Strategies for growth to make 2005 even better.Nothing fascinates people like a doomsday prediction. In the 1990's, with the millennium approaching, no less than 86 self-proclaimed prophets predicted that the world would end before the end of the decade. I'd wager that even more people have predicted the end of the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of real estate boom. For five years now I've heard self-proclaimed real estate prophets warn: "the bubble's going to burst." But except for a correction after the September 11 terrorist attack, the market has remained strong. Rents are high, property values continue to appreciate, and, perhaps most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. is still perceived as the media, culture, and finance capital of the nation. In addition, several specific conditions exist which suggest that 2005 will be a good year for property owners: Gradual interest rate hikes on the way The rule of thumb is that higher interest rates are bad for the real estate market, but gradual interest rate hikes indicate that the economy is growing--which is good for everyone. The declining dollar The dollar is falling relative to the yen and the euro. New York is a powerful, blue-chip magnet, and foreign investors will take advantage of the weak dollar to invest in American real estate, keeping demand high. Demand continues to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, supply If investors were paying high prices for tenant-less properties, this might suggest that a bubble was forming. It hasn't happened. No glut glut pronounced as rut, slut Vox populi An excess of a service or skilled labor in a particular area. See Physician glut. of space exists. If 2005 looks strong, should real estate investors A real estate investor is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. and property owners simply continue their 2004 strategies? Not necessarily, and here's why: With the economy in recovery, economic stimuli such as low interest rates and tax breaks will soon end. I'm advising clients to take advantage of these opportunities now, before the federal government takes them away. Buy or refinance before interest rates go up. No one expects the Fed to hike interest rates dramatically, but a small increase is coming. Even small increases translate to thousands of dollars in interest over the life of a mortgage. So if you are thinking of buying, do so now. Consider refinancing as well, but early payment penalties may negate ne·gate tr.v. ne·gat·ed, ne·gat·ing, ne·gates 1. To make ineffective or invalid; nullify. 2. To rule out; deny. See Synonyms at deny. 3. the savings of a lower interest rate. A good accountant will be able to crunch the numbers for you. One warning: Be cautious about starting new construction in 2005. Interest rates will likely rise, and you don't want to be caught without the resources to complete a construction project once loans get too expensive. Amass a sixmonth cash reserve before beginning any construction project. Commercial Property Owners: Get tenants in your building now My caller ID A telephone company service that sends the caller's telephone number between the first and second ring of the call. If the calling number is not blocked, the calling number is displayed on the handset or base station of the called party. often looks like a Keno board with all the calls I get from different area codes. And from 201, 212, 516, 631, 718, 914, and almost everything in between, I hear the same thing: commercial demand is back to pre-2001 levels. The days of "shadow space"--space that a tenant leased but was not using or was subletting--are over. It's a commercial property owner's market. A major benefit of getting tenants now is the chance to make leasehold improvements. Tax stimuli still exist to encourage this. A new law allows calculation on depreciation of lease-hold improvements to be cut from the traditional 39 years down to 15 years. Cost-segregation and tax-free exchanges are still great strategies Two of the most popular strategies of 2004 will work again in 2005. If you purchase a building, a cost-segregation analysis will identify which aspects of the property, like fixtures, wiring and furniture, can be depreciated Depreciated may refer to:
Tax-free or 1031 exchanges are very popular, and with good reason. You can avoid liability for capital gains taxes by exchanging property with another owner. This does not have to be a direct trade--there are companies that will hold the cash from your sale in escrow until a suitable exchange can be made. The current real estate market is holding steady. Though looming interest rate hikes will likely prevent a boom, opportunities exist to improve your position in 2005. The situation brings to mind an old Chinese Old Chinese (Simplified Chinese: 上古汉语; Traditional Chinese: 上古漢語; Pinyin: proverb proverb, short statement of wisdom or advice that has passed into general use. More homely than aphorisms, proverbs generally refer to common experience and are often expressed in metaphor, alliteration, or rhyme, e.g. : "Be not afraid of growing slowly, be afraid only of standing-still." HARRY MOEHRINGER, PARTNER, MARKS, PANETH & SHRON LLP LLP - Lower Layer Protocol |
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