Building Wealth With Real Estate Investing ? Three Simple Strategies

Building wealth with real estate investing is one hot topic that is at the back of everyone?s mind these days with property investment training seminars running advertisements in the major newspapers. This article will highlight three simple strategies to build wealth

Cash Flow Properties

Building wealth with cash flow properties is a simple concept. However, looking for a high rental yield property takes some time and education. Focus on looking for properties in high demand areas with higher than average rental yields. This is critical if you want to ride out the down part of the rental cycle and you want to do a simple maths calculation to see if your current instalment size can withstand the down part of the rental cycle or would it deplete your savings instead. In cash flow properties, you want to find a property that puts a net amount of income into your pocket each month and then go on to find more and more such properties to make you a landlord of even more properties.

Flipping Properties

The best types of properties are those that look run-down but are actually quite easy to spruce up. Spend some time looking for auction and foreclosure type properties which can be spruced up real fast for a quick resale. Do your homework and inspect the house before you buy it because some of them can be real problematic. Take some time as well to figure out the foreclosure and flipping real estate laws in your state because you want to

Land Banking

Land banking is an interesting concept and basically means that you take the risk of the developer?s land bank and when the developer is ready to build and develop the land, he buys it back from you and usually at a few times the rate that he sold the rights to you. This benefits both parties since the developer gets to free up his initial capital and you get a good return on your investment.

In conclusion, we have covered three simple ways that allow you to build wealth with real estate. Take some action today and start seeing your income rise and achieve your lifelong dreams today.

About the Author:

Joel Teo writes on Ahwatukee Real Estate Investment. Learn more about Property Investment by signing up for his free Real Estate Investing Ezine

Don’t Leap Before You Look - Successful Real Estate Investing Through Financial Analysis

You’ve been working up the nerve to get started in real estate investing for some time. You’ve had all the conversations with your rich uncle and your obscenely successful friends. You’ve read the how-to books. And now you’ve finally found the right property. It looks right, and the deal ?smells? right to you. The location seems like a sure bet.

But before you jump right in, take a step back and crunch the numbers. Forget about the back-of-the-napkin analyses your heroes may tell you about. If you’re spending this much of your hard-earned money, you owe it to yourself to do some thorough due diligence. There’s a good reason for it:

• The financial analysis process forces you to take a good look at the entire picture, not just the parts which appeal to you. You are forced to think things through, which in and of itself reduces the risk that you?ll overlook something critical.

Analysis can be an objective exercise, very different from the emotion-laden, and subjective, process of negotiating and getting caught up in deal-frenzy. Especially when it’s your first time out, you don’t want to rush into one of those projects which turns out to be one where you would later say (with regret) ‘it seemed like a good idea at the time.?

There are a few other very solid reasons to perform thorough financial analysis on your deal:

• Techniques such as discount cash flow analysis will project the ultimate potential gain or loss of your investment. This will help you to get from ‘it seems like a great deal’ to ‘it has the potential to net me $200,000 over 5 years.’
• Preparing detailed financial projections is the hallmark of the professional. Doing your homework in this way will improve your attractiveness to bankers, potentially aiding you in attracting financing for your deal.
• Financial analysis can’t see the future- you should not expect to be able to accurately predict the end results. However, through financial analysis, you can generate best- and worst-case scenarios in order to create a range of projected results. This will help you to approximate the maximum and minimum amounts you stand to gain or lose, as well as what you believe to be the most-likely gain or loss.

Investing is all about risk mitigation. Through this process, you can avoid deals which exceed your risk threshold, as well as deals which do not offer an adequate upside to balance against the potential downside. Never pursue an investment where you aren?t comfortable with the risks. That’s what we call ‘gambling.’ Nor should you pursue investments where the best-case scenario doesn?t meet your minimum return.
Don?t leap before you look. Run the numbers and be prepared.

For A New Real Estate Investor The Idea Of Investing In Foreclosures Can Look Temptingly Attractive

You might be looking for “How to make a zillion dollars in 3 months”, well, you won’t find that here but if you want some practical tips, you came to the right place. Read on …

To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn’t want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.

Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow ’strict’ foreclosure ? the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.

You want to stay out of any legal processes going on concerning a property. Don?t get tempted to jump in and help the current owner in hopes of partial or whole ownership, this is suicidal. Pick another great deal. Never fall in love with a property. You have to maintain a business-like demeanor in all your dealings.

