Beginner's Guide to Real Estate tag:beginnersguide.com,2007:/real-estate//215 2006-10-06T14:07:34Z Real Estate Movable Type 3.35 Should I get a Fixed or Adjustable Rate Mortgage Oveview tag:beginnersguide.com,2006:/real-estate//215.32614 2006-10-06T13:55:08Z 2006-10-06T13:57:01Z Buying a home is one of the most important decisions you can make. Unfortunately, it can also be one of the most confusing and perplexing decisions to make. The choice between choosing a fixed or adjustable rate mortgage is a... John Buying a home is one of the most important decisions you can make. Unfortunately, it can also be one of the most confusing and perplexing decisions to make. The choice between choosing a fixed or adjustable rate mortgage is a common stumbling block for first time buyers. When you understand the difference between a fixed and adjustable mortgage rate and the advantages and disadvantages of each, hopefully the choice that is right for you will be much clearer.

]]> Fixed Rate Mortgage tag:beginnersguide.com,2006:/real-estate//215.32615 2006-10-06T13:56:41Z 2006-10-06T13:57:31Z The most common type of mortgage lenders offer is a traditional fixed rate mortgage. These are loans that have a fixed interest rate on your monthly payments for the life of the loan, which is typically 10, 15, 20 or... John The most common type of mortgage lenders offer is a traditional fixed rate mortgage. These are loans that have a fixed interest rate on your monthly payments for the life of the loan, which is typically 10, 15, 20 or 30 years. With these types of loans your monthly payment will remain the same the entire duration of the loan, although other cost like insurance and taxes may go up. People like the thought of a fixed rate loan because they have the assurance of paying the same each month with no surprises. They might also feel that as their income goes up through raises or better career moves, their house payment will stay that same and the additional money can be used elsewhere. If you have decided that this mortgage is best for you then you are now faced with the decision of how long you want your loan life to be. Here are the advantages and disadvantages of both 15 and 30 year loans.

• 15 Year Fixed Rate Loan Advantages: With this type of loan, interest rates are typically lower than 30 year loans, you will pay much less in overall interest than on long term loans, and you can built up equity quicker due to shorter amortization schedules.
• 15 Year Fixed Rate Loan Disadvantages: Some disadvantages to a shorter loan are that monthly payments will be significantly higher than longer term loans and borrowers might have to settle on buying a smaller/cheaper house in order to afford the higher monthly payments.
• 30 Year Fixed Rate Advantages: With a longer loan your monthly payments will be much lower freeing up some extra money that you can put into home improvements, savings, college funds, etc. and the more interest you pay on a mortgage the more money you will be able to deduct off your federal tax income.
• 30 Year Fixed Rate Disadvantages: Because the interest rates are so much higher than shorter loans, it will take more time to build up equity because payments for the first few years will go to paying the interest instead of the principal. Of course, choosing a longer loan means paying more interest than you would with a shorter one in the long run.

The choice between a 15 and 30 year loan basically boils down to how much you can afford, how much house you want, and how much money you are willing to spend.

]]> Advantages and Disadvantages of a Fixed Rate Mortgage tag:beginnersguide.com,2006:/real-estate//215.32616 2006-10-06T13:57:18Z 2006-10-06T13:58:07Z If you are still unsure of whether a fixed rate mortgage is right for you, it might help to look at a brief summary of its basic advantages and disadvantages. Advantages of Fixed Rate Mortgages • Interest rates and monthly... John If you are still unsure of whether a fixed rate mortgage is right for you, it might help to look at a brief summary of its basic advantages and disadvantages.

Advantages of Fixed Rate Mortgages

• Interest rates and monthly payments remain consistent over the period of the loan so there will be no surprises or changes no matter what the market and economy is doing.
• Some feel that fixed rate mortgages are safer for first time buyers because there is less to figure out. You either can or can't afford your payments and you won't need an expert to explain that to you.
• Some also feel that fixed rates are safer if you feel that your job is unstable or there is not much room for advancement. In this case, if for some reason you did lose your job or chose to pursue other paths you would know exactly what you need to bring in to continue paying on your mortgage.
• Fixed rates make budgeting easier. Because you know with certainty what your monthly payments are, you can easily manage the rest of your budget without getting into any unforeseen trouble.

