Chicago Relocation

Don’t Stop Believing

June 16, 2014

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John D’Ambrogio

Yes, America has held on to that feeling.

Guess what? Americans still view home ownership as the safest investment they have. While that may be counterintuitive  iven price fluctuations the last seven years, it is nice to see that the big picture long term view is still there (or maybe I should say it is back again).

Gallup Poll released a poll showing home ownership above stocks, bonds, mutuals and the rest.

Not surprisingly, Fannie Mae’s recent National Housing Survey which asked Americans which assets had both potential and safety, home ownership came up number one again. FNME may be a little biased, but the results did fall in line with Gallup.

Why the optimism after living through such a bubble? The S &P has actually outpaced the returns on real estate investment over the past century, but I think you are missing a few things when you try to compare apples to apples.

Here is a list of a few of my reasons:

*The generous tax deductions for both primary and investment property provides far more advantages than simple capital gains/losses.

*Leverage. Few of us buy stocks on margin. Most of us finance 80% or more of our home purchases. So a 20% gain on a $100k home, with 20% down, equates to a 100% increase (commissions another selling costs notwithstanding). Yes, it swings both ways. A 20% loss wipes out all your investment.

*Speaking of cap gains, being able to take hundreds of thousands in cap gains TAX FREE is appealing.

*It would be foolish to not take into account years of rental income and cash flow on investments, as opposed to simply price bought and price sold.

*Oh, and you can’t live inside a stock certificate. Studies don’t usually impute the cost of rental housing against stock investment gains. You remember the jokes about the 401k becoming a 201k. Well, your four bedroom house didn’t become a two bedroom house during the recession (although it may have been valued at one). Which is good because your adult kid probably moved back!

So maybe we practice things in moderation. Fund your IRA, and buy a home. Put a reasonable amount down, and make sure your payment is affordable.

I think in the long run you will be ok.



Dodd-Frank and Mortgages in 2014

May 5, 2014

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John D’Ambrogio

While Dodd-Frank may be a bit of a dry subject, it’s still important!

The latest Dodd-Frank mortgage regs have seemed to cause a bit of a stir in the industry. And to add to that, the Consumer Finance Protection Bureau has adopted rules which prohibit lenders from making large loans without regard to the consumer’s ability to pay it back.  Lenders reacted by becoming even more cautious. So what gives and how does it affect relocating transferees to Chicagoland?

“The new mortgage rules are a serious challenge, especially in the near term, for mortgage lending,” according to Robert Davis, EVP of the ABA. “The problem will last at least as long as bankers calibrate their compliance systems, and perhaps much longer.”

The American Bankers Association’s (ABA) release the of its most recent Real Estate Lending Survey, shows signs of a little anxiety among lenders. Four out of five surveyed believe Dodd-Frank rules will restrict credit, decreasing the number of candidates able to secure mortgages.

The report shows 95 percent of those who say they will offer non-QMs plan to hold the loan as an investment. Only five per cent plan to sell the loan to secondary market investors.

But it was not all doom and gloom. First time homebuyer mortgages were up for the first time in seven years. And the traditional 30 year fixed was the mortgage choice for a full half on mortgages. The verdict? Those with a good job and good credit (and transferees with employer support) are in great shape. And the over the counter crowd still has some conservative hurdles to address. Not surprising…. 


It’s that time of the year again

March 31, 2014

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John D’Ambrogio

By: Craig Anderson, President of C.E. Anderson & Company

I’m proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money.~Arthur Godfrey

It’s that time of the year again.

It’s not good enough that we have to deal with post-holiday debt, and the incessant cold and snow of one of the worst winters in recent history; we now must reminisce, with accuracy, the financial life events of 2013 and reduce them to figures to be placed in hundreds of lines on multiple forms in the annual ritual we call Filing Our Income Tax Returns!

As always, it is a good idea to learn from the mistakes of others and reading a reminder of the oft overlooked deductions is a good place to start. As a reader of this Relo Blog, you or others you know are probably involved with, or have been, relocated. So let’s look at a few items surrounding moving and selling property that we should know.

