Thursday, 26 March 2015

Westhill Consulting British Colombia, Hong Kong, Jakarta, USA: How to Avoid a Real Estate Scam

You'd be foolish to think you couldn't be fooled in a real estate transaction. While the majority of sellers, buyers and renters are presumably honest, there can be additional players with skin in the game, from landlords and real estate agents to title agency workers and bankers.

As Sacramento real estate broker Alexis Moore observes: "The crooks don't always have on orange jump suits. Many are former real estate professionals who are using the system."

So how do you know if you're about to be scammed? You can't, but there are warning signs and steps you can take to protect yourself. Even if you are working with honest people, these are smart ways to approach buying, renting or selling any home.

Don't rush. Sometimes, you really do stumble into a great deal, and, yes, you want to act quickly before someone else stumbles on – and snags – this great deal. But rushing means you have little time to question what you're doing.

Joe Rand, managing partner for Better Homes and Gardens Rand Realty, which sells and rents home in New York and New Jersey, says that about once a week, he hears of a renter who saw a house but didn't actually go inside.

"The person will tell the renter that they've relocated, they need to rent [the property] quickly, here's a photo. Just go look at the place, but I can't show you the inside," Rand says. The renter will send the "landlord" deposit money and show up at one of his business's many offices, asking for the keys. Of course, that's when the renter learns he was working with a con artist who had simply taken a photo of an apartment and let the victim's imagination fill in the blanks.

It may seem crazy to rent property without touring the interior, but as Rand explains: "What does every scam depend on? Somebody thinking this is an amazing deal, and they have to jump on it."

Vet the person you're working with. Just because someone has a LinkedIn page doesn't make him or her a swell human being. For instance, earlier this month, at least 14 unsuspecting homebuyers in towns around Monroe County, New York, paid down payments to a real estate agent whose license had reportedly expired. The homeowners wrote him checks, but instead of putting their funds in escrow, the agent allegedly pocketed the money. At the time of this writing, the accused agent, John Valerio, is cooling his heels in the county clink.

But one can hardly blame the victims. Valerio, after all, apparently was, until very recently, a licensed real estate agent. He doesn’t have much of an online presence, but his LinkedIn profile states that his company, Lamplighter Realty Inc., has been in business since 1971. What’s more, his business is listed in the Yellow Pages.

This scenario may happen more than we’d like to believe. Moore says she recently reported an unlicensed colleague who was still selling homes. Your safest bet is likely to walk into a bustling, reputable real estate office to meet with a new agent, but if you meet an agent randomly who has little more than a business card and a charming demeanor, ask to see an agent’s license to ensure it's current, Moore suggests.

"We all carry a plastic card like a credit card in California, and it says the person's name and their title, like broker or sales agent," she adds.

If you're really concerned, check online to see if anything concerning pops up. To find someone you trust, ask for a referral from a close friend or family member.

Wednesday, 25 March 2015

Westhill Consulting British Colombia, Hong Kong, Jakarta, USA: 11 tips to protect yourself from a property investment scammer

Real estate investment seminars are in the spotlight again with the competition watchdog instituting proceedings against property training company We Buy Houses and best-selling author Rick Otton.

The Australian Competition and Consumer Commission (ACCC) has repeatedly warned consumers to be cautious about real estate investment seminars in general. It urges people who have been scammed or come into contact with a seminar or real estate investment that “doesn’t seem right” to report it to the ACCC through the SCAMwatch website.

In the latest case, the ACCC alleges We Buy Houses and Otton contravened the Australian Consumer Law by making misleading claims in promoting property investment seminars and training programs at costs ranging from $2997 to about $17,000.

Otton, who wrote the popular book How to Buy a House for a Dollar, says the ACCC is taking a literal interpretation of the book’s title while members of the public would understand that the dollar was just the start of the process.

But the ACCC is concerned the seminars target vulnerable consumers who don’t qualify for bank loans or who are having difficulties meeting their mortgage repayments.

