Real Estate Investing - An Alternative To Traditional Stock Market Investment

From a historical perspective, investing in real estate is almost as old as the construction of property itself. Indeed many business owners who created their wealth through companies then went on to diversify into real estate investments. In fact, over the years real estate investments have produced similar returns to those found in the stock market. Let’s take a look at some of the reasons:

First of all, and most obviously, the supply of building land around the world is limited, even when taking into account landfill opportunities. Since the world’s population is growing and the demand for housing ever increasing, then there would seem to be a never-ending and increasing requirement for real estate of all types.

Now let’s take a look at the mechanics of buying property. Here it can be seen that investing in real estate is quite different from most other traditional investments such as stocks. With real estate you can often borrow up to around 80 percent of the value of a property, sometimes even the full value and beyond under special circumstances. Thus a more modest investment of say 20 percent of the value can be used to buy and control the full value of the larger investment. Naturally, if the value of your investment increases, I.e. property prices rise, then the value of your real estate investment also increases. If so, then you are into profit, including that on the money you originally borrowed.

Naturally, there will be costs associated with real estate investing (such as legal fees and property maintenance, taxes, etc), but these are usually small in comparison with the potential gains.

Borrowing in order to invest in real estate makes real estate a type of leveraged investment. But if you know anything about leverage, you will realize that leveraged investments can also go against you. What, for example, if the property you purchased for $300,000 decreased in value to $240,000? Even though the value only dropped by 20 percent, you actually lose 100 percent of the original $60,000 investment. And if you have a mortgage on this property making up its full purchase price, you will actually need to pay money to the mortgage provider in order to cover the costs of selling the property. That’s in addition to the loss of the whole of your initial investment.

So, as you see, investing in real estate is something to be taken very seriously and should not be done with money which you might need for other things in the near future. Investment in property is more secure as a long-term investment. In the above example, if you could have held onto the property and not sold it, the loss would purely have been ‘on paper’. In all likelihood, over time the value of the property, unless grossly overpriced when you originally bought it, will rise and you will likely not only recover the full value of the initial investment, but also possibly make a nice profit when you do come to sell.

Another reason that real estate is a popular investment is that there are profits to be made from it whilst you are the owner. In addition to the tax-saving benefits (in that any tax due on the property’s increase in value doesn’t become due until it is eventually sold), you can also make additional money from renting out the property. This can often cover all your running costs of the property, plus providing a profit on top.

Unless you make a large down payment, early on during your ownership the monthly operating profit from your property business is likely to be small or non-existent. But over time this profit will increase as the amount of rent you can charge increases at a higher rate than the running costs. Naturally these profits will be subject to normal income tax rules.

A further benefit of investing in property is that you might be able to purchase cheaply a run-down or ‘distressed’ property and fix it up or develop it further. Properties like this can still be found if you look around carefully. Naturally, investing in this type of real estate can still produce large gains. This is something you certainly can’t do with traditional stock market investments.

However, returning to the initial question about whether real estate investing is still a viable option when current prices seem to be nearing their peak: yes, it can still be so, but you might need to be more creative and prepare to be in for the long haul. Property ‘flipping’ methods that worked extremely successfully yesterday, might not work at all well tomorrow.

You might also consider diversifying into overseas real estate markets. Whilst this will require greater study and analysis, and there are many more legal issues to consider, seeking out what appear to be undervalued international real estate opportunities has the potential to be highly profitable if handled correctly.

Naturally, you should always seek the advice of professionals, both financial and legal, before investing in properties of any description, particularly when considering investing overseas. There might be major implications to your overall taxation. Risks can also be substantially higher when you are not there to oversee your investment in person.

About the Author

You can learn more about real estate investing and Bianca Tavares’ guide to Florida property at Florida Real Estate.

Beginning Real Estate Investing - Understanding Leverage

This is one of a series of articles on beginning real estate investing. One of the fundamental concepts to understand as you are beginning real estate investing is the concept of leverage. Leverage is the ability to move or control something very large with a very small object or force. Leverage as it applies to real estate investing is the ability to control high value properties with small amounts of your own cash.

