The Arizona Sentinel

June 24, 2009

My Letter to Fox Business , Brian Sullivan

Filed under: My Posts — thearizonasentinel @ 3:26 pm

As many of you know , Im interested in economics, and how it relates to real estate,.. This morning I was watching Fox Business . Brian Sullivan was doing a bit on the housing market.  Its frustrating to me that all of these network talking heads, never go to the most crucial issue in real estate investing.  And that is how it relates to your year end tax liability.  So I wrote Brian a short , letter , hoping that he will expose this issue to the American people.   The higher the rate, the lower, your tax liability.  The letter follows:

Note:   If you bought a home 2-3 years ago, you paid 40-50% more than its actual worth,. ” Talk to your broker about that “!!!   Doing a refi at a lower rate only moves your problem down the road.  And down the road aint looking so good.  Borrowing all you can,due to a lower rate  is problematic.  Sooner or later you are going to have to put some skin in the game.  If you have no skin,  Rent until you do. !!!

Goodmorning Brian:
 
First, thank God for Fox and Rupert:
 
Now, this morning you were doing a bit on new home sales,mortgage rates yadada<.
 
Your missing a crucial element relating to mortgage rates VS. home prices.
 
We will not see a turn in home sales until the American people understand the tax code as it relates to home buying. And the surplus homes are out of the system, one way or the other,..
I just got back from a 2500 mile trip , thru, AZ,UT,ID,MT,WY.  There are new homes sitting around empty everywhere. And Prices were advertised on billboards from $149,K to $199K. 
 
In short, the higher the rate%, the lower the cost of the home.
Mr. Lieberman went there this morning,  but he failed to explain that the higher the rate, those interest dollars are a tax deduction on the 1040,.  You can not depreciate residential property.  So if you want to lower your monthy costs for residential housing, == Raise the interest rate, write that rate off against income, and reduce your tax liability by sheltering your income .
 
The reason the FED wants to keep interest rates low is a lie: They say they are trying to encourage buying.  Wrong, they know that the higher the rate, the fewer dollars will be coming into the Treasury at tax time. 
 
As a investor in commercial property and having owned several personal homes,.. If people want to improve their net worth , they need the rate deduction, and a lower capital outlay.
 
I learned this lesson in the 80’s during the RTC , Savings and loan issue.   I created a great retirement, by buying commercial properties at super discount.  and financing at 8-10% rates.
 
I also bought a home, distress sale, reduced cost, with at 7% interest rate,…
 
The American people do not understand the mechanics of real estate buying as it relates to actual cash outlays:
 
One more crucial point here:   If your going to give your money to someone, give it to a local banker,.  They will continue to loan you money,. The Fed IRS, will not loan you money.   And you need to keep your “local” banker making profit. 
 
The housing market is not going to return until surplus overbuilt,toomany, homes are off the market.
And to encourage people to buy, the cost of homes will continue to go down, Until those homes are gone.
 
The unfinished homes are being demolished and hauled away, due to mold and vandelism.
 
Rates must go up,.  which will give people a incentive to buy and shelter income.
 
Fox should expose this and show the country exactly what the Fed , is up to. 
 
I had a investor in the 80s and 90s, I was a aircraft dealer and had a auto dealership and finance company, invested in commercial property.   He made me study the tax code,.  It worked and still does,.  Another benefit that is never talked about , higher rates keep a check on property taxes , by preventing the county commissioner, phony apprasiers ,mortgage brokers, and real estate brokers from jacking up phony values of real estate.
 
After I moved to AZ , I opened a mortgage office,, after a year I shut it down , because people did not could not and would not understand the importance of having skin in the game,.. All they wanted to look at was the interest rate. They went else where , and now they are losing their homes.
Love the show,   Dagen’s a hoot!!!
 
 
 
 

Make your summer sizzle with fast and easy recipes for the grill.

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