The latest action follows an investigation with New South Wales Fair Trading. We Buy Houses and Otton have previously been under scrutiny in other states with Victorian consumers warned about the seminars in 2012 and Otton being banned from conducting seminars in Western Australia in 2013.

The ACCC frequently warns would-be investors that many consumers have paid thousands of dollars to a wide range of property investment seminar promoters to receive advice. In many cases the strategies presented have been high-risk, involving borrowing excessive sums or borrowing on risky terms, and inappropriate for the investor.

In some instances, people with self-managed superannuation funds have been specifically targeted, although proposals to ban SMSFs from borrowing may curb that.

Some investment seminar promoters use high pressure tactics to coerce people into making investments without independent advice. Some charge unexpected fees and commissions or make false or misleading promises about rent guarantees or discounts for buying off the plan.

Here’s a list of tips compiled from the ACCC’s ScamWatch website and the Australian Securities and Investments Commission’s (ASIC) MoneySmart website on how consumers can protect themselves from losing money as a result of advice from a property investment seminar:

• Use your common sense: the offer may be a scam.

• Remember there are no get-rich-quick schemes: the only people who make money are the scammers.

• Be wary of investments promising a high return with little or no risk. No investment is risk-free. If it looks too good to be true—it probably is.

• Look carefully at the strategies suggested by the seminar to achieve these results. Property typically returns 6-7% a year, year after year. If you're offered returns of 1-2% more than the typically return, get a second opinion and ask for a detailed written explanation.

• Watch out for property deals that include 'rent guarantees' or 'discounts' for buying off the plan. They can involve hidden fees and commissions. The properties can also be over-valued.

• If you are planning to make an investment, consider other costs that may be involved such as legal fees and stamp duty.

• Do not let anyone pressure you into making decisions about money or investments. Do not commit to any investment at a seminar where the atmosphere can be charged and exciting. Investment decisions should only be made after a lot of thinking and after seeking independent advice.

• Remember that family members and friends may try to involve you in a scam without realising that it is a scam: you should seek independent advice (from a lawyer or financial adviser).

• Do not open suspicious or unsolicited emails (spam): delete them. Do not reply to a spam email even to unsubscribe.

• Check with ASIC and the ACCC to see if they have taken any action against seminar promoters or their schemes. Remember that even if ASIC or the ACCC have not taken any action to date, this does not mean the scheme is safe or legal.

• Before you accept an offer to fly interstate to view properties, find out if you must pay for your travel and accommodation if you don’t buy.

• Another twist is to get you to invest in offshore schemes where you lose the protection of Australian laws. You may never see your money again.

Friday, 20 March 2015

Westhill Consulting British Colombia, Hong Kong, Jakarta, USA: Jakarta weighs new land and property tax formula

Indonesian president Joko Widodo's administration is sending mixed signals to the public about new tax regulations on property, as it aims to fill state coffers and introduce populist policies at the same time.

In a bid to meet a revenue target of 1.5 quadrillion rupiah (UScopy14 billion) this year, the government plans to introduce various measures, including revised property tax regulations.

The finance ministry says that starting from April it will adopt a new formula to collect luxury goods tax on landed houses or apartment.

"The formula will be based on [property] value, not on its size. Surely, the value will be more than one billion rupiah," Finance Minister Bambang Brodjonegoro said last Monday.

The current luxury tax on property transactions is imposed on purchases of landed houses bigger than 350 square metres and apartments of more than 150 square metres.

Bambang said that determining "luxury" based on property size was not always accurate. For example, he said, a 150-square-metre apartment might be seen as luxurious in one location but not in another.

The government also plans to lower the property price limit when imposing 5% income tax on property transactions, to 2 billion rupiah (about 5 million baht) from the previous limit of 10 billion for houses of more than 500 square metres and apartments of more than 400 square metres.

But Anton Sitorus, head of research at the real estate services firm Jones Lang LaSalle Indonesia disagrees with the new proposed formula.

"This new regulation is aimed at boosting revenue from property tax. But a luxury tax on property should be regulated by size first, not based on its value," Sitorus said.

