Forbes: 2007 most affortable U.S. real estate markets

1. Indianapolis, Ind.

Median home price: $112,500
Median household income: $60,383

2. Cleveland, Ohio

Median home price: $122,900
Median household income: $57,472

3. Detroit, Mich.

Median home price: $154,600
Median household income: $63,052

4. Pittsburgh, Pa.

Median home price: $109,000
Median household income: $54,872

5. Cincinnati, Ohio

Median home price: $136,800
Median household income: $60,146

6. St. Louis, Mo.

Median home price: $134,400
Median household income: $59,950

7. Atlanta, Ga.

Median home price: $170,400
Median household income: $63,484

8. Greensboro, N.C.

Median home price: $145,100
Median household income: $50,447

9. Dallas, Texas

Median home price: $145,500
Median household income: $58,736

10. Austin, Texas

Median home price: $176,200
Median household income: $65,739

U.S. rent control

In the United States during World War I, rents were "controlled" through the efforts of local rent anti-profiteering committees and public pressure. Between 1919 and 1924, a number of cities and states adopted rent and eviction control laws. Modern rent controls were first adopted in response to WWII-era shortages, or following Richard Nixon's 1971 wage and price controls. They remain in effect or have been reintroduced in some cities with large tenant populations, such as New York, San Francisco, Los Angeles, Washington, DC, and Oakland, California. Many smaller communities also have rent control, notably Santa Monica, Berkeley, and West Hollywood, California[1] along with many small towns in New Jersey. In recent years, rent control in some cities, such as Boston, Massachusetts and Cambridge, Massachusetts, has been ended by state referenda.

California - Landlord and Tenant responsibility for repairs

The landlord is under an obligation to put and keep his rental units in a condition fit for human occupancy, except for those conditions caused by his tenant's want of ordinary care {Civil Code Secs. 1929, 1941} A building fit for human occupancy must have at least the following characteristics {Civil Code Sec. 1941.1}.

1. Effective weatherproofing of roof, exterior walls, and unbroken windows

2. Plumbing up to code and in good condition

3. Water supply up to code providing hot and cold water

4. Heating facilities up to code and in good condition

5. Electrical lighting up to code and in good condition

6. Building, grounds and appurtenances clean and free of vermin at the time of renting

7. Adequate receptacles for garbage

8. Floors, stairways and railings in good repair Install and maintain locks

9. Conforming locks {Civil Code Sec. 1941.3}

The landlord's obligation to repair dilapidations in the characteristics of habitable dwellings does not arise if the tenant violates his own legal obligations as to maintenance, provided these violations substantially interfere with the landlord's ability to do the repairs {Civil Code Sec. 1941.2}

Tenants are required by law to take reasonable care of their rental units, as well as common areas such as hallways and outside areas. Tenants must act to keep those areas clean and undamaged. Tenants also are responsible for repair of all damage that results from their neglect or abuse, and for repair of damage caused by anyone for whom they are responsible, such as family, guests, or pets.

3 tips for buying foreclosure properties

In addition to the usual tips for buying a property,

1. Use web sites such as www.redfin.com, www.realtytrac, www.foreclosure.com.

2. Use a broker who is familiar with REO (Real Estate Owned) properties in the area.

3. Watch out for repair costs. Foreclosed properties could have been neglected and the prior owner was not able to upkeep it.

Rent amount references

As of June 2008, here are some examples from Craigslist:

In Queens, NY - 2BR/2BA apartment - $1340/month


In Redmond, WA - 3 BR/2 BATH TOWNHOUSE - $1600/month

• Near Microsoft, I-520, shopping, trails, award-winning schools
• Water and landscaping included

In Cupertino, CA - single family house in great school district - $3190/month:

• National award school district: Lincoln Elementary, Lawson Middle, Monta Vista High
• 3 Bed/2 Bath/2 Car Garage, 1550 S.F. huge lot; almost 9000sq
• Completely remodeled, mint condition
• Dual Pane window

In Foster City, CA - condo - $2300/month

• 2 Bedrooms 2 Baths Condo, approximately 1350 sq, ft.
• Living Room with fireplace
• Secured One-car underground parking
• Swimming Pool
• Tennis Courts

In Fremont, CA - 1br apartment - $1250/month

• Pool
• Fitness center
• Cable TV and internet connection available

Tenant credit and background check

It's essential to run a check on the applicant.

