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deanagiltner

deanagiltner   , 28

from Paris

Dorota Dyman and Associates: 3 Tips for Doing Real Estate Deals with Foreign Investors

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As foreign investment in U.S. real estate continues to increase, experts say foreign investors, sellers and rival bidders alike should be wary of potential tax hurdles, differences in deal-making style and other cultural customs. U.S. gateway markets like New York, Los Angeles and Washington stand out as "safe havens" for cash from less economically stable regions around the world, and the trend of foreign investors picking up trophy properties in these cities continues to grow.

But experts say that each party to such a transaction — the investor, any potential rival bidders and the seller — should carefully consider the unique challenges that arise when parties from different countries do a deal.

Here are three things to look out for when representing foreign investors or those working with them.

Foreign Investors: Prepare for Financing and Tax Trip-Ups

Attorneys representing the foreign investors looking to purchase U.S. property often face the challenge of working with clients who are unfamiliar with U.S. financing and tax structure, experts say.

Tax consequences can vary widely from client to client, based on their tax status in the U.S. and in their own country and on the tax treaties between the two. Foreign individuals not considered U.S. tax residents may be subject to withholding taxes, either as estimates of taxes that they might owe or as flat tax amounts, regardless of a deal's profitability.

In practice, this can mean a foreign investor is subject to tax on interest, leases or dividends, impacting how property ownership is structured, according to Dana Newman, a partner with Pillsbury Winthrop Shaw Pittman LLP.

Getting the money back out of the U.S. after it's invested in a property here without paying a disproportionate amount of sales tax can also be a major hurdle, Newman said.

"The overall issue is tax planning for a foreign investor to maximize their ability to get profits free of U.S. income taxes," she said.

Financing can be a problem for foreign investors as well, according to Wei Min Tan of New York buy-side condominium brokerage Rutenberg Realty, because U.S. banks lend to them at higher rates and require larger down payments.

"The key is to work with an experienced mortgage broker who has done many foreigner transactions," he said. "Just because a bank offers a foreigner mortgage program doesn't mean all of its bankers are experienced working with foreign buyers, because that's a niche market."

And on some deals, it may be necessary to explain concepts that U.S.-based clients take for granted, such as the fact that a trusted third party, and not a family member, should conduct the deal, and that a deal must be written and signed in order to be binding.

"It's important to explain this to foreign buyers because in many countries verbal agreements are binding," Tan said.

Sellers: Anticipate Differing Needs and Customs

Many of the foreign investors that are currently flocking to the U.S. are attracted to properties with specific characteristics, and they also may not have a traditional way of going about acquiring them.

Because of the tax issues mentioned above, many foreign investors have a strong preference for buying property through acquiring real estate investment trust shares, according to John Sullivan, a partner with DLA Piper.

"If you're a U.S. seller and you want to maximize the potential buyers for your property, if you hold it in a private REIT, you make buying that property more attractive for certain non-U.S. investors," Sullivan said.

This trend has led to an increase in the number of properties companies will put into private REITs even if there is no immediate benefit to the company, with an eye toward attracting foreign investors in the future, according to Sullivan.

When it comes to making the actual deal, experts say there are also some things that most U.S. investors might do as a matter of course that do not work for many foreign investors, such as setting the deal up through limited liability companies. More typically, non-U.S. investors prefer to use offshore corporations.

"For some non-U.S. investors, [using an LLC] has a very adverse tax result," Sullivan said.

Rival Bidders: Beware Foreign Investors' Pricing Power

The biggest issue for attorneys representing U.S.-based investors looking to compete with foreign investors on major deals — an increasingly common situation — is the disparity in price constraints, experts say.

While many U.S. investors look to purchase a property in an effort to make a quick return, either because they are investing through a fund with a short life or because their investors expect to see the benefit of the deal quickly for other reasons, a great number of the foreign investors currently doing deals in the U.S. are more concerned about stability than yields.

