Opportunities for real estate investment for foreigners is wide and varied in the United States. It doesn't matter where you're from and what currency you'd be using to purchase a property, you have a property waiting for you.
There are generally three kinds of real estate investment available to foreigners. These investments include the commercial estate investment and residential property investment. Residential properties are further classified into single family properties, apartments or condominiums and recreational properties. Regardless of what kind of real estate you are interested in, there are all sorts of tax ramifications, financing options and legal requirements that you have to deal with.
Why Should You Invest in the U.S. Real Estate Market?
You've probably heard of the increasing number of foreign real estate investments in the United States. This is not surprising. With the troubles that the real estate investment market is facing in the United States, greater opportunities in real estate investment were opened to foreign investors.
With the dollar's value in its all time low, foreign investors are finding real estate bargains all over the United States. There are no shortages of deals in this market. More and more distressed properties are being sold everywhere and foreigners are pouring in millions buying these foreclosed or distressed properties. The United States real estate has become a fairly attractive long-term investment for foreign investors.
In November of 2006, the National Association of Realtors released a report entitled "Foreign Investments in U.S Real Estate: Current Trends and Historical Perspective". The report showed that there has been a steady increase in foreign real estate investment in the United States. This is especially after the euro and the loonie became stronger in the face of the continuous devaluation of the US dollar. Prime bargains were opened to foreigners. Many foreigners have now looked into the possibility of retiring or settling in the United States.
If you're a foreigner, you would find a lot of reasons why you should invest in the United States real estate market. Aside from the fact that the floating exchange rate has given you a lot of leverage over the bargaining table, the financial market is a pretty good reason why you should invest in the US real estate.
The financial market in the United States in relation to the real estate market is quite liberal and the restrictions against foreign investors are pretty reasonable. This is ideal for foreign companies that are seeking to invest in the real estate market in the United States in order to avoid tariff restrictions and are considering setting up an office or a company in the United States.
Furthermore, despite the devaluation of the US dollar and the wide foreclosures of a lot of property, the real estate market remains to be stable, though slightly shaky, due to foreign investors' capital appreciation. Domestic real estate buyers may not necessarily share the same opinion, but the market has remained to be strong for foreign real estate buyers. This may be largely credited to the fact that there is minimal risk for them.
Why are Foreign Real Estate Investments Safe and Profitable?
There are a lot of investments you can make, but the safest you can make right now is investing your money in real properties. This is another good reason aside from the fact that you can make a pretty nifty profit, if you like, particularly now with the widespread property foreclosures and seemingly continuous US dollar devaluation. This is especially true if you are going to use the euro or the loonie when making your investment.
But why is US real estate investment safe for foreigners?
It is undeniable that stock investments are not a safe avenue at this point. The recession has not only affected the US economy; the same recession has greatly affected worldwide stock investments. Stocks values are dropping. It is also a fact that even without the current economic situation, stock values fluctuates.
On the other hand, real estate investments are pretty stable if you would compare it to stock investments - or even bond or mutual fund investments. With real estate investment, you'd be putting your money in an investment that would grow in value as years go by.
What are the Benefits of Foreign Real Estate Investment?
US state government supports foreign investments and along this line has formulated various tax breaks to encourage foreign investment on real estate. Many of these tax breaks are not available in many countries. In fact, most countries would frown at foreigners owning real properties within their territory.
Foreign real estate investment in the United States is open to everyone. As long as you can afford to buy the property or at least comply with the mortgage requirements and payments, you can secure for yourself a pretty good property in the United States. Again, with the current economic situation of the United States, this is the perfect chance for you to make an investment.
Another great benefit that you can take advantage of is the availability of mortgage financing. Lenders have opened their doors to foreign investors who are looking into purchasing a property. So, you don't have to actually deplete your bank account. You can actually secure a mortgage loan and gradually pay it off.
I'm Canadian, What Are My Financing Options?
There is a steady increasing rate of Canadian real estate investors in the United States; and accordingly, the government has made certain that they have attractive financing options available to them.
If you're Canadian - or if you're a foreigner - you'd find a lot of reasons why you should buy a piece of real property in the United States. For Canadians, the parity of the currencies or the apparent devaluation of the US dollar is a pretty good reason itself. But how do you finance your purchase?
There are various financing options available to you depending on which state you are in. In Arizona, for instance, you'd get favorable financing terms if you are purchasing a property for recreational purposes, that is, you do not derive any income or benefit from your purchase or ownership. You will be required, however, to sign up a disclosure agreement and give a 30% down payment for your loan. To qualify though for a loan, you may be required to show availability of liquid reserves for a period of three to six months. You may also be required to present a minimum of 3-month bank statement.
If you are purchasing a property for investment, you'd probably meet stricter terms. Requirements may be more stringent. For instance, you could be required to give a down payment of more than 30% and you may be required to show one year worth of liquidity reserves.
