloosa, AL

Tuscaloosa home to the University of Alabama, had a vacancy rate of 22.5%. Despite a minimal population increase of 0.3% from 2017 to 2022, the city reported 12,050 empty housing units by the end of that five-year period.

There are Jobs in Tuscaloosa: manufacturing, health care and social assistance, and educational services. This makes properties valuable. But the city has high crime rates.  It is a charming college town. I would invest here. 

3. Detroit, MI

Detroit's vacancy rate is 21.9%. The city's population diminished by 6.0% over five years, with 68,048 housing units vacant in 2022. However, the city had approximately 31,000 more vacant housing units at the start of that five-year period compared to 2022.

Highest homicide rate (crime), cheap, low paying jobs, snow/ice, higher utility cost, flooding, storms, and earthquakes. Natural hazards cost money. Very low cost housing in the $80000 range.     I would buy in Bloomfield Hills but Detroit is too cold and rough for me.

4. Pompano Beach, FL

10 miles north of Fort Lauderdale, Pompano Beach's vacancy rate was 21.7%. The city saw its population grow by just 0.8% between 2017 and 2022, to end up with 13,376 unoccupied housing units.

Flooding, can’t get insurance, winds, heavy traffic, higher crime rate, no jobs seem to make this Florida town a no for housing. Even snow birds suffering in the Artic Storm this week frown on this move.

5. Fort Lauderdale, FL

Fort Lauderdale, 21.4% of housing units were vacant in 2022. While the city's population grew by 0.9% during the five-year period that started in 2017, there were 21,751 vacant residences in 2022.

So many Florida towns on the list.  DeSantis fix your home state. Florida was once booming. Weather and climate change are tearing off roofs and flooding towns - this is a major planning mess.  There are many jobs here in marine, manufacturing, finance, insurance, real estate, high technology, avionics/aerospace, film and television production.  Fort Lauderdale has a twenty percent higher cost of living than other Florida cities, crime rate of 41 per one thousand residents, Fort Lauderdale has one of the highest crime rates in America. Problems I cannot overcome alone.

6. Clearwater, FL 

Clearwater vacancy rate of 20.7% in 2022 is identical to five years earlier when 20.8% of housing units were empty. While the city's population grew by 1.0% between 2017 and 2022, there were 12,641 vacant housing units by the end of that five-year stretch.

Crime stats high, hot/humid in summer, white sand beaches, Pinellas county highest number of homeless in FL, tornadoes, hurricanes, and storm surges. The State of Florida needs to get this beautiful place back up to what it once was.

7. Paradise, NV

Paradise, 20.5% of housing units were vacant in 2022, while the population declined by 21.0% between 2017 and 2022. There were 19,210 units of unoccupied housing by the end of that five-year period.

It gets to 115 degrees for a couple months, water shortages, high insurance costs, high crime, high utility cost. However there are job in casinos. Not for me.

8. Birmingham, AL

Alabama's largest city lost 7.7% of its residents between 2017 and 2022, with a tailing vacancy rate of 18.9%. In total, Birmingham reported 20,644 empty residences in 2022 or about 3,000 fewer than the city recorded five years earlier.

Causes: hurricanes, tornadoes, and floods; high crime rates. There are jobs in Birmingham in Retail, Finance and insurance, Technical, scientific, and professional services. 

  

9. Jackson, MS

In 2022, Jackson had a vacancy rate of 18.7%. The city faced a notable population reduction of 10.4% between 2017 and 2022, with 14,325 empty housing units by the end of that period – nearly 4,000 more vacants housing units than five years earlier.

Highest crime rates, it’s the SOUTH, 61% natural disaster risk, flooding, no water with Escherichia coli contamination and the City knew about it, tornadoes, Gulf Coast hurricanes make this also a no for me.

10. Cape Coral, FL 

Cape Coral recorded the 10th-highest vacancy rate in the country with 18.4% homes sitting empty in 2022. Despite the city's robust population growth of 11.5% from 2017 to 2022 – more than any other city in the top 10 – there were 18,392 vacant

four major hurricanes have hit outside of Cape Coral's city limits, including Donna, Charley, Irma, and Ian. Hurricane Ian has had a significant impact on local businesses, with many storefronts destroyed and roofs torn. Special flood hazard zones, can’t get insurance, put your house on stilts, have a metal roof and no trees near the house. House prices dropping 3.6%  Humid and hot in summer. Its a maybe if I can get my house above flood levels.