Moving Expenses:

  • Many relocatees move as part of an employer sponsored program, so many costs are paid for by the employer. Often overlooked are move related expenses not covered by the employer, or not known by those individuals moving without sponsorship;
    • Cost of packing supplies, boxes, tape, bubble wrap, UPS or FedEx charges for pre-shipping any household goods. And yes, HHGs include our pets!
    • Tips paid to the van line driver and crew.
    • Any special packing, crating, dismantling, appliance hook-up, etc.
    • $.24 a mile (2013 rate) for driving not only your first but your second or third cars to your new location, plus tolls.
    • Lodging on route including your last night in your old location and first night at your destination. But no meals! So bring a sandwich.
    • HH goods from another location are deducted too, with certain restrictions.
    • Storage of HHG for up to 30 days, and the cost of putting things in and out of storage. In and out costs are always deductible regardless of the length of time goods are in storage.

Just remember that you can only deduct the expenses you paid for.  No deduction for expenses for which you were reimbursed or for Qualified Moving Expenses paid directly by your employer.  (See IRS Code 217 for a definition of QMEs.)

Mortgage Expenses:

  • Remember these fun facts concerning Mortgage Points and MIP;
    • Did you know that if the seller of your new house agreed to pay your mortgage points in lieu of reducing the sales price that the IRS lets YOU take a deduction for those points even though the seller paid them? Yea, I didn’t think you did.
    • Mortgage points paid as part of a re-finance are normally deducted over the life of the loan UNLESS the loan was used for home improvement – then take them now.
    • In the year you sell your home deduct the entire remaining balance of your points paid.
    • If you paid a premium for mortgage insurance you may be entitled to a mortgage interest deduction for a portion of the premium allocated to 2013. Enjoy this treat – it expired 12/31/2013 so this is the last year to take it!  Oh I forgot – if your adjusted gross income was over $110,000 – you don’t get the deduction. Sorry.

Other Random Thoughts:

  • If you claimed a Homebuyer Credit in 2008 – 2010 you may need to pay some of it back if your home ceased being your principle residence in 2013. (See IRS Form 5404)
    • Repayment is always required for a Credit taken in 2008.
    • Repayment for 2009 and 2010 Credits is only required if your home ceased being your primary digs – if sold, your payback is NOT required if you had no realized gain.
    • Remember you need to adjust your home’s Purchase Basis as well as its Selling Basis to determine the gain on sale. If you don’t understand this, look it up! IRS Publication 523.
    • Prior to 2007, if you were unfortunate enough to lose your house and the bank had to write off some of your outstanding mortgage debt, you received a 1099 from them because the IRS views cancellation of debt as a taxable event! (Talk about kicking the dog when he’s down) Since then, the Debt Relief Act stopped the taxability of relieved debt. If you had a Short Sale or if your bank wrote down your debt in 2013 you will still receive a 1099-C but the forgiven debt is not taxable. This benefit also expired 12/31/2013 and we do not know if Congress will extend it again.
    • The maximum you need to contribute to the OASDI portion of FICA tax is 6.2% of $113,700 of earnings in 2013 or $7,049. If you worked for more than one employer during the year you may have had more than that amount withheld (in total). So remember to take a credit on line 69 of your 1040 return for the excess.

As bad as it may seem the U.S. Tax rates are less than many other countries in the world. So, pay the piper and enjoy the dance, but just don’t overpay!



Where to Start Renovating In Your New Home

February 3, 2014

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John D’Ambrogio

By: David Hurley 

Renovating your home can be an exciting experience, with very rewarding results, but it can feel like an overwhelming experience when you first take stock of everything that you’ll need to do. Even once you’ve started the renovation, those first days or weeks will feel both mentally and physically challenging. It is never easy to see a room stripped back before you start to make improvements, and if you have spent months planning then you might end up feeling like you have made a mistake. Yet, the end results will certainly be worth it…so, where do you start?

The truth is that your renovation tactic should be different if you are living in your house than it would be if you were not. If you are not living in your property and want to start from scratch, rip out every room at once. It is then easy to work on the heating and plumbing as a whole. If you’re living in your house it is not practical to do everything at once, so consider where people will sleep whilst each bedroom is being renovated and which rooms are the most vital (typically your bathroom and kitchen).

