“The Vermont housing market was the only one in New England to experience a year-over-year decline in both number of transactions, down -2.4 percent, and median price, down -4.3 percent, according to RE/MAX. Vermont’s median home price is $180,900, down from $189,000. This still places Vermont third highest in the region, behind only Massachusetts ($260,000) and Connecticut ($232,500).”…  vermontbiz.com, February 15, 2012

As a result, rental vacancy rates are dropping and rental rates are increasing.  Read the entire article in today’s Burlington Free Press.

Looks like multi-family properties are where it’s at if you’re looking for a solid commercial property investment.  Check out a few of Redstone’s Multi-Family property listings below:

457 St. Paul Street, Burlington

389 Riverside Avenue, Burlington

105 Hyde Street, Burlington

86 Pearl Street, Essex Junction

373 Vine Street, Northfield

233 Main Street, Northfield

246-250 Main Street, St. Albans

7 Alden Place, Vergennes

83 Hickok Street, Winooski

45 West Street, Winooski

Some good news in terms of the Vermont housing market.  “Vermont reverses trend: Home prices down, sales up”, as reported on vermontbiz.com, Monday, July 18, 2011.

With the current state of our economy, many people are taking the ‘wait and see what happens’ approach to making many investments or financial commitments.  While lines of credit require a bit more than they once did in the times of zero-down financing, it is still a great time to invest, particularly in real estate.  Low interest rates, tax incentives, from first time home buyer (here) to energy efficiency credits (here), are not only available, but accessible.  

However, many people are still left wondering what they should be looking for when investing?  As a general rule, a good investment is one meets the objectives of a specific investor or investors, regardless of what the asset is.  Any investment has certain characteristics that include liquidity, marketability, and risk, each having higher or lower degrees of importance and impact on any given investment scenario.  For instance, if you want to invest in something that has high liquidity, meaning the ability to turn your investment into cash quickly with no loss to your principle, real estate may not be the best vehicle to meet your objectives.  Further, when speaking about real estate investments, you are speaking about an equity type investment, where the investor is placed in a position of ownership.   Three characteristics that favor, and should be considered when making a real estate investment are:

Rate of Return:  Referred to as ‘Yield’, it is simply the percentage return on each dollar invested for each period invested.  This can be done on a pre-tax as well as a post-tax basis.

Tax Impact:  See above, as well as capital gains taxes on certain types of income, and tax deferments

Leverage: The use of borrowed funds to finance some of the purchase price of an investment.  The ratio of borrowed funds to total purchase price is referred to as Loan to Value ratio, or LTV.  A higher LTV means a greater amount of leverage.  Real estate transaction can often be highly leveraged when comparing them to other investment types.

Depending on what your investment objectives are, generally speaking, real estate has real potential for a high rate of return and can in many scenarios have a favorable tax impact.  This coupled with the ability to finance a significant percentage of the cost, make real estate, commercial and residential alike, a great option for a long term investing. 

First-time home buyers who purchase homes from January-09 thru November-09 may be eligible for a tax credit.  This credit is equivalent to 10% of the purchase price of the home, although it’s capped at $8,000.  Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.  This replaces the Senate’s proposed $15,000 tax credit to all buyers (not just first time buyers).  It is not retroactive to borrowers who fell under the previous $7,500 tax credit that had to be re-paid over 15 years.  Finally, it appears that this latest and final revision took out the exemption for buyers who use housing bond programs like VHFA.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.  Those earning more than these thresholds may be eligible for reduced credits.  Buyers will also have to repay the credit if they sell their homes within three years.

To learn more about this tax credit, go to http://www.federalhousingtaxcredit.com/.