Feeling Tired All the Time


It’s not ok to feel tired all of the time. So my daughter really wanted to do a food detox with me….and…today is day 2. I agreed to do it over 90 days, not 7 like I used to. My body used to feel so mangled up inside doing the really short ones and caused too much inner chaos. In the first week the only adjustment to our food program we will be making is to cut out sugar from snacking and eliminating breakfast cereals. Goodbye pancakes 🥞. She is going to miss that Saturday morning ritual. We replaced both with non-dairy yogurt, fruit and raw almonds. 🍐 No honey or agave either. Stevia is ok. Lunch and dinner for week 1 will be the same except except white starch foods will be replaced with a salad or vegetable soup made from vegetable stock and raw veggies. Honestly easing my way out of sugar sounds easy but it really does require the discipline of drinking more water and resting more. The adrenal glands and kidneys need time to adjust to the change otherwise anything from dizziness and light headedness is likely to occur, for me at least. In week 2 we will be changing our dinner program to cut back on animal protein and cut dairy from the meal entirely. Lunch will stay the same. My daughter doesn’t know it yet but starting in week 2 we also CHANGE the dressing used on our salads and ranch dressings and other pre-made dressings will be replaced by simple Apple Cider Vinegar and olive oil. She can always opt out and have soup but the point is to move away from the store bought dressings that contain canola oil. Last but not least will be an increase in our exercise program. We have agreed to a minimum of a 30 minute walk together, even though i will do more. I want to get back to doing 20 pullups 💪 in a row! That’s a goal to work up to. To our health!😃🍇🍌🥑 #fooddetoxprogramsforlife

Foreclosure with Equity?


It’s hard to imagine in this day and age with the amount of information available on the internet about how homeowners can avoid foreclosure that they still happen.  But they do.  Although the foreclosure process ends with the possession of the home (the collateral for the mortgage loan) returned back to the bank that is servicing the mortgage, what some people still don’t realize is this:  foreclosures with equity can be just as common a foreclosures without.  What is a foreclosure with equity?  It’s a foreclosure of a home that is worth more than what is owed on the outstanding mortgage.  Banks that service the mortgage loan for homeowners will use a Trustee to handle the business of sending notices and ultimately the sale of the property at auction if a mortgage is in default (has not been paid in full and on time).  In some cases, a property that is sold above what is owed on the original mortgage+interest+legal fees is classified as an Equity Foreclosure, meaning, the amount over what is owed to the bank is equity, the borrower’s equity.  BUT the borrower must makes a demand to the Trustee for the equity portion to be returned!  Although the bank does not get to keep this “overage” the borrower must make a demand to receive it.  The foreclosing Trustee will almost never make an effort to find the borrower if the borrower is still owed money from the sale of the property.  It is very important to understand that a borrower who has equity in their home can still experience a death, divorce, disability, loss of employment or income source or a variety of other “life events” that can cause a borrower to get behind on their payments.  If the payments continue to remain unpaid the bank who is servicing the loan can still move to foreclose the home, even if the home has equity.  One strategy to avoid foreclosure of a home with equity is the sale lease-back.  As a true win-win strategy it allows the borrower to lease back their home from a new buyer with a promise that they will be able to purchase the property back after a certain period of time has passed.  After the borrower repairs the financial damage that caused them to get behind on their payments, the borrower (who will temporarily become a tenant) will have the option to purchase the house back in the future at an agreed upon price.   The new buyer and the borrower will negotiate how the equity in the property is split before either party enters into the sale of the house and after reviewing the contract with qualified legal counsel.  The equity in this scenario is used by the borrower as a bargaining chip with the buyer and in turn offers the opportunity for a buyer to earn a return on dormant cash that might be earning a meager 1% or less in a savings account.  In my next article I will discuss ways to avoid foreclosure of homes that have no equity.  To your prosperity!

