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 - Ten Myths

Is real estate investing only for the wealthy? Can you buy with no money down? Do you have to know the “right” people? Let’s answer by looking at some of the myths of real estate.

1. Real estate investing is for the wealthy. Money helps, but my first real estate investment was a $3,500 lot - which I sold for a profit two weeks after I bought it. Small deals, partners, low-down deals, or just putting aside $7 per day for a couple years until you have enough money for a downpayment - these are some of the ways to start with a little and invest in real estate.

2. “0 down” isn’t possible. I sold a rental property for $1,000 down because I trusted the buyer to make the payments, and I wanted the 9% interest and higher price. He could have gotten a cash-advance on a credit card for another $30 per month and made it a “0-down” deal. “No money down” means none of YOUR money down, and yes, it happens.

3. “0 down” is the best way. If you don’t invest some of your own money, you’ll have higher payments. You’ll also spend more time finding suitable properties, and pay more for them (generally cooperative sellers want more for their cooperation - I do). There are 0-down deals out there - they just aren’t always worth doing.

3. You need experience. Experience helps, but you get it by investing. Start with common sense, ask how you can lose money, be willing to learn the numbers, and you can start where you are.

4. Some investors have a “knack” for making money. Sort of. More accurately, some just took the time and risk to learn the market and continue their education.

5. You need to know the “right” people. It helps, so start the process. Talk to investors, real estate agents, landlords, etc.

6. You have to be great negotiator. If you learn to run the numbers and make the offers based on them, you can be the worst negotiator and still do okay.

8. You need insider knowledge. Understand one deal, and you are on your way. Read and read more, but the best “insider” knowledge comes from experience.

9. Fixer-uppers are safe. People have the idea that doing the work themselves is the safest way to assure a profit. Not true. Mis-planned “fix and flips” have bankrupted even experienced investors. Most poorly purchased rental properties will only eat a little money every month.

10. The key is lowball offers. The numbers have to work, and you need a plan. You can offer MORE than the market price and make money investing in real estate, if you understand creative financing - and how to do the math.

About the author:

Steve Gillman has invested in real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

Scottsdale, Arizona Real Estate Investing

There are several factors to consider when thinking about investing in Arizona Real Estate. Is this a short term or a long term investment? Is this going to be a rental property or a personal residence? Is this going to be a vacation home? Before jumping into an investment property, it may be a good idea to ask your self what type of investment is going to fit your needs.

The days of flipping houses have seem to come to a screeching halt in Arizona. A little over a year ago this was extremely common because there were too many buyers, and not enough sellers. The inventory was very slim. Now, the inventory has seemed to increase, not enough buyers and too many sellers. Obviously, when this happens prices drop.

There is no way to predict future market conditions, but now may be a good time to start purchasing property in Arizona. The sellers are giving extraordinary incentives and the interest rates are relatively low. To make an informed decision, some might think to take a look at what is happening around them.

The price of homes have been dropping, that is not a secret. When the prices of homes start dropping, this may be an indication of a market fluctuation. When the market fluctuates it is a good time to be in the right place at the right time. Many lenders have gone out of business because there is such a high foreclosure rate. It is becoming harder and harder for people with marginal credit ratings to obtain a loan. This may be an indication that the rental market is about to get stronger.

When lenders start going out of business, and the remaining lenders tighten up their criteria, not as many people can qualify to purchase a home. People have to live somewhere, so their only other option is to rent.

When investing in Arizona Real Estate, it is important to analyze the rental market of the area you may be thinking about purchasing. It is also very important to know what your payments are going to be and how much you need to put down in order to have even or positive cash flow. If you are going to purchase a home to rent out, make sure that your payments are close to what the rental rates are in the area. To find out what the rental rates are you can ask a qualified Realtor to tell you what is currently on the market for rent in the area, and what has recently rented out. Basically, you are doing a comparative market analysis on the rental market in the area you are thinking about buying. Most qualified Real Estate professionals can help you with this.

It is extremely important to find a Realtor to represent your best interests when investing in Arizona. The difference between a good Realtor and a bad Realtor could cost you thousands of dollars. Make sure your Real Estate professional is experienced, educated, and knowledgeable of the area you are thinking about buying in. Above all, make sure your agent is aggressive.