The items to check include:

• Credit check
• Eviction records
• Criminal records

There are quite a few service providers out there. Be sure to choose one who is creditable and provide accurate information of the tenant's, so you can make sound decision.

What are IRS depreciation methods?

Please refer to IRS publication 527 for detail.

There are three ways to figure depreciation. The depreciation method you use depends on the type of property and when it was placed in service. For property used in rental activities you use one of the following.

• MACRS (Modified Accelerated Cost Recovery System) for property placed in service after 1986.

• ACRS (Accelerated Cost Recovery System) for property placed in service after 1980 but before 1987.

• Useful lives and either straight line or an accelerated method of depreciation, such as the declining balance method, for property placed in service before 1981.

How does ACF Rental Cash Flow help me in filing tax return?

In the system, the income and the expenses you entered are by tax categories. The system totals the income and expenses for the tax year for each property. You simply carry them onto schedule E, or into tax software.

Or if you use an accountant, you may choose to use "export to file" feature, and forward to your accountant the Excel file or HTML file. This feature may help to save you $$$ on accountant fees.

Receiving and returning of security deposits do not have tax consequences. In CA, you return the full amount plus interest to the tenant when after the tenant moved out. If you use a portion of the security deposit for cleaning fees or late fees, you need to enter them as income.

For depreciation items, if you use a tax software, you enter each of them to the tax software. The tax software should calculate it based on the nature of the item, the depreciation method used, and the property location (e.g. Gulf Opportunity Zone). If you use accountant, he/she will figure this out for you. Please refer to IRS publication 527 for detail.

Is my rental property a good investment?

If one put money in a FDIC insured online CD account such as ING Direct, WAMU, etc., he/she will get slightly better return than regular bank accounts. At this time, the return is close to the inflation rate.

For U.S. stock market, if you invested on S&P 500 index fund over the last 20 years, the annual average return would be at ~10%.

To invest in real estate, longer term investors would be looking at both the cash flow, and the appreciation of the property value.

There is a popular saying "real estate is local". The rent amount and the property value depend on mostly on local situation. For example, if you own a rental property in Silicon Valley near an excellent high school, and you have owned it for a few years, most likely you are doing very well. But if you've just purchased the property not long ago at a high price with 20% down-payment, the rent income may not generate positive cash flow at present time. But still, the property value may increase year-over-year.

To make a sound decision, you need put into consideration for:
. Purchase costs - commission, title insurance, escrow, etc.
. How much down-payment you put in.
. Loan amount, interest rate, and therefore, the points and mortgage payment.
. Property tax, insurance, and other expenses.
. Rent income generated.
. In the future, when you sell the property, the selling price and selling costs.

Rent amount discussion

Factors include:
. Local market situation - such as job situation, schools, etc.
. Quality of the property.
. Get ideas from local craigslist.com, and/or from newspaper.
. You may want to keep the existing rent amount for an excellent tenant. This will reduce tenant turnover rate.

What's the purpose of ACF Rental Cash Flow exporting data to file?

File export creates an .XML file. This file can be opened by Excel 2002, 2003, or 2007. Please refer to the help contents for how to export, and to open the file.

Within Excel, you can further format the data, or perform additional calculations. Afterward, you may choose to email the file to your accountant for tax filing - including rental income, expenses, and depreciation.

From Excel, you may choose to save the file as .HTML. This file then can be opened by any browser.

ACF Rental Cash Flow, Installation notes for Windows Vista users

To install ACF Rental Cash Flow on Windows Vista O.S., perform these steps:

. Download our .RAR file and extract the files from .RAR to a folder on your hard-drive.
. Logon as Administrator user role. Under Account Setup, turn off the user account UAC. Vista will ask you to reboot your computer - you reboot the computer.
. Execute our setup .exe file you extracted from the .RAR. The installation procedure checks for required Microsoft components and install them. You must have active internet connection at this time.
. After finishing the installation, you may turn user account UAC back on.