by: W. Troy Swezey
Opportunities to make big, quick profits in residential real estate tend to come and go in cycles. When a local market is hot, families may find it possible to buy a house at an attractive price, fix it up, and watch its value rise in just a few years.
When the same local market is at the low end of the appreciation cycle, reaping a profit on the family home can take a good deal more time but the reward can be just as satisfying if price and location and carefully considered.
Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. During the Great Depression of the 1930s when the stock market plummeted as much as 89 percent, housing prices dropped only 39 percent. According to most of the research on housing trends, prices continually stay at the same level as, and most often appreciate faster than, the rate of inflation. Housing prices actually rose an average of 10 percent during the recessions of the mid-1970’s and early 1980s.
CENTURY 21 statisticians report that the rate of home appreciation since 1990 has been around five percent nationally, with inflation hovering around four percent. Homeowners, obviously, are still staying ahead in the real estate game on average.
And, with mortgage interest rates the lowest they’ve been in two decades, real estate today is a more attractive investment than it’s been in years.
First-time buyers are the big winners in this environment. Drawing up a budget can help you and your family decide on what you can afford. Once you’ve determined a price and picked your desired community, shop around to find the best house you can buy for your money. This strategy can help you realize greater appreciation two or three years down the road.
This is also a good time to purchase a second or vacation home. A bargain cabin in the woods today might bring an excellent return when housing prices move upward. Affordable second-home prices also allow you to purchase a vacation home that can serve as a stepping-stone to a larger retreat in the future.
But appreciation isn’t the only advantage to buying a home. The federal government thinks home ownership is so important to the future of our country that it allows mortgage interest to remain the last substantial tax shelter for families. Owners can also take deductions on their property taxes. And, the profit on the sale of your home remains tax free as long s you buy a house for a greater or equal price.
So before you decide that this is not a good time to invest in residential property, re-examine the financial benefits of owning your own home and put them to work for you.
About The Author
W. Troy Swezey is the author of “REAL ESTATE REMAINS A STRONG INVESTMENT." As a Realtor at Century 21 Paul & Associates, he has helped many individuals with their real estate needs. Visit his web site to download his free e-book, “Real Estate Secrets Exposed.” http://www.TroyIsMyRealtor.com or mail to: TroyC21@usa.net
Wednesday, November 29, 2006
Saturday, November 25, 2006
Real Estate: A Strong Investment
by: Naomi Warne
Description: Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. Also remember that the stock market is not the only place where people can make their fortunes. And also, you’ll hardly ever hear of real-estate investors who’ve gone bankrupt, unlike stock market investors.
Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. During the Great Depression of the 1930s when the stock market plummeted as much as 89 percent, housing prices dropped only 39 percent. So, according to most of the research on housing trends, prices continually stay at the same level as, and most often appreciate faster than the rate of inflation. In fact, the prices of houses actually increased by 10 percent during the economic recessions of the mid-19702 and the early 1980s.
The last downturn of the global stock market resulted in millions of investors who got their fingers burned. Overnight, life savings were eaten away, retirement funds went into decline and the economic forecast for all of us who had any money invested in stocks and shares was gloomy, to say the very least. And as a direct result, investors sought alternative asset classes to invest their hard earned money in. This has led to a global boom in real estate markets and property prices, and has spawned a generation of budding real estate investors.
However, the opportunities to make big, quick profits in residential real estate tend to come and go. If the local market is hot, families might get to buy and sell a house at a profit. but, if the market is not so hot, there are chances that you’ll have to hold on to the house for a longer period of time before selling it or at least till the market turns.
Tips for First-Time Real Estate Buyers
If you play well, you can be the big winners in this current environment of boom. However, it’s important to draw up a good budget to help you decide what you can afford. And, once you’ve determined a price and picked your desired community, you can shop around to find the best house within your budget.