All these locations allow a home buyer to do a 203k FHA loan which would give them $30000 in improvements to get the house water tight, warm, have HVAC, fix a roof - but not a total gutting rehabilitation. All of these cities have affordable houses. If you want a list of the vacant houses in a certain city, give me a call, you may need to track down the owner. Next try to determine the valuation with comparable sales to make an offer to the owner of record. You need a contractor to look inside and an inspector as a vacant house is going to have things that are not working.

 

 

California Living Trust Stepped Up

Stepped-Up Basis California Living Trusts: Tax Advantages 

A living trust can be a powerful tool for managing your assets and ensuring a smooth transition after your death. But did you know it can also offer significant tax advantages, particularly through the concept of stepped-up basis?

Here's what you need to know about how stepped-up basis works in the context of a California living trust and the potential tax benefits it can offer:

What is Stepped-Up Basis?

Stepped-up basis is a legal principle that resets the cost basis of an asset for tax purposes to its fair market value on the date of the owner's death. This means that any appreciation that occurred before the owner's death is not considered taxable income for the beneficiary who inherits the asset.

How Does This Apply to California Living Trusts?

When assets are transferred into a revocable living trust, they retain the same cost basis as when you purchased them. However, upon your death, the assets held in the trust receive a step-up in basis to their fair market value. This applies to a wide range of assets, including:

• Real estate: If you purchased a home for $200,000 in 1990 and its value skyrockets to $800,000 at your death, the beneficiary's cost basis becomes $800,000. If they sell the house immediately for $800,000, they will owe no capital gains tax.
• Stocks and bonds: Similarly, any appreciated stocks or bonds held in the trust will receive a step-up in basis, potentially shielding future sales from capital gains taxes.
• Other tangible assets: This can also apply to cars, jewelry, artwork, and other valuable items.

Tax Advantages for Beneficiaries:

This stepped-up basis can translate to significant tax savings for your beneficiaries. They inherit assets with a higher cost basis, meaning they only pay capital gains tax on any appreciation that occurs after they inherit the asset. This can be extremely beneficial for assets that have been held for a long time and have experienced significant appreciation.

Additional Considerations:

• Bypass trusts: While assets in a revocable living trust receive a step-up in basis, this may not apply to assets held in a bypass trust. Bypass trusts are designed to shelter assets from your estate tax, but they also forfeit the step-up in basis advantage. Bypass is when the trustee dies or trustees and amendments or continuing new trustees come in to play.
• Capital gains tax rates: Remember, even with a stepped-up basis, beneficiaries will still owe capital gains tax on any appreciation that occurs after they inherit the asset. However, the stepped-up basis can significantly reduce the overall tax liability.

Consult with a Professional:

While the concept of stepped-up basis in the context of California living trusts offers substantial tax benefits, it's crucial to consult with a qualified estate planning attorney. They can guide you through the nuances of living trusts, bypass trusts, and other estate planning tools to ensure you create a plan that maximizes tax efficiency for your beneficiaries. The Trust needs proper formatting, legalese, witnesses not party to any asset, a notary stamp and needs a will to be an accompanying document which I explain in other posts is not provided to a title officer or lender.

A key advantage of a Living Trust is that residency of the beneficiaries is not a factor when it comes to inheriting property. Unlike wills, which are subject to probate court laws that can vary by state, Living Trusts bypass probate and distribute assets according to the terms set forth in the document, regardless of where the beneficiaries are located.

Here are some of the benefits of this for heirs and beneficiaries:

• Flexibility: Beneficiaries can live anywhere in the world and still receive their inheritance from the Living Trust. This is especially helpful for families with members scattered across different countries or states.
• Streamlined process: Inheritance through a Living Trust avoids the potentially lengthy and costly probate process. This means beneficiaries receive their inheritance faster and with less hassle.
• Privacy: Living Trusts are private documents, unlike wills which become public record after the death of the grantor. This means the financial details of the inheritance are not publicly available.
• Tax benefits: In some cases, Living Trusts can offer tax advantages for beneficiaries, depending on the type of assets held in the trust and the laws of the relevant jurisdiction.