"They're willing to pay a premium, and many times they are the top bidder because they will pay more for a certain type of asset," said Manny Fishman, a shareholder with Buchalter Nemer PLC.

But there are ways to beat out foreign bidders, even if an investor can't offer the same high price.

Having a good track record of closing deals and being able to do so quickly, can put a U.S. investor ahead of a foreign rival, according to Fishman.

"A seller is looking for someone that will close and has a track record of closing, and sometimes the foreign investor is not that person, even with the higher price," he said.


Real Estate Dorota Dyman & Associates Blog: Tips To Manage Home Buying Stress

https://www.youtube.com/watch?v=p69tBTlBMo4

If you are considering buying a home in Gilroy, Morgan Hill or San Martin this year, there are steps you can take to make your experience more enjoyable.  Be sure to reach out to trusted professionals whenever you have questions.

Establish Your Budget

Before setting out to make an offer on a home, you need to know how much you can afford to spend.  Each buyer’s situation is different and the financing method you use will depend on your circumstance.

If you plan on paying cash, you will need to show proof of funds with a statement of account from your financial institution. Another common method of finance in South County is using the proceeds of your existing home sale to purchase a replacement home, sometimes referred to as a contingency. If you will rely on a purchase assist loan, you will need to be preapproved by a lender in addition to having proof of funds showing your deposit and closing moneys.  With the recent implementation of Qualified Mortgage (QM) rules, some buyers are finding they need to reconfirm their borrowing status.

Keeping your budget firmly in mind helps ensure your home, perhaps your largest investment, remains secure. 

Defining That “Perfect” Home

Once you understand your buying power, it’s time to start looking for your home.  Structures are human made and therefore imperfect, but they can be perfect for you once you embrace them as your own.  You’ve likely created a minimum criteria of how much space you need, but have you thought about what makes it special?

Consider making a list of pros and pros, both being positive as opposed to the pros and cons list you may have tried in the past.  Jot down what you love about your current home as well as what you’d love in your new home.  If you initially focus only on the positive aspects of a situation, you may zero in on what you truly love the most.  Those items should form the critical criteria to keep in mind when you view homes.

Avoiding Burn-Out

No doubt you’ve begun looking on the internet for homes; perhaps you’ve also gone to some open houses.  Selecting a local real estate agent to help you is an important step early in the process.  Why?  You want to make sure your decision is based on accurate and current information for the area you’re looking.  There’s an incredible amount of information available, both good and bad, and it’s possible to get discouraged or form the wrong conclusion.

How do you keep energized while shopping for your home?

Communicate with your real estate agent.  Ask questions and get details about how the market is progressing in the area and for the type of home you seek.Keep your proof of funds documentation and lender preapproval (if applicable) current so you're ready to make an offer.Think positively; there is always a housing market and it may take time to find the right fit for you.Mind your health; get plenty of sleep and eat well to keep your strength up.Take a few days off without looking; take part in an activity that recharges you for the search ahead.Be open to suggestions which may be slightly out of your initial selection criteria, they may lead to a great result.

Once you have found the ideal home, your real estate agent will present your offer for consideration by the seller.  Each step you’ve taken in preparation increases your opportunity for acceptance.

Oftentimes we find a home that will meet our needs, but it takes vision to personalize it.  What is your vision for your perfect home?

As always, let’s foresee the possibilities... and get results!


Dyman Real Estate: Melbourne real estate market picks up where it left off

Just over two-thirds of properties up for auction over the weekend sold, setting the scene for a hot market in the late summer and autumn.

 

The Real Estate Institute of Victoria recorded a 68 per cent clearance rate from 253 results. Research house RP Data recorded 68.8 per cent from 285 auctions.

 

RP Data spokesman Robert Larocca said the market was picking up where it left off last year but the low number of auctions meant it was too soon to judge where it was going.