To understand why this is important, and why leverage is so valuable, an example will help. Let’s assume you are just beginning real estate investing and you have $20,000 cash to invest. The exact amount is really unimportant, so long as you understand the principle involved. To illustrate the power of leverage, let’s assume you are faced with three possible choices of how to invest your $20,000.

Choice one is to purchase a small single family home with a purchase price of $20,000. The market rent for this home is $250 per month, or $3,000 per year. For purposes of this illustration, let’s pretend there are no such things as taxes, Realtor fees, or any other costs involved with purchasing a piece of property. Wouldn’t that be nice? As a you are beginning real estate investing you’ll soon learn otherwise, but for now let’s indulge in a little fantasy.

Choice two is to purchase a duplex for $40,000 by putting our $20,000 cash down and borrowing the additional $20,000. The market rent for this duplex is $500 per month, or $6,000 per year. The monthly payment on our loan is $200, so positive cash flow is $300 per month, or $3,600 per year. Not too bad, considering we are just beginning real estate investing.

Finally, choice three in beginning real estate investing is to purchase a multi-unit apartment building for $140,000 by putting $20,000 cash down and borrowing the additional $120,000. The market rent for all the units in the building totals $1,500, and our monthly loan payment is $1100, leaving us a positive cash flow of $400 per month, or $4,800 per year.

Let’s see which of these three situations best demonstrates the power of leverage. To do this we need to make a simple calculation, called Return On Investment (ROI) for each choice. This is a very important calculation to learn as you are beginning real estate investing. ROI is calculated by dividing the amount of return we get back in a year’s time by the amount of cash we have invested.

In choice one, $3,000 return divided by $20,000 gives us a Return On Investment of 15%. Not bad, considering we’re just beginning real estate investing, but let’s see if we can do better. Choice two gives us a return of $3,600 per year for the same $20,000 invested, so our ROI is $3,600 divided by $20,000, or 18%. That’s excellent, but we still have one more choice to look at.

Choice three gave us a return of $4,800 on our investment of $20,000, so our ROI is a whopping 24%! Why so big? Because even though we’re just beginning real estate investing, we were able to “move” or control a much more valuable piece of property with a very small “lever”… in this case, our $20,000. What gave us that leverage? The ability to use Other People’s Money (OPM), but that’s a topic for another article.

Until next time, I’ve written another in-depth article called Beginning Real Estate Investing.

Now, go make more offers!

Why Use Private Money For Real Estate Investing?

There are many reasons a real estate investor might want to have a ready access to private money for real estate investing. This article will explore a few of those reasons.

The first reason to use private money for real estate investing is to protect your credit rating. Think about this… if you borrow the money from a private individual, rather than a bank or lending institution, the loan will never be reported to the credit bureau. It won’t count against your debt-to-income ratio, and no record of the payment history will be kept. No one will ever know about that loan, unless you tell them.

Next, and one of the very best reasons to use private money for real estate investing, is the elimination of paperwork. I have never had to complete a loan application for private money for real estate investing. The lenders I work with all know me and the kind of investing I do. Many of them never even care to see the property. When I apply for a mortgage, on the other hand, the application process itself can take several days, and there are mountains of paper.

Yet another reason to use private money for real estate investing is the ready access to fast cash. Sometimes, when a deal is especially good, moving super-fast is a necessity. With bank financing, that kind of speed is often impossible. Even lines of credit don’t always give you the same speed capability that private lenders do. With one phone call to one of my private lenders, I can tie up a deal that other investors only dream about.

A great reason to use private money for real estate investing is the leverage that it gives you. Think about this… if you have $50,000 of your own money, is it better to pay all cash for a $50,000 property, or to put $50,000 cash down on a $500,000 property and use private lenders to finance the rest?

If you answered the $500,000 property, you’re right- and here’s why. Let’s say the $50,000 property rents for $500 per month, or $6,000 per year. Your Return On Investment (ROI would be 12% the first year ($6,000 divided by $50,000). It’s safe to assume the rent on the $500,000 property might be about 10 times that of the $50,000 property, or about $60,000 for the year. If your payback to your lender totals $4,000 per month, or $48,000 per year, what’s your Return On Investment (ROI) for the $500,000 property? If you answered 24%, give yourself a gold star!