In order to get the best price possible with the current market conditions, it is imperative to start extremely low regarding an offer to purchase. Rarely is the sticker price the purchase price. A good Realtor that is representing an investor may see a home for three hundred thousand dollars, offer two hundred and fifty thousand, and have the seller pay for all of the investors closing costs. Will the seller except this contract? There is no way to know for sure. All the seller wants to know is how much money they are walking away with in most cases. If the seller will have to pay to close escrow the contract will probably not fly. It is always a great idea to find out how much the seller owes before writing an offer on any home by having your Realtor look at the tax records. This way, you know how much flexibility you have. A desperate seller with an enormous amount of equity may have some opportunity.

Make sure when you are investing in Real Estate in Arizona, you have proper representation, you do your homework with your agent, and know that there is risk involved. Like any investment, there is risk involved. There is no way to determine future market conditions. Real Estate markets are cyclical. What goes up may very well come down. It is better to have an honest Realtor that tells you the truth versus a Realtor fluffing the truth that may cost you a lot of money. If you need a good, honest, hard working aggressive Realtor to help you with any and all of your Arizona Real Estate needs, please click on the link below to visit an extremely helpful website to get you in contact with a professional Realtor in Arizona.

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 ? Which Approach Is Right For You?

In his Rich Dad book series, Robert Kiyosaki trumpets the benefits of investing, especially those of real estate investing. Those include tax benefits, and the ability to have your money go to work for you without your lifting a finger. It sounds wonderful, doesn’t it? The idea that you can turn a dollar into two just by placing it in what can seem like a magical realm can seem very enticing.

In order to actually turn a good idea into money in your bank account, however, you have to know a little something about how the magic works. It is a good idea, for instance, to take apart this term ?real estate.? Just what is real estate, and what are the types of real estate investing that are open to you?

?Real estate? is a term that refers to a piece of land and everything that sits on it, usually meaning structures. In terms of investment, its value is affected by local market conditions more than global conditions. There are several different ways to invest in real estate.

Real Estate Investment Trusts (REITs) allow you to make money by investing in real estate, either by owning the properties themselves or by owning the mortgages on them, or to do a combination of both. The benefits of this type of investing are high yields and tax considerations. This is also a highly liquid type of investing, which means that it is easily converted to cash.

In a real estate partnership, you are pairing with (who or what?) in order to make money from existing structures or to build new ones. You can even make money off the sheer appreciation of undeveloped land itself. This is a good bet because of high growth potential and tax benefits (shelter).

The rental of vacation property is pretty self-explanatory. Your vacation property is one that is used for recreational purposes and is not your primary residence. (Define primary residence.)

Rental property is another almost self-explanatory concept, as we have all done business with landlords at some point in our lives. However, there may be a difference between residential and business rental property.

You may also invest in raw, or undeveloped, land.

It is a good idea to learn about each type of real estate investment to determine which yields the greatest benefits, determined by your particular needs. Kiyosaki named tax benefits as a good reason to become a real estate investor. After all, money you keep in your pocket is just as good as money earned.

If you are particularly interested in pursuing real estate investment because of tax benefits, you may even wish to become a real estate professional, as the IRS allows people who spend at least 750 hours a year to have nearly unlimited tax deductions. If you are not considered a professional, and your salary is high, that can actually cost you deductions on your real estate. You must have the time to participate in your real estate activities yourself, even if you have hired another real estate professional, to qualify for all tax benefits.

About the Author:

Alex Anderson Connects Investors With Minnesota Investment Property and Florida Investment Properties in Appreciating Markets.

How to Make Money in Real Estate Investing

Raja” Ahluwalia

Lower Your Taxes
Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit.

Lower Your Taxes
Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit.

For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating the rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming the tenant doesn”t pay them). These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed the amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation. Buildings naturally deteriorate over time, and these “losses” can be deducted regardless of the actual market value of the property. Because depreciation is a non-cash expense — you are not actually spending any money — the tax code can get a bit tricky. For more information about depreciation and various tax alternatives, ask your tax advisor about Section 1031 of the U.S. Tax Code.

Have a Positive Cash Flow

There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow.

Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow — whether it is pre-tax or after-tax — requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea.

Use Leverage

One of the most important factors in determining a solid investment is the amount of equity you are purchasing. Equity is the difference between the actual worth of the property and the balanced owed on the mortgage.