"Luxury tax and income tax are two very different things, but they've been mixed up in this proposed formula."

While Indonesia does not exempt a first house from tax, a central bank regulation makes it easier for people to acquire a first home by allowing a 20% down payment, compared with the normal requirement atleast of 30%.

But even as the finance ministry is preparing the public for new taxes, there is confusion about how united the government is behind the idea. Ferry Mursyidan Baldan, the minister of agrarian and land reform, in January called for a populist policy to scrap the taxable value of property, property transfer fees and the annual land and building tax in a bid to ease taxpayer's burdens. He said he would propose the idea to the finance ministry.

The taxable value of property, also known as NJOP, is normally used to determine the value of land but it doesn't always reflect in a property transaction since the actual transaction value could be lower or higher depending on whether the land is strategically plotted or not, despite being situated in a prime location.

To replace the NJOP as a determining factor for valuing land, Ferry said his ministry proposed a new system called land value zoning. He said it would be based on more concrete variables and spatial planning concepts and would set the land value higher if it was situated with good access to public facilities and infrastructure.

Ferry said he expected the initial phase of the new property tax regulation would be imposed by 2016 and would first exempt houses below 200 square metres, places of worship and other buildings used for social purposes. It would still collect property transfer fees and annual land and building tax on land and buildings used for commercial purposes and houses larger than 200 square metres.

Ferry's proposal has met with opposition from regional governments. The central government in 2011 gave them the authority to collect land and building tax, and they fear that his plan would reduce their revenues.

Tuesday, 17 March 2015

Westhill Consulting British Colombia, Hong Kong, Jakarta, USA: Tax-saving tips for buying and selling a property

A joint loan while buying is beneficial; make full use of deductions available while selling.

Irrespective of class or income, Indians are fond of buying gold and real estate. Purchasing and selling the metal is a straightforward game but a property, through its lifecycle (buying, owning and selling), can be taxing. If played right, you can reduce the tax outgo.

While buying

A house is the biggest purchase most people make in their lifetime and the government realises this. To give buyers relief, the government has allowed income tax (I-T) deductions if the property is bought on a loan. Under Section 80C, the borrower can claim deduction of up to Rs 1.5 lakh. For a self-occupied property, a Rs 2 lakh benefit is available under Section 24 (b) of the Income Tax Act for interest on the home loan. If the property is not self-occupied, the entire interest paid to the lender can be deducted from income. "This applies even if a person borrows money from a friend, his family or a private lender provided appropriate loan document between the borrower and private lender is done and there is either a letter or a confirmation of interest charged by lender," said Hemal Mehta, senior director, Deloitte in India.

Problem area: Under the current market conditions, project delays are a common thing. This can cause financial trouble to the borrower. A person can't claim deduction for the interest if his or her house is still under construction. A buyer can, however, get benefit for the principal amount. On possession, the borrower can claim deduction for the interest paid during the pre-construction period. This needs to be done in five equal instalments, starting the financial year you are handed the property.

Tip: To take advantage of current laws, a couple should take a joint loan in equal proportion. This will allow each to claim full tax deductions available for the principal and interest. This also applies to a child and a parent.

While you own it

If it's the borrower's only house and self-occupied, there's no taxation. For those who have two or more houses and these are neither let out nor occupied, the taxation can get tricky.

According to I-T laws, in such cases the owner should take a notional rent value and pay tax on it. There's a prescribed method to calculate the notional value, which takes into consideration the municipal value of the property and the rent control legislation (either of the two) or the prevailing rent in the area for a similar house. "In a case of a notional rent, there is no rule to submit a certificate from a third party. However, it's better that a person submits a letter from a broker stating the prevalent rent in the area," said Mayur Shah, executive director - tax & regulatory services, EY India.

