Should You Really Invest Your Hard Earned Money In Real Estate

Posted on June 15, 2017 in Uncategorized

Many people are scared to take chances but the ones who aren’t are the ones who emptied their savings and 401k’s and invested their money in real estate. Their now getting cash flow, hopefully taking advantage of the tax breaks that come with investing in real estate and best of all, they don’t have to worry about some corporation running their life savings into the ground.

Now it may sound easy, but there are steps to take to make sure that you invest your hard earned money right.

First off, I don’t suggest working with a real estate agent. They are great and they have a job to do but most of them are still stuck in the retail world of real estate. That world ceases to exist now. A huge percentage of real estate purchases are from cash buyers.

What you need do is hook up with an experienced real estate investor like myself that will take your hand and show you how the market works.

Some potential investors get in this business without anyone to guide them but end up getting way over their head because they simple don’t know what they’re doing. This is what causes many to say it’s a scam.

With companies closing down left and right, 401ks are no longer safe. This along with the shaky stock market can take away what you’ve worked all your life for.

As for saving, banks are closing down and yes your money is backed by the US, but truthfully, how long can they do this?

Investing in real estate is the safest way to invest because you don’t have to worry about some big corporation having control over your assets and you get plenty of tax breaks when done right.

If you own enough properties, you can get enough income to support your lifestyle and this is while you’re sitting at home. You can have property management firms control all aspects of you properties for a small percentage which physically removes you from the property.

Start small though. Buy a few while working with the right investor and see how it works for you. After seeing how profitable it is, you’ll be well on your way to building a massive real estate empire. How do you think Donald Trump started?

Commercial Real Estate For Business Owners

Posted on June 10, 2017 in Uncategorized

With interest rates now at historically low levels and the United States economy growing at a strong pace, many business owners have been considering the purchase of commercial real estate for their business locations. The benefits and drawbacks to commercial real estate ownership vary from business owner to business owner but potential buyers should educate themselves about the obvious and sometimes hidden benefits to the ownership of a commercial property. Below are some of the major benefits to ownership as opposed to leasing a commercial space.

Tax Deductions

For many business owners one of the primary benefits of commercial real estate ownership are the tax deductions that can be taken on the interest portion of the monthly commercial loan payment. These deductions can be substantial and each business owner should consult a qualified tax specialist about their unique situation.

Equity Appreciation

On average, commercial real estate properties will appreciate about two to three percent above inflation over the long term. This equity appreciation can result in significant financial gains over a period of decades.

A Retirement Fund

Many small business owners will not receive a pension when they decide to retire. The equity appreciation on commercial property can be significant. An owner can decide either to sell their property at retirement, cashing in on equity appreciation or lease it to another business for a continuous retirement income stream. In fact, in many situations, a business owner may be able to lease out an unused portion of his property, such as a spare office, before retirement for additional income.

Added Value To Business

As opposed to residential loans, many commercial loans are assumable. This makes the business and real estate much easier for a buyer to acquire and enhances the value of the business tremendously.

No Taxes To Pay On Your Rent

When a business leases their real estate they must pay sales tax on the rent paid to the landlord. When you own the real estate there is no tax to pay on the rent. The savings can be significant.

Easy Access To Financing

Great fixed rate loans for terms up to 30 years are now available for owner occupied commercial properties. In fact, in some instances, with strong financials, a business owner may qualify for loan financing up to 100% of the purchase price for his commercial real estate. Business owners should consult an experienced commercial mortgage adviser before making an offer on a commercial property.

In addition to the easily tangible benefits outlined above the business owner who purchases a property to house his business location will be able to have the satisfaction that only comes with ownership and he won’t be making his landlord rich.

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Seven Habits of Highly-Successful Real Estate Investors

Posted on June 5, 2017 in Uncategorized

I have been asked a number of times about the common traits of successful real estate investors, owners and operators. So I’ve given it a little thought and stolen a catch phrase from Stephen Covey and originated the following Seven Habits of Highly Successful Real Estate Investors. Whether you’re investing for wealth development, income, tax shelter or asset growth, these habits will hold true for you. At least give them a read and a thought or two. They can help and I hope they’ll help you.

From my experience I believe that the following seven principles are consistently understood and implemented by successful investors. Let’s review what they are and why they’re important.

1. Reduce the risk of negative cash flow by not overleveraging. When you over borrow for a piece of real estate the property must earn enough money to pay its traditional operating expenses and debt service. Unless you are able to buy the property at significantly below its value, when you over-leverage you will put the property at a huge disadvantage that will typically result in significant negative cash flow. I can’t speak for all investors, but I don’t like negative cash flow!

2. Reduce the risk of property/ casualty losses or related law suits by purchasing adequate coverage from a reputable insurance firm. Sometimes an owner may think that insurance is an unnecessary expense, after all, they never plan to use it. So they get the cheapest coverage they can find. The biggest reason some policies are cheap is because they don’t cover much. This looks good until the disaster occurs and then you are financially crippled. Better to get adequate coverage and not worry about it. It says in the Good Book that if you are prepared you shall not fear. Proper insurance makes for proper preparation.

3. Reduce the risk of financial devastation caused by major repairs or upgrades by initiating an inexpensive preventative maintenance program. By keeping a property in decent operating condition, all components will last longer, upkeep will be minimal and revenue sustained. If you let a property deteriorate, you will have major capital expenses, loss of revenue from down rooms, apartments or units and a drop in value. Better to spend a little now than lose a boat-load tomorrow.

4. Reduce the risk of tenant problems by actually doing a credit and rental history check on applicants. Just because somebody is vertical and ventilating does not mean you should rent to them. There are lots of firms that will do the research for you (for a small fee) to tell you whether an applicant has a history of suing landlords, running on leases or not making payments. You cannot make good decisions without accurate information. Credit and rental checks give you the data you need.

5. Reduce the risk of personal financial ruin by using a properly formed and maintained legal entity to own the real estate. The business value of using an LLC, Corporation or Partnership to own real estate is well documented. While it may be easier to just “do it in your name”, that would will allow any financial or legal problems to follow you home from work and invade your personal assets, bank accounts and investments. Chances are that you will sleep better being a stockholder or interest holder than you would as a sole owner.

6. Reduce the risk of business failure by implementing an effective property management system. With a few simple protocols and practices you can take the headache out of property management. Simple timed activities will remarkably reduce the time, effort and frustration of being a property manager. Take the time to establish your program early on or you’ll be investing tons more time than you need to in the future.

7. Reduce the risk of tax problems by keeping accurate books and records and using a CPA at tax time. You cannot manage what you cannot measure. You cannot measure what you cannot monitor. You need accurate books and records if you expect to be successful long term. Without good financial records you will never be able to maximize your yield. Get them started and keep them up to date.

There they are, seven habits that are simple, sweet, straight to the point and sure to work. While virtually every property owner you will ever meet will agree with these principles, yet only a few will actually live by them. It will be easy to recognize the difference. Those that put these principles into play will smile a lot and visit the bank to make deposits. Those that don’t will frown more and need to visit the bank to get extensions or new loans. I know which one I’d rather be. Keep smiling. If we can help we’d be glad to.

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