However, for those of you who’re still uncertain about how to go about it, there are five things that might just help you close a great deal. While deciding on the house to invest in, never make the mistake of assuming anything. Instead get help from an expert if you’ve any doubts. Also, it’s important to set a realistic budget and stick to it. You also need to consider every single area of cost and payment to make sure that there are no nasty surprises on the way.
More than Just an Investment
Residential real estate is more than just an investment. For example, if you purchase a vacation home, it will not only be a great deal when housing prices move upwards, but it can also be a place for some great vacations for your family and you.
Also, there is another advantage. The federal government believes that home ownership is so important to the future of our country that it has allowed mortgage interests to remain a substantial tax shelter for families. So, homeowners are allowed deductions on their property taxes. And, the profit on the sale of your home remains tax-free as long as you buy a house for a greater or equal price.
So, before you decide that residential real estate investment is not exactly your cup of tea, re-examine the financial benefits of owning your own home. Also remember that the stock market is not the only place where people can make their fortunes. And also, you’ll hardly ever hear of real-estate investors who’ve gone bankrupt, unlike stock market investors.
About The Author
Naomi Warne of Around the Corner Real Estate Dealers, Sydney, has helped her clients with profitable property investments and numerous tax benefits. Having started as a Real Estate Agent, Naomi has established herself as an analyst and Property Consultant, Australia.
www.mortgagemall.com.au
mortgagemali@yahoo.com.au
Description: Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. Also remember that the stock market is not the only place where people can make their fortunes. And also, you’ll hardly ever hear of real-estate investors who’ve gone bankrupt, unlike stock market investors.
Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. During the Great Depression of the 1930s when the stock market plummeted as much as 89 percent, housing prices dropped only 39 percent. So, according to most of the research on housing trends, prices continually stay at the same level as, and most often appreciate faster than the rate of inflation. In fact, the prices of houses actually increased by 10 percent during the economic recessions of the mid-19702 and the early 1980s.
The last downturn of the global stock market resulted in millions of investors who got their fingers burned. Overnight, life savings were eaten away, retirement funds went into decline and the economic forecast for all of us who had any money invested in stocks and shares was gloomy, to say the very least. And as a direct result, investors sought alternative asset classes to invest their hard earned money in. This has led to a global boom in real estate markets and property prices, and has spawned a generation of budding real estate investors.
However, the opportunities to make big, quick profits in residential real estate tend to come and go. If the local market is hot, families might get to buy and sell a house at a profit. but, if the market is not so hot, there are chances that you’ll have to hold on to the house for a longer period of time before selling it or at least till the market turns.
Tips for First-Time Real Estate Buyers
If you play well, you can be the big winners in this current environment of boom. However, it’s important to draw up a good budget to help you decide what you can afford. And, once you’ve determined a price and picked your desired community, you can shop around to find the best house within your budget.
However, for those of you who’re still uncertain about how to go about it, there are five things that might just help you close a great deal. While deciding on the house to invest in, never make the mistake of assuming anything. Instead get help from an expert if you’ve any doubts. Also, it’s important to set a realistic budget and stick to it. You also need to consider every single area of cost and payment to make sure that there are no nasty surprises on the way.
More than Just an Investment
Residential real estate is more than just an investment. For example, if you purchase a vacation home, it will not only be a great deal when housing prices move upwards, but it can also be a place for some great vacations for your family and you.
Also, there is another advantage. The federal government believes that home ownership is so important to the future of our country that it has allowed mortgage interests to remain a substantial tax shelter for families. So, homeowners are allowed deductions on their property taxes. And, the profit on the sale of your home remains tax-free as long as you buy a house for a greater or equal price.
So, before you decide that residential real estate investment is not exactly your cup of tea, re-examine the financial benefits of owning your own home. Also remember that the stock market is not the only place where people can make their fortunes. And also, you’ll hardly ever hear of real-estate investors who’ve gone bankrupt, unlike stock market investors.