Be prepared to spend some time sleeping on an inflatable bed or on the sofa. Also think about whether you prefer to start with the rooms that will be cheaper to renovate, or the ones that are likely to cost a lot more. Follow these steps to prepare for your renovation:

 Arrange a Visit from a Home Inspector

It is a home inspector’s job to check that your house is structurally sound and undamaged, and that there are no major issues. An inspector will check the plumbing and heating, ensure that there are no leaks or damp patches and check that your wiring is up to standard. If you love in a cold Canadian city like Toronto, Ottawa or Vancouver, you will want to be particularly sure that there are no gaps in your house that are letting the outside in. A renovation is a chance to give your house a thorough check, so that you know as you renovate that the finished product will be a job well done. Nothing is worse than renovating your house only to find that a pipe was about to burst and that those new carpets are being destroyed by a leak below the floorboards.

Think About Permissions

You are not the only one to have a say in whether or not your renovation is going to work.  For example, in Toronto you will need a Building Permit if you are renovating your home, adding to your home, removing parts of your home, making structural changes, repairing your home, adding or removing interior partitions, adding new doors and windows, building a garage or balcony, changing your plumbing or heating system or installing a fireplace. Most cities have easy to follow instructions on their websites to help with the permit applications, take Chicago for example. The City of Chicago’s Official Site has a specific section for ‘Easy Building Permit Applications’.

To apply for a Building Permit you will need documentation. Typically you’ll be asked to supply detailed floor plans with measurements, a list of building materials, survey documents and site plans. Remember that getting together the required documentation can take months, so you should start this process well in advance.

Create a Schedule

Whether you are going it alone or getting help from the professionals, you’ll need a schedule that indicates how long everything should take. Think about how long rooms will be out of action for, and whether you can continue living in your home or will need to find alternative accommodation for part of your renovation period.

Create a Budget

As well as knowing how long a renovation should take, it is important to know how much it is going to cost. Price up your materials and the costs of hiring professionals, and draw up a budget that indicates how much your renovation project will set you back financially.

Think About Plug Sockets

Most houses are not built with enough plug sockets and electrical outlets for modern consumption. When you are planning your renovation, think carefully about how many you will need and where they will go. Once you have made your house look nice, you do not want to be trailing extension cords and cables across the floor and behind pieces of furniture.

And Finally…

Only once you have done all of the above should you begin the renovation. Refer to your schedule, and do your best to keep on track.

Have you renovated your home? Are you considering it? Have you got any tips to add? Leave a comment and share your opinion.

David Hurley enjoys buying and selling property around the world, and blogging about home renovation projects to prepare houses to live in or sell on.


Chicago – A City of Rentals

November 4, 2013

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John D’Ambrogio

Some comments from Baird & Warner‘s Elizabeth McGrath

After  surveying the country for the best cities to invest in real estate, named Chicago second in the nation.

Why?  The  benefits of living in a world class metropolitan city – top museums, food, arts, culture, sports – combined with short term housing needs have created a hot and vibrant rental market.

Beyond the numerous reasons renters flock to cities ( short term job plans, wanting to spend time experiencing all that Chicago has to offer, etc.) Chicago is also home to some of the top colleges and universities in the country drawing a consistent and continuous student rental market.  The student market is a always turning over and many students find the benefits of renting a property given that it grants them the freedom outside of resident halls.  (Side note: US New’s National University Rankings ranked University of Chicago at #4 and Northwestern  at #12.)

The high demand for rentals can cause higher rental prices. (Simple economics there).  Pair that with low median  mortgage bills and an investment property in Chicago has the potential to pay itself off much sooner than expected.

The other cities that topped the best rental town list share similar characteristics with Chicago – a metropolitan area filled with or surrounded by colleges and universities.  Boston barely beat Chicago coming in at first in the study.  Pittsburgh, Princeton, and Atlanta followed in the third, fourth and fifth spots.



