Saturday, March 31, 2012

Why Not Make Payments to Mortgage Principal Tax Deductible Instead of Mortgage Interest Payments

Former FDIC Chair, Sheila Bair has a thought provoking piece in the March 19th issue of Fortune:

In it she proposes a pretty controversial idea.  Why not get rid of the mortgage interest deduction and replace it with a tax break for paying down principal on a mortgage.  This is a very interesting question. What are we really incentivizing with a mortgage interest deduction?

As Bair says, we are incentivizing homeowners to use their homes like a credit card because even interest on second mortages is tax deductible.  As Bair writes, "A dirty little secret of the crisis is that the majority of toxic mortgages were not made to expand home ownership. They were refinancings aggressively marketed as a tax-advantaged way to pull cash out of a house." 

So if we really want to encourage homeownership, give consumers more of a reason to "own" more of their own home by paying down the principal faster instead of giving them a reason to hold on to a mortgage as long as they can.  I've heard people say that they don't want to pay off their mortgage because they would lose the tax break.  Ultimately that seems to benefit banks more than homeowners.  

There are plenty of other tax breaks you can take advantage of including depreciation on a rental property (
I would like to see some economic studies on this idea but benefiting consumers for paying down principal seems like an idea with a lot of merit. 

Friday, March 30, 2012

GMU in talks to Join Atlantic 10 Conference

For all of you local GMU Patriots basketball fans, some interesting news is brewing.  There is a very real possiblity that GMU will leave the Colonial Athletic Association and join the Atlantic 10 Conference in the 2013-14 season.

One of my favorite local bloggers reported the story here:

What does that mean for GMU fans?  It means moving to a conference with better teams, bigger budgets, and more TV time.  They would be in the same conference with the likes of Xavier, University of Richmond, St Joe's, and UMass.  It is also rumored that two basketball powerhouses may also be joining the Atlantic 10: VCU and Butler.

GMU would have some stiff competition and less local games in this new Conference but it could be a big draw for recruiting with more opportunities to play before a national audience.

There should be a decision on this in about a month so we will keep you posted.

Thursday, March 29, 2012

Fairfax County had the largest influx of new residents in the DC area

According to the latest available statistics, the top destination in the region for new residents is Fairfax County.  Liz Farmer gives the details in her piece today in The Examiner:

In 2009, nearly 88,000 new residents moved to Fairfax County.  That is 20,000 more than the next closest county (Montgomery, 68,000 new residents).  The numbers are fascinating.  Apparently the reason Fairfax is no 1 is its business-friendly climate and excellent public schools.  In fact education was the main reason that Northrup Grumman chose Fairfax over Montgomery county in 2010 for its corporate headquarters.

That type of growth and the foundation of a great educational system means its a great environment to invest in.  All of these new residents need somewhere to live so you might as well take advantage of the high demand for rental housing.

Tuesday, March 27, 2012

Honey Pig in Centreville: Delicious Korean BBQ

If you are looking for scrumptious, affordable korean bbq then Honey Pig ( is your place.  This restaurant is the epitome of authentic.  Korean pop blares throughout the restaurant.  The walls are festooned with advertisements and posters in Korean.

Every table has a circular grill in the middle where they cook your favorite meats in front of you and there are a lot of options.  You can choose from pork bellies, octupus, squid, pork rib, pork neck, beef brisket, beef intestine, beef sashimi, flaming hot chicken and others.  The food (especially the pork bellies which are like large pieces of bacon) is delicious.  The grilling makes the meat very tender.  It is also accompanied by a wide variety of cabbages with varying degrees of hot sauce.  If cabbage is your thing then you will really love this place.

The prices can't be beat.  Between $13-$15 for substantial portions.  They are open 24 hours so bring your appetite anytime.

Sunday, March 25, 2012

Prepaying Mortgage Interest at the End of a Tax Year Doesn't Bring Immediate Tax Breaks

For all those in the throes of doing their taxes I thought I would pass along a little tip that I learned the hard way.