Benefit from Growing Equity

While investing in real estate is relatively complex, it is often worth the extra work. When compared to other financial investments, like bonds or CD’s, the return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it’s time to sell or refinance. Determining the proper amount of equity may require the assistance of a real estate professional.

(c) Copyright 2005 Madan Ahluwalia. All rights reserved.

ABOUT THE AUTHOR

Real Estate Investing - Ten Myths

Is real estate investing only for the wealthy? Can you buy with no money down? Do you have to know the “right” people? Let’s answer by looking at some of the myths of real estate.

1. Real estate investing is for the wealthy. Money helps, but my first real estate investment was a $3,500 lot - which I sold for a profit two weeks after I bought it. Small deals, partners, low-down deals, or just putting aside $7 per day for a couple years until you have enough money for a downpayment - these are some of the ways to start with a little and invest in real estate.

2. “0 down” isn’t possible. I sold a rental property for $1,000 down because I trusted the buyer to make the payments, and I wanted the 9% interest and higher price. He could have gotten a cash-advance on a credit card for another $30 per month and made it a “0-down” deal. “No money down” means none of YOUR money down, and yes, it happens.

3. “0 down” is the best way. If you don’t invest some of your own money, you’ll have higher payments. You’ll also spend more time finding suitable properties, and pay more for them (generally cooperative sellers want more for their cooperation - I do). There are 0-down deals out there - they just aren’t always worth doing.

3. You need experience. Experience helps, but you get it by investing. Start with common sense, ask how you can lose money, be willing to learn the numbers, and you can start where you are.

4. Some investors have a “knack” for making money. Sort of. More accurately, some just took the time and risk to learn the market and continue their education.

5. You need to know the “right” people. It helps, so start the process. Talk to investors, real estate agents, landlords, etc.

6. You have to be great negotiator. If you learn to run the numbers and make the offers based on them, you can be the worst negotiator and still do okay.

8. You need insider knowledge. Understand one deal, and you are on your way. Read and read more, but the best “insider” knowledge comes from experience.

9. Fixer-uppers are safe. People have the idea that doing the work themselves is the safest way to assure a profit. Not true. Mis-planned “fix and flips” have bankrupted even experienced investors. Most poorly purchased rental properties will only eat a little money every month.

10. The key is lowball offers. The numbers have to work, and you need a plan. You can offer MORE than the market price and make money investing in real estate, if you understand creative financing - and how to do the math.

About the author:

Steve Gillman has invested in real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

Real Estate Investing - Ten Myths

Is real estate investing only for the wealthy? Can you buy with no money down? Do you have to know the “right” people? Let’s answer by looking at some of the myths of real estate.

1. Real estate investing is for the wealthy. Money helps, but my first real estate investment was a $3,500 lot - which I sold for a profit two weeks after I bought it. Small deals, partners, low-down deals, or just putting aside $7 per day for a couple years until you have enough money for a downpayment - these are some of the ways to start with a little and invest in real estate.

2. “0 down” isn’t possible. I sold a rental property for $1,000 down because I trusted the buyer to make the payments, and I wanted the 9% interest and higher price. He could have gotten a cash-advance on a credit card for another $30 per month and made it a “0-down” deal. “No money down” means none of YOUR money down, and yes, it happens.

3. “0 down” is the best way. If you don’t invest some of your own money, you’ll have higher payments. You’ll also spend more time finding suitable properties, and pay more for them (generally cooperative sellers want more for their cooperation - I do). There are 0-down deals out there - they just aren’t always worth doing.

3. You need experience. Experience helps, but you get it by investing. Start with common sense, ask how you can lose money, be willing to learn the numbers, and you can start where you are.

4. Some investors have a “knack” for making money. Sort of. More accurately, some just took the time and risk to learn the market and continue their education.

5. You need to know the “right” people. It helps, so start the process. Talk to investors, real estate agents, landlords, etc.

6. You have to be great negotiator. If you learn to run the numbers and make the offers based on them, you can be the worst negotiator and still do okay.

8. You need insider knowledge. Understand one deal, and you are on your way. Read and read more, but the best “insider” knowledge comes from experience.

9. Fixer-uppers are safe. People have the idea that doing the work themselves is the safest way to assure a profit. Not true. Mis-planned “fix and flips” have bankrupted even experienced investors. Most poorly purchased rental properties will only eat a little money every month.

10. The key is lowball offers. The numbers have to work, and you need a plan. You can offer MORE than the market price and make money investing in real estate, if you understand creative financing - and how to do the math.