About The Author
Naomi Warne of Around the Corner Real Estate Dealers, Sydney, has helped her clients with profitable property investments and numerous tax benefits. Having started as a Real Estate Agent, Naomi has established herself as an analyst and Property Consultant, Australia.
www.mortgagemall.com.au
mortgagemali@yahoo.com.au
Friday, November 24, 2006
Real Estate Investment - A Simple Formula
by: Steve Gillman
I saw the ads in our small-town newspaper for years before I realized exactly what was going on. They were always the same: A house for sale with 5% down and payments of 1% of the purchase price. It might be a three bedroom home for $90,000, for example, with $4,500 down and $900 per month payments.
A friend started doing the same thing and explained the process to me. It was a way to get a great return on capital. It was the opposite of buying with no money down. You bought for cash.
A Real Estate Investment Formula
It is simple, really. When you buy for cash, you often get a much better price. A house that needs a little work might be worth $75,000, for example. By offering $65,000 cash, you negotiate your way to a $68,000 purchase price. If not, you walk away - there are always others.
Then you put few thousand into high-return repairs and improvements. Paint, carpet, and maybe asphalt for the dirt driveway. For our example, we'll say you put $5,000 into it.
Now it's worth $85,000 perhaps, but you target those buyers who can't get financing easily, and you finance it yourself. By making it easy for the buyer, you can get $90,000 for the home - and do it without a realtor's commission. Whatever the sales price, you let the buyer put 5% down, and make monthly payments of 1% of the purchase price. Of course, you get higher than market interest too.
The buyer is thrilled that they can buy instead of renting, and you get a capital gain of perhaps $14,000 after expenses, plus good interest. Your total rate of return is somewhere over 25%!
The first to do this consistently in our town were a father and son. They were both lawyers, and saved money by doing their own foreclosures when necessary. After forclosing, they just raised the price and sold it all over again, of course. By the way, if you can get an average return of 18% on your money, you'll turn $75,000 into more than one million dollars in about fifteen years.
About The Author
Steve Gillman has invested in real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com.
I saw the ads in our small-town newspaper for years before I realized exactly what was going on. They were always the same: A house for sale with 5% down and payments of 1% of the purchase price. It might be a three bedroom home for $90,000, for example, with $4,500 down and $900 per month payments.
A friend started doing the same thing and explained the process to me. It was a way to get a great return on capital. It was the opposite of buying with no money down. You bought for cash.
A Real Estate Investment Formula
It is simple, really. When you buy for cash, you often get a much better price. A house that needs a little work might be worth $75,000, for example. By offering $65,000 cash, you negotiate your way to a $68,000 purchase price. If not, you walk away - there are always others.
Then you put few thousand into high-return repairs and improvements. Paint, carpet, and maybe asphalt for the dirt driveway. For our example, we'll say you put $5,000 into it.
Now it's worth $85,000 perhaps, but you target those buyers who can't get financing easily, and you finance it yourself. By making it easy for the buyer, you can get $90,000 for the home - and do it without a realtor's commission. Whatever the sales price, you let the buyer put 5% down, and make monthly payments of 1% of the purchase price. Of course, you get higher than market interest too.
The buyer is thrilled that they can buy instead of renting, and you get a capital gain of perhaps $14,000 after expenses, plus good interest. Your total rate of return is somewhere over 25%!
The first to do this consistently in our town were a father and son. They were both lawyers, and saved money by doing their own foreclosures when necessary. After forclosing, they just raised the price and sold it all over again, of course. By the way, if you can get an average return of 18% on your money, you'll turn $75,000 into more than one million dollars in about fifteen years.
About The Author
Steve Gillman has invested in real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com.
Why Real Estate Investment?
by: Rik Foote
Why should you invest in real estate? Well, investing in real estate for profit is one of the most popular approaches to generating additional income in the United States today. In fact, if you pay attention to recent press you will have seen numerous reports about the real estate investment craze that seems to be sweeping the Nation.
