What are Trust Deeds?

What are Trust Deeds?

A trust deed is a legally binding agreement between a person and his creditors. The agreement gives the trustee the mandate to manage the assets while repaying outstanding debts that the owner of the asset owes the creditors. With trust deeds, the agreement between the asset owner and the creditor is voluntary. As a result, creditors who opt not to sign the trust agreement can seek an alternative means of recovering the debt that the person owes them. On the contrary, creditors who sign the trust deed are bound by the terms of the agreement in that they can’t seek an alternative means of recovering their debt.

Types of Trust Deeds 

There are varied types of trust deeds, and they are outlines as follows:

  1. Asset free deed 

The asset free deed is taken by individuals who don’t have any assets. The agreement of this type of deed allows the trustee to get some portion of income from the affected individual and use that money in paying creditors. Taking an asset free deed helps the individual who doesn’t own any asset to avoid bankruptcy.

  1. General Trust Deed

Also referred to us a regular deed, the general trust deed is taken by creditors under a voluntary basis. The individual should appoint trustees who are well skilled as insolvency practitioners. He then goes on to transfer all the assets that he owns to the trustee. With the use of the general trust deed, the individual is protected from undergoing the bankruptcy process.

  1. Protect Trust Deeds 

These deeds are enforced by a court of law. The asset owner seeks the aid of the court to bind the creditors to the deed. A protected deed can also be used to protect the home equity of the individual. Once the deed is discharged as per the agreement, the asset owner becomes debt free.

Buy and Hold Strategy

Buy and Hold Strategy

The Buy and Hold strategy, as it applies to real estate, is a more passive strategy which requires a little faith in the market and time.

What is Buy and Hold Strategy?

It is basically a long-term investment approach. A buyer will purchase a property when it is priced low, and then wait for a number of years until the value of the property has gone up. When the buyer is happy with the price increase, they sell the property and make a profit.

Why Does it Work?

The key to using this strategy is understanding the long term life cycles of the housing market. Three telltale facts that make it likely that investors will get their money back are as follows:

  • First, the long-term population is growing, so homes are in need continuously.
  • Second, costs of construction rise, which ensure an increase in housing costs.
  • Supply and Demand rules apply and all markets normally move this way. Although politics can affect this, so investors must keep an ear to the governmental changes.

 

Benefits

The buy and hold strategy presents a relatively low risk investment, assuming that all trends follow their normal path. When buying a property low, it is most probable that over time, the value will increase.

The buy and hold strategy can be very valuable, although there is a considerable amount of research to perform before jumping in. If the time and price is right, and you have extra income you can invest for a set number of years, the buy and hold strategy may be the investment option for you.

Self-Directing your IRA – FAQs

Self-Directing your IRA – FAQs

An IRA is merely a savings plan for the retired. The plan allows people who have not yet retired to invest a certain fraction of their retirement package without paying tax on the invested amount. This condition of an IRA is valid either prior to retirement or shortly after retirement. IRA stands for Individual Retirement Account. A Self-Directed IRA is unique because it has more investment options than any other type of IRA that is available on the financial market. Here are some important frequently asked questions related to the Self-Directed IRA.

What are some of the most notable benefits of a Self-Directed IRA? When you have an IRA, you will be entitled to tax deductions, asset planning and tax free profits. But, a Self-Directed IRA enables you to invest in various alternative assets, like real estate. The investment options in an IRA that is self-directed are more diverse than those which are associated with a standard IRA.

Is a Self-Directed IRA common? Self-Directed IRAs have been around since the early 1970s. However, they’ve received little attention because the custodian financial institutions do not usually allow alternative investment options that come with the self-directed plan.

How do self-directed investments work? There is a very slim difference between investing in a normal IRA and a self-directed one, other than the fact that you’re able to invest your retirement funds in other alternative assets if you so choose. The basic steps that are followed when investing in a normal IRA also apply to a Self-Directed IRA.

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.

Here are 3 Reasons Why you Need a Property Manager

Here are 3 Reasons Why you Need a Property Manager

As you invest in real estate, there may be times where you find it difficult to manage your property. Hiring a property manager can help you better manage your time. Here are 3 reasons why you need to consider hiring one.

-Experience Matters

You need to keep in mind that as a landlord you will need a distinct set of skills to aid your cause. It is entirely possible that you may not have the skills or the experience to deal with most matters. Things like repair and maintenance, marketing and even book keeping are complicated and require your utmost attention at all times. However, if all of this is new to you, it is high time you consider hiring a property manager immediately. Property managers have the necessary skills and experience to overcome any obstacle they may face primarily because they have been dealing with these tasks on a daily basis.

-They Are Willing To Deal with Stress

Regardless of what you may have heard, dealing with tenants can be an excruciating endeavor. It takes a special kind of person to deal with the needs and requirements of the tenants, all the while being patient and understanding at the same time. Even though you might see yourself as a calm and tolerant individual, you need to be rational and ask yourself whether you could deal with scenarios where you have to deal with a tenant damaging your property.

-They Can Effectively Manage Different Properties At The Same Time

If you own more than one real estate, you are in for the ride of your life. The larger the number of real estate properties, the more difficult it is going to be for you to manage all of them. But if you are not willing enough to spend the required time managing your real estate investments, then there is no harm in hiring a property manager to do it for you.

Now that you know the importance of a property manager, you will come to realize that they are worth the price. Not only will they be able to deal with all of your problems effectively, but they have the necessary experience required to ensure your real estate investment actually pays off for you in the long term.

Mid-Michigan Sees House Market Moving on Up

Mid-Michigan Sees House Market Moving on Up

Mid-Michigan has always been a nice place to live. Unfortunately, the area’s housing market took a hit when the financial crisis hit in 2006, but could the area now be showing signs of recovery?

Recession Hurt the Area

When the financial crisis hit, housing prices plummeted and many people were left upside down on their mortgages. An additional side effect was a true wave of foreclosures, leading to many people losing their once valuable homes.

Demand is Now Up

Now, almost a decade later, the demand for homes is back at an all-time high. Recent trends show that it is not unusual for real estate agents to get multiple bids for the same home. This increase in demand is accredited to the stabilizing financial market.

Supply of Homes is Down

The higher demand for homes is not met though, since there are fewer properties available in the right price range ($100,000-$150,000). Even though there are a considerable amount of expensive homes, the homes that people are looking for are not widely available.

Bidding Wars

Not having enough affordable properties going around has led to intense bidding wars. These bidding wars also have had a direct consequence for the housing prices, causing them to go up dramatically over the past two years.

People are ready to buy again, unfortunately the supply is no longer present. With demand rising, the chance of young couples obtaining a good property is decreasing. However, with the housing market slowly stabilizing, there may be suppliers coming to the scene in the future.

Here is How You Can Make a Great Real Estate Investment

Here is How You Can Make a Great Real Estate Investment

Seeing success in real estate depends primarily on the choices and decisions you choose to make. In order to make it work for you, you will need to make the right choices and know where best to spend your time in maintaining your newly acquired property. Here are some things to keep in mind when investing in real estate.

-Look for Real Estate Properties with a Decent Return on Investment

When you choose to invest in a real estate property, you are actually tying up money from your liquid assets into something that is illiquid. Your financial assets allow you to earn a rate of return but this is not necessarily going to be the case with your real estate property. However, you need to do whatever it takes to get a decent return on investment from your property, which is possible by renting it out.

-Lower Real Estate Risks

Like other investment strategies, real estate carries with it risk. That being said, it is possible for you to know how to navigate those risks so that you are able to work the markets to see the positive returns you’re looking for. Obtaining a quality real estate education from professional and experienced trainers, using proven real estate strategies, better enables you to go forward and see success in your investments. Many of those who get involved with real estate and don’t end up seeing success are those who did not take the time to get educated to further their financial success.

-Use Time Effectively

You will come across a lot of properties that are affordable. However, these properties demand a lot of your time and attention before you can convert them into a smart investment. Some examples include, low quality properties or vacation rentals. Finding the properties that are not just right as far as price, but right as far as the time expected before you see a return on your investment, is an important factor to consider when getting involved with real estate.

Land Banking

Land Banking

Land banking refers to the keeping of land for future sale or development. In this post, we discuss land banking and keeping land for future use, especially for purposes of using it as an investment and selling it at much higher price than its current value. There are numerous advantages that are associated with this area of real estate.

One of the most renowned advantages of land banking is the fact that it enables land owners to generate profit from the sale of their land. If you own a piece of land that is likely to be useful in the future, you can keep that land and sell it at a time when its value has risen. In this way, you will be able to generate more profit from the sale of your land.

Sometimes land banking can enable you to sell a piece of land at a price that is far higher than its current value. This usually happens if the land is likely to be more costly in the future. Many land owners have benefited greatly from the sale of land at prices based on future price projections.

There are times when land becomes scarce or very expensive. However, you can buy a certain piece of land at a very low price and still develop it many years later. While your colleagues will be searching for cheaper pieces of land, you will be enjoying a piece of land that has the ability to appreciate.

Tips for First Time Property Investors

Tips for First Time Property Investors

Are you interested in real estate investments? This article can help you get started! Read the tips below and discover what you need to know about real estate investing.

-Cash Flow is King

Before you start investing in a project, you need to make sure you will be able to generate cash flow when you finish the job. Purchasing the property is only the first step, because you will also incur ongoing costs, including taxes.

-Set Financial Goals

In order to make a property investment successful, you need to set yourself some clear financial goals in advance. Ask yourself if property investment will help you reach the goal you have in mind.

-Research the Market

Market research is also vital to property investment. Find out more about the particular area you are investing in, find out the value of surrounding properties and talk to local selling agents who can provide you with additional information.

-Find the Right Property

The right property is the key to a successful investment. Buying the wrong property may lead to you incurring more costs than profit, so ask yourself what buyers are looking for. Try to see the property through the eyes of the buyer and decide if the property is a worthy investment.

-Check Age and Condition of Property and Facilities

Find out the age of the property and the state that it is in. Some types of repairs ask for more time and funds than others, so determining these things in advance can make a huge difference. It is true that you can get a huge profit from buying a fixer-upper, but some fixer-uppers are simply not worth the money you will put in it. So evaluate carefully before continuing.

-Take Long-Term View and Manage Risks

Do not look at the property from a short-term point-of-view, but try to see it from a long-term point-of-view. It is also a good idea to think about possible risks you could be encountering down the line (for example huge trees on the property).

Real estate is a great market to be involved in right now. However, investors need to do a considerable amount of research before they decide to buy a specific property. By doing so, property investors are better prepared to navigate risks and produce profit.

Rehab properties – a short or long term investment?

Rehab Properties – A Short or Long Term Investment?

Buying a property that needs work can be a great way to start your real estate investment portfolio. With careful planning, the math can really stack in your favor – but do you flip for a lump sum or buy and hold to see a steady return on your investment?

Rehab for Resale

Renovating a property for the resale market is a common project for many first time real estate investors. A quick turnaround means that first trust deed loans are a viable source of funding for you – keep focused and the loan will be paid off before the rate of interest really starts to hit.

Of course, any investment comes with risks, but today’s market is relatively stable, so the chances of being knocked by a sharp drop in value are much less than in recent years. That being said, it’s still important for you to know how to navigate the risks present in today’s market.

Rehab for Rental Income

For rehab properties that require a lot of work, the interest rates of a trust deed loan won’t work – but don’t dismiss the project right away. Decide to renovate for the rental market and the rehab can be done in stages while you lease the property. Your investment will be safer for having tenants living there and the rent you collect can be used to fund the next stage of the project.

Opting for a buy and hold rental also means that your investment will be protected from any market volatility and almost always secure you good rate of return.

Whether you decide to sell or rent, taking on a rehab property can be hard work but ultimately incredibly rewarding. Not only can rehabbing give you a great return on your investment, but also contribute to neighborhood regeneration – and that’s a great way to showcase your property management talents.

The SMART plan for real estate investment: How to get to where you want to be.

The SMART Plan for Real Estate Investment: How to Get to Where You Want to Be.

If you’re going to succeed in the world of property investment, you need to have a plan. Whatever your goals, you’ll be committing significant time and money to them, so treat them with the respect they deserve.

  1. Be specific.

What’s your real estate dream? Whether you want a single investment in a REIT or a portfolio of apartment complexes, write down your end goal and then work backwards, detailing each step you need to take in order to get there.

  1. Create measurable goals.

You need to make sure you know exactly when you hit each goal – if you can’t measure it, you can’t manage it. Is it when your savings account hits $15,000? Or that moment when you’re handed the keys to your first property?

  1. Are your goals attainable?

If a goal is too far out of reach, it’s really hard to stay committed. If a goal seems too much, break it down into smaller steps so you can keep feeling good about the progress you’re making.

  1. Be realistic.

Investing is a time for rational thinking – don’t let emotions influence your decisions. It also helps to seek professional advice, so get to know your local agents and vendors. You’ll learn about current market conditions, the types of property that are a good investment – and which areas to steer clear of.

  1. Set time limits.

Finally, set a timeframe for each step. Deadlines give your project momentum – and real estate investments are one of the biggest projects you’ll undertake.

Investing in property can produce much higher returns than banks currently offer – and by using a SMART plan you’re way more likely to reach your real estate goal.

Four Important Tips For First Time Property Investors

Four Important Tips For First Time Property Investors

Every investor wants to know how to invest well. But, as we know, investing is a learning experience, especially for those investing in real estate for the first time. Here are a few tips to keep in mind as you begin your experience as a real estate investor.

Be practical: When under the trend of buying properties in order to rent them out, please consider the current market climate. The investor should try and have a clear understanding on the purchase price, loan amount, and the rent that would be generated on a monthly basis from the property.

Minimum expenses: After assessing loans and rents, the next thing the investor needs to get into is the spectrum of insurance, property maintenance charges, rehab costs, and in the event of either having a property manager, or taking on the role themselves.

Background check: Beyond attending property fairs and seminars, the investor has to be thorough in the background and history of the property. All kinds of details pertaining to the property can be acquired by talking to the local real estate agents, neighbors, and property managers. Due diligence is key, and should be thorough.

The right finance options: Comparing multiple mortgage plans and the right finance options is vital before signing up for a plan.

First time investors should be very careful in every step of their property investing process. Being their first time, they are prone to being duped or scammed with the wrong kind of property/finance/documentation.

In the beginning, it is recommended that the first time property investors gain an investing education that leaves them well rounded and well equipped as they proceed to make their mark on the real estate community.

Understanding Trust Deed Investment

Understanding Trust Deed Investment

Trust deed investments are nothing new. In fact they have existed for a long time, yet many prospective investors do not know much about them. In essence they are just like mortgages except for one difference: Apart from a borrower and a lender there is a third party involved – an investor.

Nowadays and in the current economic climate, trust deed investments help many mortgage borrowers who are in need of bridge loans. Mortgage brokers who partner with third party lenders are able to assist with a loan and it is part of their job to explain all associated risks.

Trust deed loans can bring above the average profits but only if all risks have been calculated and adjusted to the particular client’s needs. Hence a broker would have to ensure that the client’s future plans and financial resources are compatible with the financial risks involved.

Ever since the recession has hit the market such investments have created losses with similar percentages. Such losses were worsened in the past five years by brokers who failed to risk assess and inform their clients properly and offered inappropriate trust deed loans.