Problem area: If you are claiming housing loan deductions and housing rent allowance (HRA) at the same time, it can cause trouble. Many people claim HRA by showing rent paid to parents or wife (if there's a house in their names). A taxpayer is allowed HRA and loan deductions both under certain conditions. For example if your house is in a different city than that of residence. The department also allows you to claim HRA if you have a house in the same city as your residence, but you need to have a genuine reason. For example, many people in metros such as Delhi and Mumbai own house in far-off suburbs and can find it difficult to commute, owing to the distance. In such case, the person can claim both.

Tip: While calculating the notional value of a second home, you are allowed to claim few deductions such as municipal taxes. Also, an owner can claim deduction of a sum equal to 30 per cent of the value of the house property towards repair and maintenance charges.

While selling

When a person sells a property, he or she needs to pay tax on the profits made. If sold within three years of acquisition, the seller needs to pay short-term capital gains tax (STCG). In this case, the profits are combined with the income and taxed on the I-T slab rate.

If the property is held for more than three years, it attracts long-term capital gains tax (LTCG). The tax is levied at 20 per cent (plus surcharge and cess) after adjusting the gains for inflation using the cost inflation index the government issues.

A seller can save entire tax outgo if he or she uses proceeds equivalent to long-term capital gains for buying a new house located within India within one year prior to the sale date or two years from the sale date. If the property is under construction the time period permitted is three years.

The amount used for buying a new property is exempted from tax and if there's any balance, it will be taxed at a flat 20 per cent (plus cess and surcharge). If you are not immediately buying a house, this money needs to be kept in the Capital Gains Account Scheme (CGAS), and withdrawn within the stipulated timeframe.

If you don't want to go for a residential property, you can still save LTCG tax by investing in specified bonds issued by the National Highways Authority of India or Rural Electrification Corp (under section 54/54EC) within six months from the date of sale. These bonds have a lock-in period of three years. Also, the seller can only invest a maximum of Rs 50 lakh in these bonds, while you have to pay tax on the remaining amount.

Problem area: If the seller had inherited the property or it was gifted to him, the capital gain will be computed on the basis of the cost to the previous owner. If the house was purchased before April 1, 1981, the I-T department will consider the acquisition cost by the original owner or the fair market value of the property as on April 1, 1981, whichever is higher.

If a person sells an under-construction property after holding it for over three years, the taxation rules completely change. This is because the I-T department considers the person as a property owner only when he or she has received possession.

Tip: While calculating STCG and LTCG tax on sale of property, one can deduct the money spent on improvement and also cost for acquiring the asset such as stamp duty, legal fees, and payment of brokerage.

For more tips, just go to Westhill Consulting British Colombia website. Westhills offers a wide variety of innovative housing styles and options. You can also visit our Linkedin group and read some discussion for more info.

Monday, 16 March 2015

Westhill Consulting British Colombia, Hong Kong, Jakarta, USA: 5 tips for first-time homebuyers

You’ve decided to go for it. Buying a home can be thrilling and nerve-wracking at the same time, especially for a first-time homebuyer. It’s difficult to know exactly what to expect. The learning curve can be steep, but most of the issues can be resolved by doing a little financial homework at the outset.

1. Check your credit report

The homebuyer’s credit score is among the most important factors in qualifying for a loan these days.

“In addition, the standards are higher in terms of what score you need and how it affects the cost of the loan,” says Mike Winesburg, formerly a mortgage planner with McKinley Carter Wealth Services in Wheeling, W.Va.

To get a sense of where your credit stands, go to to get your free credit report from each of the three credit bureaus.

Scour the reports for mistakes, unpaid accounts or collection accounts.

Just because you pay everything on time every month doesn’t mean your credit is stellar, however. The amount of credit you’re using relative to your available credit limit, or your credit utilization ratio, can sink a credit score.

The lower the utilization rate, the higher your score will be. Ideally, first-time homebuyers would have a lot of credit available, with less than a third of it used.

Repairing damaged credit takes time — and money, if you owe more than lenders would prefer to see relative to your income. Begin the process at least six months before shopping for a home.

2. Evaluate assets and liabilities

How do you spend your money? Do you have piles of money left over every month, or are you on a shoestring budget?

A first-time homebuyer should have a good idea of what is owed and what is coming in. If you don’t know, track your spending for several months.

