Sometimes, properties, whether single-family detached homes, multiple-unit dwellings, or commercial property, can be bought for a much lower than market price because of their deteriorated condition.

This is usually the case when an owner/seller has put off necessary maintenance and repair work for many years. These are commonly referred to as “fixer-uppers” or “handyman specials.” Some real estate investors specialize in this facet of the market. They buy rundown properties, fix them up, and then either resell quickly for a profit or hold for years collecting ever higher rents. In your analysis of a property, it’s important to determine if it’s a good purchase because of its poor condition.

A cool site online - Pandora.

Pandora is a personalized radio station. You simply put in the name of an artist or song that you enjoy, and Pandora finds other artists and songs with a similar vibe and adds them to your own playlist - automatically. You can have as many radio stations as you like.

I set mine up this morning and have been listening while I read the paper and surf the web. It’s very cool!

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A land contract of sale (also called a contract for deed) is an old form of transferring property used for years in bare land sales where the buyer couldn’t come up with the full purchase price in cash. The seller gives the buyer a contract to buy that states if and when the buyer ultimately comes up with all the cash, title will be transferred—no cash, no title. During that time the buyer usually can work or occupy the property. Today, the land contract is still used by investors to purchase properties that they otherwise can’t get into, and to sell properties that they otherwise can’t get rid of. Some of the reasons for using it include the following.
Reasons for Using a Land Contract
•  To give the buyer time to come up with the cash while protecting the seller from giving title to a property not paid for.
•  To avoid lawsuits. A buyer who is being threatened by law suits will sometimes acquire property using the land contract. Since the contract is not recorded, the buyer’s name is not on the property, and in a lawsuit that property is less likely to become involved.
• To attempt circumvention of the alienation (due on sale) clause in modern mortgages. Since the contract is not recorded, the lender may not learn about the transfer and may not demand the mortgage be paid. This is a dangerous tact.
On the negative side, the contract of sale is often an insecure position for a buyer. If the seller of a property decides that he or she wants to be dishonest, he or she can sell it again, even after it’s first been sold to you. Since recording of title is the means by which ownership is determined, and since a contract of sale is not usually recorded, this is possible. Today, in many states a contract of sale can be recorded if at least one party that signs it has that signature notarized. Further, some states now restrict or prohibit land contracts.

Here’s a detached condo in 4S Ranch of San Diego. 1,644 sqft, 3 bed, 2.5 bath, built in 2003. Bought in 8/2003 for $403,000. Hmmm… how much should we price this home? $550,000? $560,000? $580,000? $570,000? Should we make a $150,000 profit? or do we deserve a $180,000 profit. Gosh, this is so hard!!!

Days on Market: 44 days

Listing Date: 04/06/06 — $550,000
Price Increased: 04/27/06 — $550,000 to $560,000
Price Reduced: 04/28/06 — $560,000 to $550,000
Price Increased: 05/05/06 — $550,000 to $580,000
Price Reduced: 05/08/06 — $580,000 to $570,000
Price Reduced: 05/16/06 — $570,000 to $560,000
Price Reduced: 05/19/06 — $560,000 to $550,000

You will likely owe taxes on your capital gain, therefore it behooves you to know how it’s calculated.

Basically, your capital gain on the property is the difference between the adjusted tax basis and the sales price.

Calculating Capital Gain

Sales price (adjusted for costs of sale such as commission)  $400,000 Minus Adjusted tax basis 250.000 Equals Capital gain (on which tax is due) $150,000.

Thus, to go through our example, your basis is $250,000. When you sell, after taking off the costs of sale (in this case $400,000), you subtract the basis from the adjusted sales price and that’s your capital gain. The capital gains tax rate as of this writing is 15 percent for most taxpayers.