While residency doesn't matter, it's important to note that the terms of the Living Trust itself may dictate how the property is distributed or used. For example, the grantor may specify that the property can only be used for certain purposes, like vacationing or providing income for a specific beneficiary.

Here are some additional points to consider:

• If the property is real estate, there may be local laws or regulations that affect its use or ownership, regardless of the Living Trust.
• The Living Trust document should be clear and unambiguous about the beneficiaries' rights and responsibilities. Consulting with an attorney specializing in estate planning can help ensure the document is properly drafted and meets the grantor's intentions.
• It's always a good idea for the grantor to communicate their estate planning wishes to the beneficiaries, including the terms of the Living Trust and any expectations they may have regarding the property.

Overall, the ability of beneficiaries in a Living Trust to live anywhere is a significant advantage for families wanting to distribute assets with flexibility and avoid unnecessary delays or complications. Remember, careful planning and clear communication are key to ensuring a smooth and successful transfer of assets to loved ones, regardless of their location.

Heirs, Beneficiaries, and the California Home Sale Tax Exclusion: DO Not CONFUSE WITH STEP UP BASIS

When it comes to inheriting or receiving property in California, understanding the tax implications is crucial. This includes being aware of the home sale tax exclusion, which allows homeowners to exclude a portion of the profit from the sale of their primary residence from their taxable income. In California, the exclusion varies depending on whether you're an individual or a married couple filing jointly:

• Individual: You can exclude up to $250,000 of profit from the sale of your home.
• Married filing jointly: You can exclude up to $500,000 of profit from the sale of your home.

However, it's important to note that heirs and beneficiaries don't automatically inherit the home sale tax exclusion. This means that if you inherit a home and then sell it, you won't be able to use the deceased homeowner's remaining exclusion unless you meet the ownership and usage requirements yourself.

Here's a breakdown of how the exclusion applies to different scenarios:

Inheriting a home:

• Ownership and usage: To qualify for the exclusion, you must have owned and used the home as your primary residence for at least two out of the five years before the sale. This applies even if you inherited the home.
• Inherited basis: When you inherit property, its tax basis generally adjusts to its fair market value at the date of inheritance (known as "stepped-up basis"). This means that the potential capital gain you'll face when selling is calculated from the inherited value, not the original purchase price. This can significantly reduce your taxable gain, even if you can't claim the full exclusion.

Benefiting from a trust:

• Trust type: The type of trust can affect how the home sale tax exclusion applies. In some cases, the trust itself may be eligible for the exclusion, while in others, the individual beneficiaries may be able to claim it if they inherit the home and meet the ownership and usage requirements.

Additional points to consider:

• The exclusion only applies to capital gains from the sale of a primary residence. It doesn't apply to other types of property, such as investment properties.
• There are additional eligibility requirements for claiming the exclusion, such as not having claimed it on another home sale in the previous two years.
• Tax laws can be complex, and it's recommended to consult with a tax advisor to understand your specific situation and how the home sale tax exclusion applies to you.

In conclusion, while heirs and beneficiaries don't automatically inherit the home sale tax exclusion, understanding the ownership and usage requirements, as well as the stepped-up basis rule, can help you navigate the tax implications of selling an inherited property. Consulting with a tax professional is always advisable for ensuring accurate and personalized advice based on your unique circumstances.

• California Probate Code: https://www.leginfo.legislature.ca.gov/faces/codesTOCSelected.xhtml?tocCode=PROB&tocTitle=+Probate+Code+-+PROB
• Nolo: Estate Planning in California: https://smartasset.com/estate-planning/california-inheritance-laws
• California Bar Association Legal Guide: Trust and Estate Law: https://calawyers.org/section/trusts-and-estates/

Legal Resources:

• Internal Revenue Code (IRC) Section 1014: This section of the US tax code establishes the general rule for step-up in basis for inherited property. While not specific to California, it's the federal foundation for the concept.
• California Revenue and Taxation Code (CRTC) Section 18031: This section outlines California's inheritance tax, which has been repealed but still holds relevance for understanding historical basis adjustments.
• Proposition 19 (2020): This California ballot measure reformed property tax assessments for inherited homes, impacting property taxes for beneficiaries receiving stepped-up basis.