Be sure you understand that in many foreclosure proceedings, a borrower might have the ‘right of redemption’. This legal claim will let them have a particular amount of time in which to ‘cure the loan’. That is, they are allowed to make back payments, shore up credit, etc., and then they are allowed to reclaim property title to, and the possession of, the property. Beware!

As soon as the foreclosure procedure is complete, or at minimum unavoidable, you may initiate an action plan to obtain the real estate. Watch for transactions in which, at least, a Notice of Default has been given out.

Public sales on foreclosed possessions are common but can be complicated. Always do your homework before actually making a bid on a property. There’s no alternative for gaining first hand familiarity of the physical state and legal standing of a property.

Be sure to take into account that foreclosures are sold ‘as is ‘, or, in its present condition. Contrasting other property sales, no warranties are made available and no title insurance approved.

At least, you’ll be required to have a professional inspection carried out, even if you are a well-informed investor. Some investors are, of course, qualified inspectors themselves ? besides wearing various other hats.

The property does not need to be free of every little fault, but you’ll want to be aware of the roof - does it or does it not need to be replaced, that the plumbing is ok, there are no severe foundation cracks, or possibility for flooding, etc. If any of those are there, they can be satisfactory if you’re searching for a ‘fixer-upper’ and are prepared to invest the time and funds to make repairs. Mark down your offer for that reason.

Soon you will hear about a ’short sale’ deal. That is, this comes about when a lender is prepared to allow lower cash settlement for a property than is outstanding on the loan now.

And yet another kind of foreclosure situation is the REO ? real estate owned (by the lender). Usually these are properties that were auctioned but no one bought them. You can, potentially, get an extremely good deal, but you will need to exercise extreme caution and keep your eyes wide open.

Ok, so bear in mind to follow a line of investigation. Have a systematic inspection done and complete a satisfactory title search. Any key defects or impediments in the form of tax or other liens have to factor big in your strategy.

Real estate, like other endeavors in life, requires diligence and a grasp of the fundamentals to be successful. Learn to tell the difference between a good deal and one to walk away from without losing your shirt in the process.

All things considered, real estate investing is still the best game in town. So go out and make your fortune and say ‘Hi’ to Donald Trump for me!

Building Wealth With Real Estate Investing ? Three Simple Strategies

Building wealth with real estate investing is one hot topic that is at the back of everyone?s mind these days with property investment training seminars running advertisements in the major newspapers. This article will highlight three simple strategies to build wealth

Cash Flow Properties

Building wealth with cash flow properties is a simple concept. However, looking for a high rental yield property takes some time and education. Focus on looking for properties in high demand areas with higher than average rental yields. This is critical if you want to ride out the down part of the rental cycle and you want to do a simple maths calculation to see if your current instalment size can withstand the down part of the rental cycle or would it deplete your savings instead. In cash flow properties, you want to find a property that puts a net amount of income into your pocket each month and then go on to find more and more such properties to make you a landlord of even more properties.

Flipping Properties

The best types of properties are those that look run-down but are actually quite easy to spruce up. Spend some time looking for auction and foreclosure type properties which can be spruced up real fast for a quick resale. Do your homework and inspect the house before you buy it because some of them can be real problematic. Take some time as well to figure out the foreclosure and flipping real estate laws in your state because you want to

Land Banking

Land banking is an interesting concept and basically means that you take the risk of the developer?s land bank and when the developer is ready to build and develop the land, he buys it back from you and usually at a few times the rate that he sold the rights to you. This benefits both parties since the developer gets to free up his initial capital and you get a good return on your investment.

In conclusion, we have covered three simple ways that allow you to build wealth with real estate. Take some action today and start seeing your income rise and achieve your lifelong dreams today.

About the Author:

Joel Teo writes on Ahwatukee Real Estate Investment. Learn more about Property Investment by signing up for his free Real Estate Investing Ezine

How To Get Started In Commercial Real Estate Investing

Commercial real estate investing can be very rewarding for those who take the time and effort to approach it wisely, but it can be a trap for those who rush in without doing their homework properly.

Too often, investors rush into buying a property for all the wrong reasons ? “it’s a good deal,” a “bargain opportunity” and the list goes on. Then they wonder what happened when the investment either goes pear shaped or becomes a full time job.

If you are serious about building significant wealth from commercial property investment, you must have a proper investment strategy. This is a get rich slow business that requires patience, planning and persistence.

The key elements to any property investment strategy are:

* Get your personal financial affairs in order and make sure they are geared towards building wealth, not paying off consumer debt. Also, check your credit rating to make sure it is in order.