 

''I would be surprised if there is any substantive change from last year. The fundamentals haven't changed,'' Mr Larocca said.

 

Commentary over the holiday break has focused on concern about the surging house prices in Sydney and Melbourne but the Reserve Bank of Australia kept rates on hold last week.

 

There are signs the market will remain as hot as it ended in December. The highest price in weekend auction results was for a house that was snapped up last week.

 

The four-bedroom clifftop property at 4 Ian Road, Mount Martha, had six registered bidders and a quoted price of more than $1.3 million, JP Dixon agent Val Garma said.

 

''One particular buyer threw in an offer that was way above the rest of the pack at $1.48 million, on a 30-day unconditional settlement,'' Mr Garma said. ''It was way too tempting for our vendors. Other offers had been around $1.3 million,'' he said.

 

Agent Greg Hocking said there was a ''new range of buyers'' in the market place impatient to see new stock. ''They've been saying to us, what's coming up? Where are the new properties?'' he said.

 

Mr Hocking said the weekend before the Labour Day long weekend in March was shaping up to be a super weekend.

 

It was full house at the Metung Hotel in East Gippsland where 1400 hopeful buyers competed for 86 properties and marina berths.

 

Agent John Castran said all properties sold, with multiple bidders for each. The mortgagee auction followed the collapse of developer Riviera Properties.


Real Estate Dyman: La Crème de La Crème of Paris

The Sixth Arrondissement has become the most expensive address in the City of Light, luring a new generation of home buyers with a rustic vibe that still conjures up the feel of an 18th-century neighborhood.

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Paris’s Sixth Arrondissement, in the heart of the city’s Left Bank, has been the stomping ground of Europe’s intellectual and artistic elite for most of the past 100 years. Gertrude Stein, Ernest Hemingway, Jean-Luc Godard and Jean-Paul Sartre all lived there. Now, drawn to the area’s 18th-century architecture and 21st-century amenities, a new kind of elite led by wealthy Americans and Europeans has helped give the Sixth the highest median prices for residential real estate in Paris

The current average price for an apartment in the Sixth is $1,589 per square foot, according to figures released in late November by the Chambre des Notaires de Paris, the city’s organization of notaries who supervise all real-estate transactions. That is more than $93 per square foot above prices in second-place Seventh Arrondissement, long associated with France’s titled families, and ahead of the Fourth, which includes the most desirable areas of Le Marais, home to even older buildings than in the Sixth and transformed by gentrification over the past several years. 

That price is also $443 per square foot higher than in the Right Bank’s 16th Arrondissement, which boasts a high proportion of luxury buildings from the Belle Époque and Art Deco periods. 

French buyers still have a presence in some high-end Paris deals, says Marie-Hélène Lundgreen, director of Belles demeures de France, the Paris-based agency affiliated with Christie’s International Real Estate, but “when you go over $5 million, 80% aren’t French residents.” 

“Foreign buyers have made the new benchmark in prices,” adds Jules Caris, managing director of La Galerie de l’Immobilier, a Left Bank real-estate agency that handles high-end properties throughout Paris. 

He says desirable apartments can cost much more than the median figures suggest. A three-bedroom, 1,076-square-foot apartment “on a good street but not the best, with not too much noise” and in need of some renovation, could cost about $1.9 million, or $1,772 per square foot, he estimates. High-end apartment’s right on the Luxembourg Gardens or in prime buildings in Saint-Germain-des-Prés can reach $2,530 per square foot. 

The general rise in prices over the past decade has closely followed a move by upmarket stores into the area that has made it a major shopping destination. 

The chief appeal of the Sixth, however, is its central location, across the Seine from the area between the Louvre and Notre Dame. In addition to the Luxembourg Gardens, it is home to the city’s legendary art school, the École nationale supérieure des Beaux-Arts, and famous Left Bank watering hole, Café de Flore. Its narrow, winding streets give it a rustic charm. And unlike much of central Paris, which was remade in the middle of the 19th century under the radical guidance of prefect Georges-Eugène Haussmann, the Sixth was crisscrossed by only a few new boulevards, leaving intact many of its historic buildings and inner courtyards. 