Of course, you would need to take into account the cost of borrowing the money, but even after doing that, you can see there really is no comparison. Using private money for real estate investing gives you something called leverage. Leverage is the ability to move something very large with something very small… a lever. The lever, in this case, is your small amount of cash ($50,000). With it, you can “move” or control a $500,000 property, because the private lender’s money increases the power of your “lever”.

Here I’ve given you a few of the many great reasons for using private money for real estate investing. There are more, but you should have a clear picture of why private money can be so useful in your real estate investing toolkit. If you would like more information, I have written another article on my website titled Private Money For Real Estate Investing.

Now, go make more offers!

Why Use Private Money For Real Estate Investing?

There are many reasons a real estate investor might want to have a ready access to private money for real estate investing. This article will explore a few of those reasons.

The first reason to use private money for real estate investing is to protect your credit rating. Think about this… if you borrow the money from a private individual, rather than a bank or lending institution, the loan will never be reported to the credit bureau. It won’t count against your debt-to-income ratio, and no record of the payment history will be kept. No one will ever know about that loan, unless you tell them.

Next, and one of the very best reasons to use private money for real estate investing, is the elimination of paperwork. I have never had to complete a loan application for private money for real estate investing. The lenders I work with all know me and the kind of investing I do. Many of them never even care to see the property. When I apply for a mortgage, on the other hand, the application process itself can take several days, and there are mountains of paper.

Yet another reason to use private money for real estate investing is the ready access to fast cash. Sometimes, when a deal is especially good, moving super-fast is a necessity. With bank financing, that kind of speed is often impossible. Even lines of credit don’t always give you the same speed capability that private lenders do. With one phone call to one of my private lenders, I can tie up a deal that other investors only dream about.

A great reason to use private money for real estate investing is the leverage that it gives you. Think about this… if you have $50,000 of your own money, is it better to pay all cash for a $50,000 property, or to put $50,000 cash down on a $500,000 property and use private lenders to finance the rest?

If you answered the $500,000 property, you’re right- and here’s why. Let’s say the $50,000 property rents for $500 per month, or $6,000 per year. Your Return On Investment (ROI would be 12% the first year ($6,000 divided by $50,000). It’s safe to assume the rent on the $500,000 property might be about 10 times that of the $50,000 property, or about $60,000 for the year. If your payback to your lender totals $4,000 per month, or $48,000 per year, what’s your Return On Investment (ROI) for the $500,000 property? If you answered 24%, give yourself a gold star!

Of course, you would need to take into account the cost of borrowing the money, but even after doing that, you can see there really is no comparison. Using private money for real estate investing gives you something called leverage. Leverage is the ability to move something very large with something very small… a lever. The lever, in this case, is your small amount of cash ($50,000). With it, you can “move” or control a $500,000 property, because the private lender’s money increases the power of your “lever”.

Here I’ve given you a few of the many great reasons for using private money for real estate investing. There are more, but you should have a clear picture of why private money can be so useful in your real estate investing toolkit. If you would like more information, I have written another article on my website titled Private Money For Real Estate Investing.

Now, go make more offers!

Beginning Real Estate Investing - Understanding Leverage

This is one of a series of articles on beginning real estate investing. One of the fundamental concepts to understand as you are beginning real estate investing is the concept of leverage. Leverage is the ability to move or control something very large with a very small object or force. Leverage as it applies to real estate investing is the ability to control high value properties with small amounts of your own cash.

To understand why this is important, and why leverage is so valuable, an example will help. Let’s assume you are just beginning real estate investing and you have $20,000 cash to invest. The exact amount is really unimportant, so long as you understand the principle involved. To illustrate the power of leverage, let’s assume you are faced with three possible choices of how to invest your $20,000.

Choice one is to purchase a small single family home with a purchase price of $20,000. The market rent for this home is $250 per month, or $3,000 per year. For purposes of this illustration, let’s pretend there are no such things as taxes, Realtor fees, or any other costs involved with purchasing a piece of property. Wouldn’t that be nice? As a you are beginning real estate investing you’ll soon learn otherwise, but for now let’s indulge in a little fantasy.