Today the dislocation capital markets means that many commercial banks are not equipped to provide bridge loans on strong collateral, even to customers who would have qualified previously. As such, investors can now provide private loans secured by quality collateral to strong borrowers with less risk than afforded previously.

Why You Should Hire a Property Management Company

Why You Should Hire a Property Management Company

It is wise and even recommended to make a career out of real estate investing, as the potential to make a good amount of money is always there. While it is true that the housing market can experience bubbles and crisis at times, it would still spring back into shape and with proper strategies, you can actually weather such crisis.

It is true however, that managing rental properties is not always an easy task. It is something that is filled to the brim with tasks and responsibilities. If you want your investments to be really managed in the best way, you ought to hire a property management company.

Expertise

The first and most important reason as to why you should hire such is the fact that they have the necessary knowledge and expertise when it comes to these matters. These businesses are composed of different professionals, each with their own areas of expertise, and combined, they would make one awesome team that can manage your investment in the ideal way. Not only do they know how to run the properties, but they may also know a good bit about real estate trends and legalities.

Consistent response to matters

These experts would be able to evaluate things in the right way. They can formulate good plans and strategies in managing your investment. When they know the needs and details of the place, they can respond and act accordingly. You would be able to rest knowing that they would not be neglecting any aspect of the real estate.

Maintenance taken care of

You could also relax concerning the maintenance of the place. Any maintenance work would be dealt with by these professionals and you will be billed for the work. Not having to contend with matters yourself can save you a lot of headaches.

Screening of prospective tenants

It is also nice to have them since they can screen your prospective tenants, as showing the property and doing the necessary paperwork is quite time consuming. A property management company would ensure that only reliable and trustworthy tenants would be staying at the property. This will ensure continuity and safety in the operations of the investment.

Investors that have multiple rental properties quite enjoy handing off the maintenance part of their investments off to a property management company. Sure, you have to pay them a certain percentage each month, but for the most part it is worth it.

Buy And Hold Strategy Is On The Rise

Buy And Hold Strategy Is On The Rise

Every few years, some investors change their strategies to tackle the challenges posed by the real estate market. Of course, some of these strategies regain their popularity again and again in a cyclical manner. In the current economic climate a wise investor should consider revisiting the tried and tested “Buy and Hold” strategy.

A long time ago, before 2002 at least, you could quite easily find property below the market rate. A sensible option in that scenario was to hold onto the property for the long term. You could be certain of a good profit within three to five years. This of course all changed once the market started booming and property prices skyrocketed. No long-term game was viable anymore and investors stopped buying. But the smart ones waited for the right market conditions to return.

Nowadays such conditions might exist once more. You can purchase properties that will bring a ROI between 23 and 25%, ideal for buy and hold.

To make it simple: Buy and hold is little different from buy low and sell high. If you want to use this strategy, you need to be aware of the long-term changes in the real estate market. Keeping track of supply and demand is essential in order to buy property just before others realize that values are low. Similarly you will need to sell property when the supply market is stretched and prices are at their high.

Having sailed through the recent financial crisis, the market is picking up slowly. This may be just the right time for you to try the Buy and Hold strategy and enter the real estate market.

Trust Deeds: What you should know

Trust Deeds: What You Should Know

Trust deeds, also referred to as deeds of trust or notes, are deeds whereby the legal title of real estate property is transferred to a trustee. This individual holds the deed as a form of security for a loan secured between the borrower and lender. In other words, trust deeds are formal documents that outline terms of a trust agreement and serve as additional security.

With trust deeds, the official property title is maintained by the trustee until the loan on the property is paid in full. Although the trustee is not involved with the agreement between the borrower and lender, this person is responsible holding the note unless the borrower defaults on the loan, at which time the trustee has the legal right to sell the property.

Additional Factors

Certain steps are taken in setting up deed trusts, including:

  • Real estate purchases are typically structured so the lender provides the borrower with money to buy the property.
  • In exchange for paying the seller, the buyer receives a grant deed for the property.
  • Immediately, the borrower executes a trust deed whereby the property is given to the trustee to be held in a trust until the loan between the borrower and lender is paid.

An escrow holder is always used when dealing with deeds of trust to ensure the transaction will not close until the funds, grant deed, and trust deed are handed over. With that, the transaction can be rolled back if for any reason one of the parties involved cannot complete his or her end of the deal.

Trust deeds are different from mortgages since the deed always involves a minimum of three parties: the borrower, lender, and trustee. The legal title for a mortgage goes to the mortgage company, whereas for a deed of trust, it goes to the trustee. In both scenarios, the borrower retains the equitable title. While there are distinct differences between mortgages and trust deeds, essentially, they are both security instruments.

The Recovery of Residential Real Estate

The Recovery of Residential Real Estate

Over the past several years, it has become evident that the residential real estate market is going through a recovery. Along with this, the number of unemployed workers has declined and interest rates have remained low. Obviously, the recovery of the real estate market is outstanding, but it is also uneven.

In other words, residential real estate in certain states is going exceptionally well, whereas in other regions, things are much slower. For states like Florida, Illinois, Michigan, Missouri, and Nevada, the market is moving in a positive direction. However, this causes certain concerns specific to the low inventory of existing homes, stiff competition among homebuyers, and longer wait times for new home construction.

Slowing in 2015

Even though the residential real estate market as a whole has stabilized and even grown in certain states, the housing market has begun to slow this year. Just in the past few months, the number of pending home sales is down. Part of this has to do with weather, but an increase in mortgage rates and a 12 percent jump in home prices are also to blame.

Prior to the recent market crash, we saw the biggest financial and residential real estate bubble, followed by the longest recovery period since the Great Depression. Fueled by easier financing, housing prices topped out by 2007. Then, the market completely crashed, taking almost six years to get into a healthy recovery mode.

Based on what people experienced, the buyer’s mentality completely changed. As a result, a large number of people began renting as opposed to buying, which caused a shift in the housing market.

The recent market crash is still very fresh in some people’s minds, but instead of worrying, people need to understand the recent residential real estate slowdown.

  • Fewer short sales and foreclosures
  • Historical slowing for a few months after residential real estate recovery
  • Slowing of bank and mortgage company failures

Overall, the residential real estate market remains in good shape with homes being affordable throughout the country.

Value of Land Banking

Value of Land Banking

Land banking is a very valuable process. It offers a solution to the common real estate problems of foreclosed properties and abandoned buildings. But what is land banking exactly and how can it benefit communities?

What is a Land Bank?

A land bank is basically a public or community owned entity. This entity specializes in acquiring, managing, maintaining and repurposing empty, foreclosed and abandoned properties.

Value of Land Banking

What are the benefits of land banking and how can it deliver some return to the community?

Increase in tax revenues

By turning useless properties back into valuable ones, and taking the properties back to the market, local governments will be able to collect taxes again. This leads to more money back into the community.

Cost Savings

Another great benefit is cost reductions for local governments who will not have to spend money on emergency protection, inspections or police services, given the fact that the property is functional again.

Maintenance Services

Neighborhoods can also directly benefit, given the fact that these entities provide many maintenance services to vacant properties, immediately increasing the land value of the surrounding neighborhood.

Demolition

Land banks can also take immediate action by demolishing buildings beyond repair.

Funding

Entities taking advantage of the land bank system are able to acquire additional funding.

Parcel Assembly

Land banks are also able to purchase multiple properties in a less valuable neighborhood and turn these into valuable assets again.

Liability

The land banking system ensures that the pressure is off the local government, since responsibility is carried by the private or community-owned entity.

Speed

Land banking entities are able to shorten foreclosure times. The additional advantage is that these entities can make vacant building available again more quickly

Affordable Housing

Many of the land banking properties end up in the hands of non-profit community organizations, which will directly benefit low-income families.

Land banking has many benefits, not only for the people investing in them, but also for the people in the community.

The vitality of investment goal setting

The Vitality of Investment Goal Setting

An investment is aimed at enabling the investor to generate cashflow from one’s resources. The resources can be in the form of capital, or assets. In as far as business is concerned, an investment is generally money that is spent for purposes of generating a profit. Every investment plan has its own goals. The goals are what drive an investor to go along with the plan to invest one’s capital into a certain asset or financial activity. Setting investment goals is not always easy, but it is an important aspect of investing that can never be overlooked. Here are some important reasons behind the importance of setting investment goals.

Vision or direction is only realized when there is a proper investment goal in place. When you are investing in something, you need to have a proper direction to guide you throughout your investment experience. That direction determines the decisions you make and also determines the minimum amount of profit that you will be able to generate within a specific time frame, depending on the business strategies being used.

When you have a good investment goal in place, you will feel motivated to work hard to realize that goal. It will be the main focus of all your investment activities, even if you may be taking certain steps for the first time.

There is a sense of fulfillment after you’ve reached your investment goals. Without these goals in place, you could very well miss out on that sense of fulfillment. Goals allow you to measure your progress day-by-day, month-by-month, and year-by-year. With investing goals, you can determine your potential and go for it!

What to know when investing for the first time

What to Know When Investing for the First Time

If you’re interested in investing in real estate, it’s a good idea to learn as much as you can about the ins and outs of investing. You certainly don’t want to go in without doing your homework. Many investors do not understand the complex nuances of investing in real estate or beginning the process. They fail to understand that real estate investment is different from investing in stock or bonds, so some guidance is necessary.

Here are a few tips that will help first time real estate property investors successfully launch their career.

-Determine How Much Capital You Have

Visit your bank or mortgage broker to determine how much you can afford to borrow responsibly for the investment before you go far down the path of exploring investment options. Look for property that will generate a positive cash flow in that the rent you receive should be enough to pay your mortgage payment, utilities, insurance, and property taxes. Be sure to maintain a healthy cash balance to cater for the unpredictable repairs and maintenance of the property.

-Know Your Property Options

Most first time real estate investors do not fully appreciate all types of investment options available. It’s always important to consult an expert while you explore various options, such as restoring run down properties, renting out family homes, or commercial properties like a small apartment building.

-Location, Location, Location

The most important element in the valuation of real estate is always the location. Highly populated areas with a rising job market are great for real estate. Look for property that is located in safe neighborhoods with good schools and nearby amenities, such as shopping malls and public transportation. You can also find property near large educational institutions, such as colleges and universities in order to attract students.

-Consult With Experts

Make good use of your lawyers and accountants on matters such as legal issues and how to use your money wisely. Ask them the best type of business unit to register your business as. Limited companies are the best as the name protects you against personal liability in case anyone is hurt on the property or for other tax planning purposes. You can also hire experienced real estate agents to help you in finding the best property.

-Learn From the Best

Model your investing decisions after what other successful investors within and outside your area have done. Search for real estate clubs both locally and internationally. You can also spare some time and read books about real estate investing. Look for the books written by successful real estate investors, such as practical guides to buying, renting, and selling properties.

-Be Patient

Be patient and do not be afraid to walk away if the deal goes against your wishes, no matter how much time you have invested in the property.

Take these tips into consideration as you begin your career in real estate investing. It can be quite the lucrative career.

Buy and Hold Strategy

Buy and Hold Strategy

The buy and hold strategy is a great means to accomplish the goal of yielding returns and creating cashflow. It also provides the opportunity for you to be a landlord. The concept of a buy and hold strategy is that an individual purchases a real estate asset, such as a residential property, and doesn’t sell it, but rents it generate monthly cashflow.

In the pursuit of a buy and hold strategy, one of the main decisions to consider is to whether or not to utilize leverage. More properties can be invested from the distribution of your investment capital by funding your purchases. At the same time, a risk is more diversified and total returns will be increased in a market situation in which the value of an asset is increasing over time. Paying for the property in full reduces losses in a depreciating market. Returns will also be increased in a flat market because income isn’t going towards interest payments.

One of the advantage in the practice of a buy and hold strategy is the acquisition of tax benefits wherein the tax rate imposed to a long-term profit is zero. This occurs if the total of your income and profits position you between the 10-15% tax brackets. Another advantage derived from this strategy is protection from inflation, which means that as inflation increases, so does the rent for your property. This helps to generate added cashflow as you hold your property for rent. However, the risk of adopting this strategy is the possible incurrence of expenses in managing with tenants who cannot pay their rents as due.

Self-Directing Your IRA

Self-Directing Your IRA

IRA stands for Individual Retirement Arrangement, which is more popularly known as an Individual Retirement Account. This allows persons to save money for retirement. The word “self-directed” easily implies that you, as the personal account holder, have full power over choosing and commanding your personal retirement account investments. The investment to real estate may be possible under a self-directed account, since you are able to use your retirement funds to invest in alternative assets through this type of account.

Nicknames are provided to self-directed IRAs that invest in particular assets, for instance, a self-directed IRA holding a real estate property is called a Real Estate IRA. It is required that a competent trustee acts as a proxy to hold the IRA account of the IRA owner under the rules of the Internal Revenue Service (IRS). Self-directed IRA trustees are qualified to manage the increased complications of documentation needed for transactions engaged in alternative investments.

A self-directed IRA allows you to diversify your investment into several different investment assets, such as real property, mortgages notes, and foreign currencies. You can invest in any of these assets, and others, through the use of your self-directed IRA.

There are also tax advantages obtained from self-directed IRAs. This is because no tax is imposed to investments under this account which could mean an acquisition of higher profits. Mix this benefit with the capability to actually diversify and invest in a variety of assets, and you could have a winning combination for a higher return.

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.

Property Management – Every Property Needs It

Property Management – Every Property Needs It

Property management is the overall efficiency brought about in the administration and oversight of real estate concerning facets like property value, requirements, facilities, accountability provided during the life span of the property to keep it alive and in good condition.

Property management also involves the processes, infrastructure and labor required to manage and organize the tenure of a property right from acquisition till disposition.

Real estate brokers in states like Colorado, New York, and Texas are to be license if they have to collect rent, list properties for rent or be the third party in negotiating lease and inspections. All property managers are required to work under a licensed real estate broker even if they are licensed real estate salesmen.

The requirement of needing a license to perform the duties of property manager changes from state to state.

When it comes to owners managing their own properties, most states do no insist on having a real estate license, but if the owner intends on renting the property, a business license is required. For the property owners who do not stay near the rental property have to mandatorily hire a property manager to manager their property.

Most property owners with multiple properties prefer to hire property managers to manage their properties for rent collection, handling/maintenance, catering to tenant’s complaints/evictions, and most importantly keeping the property healthy and alive.

Things to Keep In Mind While Setting Real Estate Investment Goals

Things to Keep In Mind While Setting Real Estate Investment Goals

Real estate is a fast paced industry and there is no doubt about it. As an investor, you will do whatever is required in order to make quick decisions. Additionally, you will need to act quickly when an opportunity presents itself. You will have the make the best of what you have got to take advantage of property deals. You will come across a lot of investors who invest in fixer uppers; they have such properties repaired and then sell them within a few weeks. But you have to keep in mind that despite all the time pressures, you will still need to set goals. Establishing a strategic plan beforehand will save you from a lot of problems later on.

-General Strategies

Before you make any decision whatsoever, it is important for you to do your homework beforehand. You will need to find out everything there is to know about real estate properties in the area. There is no harm in looking for profiles offering real estate properties and gathering as much information as you possibly can to aid your cause.