Regardless of your reasons, if you feel like you can fulfill the requirements of a financing loan, you can then proceed to actually applying for a mortgage loan. Also, keeping yourself updated with the financing terms flux may be a wise idea.
Understanding the Tax Ramifications of Real Estate Investment
The first foreigner to have ever bought a real estate property in the United States was Peter Minuit. This opened the doors to foreign real estate investors. After a couple of centuries later, foreign real estate investment has grown into huge proportions, accounting for billion-of-dollar worth of industry.
The low risk attached to US real estate market, the availability of countless properties, and the steady market liquidity attract foreign investors in droves. The initial snag, however, is the process of understanding the legal ramifications of foreign real estate investment.
What you have to understand is that foreign investment in the United States can take a lot of forms. A foreigner has various options. He can acquire direct interest. He can acquire an interest in the real estate through a partnership, a corporation, or a limited liability company. The latter is the typical structure used by foreign investors.
Limited partnership or Limited Liability Company offers financial protection or indirect asset protection, especially in cases of bankruptcy, law suits and taxes. Foreign investors are generally taxed on the property as if they hold the property in direct interest.
Ideally, you should secure the services of a real estate accountant to help you out with the tax ramifications, but it would help if you, at least, know the basics before you actually talk to an accountant.
There are tax consequences that you have to deal with when you buy a real estate in the United States. You would need an Individual Taxpayer Identification Number which you will use with all your tax transactions. Your investment in real estates can be treated as a portfolio investment and will be accounted for as an investment income which can either be fixed or a periodic income. This is typically taxed at 30% on gross revenues. This tax though does not apply though to all foreign investors. Tax rates would vary depending on the tax personality the foreign investor opted for. For instance, a corporation would be taxed differently.
Other things that you should take note of are availability and requirements of tax refunds and state tax laws on real estate properties as they may differ from federal laws, among other things.
By knowing all these things, you may save yourself from a lot of hassles when you finally approach a real estate accountant. You'd be in same wavelength when you finally get down to talking business. It is, however, very important that you secure the services of an accountant. You'd have an easier time dealing with the taxes ramifications. You'd also have assistance ensuring that you comply with all the accounting aspect of your investment. This is especially true if you are purchasing a real property for investment purposes.
Do You Need to Secure the Service of a Real Estate Lawyer?
If you are considering buying a property in the United States, you need to secure the services of a real estate attorney - someone who could help you with the legal issues concerning your purchase. It is tempting to forego securing the service of a lawyer to save money, but this could cost you a lot of money in the long run. Make sure that you have an experienced and trustworthy lawyer to help you out. Make sure that you have thoroughly checked out his credentials, profile, history of successful cases handled by him, and other factors that would influence your decision. You could check online and look for a lawyer working within the state where you are considering purchasing a property.
Functions of a Real Estate Lawyer
There is no actual distinctive function for a lawyer in a real estate case. However, you would really need the assistance of a lawyer for various tasks. A real estate lawyer would review the sales contract for you. He would also check on the title and other documents relating to the property. A lawyer would also review your mortgage contract and make the necessary adjustments or corrections. You could also get him to review with you the legal and tax issues concerning the purchase. A real estate attorney could also make the necessary adjustments relating to various expenses and costs involved in the purchase. He would assess your eligibility for tax refunds and draft the documents and statements relating to this.
Putting it simply, a real estate lawyer will be your watchdog. He would guide you through the whole process of purchasing a real estate in the United States in order to make sure that you will be legally protected. You will have a capable and trustworthy liaison to help you out with the contract. He will also face legal disputes if any arise.
Tips on How to Invest in Real Estate Successfully
Now, if you've fully bought into the idea of real estate investing in the United States, you might just want to know how to go about investing in real estate successfully. If you want to be successful in this venture, the first thing that you have to avoid is overanalyzing. Of course, it is a good idea to carefully think through your actions but it is a bad idea to overanalyze your investment to nonexistence. You might lose a great opportunity.
Before you purchase the property though, it might be wise to check the property value. If it sits well with you and you can reasonably afford the property, go ahead and make the purchase.
If you are considering the property for a quick flip, make sure that the property is in perfect condition and in good area. This is to ensure that you could double or actually triple your return of investment. If you can inspect the property yourself, do so. If not, a good and trustworthy agent can help you with this task.
Another important thing to remember when you're buying real estate is good financing. You should take your time to carefully consider all your financing options. Foreign investors can email in their queries to various lending institutions. It is a good idea to make sure that you've had their terms and rates on paper because they tend to change these terms and charge you with a lot of junk. Your real estate agent can help you with reviewing the escrow charges.
The bottom line, however, is that it is very important that you do your homework before you actually buy a real property. Investing in real properties in the United States can be profitable especially during these times. In fact, it may be the wisest and most perfect investment you can make right now.