Choice two is to purchase a duplex for $40,000 by putting our $20,000 cash down and borrowing the additional $20,000. The market rent for this duplex is $500 per month, or $6,000 per year. The monthly payment on our loan is $200, so positive cash flow is $300 per month, or $3,600 per year. Not too bad, considering we are just beginning real estate investing.

Finally, choice three in beginning real estate investing is to purchase a multi-unit apartment building for $140,000 by putting $20,000 cash down and borrowing the additional $120,000. The market rent for all the units in the building totals $1,500, and our monthly loan payment is $1100, leaving us a positive cash flow of $400 per month, or $4,800 per year.

Let’s see which of these three situations best demonstrates the power of leverage. To do this we need to make a simple calculation, called Return On Investment (ROI) for each choice. This is a very important calculation to learn as you are beginning real estate investing. ROI is calculated by dividing the amount of return we get back in a year’s time by the amount of cash we have invested.

In choice one, $3,000 return divided by $20,000 gives us a Return On Investment of 15%. Not bad, considering we’re just beginning real estate investing, but let’s see if we can do better. Choice two gives us a return of $3,600 per year for the same $20,000 invested, so our ROI is $3,600 divided by $20,000, or 18%. That’s excellent, but we still have one more choice to look at.

Choice three gave us a return of $4,800 on our investment of $20,000, so our ROI is a whopping 24%! Why so big? Because even though we’re just beginning real estate investing, we were able to “move” or control a much more valuable piece of property with a very small “lever”… in this case, our $20,000. What gave us that leverage? The ability to use Other People’s Money (OPM), but that’s a topic for another article.

Until next time, I’ve written another in-depth article called Beginning Real Estate Investing.

Now, go make more offers!

SECRETS TO SUCCESS IN NETWORK MARKETING?

this is by mark januszewski

The only secret you need to know is the one guru’s and generic tool peddlers know…….and don’t want you to know.

There are no secrets to network marketing or, for that matter to success.

See, if people can get you to believe there is a secret or two…..or a magic way to get prospects online that are ‘pre-qualified’…..they can sell you something.

These bottom feeders leverage your inexperience, impatient and fear to get at your credit card.

Before you know it you are spending more time on these ‘secrets’ and ‘shortcuts’ AND promoting this guru who has earned a dime for you…….than your own business.

So, let me repeat…..there are no secrets…….only people who want you to believe that so they can sell you stuff.

WE ARE ALL SCARED

I’m close to 20 years of succeeding and before I did, I failed for 5 years. That’s 25 years.

I’ve never met anyone who joined an MLM, mine or countless others from other deals who had all the time and money they wanted BEFORE they joined.

Most of us finally look at networking when we are in pain over time, money or both.

We are scared. Oh, we might not admit that but the situation that trigger our decision and trying something new is going to create some fear.

It’s normal.

It’s my story and probably yours too.

Deal with it as a successful person deals with things.

That is the key.

LIKE ATTRACTS LIKE

Success thinking attracts success…..fear thinking? Well….

Don’t kid yourself by comparing what you are feeling on the inside to what other people’s outsides.

Successful people, both in and out of MLM have some fear….most of it healthy they just do something different with it.

And no, this is not some new-age or Zen solution coming at you.

We’ve been blessed to be asked to speak all over the world. After we do, we get lots of kind words and always a few people who comment on how relaxed and comfortable we were and it made them relax about networking.

We always tell them the same thing, the thing that turned us into coveted speakers…..

“Show me a speaker who isn’t nervous or scared and I’ll show you a bad speaker.”

It’s true…we just know what to do with that fear, what all successful people so with fear.

KNOWLEDGE

Most fear is a lack of knowledge, certainly in business it is…..

Successful people

1.get the knowledge, reduced fear
2.create a written plan to put knowldge in play
3.practice, shrinking fear
4.put it in play, courage built on confindence from 1&3
Network marketing, truth be told, is easy once you realize you’ve been doing it since you were 6 years old…..you learned about stuff from some kids, told others and told your parents; about a baseball glove, a movie or a new ice cream stand.