Disadvantages of Fixed Rate Mortgages

• There is not much diversity in finding different rate plans among lenders. One of the first things experts recommend doing is shopping around to find the best deal, but with fixed rate mortgages that is difficult because most all lenders plans look the same. There is no real customizing to fit your particular needs.
• If interest rates take a big fall, you would have to refinance in order to cash in on the trend. That means having to spend more time setting up appointments, going through records, and most importantly paying closing cost again.
• For some, fixed rate mortgages are just too expensive when first starting off especially in highly desired areas.

]]> Adjustable Rate Mortgages tag:beginnersguide.com,2006:/real-estate//215.32617 2006-10-06T13:57:55Z 2006-10-06T13:58:27Z Adjustable rate mortgages, commonly referred to as ARMs, are loans where the monthly interest rates and payments fluctuate up and down according to the market. They are typically adjusted annually although there are some that adjust more frequently. Although the... John Adjustable rate mortgages, commonly referred to as ARMs, are loans where the monthly interest rates and payments fluctuate up and down according to the market. They are typically adjusted annually although there are some that adjust more frequently. Although the rates can rise, there is usually a cap on the amount it can be raised in a year's time and for the life of the loan. So for instance if your cap is three points per year and 7 for life you could start out at 6% and rise to 9% the second year, 12% the third, and 13% the next where it would be capped. At first this might sound a little crazy, but it can work for those who want to buy a larger house with the hopes that their income will be going up from year to year. Often to make the deal look a little sweeter, lenders will set a period of time that they will honor the lower rate before adjusting. This time period could rage anywhere from 1 to 10 years. In this case, the buyer might be paying much less than someone with a fixed rate for the first 10 years and then much more for the next 20! Just like ice cream there are lots of "flavors" of adjustable rate mortgages and this is a definite time when shopping around is necessary. Ask questions, research information, and talk to lenders. Many times they can mold a plan that works just for you and your needs.

]]> Advantages and Disadvantages of Adjustable Rate Mortgages tag:beginnersguide.com,2006:/real-estate//215.32618 2006-10-06T13:58:14Z 2006-10-06T13:59:11Z Just as with fixed rates, there are obvious advantages and disadvantages to adjustable rate mortgages that you will want to take a look at. Advantages of Adjustable Rate Mortgages • Since rates are usually low to begin with buyers can... John Just as with fixed rates, there are obvious advantages and disadvantages to adjustable rate mortgages that you will want to take a look at.

Advantages of Adjustable Rate Mortgages

• Since rates are usually low to begin with buyers can afford to purchase a larger home with the expectations that their income will rise with the payments.
• If you don't plan on living in an area too long or plan on "moving up" adjustable rates offer the ability to pay less while you are there.
• If rates fall, there is no need to refinance to cash in on it. As they fall so will your payments.
• In the time period when borrowers are paying less, they can use the extra money to make more profitable investments. Also, more people need some extra money when their career is just beginning or they are just starting out. Fixed rates free up that money and hopefully will rise with income.

Disadvantages of Adjustable Rate Mortgages

• If rates hike up, so do the monthly payments whether you are ready or not and for the most part, the rates are totally out of your control. You are at the mercy of the market, good or bad.
• Typically people find adjustable rate mortgages harder to understand and it makes budgeting more difficult since you have to adjust to rising rates.
• Borrowers can be sucked into the idea of the initial low rates and make a bad deal. While everything seems sunny while payments are low, if they did not choose one with realistic caps or did not plan properly, the first adjustment might come as a shock to not only them, but their bank account!

There are so many things to consider when choosing between a fixed and adjustable rate mortgage. Try to play out all the possible scenarios dealing with the advantages and disadvantages of each and how they relate to your situation. With a little luck and a whole lot of research, you can make the right choice. Don't forget to check out the internet. There are tons of sites where you can calculate how much of a loan you can qualify for, compare loans from different lenders, and find rates in your area.