Depending on where you are planning to invest, you should consider studying public property records. This gives you all the information you need about the property including recent sales and purchases. Any and all information gathered can then be used to talk to the concerned parties. Additionally, you will also learn about emerging markets, concerns and trends, thus ensuring you make an effective decision while investing in a real estate property.

-Real Estate Relationship Goals

Being a real estate investor is not as easy as it may seem, to better your chances for success you will need to identify those individuals and parties that can actually help you achieve your goals.

Before you go any further, it would be wise to know what your goals are in the first place. For each party and individual, you will need to know what you are hoping to achieve from them. Whether you want to develop a relationship with brokers or lenders, it is necessary for you to be clear about what you want.

To better your chances for success, you can also consider creating a short term plan. The plan will give you everything you will need including the potential clients you need to meet to get the results you require.

-Profitability

Making a good real estate investment is not going to be enough. You will at the same time have to make sure it is profitable at the same time. Depending on the number of properties you are planning to invest in, it would be a good idea to estimate the average potential profits every year. Enough emphasis cannot be placed on the fact that research is vital for your success.

Keeping the aforementioned factors in mind, you have some of the tools to start investing in real estate properties. Even though it may seem complicated at first, setting real estate investment goals will make your job easier than it could have ever been before.

Is Land Banking an Effective Investment Strategy?

Is Land Banking an Effective Investment Strategy?

The process of land banking is simple and it involves securing property development sites for the future by purchasing them at current price. You will come across several land development companies that buy large tracts of land and make them a part of their ‘land bank’. After some time, these lands are rezoned after the necessary infrastructure and roads are put in and then sold as individual lots instead. However, the million-dollar question is whether land banking is an effective investment strategy or not. Let’s go over the factors which affect the answer:

-Land Appreciation

The value of the land you have purchased will appreciate regardless of the developments being made. However, it would be a good idea to make sure you invest in a property close to its land value. Not only is it a smart strategy but it also offers numerous benefits in the long run.

-Property Cycle

If you are part of a ‘soft’ market, you should consider securing your potential real investment properties. During these times, completing a project may not be as profitable which is why investing in multiple properties is better, as long as you get them at a good price. Eventually, the market will move on and the combination of owning a block of land, located in a prime location and a stronger market will allow you to enjoy substantial profits.

-Value Addition

If you acquire property development approvals, you can work towards enhancing the value of the property. Whether it is an approval for apartments, townhouses or multiple dwellings, by overcoming the council approval process, you can eliminate one of the property development risk factors, making them more attractive for buyers.

So, as long as you play your cards right and make smart decisions, you will achieve success with land banking, making it an effective investment strategy.

Starting Out in Residential Real Estate – How to assess the market?

Starting Out in Residential Real Estate – How to Assess the Market?

More and more real estate investors seem to be under the impression that one can get rich by using a loan to buy and renovate low value property. It is true that for most investors traditional real estate can a better investment option than the volatility of trading stock. The localized market, inefficiencies and long term prospects all make investing in property a wise choice.

However, to become a true real estate professional, you must understand some key elements of the market. Today we deal with number 1: Understanding when the national market is strong.

Assessing the Market

 

Some seasoned professionals will be able to make money, no matter how weak the economy is. However, it is tough to enter the game as newbie when the market is in a bad shape. Rising interest rates and reduced demand for real estate leads to falling property prices. A disheartening situation.

Hence, you should start out when the economic climate leads to dropping interest rates. You are likely to get cheaper loans and more potential clients. Similarly, growing gross domestic (GDP) rates are a sign of improving economy. When you are looking at a minimum of 2.8% annual growth, you can be confident that the real estate market will be going strong for some time. Finally, another way to assess the market is by looking at the official unemployment data in your chosen region. When people lack opportunities in their city/state, sooner or later they will move. This of course quickly leads to the reduction of home price appreciation (HPA).

To sum up: When starting out on the real estate market, look for a local market with strong GDP and acceptable unemployment rates. Making sure to keep on top of these numbers could determine if you make it or break it in real estate.

Tips for first time property investors

Tips for First Time Property Investors

Real estate provides a valuable option for those looking to invest. This can be attributed to the fact that it is associated with many advantages. But, like any other investment, you have to be cautious when venturing into real estate. As much as it is advantageous to invest, there are numerous challenges that you may encounter. You may fail to edge past those challenges if you are not properly informed. This post highlights some important tips for first time property investors.

First of all, seek audience with a reliable property investment educator. There are many business experts that can give you reliable advice on how to realize your idea to invest in real estate. Real estate educators can give you technical advice on the current assets that can enable you to generate more profit. They can even help you to have a clear picture of the current market. Such information will help you to make good investment decisions.

Property evaluation is also very important. When you are buying a property, you need to evaluate it based on certain attributes associated with it. For example, you can evaluate a certain piece of land before you buy to determine whether or not it’s going to be an asset that creates cashflow. This will enable you to know whether you are actually spending more than you need to be.

The use of multiple strategies is effective in real estate investing. Depending on the goals that you want to achieve, you can manipulate the buy and hold strategy as well as the banking strategy. When you do land banking, you can sell it at higher prices based on the hope that its value will rise in future. In the case of holding, you can hold on to land for many years and only sell it when its value has risen.

Trust Deeds

Trust Deeds

A trust deed is a formal arrangement between the lender and the borrower to allow the borrower to pay back the fraction of the debt that you can afford. Trust deeds are legal arrangements that can prove to be very important. One notable reason why they are important is the fact that they can enable highly indebted borrowers to regain financial stability. The time frame for a trust deed is determined by the lender after formal negotiations with the borrower. During this period of time, the debtor will be able to regain financial stability because one will only be required to remit payments that one can manage.

Every trust deed is associated with its specific validity period. A trust deed will be honoured for as long as its validity time frame has not elapsed. Under normal circumstances, the minimum validity period of a trust deed is 4 years. During this period, the borrower will be required to make monthly payments as stipulated by the trust deed. The borrower and the lender agree on a specific amount of money that is supposed to be remitted on a monthly basis until the debt has been cleared in full.

Sometimes extensions are possible if the borrower fails to meet the stipulations of the previous trust deed. New stipulations may be laid out or the same stipulations may be maintained until the borrower has liquidated the outstanding balance of the debt.

But, there are certain penalties that may be slapped on the debtor should one fail to clear the outstanding debts. The debtor may have difficulty getting into a similar agreement in future, so it is important to remain up to date with the expectations set on a trust deed.

Can A Self-Directed IRA Benefit You In The Long Run

Can A Self-Directed IRA Benefit You In The Long Run

From a technical standpoint, a self-directed IRA is similar to any other type of IRA with the exception of there being different options for investment. For instance, most custodians of IRAs can only allow approved stocks, bonds, CDs, and mutual funds. In self-directed IRAs, those same types of investments are allowed, as well as private placements, notes, real estate, and tax lien certificates, among others.

Although many investors have never heard of self-directed IRAs, they were first created decades ago. Of course, the Internal Revenue Service (IRS) has always allowed investing in things like stocks, bonds, and mutual funds.

Dating back to 1983, Equity Trust has been a custodian of alternative investments, including real estate. As an increasing number of investors wanted more control over their finances and futures, the popularity of self-directed IRAs grew. Today, self-directing your IRA is a viable option with many benefits that are worth researching.

Key Benefits

In addition to having more investment options by self-directing your IRA, there are other benefits. For example, you will enjoy asset protection, tax-free profits, estate planning, tax deductions, and more. You will also have the opportunity to invest in tax-free investments that you understand and are familiar with to create long-term wealth.

Under the IRA rules, self-directed IRAs are allowed as long as all relevant rules are followed. As expected, there are very specific rules associated with IRAs, in particular those that are self-directed. Therefore, it is important that you conduct extensive research or work closely with a qualified CPA or other financial advisor.

Simple Steps

When self-directing your IRA, there are only three steps. With those, you will soon enjoy tax-deferred profits.

  • Identify the Investment
  • Process the Investment
  • Manage and Sell the Investment

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.

Goal Setting (when investing)

Goal Setting (When Investing)

Real estate investing is fast-paced. To benefit in today’s market, investors need to act as fast as they can, because they’re not the only ones out looking for deals. Due to the time constraints faced by real estate investors, it is recommended to establish goals and develop a strategic plan prior to the purchase, sale, or rent of your own assets.

To establish strategic goals, personal research is required. The locations where you wish to invest must be studied thoroughly with the use of public property records. Also, network with other investors while attending property auctions. By attending these events, you may learn about the trends and potential markets that are useful for property investment decisions. Based from all the research you have gathered from all the activities stated beforehand, you can further your own investment plan and goals. Also, you can already determine your own niche, like rehabbing, or creating an income property.

To set goals for profit, you need to estimate your target annual profit from your property investments. Next, you can approximate the average potential profit from every real estate asset in one year. Finally, you can divide your wanted profit by the average profit per real estate to approximate the least number of real estate you must search and administer annually to accomplish the profit goal.

Tips to Keep in Mind as a First Time Property Investor

Tips to Keep in Mind as a First Time Property Investor

If you wish to make an investment, investing in real estate is a great option. Real estate investment is all about increasing your overall wealth. Additionally, it is also about securing your financial future. However, many people make the mistake of assuming property investment to deliver positive returns at all times. While it’s true that the value of land does not depreciate but there are certain other factors which you have to keep in mind. That being said, here are some important tips to keep in mind as a first time property investor:

Do the Math

First and foremost, you need to understand that cash flow is the key. Even though property investment is your best bet at creating long-term wealth, you still need to make sure you can afford it in the long run. Investing in a property is of little use if you will not be able to maintain your mortgage payments later on. This means you will need to learn all there is to know about owning a property. You need to find out about the different expenditures and taxes you will incur and then decide whether you can actually afford it without any significant financial stress.

Find a Reliable Property Manager to Work With

There is no better way to ensure your success as a first time property investor than by finding a reliable property manager to work with. These individuals are licensed real estate agents and have the necessary experience and knowledge required for keeping things in order. Their advice is invaluable and they will assist you in getting the best possible value from your property.

Check the Condition and Age of the Property

Before you go ahead and make the purchase, it is wise to have the property inspected and valuated. You need to check the condition and age of the property as well as the amenities and fixtures installed there to make sure it is worth the price. Via a thorough inspection of the property, you can uncover potential problems that can affect your decision. Even though there is nothing wrong in buying a property that is not in peak condition but you need to make sure it is worth your while to fix the place up.

Keeping the aforementioned factors in mind, you have enough information to get started with investing in your first property. However, you need to understand the importance of doing your homework. The better your research is, the better the results you can expect.

What is the Buy and Hold Strategy in Real Estate?

If you’re interested in real estate, then you may be interested in learning a bit about the buy and hold strategy. This strategy is essentially a long term investment strategy whereby an investor buys and holds a property for a time being. This form of investment is best when a market is developing and it may continue improving for a number of years.

This strategy has been around for a very long time and has oftentimes been the strategy used by the richest people in history. To invest in this, you will have to buy and hold a certain type of property. Instead of buying land, developing it, and then reselling it, you will only need to buy it and wait for its price to increase and then make a decision of whether to sell or not. Furthermore, while you wait for the land value to increase, you always have the option to rent the land out.

How to utilize the strategy

Always ensure that the market will develop. The first step in utilizing this strategy is determining whether you really want to buy and hold. Are you really ready to take such a risk? In real estate your gain is the difference between the purchase cost and the selling cost, so you want to do your research when it comes to the area you are thinking of purchasing. Ask around. Also, you have to be patient and willing to wait a while for the value to increase.

Find suitable property and buy. You will have to look for solid property to invest in. You should consider some elements like proximity to a school, general location within the larger community, and the immediate neighborhood. Finding a property in excellent condition can be beneficial. However, you do have the option to purchase less-then-optimal property and do some clean up and maintenance.

Decide on whether to lease it. Your main goal is to wait for the property’s value to increase and then sell it. However, having a short-term plan is also important. You can gain a monthly income by simply renting the property to a tenant.

Sell the property when its value increases. If your property highly appreciates in value, you should sell it and enjoy the long awaited profit. When selling this property, you may have to use the services of a real estate agent and also list it in newspapers and even online.

The buy and hold strategy works quite well when you do your homework when it comes to location and market. Learn more about this strategy and begin looking for properties that suit your budget and scope. You may just make some excellent money in the long run!

Tips for First-Time Property Investors

Tips for First-Time Property Investors

The goal of any property investor is to make money, whether short or long term. Especially for first-time property investors, it is important to learn as much as possible so this goal can be accomplished. Whether investing in commercial or residential real estate, there are definite wrong and right ways to get things done.

Helpful Tips

Following are a few helpful tips for first-time property investors.

  1. Right Property/Right Price – Because real estate investment is about capital growth, it is imperative that you choose the right property at the right price, which increases the chance for better value. For this, you want to conduct in-depth research on not just the property but also the market and entire geographical area to get a more realistic view of property worth.
  2. Cash Flow – When investing in property, there is always the risk of major financial challenges. For instance, if buying a distressed property to flip, high-dollar expenses may be uncovered during the demolition process. If investing property to rent long-term, there could be periods of vacancy. To avoid financial stress, you need available cash flow for repairs, upgrades, insurance, taxes, and to cover mortgage or rent payments.
  1. Mortgage Type – For first-time property investors, it is critical to work with a reputable lender, one that can offer different types of mortgages but also the best terms and rates. This will ensure you receive trusted financial advice about things like tax-deductible interest on an investment property loan.
  1. Repairs and Upgrades – A common mistake made by first-time property investors is going too far with repairs and upgrades. There is nothing wrong in taking pride in the work done, but there is also a budget to consider and not all changes may be warranted. By performing an analysis of the property and the area, you will be able to focus in on specific repairs and upgrades deemed the most important.

Residential Real Estate

Residential Real Estate

Compared to some investment assets, residential real estate properties focus on personal use rather than commercial. There are several categories of residential real estate, including connected/multi-unit residences, semi-detached residences, single-family detached homes, and portable residences. Connected/multi-unit residences include apartments, condominiums, and multi-family homes. An apartment is a single unit included in a multi-unit complex, with a condominium being similar. The common areas built inside the complex are occupied and possessed together. A multi-family house is usually viewed as a multi-story structure with separate units.

A duplex is one example of a semi-detached residence where two units are divided with one wall. However, a single-family detached residence is an independent residential property all together. Examples of portable residences include mobile homes, and houseboats. Mobile homes can function as a full-time residence, but are capable of being moved if and when needed. The point is, there are a variety of different residential real estate forms that can be invested in, and it’s important to know that even as you hone in on the area of real estate that interests you, like residential, it’s still important to look even further into the details to determine which asset within that area is best for your needs as an investor.

How to Find Prime Residential Real Estate to Purchase

How to Find Prime Residential Real Estate to Purchase

If you are looking for prime residential real estate to purchase, it’s a good idea to acquire the knowledge on how you can get the best. This can be a daunting task, especially if you are doing this for the first time. However, there are different avenues you can use to find the best property for you to purchase.

Here are some effective ways to do so:

Search online

The advent of technology has made it easy for people who want to purchase properties, as you can now search online for prime residential property. The greatest benefit of searching online is that you have wide range of properties to select and make comparisons. Even though there are many properties to compare, you can certainly find the perfect one that meets your specific needs within a short time. This is a great avenue because you end up saving a lot of time and money because you do not have to travel from one place to another as you search.