2. Case Law:

• United States v. Craft: This 1955 Supreme Court case upheld the constitutionality of step-up in basis under federal law, setting a precedent relevant to California inheritance.

3. Articles and Resources:

• Investopedia: Step-Up in Basis: Definition, How It Works for Inherited Property: Provides a clear explanation of step-up in basis with specific examples for California beneficiaries.
• Financial Alternatives: Step-up in cost basis: What California residents need to know: Discusses the double step-up benefit for surviving spouses in California and potential tax implications for heirs.
• California Department of Finance: Proposition 19: Offers official information on the measure and its impacts on inherited property taxes.

•  

Remember, legal matters are complex and seek a CPA and a tax attorney for advice.

 THIS IS NOT LEGAL ADVICE. Get your own attorney.

 

 

Commercial Real Estate Apps and Tools CRE

LightBox: A leading provider of due diligence, risk management, and location. LightBox is a company that provides commercial real estate (CRE) data and technology solutions. LightBox's data and workflow tools support decision making across CRE, including real estate lending, investment sales, appraisals, debt capital markets, property development, and environmental engineering. 

Trepp  Industrial, Lodging, Mixed-Use, Multifamily, Office, Retail Trepp and Placer.ai are both companies that provide data and insights. Trepp is a data analytics and software company that provides information about the commercial real estate and CMBS markets. Placer.ai is a location intelligence software company that provides businesses with insights and analytics about consumer foot traffic. 

Trepp's products are mainly targeted towards institutional bond investors, broker dealers, and hedge funds. Placer.ai's clients include restaurants, hospitality, and retail. 

Trepp provides information, analytics, and services to the Structured Finance, CRE, and Banking markets. TreppCRE connects disparate datasets using proprietary, patent-pending technology. 

Placerai: A tool that provides pre-run risk metrics for millions of properties. It also allows lenders to assess risk based on lending assumptions, location, property type, and economic forecast. Placerai also allows risk managers to analyze the commercial real estate market and understand current trends. LightBox: A leading provider of due diligence, risk management, and location

LightBox is a company that provides commercial real estate (CRE) data and technology solutions. LightBox's data and workflow tools support decision making across CRE, including real estate lending, investment sales, appraisals, debt capital markets, property development, and environmental engineering. 

Trepp  Industrial, Lodging, Mixed-Use, Multifamily, Office, Retail Trepp and Placer.ai are both companies that provide data and insights. Trepp is a data analytics and software company that provides information about the commercial real estate and CMBS markets. Placer.ai is a location intelligence software company that provides businesses with insights and analytics about consumer foot traffic. 

Trepp's products are mainly targeted towards institutional bond investors, broker dealers, and hedge funds. Placer.ai's clients include restaurants, hospitality, and retail. 

Trepp provides information, analytics, and services to the Structured Finance, CRE, and Banking markets. TreppCRE connects disparate datasets using proprietary, patent-pending technology. 

Placerai: A tool that provides pre-run risk metrics for millions of properties. It also allows lenders to assess risk based on lending assumptions, location, property type, and economic forecast. 

 

Placer.ai uses property-level polygons, a unique de-identified panel, and data science to give users visibility into places, markets, and consumer trends. Placer.ai's product is based on location insights for big box stores to look at brand dominance, consumer visitation and demographic insights, competitive benchmarking, and industry trends. Placer.ai is able to track cell phones that have an app installed that uses their SDK. They currently have their SDK in over 500 mobile apps. The data is anonymized. 

 

 

Reonomy: A commercial real estate database that uses machine learning and AI to locate property opportunities. It's a cloud-based property intelligence platform that helps real estate businesses discover opportunities, manage risks, and gain insight into competitors. Used for leads.

GreenStreet

Provides research, news, data, analytics, and advisory services for the commercial real estate industry. My favorite source for deal information

Cherre

A real estate data platform that connects decision-makers to property investment, management, and market information. Cherre primarily serves the real estate, insurance, and startup industries.

Real Pace

A corporate portfolio builder that invests in companies across the construction and real estate industry.

Dealpath

A cloud-based deal management platform designed for corporate development, venture capital, and private equity professionals. Dealpath offers deal tracking, document management, task management, and reporting tools.