Sources:
www.bankrate.com

]]> What is a 1031 exchange? tag:beginnersguide.com,2006:/real-estate//215.32619 2006-10-06T13:58:58Z 2006-10-06T14:01:03Z A 1031 exchange (also called a Starker, like-kind, or tax-free exchange) occurs when an investor sells property and then uses the sale proceeds to purchase a similar piece of property--in essence, "exchanging" one property for another. If you adhere to... John A 1031 exchange (also called a Starker, like-kind, or tax-free exchange) occurs when an investor sells property and then uses the sale proceeds to purchase a similar piece of property--in essence, "exchanging" one property for another. If you adhere to IRS regulations regarding this transaction, you can defer all of the tax on the sale of the property.

Normally, the IRS requires that you pay taxes on your gain from the sale of property, but regarding a 1031 exchange, the IRS declares that no funds are actually generated by the sale. Thus, there is only a "paper gain," which the IRS will not tax, and until you can defer the tax indefinitely until you sell the property for cash.

1031 exchanges are potentially very lucrative, but the IRS does restrict their operation. You have to follow a strict timetable and allow a neutral part to hold the sale proceeds in the time between the sale of the first property and the purchase of the replacement property. In addition, you can only exchange investment and income-producing property of like kind. Even with these restrictions, however, thousands of businesses and individuals have benefited from 1031 exchanges.

]]> What are the benefits and drawbacks of a 1031 exchange? tag:beginnersguide.com,2006:/real-estate//215.32620 2006-10-06T14:00:52Z 2007-08-06T18:33:05Z Before you decide whether to complete a 1031 exchange, it's a good idea to learn the advantages and disadvantages of the transaction. The advantages include both direct tax benefits and opportunities for further profit while the drawbacks are largely a... John Before you decide whether to complete a 1031 exchange, it's a good idea to learn the advantages and disadvantages of the transaction. The advantages include both direct tax benefits and opportunities for further profit while the drawbacks are largely a recognition of the limitations the IRS places on 1031 exchanges.

BENEFITS
• Defer taxes--Because a 1031 exchange generates no funds, the IRS defers all capital gain taxes. In other words, you get an interest-free loan on the tax dollars you would have owed for the cash sale. The tax is deferred indefinitely until you make a cash sale.
• Greater equity--A 1031 exchange allows you to retain more equity in the property and to use your entire equity to acquire a replacement property. Thus, you can repeatedly exchange up to better properties.
• Property flexibility--1031 exchanges give you more options. If you don't like the location of your office building, perform a 1031 exchange and relocate. If you have many small branch offices, perform a 1031 exchange and consolidate into one large office.

DRAWBACKS
• Leftover taxes--If you don't spend the entire sale proceeds on a replacement property, you will have to pay taxes on the leftovers, so you might be tempted to purchase more property than you need.
• Transactional costs--You will likely need to hire attorneys, real estate agents, cpas/what-is-a-cpa.php">CPAs, and qualified intermediaries to perform a 1031 exchange. In addition, you having closing and moving costs associated with the transaction.
• Fixed timetable--You have 180 days from the sale of the first property to the closing on the second property. No exceptions.
• Reduced tax basis in replacement property--Because you used a 1031 exchange, you will have a lower cost-recovery tax deduction from your new property.

None of these drawbacks are deal-breakers, just as none of the advantages are deal-sealers, but you should know what you're getting yourself into. If you want to learn more regarding how a 1031 exchange could impact your specific financial situation, contact your real estate attorney or cpas/what-is-a-cpa.php">CPA.

]]> How do I perform a 1031 exchange? tag:beginnersguide.com,2006:/real-estate//215.32621 2006-10-06T14:01:22Z 2007-08-06T18:33:05Z There are six basic steps in a 1031 exchange. Scores of small jobs take place within each of these steps, but this list of steps can at least help you understand the basic timetable. Step One: Identify selling property. You... John There are six basic steps in a 1031 exchange. Scores of small jobs take place within each of these steps, but this list of steps can at least help you understand the basic timetable.

Step One: Identify selling property. You may already have a property in mind that you want to sell. On the other hand, you may receive an offer you can't refuse, or you may just wake up in the middle of the night eager to unload a property.

Step Two: Contact the right parties. You'll need to hire a qualified intermediary to run the 1031 exchange for you and to hold the proceeds from the sale. In addition, you'll want to contact your attorney, cpas/what-is-a-cpa.php">CPA, and real estate agent.

