Real Estate Investing: Protecting Your Assets

Real estate investing can provide you with positive cash flows, tax benefits and the satisfaction of having impacted your life positively. Just like in any other business, in real estate investments too, there are intricacies that are personal to it, and can cause negative impacts if ignored. Many first time real estate investors make the mistake of investing their hard earned money without understanding, and thereby risking their investments. There is a need in real estate investing of protecting your assets.

Avoiding the Errors:

It depends on why you are investing in a particular property. Do you intend to hold it for a long period, or do you intend to turn it around for selling at the earliest? Let us look at some of the errors that certain investors make, which you need to avoid to protect your assets, and ensure excellent returns on your investments.

Check the Property:

Do not get sucked into the excitement of investing in a real estate property. There are rampant claims of high return on investment in the real estate business. Check the condition of the property, and how much modifications, renovations, etc will be required. Ensure you have a right real estate agent who will not overlook all the seemingly insignificant but important details.

Inspect Thoroughly:

Have a professional inspector thoroughly check the property. You need to exercise sound business judgment, as you are ready to invest your hard earned money. If it is a rental property, check with the tenants regarding pest problems, structural damage or any reoccurring problems.

Check All Documents:

Documents involved in a property can be overwhelming: building permits; zoning laws; rental and lease applications (in case of rental property); underlying loan documents; CC&Rs (covenants, conditions and restrictions); by-laws; title policies; inspection reports; purchase contracts; insurance; the list is never ending.

Cash Flow:

If your real estate investing is in a rental property, you intend to hold on to the property for a longer period, as much as 15 to 20 years. You will need to ensure cash flow to take care of your property, vis-?-vis the property?s maintenance, repairs, improvements, etc. There will be times when your rental property will be vacant and not earning you a rental. You still need to have cash for the upkeep of your property.

Short Duration Investing:

If you plan to invest in a real estate property for a shorter duration, you may not feel the need to invest heavily on improvements etc. Sometimes, short duration investing could be risky, as the property may lose in value. Generally, property prices appreciate over longer periods.

To help you in real estate investing, there are professionals available, online as well as offline, who can guide you in protecting your assets.

Real Estate Investing: Protecting Your Assets

Real estate investing can provide you with positive cash flows, tax benefits and the satisfaction of having impacted your life positively. Just like in any other business, in real estate investments too, there are intricacies that are personal to it, and can cause negative impacts if ignored. Many first time real estate investors make the mistake of investing their hard earned money without understanding, and thereby risking their investments. There is a need in real estate investing of protecting your assets.

Avoiding the Errors:

It depends on why you are investing in a particular property. Do you intend to hold it for a long period, or do you intend to turn it around for selling at the earliest? Let us look at some of the errors that certain investors make, which you need to avoid to protect your assets, and ensure excellent returns on your investments.

Check the Property:

Do not get sucked into the excitement of investing in a real estate property. There are rampant claims of high return on investment in the real estate business. Check the condition of the property, and how much modifications, renovations, etc will be required. Ensure you have a right real estate agent who will not overlook all the seemingly insignificant but important details.

Inspect Thoroughly:

Have a professional inspector thoroughly check the property. You need to exercise sound business judgment, as you are ready to invest your hard earned money. If it is a rental property, check with the tenants regarding pest problems, structural damage or any reoccurring problems.

Check All Documents:

Documents involved in a property can be overwhelming: building permits; zoning laws; rental and lease applications (in case of rental property); underlying loan documents; CC&Rs (covenants, conditions and restrictions); by-laws; title policies; inspection reports; purchase contracts; insurance; the list is never ending.

Cash Flow:

If your real estate investing is in a rental property, you intend to hold on to the property for a longer period, as much as 15 to 20 years. You will need to ensure cash flow to take care of your property, vis-?-vis the property?s maintenance, repairs, improvements, etc. There will be times when your rental property will be vacant and not earning you a rental. You still need to have cash for the upkeep of your property.