Real estate agents

With the increased demand for prime residential real estate these days, there has been an influx in the number of real estate agents. You can hire a highly qualified and experienced real estate agent to help you get the real estate that you want. The good thing about using the services of a real estate agent is that they have ample knowledge on the prime real estate that are listed in the specific area that you want to purchase. They also help you along the buying process, which can save you a lot of headaches.

Look for residential listings in the media

You can use the online listings or listings found in other media like the newspapers or magazines, to get prime real estate of your own. Here you get a lot of information that will help you make an informed choice depending on size, price and other factors.

Self-Directing Your IRA

Self-Directing Your IRA

Most people have heard of an IRA before, but are not familiar with the self-directed IRA. Despite the self-directed IRA being unfamiliar, it’s actually been around for over 30 years.

What is a Self-Directed IRA?

The self-directed IRA is not that much different from the traditional IRA. The only difference between the two is that the self-directed IRA provides you with the ability to self-direct your retirement funds into alternative assets, including equity trusts, real estate, and tax certificates and much more.

Benefits

There are a number of benefits for using a self-directed IRA, including some of the benefits you get for regular IRA. These include tax-free profit, deductions, asset protection and estate planning.

Steps to Self-Directed IRA Investing

Before you can start with your self-directed IRA, you will need to identify the investment you want to make. Once you have found a viable investment, you will need to acquire the necessary funds. Any documents you acquire and use during this process, must be in the name of the IRA.

When the equity trust has received your application forms, the investment can be processed. When the forms have been completed and accepted, funds will be sent from your IRA. All documents and records will still be kept by the Equity Trust.

Investors who are ready to sell their investment must complete a so-called investment form. This form tells the Equity Trust to remove the investment from their account. Once the investment has been sold, the profits will end up in your self-directed IRA. The beauty of this is that no taxes will be imposed on this investment.

Self-directed IRA investments are definitely worthwhile, especially due to the fact that they are accompanied by so many benefits. Any investor can greatly benefit from this process.

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.

Facets of property management

Facets of Property Management

Real estate management can be associated with a number of different assets, and can involve property management, even if you’re doing land banking. In most cases, land banking is often considered as a subset of property management. But, it is sometimes considered as an independent method in countries where the terminology is ascribed to the management of land by local authorities. Property management is the most often refers to the control and management of real estate properties and assets. The owner of a property can manage it or entrust the responsibility into the hands of a professional property manager.

In property management, there is always need to monitor the activities that are taking place on a certain piece of land or real estate. As the manager of real estate, you have to be fully aware of all the activities that are occurring on your piece of land or property at any given time.

Property management also means checking the value of your assets and the current market demand. As a property manager, you have to regularly be evaluating your property’s current market value. If the need to sell the property arises, you will be able to sell it at a reasonable price and generate profit.

In cases where the need to sell real estate arises, a property manager will be responsible for the selling process, including the evaluation of the buyer. This includes looking into the prospective buyer’s financial history and whether or not they will be able to afford the property.

Real estate rehab and its importance

Real Estate Rehab and Its Importance

Marketing in real estate is associated with intense competition. All the players of the industry are doing everything within their power to attract buyers and tenants in cases where the real estate is meant for residential accommodation. If you have prospects of selling or leasing real estate, you need to ensure that its attributes are attractive. There are numerous ways in which real estate is improved for purposes of attracting clients. This is often referred to as rehabbing. It does not differ greatly from any form of rehabilitation; however, real estate rehab is primarily concerned with the improvement of real estate for purposes of attracting clients. The following methods are used to improve real estate in a bid to attract clients.

One of the most reliable ways of attracting clients in the real estate industry is through the transformation of the structures that are present on the property. This is aimed at enhancing the elegance of the property based on the demands of a client or on the basis of preconceived client demands. The latter is the most common basis for the transformation of real estate.

Sometimes real estate rehabilitation is based on the demands of targeted clients. In this case, property owners are mainly concerned about the attributes that are able to attract a certain class of clients. For example, some clients may be interested in property that is luxurious. In order to attract such clients, property owners can transform their real estate so that it meets the standards of these prospective clients.

Tips for getting started as a real estate investor

Tips For Getting Started As a Real Estate Investor

Most people looking to invest their money could sooner or later turn to property. It is an established, proven and rewarding investment option. Although investing in this way may not seem as complicated as buying and selling stocks, you will still have to get your head around the basics if you want to be successful. This post has collected four of the most important things to keep in mind when investing in property.

  1. Be professional: Write a professional and detailed investment plan, outlining goals and timescales for two, four and six years.
  1. Learn about real estate investing: You can find huge amount of free information on the Internet but do consider buying a book with practical guidelines. At the same time, avoid guides that promise astronomical profits in a very short amount of time.
  1. Find the best local market: Do not limit yourself by only looking in your proximity. Often the market is booming a bit further away. You may worry about constantly having to travel for repairs and similar. However, making sure that the property is in top state before anyone moves will reduce this risk.
  1. The 1% rule: An old rule of real estate claims that a rental property generating 1% of the sales price per month is a good deal. This means that if the home cost $200,000, you could charge $2,000 per month in rent, or about 12 percent annual yield.

In the end, don’t forget that like anything else, the harder you work and the more effort you put into your real estate investments, the greater your success can be. Good luck!

The Pros to Purchasing Real Estate in Florida

The Pros to Purchasing Real Estate in Florida

Florida is one of the most attractive areas when it comes to residing, especially for those looking to buy or build homes in a warm, sunny climate. Whether you’re a snowbird looking for a warm place to stay or want to relocate permanently, the real estate market is prime right now in making the transition. There are plenty of advantages if you’re considering to venture into real estate in Florida, including:

Warm climate 

If you’re getting tired of the cold winters, you may just want to consider moving to Florida, as the warm weather and the housing market is heating up and everyone is looking at getting a piece of the sunny state for themselves. Both young and old flock to Florida to enjoy relaxing days in the sun.

Revenue from vacation homes

If you purchase a vacation home in Florida, feel free to rent the home out year round so you can enjoy the extra income to help with the house payment. With so many local and foreign people touring the state, it’s rare that you won’t be able to find someone to rent the home.

Florida’s fast economic growth

The rate of Florida’s economic growth is growing very fast and is a magnet for serious investors in the area and abroad. With tourism and a strong economic presence, you cannot go wrong with purchasing real estate in Florida.

Fierce competition

The competition, especially when it comes to vacation homes, is pretty good, so if your new in the game, you have to know what makes clients happy and what makes your competitors tick. The deals and price wars are very real to those venturing in this niche, and so be sure to do your research and hire a reputable real estate agent to help you get through the process.

Go ahead and look into purchasing a home in Florida, as the market is currently pretty strong. Whether you prefer inland or the coast, you’re sure to get great value for your investment.

The Importance Goal Setting When Investing

The Importance Goal Setting When Investing

Investing in real estate is an exciting and potentially lucrative investment option. Even when investing part time, this is an excellent way to supplement your income. However, to avoid common mistakes so you can achieve great success, it is important to learn about proper goal setting.

Real estate investing is hard work, but when done right, it can lead to great things. Unfortunately, many investors dive in without first establishing goals. The outcome is a long list of challenges that are hard, if not impossible, to overcome.

The Value of Setting Goals

Goals create direction and focus. For investing, goal setting allows you to maintain control over the direction of your career and identify benchmarks to determine if you are on track.

  • Motivation – Whatever goals you set need to be motivators. In other words, goals need to be things of real importance and value to you, which in turn increases the chance of achieving them. For investing, set goals that are of high priority. This will help with focus and drive you to succeed.
  • Make SMART Choices – SMART is the acronym for Specific, Measurable, Attainable, Relevant, and Time bound. By following this philosophy for goal setting, the direction will be clear and defined. Rather than set goals that are vague, you want to be precise. Goals also need to be measurable so you know if you are heading toward success or not. In addition, for investing, goals must be attainable. Otherwise, you will work and never make significant progress.
  • Put It in Writing – Always put goals in writing, which helps remember them and makes them more real.
  • Action Plans – One final aspect of goal setting specific to investing is that you need to make a viable action plan. Putting goals in actionable steps allows you to see progress along the way. With this, you can make appropriate adjustments while experiencing ongoing motivation.

Tips on Buying Rehab Properties

Tips on Buying Rehab Properties

Buying rehab houses in the real estate market can be a rather challenging task, especially for newbies. Also commonly referred to as “flipping houses, it generally refers to the business practice of buying real estate cheaply and then selling them later on at a profit, usually after doing some renovations or upgrades.

It can be an exciting and profitable business venture if you know what to look out for, which is not always so easy especially for inexperienced entrepreneurs. Fortunately, there are a few simple guidelines that will help you get started in the right direction:

1. See the big picture
Take a look at the property up for sale and try to visualize it in its final form. If you can picture a fantastic finish, go for it. If you have a considerable amount of doubt, it’s best to steer clear. There’s no point in buying something that you can’t picture being a success simply because it’s up for sale at a cheap price. Always think about the big picture before purchasing.

2. Calculate the numbers
Consider the overall value of the property right now and when you’re done making renovations. For example, tally up the purchase price, rough estimate of renovation/upgrade costs, and the legal fees involved. Then come up with an estimated selling price. Calculate the profit and consider if the return on investment will be worth it.

3. Research the history and current state of the neighborhood
Dig up some information about that particular piece of property. Ask around the neighborhood and perhaps even some realtors. Sometimes the history will make a difference in whether someone will want to purchase that property from you in the future. For example, a long history of mysterious deaths on the property may work against you, while a discovery that someone important was born there may drive up the value of the said property.

4. Determine the reason the owners are selling the property
Is the home a favorite spot for seasonal ants, flood prone, or a bulls eye for tornadoes? These could not only catch you by surprise in the middle of renovations (incurring heavy losses and delayed timelines), but leave you with unexpected expenses on top of a moral dilemma of whether or not to sell to someone else.

5. Check on legal issues
Are there any legal limitations on what can or cannot be done to the property in question? For example, it would be disastrous to discover that the property you bought with the intention of turning into a five-storied flat actually has a legal limit of four.

As you can clearly see, it would be extremely wise to avoid any rash decisions as just one misstep could turn out to be really bad for business. Take your time and follow the prescribed guidelines above and you’ll be a real estate rehab guru enjoying excellent cash flow in no time.

Goal Setting Principles When Investing

Goal Setting Principles When Investing

Are you thinking of making a serious investment? When doing so, setting proper goals can help ensure your investment gets you what you want. But, what makes a goal one that is likely to be achieved? Here are a few principles to help you along the way.

Be Specific

Before you make an investment, you need to be sure of what you want to invest in. You need a clear picture of the investment that is written down. Specific goals are easier to maintain and have a higher success ratio.

Measurable

A good goal is also measurable. Investors need to be sure that they can calculate progress, risks and even estimated profit margins. When you are able to gauge how you are advancing toward your goal, it helps to keep you on track.

Time-Sensitive

Goals should also time-sensitive, because all great opportunities have deadlines. The time period, in which the investment occurs, should also be tracked and laid out.

Challenging

Anything worth having is going to be some work. The goals you lay out should be somewhat challenging, to push you to achieve more.

Congruent with Beliefs and Values

Ensure that the goal you want to make aligns with your current beliefs and values. For example, if you are a health freak, it is a bad idea to invest in a junk food factory. Investing in something you stand behind is more satisfying and also closer to your own expertise.

Balanced

Any one goal should not take over your entire life, so make sure you make an investment that will leave you time for your family, your physical health and your mental health.

By taking into account the guidelines, you can set tangible goals that will help you to invest in the right properties.

Buy and Hold – Reliable Real Estate Investment

Buy and Hold – Reliable Real Estate Investment

As the name suggests, buy and hold is the principle where the buyer buys a property and holds it for an extended amount of time, ideally until the property value increases and the buyer can sell it for more than it was purchased.

The investor needs to be sure and do their research of properties to best identify property types (single family/multi-unit homes) in areas that have been tested and trusted to generate high rents.

Once the property is purchased, the investor can rehab the property and then look for a qualified tenant.

Tenant selection is an important consideration in buying and holding, as having a good tenant will reduce the amount of damage to the property, and enables the investor to protract investments until the tenure lasts. A good tenant will bring forth the need of installing only the minimal updates. The investor also needs to make sure the property is in a stable rental market that is not saturated fully.

Proper buy and hold investments provide steady cash flow from rents and pay off loans in due time, making way for a monthly income.

The technique of buying and holding takes after the “slow and steady wins the race” approach by creating residual income for the investors, maturing equity exponentially through the tunnels of principle pay down, appreciation and the advantage of low-volatility.

Trust deeds – inflation-beating investments?

Trust deeds – Inflation-Beating Investments?

Low rates of inflation are meaning that savers aren’t seeing much return for their money. Investing in trust deeds can offer interest rates that often go into double digits. Use our guide to find out if trust deeds are the right financial venture for you.

What is trust deed investing?

Put simply, it’s investing in loans secured by real estate. Most investments are short-term loans made to professional real estate investors. These borrowers are planning to make a large return by flipping the property and so are willing to pay higher interest rates for a quick source of capital.

How can I go about it?

If you’re new to the game, find a professionally-managed fund with the expertise to carefully select loans with minimal risks. Fund managers are also able to make sure that your money is continually reinvested and source the best deals.

For the experienced and adventurous, individual trust deeds often give better rates of return – but don’t be swayed by those dollar signs. To go down this route you’ll need an expert understanding of the market and a lot of time on your hands to make sure your money is quickly reinvested when one loan ends.

What are the risks?

Certain conditions can affect your investments, such as the borrower going into bankruptcy or a sharp drop in real estate values. Small investments also carry more risk as should things go wrong, there’s a tighter margin of error to recover your costs than with larger sums.

If trust deed investments are going to work for you, then choose your fund manager carefully – heard of Bernie Madoff? You’re delegating a lot of financial decisions to them, so if you’re at all unsure now’s the time to back off. Remember, trust deeds are no different to other types of investments – sign in haste, repent at leisure.

Land Banking – Be Sure to Land the Right Land

Land Banking – Be Sure to Land the Right Land

Land banking is the technique of buying a vacant, abandoned, undeveloped plot of land and holding on to it until a future date (preferably when the site prices go up) and then selling it.

Land banking has witnessed several self-made billionaires in America like Donald Trump and Bob Hope who have bought large shares of empty land that had not yet seen any sort of development and received hefty returns when their site prices went up.

Pros

Land prices are always on the rise. On that account, land banking is a diligent strategy to invest during the soft market stages with less and gain more in the bear market.

With the additions of the right developmental and industrial/urban council sanctions, the value of the land goes up.

Cons

Land is sold by communities and government at higher-than-market-prices, with the POP (promise of prospect) that the land will sell at a better price tomorrow. Say 10-15 years from the date of purchase.

When buying an empty land, parameters like size, dimensions, topography, natural terrain, site orientation, neighborhood characteristics, utilities available, accessibility, title checks are to be triple checked, as most of these aspects have to be imagined, since usually there is no real development around these types of lands.

Despite the substantial risks involved, an increasing number of Americans are investing under land banking to benefit from the current land property market that would (with the right land and right approvals) be the face of future development sites bringing in more returns than the original stake of investment.