You should understand a little bit about monthly cash flow,” says Winesburg.

Additionally, buyers should have an idea of how lenders will view their income, and that requires becoming familiar with the basics of mortgage lending.

For instance, some professionals, such as the self-employed or straight-commission salesperson, may have a more difficult time getting a loan these days than others. Gone are the days of the no-doc loan, thanks to the abuses of the go-go days.

A stated-income loan was available to non-W-2 wage earners in previous years, but today’s standards are much more stringent.

According to Winesburg, the self-employed or independent contractor will need a solid two years’ earnings history to show.

3. Organize documents

When applying for mortgages, homebuyers must document their income and taxes.

Typically, mortgage lenders will request two recent pay stubs, the previous two years’ W-2s, tax returns and the last two months of bank statements — every page, even the blank ones.

“Why it has to be every single last page, I don’t know. But that is what they want to see. I think they look for nonsufficient funds or odd money in or out,” says Floyd Walters, owner of BWA Mortgage in La Canada Flintridge, Calif.

Buying a home can take a long time, but knowing what you need and where to find it can save time when you’re ready.

4. Qualify yourself

Ideally, first-time homebuyers would know how much they can afford to spend before the mortgage lender tells them how much they qualify for.

By calculating their debt-to-income ratio and factoring in a down payment, buyers should have a good idea of what they can afford, both upfront and monthly, when it comes to their home.

Though there’s not a fixed debt-to-income ratio that lenders require, the old standard dictates that no more than 28 percent of your gross monthly income be devoted to housing costs. This percentage is called the front-end ratio.

The back-end ratio shows what portion of income covers all monthly debt obligations. Lenders prefer the back-end ratio to be 36 percent or less, but some borrowers get approved with back-end ratios of 45 percent or higher.

“Find out what you can afford and then you can back into everything else. We know the money you have available to put down, we know the monthly payment and we can solve (the equation) for the third variable — and that is the home price,” Winesburg says.

5. Your down payment

It takes effort to scrape together the down payment.

There are programs that can assist buyers with qualifying incomes and situations.

“I’ve helped arrange assistance loans for $10,000, which are interest- and payment-free, and forgivable after five years. Although considered a loan, they’re more like grants. Other programs can provide up to $40,000 interest-free,” says Winesburg.

“Each state is different, but most of this money comes from the HOME Investment Partnership Program, which is a federal block grant to create affordable housing,” he says.

Finally, speak with mortgage lenders when you’re starting the process. Check with friends, co-workers and neighbors to find out which lenders they enjoyed working with and ask them about the process and other steps first-time homebuyers should take.

Westhills offers a wide variety of innovative housing styles and options. Whether you’re looking for a 3, 4 or 5 bedroom home with or without a suite, a townhome or our new and innovative small footprint home, you’ll find it at Westhills. Follow us on Twitter @WesthillsCBC for more updates.

Sunday, 15 March 2015

Westhill Consulting British Colombia, Hong Kong, Jakarta, USA: Five things you must Avoid while investing in real estate

Real estate investing has given mind-boggling returns over last 10 years. However one should be careful while investing in real estate. Here are some useful tips that can help you be a sane investor in real-estate.

There are certain rules applicable to everything we do in our daily lives. The whole idea behind this belief is to fetch the maximal benefits, along with guarding ourselves from any kind of associated risks.

In that respect, our personal finance management is not distinct either. A number of aspects in our everyday financial matters involving loans, investments, taxes, credit cards, etc. are directed by some definite rules. Let us learn about some prohibitions that is, things we must not do while investing into real estate.

1. Say NO to very frequent switches in properties:

People tend to sometimes trade with the real estate investments. Rather than retaining property after purchase, people buy/sell them too often. This high frequency of trading can prove to be worthless. Wondering how? There are no tax benefits retrieved whenever property is sold in a short period of time.