About the author:

Steve Gillman has invested in real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

Socially Responsible Real Estate Investing

There are many ways to practice socially responsible real estate investing. In this article I will outline what I believe to be the best way to invest in real estate in a socially responsible manner.

I run into all kinds of people, many of whom are less than charitable when they find out I own rental property, and that I also flip houses and mobile homes. I frequently find myself disagreeing with those same people about just what socially responsible real estate investing means. For some strange reason, many people are predisposed to look down on those who engage in such capitalistic endeavors. Often, these are the same people who take advantage one or more of the many government programs that my tax dollars support.

Here?s what I mean when I talk about socially responsible real estate investing.

I am a man of my word, so when I say I?m going to do something, I make every effort to do it. This applies to offers I make on properties, promises I make to tenants, and agreements I make with contractors and service providers. In my mind, there is no more powerful way to engage in socially responsible real estate investing.

Being a landlord and property investor makes me a productive member of my local economic community. I strongly support and add to the tax base, and help provide a healthy living to several Realtors, contractors, and service providers. I also bank locally, and contribute to my local Real Estate Investor club. These are all great ways to pursue socially responsible real estate investing.

In addition, I provide clean, safe, affordable housing to several tenants, including children and senior citizens. I also provide housing to those in the lower income brackets through HUD?s Housing Choice Voucher Program, also known as Section 8. Providing this type of housing is another powerful way to practice socially responsible real estate investing.

There are those who believe that in order to practice socially responsible real estate investing, one needs to provide free housing to the deserving poor. I do not agree with that assessment. The Bible says, ?The laborer is worthy of his hire,? and certainly that applies to property owners. I commend those who choose to be charitable, but I do not believe it should be legislated. It needs to come from the heart, and be supported by a consistent practice of sound business principles.

That attitude, and the underlying economic practices, are reasons why the United States of America has been, and continues to be, the most charitable nation on the face of the earth. Practicing socially responsible real estate investing isn?t the result of some feel good nonsense, but rather the application of wise investing habits and moral consistency.

Now, go make more offers!

Real Estate Investing at Daytona Beach

Daytona Beach is commonly known as “the spot” for spring breakers. What many people don’t realize is that it is a good place for real estate investors as well. Located on the eastern coast of Florida, Daytona Beach has recently become a profitable market, as the average home price is approximately $212,000, and has grown over 25% since last year. This growth is expected to continue for at least the next 12 months.

One of the things that sets Daytona Beach apart from cities typically popular for real estate investing is the fact that it does not have the statistics for hurricane hits as many other cities, such as Miami and Key West. This is a tremendous benefit. If a rental property happens to get hit by a hurricane, the cost of repairing the property could greatly offset any profits that would have been made during that time. If a property is badly damaged, it will most likely need to be completely rebuilt, which is a huge expense, especially when you consider what the cost of labor will skyrocket to, since there will be ocnsiderable demand. For this reason, Daytona Beach is perfect for investors.

Daytona Beach is a prime market for investors that would also like to invest in beachfront property, since there is an opportunity to make a sizeable amount of money. All year long, because of the sunny weather, people from all over the country visit Daytona Beach to visit family, to take a vacation, or both. Beachfront property rents anywhere from $500 to $5000 per week. If your property was rented out everyday of the week for a full year, this would yield between $26,000 and $260,000 per year, depending on the rent that is charged. Investors that have a fair amount of money to spend should consider beachfront property in Daytona Beach, since its an investment property that can be rented out 12 months out of the year.

The population of Daytona Beach has been steadily increasing over the fast few years as well. Because of this, there is an increased demand for homes. However, it’s important to keep in mind that the sales cycle, at thirty to sixty days, is a little longer than other Florida cities. In order for investors to avoid being affected by this lag time in turnaround, it is important that properties are priced comparable to that of properties that have recently sold in the area. If the house is on the market too long, due to the price being inflated, people will lose interest in it rather quickly, thinking that there is something wrong with it.

All in all, people interested in the real estate market at Daytona Beach stand to gain a sizeable profit if they are in the right place at the right time. Research and patience will prove to be your greatest virtue.

About the Author

Tabitha Naylor is an experienced mortgage broker/consultant with Apex Financial Mortgage. For more information, or additional resources on home loans, visit Apex Financial Mortgage

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