Real Estate and IRA

July 9, 2013

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John D’Ambrogio

By: Daniel Hanlon Real Estate Relationship Manager at Midland IRA

Since the creation of IRAs in 1974, account holders reserve freedom to invest their retirement accounts in practically anything, including real estate. While most have their IRAs invested into bank products and the public market, many are finding great returns in real estate.

There are some key points to note when buying real estate within an IRA account.

  • Title of the Real Estate – The IRA will be the rightful owner of the property, or portion of which it owns. The IRA Funds never leave the IRA, and the real estate purchase occurs within the IRA account. You are not borrowing money from the IRA, rather you are using the funds inside the account to purchase an asset, just as you would a stock.
  • Disqualified Persons – The main rule with IRAs is who they can transact with. In the case of real estate, these are the parties from which you cannot buy, sell, lease, or exchange with. As an IRA holder, these parties include you, your spouse, your lineal ascendants (parents), your lineal descendants (kids) as well as any entity these parties own 50% or more of. In other words, the property has to be purchased with the intent of investment.
  • Real Estate Income and Expenses – Since the IRA owns the real estate, it is due any proceeds and liable for any expenses related to the property. Typical costs may include: improvements or construction, assessments, property taxes, and legal fees. The income may include proceeds from the sale or a tenant paying rent. As with all IRAs, these gains are tax deferred to the account holder and may be tax free if the account is Roth.
  • 3 Ways to Purchase – There are 3 ways to purchase real estate in an IRA.
    1. The first is with cash from the IRA. This option is simple and requires the full amount be paid by the IRA.
    2. Second, the IRA can become a partner with other parties, including disqualified parties, on a transaction. This may happen as either an LLC or Tenants in Common. The income and expenses would then be split depending on the percentage of ownership.
    3. Third, the IRA accounts can obtain mortgages. The mortgage must be non-recourse, in which the IRA holder has not signed a personal guarantee. Banks that offer this product typically only do so on income producing properties and will require 40% down.

IRAs can be a great source of funds while you look for your next investment deal. These accounts require a third party administrator to report to the IRS as most brokerage houses will not allow their account holders to invest in real estate. Midland IRA, based in Chicago, charges an annual fee of around $400 for this required service. Not only can these companies hold real estate, but they can also hold common investments like promissory notes, tax liens, LLC interests, mortgages and precious metals in IRAs.


Dan Hanlon is the Real Estate Relationship Manager at Midland IRA. He handles all of Midland IRA’s new accounts which plan on investing into real estate. He can be reached at for any questions concerning real estate investing inside of your IRA.




Today’s Home Improvements for Tomorrow

May 29, 2013

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John D’Ambrogio

Here are some comments from Baird & Warner’s own Tom Gill

Kari Richardson of the Chicago Tribune wrote an interesting article on the smartest upgrades you can make to a new home. Below are some excerpts and some of our comments.

Everyone likes upgrading a home to their personal needs, in a way that can define the home owner. Their own personal touch that makes a new home turn into their home. Unfortunately, not everyone likes the cost of these upgrades. To get the best of both worlds, Kari Richardson explored the smartest upgrades for new homes.

Richardson sat down with Christy Whelan, the director of sales for the custom home building company Airhart Construction. She first recommends two essential value adding upgrades as oak wood flooring and granite kitchen counter tops. These durable improvements will help you enjoy your home more, and add value if you ever decide to sell or rent that home.

One of the current most popular upgrades is installing built in furniture to family and dining room areas, such as a custom buffet for around the same cost as a piece of furniture. Overall, home owners looking to upgrade should search for high style and low cost to set their home apart from others on the market.

Helen Weiss, the VP of sales and marketing for Weiss Development compared home improvements to a sweater bought on sale that is never worn; even the cheapest upgrades are a waste of money if they aren’t valued or used. Overall, home buyers or owners shouldn’t look to go way over the top on upgrades in today’s market. Instead, look for the best bang for your buck to get the smartest home improvements.

You can find the whole article from the Chicago Tribune here.


More than Just a Paycheck

April 10, 2013

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John D’Ambrogio

Here are some comments from Baird & Warner’s own Tom Gill.

Joel Kotkin of Forbes wrote a great article about cities and salaries. Below are some of our comments and excerpts.