Short Duration Investing:

If you plan to invest in a real estate property for a shorter duration, you may not feel the need to invest heavily on improvements etc. Sometimes, short duration investing could be risky, as the property may lose in value. Generally, property prices appreciate over longer periods.

To help you in real estate investing, there are professionals available, online as well as offline, who can guide you in protecting your assets.

Real Estate Investing Gurus Reviewed

We’ve seen all the claims that have been made by many late night real estate informational gurus. They all talk off making thousands of dollars when you buy a property. But is it really possible? Is it really possible to buy a house and pay no money down and walk away with cash at the closing table?

It’s because of these late night infomercials that no money down real estate to pull cash out at closing has become one of the most sought after topics on the net and late night television. Most everyone has seen these commercials or even bought these real estate investing courses. Most of these courses get filled with dust, then to only find their way to the yard sale. Now, you may be asking, ” is it really possible and if so, how’s it done?”

Honestly, the one technique that gets talked about the most is the least creative way to do a deal and the most risky. There are many more profitable ways to real estate investing without the personal risk and the liability. See, what happens is you find an undervalued property, then you go to the bank to acquire financing. Many lenders will loan 80% of the appraised value on real estate investments. Many investors will then borrow the 80% even if they only paid 65% of the fair market value of the property. The crucial factor that investors must realize is that this is borrowed money and you can’t live off of borrowed money. Also, you are personally guaranteeing that you will pay back the loan. Therefore, if something goes wrong, then you are on the hook with the bank.

Not only is this very possible to pull cash out when you buy, this one method to real estate investing could be the single worst mistake that investors make when buying properties. It’s a financial disaster waiting to happen. See, when you buy to pull cash out at the closing table, you are pulling the equity out of the deal. The equity is the value of the property beyond what is owed against the property. When an investor buys a property using this method, they are truly risking their financial stability because they trust that properties will always go up in value. This myth couldn’t be farther from the truth. Most don’t even care to think about “what if the fair market value goes down? Or what if the tenants that I have completely destroys the home?”

So, are there other ways to create profitable real estate deals?

The answer is a very loud “YES”. There are numerous ways to hedge your risk of these scenarios while you avoid personal liability and financial risk all together. You should seek out a mentor or a trainer that will show you the ins and outs to real estate investing without costing you a fortune. Also, when you decide to use a mentor or buy a course of any kind, you should look at what the guru’s previous students have to say before you decide to give up your hard earned money. We’ve outlined the most popular real estate gurus and allow real life consumers to give reviews on many of the top real estate investing programs selling today. To read these reviews, then go to www.101Gurus.com.

About the Author

Discover what others have to say about the Real Estate Investing Gurus as you read the latest Real Estate Course Reviews by visiting http://www.101gurus.com

Real Estate Investing: Five Indisputable Benefits You Can Bank On

If you’ve ever played Monopoly, you already know that you can’t go wrong investing in real estate. Compared to stock market investing, real estate investments are much safer and less affected by economic downturns. But the advantages of investing in real estate don’t stop there. Real estate investments have at least six indisputable benefits that will make a positive impact on your bottom line.

Real Estate Investing Has Tax Benefits

The government understands that real estate ownership and development is good for everyone. That’s why there are so many tax advantages to investing in real estate. Mortgage interest is deductible in most situations. In some cases, depending on how you finance and handle your real estate investments, even profits can be tax deductible. Sheltering your profits and deducting your expenses from your tax bill is just as good as putting money in your pocket.

Investing in Real Estate Offers Significant Profit Potential

In a perfect world, all investments would return a profit. In case you haven’t noticed, we’re not living in that world. We are in a world where the supply of secure and affordable housing is dwindling, and the number of deteriorating homes is growing. This situation offers an outstanding opportunity for real estate investors who buy, renovate, and then sell or rent out properties. Investing in real estate easily returns profits in the 30-40 percent range, and has the potential to return much more.