When done carefully and intelligently, real estate can yield fantastic benefits that can not be achieved through any other type of investment. Here are just a few examples of why real estate investing can be such a powerful wealth generator.
1. Real Estate Markets Are Slow to React - Although real estate, like everything else, has ups and downs, it is generally a lot slower to react than the stock market. For example, you won’t get up in the morning and discover that your real estate investment is worth ten or twenty percent less than it was yesterday.
2. Leverage. You can borrow money to buy real estate, whereas, generally you can not borrow money to buy stocks. You can control a large dollar value of real estate with a small amount of your own money by using loans and mortgages. The stock market, by law, limits the amount of leverage (margin) you can use to buy stock. There are no such limits with real estate.
3. You Can Purchase Real Estate For Less Than Its Market Value. In many cases you can purchase a property for as low as 60 to 70 percent of the market value. When buying stocks, you may be able to find a stock that is considered “under valued” but generally that’s tough to do.
4. Real Estate Offers A Tremendous Amount Of Tax Advantages Through Depreciation. Real estate basically has two values, the land and the building(s) on the land. For example, if a property is valued at $250,000 and the assessed value of the land is $75,000, the building would be worth $175,000.
The government allows real estate investors to depreciate the value of the building in equal parts over its “useful life” which is defined as 27.5 years. So for example, based on the $175,000 building value above, the annual depreciation value would be $6,363.63 ($175,000 divided by 27.5). This means that for tax purposes, the investor would be able to reduce his/her annual income by $6,363.63!
Many people find the notion of depreciation to be confusing since it’s not really a loss of money. I recommend you check with a qualified tax professional for more details and how this can benefit you.
5. Real Estate Markets Are Insulated Local Markets. For instance, when the stock market falls, it takes down just about everybody and everything involved with it. When home values drop in one city such as New York, generally it does not affect property values in other cities like Boston or Chicago. To protect yourself, you can have a “geographically diversified” portfolio of real estate investments to hedge against these types events.
6. You The Investor Can Control The Value. Another aspect of real estate investment is that unlike any other investment, this investment is controlled by the investor. For example, as an investor, you can increase the value of your investment property by making some modifications to the property such as adding a garage or replacing the carpet, etc. With stocks or any other investment, the investor can’t do anything to increase the value of the investment.
7. The Efficient Market Hypothesis (EMH). When a market has prices that always "fully reflect" available information, it is called "efficient”. The stock market for example is considered by most to be an efficient market. When you call your broker to purchase or sell a stock, you can be sure of one thing – the price you bought or sold the stock for was indeed the “correct” price for that stock on that day and at that time. Why? Because the existing price for the stock will already incorporate and reflect all relevant available information about the company such as earnings, and other metrics.
With real estate, the market is very inefficient. Unlike the stock market, with real estate, the “correct” price discovery mechanism is left to each buyer and seller to figure out on their own. There is the almost always uncertainty as to whether the price offered by the seller is too high or too low. Moreover, there is typically little to no help available from analysts and research agencies (like when dealing with stocks) in this respect. This inefficiency is the very reason why real estate offers such a great investment opportunity to be smart and win! But it requires experience and a sharp eye for good deals and great negotiation skill. This expertise can be developed.
If done correctly, real estate is probably one of the smartest investments you could ever make. Hopefully this short rambling has provided you with a fresh perspective of the many benefits of real estate investing. So be smart, continue to learn and above all don't wait for some magic moment, just get started.
To Your Success!
Rik Foote
About The Author
Rik Foote is the President & CEO of The Dorian Group, Inc. Dorian is a software company that develops affordable software applications designed to help beginners get off to a realistic and practical start as real estate investors. To learn more about Dorian’s products and services visit www.reiscouts.com.