At the end of 2011, I thought I had come up with a clever way to increase expenses and thus tax deductions in 2011.  I decided to pay my February 2012 mortgage payment on an investment property at the end of 2011 so the costs would go on the 2011 taxes.  Unfortunately, when the bank sent me my tax information it applied the payment to 2012's interest payment.  I thought timing the payment the way I did would give me an immediate tax deduction but that evidently is not allowed.

I guess Einstein was right when he said "The hardest thing in the world to understand is the income tax"

Saturday, March 24, 2012

William Carlos Williams Tribute to the Cherry Blossoms

In honor of the cherry blossoms being in full bloom I thought this poem was appropriate:

Cherry Blossoms at Evening by William Carlos Williams

In the prebirth of the evening
the blue cherry blossoms
on the blue tree
from this yellow, ended room --
press to the windows
inside shall be out
the clustered faces of the flowers
straining to look in

Spa World: World Class Korean Spa in Centreville

In the most unassuming of locations, a strip mall with an IHOP near the intersection of Route 29 and Route 28, is an incredible luxury Korean spa called Spa World (  What is so special about this place you may ask?  They do offer traditional spa services like body massages and salon services but that is just the tip of the iceberg.  This is a 50,000 square foot facility with large heated "Bade" pools, steam rooms, saunas, jacuzzis, cooling tubs, and 7 "Poultice" rooms that generate radiant heat from natural earth elements such as hot red clay, oak wood, blue onyx, salt, and amethyst.  There is even an ice room!!

People looking for illicit services should look elsewhere.  This is a purely family friendly place.  In fact the rooms with all of the heated pools are segregated by sex.  And for good reason because you can only wear what God gave you into the pools.  (Evidently it is because of the residual detergents in swimming suits that could interfere with the ph balance in the water).

The poultice rooms are co-ed and they give you a short and shirt outfit to wear there.

Here's how it works:  $25 gives you 12 hour access to the Bade pool, steam, sauna, and jacuzzis.  They have delicious healthy food you can purchase and even a room where you can sleep if you want.  For $10 more you get access to the poultice rooms as well.  There are even yearly memberships of $2,000 for those who want to come really regularly.  This place is open 24/7!!

If you ever really need to relax, this is the place to visit.  It is worth every penny.

Wednesday, March 14, 2012

Public Transportation in Northern Virginia: Fairfax County Connector

For anyone who has taken Metrobus they probably have a few war stories.  I found Metrobuses to be perenially late, never on schedule, and containing poorly functioning A/C and heat.  I also found them to take the most nonsensical circuitous routes.  Quite often I could have walked faster than taking the bus.

You can only imagine my surprise then when I took my first bus run by the Fairfax County Connector (  Evidently the Connector took over from Metrobus a number of years ago because the County thought they could do a better job.  They were certainly right.  The Connector buses are clean, spacious, and modern.  They stick to a very strict schedule and are only late for reasons out of their control.  They also refuse to let their buses pile up leaving huge time gaps in service.

Furthermore, they generally only have 1 or 2 stops at most so they make for a quick and efficient ride.  It is such a nice atmosphere that I have met a number of people on the bus.  A few have even become friends.

Hopefully your experiences have been similar on the Connector.

Saturday, March 10, 2012

Great Investment Opportunity for a Cash Buyer

I've listed a property for sale at 14709 Carlbern Drive in Centreville.  You can check out the specs at:  This property is going to foreclosure on March 28th and there is at least 100,000 in equity in the property.  An offer was received for 250,000, which was withdrawn and there is only 100,000 in mortgage debt on the property.  For someone with cash who can move quickly this could be the perfect deal. 

Contact me at or 703-662-5992 if you want to make an offer. 

Wednesday, March 7, 2012

Should the Redskins Get Peyton Manning?

Now that Peyton Manning is officially no longer an Indianapolis Colt, Redskins fans are definitely wondering if he is the quarterback answer their team needs? It's tough to say.  He's definitely on the downside of his career so he may not be spectacular for too many years.  He also doesn't fit with the Redskins' use of rollouts and bootlegs.  Manning just isn't that mobile.  Also the offensive line isn't built to protect a drop back passer for any length of time.  Lastly, he doesn't have too many current legitimate targets on the team.  So the Redskins will have to go find him some receivers as well.