Step Three: Find a buyer and write a contract. Your intent to perform a 1031 exchange doesn't impact the buyer, but the contract should have specific language proclaiming your intention to perform an exchange.

Step Four: Sell the property. At the closing, the contract should list your qualified intermediary as the seller, and all the sale proceeds will go into his trust.

Step Five: Find your new property. Per IRS guidelines, you have forty-five days to identify up to three potential replacement properties, and within 180 days, you must close on the new property.

Step Six: Purchase the new property. Notify your intermediary of your intent to purchase property and, at the closing, he will transfer the proceeds from the first sale to the seller of your new property.

Fortunately, intermediaries are very experienced in performing 1031 exchanges. They do most of the paperwork and guide you through the process; your primary jobs are identifying the properties and giving the go-ahead.

]]> What kind of property can I use in a 1031 exchange? tag:beginnersguide.com,2006:/real-estate//215.32622 2006-10-06T14:01:50Z 2006-10-06T14:02:28Z The IRS has strict regulations regarding the property that you can use in a 1031 exchange. Over all of the details, however, is the general rule that you must exchange like-kind properties (e.g. real property for real property). You can... John The IRS has strict regulations regarding the property that you can use in a 1031 exchange. Over all of the details, however, is the general rule that you must exchange like-kind properties (e.g. real property for real property). You can exchange one property for several properties (or vice-versa), but they must be like-kind properties.

1031 exchanges are designed for investment or income-producing properties. In other words, you can exchange apartment and office buildings as well as farmland. In addition, you can exchange more abstract properties such as oil and gas interests, livestock, and leasehold interests. You can also exchange personal property.

On the other hand, you cannot exchange your personal residence because it is neither an investment nor income-producing property. You also cannot exchange inventory, stocks, bonds, notes, or securities. Finally, you cannot purchase a replacement property and then immediately sell it; wait at least a year before selling that acquisition.

]]> What are the different types of 1031 exchanges? tag:beginnersguide.com,2006:/real-estate//215.32623 2006-10-06T14:02:17Z 2006-10-06T14:02:59Z The standard 1031 exchange is a delayed exchange on real property--you sell your property and then have 180 days to close on a replacement property. This delayed exchange, however, is by no means the only option. • Personal Property Exchange:... John The standard 1031 exchange is a delayed exchange on real property--you sell your property and then have 180 days to close on a replacement property. This delayed exchange, however, is by no means the only option.

• Personal Property Exchange: A personal property exchange is a typical delayed exchange in which the investor exchanges personal, rather than real, property.
• Simultaneous Exchange: In this exchange, the investor sells one property and buys another at the same time. A simultaneous exchange can reduce some costs, but it requires a lot of advance planning.
• Build-to-Suit Exchange: If you put the right language into your exchange contract, you can both purchase and make improvements to the replacement property using sale proceeds.
• Reverse Exchange: A reverse exchange (or parking arrangement) is a fairly common alternative to a delayed exchange. In this situation, the investor identifies the replacement property first and hires an Exchange Accommodation Titleholder (EAT) to purchase the property and hold title on his behalf. Then, within 180 days, the investor sells a separate piece of property, assumes the loan made to the EAT, and receives the first property. The contract contains the EAT's intent to transfer the property to the investor, and the IRS allows the EAT to serve as a safe harbor for the property until the investor can purchase the property outright.

]]> Qualified intermediaries in a 1031 exchange tag:beginnersguide.com,2006:/real-estate//215.32624 2006-10-06T14:02:50Z 2007-08-06T18:33:05Z The qualified intermediary (QI) is the key to a successful 1031 exchange. Also called a facilitator or an accommodator, the QI both fulfills an IRS requirement by holding the sale proceeds and takes care of the countless details of the... John The qualified intermediary (QI) is the key to a successful 1031 exchange. Also called a facilitator or an accommodator, the QI both fulfills an IRS requirement by holding the sale proceeds and takes care of the countless details of the exchange process.

Your QI should be a neutral party (i.e. not your employee, attorney, or cpas/what-is-a-cpa.php">CPA) who enters into a written exchange agreement with you. Per that agreement, he will hold the proceeds from your first sale until he transfers them to the seller of your replacement property. Your QI is an IRS-sanctioned safe harbor, protecting your sale proceeds from capital gains taxes. He will usually not take title to the property himself, but he will ensure that title is correctly transferred into your name.