Real Estate Investing Diversifies Your Portfolio

Investing in real estate is a great way to diversify your financial portfolio. Investment opportunities abound in today’s world, and there’s no reason to pick just one. Some of them have great potential for profit, and for significant loss. You have to make your own financial decisions about which investments are right for you. But chances are it will be your real estate investments that keep you going when your riskier investments aren’t performing well.

Investing in Real Estate Provides Income

Real estate investing gives you options. If you want to supplement or replace your monthly income, you can choose to rent out a property instead of selling it. A property manager can handle the rental for you, which means your only work for the month will be depositing the checks.

Real Estate Investments Appreciate

If you can count on anything, then you can count on your real estate investments increasing in value. Based on long-term, historical trends, you can expect real estate to appreciate about nine percent a year. And that’s if you do nothing at all. Just imagine what could happen if you buy a handyman special and do some renovation.

Investing in real estate is one of the surest ways to improve your financial situation. The stability and benefits of real estate investing make it a best choice for the foundation of your investment portfolio.

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About the Author

Sal Vannutini is the?owner of http://www.fixerupperfortunes.com. Did you know that he is giving away a 14 part e-course for free! Visit now?and grab this amazing opportunity, to find out how you too can make profits from your fixer upper home.

Fundamental Principles of Real Estate Investing

Real Estate investing has always been viewed as a conservative investment opportunity. Real property is thought to not only hold value, but is expected to increase. This is generally true, but like any investment, there is risk involved. There are some fundamental principles of investing in Real Estate that will tend to reduce this risk. These principles hold true no matter where the actual location of the property. They apply to investing in Utah real estate as well as they do for any other area.

The first principle is education. Actually, this applies to any investment. Real estate is often about relationships. You need to learn about people. In many ways, they are going to be the key to your success or failure. You also need to learn all you can about markets and marketing techniques. Investors will have to evaluate properties and must know about home repairs. There is a lot of information that can impact your success or failure, and the more prepared you are, the better chance you will have.

Another principle is to understand cash flow. Real estate investments are not very liquid. Properties can rarely be sold quickly. The investor must be prepared for short term losses due to the need for costly repairs or the sudden departure of tenants. There are many relevant numbers involved in real estate. If you understand these numbers, you will be prepared to deal with cash flow fluctuations. It is a good idea to start small and look for every way possible to reduce risk. Although it is impossible to eliminate risk completely, when you are working to eliminate as much as possible, you are going in the right direction.

It is important to research your property. You need to find property that is going to be in demand. Provo real estate might always seem to be in demand, but every property and location has things that make it more or less desirable than the average. In addition to inspecting potential property, make an inspection of the neighborhood. It is better to be aware of conditions that might lower property value, or make rentals problematic, before you are the owner of the property.

The most important principle to remember in real estate investing is this: Your home may be where your heart is, and emotion and sentimental attachment may matter in selecting your personal home, but when you are investing, return on investment is all that matters.

Learning Real Estate Investing

Everyone seems to be after real estate investments as that is regarded as one of the safest high return investments. There are various schools of thought on real estate investments. Let’s explore two of the most common real estate schools of thought.

One real estate school of thought talks about doing a lot of analysis. This real estate school of thought advocates studying a lot of factors which are generally linked to economic indicators. This real estate school of thought evaluates the economic indicators in many different ways. It takes its cues from a number of financial indices and how they are expected to perform in the near future. This real estate school of thought evaluates various socio-economic indicators at all levels - Global, national and local. This real estate school of thought evaluates inflation and things like value of money today and value of money next year etc. It uses all these evaluations in order to come up with predictions on how real estate industry is expected to fare in the next few years. So, this real estate school of thought tries to determine the buying power of people in order to determine the course of real estate prices. When it comes to evaluating the real estate trend with regards to a particular place (i.e. locally), this real estate school of thought takes into account various local factors like the unemployment rate, the industrial development in the region, the change in tax policies and any events that might affect the real estate prices in the area. It also takes into consideration the surrounding areas and the real estate trend in those areas. So, this real estate school of thought is really followed by arch real estate consultants/investors who know a lot about finance and put all that knowledge to use in determining the trends for real estate industry. However, that is just one real estate school of thought.