Why should you invest in real estate? Well, investing in real estate for profit is one of the most popular approaches to generating additional income in the United States today. In fact, if you pay attention to recent press you will have seen numerous reports about the real estate investment craze that seems to be sweeping the Nation.
When done carefully and intelligently, real estate can yield fantastic benefits that can not be achieved through any other type of investment. Here are just a few examples of why real estate investing can be such a powerful wealth generator.
1. Real Estate Markets Are Slow to React - Although real estate, like everything else, has ups and downs, it is generally a lot slower to react than the stock market. For example, you won’t get up in the morning and discover that your real estate investment is worth ten or twenty percent less than it was yesterday.
2. Leverage. You can borrow money to buy real estate, whereas, generally you can not borrow money to buy stocks. You can control a large dollar value of real estate with a small amount of your own money by using loans and mortgages. The stock market, by law, limits the amount of leverage (margin) you can use to buy stock. There are no such limits with real estate.
3. You Can Purchase Real Estate For Less Than Its Market Value. In many cases you can purchase a property for as low as 60 to 70 percent of the market value. When buying stocks, you may be able to find a stock that is considered “under valued” but generally that’s tough to do.
4. Real Estate Offers A Tremendous Amount Of Tax Advantages Through Depreciation. Real estate basically has two values, the land and the building(s) on the land. For example, if a property is valued at $250,000 and the assessed value of the land is $75,000, the building would be worth $175,000.
The government allows real estate investors to depreciate the value of the building in equal parts over its “useful life” which is defined as 27.5 years. So for example, based on the $175,000 building value above, the annual depreciation value would be $6,363.63 ($175,000 divided by 27.5). This means that for tax purposes, the investor would be able to reduce his/her annual income by $6,363.63!
Many people find the notion of depreciation to be confusing since it’s not really a loss of money. I recommend you check with a qualified tax professional for more details and how this can benefit you.
5. Real Estate Markets Are Insulated Local Markets. For instance, when the stock market falls, it takes down just about everybody and everything involved with it. When home values drop in one city such as New York, generally it does not affect property values in other cities like Boston or Chicago. To protect yourself, you can have a “geographically diversified” portfolio of real estate investments to hedge against these types events.
6. You The Investor Can Control The Value. Another aspect of real estate investment is that unlike any other investment, this investment is controlled by the investor. For example, as an investor, you can increase the value of your investment property by making some modifications to the property such as adding a garage or replacing the carpet, etc. With stocks or any other investment, the investor can’t do anything to increase the value of the investment.
7. The Efficient Market Hypothesis (EMH). When a market has prices that always "fully reflect" available information, it is called "efficient”. The stock market for example is considered by most to be an efficient market. When you call your broker to purchase or sell a stock, you can be sure of one thing – the price you bought or sold the stock for was indeed the “correct” price for that stock on that day and at that time. Why? Because the existing price for the stock will already incorporate and reflect all relevant available information about the company such as earnings, and other metrics.
With real estate, the market is very inefficient. Unlike the stock market, with real estate, the “correct” price discovery mechanism is left to each buyer and seller to figure out on their own. There is the almost always uncertainty as to whether the price offered by the seller is too high or too low. Moreover, there is typically little to no help available from analysts and research agencies (like when dealing with stocks) in this respect. This inefficiency is the very reason why real estate offers such a great investment opportunity to be smart and win! But it requires experience and a sharp eye for good deals and great negotiation skill. This expertise can be developed.
If done correctly, real estate is probably one of the smartest investments you could ever make. Hopefully this short rambling has provided you with a fresh perspective of the many benefits of real estate investing. So be smart, continue to learn and above all don't wait for some magic moment, just get started.
To Your Success!
Rik Foote
About The Author
Rik Foote is the President & CEO of The Dorian Group, Inc. Dorian is a software company that develops affordable software applications designed to help beginners get off to a realistic and practical start as real estate investors. To learn more about Dorian’s products and services visit www.reiscouts.com.
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