 

Moody's

An American business and financial services company that provides independent, in-depth, and transparent opinions on credit risk through its credit ratings.

 

 

CoStar

The largest source of verified commercial real estate information, analytics, and data-driven news worldwide. Perhaps the most used and deepest information. Source for comparable valuations for commercial appraisals.

Others:

Unacast

Compstak

Corelogic

MSCI

Morningstar

EDR

DBRS

DataLinks

REIS Reports

CREPI

YARDI (HOA self storage, payment processing, brochures

LOOPNET ads

Data Tree from FATCO

MELISSA Data - property and owner, fire, earthquake

Bowery for appraisal, maps, broad band, weather, fire predictions,

Estated  -parcel/ Attom Data

ATTOM - transaction information, comps, AVM, flood, legal, risks, leads, UW, foreclosures,,,

Robogateway- default, absentee owner, leases

Kompyte

Property Radar 

Prop Stream - skip trace, MLS, marketing

Local Logic

House Canary

SiteX Title Pro -BKI lists to market, leads, owner name, comps, bankruptcy

Parcel OWl

Fitch ratings

Free ones: Census, crime, flood, FEMA, USEPA, City data

PARCEL QUEST

REAL QUEST

 

 

VA Mortgages

Homeownership: Understanding VA Mortgage Eligibility

For those who have served our country with honor, the VA mortgage program offers a unique advantage when purchasing a home. With its competitive interest rates, no down payment requirement, and relaxed credit score standards, it can seem like a dream come true. But before you start packing boxes, there are some important conditions you need to meet to qualify for this valuable benefit. The VA loan is perhaps one of the greatest benefits for a veteran.

Military Service Requirements:

First and foremost, your eligibility hinges on your military service. To qualify for a standard VA loan, you must have served at least:

• 181 days of active duty during wartime
• 270 days of active duty during peacetime
• 6 years of service in the Reserves with an activated service period (Title 32)
• 12 months of continuous active duty for service members currently on active duty

Additional service requirements apply to National Guard members and certain Reservists. You need a copy of your DD-214 form to provide to your lender with your bank statements all pages, w-2 forms past two years, any 1099’s past two years, thirty days of paystubs, and if any self employment all returns for IRS past two years and a current profit and or loss year to date.

Credit Score and Debt-to-Income Ratio:

While VA loans are known for their flexibility with credit scores, having a good credit history can still be beneficial. Generally, lenders prefer scores above 600, though lower scores might work depending on other factors such as having reserve funds (checking or savings accounts with money to be able to carry payments in the future. Additionally, your debt-to-income ratio (DTI) will be evaluated. This measures your monthly debt payments against your gross monthly income. Aim for a DTI below 41% for optimal approval chances.

Entitlement and Down Payment:

Your "entitlement" refers to the amount of the loan the VA guarantees to the lender in case of default. Generally, you have full entitlement if you haven't used your benefit before or have paid off a previous VA loan and sold the property. Having full entitlement allows you to borrow up to the appraised value of the home without a down payment. However, if you have less than full entitlement, you may need to make a down payment, depending on the loan amount and lender's requirements.

VA loans are assumable BUT this is not advantageous for the veteran as the veteran can lose some of their eligibility and not be able to use the VA loan for other purchases. VA assumptions are full documentation with two years IRS income using the net number so this is very difficult for someone self employed to qualify. VA assumptions can take ninety days or more, depending on the servicer.

Property Requirements:

The home you wish to purchase must also meet minimum property requirements (MPRs) set by the VA to ensure it's safe and habitable. These cover aspects like structural integrity, plumbing, electrical systems, and roofing. The VA appraisal process inspects the property to ensure it meets these standards. In general, the subject property cannot have health and safety violations.

These are just general conditions, and individual circumstances may differ. It's crucial to discuss your specific situation with a VA loan specialist who can help you navigate the eligibility process and determine your personalized options. Consulting multiple lenders can also help you find the best rates and terms for your circumstances.

Owning a home is a dream for many, and the VA mortgage program provides a valuable opportunity for veterans and service members to turn that dream into reality. By understanding the eligibility conditions and getting personalized guidance, you can accomplish your goals.

Let's talk about it

Caroline Gerardo

NMLS 324982

949  784 - 9699