The other real estate school of thought doesn’t consider those factors at all. According to this real estate school of thought, real estate is always lucrative at all times and at all places. This real estate school of thought advocates looking for great deals. It’s this real estate school of thought that asks you to go to public auctions, look for distress sales and foreclosures, find motivated seller, rehab and sell, etc. So, this real estate school of thought focuses on getting the information about the best deals in town and taking advantage of them to make good profits.

So, those are the two real estate schools of thought and following either or both calls for time and effort (if you are to make any profits out of real estate investments).

About the Author

Luke Garfield
Respected computer scientist and author
Visit http://mortgageforeclosure.netfirms.com for more articles like this one.

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 - Research Before Jumping In

These days, a whole lot of people in America are investing money in real estate. Unless all these people have very poor judgment, there must be a good reason for it. Perhaps it’s because real estate can climb in value very quickly and return a good profit. I can not imagine any other reason.

When so much money is at stake, you must be certain that you know exactly what you are doing, since so many real estate investments turn out to be duds. If you make the wrong investment in a real estate property you can lose your shirt. Perhaps the best advice I could recommend is to educate yourself, and I can not think of a better way to do that than to attend a good real estate investing seminar, taught by someone who has made money investing in real estate.

While I have not yet attended a real estate investing seminar, I am seriously thinking about it. A friend of mine recently sold a home in Palm Coast, Florida, only five months after he bought it. Frankly, he had never attended a real estate investing seminar - he was just lucky that he ended up having made a good deal. He moved there to be closer to his girlfriend but soon discovered that his monthly payments were more than he could handle, so he sold the house. I could not believe it when he told me he made $45,000 on the sale. Neither could he!

Well, unlike my friend, I would not just rely on my luck. But I would like to learn how to do the same thing. That is, buy a home in a good area, fix it up to increase its value and then flip it for a hefty profit. But I would not want to go in blind. Fortunately, there is a load of information on the internet about real estate investing seminars and where to find them. I continue to search and increase my knowledge, and despite new investing in real estate is still very promising. If you would like to do the same thing, I highly recommend that you check out real estate investing seminars online. Hey, there is enough real estate out there for everyone. Maybe I’ll see you at a seminar!

Chicago Real Estate Investing

Donald Trump and countless other moguls built their empires on real estate, and, lately, a lot of people have realized the wisdom behind real estate investments. Chicago real estate investing is a formidable, yet very feasible, business. Chicago is a booming city that is economically sound with prime real estate everywhere. Owning a piece of land at the right location is like owning a gold mine: In just a few years, its value may jump to double the amount you started with in the first place.

But as with any business venture, jumping on the real estate investing bandwagon should be more than just a split-second decision. You must be well prepared before you commit to this daunting task.

First, you have to study Chicago real estate investing. Ask significant questions:

Where is the ideal location?

How is the market doing?

How much start-up capital should I have?

What are the different aspects of real estate investing should I be familiar with?

What type of property do I want to deal in?

When you have the answers to all these questions, then you can start thinking of Chicago real estate investment as a possibility.

When you start your business make sure you cover the important facets of promoting your Chicago real estate investment. Know the importance of advertising and how beneficial it can be for your business. You need to constantly let people know what is out there by advertising your property. There’s no such thing as too much advertising-it’s the lack of it that can hurt you.

You must also have reliable real estate agents handling your Chicago real estate investing business. If you surround yourself with hardworking and smart people, chances are you’ll be in it for the long haul.

Sitting at the negotiation table can be intimidating, but you must realize that you’re in this to win. Start your bargains at the lowest possible price: not too low, as this could be insulting for the seller, but low enough so that you’ll have a lot of room for haggling.

Be pro-active. Be on the watch for the smallest movements in the market and make sure you are ready to pounce when prime real estate is suddenly brought to the market.

Chicago real estate investing can be a lot of hard work but it can also be very rewarding in the end.

