FISHING PIER ON PRIVATE RANCH LAKE

If you are like a lot of my friends who have long saved for a vacation place at the coast or on the lake, soaring property taxes may have just about put that dream place out of reach. While I do not have a solution for high property taxes, I might have a suggestion that would fit the lifestyles of a lot of my outdoorsy friends and clients. Let me introduce you to cows and bees! In Texas we are fortunate that the State of Texas loves cows, bees, song birds and deer and taxes land accordingly.  All of which can play into a legitimate strategy for Texans to enjoy and invest in their own piece of the great outdoors without being taxed to the breaking point.

Whenever I mention the benefits of agriculture (AG) valuation to clients, most are quick to inform me that they are not raising cows, hay, or bees.  Fair enough, but leasing the grazing rights for a property qualifies and requires very little effort on the owner’s end.  I have yet to do it, but I understand that having bee hives also qualifies as AG on tracts up to twenty acres or so.

Of course, the other option is to secure a wildlife exemption.  This is much more technical, but my friends who have done it found it to be educational and interesting. Hunting and livestock are both allowed.  It is my understanding that the land must have had an AG valuation for the preceding two years to be accepted into the wildlife program.

So, why consider any of this? First as an example, besides farm and ranch land, what other $650,000 real estate investment (with no residence) is only taxed $175 in property taxes?   As a comparison, I looked up a lake house that recently sold on Lake Travis.  The tax appraiser put the value at $653,000 and the taxes were a whopping $10,116 per year.  In another year or two, the taxes may be $1,000 per month . . . for a weekend lake place!

Another thought is the ability to utilize a 1031 IRS tax deferred exchange.  Have a large capital gain in a problem rental property? A 1031 exchange would allow you to sell the rental and roll the proceeds tax-free into a recreational / investment property that is suitable for hunting, fishing, or camping trips.

If you would like more details on AG or wildlife exemptions do not hesitate to call me.

nformation About Brokerage Services (IABS) 

Jeff Stewart, CCIM, SRES  Broker Associate

jstewart@stanberry.com

Stanberry Realtors

It is widely reported that a large percentage of Americans are woefully prepared to afford retirement.  Likewise, we read almost daily about the rising cost of college and the growing burden of student loans.  What can we do to insure we and or our children are not tripped up by these looming problems?  Clearly the short answer is to save more in anticipation of these challenges, but all too often real life expenses get in the way.  While certainly not a fit for many people, I still think rent property is a solid solution for many families with the right skill sets.

The advantage of owning rent property is three fold. First, it is a forced savings plan.  The amortized mortgage payment, paid for by the tenants, automatically reduces the loan balance. In a sense, it is a monthly savings plan. Second, despite economic ups and downs, a well maintained property in a good area should appreciate with time. Third, rent property is an excellent way to teach your children a number of very important life skills: evaluating prospective tenants, developing financial management, and learning about common residential repairs.

So how does one begin? Ideally it would be great to take a course, but I am not aware of one right off.  I would be willing to organize a short class if several of my readers were interested.  Otherwise I would suggest that anyone wishing to explore rental management to talk to me or another long-time landlord to see if it is a fit for you.

Obviously finding the right property is the next step. I suggest that investors find rent houses that are relatively close to home.  It is important to do a drive-by on a regular basis and it is helpful to be fairly close for showings. Like any real estate investment, location is the key. I always stress to clients that they need to also give as much thought to the eventual sale of the property as they do to the initial purchase.  Sometimes a “real deal” may cash flow, but be a real loser when it is time to sell out defeating the long-term goal.

Interested? So what to look for? As mentioned, location is key for the ultimate success. I avoid streets crowded with renters’ cars and with poorly maintained yards. (Don’t be one of these landlords!) Trees are a real plus. If the property does not have them . . . plant them and arrange for the tenants to water them. They will grow quicker than one might suspect.

I prefer hip roofs instead of gable roofs, and avoid Masonite siding – exposed gable roofs and Masonite siding require frequent painting. For flooring, I prefer porcelain tile instead of the popular vinyl plank . . . it holds up much better (keep spare tiles). For carpet on smaller units like duplexes, I have been very successful with short nap commercial glue-down type carpet installed over a thin pad. It cleans great and looks good for years.

For more landlord tips, you can find more articles I have written on the subject at SpeakingOfAustinRealEstate.com or call me at the office.  I am always available to answer questions.

PLEASE READ: Texas law requires all real estate licensees provide the Information About Brokerage Services (IABS) to prospective buyers, tenants, sellers and landlords.

JEFF STEWART, CCIM, SRES

Broker Associate  /  Stanberry & Associates

jstewart@stanberry.com

Just less than a year ago, Texas Parks and Wildlife announced that the dreaded zebra mussels had been found in Lake Travis. From personal experience, I can report that they are already making an impact.  So far I have not seen examples that are totally encrusted like the items I have seen in Google images, but it will not be long.  The photo above is of a 7″ rock I picked up on the shoreline at our lake place near Pace Bend Park.  As the LCRA releases water for spring irrigation, random clusters of zebra mussels can be seen on the newly revealed waterfront rocks.

Unfortunately, the small shells are razor sharp. I reached into the water to pick up an abandoned boat anchor and I now have five small cuts on my left hand.  A careful inspection also found that they are now appearing on our dock ladder (and I assume underwater bracing).  Contemplate that . . . and think of the potential cut feet and hands.

So, what does that mean to real estate values?  It is too soon to say for sure,  but I think it will definitely be an influence – especially if other nearby lakes are not similarly afflicted. In light of the skyrocketing property taxes, dealing with an infestation of crusty zebra mussels on cables and dock frames just makes for one more expense for waterfront homeowners.

Information About Brokerage Services (IABS) 

Jeff Stewart, CCIM, SRES  Broker Associate

jstewart@stanberry.com

Stanberry Realtors