Maria Gudelis has been a real estate investor and entrepreneur for over 10 years. She has investigated or bought properties all over the world including Mexico, Ecuador, Canada and the U.S.A. Past co-founder of the Southern California 'Forum for Women Entrepreneurs', her passion is to help other entrepreneurs leverage technology and real estate to be successful in their businesses. Her website is at http://www.maria-gudelis.com
Friday, January 22, 2010
Thursday, December 24, 2009
Real Estate Investing Program
The Ultimate Real Estate Investing Program
What Type Of Real Estate Investing Program Fits You?
What type of real estate investing program is right for you? The right real estate investing program will make it simple to become a successful real estate investor. But let's be clear, the steps to becoming successful as a real estate investor are simple but simple does not always translate to easy. Choosing the right real estate investing program is one of the most important decisions you can make as a real estate investor.
The best known real estate investing program is the Carlton Sheets no down payment system that has been running as a TV infomercial for over twenty years. As fare as real estate investing programs go the Carlton Sheets No Down Payment system leaves much to be desired and I would not want to have to make a living based on that real estate investing program alone. But Carlton Sheets has introduced a lot of people to the wonderful world of real estate investing and for this he should be thanked.
Let's take a look at three real estate investing programs and the benefits of each.
Kick Ass Wholesaling. Learning How To Buy.
The single most important skill for real estate investors is learning how to buy properties significantly below market value. When you learn how to buy at 50-70% of market values profits are assured and exit strategies plentiful. Pay too much for a property and there is often little you can do other than take your losses or hang on for dear life hoping the market appreciates over time.
Another advantage of wholesaling is the ability to quickly generate profits without having to use your cash or credit. An example is you find a house worth $200,000 that a seller will sell to you for $130,000. You could in turn sell this to another investor for $140,000 and make yourself $10,000 quickly and never have to fund the purchase. For a complete system on wholesaling check out Kick Ass Wholesaling
Work For Equity. The Most Profitable Way To Sell Properties
This is an advanced real estate investing program not because it is hard to implement but because most investors never discover the system. Instead of buying ugly houses and either wholesaling or rehabbing there is a way to sell and make twice the profits and have a larger pool of buyers wanting your house.
Work For Equity is the real estate investing program where you sell the property with a special lease option agreement that requires the purchaser to repair the property at their expense. Later, typically after 12 months to maximize your tax gains the lease option buyer has the right to purchase the property (in the real world only about 30% of any lease option buyers exercise their option and purchase the property).
If the lease option buyer exercises their option and purchases the property you are cashed out and this is good news. If they lease option buyer does not exercise their option you have a property that has been improved at their expense and you are free to sell again using any method you choose.
The benefits to the real estate investor are too numerous to detail here but in the end work for equity can literally double an investors profits compared to rehabbing the property then selling the property for the full after repaired value.
Work For Equity is a real estate investing program that every investor should use. Why not make twice the profit on deals your currently rehabbing? All the details can be found in the Work For Equity Pro System.
Instant Real Estate Profit Pro - How To Buy Properties In 5 Minutes Or Less
For the serious investor there exists a real estate investing program designed to handle all of your buying needs - in 5 minutes or less.
Imagine being able to analyze a property, estimate profits, and print out all of the documents you need to give the seller a completely justified offer that includes a cover letter, repair cost estimates, how you arrived at your offered price, and two offers - one cash and one terms. Users of this system are so efficient they often put properties under contract after talking to the seller one time and without even looking at the property.
This real estate investing program also prepares complete get the deed (AKA "Subject To") packages which allow you to take over existing loans. Note: Banks do not like this practice so you must understand the risks involved. All the documents you need including disclosures, authorization to real information, power of attorneys, and so much more. It even creates a land trust for you which should be part of your asset protection plan.
Or how about buying pre-foreclosures or doing short sales? Automatically prepare short sale packages in less than 5 minutes. This section is for advanced investors but so easy to use you'll feel like a pro in no time.
There simply is no real estate investing program like Instant Real Estate Profit Pro. Just take a look at what the program has done for investors around the country.
Real estate investing is a lot like being a specialized heart surgeon. Can you imagine needing open heart surgery and the doctor not having all the tools he needs to complete the surgery? Having the right real estate investing programs is what makes successful investors!
Gerald Romine is a nationally recognized real estate expert that has been featured across North America sharing the stage with political leaders, film stars, and business leaders. Since 1989, Gerald has been involved with real estate as a real estate agent, broker, rehabber, investor, and builder and has been involved with everything from houses to apartments. For more information about Gerald’s products or services visit http://www.kickassrealestate.com
What Type Of Real Estate Investing Program Fits You?