Evidently, the Manning sweepstakes could be over in less than a week so we should know pretty soon where he ends up.  In the meantime, give me your pros and cons of signing Manning to the Redskins.

Tuesday, March 6, 2012

Learn to Shoot Skeet at Bull Run Shooting Center

One of the great things about Northern Virginia is that it still has rural areas.  Just a short drive from our nation's capital there are farms, beautiful natural areas and places where you can go hunting.  One place to get you ready for hunting season is the Bull Run Shooting Center:

They have reasonably priced introductory classes, shotguns to rent, and shells for purchase.  They also have five different shooting games:  skeet, trap, wobble trap, sporting clay, and 5 stand.  It is definitely a fun way to relax with friends and enjoy the outdoors.  Just one more place that makes this a unique and interesting area.

Monday, March 5, 2012

Book Review: Leverage Your IRA by Matthew B. Allen

The folks at Northern American Savings Bank have written a very good book on how to use a self-directed IRA to invest directly in real estate.  They are probably the leaders in non-recourse lending to IRAs so they are definitely the experts in this complicated area. 

The nice thing is that they make this rather daunting topic approachable.   They first explain how it is that you can use IRA money to invest directly in real estate.  Most people are unaware of that.  

They next explain the tax implications of buying property through your IRA.  Where it gets tricky is if you use a mortgage to purchase a property in addition to using some cash from your IRA.  Then you have to pay taxes because of the unrelated debt-financed income (UDFI).  The tax you have to pay is the Unrelated Business Income Tax (UBIT).  They simplify the calculation of this tax as much as humanly possible.  

The most important contribution of the book is to show you another way to finance real estate purchases in a tax deferred or tax free environment.  Leveraging your IRA does have significant benefits and it should be a part of your retirement planning.  

Saturday, March 3, 2012

Major League Baseball Adds Two More Wild Card Teams

Major League Baseball has made it official.  There will be two more wild card teams in the playoffs this year.  Although any change is controversial, it should a lot of excitement.

Basically these new wild card teams will play a one game playoff against the other wild card team to see who advances and plays the #1 seed in their division.  If this had been in place last year both the Atlanta Braves and Boston Red Sox who had historic collapses would have gotten in to the playoffs.

What I like about it is that it puts so many more teams in contention.  Otherwise you can get into August and 2/3rds of the teams have given up and they start dumping all of their good players to save payroll.  For a market with a rebuilding team, Nationals, this just increases the possibility that they could make the playoffs.

For a more in-depth description of how the new rule works, Jason Stark has a great article on it:

Play ball!

Thursday, March 1, 2012

Low Vacancy Rate in Northern Virginia Brings High Rents

It may be the worst of times for millions of underwater homeowners, and for anyone trying to sell a property. Even luxury homes are seeing price declines.
But for investors in rental properties it’s very close to the best of times.
That shouldn’t be a surprise. Just as pundits predicted, the housing crisis has caused many people to choose renting over owning their own home. 
These include:
·      The millions who have lost their homes to foreclosure.
·      Many afraid to buy in a market that hasn’t bottomed out.
·      Others having a hard time meeting stricter lender regulations.
And even twenty-something’s beginning their first jobs and moving out of their parents’ homes, are, by and large, choosing to rent.
At the same time, fewer rental buildings have been built since the bubble burst. According to Tony Downs writing in the National Real Estate Investor, “From 1997 to 2006, multifamily housing construction units clustered around 342.000 new units per year, but then plunged by 66% to only 110,000 units in 2010.”
It’s no surprise that, as demand continues to outpace supply, the vacancy rate is down nationwide to 5.2%. And in the DC/NOVA area it’s less than 3%.  As a result, rents continue to rise.
And as more professionals find work in our area, they, too will need places to live.  With lower prices and rising rents the right purchase could bring a good return on your investment. All of which makes it the best of times to be a landlord.
If you’re thinking about buying a property to use as a rental property, be sure to choose your realtor carefully.  You want someone who understands the rental market and who specializes in investment properties.
And now, for some tips from a highly successful father and son team who have done well investing in foreclosures. Click on the link below to learn the strategies that have helped them succeed over the decades.