* Draw up a list of your criteria for property type, size and location. Be aware that each type of property requires a different set of skills to manage and offers varying rates of return. It is much easier to fit the property to your strengths rather than you try and change to fit the property.

* Study your local market so you can quickly identify opportunities that are within your capacity to act on. It’s no use looking to invest in an area where you don’t have on the ground knowledge.

* Be prepared to study and learn. Once you’ve spotted a possible deal, you need to be able to accurately value a property based on its condition, your return expectation, and your borrowing power. You need to understand why “what is it worth” is the wrong question to ask, and how to answer the right question “what is it worth to me?”

* Last, you need to learn how to structure deals and make offers too good to refuse.

When you have done this homework properly, you will be in a position to act decisively, reap the profits and keep them. Of course, you will need to consult regularly with your accountant on tax planning and asset protection, which are cornerstones of any wealth building plan.

You also need to consider what your overall portfolio will look like. Don’t fall into the trap of buying all sorts of different properties and then end up with it being a full time job as you juggle dealing with evictions, skips, delinquencies, maintenance and bills.

Once your overall planning is done, the next step is to select your real estate team. You will need a good real estate agent, loan officer, tax advisor, and lawyer. These people are critical to your success because the investor with the best knowledge can quickly identify the properties to ignore and those worth considering.

Remember the old adage, “the quick and the dead” ? the speed at which you can close a deal will give you the edge in any type of market. In addition, your advisors can point you in the right direction regarding finance, tax and legal issues.

Also, there is a good reason behind the catch cry, “location, location, value”. You want a return on your dollar so you are looking for a property that requires some attention so you can add value.
One strategy is to buy real estate in up-and-coming area with new developments or renovated properties. This makes it easy to attract and keep good tenants and leads to greater returns.

Another tactic to add value is to buy properties in solid locations but require some maintenance or upgrading, such as improving the aesthetic appeal of the building, thus instantly improving its value with little outlay.

In regard to financing, banks are the most obvious first lender, but commercial loans are not quite as simple as the more commonly known residential loans and you should always seek professional advice from your accountant and legal advisor.

You should also understand the various methods of financing, such as double closing, lease options, and contract for deed.

Double closing has attracted negative publicity lately, but only because it is misunderstood. This is a perfectly legal, moral and ethical method of trading that has been around for 100 years or more.

A double closing is simply two back-to-back closings wherein the proceeds from the second closing are used to fund the first closing. Both closings are done in escrow, so the “middleman” can buy and resell a property for profit without putting up their own cash.

The main downside you have to be careful of is that the closing rarely goes to plan and there are delays of up to a few weeks, which can cause the plan to unravel. Make sure any contract allows for this and you should be covered.

Contract for deed is an agreement whereby the buyer makes installment payments on an arrangement similar to car financing. That is, the seller holds the title to the property while the buyer has the equitable title.

Lease options consist of two elements, the first of which is the lease. This is a contract for use and possession of the property, thus creating a lessor/lessee relationship.

The second element provides a purchase option, which is a unilateral agreement where the seller agrees to give the buyer the exclusive right to the leased property. This is NOT a sale.

Make the effort to prepare your own income and expenses pro formas from the beginning, or get your accountant to do it. Don’t rely on operating results or projections presented by the agent or the seller ? chances are the seller will overstate income and understate expenses, then claim ignorance if challenged.

The only way to know the investment value of what the property is worth to you, is to develop an accurate projection of income and expenses, which can only be obtained by researching the market and determining in advance what the cash flow will be once your investment and management plan is in place.

Also, you need at least a 20-25 % down payment to get access to the best financing terms. You can still get finance on a payment down to 10% but you will pay more interest, loan fees and private mortgage insurance.

Remember, borrowing to cover the majority of your acquisition costs can boost your rates of return, but too much debt expense can be dangerous if the market takes a downturn.

About the Author:

Specializing in commercial and investment real estate, Tony Seruga, Yolanda Seruga and Yolanda Bishop are always searching for new and profitable commercial properties across the U.S. Visit http://www.maverickrei.com for more great information

How To Get Started In Commercial Real Estate Investing

Commercial real estate investing can be very rewarding for those who take the time and effort to approach it wisely, but it can be a trap for those who rush in without doing their homework properly.

Too often, investors rush into buying a property for all the wrong reasons ? “it’s a good deal,” a “bargain opportunity” and the list goes on. Then they wonder what happened when the investment either goes pear shaped or becomes a full time job.