What type of real estate investing program is right for you? The right real estate investing program will make it simple to become a successful real estate investor. But let's be clear, the steps to becoming successful as a real estate investor are simple but simple does not always translate to easy. Choosing the right real estate investing program is one of the most important decisions you can make as a real estate investor.
The best known real estate investing program is the Carlton Sheets no down payment system that has been running as a TV infomercial for over twenty years. As fare as real estate investing programs go the Carlton Sheets No Down Payment system leaves much to be desired and I would not want to have to make a living based on that real estate investing program alone. But Carlton Sheets has introduced a lot of people to the wonderful world of real estate investing and for this he should be thanked.
Let's take a look at three real estate investing programs and the benefits of each.
Kick Ass Wholesaling. Learning How To Buy.
The single most important skill for real estate investors is learning how to buy properties significantly below market value. When you learn how to buy at 50-70% of market values profits are assured and exit strategies plentiful. Pay too much for a property and there is often little you can do other than take your losses or hang on for dear life hoping the market appreciates over time.
Another advantage of wholesaling is the ability to quickly generate profits without having to use your cash or credit. An example is you find a house worth $200,000 that a seller will sell to you for $130,000. You could in turn sell this to another investor for $140,000 and make yourself $10,000 quickly and never have to fund the purchase. For a complete system on wholesaling check out Kick Ass Wholesaling
Work For Equity. The Most Profitable Way To Sell Properties
This is an advanced real estate investing program not because it is hard to implement but because most investors never discover the system. Instead of buying ugly houses and either wholesaling or rehabbing there is a way to sell and make twice the profits and have a larger pool of buyers wanting your house.
Work For Equity is the real estate investing program where you sell the property with a special lease option agreement that requires the purchaser to repair the property at their expense. Later, typically after 12 months to maximize your tax gains the lease option buyer has the right to purchase the property (in the real world only about 30% of any lease option buyers exercise their option and purchase the property).
If the lease option buyer exercises their option and purchases the property you are cashed out and this is good news. If they lease option buyer does not exercise their option you have a property that has been improved at their expense and you are free to sell again using any method you choose.
The benefits to the real estate investor are too numerous to detail here but in the end work for equity can literally double an investors profits compared to rehabbing the property then selling the property for the full after repaired value.
Work For Equity is a real estate investing program that every investor should use. Why not make twice the profit on deals your currently rehabbing? All the details can be found in the Work For Equity Pro System.
Instant Real Estate Profit Pro - How To Buy Properties In 5 Minutes Or Less
For the serious investor there exists a real estate investing program designed to handle all of your buying needs - in 5 minutes or less.
Imagine being able to analyze a property, estimate profits, and print out all of the documents you need to give the seller a completely justified offer that includes a cover letter, repair cost estimates, how you arrived at your offered price, and two offers - one cash and one terms. Users of this system are so efficient they often put properties under contract after talking to the seller one time and without even looking at the property.
This real estate investing program also prepares complete get the deed (AKA "Subject To") packages which allow you to take over existing loans. Note: Banks do not like this practice so you must understand the risks involved. All the documents you need including disclosures, authorization to real information, power of attorneys, and so much more. It even creates a land trust for you which should be part of your asset protection plan.
Or how about buying pre-foreclosures or doing short sales? Automatically prepare short sale packages in less than 5 minutes. This section is for advanced investors but so easy to use you'll feel like a pro in no time.
There simply is no real estate investing program like Instant Real Estate Profit Pro. Just take a look at what the program has done for investors around the country.
Real estate investing is a lot like being a specialized heart surgeon. Can you imagine needing open heart surgery and the doctor not having all the tools he needs to complete the surgery? Having the right real estate investing programs is what makes successful investors!
Gerald Romine is a nationally recognized real estate expert that has been featured across North America sharing the stage with political leaders, film stars, and business leaders. Since 1989, Gerald has been involved with real estate as a real estate agent, broker, rehabber, investor, and builder and has been involved with everything from houses to apartments. For more information about Gerald’s products or services visit http://www.kickassrealestate.com
Commercial Real Estate and Retirement Planning
We often browse through newspapers, magazines, business journals and
the internet and regardless of how much we try; ignoring the vast array of
retirement planning ads is next to impossible. It seems as though the last
century has given birth to more investment vehicles than any one individual
will ever use in a lifetime. Everything from stocks and bonds to IRA's and
mutual funds are peddled in one form or another. And the number of securities
brokers and financial planners willing to help pave the way for our retirement
success are anything but scarce. What amazes me though is that of the
thousands of retirement planning professionals in the U.S., very few if any
actually recommend real estate to be included in their clients' retirement
portfolios.