When relocating for a new job to a place you have never been before, there are many things to consider. While not always the most important, salary is certainly one of them. A job in a new city can be particularly enticing if it is accompanied with a high pay check. However, this is only one side of the financial story. The other half is cost of living in your new home town. As the cost of living increases, it is most likely your salary will increase as well, leaving you at times in the same financial position that you started in. Some companies even decrease salaries when relocating if cost of living is significantly lower.

Relocating to a place such as New York or Los Angeles with a new big pay check has its appeals, but with both ranking in the top of cost of living in America, it’s no wonder the salary is higher. That being said, Forbes has listed the cities where a paycheck stretches the furthest.

Number one on Forbes list is Houston Texas, followed by San Jose California, Detroit Michigan, Memphis Tennessee, and Dallas Texas.

If you do find yourself in a position to relocate for a new job, make sure you factor what your new residence will cost you when you get there. If you’re relocating to Chicago, check out Baird & Warner’s relocation page, loaded with great features such as lifestyle search, to assist you find the home you’re looking for. Real Estate is more than just the home you live in, it’s the life you get out of it.


The Wal-Mart Effect

March 27, 2013

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John D’Ambrogio

The Wal-Mart effect

Here are some comments from Baird & Warner’s own Tom Gill.

Mary Ellen Podmolik wrote an interesting  article last June for the the Chicago Tribune: titled The Wal-Mart effect on home values. Below are pieces of the article along with our comments.

Feelings on the retail juggernaut Wal-Mart are highly controversial and extremely mixed from person to person. Some people love the low prices and location convenience often associated with the store. Others strongly oppose the negative effect that it has on local business, as well as the decline that comes with wages. There are several Wal-Marts in the Chicago area, including one near the West Loop Gate, only a few blocks from Baird & Warner’s corporate office.

However the effect a Wal-Mart has on a housing market surrounding it is not something that brings forth a clear answer. Maybe people dislike having one around because the increased traffic and noise, yet maybe people would prefer one nearby because the prices and ease of doing their shopping. University professors and brothers Devin and Jaren Pope decided to find out.

Their research of over 1 million home sales between 1998 and 2008 showed that homes within a half mile of a Wal-Mart increased between 2 and 3 percent, while homes up to a mile away from a Wal-Mart increased around 1 percent. In dollars this translated to about $7,000 and $4,000 respectively.

The results that were uncovered were not very surprising. It was a minor shift one way, and one which I personally would have guessed. With the downturned economic situation, it makes sense that more people would put a small value on lower priced goods that were so close nearby.


The Last Check On Your New Home Checklist

February 6, 2013

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John D’Ambrogio

Below are some comments from Baird & Warner’s own Tom Gill.

Harris Effron posted a very intriguing article on AOL’s real estate website last June. Here are some excerpts along with comments.

Whether you’re relocating to a new area or just moving to a new place, home buying is an exciting time in life. It can be the kick-off to a fresh start, or a simple change of scenery. If you’re not careful however, that new home could instantly cost hundreds of thousands of dollars extra; as seen in the case of John and Jessie Bates.

Shortly after purchasing their new home in Suquamish Washington, The Bates’ 7 year old son Tyler started developing an unusual rash, along with vomiting that spread to all members of the family. In addition the house was plagued with a strange unidentifiable smell; the answer? Their new home had been previously used as a meth lab.

The houses dark secret was told to the Bates by a neighbor, and the theory was solidified when they began tearing apart the master bathroom. They found iodine-looking stains on the walls, and human feces under the floorboards. Fox news reported that toxic chemicals had soaked into the fabric of the entire house, and an environmentalist agency deemed the house not suitable for living.

The Bates ended up spending an additional $184,000 to destroy and rebuild a new house, and only about half of the states have laws that require sellers to disclose whether or not the house had once been used as a meth lab. If you are unfortunate enough to live in one of the states without this disclosure law, there is little legal action that can be taken. Additionally, the DEA reported that 10,287 meth labs were seized in the United States in 2011.

Therefore the last check on your new home checklist? Chemical Contamination. This test costs only a couple hundred dollars and could save you a large amount of money. More importantly, it could protect the health and safety of you or your family.