All occupations are the same….they have a couple ‘traction’ points…..points that will ‘drive’ income.

We all talk to people everyday

It’s no mystry in network marketing…..it’s talking to people and learning a couple network marketing skills just means learning how to talk to people rejection free without pressuring them or ourselves.

When people enroll, we simply give them network marketing help by teaching them they already know how to talk to people.

I wouldn’t call it rocket science or a secret…..I’d just call it the truth…..

“If we are going to make some money, we need to talk to people.”

believe

.

Real Estate Investing: Income, Leverage, Appreciation And Depreciation

Real Estate investing is not nearly as legally complicated, financially burdensome, or time consuming as you might think.

Every investor can invest for leverage, appreciation, income, equity and appreciation. The challenge facing every transaction is learning to recognize value.

Educated real estate investing is often knowing how to do deals. It does take time to get educated in this arena.

A typical real estate transaction involves understanding financing, negotitation and reognizing the risk and reward parameters of the investment. The truth is, real estate investing is a tough business, and even tougher if you’re not fully aware of the time. However, when approached correctly this is a very exciting and lucrative business.

Several years ago a very good friend of mine purchased a duplex which needed a great deal of repairs. My friend fixed the property up themselves and rented out one part of the duplex and lived in the other part. The tennants rent payment covered the entire mortgage which alloweed my friend to live rent free. Since the time fo the purchase the property has also appreciated considerably. This experience has led my friend to really get educated in real estate investing.

Real estate investing is a business that you can run yourself, with little overhead, and finally achieve the financial freedom you desperately desire. It is not limited to wealthy tycoons. To be successful in real estate investing is to build long-term wealth. Sensible investing is a sure way to wealth, but not necessarily overnight.

For the prepared individual, foreclosures give rise to circumstances for profit. In some cities competition for foreclosures is fierce. Investing in foreclosures is a very popular subject, especially with new investors. Learning the foreclosure market requires a great deal of time and energy but the rewards are certainly well worth it.

Done correctly, real estate investing is a great way to take control of your life, and gain financial freedom. Crunch the numbers and learn as much as you can about this exciting arena. There are opportunities to profit for almost every type of investing style.

About the Author:

David Medley is an active real estate investor and webmaster of http://www.aboutreal-estate.info/

Real Estate Investing: Income, Leverage, Appreciation And Depreciation

Real Estate investing is not nearly as legally complicated, financially burdensome, or time consuming as you might think.

Every investor can invest for leverage, appreciation, income, equity and appreciation. The challenge facing every transaction is learning to recognize value.

Educated real estate investing is often knowing how to do deals. It does take time to get educated in this arena.

A typical real estate transaction involves understanding financing, negotitation and reognizing the risk and reward parameters of the investment. The truth is, real estate investing is a tough business, and even tougher if you’re not fully aware of the time. However, when approached correctly this is a very exciting and lucrative business.

Several years ago a very good friend of mine purchased a duplex which needed a great deal of repairs. My friend fixed the property up themselves and rented out one part of the duplex and lived in the other part. The tennants rent payment covered the entire mortgage which alloweed my friend to live rent free. Since the time fo the purchase the property has also appreciated considerably. This experience has led my friend to really get educated in real estate investing.

Real estate investing is a business that you can run yourself, with little overhead, and finally achieve the financial freedom you desperately desire. It is not limited to wealthy tycoons. To be successful in real estate investing is to build long-term wealth. Sensible investing is a sure way to wealth, but not necessarily overnight.

For the prepared individual, foreclosures give rise to circumstances for profit. In some cities competition for foreclosures is fierce. Investing in foreclosures is a very popular subject, especially with new investors. Learning the foreclosure market requires a great deal of time and energy but the rewards are certainly well worth it.

Done correctly, real estate investing is a great way to take control of your life, and gain financial freedom. Crunch the numbers and learn as much as you can about this exciting arena. There are opportunities to profit for almost every type of investing style.