Advantages
Let's begin with the advantages of owning what I believe to be the greatest
investment vehicle ever created; Commercial Real Estate. I want to clarify
two important points before proceeding; first, the term commercial real estate
and investment real estate will be used interchangably throughout this article
and second, even though our homes are a potential gold mine in terms of
equity and value, and make up what is more often than not our biggest asset,
it lacks one of the three characteristics that classify it as investment real
estate; Cash Flow (more on this in a moment and assuming that your principal
residence is a Single Family Home). For purposes of this article, I would like
for everyone to create a mindset that even though our home is indeed a very
valuable asset, for retirement purposes, it should be considered icing on the
cake rather than our largest contributor of net worth. The theory being that
should our home ever be sold, a large portion of the proceeds will eventually
have to be reallocated towards the purchase or leasehold of another home.
In other words, we'll still need a roof over our head and therefore the full
receipts of the sale may in many cases not remain fully liquid for retirement
purposes.
With that said, lets analyze the characteristics that make up investment real
estate and more importantly, the investment benefits they provide. There are
four characteristics to consider:
Cash Flow, Tax Shelter, Equity Build-Up, and Value Appreciation.
1.) Cash Flow. As I mentioned earlier, all of the characteristics of investment
real estate are in one form or another inherent in our primary residence
(our home) except for Cash Flow. Assuming that our primary residence is a
Single Family Home with no add-on apartments or studios or mineral rich land,
then for obvious reasons if we are the primary occupants, there is a slim
possibility of receiving cash flow from an additional source such as tenants
residing on the property or an energy company drilling in the back yard.
In investment real estate, Cash Flow refers to the property's periodic receipt
of gross income minus all of its operating expenses. Cash Flow is usually
measured in annual intervals and is classified as either Pre-Tax Cash Flow
or After Tax Cash Flow. The former, Pre-Tax Cash Flow; is the total cash
available after paying for expenses (i.e. management fees, utilities, repairs,
property taxes, insurance, etc.) and mortgage debt (i.e. principal plus interest).
After-Tax Cash Flow; is the total cash remaining after deducting income tax
liabilities from Pre-tax Cash Flow.
2.) Tax Shelter. Inherent in Investment Real Estate is the ability to keep
more of the periodic cash flow from operations through Property Depreciation
and provides a mechanism to build a tax deferred net worth via a 1031 Exchange.
Both of these are mere Tax Shelter examples of how Investment Real Estate can
contribute towards a solid retirement portfolio:
a. Property Depreciation. As a common practice recognized by the
IRS, Property Depreciation is an accounting concept that contributes
towards the deduction of taxable income by recovering the costs of
investment real estate thus improving cash flow. It's important to note
that land does not depreciate; the concept only applies to the value of
the improvements on the land. For example: say we had a multifamily
apartment building with a total assessed value of $500k and of that total
value, 40% would be allocated towards the land and 60% would be
allocated towards the actual building improvement. Based on this
example, only 60% of the value or $300k would be allowed for
depreciation. It's important to note that there are various forms of
depreciation and timelines that apply to each. For reasons of simplicity,
we will not get into the intricacies of each here, however, the important
point to understand is that investment real estate allows for depreciation
which in turn improves cash flow.
b. 1031 Exchange. Section 1031 of the IRS code allows for a seller to
exchange their investment property for another like kind property
without having to pay capital gains taxes on the transaction. The 1031
code in essence, does not exempt the taxes altogether but rather,
defers them. These are specialized transactions which require qualified
intermediaries who are well versed in the 1031 procedure. In the interest
of simplicity, we will not go into an in depth discussion of a 1031 as it
would require a lengthy explanation however, the important point once
again is to understand that investment real estate allows for the growth
of tax deferred net worth until and through retirement. Visit our section
on 1031 Exchanges for more information on this topic.
3.) Equity Build-Up. While investment real estate is sometimes purchased
all cash, more often than not, leverage is the tool of choice. Mortgage Debt
financing makes up the majority of investment real estate financing in the U.S.
A reduction in the mortgage debt occurs periodically, best measured annually
and is covered by a portion of the gross income received from the property's
operation. As the mortgage principal and interest is paid down, the property
begins to build equity; the difference between its accumulating market value
and any outstanding mortgage liabilities. As Equity builds on the property, this
provides an opportunity to re-leverage (or re-finance) and use the newly found
capital to acquire additional investment properties thus expanding the owner's
real estate portfolio.
4.) Value Appreciation. The fourth and probably the most compelling reason
for acquiring investment real estate is the increase in its market value through appreciation.
The economic forces of supply and demand coupled with inflationary trends and property improvements contribute to an everlasting growth in property market value. Real Estate
markets are local vs. regional therefore, an impact in one market may have little or no
effect in another market. This can have either a positive or negative connotation
depending on the type of impact. It's important to point out that historically,
real estate market appreciation has averaged between 3% and 6% growth annually.
the internet and regardless of how much we try; ignoring the vast array of
retirement planning ads is next to impossible. It seems as though the last
century has given birth to more investment vehicles than any one individual
will ever use in a lifetime. Everything from stocks and bonds to IRA's and
mutual funds are peddled in one form or another. And the number of securities
brokers and financial planners willing to help pave the way for our retirement
success are anything but scarce. What amazes me though is that of the
thousands of retirement planning professionals in the U.S., very few if any
actually recommend real estate to be included in their clients' retirement
portfolios.