In addition, however, the QI will often do much of the work regarding the 1031 exchange. QIs are experienced in exchanges and will coordinate with your attorney, cpas/what-is-a-cpa.php">CPA, and real estate agent in doing the necessary paperwork and taking care of all the details.

Thus, you'll want to make sure you find a solid intermediary. Most intermediaries are cpas/what-is-a-cpa.php">CPAs or attorneys with extensive experience in performing 1031 exchanges, so ask accountants and attorneys you know for suggestions. Compare the services, costs, and references of your options, and make sure your QI will have time to focus on your transaction and will guide you through the process. 1031 exchanges are fairly common, but you still don't want to go it alone.

]]> What is an Architectural Rendering? tag:beginnersguide.com,2006:/real-estate//215.32625 2006-10-06T14:03:14Z 2006-10-06T14:06:14Z If you've ever built a house, you've probably seen an architectural rendering of the home you built. An architectural rendering, or an architectural illustration is simply a two-dimensional image that shows the attributes of a proposed architectural design. Originally, the... John If you've ever built a house, you've probably seen an architectural rendering of the home you built. An architectural rendering, or an architectural illustration is simply a two-dimensional image that shows the attributes of a proposed architectural design. Originally, the word "illustrate" meant to enlighten intellectually, culturally, or spiritually. This is exactly what a well-done illustration can do for the image of a building, space, or landscape. Architectural renderings can speak volumes to clients, building authorities, and the general public about the outcome of the design. Traditionally, the techniques used in rendering were taught in "master class" practice, where a student worked with a master to study fine arts. Today, contemporary architects use hand drawings, watercolors, and pen and ink drawings to represent the design. However, the demand for hand drawn renderings is decreasing as computer generated drawings become more popular. These renderings utilize high-end computer graphics and virtual images to open up a world of options with regards to architectural renderings. When entering the field of architectural rendering today, it is essential that you have advanced computer graphic skills, as well as traditional rendering skills. An individual interested in entering this field should desire to understand the design and building process, be able to recognize the value of high quality design, and be proactive in applying a complete visual communications spectrum to achieve the design goals. There are university degree programs for architectural illustration. These programs will explore a variety of attitudes about art, coupled with aspects of architectural education and building technology.

]]> Hand Drawn Illustrations, Scale Models, and Photo Manipulation Illustrations tag:beginnersguide.com,2006:/real-estate//215.32626 2006-10-06T14:06:10Z 2006-10-06T14:06:40Z There are many different types of architectural renderings. The most traditional are hand drawn illustrations. Traditional renderings have a comfortable feel for a lot of people. The look and feel of a hand-drawn rendering is difficult to reproduce with a... John There are many different types of architectural renderings. The most traditional are hand drawn illustrations. Traditional renderings have a comfortable feel for a lot of people. The look and feel of a hand-drawn rendering is difficult to reproduce with a computer. Traditional renderings include rendering done in pen and ink, watercolor, marker, or gouache/airbrush. Another more traditional type of rendering is the scale model. A scale model is a representation or copy of an object that is larger or smaller than the actual size of the object being represented. It is a more physical approach to rendering. In architecture, the scale model is smaller than the original. It offers a hands-on visual and is a useful tool in presentations. It is also useful in engineering since the performance of a design can be tested without the expense of building it at actual size. Scale models are utilized by various real estate developers, architects, engineers, and planners. Dioramas and replicas are another form of scale model. Custom dioramas and replicas are used for museums, educational and informative models for schools and public displays, and models for filmmaking and photography.

Another form of rendering is photo manipulation. Today's software offers numerous possibilities for manipulating photos as most of us have seen first-hand with our digital cameras and photo software. This type of technology is especially useful for renderers. Photos of landscapes and existing buildings can be altered to include figures, foliage, cars, and buildings. It's also possible to create any type of window or door opening or a new roofline with new roofing material. New wall materials can be substituted for existing ones and restorative work can be illustrated with or without a new addition. Landscaping materials can even be created as specified by the landscape designer. With photo manipulation, you can see various options and changes with the realistic quality of a photo.