About the Author:

David Medley is an active real estate investor and webmaster of http://www.aboutreal-estate.info/

Beginning Real Estate Investing? Increase Your Profits With The Magic Of Leverage

When you invest your money in things like RRSP’s or stocks and bonds your leverage is zero because you have used your own money and none of other people’s money. When you buy a home with a mortgage you have used leverage, which is common in most all real estate investments. You own the down payment of coarse but the lending institution owns the rest.

You bought a house for $100,000 with a $5,000 down payment. The OPM you used, or leverage is 95% and your down payment was 5%. Here lies one of the most important principles for someone just beginning real estate investing or even if you’re well into it:

The More Leverage You Use, The Greater Your Profit Potential.

Now the house you bought for $100,000 has increased in value up to $105,000 in just under a year, not bad. It only appreciated 5% but the good news is the return on YOUR investment is 100% because you invested $5,000, it went up $5,000 so you doubled your money earning a full 100% on your investment. Let’s say that over the next 10 years your property goes up to $25,000 in value, this will give you a 500% return on your money. Leverage is computed by dividing the increase in value by the cash down payment (25 divided by 5 is 5).

If you had $100,000 you could buy one property outright with your cash or you could make a lot of money with leverage and buy 20 properties by putting $5,000 down on each one. So, now instead of having a $100,000 property you’ve got $2,000,000 worth of property. Now let’s say the properties all appreciated by 5% during the first year your profits would be $100,000. If you had bought just the one property instead you would have only made $5,000 in profits.

As you can see, the less of your own money you use, the greater your profit potential and if you were able to buy a property with none of your own money, then the return on your investment is infinite. You can’t divide by a zero down payment. To figure out the return on investment from appreciation, taxes, or principle reduction, always divide by your cash down payment.

We have seen here how leverage can increase you chance for profits, but if you are financially unprepared it can greatly increase your potential risk. Higher earning strategies always have a higher risk potential that go along with them. The super save route of investing the entire $100,000 into one property is totally safe but will give you a much lower ROI. Those 20 properties you bought all have a mortgage on them which you are responsible for so if a few aren’t rented or the rents don’t get paid the money comes out of your pocket. Does this additional risk warrant the use of leveraging? Yes it does but you have to plan ahead and be prepared to handle any possible negative cash flow problems should they arise.

“How to handle negative cash flow” will be discussed in an upcoming article.

Real Estate Investing: Income, Leverage, Appreciation And Depreciation

Real Estate investing is not nearly as legally complicated, financially burdensome, or time consuming as you might think.

Every investor can invest for leverage, appreciation, income, equity and appreciation. The challenge facing every transaction is learning to recognize value.

Educated real estate investing is often knowing how to do deals. It does take time to get educated in this arena.

A typical real estate transaction involves understanding financing, negotitation and reognizing the risk and reward parameters of the investment. The truth is, real estate investing is a tough business, and even tougher if you’re not fully aware of the time. However, when approached correctly this is a very exciting and lucrative business.

Several years ago a very good friend of mine purchased a duplex which needed a great deal of repairs. My friend fixed the property up themselves and rented out one part of the duplex and lived in the other part. The tennants rent payment covered the entire mortgage which alloweed my friend to live rent free. Since the time fo the purchase the property has also appreciated considerably. This experience has led my friend to really get educated in real estate investing.

Real estate investing is a business that you can run yourself, with little overhead, and finally achieve the financial freedom you desperately desire. It is not limited to wealthy tycoons. To be successful in real estate investing is to build long-term wealth. Sensible investing is a sure way to wealth, but not necessarily overnight.

For the prepared individual, foreclosures give rise to circumstances for profit. In some cities competition for foreclosures is fierce. Investing in foreclosures is a very popular subject, especially with new investors. Learning the foreclosure market requires a great deal of time and energy but the rewards are certainly well worth it.

Done correctly, real estate investing is a great way to take control of your life, and gain financial freedom. Crunch the numbers and learn as much as you can about this exciting arena. There are opportunities to profit for almost every type of investing style.

About the Author:

David Medley is an active real estate investor and webmaster of http://www.aboutreal-estate.info/

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