Advantages
Let's begin with the advantages of owning what I believe to be the greatest
investment vehicle ever created; Commercial Real Estate. I want to clarify
two important points before proceeding; first, the term commercial real estate
and investment real estate will be used interchangably throughout this article
and second, even though our homes are a potential gold mine in terms of
equity and value, and make up what is more often than not our biggest asset,
it lacks one of the three characteristics that classify it as investment real
estate; Cash Flow (more on this in a moment and assuming that your principal
residence is a Single Family Home). For purposes of this article, I would like
for everyone to create a mindset that even though our home is indeed a very
valuable asset, for retirement purposes, it should be considered icing on the
cake rather than our largest contributor of net worth. The theory being that
should our home ever be sold, a large portion of the proceeds will eventually
have to be reallocated towards the purchase or leasehold of another home.
In other words, we'll still need a roof over our head and therefore the full
receipts of the sale may in many cases not remain fully liquid for retirement
purposes.
With that said, lets analyze the characteristics that make up investment real
estate and more importantly, the investment benefits they provide. There are
four characteristics to consider:
Cash Flow, Tax Shelter, Equity Build-Up, and Value Appreciation.
1.) Cash Flow. As I mentioned earlier, all of the characteristics of investment
real estate are in one form or another inherent in our primary residence
(our home) except for Cash Flow. Assuming that our primary residence is a
Single Family Home with no add-on apartments or studios or mineral rich land,
then for obvious reasons if we are the primary occupants, there is a slim
possibility of receiving cash flow from an additional source such as tenants
residing on the property or an energy company drilling in the back yard.
In investment real estate, Cash Flow refers to the property's periodic receipt
of gross income minus all of its operating expenses. Cash Flow is usually
measured in annual intervals and is classified as either Pre-Tax Cash Flow
or After Tax Cash Flow. The former, Pre-Tax Cash Flow; is the total cash
available after paying for expenses (i.e. management fees, utilities, repairs,
property taxes, insurance, etc.) and mortgage debt (i.e. principal plus interest).
After-Tax Cash Flow; is the total cash remaining after deducting income tax
liabilities from Pre-tax Cash Flow.
2.) Tax Shelter. Inherent in Investment Real Estate is the ability to keep
more of the periodic cash flow from operations through Property Depreciation
and provides a mechanism to build a tax deferred net worth via a 1031 Exchange.
Both of these are mere Tax Shelter examples of how Investment Real Estate can
contribute towards a solid retirement portfolio:
a. Property Depreciation. As a common practice recognized by the
IRS, Property Depreciation is an accounting concept that contributes
towards the deduction of taxable income by recovering the costs of
investment real estate thus improving cash flow. It's important to note
that land does not depreciate; the concept only applies to the value of
the improvements on the land. For example: say we had a multifamily
apartment building with a total assessed value of $500k and of that total
value, 40% would be allocated towards the land and 60% would be
allocated towards the actual building improvement. Based on this
example, only 60% of the value or $300k would be allowed for
depreciation. It's important to note that there are various forms of
depreciation and timelines that apply to each. For reasons of simplicity,
we will not get into the intricacies of each here, however, the important
point to understand is that investment real estate allows for depreciation
which in turn improves cash flow.
b. 1031 Exchange. Section 1031 of the IRS code allows for a seller to
exchange their investment property for another like kind property
without having to pay capital gains taxes on the transaction. The 1031
code in essence, does not exempt the taxes altogether but rather,
defers them. These are specialized transactions which require qualified
intermediaries who are well versed in the 1031 procedure. In the interest
of simplicity, we will not go into an in depth discussion of a 1031 as it
would require a lengthy explanation however, the important point once
again is to understand that investment real estate allows for the growth
of tax deferred net worth until and through retirement. Visit our section
on 1031 Exchanges for more information on this topic.
3.) Equity Build-Up. While investment real estate is sometimes purchased
all cash, more often than not, leverage is the tool of choice. Mortgage Debt
financing makes up the majority of investment real estate financing in the U.S.
A reduction in the mortgage debt occurs periodically, best measured annually
and is covered by a portion of the gross income received from the property's
operation. As the mortgage principal and interest is paid down, the property
begins to build equity; the difference between its accumulating market value
and any outstanding mortgage liabilities. As Equity builds on the property, this
provides an opportunity to re-leverage (or re-finance) and use the newly found
capital to acquire additional investment properties thus expanding the owner's
real estate portfolio.