Pre-Haussmann-era architecture is a higher form of luxury, says Jean-Louis Deniot, an interior designer based on the Left Bank, when asked to compare the Sixth with more conspicuous high-end homes in the 16th Arrondissement and Avenue Montaigne.

No matter how fancy, buildings from the Haussmann period are “like the IKEA of their time,” he says. “Once you have seen one, you have seen them all—the same fireplace, same molding.” 

The buildings of the Sixth, by contrast, “feel more personal,” he says. “Your fireplace is your fireplace. You have almost no chance of seeing it somewhere else.” 

Paris brokers identify three prime areas of the Sixth: Saint-Germain-des-Prés, between the Seine and Rue de Four and once the center of Paris intellectual life; Saint-Sulpice, the area around a church of the same name dating back to the 17th century and home to the district’s most impressive square; and the streets around the Luxembourg Gardens, one of Paris’s largest parks. 

Helen Lee, a 34-year-old director of a New York real-estate private-equity fund, recently bought a small apartment in the Saint-Sulpice area. She plans to share it with a London-based friend and spend time in Paris after she has a family. She was drawn to the ghosts of the past as well as to the conveniences of the present, she says. She recently paid about $1,895 per square foot for a one bedroom. Already familiar with Paris, she started the search in October by looking at flats in Le Marais, “but it really didn’t feel the same” as the Sixth, she says. 

Miranda Bothe, founder of Paris Property Group, a Left Bank real-estate agency that offers clients English-language services, says the village-like appeal of the Sixth turns off some foreign buyers.

Many Asian and Middle Eastern buyers are drawn to the Right Bank, which includes the prime area of Avenue Montaigne in the Eighth Arrondissement. “What you see there are very clean streets and very wide sidewalks—everything looks good and shiny,” she says.

By contrast, many of the streets of the Sixth still retain the same urban clutter that has marked the neighborhood for decades. Behind that clutter, however, you can find multimillion-dollar homes.

Belles demeures de France is offering a grand duplex apartment for $15 million on Rue Cassette, a short walk from Place Saint-Sulpice. The 10-room, 5,000-square-foot home, in a building from around 1700, surrounds a courtyard, but is invisible from its quaint but otherwise anonymous side street.

Paris property prices have doubled over the past decade, but high-end homes have come down, says Charles-Marie Jottras, president of Daniel Féau, the Paris real-estate firm and parent company of Belles demeures de France.

Paris prices peaked at the beginning of 2012, after sharply recovering from the drop during the world-wide recession, but they then declined in response to increases in French capital gains and other taxes, and a perceived flight in wealth following the election of Socialist President François Hollande in May 2012. Prices continued to come down in 2013, with high-end properties registering declines of 10% or more, says Mr. Jottras.

While prices for top apartments are relatively stable, properties are taking longer to sell in the current market. Mr. Caris cites an apartment on Rue de Guynemer, overlooking the Luxembourg Gardens. Mr. Caris sold it two years ago, when the market was red hot, for $11.5 million; now, it has been on the market at $12.1 million for three months.

Rue de Guynemer has a special allure because of the views it offers, say Mr. Caris and Ms. Lundgreen. Other prime streets include Place de Furstenberg, a secluded square in Saint-Germain-des-Prés and Rue de Tournon, connecting the Luxembourg Gardens with Boulevard Saint-Germain and thick with historic mansions.

“Before you had book shops and cafés. Now you have Louis Vuitton and Dior,” says Ms. Lundgreen, who currently has a three-bedroom, 2,000-square-foot apartment for $5.7 million on Rue de l’Odeon.