Factors That Determine Land Banking Value

Factors That Determine Land Banking Value

Land banking is a common practice where pre-developed land is bought and held to be sold in the future in order to make a higher return. Purchased land is said to be banked until there is a substantial increase in value, as the demand for land increases or population increases. There are several things that determine the value of land banking. Some of the determinants include the following:

-Adequate water supply

The value of land will tend to be high if there is enough water. This is an indicator that the land has possible chances of appreciation in the near future. When the land appreciates, you will be in a position to sell it at a profit.

 

-Presence of residential and commercial development

This is an indication that in the near future more development will take place and businesses will expand. The land banking of such land will be high and you will be in a position to sell such the land in future at a higher price than you bought it.

 

-Presence of growing industries

The presence of growing industries is another important determinant of land banking value. You can buy such land at the current market value in hope that the price will increase in the future, since the presence of industries is an indication of development.

 

-Studies indicate a healthy growth in population

The land banking value will also be high as compared to other types of land where the population is decreasing. Holding such land will give you more profits when the land is sold in future since the demand will be high.

 

-Infrastructure

This is another determinant of land banking value. The value of acquiring such land may be high since it proves to be reachable by car, air or rail. After some time, many development projects will have taken place and the value of land will appreciate. When selling the land in the future, you will be in a position to make more profits after holding such land for some time.

There are several benefits that you will get from land banking. This is because holding the land for a short or long period of time gives opportunity for development to take place and this increases the value of land in future. When selling the land after holding it for a specified period of time, you will be in a position to sell it at a very high price and you will get more profits. It has proven to be a great investment all over the world.

4 Tips for Effective Goal Setting When Investing

4 Tips for Effective Goal Setting When Investing

Getting involved in real estate investing is a worthwhile endeavor, as it can be a wonderful means for creating consistent cash flow. With this in mind, it is important to be conscious of short and long-term goals when it comes to your investments and life in general. It’s important to set goals and make consistent steps toward achieving them. If you’re a real estate investor, negotiations and transactions are day-to-day tasks that you may have to contend with, as they help you take steps towards success.

To achieve your objectives, you must devise an effective plan that will assist you in reaching that particular short or long-term goal. Without a plan, you’re like a sailboat without a sail, so here are 4 tips for effective goal setting when investing in real estate:

  1. Set realistic goals
    Setting unrealistic goals is worse than not setting any goals at all, because it sets you up for failure. Go through your goals carefully and replace the unrealistic objectives with goals that you have a high likelihood of achieving. Set both measurable long and short-term goals. The short-term goals should be the precedent in line to accomplishing the long-term objectives.
  2. Know your limits Setting your goals and objectives means knowing your limits well. Know when you are going too far and when are still within your target. This helps you stay reminded of your duties as an investor. You might also want to run your goals by a seasoned investor to get his or her input.
  3. Set specific goals        The goals you set should be clearly defined and specific. At the beginning of every year, most people resolve to go to the gym more, lose more weight or save money in the New Year. But by the end of the February the same people find it difficult to measure how much they have achieved because their targets were too vague and they lost drive. A more effective target would have been to lose 5 to 10 pounds in January, spend at least 30 minutes doing cardio at the gym at least 3 times every week or to save 10 percent of their net pay every payday. Defined goals are important because they help you measure progress.
  4. Know the main purpose of your goals          Knowing why you are setting the goals helps you stay motivated to achieve them. This helps motivate you to work closely on your objectives and view them as your stepping stone towards success. Make sure you know the reason why you’re setting your sights on a certain goal. The stronger or more passionate the reason, the better chance you have of achieving it.

Setting goals is very important. If you talk to successful business men and women, most will tell you that setting goals and creating an action plan to achieve them has helped them achieve the level of success they have. If you haven’t done this, go ahead and devote some time toward doing so.

Of course there is bound to be a failure in some steps that you make towards achieving your goals but learning from those failures and mistakes should help strengthen your resolve to do better than before and help you become wiser when it comes to decision making.

What Is the Value of Land Banking Programs?

What Is the Value of Land Banking Programs?

There is a lot of value in legitimate land banking programs. In simple terms, land banking consists of aggregating parcels of land or distressed properties that will be developed or sold sometime in the future. With programs in the United States, eradicating underused, foreclosed, or abandoned properties to a productive state can be done quickly.

Unfortunately, land banking has been used as part of scams in some countries, whereby underdeveloped land is sold for a price above current market value with a promise that the parcel’s worth will increase dramatically thanks to local development. However, in the United States, there are viable programs that oversee properties with the goal of boosting revitalization in city neighborhoods that were at one time prosperous.

Many U.S. cities went through a period of deindustrialization coupled with increased suburbanization that resulted in a large inventory of vacant and abandoned residential, commercial, and industrial properties. In trying to come up with solutions, the first Land Bank was established in St. Louis, Missouri, in 1971, followed by others that have achieved great success.

The Real Value of Land Banking

By 2009, the value of land banking programs was accepted by the Department of Housing and Urban Development (HUD) and deemed a best-practice model for dealing with the collapse of the real estate market and abundance of foreclosures. The value of land banking programs is evident in many ways.

  • A reputable land bank is a one-stop-shop that offers all the necessary tools and resources for dealing with distressed properties.
  • A bona fide land bank has the ability to shorten current foreclosure processes, thereby speeding up the return of abandoned, vacant, and tax-delinquent properties to appropriate use.
  • The cost of adding emergency protection, inspections, law enforcement services, and others required in land banking neighborhoods is reduced by local governments.
  • Maintenance services for abandoned/foreclosed properties and vacant lots are another value of land banking programs.

To Rehab or Not – Real Estate

To Rehab or Not – Real Estate

There are two types of rehabbing when it comes to rehabbing a property. Partial and Gut. Partial rehabbing is where some portions are renovated. Gut rehab is where everything is taken down to bare minimum so as to redo the place completely.

The process of rehabbing depends on which category of preference you come under – namely personal, rental, and flip.

Most property owners/investors hire professional rehabbers for the simple fact that they do it a lot faster than the non-professional can.

Time is money: The faster the place is rehabbed the better. Every day spent in the process of rehabbing a property is a day without an earning.

Sample and proceed: If you are not sure what kind of rehabbing you require, consult with a local property expert first. Your real estate agent will know plenty of rehabbers. A known source is better than an unknown. If you do hire a new rehabber, give a sample area/project to work on, see how they do it and if it is according to your satisfaction proceed.

Gut rehab or partial rehab: If the previous tenants have totally disturbed the composure of the property, it is necessary for you as an investor to rehab it if you wish to find suitable long term/credit-worthy tenants or sell to the top buyer.

Again, whether or not to rehab a real estate depends on a few other factors like the market conditions, the kind of buyers you are looking for (they may want to do their own renovations, etc.). Unless you personally have experience rehabbing properties, it is recommended to leave the process to professional rehabbers.

5 questions that every first time investor should ask.

5 Questions That Every First Time Investor Should Ask.

You’re ready to make your first real estate investment – and property brochures are your new bedtime reading. How do you know when the place you’re viewing is a worthwhile investment? Here are 5 key questions to ask yourself before you start bidding.

  1. Can I stay for the long-term?

The real estate market is a very difference place these days and you can’t rely on making a fast buck anymore. When you buy a house you have to be prepared to hold onto it – and that generally means living there – or renting – for at least 3 years.

  1. Am I ready for a big financial commitment?

After purchase, maintenance and repairs can eat up a lot of your money and time. If you’re unsure, start small – maybe with a 50:50 share of a refurb. Once you’ve gained confidence you can move onward – and upwards – with a bigger project.

  1. How quickly have other houses in the neighborhood sold?

Days on the market can show how desirable the neighborhood is. Take a look at the local MLS (multiple listing service) to find out – and compare original list prices with final house prices.

  1. What are public and community facilities like?

If your property is in a catchment for good schools, houses tend to sell – or rent – quickly and for a good price. Even if you haven’t started a family yet, this is one feature that will appeal to just about everybody when you put your property on the market.

  1. Is the house designed and finished to your standards?

Don’t reject if the answer’s no! Just remember to include the cost of the renovations and improvements you need to do in your calculations. Houses that need work can be a great way of adding value to your property from the get-go.

The real estate market can seem daunting, but now you’re well on your way to taking your first step on the property ladder!

Advantages of the buy and hold strategy

Advantages of the Buy and Hold Strategy

Imagine being involved in a business deal based on a product whose value had been increasing steadily over a certain time frame. If you are the seller of the product, you will obviously be happy because of the amount of profit you will be able to generate. This scenario is a practical example of the buy and hold strategy. The buy and hold strategy is associated with both advantages and disadvantages.

One notable advantage of the strategy is the fact that it can be applied to many forms of real estate. You can buy real estate at a low price during a period when real estate prices have drastically dropped. However, you can sell the same real estate at a much higher price after holding the property over a certain period of time as it appreciates.

When you buy and hold, you stand a good chance of making more money after the sale than if you had sold your real estate asset immediately. This is mainly because you may come across better offers in future as the value on the property increases. Knowing when to buy, and how long to hold, depend on each individual market, and continually keeping up to date on which way the market trends as time goes on.

Tenant relationships – the key to successful property management.

Tenant Relationships – The Key to Successful Property Management.

Many landlords hand over the management of their property to outside companies. This not only eats up a big portion of your revenue, but misses out on building a good relationship with your tenant – and this can be the key to keeping them long-term. Here’s how to make sure the lease works for both parties.

  1. Be selective

Working within your state’s fair housing laws, it’s crucial to get to know prospective tenants before agreeing a lease. Accepting that people can sometimes fall behind on payments, professionals who can pick up extra hours often make very reliable occupants.

  1. Wise up

Landlord and tenant laws can vary tremendously from county to county, so it’s essential to know the local landlord and tenant act for your property. If you don’t, you could end up with a tenant who knows his way around the law better than you – and knows how to live rent free for a few months.

  1. Be clear and consistent

Clearly state your payment terms and conditions – and make your tenant accountable. So if rent isn’t paid on time, make sure you charge the stated late fee.

  1. Be efficient

Have a business account to process payments directly from your tenant’s checking account. It’s also worth getting authorization to process the rental payment on their credit card, in case their account does not have sufficient funds.

  1. Be a good landlord

A rental portfolio needs regular attention. Regular inspections and maintenance are essential to prevent small problems getting worse. And by making sure you’re keeping the property to a high standard, you’ll have happy tenants and a continuous turnover.

Staying on top of your tenant-landlord relationship might seem like hard work at times, but it’s easier than searching for new occupants – and easier on your finances too.

Real Estate Markets in Florida, Illinois, Michigan, Missouri, and Nevada

Real Estate Markets in Florida, Illinois, Michigan, Missouri, and Nevada

For many real estate markets, including Florida, Illinois, Michigan, Missouri, and Nevada, recovery after the crash is going well. Interest rates are stable and home prices are on the rise. Right now, there are many good things going on with the market in addition to unemployment inching down.

There is no question that in the states mentioned, it is definitely a buyer’s market. That does not discount rental opportunities but shows that this could in fact be a good time for you to become a homeowner. In the past five years, the biggest price increase for real estate was seen. Considering the housing market was going through a meltdown just prior to that time, a stronger economy is evident. While things are going in the right direction, there are still important factors to consider before buying real estate.

Factors to Consider

With the market looking strong, some people are jumping in without first analyzing some key factors. If you want to build financial security, remember that the economy is still in a recovery phase. Although analysts feel strongly that the market will continue in its current direction, you still need to be somewhat cautious.

While the real estate market has finally turned the corner, the volume of home sales is where it was in 1999. In the meantime, inflation-adjusted prices are at 2000-to-2001 levels. Even construction is currently up, with a significant increase in the number of building permits issued. While this is all great news, current numbers are still not even close to recent highs.

Something else to consider is that while the real estate market for Florida, Illinois, Michigan, Missouri, and Nevada is doing well, other parts of the country are lagging behind. If you plan to purchase a home in one of these states, you may face challenges of low inventory and high competition.

Real Estate Goal Setting – Factors that Determine Your Investment Goals

Real Estate Goal Setting – Factors that Determine Your Investment Goals

They saying, “If you fail to plan, plan to fail” can be applied to real estate, and the importance of setting goals as you invest. Being alert, guided, and guarded is foremost in real estate investing. Once you have decided to invest in real estate, you need to set strong and reasonable goals to have a successful real estate investment portfolio.

If you are a novice investor and wants to just test waters of the real estate investment world, then you would normally start off with a five year goal plan.

Investment goals are contingent on the objective of whether the investor is investing for maintaining a regular cash flow or to resale.

If you fall under the first category, that is to maintain regular cash flow, then the following should be considered in the draft of your goals.

Property Manager: Hiring a professional property manager a good way to start.

Self-sufficiency: A good investment will take care of itself. The right mortgage coupled with the long-term and credit-worthy tenant will pay for your investments and will even give you a regular income.

If the goals are for an investment made purely for the purposes of resale then:

Having a keen ear and sight is important: Since the transaction with resale involves buying properties at discounted prices, rehabbing and reselling at higher prices, the investor needs to understand the market climate, areas to invest in, places to target buyers inside out.

Maintaining reduced costs is the solution: Properties need to be well-maintained, as they are meant to be sold in a short span of time. So the investor here has to be adept in having the repairs done at low costs so as to increase his profits.

It is advisable to have a quality real estate professional to handle your portfolio in the beginning stages of your investment. Once you gather wind, you can be on your own and take care of your investment goals.

Steering clear of land banks? It’s time to change your thinking.

Steering clear of land banks? It’s time to change your thinking.

Land banks – government entities or non-profit corporations – are a growing trend in the US and there are now over 120, each dedicated to returning vacant, abandoned and tax delinquent properties to good use.

The reputation of the neighborhoods managed by land banks and strict ownership criteria means that land bank properties are often overlooked by real estate investors. But land bank properties can be a personally and financially rewarding investment – for both organizations and individuals.

-Group investors

Each land bank has their own policies on re-sales. Some only sell to non-profits, while others will work with for-profit developers. You’ll have to align your plans to their own for that particular community – so if their focus is affordable housing, don’t expect to be able to buy up smaller properties for demolition and replace them with one larger home.

-Individual investors

Not all land banks sell to individuals, so check whether your local corporation is open to this. Although property is often sold at a bargain price, the buyer has an obligation to bring it up to local building code standards. For some purchases this can be a big commitment and it’s vital to view the property – often sold as seen – before purchase. Don’t get carried away by a rock-bottom asking price!

Finally, a note of caution for the adventurous. Land banking outside of the US usually refers to private real-estate investment schemes – and are often a con. Land is sold at inflated prices, with the promise that once planning permission has been granted, the land can be sold on for a good profit. In reality, there is often no development potential and investors lose their money.

Everything You Need To Know About Investing In Rehab Real Estate

Everything You Need To Know About Investing In Rehab Real Estate

Rehab is a great area of real estate investing, but where do you start. There are a few things you need to know about investing in rehab real estate before you can put your money into it.

The Basics of Rehab Real Estate

Rehab real estate falls into three different categories, which are:

  • Flip
  • Personal Use
  • Rental

Each category has its own pros and cons. However, if it is your first time, it would be wise to start by rehabbing a house for personal use. This ensures you keep risks to a minimum and you won’t have to worry about carrying added costs from another property. By living in the house while you rehab it, you will incur regular living expenses. Also, there are several other advantages of living in the house you are rehabbing. For starters, you don’t have to worry about meeting time restrictions. But if you rehab a property and wish to flip it, the value goes down with each passing day the property is not sold.