4.) Value Appreciation. The fourth and probably the most compelling reason
for acquiring investment real estate is the increase in its market value through appreciation.
The economic forces of supply and demand coupled with inflationary trends and property improvements contribute to an everlasting growth in property market value. Real Estate
markets are local vs. regional therefore, an impact in one market may have little or no
effect in another market. This can have either a positive or negative connotation
depending on the type of impact. It's important to point out that historically,
real estate market appreciation has averaged between 3% and 6% growth annually.
Growth, Stability Of Commercial Real Estate Investing
Commercial real estate investing is a kind of investing which is used for business purpose. The commercial real estate investing property is different from other real estate investing like agriculture, residential and other industrial purpose. Commercial real estate investing property provides reasonable price consideration from the investment property and also provides income for long period. In real estate investing, real estate investors make investment on commercial real estate investing. Commercial real estate investing is made by most of the real estate investors, because it fetches more profit for the seller at the time of sale of real estate investment property.
The main purpose why people prefer to make their real estate investing is that commercial real estate investing provides stability and high return in the market. The other advantage we obtained from commercial real estate investing is that it provides investment securities for the real estate investment property purchased from the real market. Real estate investing market is said to be the stable market and it also carries high returns on investment for the property purchased. It is the obligation of the real estate investor to see that the real estate investing property fetch more profit among the customer and it realize more profit. Some of the standard features of commercial real estate investing are
High return
The main advantage of commercial real estate investing property is that it carries high return on investment. More number of people procures real estate property because of its returns provided. Real estate investor enjoys the benefits provided by the real estate property with high return and turnover during the period of sale of real estate investment property. Real estate sector is the wide sector where it carries huge number of properties required with desire prices.
Stability
The other unique feature of commercial real estate investing property is that its stability and consistency with the world market. When though more number of real properties are available in real estate investing market, still commercial estate investment obtains more demand among the customers for reasonable price consideration. Real estate investing benefits are provided more in real estate investing and it is due to the stability provided in the real market.
Commercial estate investment provides long term security of cash flow for the real estate investors who had made their real estate investing. Commercial real estate obtains more demand among the customer and they provides more return on investment with principal and interest. This kind of investment obtains more demand, growth, return and stability compared to other real estate investment property in the real estate market.
Kumaran is a seo copywriter having more than 3 years of experience in this field who is currently working for the site real-estate-investing-information.net. For further information on real estate investing information, real estate investing and real estate investing tips please visit http://www.real-estate-investing-information.net/ or contact me through mail: kumaran.reii@gmail.com
The main purpose why people prefer to make their real estate investing is that commercial real estate investing provides stability and high return in the market. The other advantage we obtained from commercial real estate investing is that it provides investment securities for the real estate investment property purchased from the real market. Real estate investing market is said to be the stable market and it also carries high returns on investment for the property purchased. It is the obligation of the real estate investor to see that the real estate investing property fetch more profit among the customer and it realize more profit. Some of the standard features of commercial real estate investing are
High return
The main advantage of commercial real estate investing property is that it carries high return on investment. More number of people procures real estate property because of its returns provided. Real estate investor enjoys the benefits provided by the real estate property with high return and turnover during the period of sale of real estate investment property. Real estate sector is the wide sector where it carries huge number of properties required with desire prices.
Stability
The other unique feature of commercial real estate investing property is that its stability and consistency with the world market. When though more number of real properties are available in real estate investing market, still commercial estate investment obtains more demand among the customers for reasonable price consideration. Real estate investing benefits are provided more in real estate investing and it is due to the stability provided in the real market.
Commercial estate investment provides long term security of cash flow for the real estate investors who had made their real estate investing. Commercial real estate obtains more demand among the customer and they provides more return on investment with principal and interest. This kind of investment obtains more demand, growth, return and stability compared to other real estate investment property in the real estate market.
Kumaran is a seo copywriter having more than 3 years of experience in this field who is currently working for the site real-estate-investing-information.net. For further information on real estate investing information, real estate investing and real estate investing tips please visit http://www.real-estate-investing-information.net/ or contact me through mail: kumaran.reii@gmail.com
Tuesday, May 26, 2009
Robert Kiyosaki's Teachings
Robert Kiyosaki is a well known author and successful businessman!
A large part of Kiyosaki's teachings focus on generating passive income by means of investment opportunities, such as real estate and small businesses, with the ultimate goal of being able to support oneself by such investments alone. Kiyosaki also defines "assets" as things that generate money, such as rental properties or businesses, and "liabilities" as things that cost money, such as house payments, cars and so on. Kiyosaki also proclaims financial leverage to be critically important in becoming rich.