If a property is sold within 3 years of purchase, the gain is treated as short term capital gain and there is no tax concession or exepmtion. If you sell a property after 3 years, it becomes long term capital gain and will be taxed at a lower rate. Even this concessional lower rate, can be withdrawn on long term capital gains from the property if these property transactions are happening too frequently.

If it happens very frequently, the Income Tax officer may treat this as a business income.

2. Do not invest into an unfinished property:

Delay in the complete construction of property is an instance that is too common to happen and is seen often. Postponing the property’s date of completion has become an industry norm that keeps repeating on a frequent basis.

Sometimes, extended delays can even result into postponed or incomplete projects. You cannot afford to put your savings of a lifetime at a serious risk, by overlooking this harsh fact. A long delay in property completion may even put you under the dual strain of rent and EMI. Also, the tax benefits available on real estate investments become restrained with time, in cases of extremely delayed possession. Considering this, purchasing a completed property will prove to a wise decision.

3. Do not broaden your budget too much:

Property purchase can cost you a lot, really a lot. It involves not only putting in all the money saved till date as down payment, but also paying a huge portion of our income as monthly EMI for years to come. This can jeopardize many of our other serious and important commitments such as, a medical emergency or children’s higher education, not to forget our daily expenses and small luxuries.

4. Avoid too much investment in real estate:

Most of us are big fans of property, gold, or big bank deposits. We generally overlook asset classes such as bond funds and equities. Also we have many misconceptions about investments in property. Here is one - property prices increase at a much faster rate compared to gold and other financial assets. This belief is one reason why most people end up investing entirely, or corpulent sums in property. This leads to negligible amount of money invested in other investment assets.

Transaction costs involved into property are comparably much higher. It is an asset that canneither be converted into cash in a single day, nor can it be sold into multiple parts. With these constraints in mind, one should think twice before locking all their money into property.

Because of its illiquid nature, it is not advisable to invest more than 30% of your assets in real estate.

5. Don’t jump into real estate investment before seeing your big picture

What generally investor considers before investing in a property? Their repaying capacity, loan eligibility and property details… Is this enough?

This may not be enough. Because of this additional property investment, your money is getting locked. To service this loan, your retirement may get postponed by a few years. Therefore before taking real estate investment decision it is better to consider your big picture in the form of a comprehensive financial plan. That will hep you take a right investment decision.

Not doing the above mistakes can help you become a better and profitable investor.

Other info? visit Westhill Consulting British Colombia website. We offers a wide variety of innovative housing styles and options. Like us on Westhill Consulting British Colombia facebook page for more updates.

Thursday, 12 March 2015

Westhill Consulting British Colombia, Hong Kong, Jakarta, USA: 5 tips on avoiding Florida home scams

The Florida Office of Financial Regulation is warning residents today to be wary of real estate fraud scams that require consumers to spend large sums of money on investment properties.

• Straw Borrowers: A straw borrower is used when the actual buyer has poor credit and is unable to obtain financing. The actual buyer promises to make all payments and may compensate the straw borrower for the use of their credit. It is illegal to misrepresent the identity of any party in the transaction to the lender.

• Abnormally High Appraisals: An appraisal is expected to be a truthful representation of the value of a property. Scammers will give unusually high appraisals in order to lure potential investors into their scam, especially those with poor credit histories. Keep in mind that most legitimate lenders will use the lower of the appraised value or purchase price.

• Evasion of Purchase Guidelines: Be wary of anything unusual during the beginning stages of the purchase and contract process, such as missing or withheld information and falsified income. Always research your investment professional or organization by verifying their license and history.

• Large Number of Purchased Properties: A large amount of properties purchased is a common characteristic of real estate investment fraud cases.

• Investor Locations: Historically, real estate investment fraud cases involved investors living close to the purchased properties. Today, however, it is common for investors to be located several states away.

For more info, visit Westhill Consulting British Colombia site. Westhills offers a wide variety of innovative housing styles and options. Whether you’re looking for a 3, 4 or 5 bedroom home with or without a suite, a townhome or our new and innovative small footprint home, you’ll find it at Westhills. You may go to our blogsite for some news and info.