]]> Computer Generated Illustrations and Animation tag:beginnersguide.com,2006:/real-estate//215.32627 2006-10-06T14:06:35Z 2006-10-06T14:07:03Z The new type of rendering on the horizon is computer-generated rendering. Computer-generated renderings or illustrations can be done for architectural illustration, photo retouch, 3D computer renderings, or site plan illustration. Whether you need a simple wire-frame for view approval or... John The new type of rendering on the horizon is computer-generated rendering. Computer-generated renderings or illustrations can be done for architectural illustration, photo retouch, 3D computer renderings, or site plan illustration. Whether you need a simple wire-frame for view approval or a fully detailed computer model, a computer-generated illustration is the ticket. Among the possibilities they offers are: multiple views and walk-through animations complete with shade and shadows, ray tracing, texture mapping, landscaping, cars, and people. Colors can be easily changes, as can material schemes. Structures can be easily added, removed, or reshaped and lighting can be changed. Computer-generated illustrations are great for landscape studies, growth studies, and impact studies with surrounding structures. In today market, computer-generated illustrations are no longer a luxury. They are a necessity.

Computer-generated animation is an effective way to create virtual environments, walk-throughs, and to express the details of the design. Today, computer-generated illustrations are being used effectively in multimedia presentations, and animation is being used more and more for presale activities. Computer animation can greatly benefit your architectural project since it offers a visual image to help simplify your key points. Seeing an animated video presentation leaves a strong impression on investors, planning commissions and potential clients, even before any of your construction has begun. Computer animation is useful for all types and sizes of projects, from major land developments to commercial and residential projects and custom additions. A simple design cans cost between $5-6K, but it often pays for itself with a maximum contract award. Computer animation is an affordable way to visualize the design without having to pay for expensive physical models. You can get your animation on the videotape format of your choice or get the footage in MPEG, Quicktime Movie or AVI format for computer playback at multiple resolutions on CD-Rom and Internet.

]]> Careers in Architectural Rendering tag:beginnersguide.com,2006:/real-estate//215.32628 2006-10-06T14:07:01Z 2006-10-06T14:07:34Z Those interested in entering the field of architectural renderings should be aware that architectural rendering today is a combination of the traditional skills of rendering and advanced computer graphics. The traditional skills of rendering are learned in Master Class practice,... John Those interested in entering the field of architectural renderings should be aware that architectural rendering today is a combination of the traditional skills of rendering and advanced computer graphics. The traditional skills of rendering are learned in Master Class practice, where a student works creatively with a leading practitioner. It is the high-end computer graphic, however, that hold the future of architectural rendering. There is a huge demand today for architectural rendering services. This is due to the fact that visualization is crucial from the sales perspective of architects, landscape architects, planners, and interior designers. Producing quality visualizations require that illustrators have artistic and CAD-based skills in space visualization, signage and environmental graphics, photography, and modeling. Although this advent of technology has provided the means for higher quality renderings, it is still important to communicate architectural ideas through a wide range of visual media in a manner that clients can comprehend. Because of this, there are career opportunities in architectural design/illustration offices, architectural firms, commercial or contract facilities planning; interior design firms, industrial and graphic design firms, art agencies and studios, and government and planning agencies.
For individuals interested in pursuing a career in this field, the best place to start is with a university degree program in architectural illustration. This type of program will explore a variety of attitudes about art, connect to aspects of architectural education and building technology, and lead the student through a sequence of courses, events and experiences that develop individual potential in terms of specific illustration practice. The goal of such a program should be to prepare each student to enter the design/illustration profession as a skilled, creative, and highly motivated illustrator. Whether or not a senior thesis project or internship is required, the program should emphasize the importance of students creating a portfolio that demonstrates the expression of their creativity with large degree of competence and professionalism. There are many professional societies, including the New York Renderers Society, the American Society of Architectural Perspectivists and the Society of Architectural Illustration in the UK, that offer opportunities and expertise for continued growth and development in the field of architectural renderings.


References
http://www.studyoverseas.com/art/articles/archit3.htm
http://www.bzaonline.com/services.htm
http://www.graphicanow.com/-Services/Services.html
www.wikipedia.org
http://www.architecturalmodels.info/

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