Additional Factors to Keep in Mind

  • Learn From Your Mistakes

No matter how well prepared you are, as a first time rehab real estate investor, you are bound to make mistakes. Try to learn from the missteps and your chances of success in the future will increase.

  • Keep the Buyer in Mind

If you are rehabbing a house with the intention to flip it, think from a buyer’s perspective. Consider making choices that will appeal to potential buyers to ensure a quick sale.

On the surface, rehabbing real estate may seem complicated but as you can see, the process is quite simple.

Rehab Real Estate – The First Steps to Success

Rehab Real Estate – The First Steps to Success

Starting out with investing in rehab property is a viable strategy, but how do you launch out? The first step is to establish a rock solid business plan and a detailed financial forecast. Once you have these, you can get started.

Rehab real estate can be divided into three main categories: personal, rental and flip. All three carry their own risk/benefit ratios. To start out, you should begin by revamping a property for personal use. Living in the house whilst doing the renovation will save you money as you will only have to budget for your living costs.

On the other hand, if you are rehabbing to rent or to flip you will have to think of your potential buyer. Hence, try to choose building materials and design elements that will appeal to many different types of people. In case your intention is to live in the property first but pass it on after, think carefully about modifications that may suit your personal taste but may not be favored by others.

Getting into rehabbing can be a risky business and you are bound to make mistakes. As matter of fact, treat your first property as a rehabbing course. Something where you can learn without the fear of making mistakes. Going back to the first advice, doing a renovation for personal use will give you the time and space to explore and develop.

When the time is right and you decide to sell your first property, look for a moderate deal with a satisfied customer. Chasing the millions from day one could leave you frustrated for a long time and make your first deal a miserable one. Going step by step will make both you and your business a long-term success.

Residential Real Estate Investing

Residential Real Estate Investing

Given that real estate investing is better than most stock options, the investor has to be absolutely clear in what he is getting into.

Competitive Market: The real estate environment the investor chooses must be smart and active. The ever-rising interest rates make it difficult for investors who have purchased their properties with adjustable rate mortgages – where the investor needs to keep paying more and more to keep the property alive, eventually making the investment unaffordable for the investor.

Gross Domestic Product (GDP): The investor needs to check the temperature of the GDP in the area of his investing.

Smart Location: The location of the property can make or break the investment. Check for regions with good appreciation potential. Also a check on the housing price indexes and unemployment rates are key to determining the health of the market of investment.

The primary rule of investing in residential areas is to make a detailed inspection of the surroundings multiple times before conforming a property.

From a reliable and safe buy and hold strategy to flipping, real estate investors have a number of investing options in real estate to choose from.

Trust Deed Notes – A Brief Note

Trust Deed Notes – A Brief Note

A trust deed or a deed of trust is an intangible instrument of security. It has the qualities of a basic mortgage. The trust deed will declare that until the borrower pays back the debt, the borrower will be entitled to an equitable title alone. The legal title to the property will be transferred to the trustee.

Trust deeds are of two types:

Secured notes: These are backed by collateral, meaning the lender is given assurance in the form return and interest via the deeds of trust.

Unsecured notes: As expected, is not backed by collateral. Unsecured notes are mostly reserved for known acquaintances.

Trust deed investing is investing in loans that are secured by properties. Most trust deed investing is undertaken for short term maturity (usually under 5 years) when investing in trusted real estate investors.

What makes trust deed investing a good option?

The number one factor that drives trust deed investing is the high interest rate with almost no risk. Trust deed investors get their top single-digit returns monthly. Returns over 8% are not uncommon in trust deed investing.

The setback for this policy is that it is not liquid. Investments have to run their tenure or until the borrower has paid the loan back or when there is default, until the property is foreclosed and sold.

In the eventuality of the payment default by the borrower, the property in concern cannot be sold for more than the amount transacted for.

Trust deeds investments, backed by a promissory note that defines the amount and terms of the loan and high rates, are a relatively safe option for investments in real estate.

Thinking about hiring a Property Management Company?

Thinking About Hiring a Property Management Company?

Many landlords and property owners choose to do all related property management tasks by themselves or with the help of a residential employee. However, if you own a number of properties or are looking to get more help you may want to consider hiring a property management company.

Such companies can be fairly expensive and often you will find that their services do not align with your needs. Hence, before making a decision about this investment be sure to consider the following points.

What Does A Property Management Company Do?

A good company will offer you to deal with the full cycle from advertising your property and interviewing prospective tenants right through to collecting rents and settling any issues that may arise. At the same time, look for companies who are interested in your individual situation and are prepared to go a long way to prepare a tailored solution that suits your needs. It is also important to remember that management companies are service providers and thus you will avoid all problems associated with being an employer.

When Should You Hire a Property Management Company?

You own several properties or estates. It’s a simple numbers game but if you have several properties that need to be taken care of, hiring a management service will be more cost effective.

Your property is located far away. If you don’t live in the proximity of your property, a management company could prove to invaluable. As part of their service they would take care of everyday tasks that you could not do from your home.

Means of acquiring residential real estate

Means of Acquiring Residential Real Estate

Residential real estate is real estate that is sold out or bought for purposes of accommodating those looking to live in a residential area. Such properties are often expensive to buy or develop from scratch. But, there are numerous ways of acquiring residential real estate properties. Each method is associated with its own pros and cons.

To start with, residential properties may be acquired through crowd funding. In this case, individuals come together and decide to purchase a certain piece of property. The cost of the property is shared among the individuals involved. Finding other assets, such as a piece of land that can be developed, can be done through consulting real estate listings. These help to locate residential real estate that is available for sale.

Another manner in which residential real estate is acquired is through a mortgage. There are numerous financial lending institutions that are interested in providing funds for the purpose of acquiring real estates. Mortgages are usually flexible long-term loans that are associated with reasonable interest rates. They can be used to purchase residential real estate.

Private ownership of residential real estate is not only done through joining hands with other potential owners. Rather, it is also possible to buy residential real estate without the involvement of partners. However, you need to have a firm financial base.

Understanding Trust Deeds

Understanding Trust Deeds

When entering the realm of real estate, you will inevitably need to understand trust deeds and how they work. We’ll answer both of those questions below.

What is a Trust Deed?

A trust deed is a deed held on a property. The trust deed is not held by a so-called borrower or lender, but by an independent entity better known as a trustee.

How Do They Work?

The trust deed is better known under the term “promissory note.” This promissory note basically asks the borrower to repay a certain amount of money within a given time period.

What Else Do They Include?

A trust deed will also specify a number of details including the amount of the loan, the applicable interest rate, repayment frequency and the time period in which the borrower is obligated to repay the agreed amount. In addition to that, the trust deed describes any penalties that will be implemented when the conditions are not adhered to.

How to Get One

In order to take advantage of the promissory note, the lender has to take out a loan or purchase an existing promissory note. The loan can be acquired from a private lender, but can also be arranged by a real estate broker. For that reason, the conditions of the trust deed may heavily depend on the conditions and requirements of the lender or private entity.

Even though a trust deed may be a good alternative for a traditional loan, especially for people who cannot acquire a loan for themselves, they are accompanied with a number of risks. Compared with other lending options, the trust deed is right on par with other popular lending solutions.

3 Real Estate Markets you need to Invest in Today

3 Real Estate Markets you need to Invest in Today

If you have finally decided to invest in real estate, there it is about time you start planning right away. Investing in real estate is not as easy as it may seem. It requires extensive research and in-depth analysis of the market you plan to invest in. You will need to do your homework and find out about markets that actually have potential in the first place. Failure to do so will not only cost you money, but you will end up wasting time, which could have been invested elsewhere. To make things simple, here are 3 real estate markets you need to invest in today for a better tomorrow.

-Cape Coral – Florida

Located in the Fort Myers locale, you will get to experience everything that the Gulf Coast of Florida has to offer. Even though it has suffered from the biggest decline since the recession, it gives you the opportunity to reap rewards as property values have substantially recovered and increased over time. Home values initially fell to 59% with a median price of $86,000.

-Las Vegas – Nevada

There is no doubt that the recent recession left no stone unturned when it came to real estate properties. Even Sin City itself felt the full blunt force of the recession. Most people assume that the glamour and glitz of the city kept things intact. Unfortunately, it was unable to do so as values fell by 36%. This means that you can easily buy a good home, but it can put you back around $150,000. But then again, who would ever consider missing out on an opportunity such as this?

-Saginaw – Michigan

Not far from the Grand Rapids, the locale is perhaps one of the finest you can ever consider living in. The area was hit hard as well; values fell by a staggering 54%. However, things are looking up for the residents currently living in Saginaw as real estate properties are slowly gaining traction once more. Keeping this in mind, it would be wise to make the most of the situation before it is too late.

Now that you know about three of the real estate markets you could invest in, you should make the most of the situation. Enough emphasis cannot be placed on the fact that you will need to do your research and find out as much as you can about the potential real estate properties that interest you the most. If you are uncertain, there is no harm in seeking professional assistance to make an effective decision.

What is a Self-Directed IRA?

What is a Self-Directed IRA?

A self-directed IRA is an individual retirement account which is usually provided by financial institutions as an alternative investment for retirement savings. This account allows individuals to put aside some money for retirements which they can use in the future. It encourages savings and offers a number of benefits to the account holders. The account is referred to as self-directed since the owner of the account has full control over both selecting and directing their individual retirement account investment.

A self-directed IRA will involve a custodian who holds money in the account and will make investments in things like private placements, real estate, or other things depending on the owner’s directives. To begin utilizing a self-directed IRA, you must understand all the rules and regulations governing the investments as well as the tax implications. This is because the self-directed accounts put most of the responsibility on you as the owner.

The benefits of self-directed IRAs

There are many benefits of self-directed IRAs. One can access a wide range of alternative investments which are not actually offered by the brokerage firms and the banks. One also gets a chance to invest in what they know and understand well and they can directly manage their investments. By owning different commodities, the account owners can protect their wealth even when there is economic fluctuation. In addition, the portfolios are truly diversified to protect the owners against the possible market volatility, as well as harsh inflation rates. One will also get an opportunity to partner with friends and family while making more and more investments.

Self-directed IRAs are gaining popularity recently with a lot of investors expanding beyond stocks and bonds. Opening a self-directed IRA is simple and easy. All one needs to do is to determine the account they want, choose a fee option, fund the account, provide a copy of the national ID, and submit the new account kit and get started.

 

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.

Getting Started with Real Estate Investing

Getting Started with Real Estate Investing

You can make profit with real estate investing, but before any purchase is made, there are things to consider. Investing is a serious business that can lead to great success or cause major financial failure. Therefore, it is to your benefit to learn the fundamentals so you always make good choices.

Critical Factors of Real Estate Investing

 

-Personal Finances – Real estate investing is not for everyone, but if your personal finances are in order, including money in the bank, steady income, and better-than-average credit, you may be in a position to invest in real estate. Generating cashflow in real estate can take hard work and time, so having your personal finances in order is critical.

Good Planning – A major reason that investors fail is a lack of planning. With appropriate planning, you will understand the market you are most interested in, the process of securing loans, who to go to for needed repairs and upgrades, proper marketing/advertising strategies, and more.

Property Choice – You need to determine the market segment you are interested in (residential, commercial, retail, or industrial), as well as the type of property that will be purchased. You can use the property for long-term rental income or rehab it for a quick sale and nice profit.

Investment Expenses – There will be different expenses incurred when buying a property. For real estate investing, you must be prepared for everything, including the mortgage loan, utilities, legal fees, scheduled maintenance, capital improvements, and more. A good rule to follow is that over time, on average the expenses of a property will equal 50 percent of the income.

Vacancy Rates – For real estate investing, the vacancy rate is also important. The last thing you want to do is purchase a piece of property anticipating a long-term tenant or quick sale, only to be left with a vacant building that yields no income or profit. As stated, with real estate investing, it is important to have a healthy bank account and steady income so expenses during periods of non-vacancy can be covered.

What to Look for in Rehab Properties

What to Look for in Rehab Properties

When done correctly, there is significant money to be made in rehabbing properties. Also known as “flipping,” the process involves buying a distressed property for as little money as possible, making necessary repairs and improvements, and then renting long term or selling for a nice profit. Because there are always risks with rehabbing, it is critical to purchase the right property, possess the right knowledge, have necessary funding, and work with an incredibly talented and dedicated crew.

Financial Responsibilities

For starters, the economics of the deal, as well as specific financial goals, need to be determined. This includes not only the initial purchase price but also the expenses for labor and materials in order to bring the property to a productive state so it rents or sells quickly. There are also expenses for insurance, property taxes, and utilities.

Most importantly, you need available funds for unexpected expenses. For instance, you might discover the entire subflooring has to be replaced, hidden black mold, or structural damage. With rehab properties, anything is possible, so you have to be prepared.

Finding Great Rehab Properties

Choosing the right rehab properties is essential. Below are some helpful tips:

  • Identify who the renter or buyer is.
  • Consider the type of features/amenities most wanted.
  • Determine the current market value for specific geographical areas.
  • Calculate the estimated cost and time needed to transform the property.
  • Find out how long the property has been on the market.
  • Determine if the property is in an area that supports good renters or quick sale.
  • Research any liens or judgments against the property.
  • Identify any special challenges with building codes and permits.

Although tempting, you never want to purchase a rehab property just because the price is low. Even though a bargain is important, look for properties that will attract solid renters or serious buyers by being located in low-crime neighborhoods, close to good schools, and near parks, grocery stores, and hospitals.

Property Management

Property Management

The operation of administering a real estate property is known as property management. In order to conserve the value of the real estate property and at the same time generate profit, the property manager is assigned by the owner to act on his or her behalf, if the manager is not the actual owner. Administered properties may include vacation homes or other areas of residential real estate, commercial spaces, and buildings. Property managers accept compensation from the percentage of the rent that is provided by the property while under administration.

There are certain duties that must be duly exercised by a property manager. One is the market and financial function where the comprehension of operating costs and budgeting must be understood. From this area of responsibility, proper rental rates must be established. Marketing strategies must also be conducted to attract tenants.

Another is the understanding and meeting the needs of the tenant. Facility management is vital, including the physical administration of the structures and outdoor spaces of the property. The execution of building maintenance falls under this certain function to make sure that all facilities are in good condition at all times. Property managers also handle risk control, including the proper documentation activities. This is where all government reporting requirements must be executed and submitted accordingly.

Everything you need to Know about Deed of Trust

Everything You Need to Know about Deed of Trust

If you are one of those people who are not sure about what a deed of trust is all about, you are not alone. You have to keep in mind, that as an owner of a newly acquired real estate property, you sign a deed of trust at closing. There is a lot of paperwork to be dealt with at the closing, which makes it important for you to take your time and read them before you even considering signing. That being said, here are a few additional things to keep in mind about a deed of trust.

What is a Deed of Trust?

A deed of trust is not just a piece of paper, it is in fact a security for you loan. Additionally, the document is recorded and kept safe in public records at the same time. Essentially, a deed of trust comprises of three parties, which include:

  • The borrower, referred to as the ‘trustor’
  • The entity holding legal or bare title, referred to as the ‘trustee’
  • The lender, referred to as the ‘beneficiary’

The document serves as an instrument that identifies key elements of the agreement including the original amount of money borrowed, the different parties involved, legal description of the real estate property being secured for the mortgage and other details including the commencement and maturation of the loaned amount. Additionally, it covers additional factors including legal procedures, late fees and the requirements of the mortgage.