If you are serious about building significant wealth from commercial property investment, you must have a proper investment strategy. This is a get rich slow business that requires patience, planning and persistence.

The key elements to any property investment strategy are:

* Get your personal financial affairs in order and make sure they are geared towards building wealth, not paying off consumer debt. Also, check your credit rating to make sure it is in order.

* Draw up a list of your criteria for property type, size and location. Be aware that each type of property requires a different set of skills to manage and offers varying rates of return. It is much easier to fit the property to your strengths rather than you try and change to fit the property.

* Study your local market so you can quickly identify opportunities that are within your capacity to act on. It’s no use looking to invest in an area where you don’t have on the ground knowledge.

* Be prepared to study and learn. Once you’ve spotted a possible deal, you need to be able to accurately value a property based on its condition, your return expectation, and your borrowing power. You need to understand why “what is it worth” is the wrong question to ask, and how to answer the right question “what is it worth to me?”

* Last, you need to learn how to structure deals and make offers too good to refuse.

When you have done this homework properly, you will be in a position to act decisively, reap the profits and keep them. Of course, you will need to consult regularly with your accountant on tax planning and asset protection, which are cornerstones of any wealth building plan.

You also need to consider what your overall portfolio will look like. Don’t fall into the trap of buying all sorts of different properties and then end up with it being a full time job as you juggle dealing with evictions, skips, delinquencies, maintenance and bills.

Once your overall planning is done, the next step is to select your real estate team. You will need a good real estate agent, loan officer, tax advisor, and lawyer. These people are critical to your success because the investor with the best knowledge can quickly identify the properties to ignore and those worth considering.

Remember the old adage, “the quick and the dead” ? the speed at which you can close a deal will give you the edge in any type of market. In addition, your advisors can point you in the right direction regarding finance, tax and legal issues.

Also, there is a good reason behind the catch cry, “location, location, value”. You want a return on your dollar so you are looking for a property that requires some attention so you can add value.
One strategy is to buy real estate in up-and-coming area with new developments or renovated properties. This makes it easy to attract and keep good tenants and leads to greater returns.

Another tactic to add value is to buy properties in solid locations but require some maintenance or upgrading, such as improving the aesthetic appeal of the building, thus instantly improving its value with little outlay.

In regard to financing, banks are the most obvious first lender, but commercial loans are not quite as simple as the more commonly known residential loans and you should always seek professional advice from your accountant and legal advisor.

You should also understand the various methods of financing, such as double closing, lease options, and contract for deed.

Double closing has attracted negative publicity lately, but only because it is misunderstood. This is a perfectly legal, moral and ethical method of trading that has been around for 100 years or more.

A double closing is simply two back-to-back closings wherein the proceeds from the second closing are used to fund the first closing. Both closings are done in escrow, so the “middleman” can buy and resell a property for profit without putting up their own cash.

The main downside you have to be careful of is that the closing rarely goes to plan and there are delays of up to a few weeks, which can cause the plan to unravel. Make sure any contract allows for this and you should be covered.

Contract for deed is an agreement whereby the buyer makes installment payments on an arrangement similar to car financing. That is, the seller holds the title to the property while the buyer has the equitable title.

Lease options consist of two elements, the first of which is the lease. This is a contract for use and possession of the property, thus creating a lessor/lessee relationship.

The second element provides a purchase option, which is a unilateral agreement where the seller agrees to give the buyer the exclusive right to the leased property. This is NOT a sale.

Make the effort to prepare your own income and expenses pro formas from the beginning, or get your accountant to do it. Don’t rely on operating results or projections presented by the agent or the seller ? chances are the seller will overstate income and understate expenses, then claim ignorance if challenged.

The only way to know the investment value of what the property is worth to you, is to develop an accurate projection of income and expenses, which can only be obtained by researching the market and determining in advance what the cash flow will be once your investment and management plan is in place.

Also, you need at least a 20-25 % down payment to get access to the best financing terms. You can still get finance on a payment down to 10% but you will pay more interest, loan fees and private mortgage insurance.

Remember, borrowing to cover the majority of your acquisition costs can boost your rates of return, but too much debt expense can be dangerous if the market takes a downturn.

About the Author:

Specializing in commercial and investment real estate, Tony Seruga, Yolanda Seruga and Yolanda Bishop are always searching for new and profitable commercial properties across the U.S. Visit http://www.maverickrei.com for more great information

For A New Real Estate Investor The Idea Of Investing In Foreclosures Can Look Temptingly Attractive

You might be looking for “How to make a zillion dollars in 3 months”, well, you won’t find that here but if you want some practical tips, you came to the right place. Read on …

To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn’t want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.

Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow ’strict’ foreclosure ? the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.

You want to stay out of any legal processes going on concerning a property. Don?t get tempted to jump in and help the current owner in hopes of partial or whole ownership, this is suicidal. Pick another great deal. Never fall in love with a property. You have to maintain a business-like demeanor in all your dealings.

Be sure you understand that in many foreclosure proceedings, a borrower might have the ‘right of redemption’. This legal claim will let them have a particular amount of time in which to ‘cure the loan’. That is, they are allowed to make back payments, shore up credit, etc., and then they are allowed to reclaim property title to, and the possession of, the property. Beware!

As soon as the foreclosure procedure is complete, or at minimum unavoidable, you may initiate an action plan to obtain the real estate. Watch for transactions in which, at least, a Notice of Default has been given out.

Public sales on foreclosed possessions are common but can be complicated. Always do your homework before actually making a bid on a property. There’s no alternative for gaining first hand familiarity of the physical state and legal standing of a property.

Be sure to take into account that foreclosures are sold ‘as is ‘, or, in its present condition. Contrasting other property sales, no warranties are made available and no title insurance approved.

At least, you’ll be required to have a professional inspection carried out, even if you are a well-informed investor. Some investors are, of course, qualified inspectors themselves ? besides wearing various other hats.

The property does not need to be free of every little fault, but you’ll want to be aware of the roof - does it or does it not need to be replaced, that the plumbing is ok, there are no severe foundation cracks, or possibility for flooding, etc. If any of those are there, they can be satisfactory if you’re searching for a ‘fixer-upper’ and are prepared to invest the time and funds to make repairs. Mark down your offer for that reason.

Soon you will hear about a ’short sale’ deal. That is, this comes about when a lender is prepared to allow lower cash settlement for a property than is outstanding on the loan now.

And yet another kind of foreclosure situation is the REO ? real estate owned (by the lender). Usually these are properties that were auctioned but no one bought them. You can, potentially, get an extremely good deal, but you will need to exercise extreme caution and keep your eyes wide open.

Ok, so bear in mind to follow a line of investigation. Have a systematic inspection done and complete a satisfactory title search. Any key defects or impediments in the form of tax or other liens have to factor big in your strategy.

Real estate, like other endeavors in life, requires diligence and a grasp of the fundamentals to be successful. Learn to tell the difference between a good deal and one to walk away from without losing your shirt in the process.

All things considered, real estate investing is still the best game in town. So go out and make your fortune and say ‘Hi’ to Donald Trump for me!

401K and Real Estate Investing-An Overview

Is it possible to combine your 401k and real estate investing? Wouldn?t it be great to invest in real estate with a maximum amount of pre-tax dollars, realize the huge gains possible only with real estate investing, and then re-invest those dollars in your tax-free 401k?

Of course it would, and there are ways for the savvy investor to combine their 401k and real estate investing.

First, you could borrow funds from your 401k. This is not necessarily the best way to combine your 401k and real estate investing, but it might be worth looking into if you have no other available funds for investing. Realize that there are limits on the amount you can borrow, and the interest you pay won?t be deductible, as it would with a typical mortgage. Choose this option only after doing your homework.

The second method of combining your 401k and real estate investing is the IRA roll-over. If your 401k allows you the benefit of rolling over into an Individual Retirement Account, this may be the best way for you to go. Select a specific type of IRA- called a ?Self-Directed IRA? to roll your funds into.

The Self-Directed IRA is a very powerful investment vehicle that allows you to direct exactly how your money is invested, within certain limits. For instance, you could direct that the money be invested in a REIT (real estate investment trust), an apartment complex, or a strip mall. When you sell and realize a profit, the increase in the IRA is tax-deferred. This is a huge benefit, and you should really consider this method of combining your 401k and real estate investing.

One downside to the roll-over - you would be giving up the employer contribution portion of your 401K deposits, if any. Another reason why you should weigh this option carefully before deciding to use it to combine your 401k and real estate investing.

Finally, and the simplest method of combining your 401k and real estate investing, is to ask your 401k account manager if they allow the funds to be invested in REIT?s directly. Some do, and this is a low risk, high return strategy for a lot of investors.

Whatever you do, don?t make a hasty decision to combine your 401k and real estate investing. Each of the above methods has a different risk/reward ratio, and you should familiarize yourself with them first, before risking your hard-earned money.