He stresses what he calls "financial literacy" as the means to obtaining wealth. He says that life skills are often best learned through experience and that there are important lessons not taught in school. He says that formal education is primarily for those seeking to be employees or self-employed individuals, and that this is an "Industrial Age idea". And according to Kiyosaki, in order to obtain financial freedom, one must be either a business owner or an investor, generating passive income.
Kiyosaki uses the "rich dad, poor dad" series of books to illustrate his view that the majority of people are stuck in what he refers to as "the rat race"-living paycheck to paycheck and spending all of their time working to pay bills. In his books, Kiyosaki advocates tax-advantaged investment vehicles, such as real estate or businesses, rather than ownership of securities. This idea is further developed in his later books and "Rich Dad" became Kiyosaki's personal brand for various publishing ventures.
Although Kiyosaki recommends investing in real estate usually for rental income, there is one thing that he doesn't seem to teach...how to pay-off your rental property and even your house in one-third the time! If you would like to know how to rapidly pay-off your mortgage and other debts and supercharge your retirement account, visit my site for a free report at: www.financialadvantages.com
| My name is Steve Herman and 5 years ago I discovered a way to rapidly pay-off debt and rapidly fund a retirement account! my website is http://www.financialadvantages.com Article Source: http://EzineArticles.com/?expert=Steve_Herman |
Real Estate Investing - Should I Rent, Or Fix And Flip?
If you're just getting into real estate investing, chances are you are looking at two basic options for mid-range residential property. You can either own the property indefinitely and rent it out at a profit or you can own the property for a short period of time, fix it up, and sell it for a profit. While both can be great approaches to real estate, some properties are not equally suitable for both.
Renting It Out: Renting out your property can be a huge moneymaker, but not for every property. For instance, if you have just bought a property that is in serious disrepair, you may not want to rent it out. It might be better to fix it up and sell it, because nobody wants to rent a property that is in serious disrepair. Furthermore, if you fix it up and then try to rent it, you now have to recover the initial payment on the property as well as the cost of renovation. That can take awhile, and can be recovered faster by selling the property.
Likewise, if you have just bought an expensive property which is in great shape, you may be better served to make some market-specific improvements and sell the property. People who can afford to rent expensive residential property are probably not looking to rent; they're looking to buy.
Finally, consider the area the property is in. Is it in a transitional area, where people tend to stay for five years or less and move on? If so, renting it out can be extremely profitable. Do something with the property to set it apart from the average property in the market and then list it at 120% of the market value, trumpeting the aspect of the property that sets it apart. In a market where everyone is stuck renting basically the same property, a little bit of color or flair can add a lot of value to a property.
Fixing and Flipping: The key to the fix it and flip it philosophy is to renovate the property to the extent that it is now marketable to a wealthier buyer without spending so much in the renovation process that the increase in value is negligible. This can be more difficult than it seems. First, major renovations can sometimes snowball out of control. What started as a $30,000 project can turn into a $60,000 project before you even know what hit you. Second, you need to know your market very well. You need to know that by investing $30,000 in the renovation of a property you can turn around and sell that property for (significantly) more than $30,000 more than you paid for it. This can be risky.
However, if you are confident that you know your market and can keep the renovation project under control, fixing and flipping a property can involve much less risk. Because you can make your money back in a shorter period of time than renting the property, unforeseen changes in the market are less likely to cause you problems. A faster turnaround should make for higher profits in the long run.
| If you're considering buying http://www.automatedhomefinder.com/Denver-Northwest-Colorado-real-estate-for-sale.php |
Dubai Hotels - Dubai Hotel Apartment
If you look closer at the 5 star hotel segment the occupancy rates are even higher at 92%. This is even with the highest price per room at $232 US. These rates are even greater than the 5 star price per room night of cities such as New York and Paris.
The Dubai tourism boom is fueling these lofty numbers and are expected to increase their 5 million annual visitors to 15 million by 2012. Most of this boom is being driven by the city run airline Emirates. Emirates has 80 direct flights to destinations around the world and is expecting to add another 20 destinations over the next few years.
Dubai Hotel sector is set to add a Palazzo Versace and the first Trump International project outside of North America. It is no mistake that the Trump organization has spotted Dubai as its first step into the region to begin its international branding initiative.
The tourism boom spearheaded by Emirates has been strategically driven by acting initially as the stopover point for Europeans and Asian connecting through their respective continents.
The strategy has now expanded into Australia and North America with new destinations such as San Francisco and Chicago to be announced pending airline orders. Additionally given the initial demand for its Australian and its lone North American destination New York Emirates has added additional daily flights.
Much of its future focus will be on capturing the North American market similar to what they have done in Australia in addition too aggressively going after the China market. Initial destinations of Hong Kong and Shanghai and now Beijing show Emirates is committed to China.
| Browse Dubai hotels and book your Oasis Beach tower hotel in Dubai on line make it easy for you to find your holiday apartment and furnished rentals of your choice |
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