These days, a Saint-Germain-des-Prés address suggests a luxury lifestyle. A pair of British clients asked about Le Marais, recalls Ms. Lundgreen. She showed them something on Place des Vosges, a sedate 17th-century square with some of Paris’s most expensive real estate, but surrounded by the rollicking night life once associated with the Left Bank. They were impressed—until a walk around the neighborhood on a lively Friday evening. They asked her how they could put on jewelry and a fur coat there. She recalls: “They told me, ‘Please find us something in the Sixth.’ “ 

To give your home the best exposure and positioning, Dorota will work with you when selling it; and will guide you every step of the way in purchasing a home - from mortgage financing to selecting a mover. Meanwhile, you can read the following topics below:

Dorota Dyman & Associates on Goodreads.

Dorota Dyman & Associates Real Estate.

Dorota Dyman & Associates Real Estate Ask Adam: Are We in a Real Estate Bubble?

 

Posted in Real Estate.

Tagged with real estate dyman La Crème de La Crème of Paris.



Real Estate in 2014: A Need-to-Know Guide

After year of struggles, the housing market roared back to life in 2013. The rebound will continue in 2014, but the pace will slow.

Experts say 2014 will be a year of continued growth and stabilization in the housing market with rising home prices, fewer foreclosures and greater activity among underwater homeowners. But this year’s market faces strong headwinds as inventory remains tight and both homebuyers and builders face tough lending standards.

 

Related:  5 Money-Saving Tax Tips to Make Right Now

To buy a home in today’s market, you either need impeccable credit or the ability to make an all-cash purchase. The average FICO credit score on conventional loans used to purchase homes in November 2013 was 756, according to the most recent data from Ellie Mae, a company that produces mortgage underwriting software. The average score for denied applications was 729.

"To put that in perspective, the normal average acceptance score historically is around 720," says Walter Molony, a spokesman for the National Association of Realtors (NAR). "Right now, the average rejection score is now what the acceptance score was historically."

Don’t expect credit standards to ease up any time soon. This month, new Dodd-Frank regulations aimed at preventing risky borrowers and equally risky mortgage products from entering the market take effect. The new changes require lenders to closely evaluate such factors as a borrower's debt-to-income ratio, employment status, income, assets and credit history before underwriting a loan.

 

Home Prices Continue to Climb

In addition to tight credit, rising interest rates and home prices may discourage buyers from purchasing in 2014, says Jed Kolko, chief economist for Trulia.com, the real estate site.  Average 30-year mortgage rates bounced from 3.34 percent last January to their current 4.48 percent rate, with many expecting further increases of up to a full percentage point in the New Year. Home prices nationwide have risen 11.2 percent on average over the past year, according to the S&P/Case-Shiller home price index. Sunbelt cities in places like California and Arizona have seen home values surge in excess of 20 percent.

 

Related: 5 Reasons the Luxury Real Estate Market Is Booming

While it remains a sellers’ market, price gains aren’t all bad news for buyers. First-timers may be discouraged, but increasing prices are music to the ears of current owners, many of whom are watching their formerly underwater homes gain value. More than 85 percent of homeowners with a mortgage in the second quarter have some equity in their home, up from less than 75 percent in the fourth quarter of 2011, according to CoreLogic.

"We saw a period where the first-time buyer was sort of a driving force," says Robert Denk, senior economist for the National Association of Home Builders. "We expect that to reverse...  As house prices rise, as fewer mortgages are under water that should bring the more established [buyers], the trade-up market, back to some degree."

How much the housing market bounces back in 2014 also depends on construction activity. With builders still fiscally cautious and facing the same tight lending environment as buyers, expect a small increase in the number of new homes on the market. As buyer demand picks up, the pace of new home construction should follow.

"The [housing] bust was basically a five-year period where we produced and sold a fraction of the homes we would see in that normal market," Denk says. "We’re going to see a lot of that pent-up demand turn into realized demand. That will be an important driving force in 2014 and 2015."

Read More Need-to-Know Guide