Building a Portfolio versus Building Equity


“My portfolio is growing!  I just closed on my fourth house and I just got a promotion at work – things couldn’t be better!”  On the outset this sounds great.  Until you ask, “do you have any debt on those properties?”  The eager up-and-comer quickly responds “well, yes, but I have renters, so I’m building equity!”  As the onion peels away we start understanding the situation much better.  “I took advantage of a low down payment loan program to buy the houses so my renters (as they pay their monthly rent) are paying down my mortgage for me.  These houses will be my retirement portfolio one day.”  If this sounds familiar, then I agree with you.  I am learning about more and more “investors” who are buying homes at or near market price, adding some fresh paint and carpet, replace a few kitchen cabinets and toilets and then rent their properties out.  This strategy is only one paycheck (of the renter) away from becoming a disaster for the owner.  Simply put, the only viable reason to rent out a single family house is because either (a) you are using your own money, and (b) the rental rate is so far above your holding costs that your net profit is better than any other investment alternative on a return-on-cash basis.  Otherwise, if you are buying a house near or at market price, one missed rental payment (and usually will at the wrong time) can spell disaster for the owner.  The cost of eviction and missed payments will eat up any “discount” you bought the property for.  So now you have to ask yourself, DID YOU GET INTO REAL ESTATE TO BUILD A PORTFOLIO OR TO BUILD EQUITY?  The purchase of a rental home should made at a steep enough discount that lost rents, non-paying tenants, and expensive repairs do no cut significantly into PROFITS.  Remember profits are why you got into real estate investing to begin with!  Four home purchases made at or near market price with a low to zero down payment is speculation.  The buyer is speculating that the renter will not default, that the house will not need repairs, that economic circumstances won’t change, that a host of factors will not cut into profits.  Homes in several hot markets during 2007-2012 including Las Vegas, Phoenix and Tucson went through a boom/bust cycle that wiped out half the value of the residential market.  Short sale properties were so common few people wanted to buy them and so many more couldn’t because the banks were barely lending to even the top tier borrowers in the country!  Build a portfolio Yes, if you bought equity on the day of closing.  But, depending on a series of factors that are not under your control No.  Equity is bought on day one.  Having a strategy to cash in on that equity will be in my next article!  To your prosperity!

Value Add, Wholesaling and Speculating


The seller doesn’t get it!  I’m reading from the end of an email chain in which the seller is blasting me for not taking his counter offer on a single family house.  A few email messages ago he discussed ad-nauseum why I  ” . . . really need to reset my expectations in this market.”   The truth is that I’m not buying the deal for one simple reason:  the deal has been stripped of it’s equity.  I have no issues with a person wanting to make a profit.  That’s par for the course.  But if a property is not in Turn Key condition (requiring no work or upgrades) paying market price leaves me no upside potential in the property.  NEXT!  I’ve been around single family deals long enough to know when a seller has priced a property for a fast sale and when they are speculating.  What’s a speculator.  Here’s an example:  A brand new remodeled home recently sells in your neighborhood for $500,000.  The house was move in condition, no upgrades or repairs needed with all the latest shiny features, materials, etc.  The seller has priced his outdated house with none of the latest features for $485,000.  Yet when I look around the neighborhood the price for comparable quality and features is more like $450,000.  As a contractor I determine that is would take a $25,000 investment to bring the outdated home to date with the $500,000 remodeled home.  If I pay $485,000 I’m speculating that an extra investment of $25,000 will fetch an even greater price than the $500,000 newly remodeled home.  However, if I pay $415,000 the $25,000 investment should bring me a $500,000 home for the cost of $440,000.  This is a value-add strategy because I have “built in” $60,000 of equity by doing the upgrades.  If I decided not to do the upgrades but still purchased the house for $415,000 another strategy is to sell the house for $450,000 (the value for similar outdated homes).  This is the wholesaling strategy which would net a profit of $35,000 minus my costs to quickly sell the property.  And as you can see from this example, if you can get an offer accepted at a discount you will have more options available should your plans ever change.  Food for thought.

Will Your House Sale Trigger a BIG Tax? GO Installment Sale!