Real Estate Investing By The Numbers: Part 1

In our recent Mastermind Group training session, our key topic of discussion was how to invest by the numbers. The longer that I spend investing in real estate and also evaluating projects around the county, the more and more I am astounded at the lack of knowledge from “so called” professionals. For most individual real estate investments, the level of analysis is not terribly difficult?. You find yourself doing the same thing over and over again. In this article, I will try and share this simplistic view and how you can know more than 95% of the “professionals” in this market.

What You Need To Know? For any investment, there really is 4 things you need to know and guess what, NOBODY gives them to you in a normal sales presentation. Let’s break down each one and how it is obtained:

1)Purchase Equity ? This is one of the simplest to obtain but is easily abused by sales people. What you want to know is what is your purchase price, relative to the actual STREET PRICE; i.e., the price a real individual in the area would pay to own your property. How do you get it? Appraisals, talking with agents in the area, running test ads in newspapers, etc.

2)Annual Appreciation (%) ? Now the witch craft begins?.. This requires a CRYSTAL BALL to look into the future. Because of this, appreciation is an OPINION that you should form on your own?. An “Experts” OPINION is still an opinion and you should treat it as such. To make an opinion, you had to consider things like job growth, lack of similar product, future demand, etc. Bottom line is that you would like to come up with a % number and this takes a little practice but after looking at a few areas, you can pretty easily form an opinion. PLEASE NOTE: If we “project” appreciation rates in an area, we are violating securities laws so we don’t do this. We share all the information about an area and why we like it and then have to leave it up to the individual to form their own opinion. However, when we have decided to introduce a property, we have formed our own OPINION and we like what we see.

3)Annual Cashflow ? Over time, you will either be making or losing money on this investment. It may turn out that small amounts of negative cashflow make sense if the annual appreciation and purchase equity are strong. The components that you have to gather for annual cashflow are

?Gross Annual Income; ?Management Expenses; ?Taxes, Insurance, HOA; ?Interest Expenses; and ?Maintenance Estimates

Fortunately, most of the expenses can be estimated pretty closely. For gross annual income, realize that again, NOBODY can predict the future. So, you can gather market rents data that you believe are comparable, apply any safety factor that you like, and then use that for ESTIMATES.

4)Special Tax Situations ? This is typically an unusual situation for individual investors but applies in areas such as the Go Zone where bonus depreciation can be used.

How Do You Use This Information Suppose you could see EXACTLY what was going to happen into the future?.. Of course, we know this is unrealistic however it still does not hurt to try based on our assumptions.

Suppose you looked into the future and you saw that in 5 years, your net gain on a property was going to be a little over $87,000 with a $21,000 dollar total investment and a little bit of your time. If you KNEW that was GOING to happen, what would you do? Would you purchase the property? Would you pass on the property? Why?

Realize, that for a $21,000 investment, this equates to making 33.9% on your money, year after year after year. That is not too shabby. Let’s apply the “rule of 72″ here which states that you can calculate how long (approximately) it will take to double your money with a certain return %. You take 72% / 33.9% = 2.1 Years to double your money. Is this something that is good?

The answer of course depends on a few factors but let’s put it into perspective. Suppose you invested $100,000 at a steady 33.9% rate of return. In 15 years, then you have now turned that $100,000 into $7.9 Million. Got your attention yet if you KNEW this was going to happen? Of course, if we have to take on all kinds of risks to get that return, then that may, or may not be such a good idea. If, however, it is low risk, now you have the makings of a good investment.

My argument now is that IF YOU COULD SEE INTO THE FUTURE, and you saw this kind of performance, you would be excited. Right? Well, why not pretend we can look into the future and CALCULATE what the future looks like using our 4 KEY parameters above. If we like the “future” answers, and we believe our assumptions, and we believe the risk to be low, isn’t that a prudent approach?

For many non-investors, they believe that real estate investors take on tons of risk and are gun slingers?? Quite contraire, monsieur, that is exactly what we DON’T do. Good investors simply look at all the FACTS, make some estimates of key parameters, estimate future performance, and then play “what if” games to what happens if things don’t work out exactly as thought.

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