Who is a Trustee?

A lot of people find the deed of trust and mortgage to be quite confusing. This is primarily because a trustee is not required when you apply for the mortgage; however the same cannot be said about a deed of trust. The trustee is an independent third party that acts as nothing more than a neutral entity that does not represent the lender or the borrower.

Promissory Note and its Importance

As mentioned earlier, the deed of trust is a legal document that ensures security of the debt. This is made possible by securing any other property and promissory note is required as evidence of the debt actually existing in the first place. The note serves as a promise of payment, which is signed by the borrower and even contains key elements of the loan including payment obligation and interest rates.

Additional Factors to keep in Mind before Signing a Deed of Trust and Promissory Note

Before you actually go ahead and sign a deed of trust and the promissory note, there are some things that need to be kept in mind in order to make sure you are not in way over your head in the first place. You can start by reading the documents carefully and make sure it is exactly what you agreed upon. Moreover, there is no harm in checking for mistakes, important items to review include:

  • Trustor’s name
  • Balance of the loan
  • Amount that needs to be paid
  • Interest rates agreed upon
  • Physical address of the property
  • Any and all, prepayment penalties

Now that you know everything there is to know about deed of trust, you will be able to make more effective decisions that are in your favor. However, if you are not sure about something in particular, there is no harm in asking for help or seeking professional assistance.

Investing In Detroit Real Estate Could Be The Deal of The Year – Get In There First!

Investing In Detroit Real Estate Could Be The Deal of The Year – Get In There First!

For most of us Detroit is not much more than a collection of news stories related to crime and low economic output. It’s a sad image but a vivid one that is rooted deep in our memories ever since the downfall of Motor City.

But things are changing and in the near future a new image of Detroit will emerge, one of rapidly growing markets and of a high-flying economy. This also means that there are good reasons for investing in real estate.

  1. The startups are coming. As was foretold by Venture Beat News in recent weeks, major venture capital firms are investing heavily in newly created startups that see their future in Detroit. It is only a matter of time that some of the currently rough neighborhoods will turn into fashionable young professionals’ quarters.
  1. Buy cheap and keep it. Buy and hold strategy could work in Detroit like no other city before. Whilst the city is crumbling at the moment, give it five years and you will see impressive changes. The city parks will be cleaned up, the fountains will be turned on, and major corporations will put their names on the city’s skyscrapers. Just wait for it.
  1. Emerging market on your doorstep. Let’s call it what it is: Detroit is an emerging market. It is emerging in the sense that it has started to attract new investors with fresh ideas and a desire to settle new industries. Stakeholders have already invested over $1 billion to renovate sights like the Greektown Casino, downtown hotels, and restaurants. $650 million has been spent on a new sports complex and into rebuilding the arena district.

It all takes time and you will not cash in tomorrow, but Detroit will be a big hit for those willing to invest in real estate today.

Understanding Trust Deeds (Notes)

Understanding Trust Deeds

A Trust Deed is a legal document wherein the real property’s legal title is moved to the custody of a trustee. This particular deed is usually held as collateral for a debt between a debtor and lender. The debtor serves as the trustor while the lender is known as the beneficiary. On the other hand, the trustee serves as a third party that holds the trust deed to ensure that the deal between the lender and beneficiary are acted accordingly.

The purpose of enacting this strategic investment is to let the debtor acquire money from the lender to purchase a property.

Here’s how it actually works: you, the debtor, quote the amount of cash to the seller. The seller then performs a grant deed providing the property to the trustor. Next, the trustor can quickly perform a trust deed moving the property to the trustee to be detained in trust for the beneficiary.

A Trust Deed is more advantageous than a mortgage in the part of the lenders. This is due to the fact that the trustee has the capacity to foreclose on the real estate property in the event that the debtor fails to pay the loan.

Trust Deeds differ from mortgages, because they actually include three parties: the debtor, the lender, and the trustee. A mortgage, on the other hand, only involves two parties, the mortgagor and the mortgagee. Trust Deeds are commonly used as a means in funding real estate purchases in several American states, such as Missouri, Nevada, and Colorado.

Introduction to Property Management

Introduction to Property Management

Property management involves the operation, control, and oversight of commercial, residential, or industrial real estate. This involves a hired company with accountability for numerous aspects of the property. For residential rental units, the property management company will conduct background/credit checks of potential tenants, handle leasing contracts, collect monthly rent, maintain on-site amenities, and keep the owner abreast of any concerns or problems.

While the benefits of a property management company can be enjoyed by anyone, this service is often most advantageous for owners who live out of state or have multiple properties. Regardless, the company serves as the eyes and ears of the owner while handling the responsibilities of the property.

Licensing Requirements

In most states, a property management company must possess specific licensing in order to list properties, negotiate leases, conduct inspections, and accept rent payments, among other things. Most states, excluding Vermont, Idaho, and Maine, require a property manager to be a licensed real estate agent or someone working under a licensed broker. However, in South Carolina, Montana, and Oregon, a real estate license is not mandated, although a property management license is.

Benefits of Property Management

There are tremendous benefits in using a reputable property management company, which include:

  • Higher-Caliber Tenants – Because the tenant screening process is stricter, more people pay rent on time, stay longer on the property, take better care of the rented unit, and overall cause fewer problems.
  • Vacancy Cycles – Because of the services provided, a reputable property management company will perform critical tasks that shorten vacancy cycles. This includes making necessary repairs and/or improvements to the property, determining appropriate monthly rent, and conducting effective marketing.
  • Rent Collection – The success or failure of a property has a lot to do with how rent is collected and late payments are handled. The property management company will set payment criteria for everyone without exception. By enforcing the terms of the lease, tenants know that unless their rent is paid as stipulated, an eviction is imminent.

How to make the right investments in the right places

How to Make the Right Investments in the Right Places

If you’re trusting the real estate market with your money, you’ve got to understand the local and regional conditions you’re investing in. Start by taking a moment to get to know the basic types of markets in the US.

-Linear Markets

Characterized by a ‘flat’ growth curve, linear markets tend to enjoy steady growth with no major highs or lows. If you’re looking to flip, then you’ll need to find a refurb property to make your gains, but sit tight and hold onto your investments and you’re likely to get some of the best returns on the market. This type of market is commonly found in the Middle-American heartland, as well as some of the southern and southeastern states.

-Cyclical Markets

These markets are the direct opposite of linear – and you’ll be in for the ride of your life. Found along the US coasts, property prices can change fast – we’re talking ‘boom and bust’ on a grand scale. When times are good, flipping can bring big rewards, but judge it wrong and you’ll have to hold onto your property for years before you can make a profit – each cycle lasts for between 7 and 10 years.

-Hybrid Markets

Some markets, like Florida and Illinois, never quite boom – or bust – but are characterized by slow growth followed by moderate periods of cycling. Properties that need a lot of work or can be developed might suit a quick turnaround, but in general it’s usually better to go with a buy and hold strategy.

Now you can match the type of investment you’re looking for with the right market – get ready to start reaping the rewards of real estate investments.

Rehabbing a Property

Rehabbing a Property

Rehabbing is a term commonly used in real estate, which means to renovate or fix-up a home. Most every home that is purchased will need some kind of rehabbing, whether miniscule or large. The costs of rehab are an important factor in the profitability of a home, because you’ll ultimately want to make more in selling the home than you spent on your purchase and renovations. Otherwise, you’re going to be in the negative. Let us take a closer look at what rehabbing actually entails.

Rehab Overview

When rehabbing a property, whether your own home or an investment property, it is important to estimate the total costs involved. It is easy to end up over or under investing in rehabbing, so rehabbers will have to find the right balance.

It is important to consider what renovations will be most appealing to a wide audience of potential buyers, and how those renovations will affect the home’s value. When done properly, a house can be bought low, strategically rehabbed and sold to earn a profit.

Rehab Categories

Rehabbing is generally performed for one of the following situations:

  • Personal Use– In this scenario, you will be living in the home you are rehabbing, which creates less risk and fewer time restraints. You can make the renovations based on your personal tastes; keeping future resale value in mind of course.
  • Rentals- Investors typically will rehab rental properties in order to make them more appealing or valuable to renters, to in turn charge a higher rent.
  • Flipping- Many investors will buy properties for a low price, with renovations in mind that will increase the value, and complete them with the intention to resale and make a profit.

Rehabbing can include painting the interior or exterior of the home, re-shingling the roof, adding new appliances, replacing windows, and much more.

Tips

Before you start your rehab project, we have some additional tips for you.

  • Always have a cost estimate
  • Decide if you are going to need contractors
  • Ensure that you have the proper permits in your possession
  • Find a place to get your supplies

Rehabbing a property is a tactic that is often times necessary, and can also be very profitable for property owners.

Real Estate Investing Mistakes to Avoid

Real Estate Investing Mistakes to Avoid

Real estate investments are pretty lucrative, but there are some common mistakes that can cost new investors. Read on and discover what to avoid when making real estate investments, so you can make your next project a success.

Lack of Research

Some new investors jump right in without doing sufficient research. This mistake can cost them quite a bit in terms of time and profits. Before you make a decision, ensure you know everything there is to know about the surroundings, if there are any nearby flood zones or problem areas, or if there are any permit issues connected to the property. Also, always ask the property owner why he is selling and how much he paid for the property when he bought it.

Poor Financing

If you have to take out a loan to purchase a property, make sure that you have a decent loan option. Try to avoid loans with rising interest rates, and ensure that there is some flexibility in your acquired finance plan.

Not Seeking Advice

Asking advice from professionals is absolutely essential for first time investors. Speak to selling agents, contractors and all other people who have something to do with the real estate business in order to acquire the necessary information. Obtaining a real estate education from experienced mentors and educators is ideal.

Paying Too Much

Overpaying is another common mistake that new investors tend to make. Research definitely contributes to avoiding this mistake, because it will tell you what you should be paying.

Underestimating Costs

Buying a new property is not the only big expense you are going to have to make. Before you buy your intended property, ensure that you have a cost estimate ready and find out if you can afford all the costs coming your way, particularly the necessary rehab renovations.

New real estate investors that take the above tips into account, have more of a chance to make their project a success. Make sure you do the proper research and have sufficient funding available to make your real estate investment a success.

Property Management

Property Management

Property management has emerged as an extension of real estate investing. As soon as properties were built and sold, property management came in the picture. So let us have a closer look at property management, its primary roles and benefits.

What Is Property Management?

Property management is a very broad term and consists of everything from the operation of real estate to its control and oversight. Such a broad term also surrounds a great number of processes, including maintenance, building and repairs.

Primary Roles

So what does property management actually entail in direct terms? Property management can be divided into various primary roles:

Screening Applicants

One of the most common tasks that fall under property management is the screening of applicants. This includes screening the credit of the applicant, checking their criminal history, rental history and their ability to pay.

Lease Contracting/Accepting Rent

A property manager is also responsible for the lease contracting and collecting the rent. In order to ensure the legality of this process, several legal documents must be drafted.

Maintenance

Property management also entails the maintenance of the property. Maintenance costs are usually limited to a pre-determined amount that is displayed in the lease agreement.

Benefits

Property management comes with a number of benefits. Property management can cause less legal issues and is also cost-effective. Proper management will also lead to shorter vacancy cycles, and can allow you to better manage your time as the investor. Taking on a property manager or taking property management into your own hands can yield a great ROI (return on investment).

Real Estate Investing

Real Estate Investing

Real estate provides a great investment that can be used by investors to generate regular cashflow. While not without its risks, investing in real estate carries with it the potential to yield returns that help to supplement the income of the investor, with the generated cashflow helping to secure additional financial freedom.

How long it takes for certain real estate investments to generate cashflow depends on the asset, but it can also depend on the strategies and tactics used and implemented by the investor, which is why obtaining some form of investor education is important when beginning to invest in real estate. The quality of your real estate education, whether through an education program or the use of a mentor, could prove crucial as you go forward with investing in real estate.

Each property and asset could bring with it its own set of challenges, which can make it difficult to fully assess each deal before it’s made, but knowing what to look for and how to approach risks as an educated investor provides significant help and protection against such situations. The search for the right property typically involves a bit of research and hard work, but it can prove more than worthwhile in the end when done right! Investing is all about having the right set of tools and strategies, and knowing how to use them.

Real Estate and Self-Directing Your IRA

Real Estate and Self-Directing Your IRA

A self-directed individual retirement account is a category in IRA backed by a few financial institutions in America that offer alternative investments for retirement savings.

The self-directing here implies that you, the individual account owner, having complete control over your retirement investments, will have access to your retirement funds to be used to invest in alternative assets, like real estate.

To be able to self-direct your IRA, you must first appoint a trustee to manage the IRA in terms of administrating the formalities required by the IRS.

Advantages of self-directing IRA to buy real estate

– Tax free gains

– Tax free positive cash flow

– Limitless property holding

– Potential to earn greater returns on invested capital

When you purchase real estate with a self-directed IRA, all income and gains gathered by your pre-tax retirement account investment will be routed back to the retirement account 100% tax-free.

How this works is that instead of having to pay tax on the returns of real estate investment, tax is to be paid at a future date, enabling the present investment to grow steady and uninterrupted.

From Land banking to mobile homes, there are a number of quality and reliable options for those interested in self-directed IRA investments.

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.

Rehab Properties

Rehab Properties

One major attraction of real estate investment is the ability it has to generate cashflow in a good amount of time. One of the more popular areas of real estate investing is that of rehabbing properties, which involves fixing up rundown homes and putting them back on the market with added value. Effective rehab starts when you know how to accurately evaluate the value of a real estate after, as well as before, you begin rehabbing the property. Some investors tend to overestimate the value of the property following its modifications. Others simply underestimate the prices or time required in selling the rehab property. The longer you hold on to a flip property, the more expensive it gets for you as the investor as you begin to make the payments on the property as well as taking care of all the needed items as part of the rehab.

Utilize lower price values, exaggerate repair costs, and think that the job will finish longer as you expected. When your detailed examination is based from these three assumptions and the deal still appears reasonable, then it is likely that the deal could very well work for you.

Be sure to keep the end in mind. Think of your potential buyers, and who they could end up being. Who are you targeting? Ideal rehab properties are in locations where homeowners are seeking to purchase, which will help you in securing a buyer.

Rehabbing a Property

Rehabbing a Property

Rehabbing is a term commonly used in real estate, which means to renovate or fix-up a home. Most every home that is purchased will need some kind of rehabbing, whether miniscule or large. The costs of rehab are an important factor in the profitability of a home, because you’ll ultimately want to make more in selling the home than you spent on your purchase and renovations. Otherwise, you’re going to be in the negative. Let us take a closer look at what rehabbing actually entails.

Rehab Overview

When rehabbing a property, whether your own home or an investment property, it is important to estimate the total costs involved. It is easy to end up over or under investing in rehabbing, so rehabbers will have to find the right balance.

It is important to consider what renovations will be most appealing to a wide audience of potential buyers, and how those renovations will affect the home’s value. When done properly, a house can be bought low, strategically rehabbed and sold to earn a profit.