Picture twenty years from now.  You and you’re families needs have changed.  Maybe you had children that are grown and out of the house now.  Maybe you and your significant other are quickly nearing retirement.  That four bedroom house is really “a lot” of house to clean, maintain and pay the property taxes.  And maybe you made other investments in real estate and those properties have appreciated as well.  You bought the house at a time when real estate was considered cheap, realizing now that your house IS your nest egg and has grown three to five times the price you originally paid!  If you considered downsizing your lifestyle the prospect of having to pay the tax on the gains you earned makes the idea seem impossible, right?  I mean why would anyone pay so much in taxes on the sale of the home to downsize right before retiring and your dependable income disappears?  The tax will deplete a large amount of money that you could have gone towards your retirement!  For this reason it is a MUST to learn about selling your home using the Installment Sale method.  Before I go too far, please remember that I am not licensed tax professional and I am not giving tax advice.  I am a real estate professional and like you I get my tax advice from a licensed tax professional and pay them a fee for that advice.  So if you need tax advice please see your tax professional BEFORE taking any action that could trigger a taxable event!  That said, an Installment Sale is a method of selling your house now, and spreading out the taxable consequence over time.  For example if you purchased your house for $100,000 and it is now worth $500,000 you have a basis in your house of $100,000 so any amount that you sell your house over and above that amount will have a taxable consequence.  And the tax would be paid for the current year’s tax filing.  However, if I offered to purchase your home for $700,000 with a $100,000 down payment and then pay you the remaining $600,000 over the next 30 years, we now have an installment sale.  You may have hear of the term a “carry-back” which it is similar.  In this example the seller is taking back an income stream for the next 30 years instead of all the money up front.  The seller gets to spread out the taxable consequence over the next 30 years and the house is sold.  What binds the buyer to pay this balance due?  The purchase and sale agreement (which is the executed contract), the promise to pay secured by a promissory note and a deed of trust against the property.  The deed of trust is the 1st position lien holder with rights to foreclose and take back possession of the property if the buyer fails to pay the remaining balance due.

Here are some additional resources to understand how the sale of you’re house can qualify for an installment sale.  As always feel free to send me a message if you have questions about how this strategy can help you sell your home!







Single Women Leading the First Time Home Buyer Charge!


Skip the spouse, buy a house.  Right?  Recently the National Association of Realtors found that single head of household females were outpacing their male counterparts in the first time home buyer surge going on across America.  The percentages from today’s infographic speak clearly to the fact that women value home ownership and are wiling to use a greater amount of disposable income to maintain housing ownership.  In Australia, woman are outpacing their male counterparts also because they no longer need a guarantor for they are encumbering against the home they are purchasing (https://www.westpac.com.au/news/money-matters/2018/02/women-holding-the-keys-to-the-housing-market/).  According to data released in 2006 by the Joint Center for Housing Studies at Harvard University, the three main reasons a single woman would buy a home are:
1. A strong desire to own her own home.
2. Needing more space or wanting smaller home.
3. Relocating closer to job, school or family.

And a 2012 blog post on Redfin revealed that women buying a home are more focused on whether they love it — 46 percent of women first evaluate a home based on this, compared to 24 percent of men. Fifty-four percent of women and 76 percent of men evaluate a property based on cost and value (https://www.huffingtonpost.com/2013/07/10/single-women-buying-homes_n_3573801.html).

I am all for more woman becoming homeowners.  Neighborhoods that are predominantly owner-occupied tend to be maintained better, safer and maintain higher asset values.  Want to learn more about becoming an owner for the first time?  Send me a message at paul.krause@kw.com Today!

The Biggest Home Buying Mistake – Timing versus Planning

SoCal median home prices


  1. Loss of a job/income
  2. Health emergency not covered by insurance
  3. Auto accident not covered by insurance
  4. Home repair not planned that drains savings
  5. Tax levy from the IRS or State taxing board
  6. Legal settlement not covered by insurance or savings
  7. Family emergency not covered by savings or insurance