Rehab Categories

Rehabbing is generally performed for one of the following situations:

  • Personal Use– In this scenario, you will be living in the home you are rehabbing, which creates less risk and fewer time restraints. You can make the renovations based on your personal tastes; keeping future resale value in mind of course.
  • Rentals- Investors typically will rehab rental properties in order to make them more appealing or valuable to renters, to in turn charge a higher rent.
  • Flipping- Many investors will buy properties for a low price, with renovations in mind that will increase the value, and complete them with the intention to resale and make a profit.

Rehabbing can include painting the interior or exterior of the home, re-shingling the roof, adding new appliances, replacing windows, and much more.

Tips

Before you start your rehab project, we have some additional tips for you.

  • Always have a cost estimate
  • Decide if you are going to need contractors
  • Ensure that you have the proper permits in your possession
  • Find a place to get your supplies

Rehabbing a property is a tactic that is often times necessary, and can also be very profitable for property owners.

Real Estate Investing in Detroit

Real Estate Investing in Detroit

Detroit, one of the most dejected real estate markets in the USA shows that nothing is impossible. Picking its bones from the ashes, Detroit is showing some real hope for first time property investors and even the professional investors are nodding their heads in agreement.

Being the largest city to have come under the blanket drive of bankruptcy protection, Detroit’s real estate is filled with a new-bound promise.

From being neck deep in debt with $18-20 billion, crippling the housing sector, leaving properties in depression, abandoning properties and leaving schools to the hands of wreck two years ago, Detroit is currently seeing a forecast of increased home prices.

Realtors are ecstatic as they are receiving multiple offers for desirable home within hours of listing.

Recent real estate investors are finding deals as they come to understand that their timing of investing in real estate in Detroit couldn’t be better.

Foreclosures, still being a part and parcel in the life of real estate in Detroit will not take away the present light dawning on the current real estate market with its housing sector selling properties at affordable prices.

Self-directed funds – your ticket to financial freedom?

Self-Directed Funds – Your Ticket to Financial Freedom?

Self-directing your IRA offers you the option to make your own investment decisions with a range of alternative investments for your savings – including real estate.

What’s in it for me?

Real estate makes a solid investment for your IRA and can give you a cash stream as well as long-term appreciation. It also means that you can buy and sell properties without taxation.

Self-directing real estate IRAs can put you in control of your funds. Stocks, shares and intellectual property are all common investments, but not as familiar to most us as real estate. By choosing to go with something you know, you’ll know the language being spoken.

What can’t I do through self-directing?

Any work on your properties must be done by a third party – meaning that you can’t provide any required labor yourself. You also can’t live in the property and self-dealing – selling a property you own to the IRA provider – is a big no.

How does it work?

The IRA provider uses the funds to purchase and maintain the property – and when it generates cash either through rentals or sales, those funds go directly back to the IRA and can be used to buy other assets.

Choose an IRA provider authorized by the IRA to handle real estate. You’ll be able to select the property and negotiate the terms for any deal, negotiated by the provider.

As with all investments it’s essential to do your homework and get legal advice, but with both a cash stream and appreciation, self-directed real estate funds have the potential to give you the financial freedom you’ve been looking for.

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is risk in using retirement funds for investing in real estate assets. It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds. Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at: http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice. Prior to acting upon this information, you may consult your own accounting, legal and financial advisors to evaluate the risks, consequences and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.

Real Estate Investing Mistakes to Avoid

Real Estate Investing Mistakes to Avoid

Real estate investments are pretty lucrative, but there are some common mistakes that can cost new investors. Read on and discover what to avoid when making real estate investments, so you can make your next project a success.

Lack of Research

Some new investors jump right in without doing sufficient research. This mistake can cost them quite a bit in terms of time and profits. Before you make a decision, ensure you know everything there is to know about the surroundings, if there are any nearby flood zones or problem areas, or if there are any permit issues connected to the property. Also, always ask the property owner why he is selling and how much he paid for the property when he bought it.

Poor Financing

If you have to take out a loan to purchase a property, make sure that you have a decent loan option. Try to avoid loans with rising interest rates, and ensure that there is some flexibility in your acquired finance plan.

Not Seeking Advice

Asking advice from professionals is absolutely essential for first time investors. Speak to selling agents, contractors and all other people who have something to do with the real estate business in order to acquire the necessary information. Obtaining a real estate education from experienced mentors and educators is ideal.

Paying Too Much

Overpaying is another common mistake that new investors tend to make. Research definitely contributes to avoiding this mistake, because it will tell you what you should be paying.

Underestimating Costs

Buying a new property is not the only big expense you are going to have to make. Before you buy your intended property, ensure that you have a cost estimate ready and find out if you can afford all the costs coming your way, particularly the necessary rehab renovations.

New real estate investors that take the above tips into account, have more of a chance to make their project a success. Make sure you do the proper research and have sufficient funding available to make your real estate investment a success.

Value of Land Banking

Land Investments

The Value of Land Banking

Have you ever seen a property and thought it would have been a great investment had you gotten involved a few years back? If people only knew how much value a property could have after a few years, they would likely get involved as an investor sooner. Fortunes have been made with Land Banking.

If you’d like to possess a property with hopes it will appreciate over time, then Land Banking is an area of real estate to look at. This is a process of acquiring future property development sites now, at the present value (speculating the increase of value in the coming years).

Numerous property development enterprises purchase large pieces of land and place them in their land bank. This assures them that they will have enough land available for future property developments or parcel sales.

Even though big profits have been generated from holding a bank of land by numerous developers, there is also a flip side. Land Banking has caused the ruin of some developers when the values of the banked real estate declined. As always, take these risks into account.

When land banking, you’re basically banking on

  • The fact that you think the value of the land will increase over time.
  • In due time, you could very well move forward with a property development plan.
  • Sell the property at a higher value.

Land Banking is a good investment method. The value of land can appreciate every year. You can even decide to build on the land to further increase its value.

Land banking, much like the buy and hold strategy, takes time. But, that time can also lead to an increase in value and a greater ROI for you as the investor.

The Art of Setting Goals for Real Estate Investors

The Art of Setting Goals for Real Estate Investors

Investing in real estate will expose you to a hectic and fast moving market. You will need to be on your feet and rapidly exploit advantageous property deals. In fact a large proportion of house flipping deals (buy, restore and sell a property) happen in matter of weeks. Nevertheless, for you to succeed in the long term you will need to set your investment goals and prepare a plan for the future.

How to set your profit goals?

  1. Calculate your desired annual profit based on planned investments.
  1. Calculate the average profit that could be generated by your individual properties. To do this, look at similar real estate investors in your area or study property sales of the past year.
  1. Divide your annual target profit by the profit by the individual property profit. This will help you to estimate how many properties you will need to locate and manage this year to reach your profit goal.

Once you have set your profit goals, prepare the groundwork that will help you achieve them.

  • Look up similar investors in your region and review their range of properties and any business data that you can access. You could this by looking at press releases in the local real estate media (for small scale investors) or by purchasing business reports (large scale investors.)
  • Analyze public property records and find the best areas to go to. These records will reveal past purchases and sales. It could help you understand where your competition is making their biggest profits.

First time investment tips

First Time Real Estate Investment Tips

Investing in real estate is a great way to move toward financial security. However, it is not always guaranteed that property investments will yield the desired results, so it’s important to know where to start when thinking of investing. Here are some helpful Real Estate Investment tips that could help.

Select the right property at the right value

 

This is important if you want to select a property that has the highest probability to increase in value. If you are patient and well informed, you can wait to buy the property below its actual market price. This can be possible through research, as well as through gaining a real estate investment education that can provide you with the confidence and the background you need going into deals.

-Search for a reputable property manager, or become one yourself

A property manager can aid you with ongoing guidance and aid you in the management of tenants. As a result, you can achieve the best probable value from the property you own.

Learn the market and the developments of the location where you are purchasing

It is advisable to look at other properties available in the area and talk to some residents and real estate agents. In this way, you will be able to learn what markets and areas you should be looking at as you begin to invest.

-Inspect the age and state of the property

This is highly recommended because needing to fix the roof, walls, and other facilities in the first days of ownership can greatly minimize your earnings and provide you with a pretty shaky start. It is advisable that you take the time to inspect the property, and be sure you know what you’re getting into. Simply do your due diligence, and you could save yourself some heartache.

Tortoise or hare? Why buy and hold makes for a winning strategy.

buy and hold real estateTortoise or Hare? Why Buying and Holding Real Estate Makes for a Winning Strategy.

Buying and holding Real Estate is a long-term approach to real estate investment. Instead of flipping for a quick lump sum, you’ll hold on to your investment and use the rental market to earn a regular income.

Buy and Holding Real Estate – why should I be interested?

There are heaps of benefits for investors who choose to hold onto their property portfolio. Flipping houses can be lucrative but risky. If you’re unlucky enough to hit a dip in the market you could be left with the dilemma of either selling for reduced profit or paying off a high-interest loan until the market improves.

Buy and hold also involves fewer transactions – and the cost is spread over a longer period of time. It’s also good news on the taxation front. Not only can the tax paid on long-term capital gains be lower but might only be due if you sell the property.

How should I go about it?

Properties that need maintenance, reconfiguring or repairs create value from the get-go– your work has just increased its asking price. Your investment needs to start paying, so get the property ready for the rental market as soon as possible.

The highest rent you can achieve isn’t always the best strategy – go for a low but regular turnover, so you’re not constantly on the lookout for new tenants.

So why should you go with buying and holding real estate? Hanging on to your investment makes the most of long-term market stability and gives a good rate of return. Flipping might sound exciting but playing the long game can give you a solid financial income – without losing sleep.

Benefits to Look Forward to with Buy and Hold Real Estate

buy and hold real estate

The Benefits You Should Look Forward – with Buy and Hold Real Estate

A buy and hold real estate strategy is one of the most effective ways of quickly establishing regular cash flow. There is a number of ways you can go about dealing with real estate. It’s important for you as an investor to weigh your options.

Rest assured, you will come to realize that using the buy and hold strategy in real estate is a great option. If you still are not convinced, here are a few benefits:

Value Appreciation

Generally, the price of land only appreciates. This means that as an investor, your equity will increase exponentially over the time you hold the property.

Great Source of Income

You have to keep in mind that not all investments are going to work the same way. Some will offer the potential for equity appreciation or a consistent return, but in the case of real estate, it offers both.

The latest findings have shown that the average annuity pays out no more than 3% per year, but an investor who makes even a half decent buy and holds investment can beat these rates any day.

Depreciation Is Not Necessarily a Bad Thing

Most people are not aware that the IRS writes off any property that is more than 27.5 years old. Depreciation is not exactly an income and is referred to as a liability.

Depreciation is only an expense on paper. The costs of keeping a property in good condition can be paid out of the rent earned. This actually leads to the elimination of tax obligations due to ‘losses’ on the positive cash flow from the real estate property.

These are 3 of the benefits of buy and hold real estate.

Using your IRA To Acquire Investment Properties

Using Your IRA to Acquire Investment Properties (Updated)

Depositing savings into a self-directed IRA could be a wise choice for those who are looking for long-term tax-free real estate investment (specifically buying investment properties). Whether this is a good choice for you depends on the circumstances.

Eligible properties

The purchased real estate must be used for business purposes an example would be private homes, secondary residences or weekend estates do not qualify. Similarly, purchasing a property already in your possession is not allowed.

The governing rules state that in any case, it has to be a new purchase directly into the IRA.

On the other hand, you would be allowed to buy real estate into a self-directed IRA for flipping purposes. There is an annual limit on the number of purchases and sales you can make, all profits will be tax-deferred or tax-free. Thus your IRA will grow without any deductions.

IRA investment concerns

You are not allowed to get a mortgage loan in an IRA. If you’re planning on keeping real estate as a long-term rental it’s essential to have enough cash from your IRA to purchase the property. Don’t forget the IRA carries administration costs, that should be considered in your financial plans.

The IRA investment depreciation or other kinds of losses will not result in tax savings.

Have a Plan B

Most people will lose out because they fail to diversify their savings. Considering the option of failure and spreading out your investment. Investing wisely and having a plan B can save you a lot of money in the long term.

Disclaimer: The Company introduces general information and education concepts about self-directed retirement accounts (such as 401(k) and IRA accounts). Like any investment, there is a risk in using retirement funds for investing in real estate assets.

It is possible to lose a portion or all of an investment in real estate – including those purchased with retirement funds.

Please review IRS Publication 3125 regarding the use of retirement funds for alternative investments. The document can be found at http://www.irs.gov/pub/irs-pdf/p3125.pdf. Every individual is different, with unique circumstances. We do not offer tax, accounting, financial or legal advice.

Prior to acting upon this information, consult your own accounting, legal and financial advisors to evaluate the risks, consequences, and suitability of that transaction. The Company is not a retirement account custodian, trustee, or securities dealer.

Facts about real estate investing

Real Estate Investing EducationFacts About Real Estate Investing (Updated)

Real estate investing refers to the buying, ownership and manning of real estate for the purposes of generating profit. It’s a popular form of investment that requires proper management. Good management could yield the desired result but like all investments, it is not without its risks.

This is often the case when the investor doesn’t take into account the limited liquidity and the capital-intensive nature of the investment. Since the investment is actually capital intensive, it’s the form of investment that could require upfront capital.

Keeping in mind the risks of investing, and learning how to properly navigate them, is important if you are to successfully invest in Real estate market.

Like other investments, the successfulness could depend on whether or not cashflow is being generated by the actual investment. Investment failure in real estate is often as a result of the investor being plunged into a negative flow of cash for a prolonged period of time.

If you’re an investor and you decide to resell your property at a lower price, you may incur losses.

Most investors often fail because of this factor. Luckily, there are a variety of strategies and tactics designed to help you navigate the risks of the current markets.

Sometimes real estate investing involves taking chances as they arrive. A good example is buying real estate during a period when prices have dropped significantly. You can choose to hold on to your properties until the prices have risen.

This strategy, buying at the bottom, has the potential to yield great returns in the future as properties further appreciate and values increase.

Key Principles for Real Estate Investing Success

Key Principles for Real Estate Investing Success

Real Estate investing may seem like a daunting process at the beginning but by following some basic rules, the road to success becomes much easier.

What follows are five of the most important factors to consider:

  • Investing in real estate is not for everyone. Think about your character traits and personal qualities. Would you be willing to take the time to study the market and the principles of investment? Apart from closing deals, could you see yourself as a property manager taking care of everyday maintenance?
  • Having a reputation is crucial, and it needs to be an excellent reputation. There are a lot of property dealers out there and the only way to distinguish yourself is by bringing the best and most reliable service to your customers. This can be extremely tough, but nonetheless, it is essential.
  • Start with residential real estate. You already live in a house and thus you have experience with finding, buying and servicing a home. These experiences will be invaluable when starting out with your investments. Also, the residential property market is the largest in real estate.
  • Invest where you live. In the beginning, you will want to keep things under your control. Buy properties within a couple of hours distance so you can check on them regularly. Once you have gained experience and maybe found a reliable estate manager, you could look for opportunities further away.
  • Research, research, research! Look in particular at the health of the regional economy and unemployment rates. These numbers will all influence the cost of the property.

Understanding these five points will give you an easier start as in real estate investing. However, most learning in this sector happens through the day to day experiences. So don’t be afraid to launch out!