Archive for the 'Real Estate Investing' Category
You’ll often hear people say that they don’t like real estate because if you look at the long-term returns of the stock market, it seems to have a better return over the long-term.
Of course, when they say this, they are leaving a few key things out.
Successful real estate investing relies on several factors, but as the old adage goes, “location, location, location” is top of the list. But “location” is a broad term, and evaluating the right place to invest your dollars in real estate means identifying the right market in both the macro and micro senses.
Small is Big!
If you own one investment property you are a significant investor and contributor to the American economy. The engaged (as opposed to “aspiring,”) real estate investor population is estimated to be at 11.1 million individuals and companies. Together this tier of investors owns $3.1 trillion in single-family residential (SFR) asset value representing 13.3 million homes.
A few years ago, I was chatting about financial freedom with a close friend. My friend was very interested in becoming financially independent, and really wanted to discuss how she could increase her wealth.
However, when I shared my journey to financial independence, she had a lot of reservations.
How will the real estate market be impacted by Donald Trump’s victory and Republicans controlling both chambers of Congress?
Though Mr. Trump is a real estate man, his policy platform has been largely vague on real estate proposals. Here are my thoughts on how certain real estate issues may play out under President Trump and of their potential impact to consumers.
Financial liberation is beyond most people’s reach because of the following four myths and destructive mind-sets:
1. The Retirement Myth
2. The Financial Freedom Myth
3. The Entitlement Mentality
4. The Fallacy of “Someday”
The Retirement Myth
The retirement myth is the idea that the purpose of life is to work for thirty years, save enough money, and then stop working and live off one’s savings. This destructive myth causes many people to stay in jobs they don’t like and that don’t allow them full expression of their best talents. It makes us sell our “birthright” for a “mess of pottage” in the form of golden handcuffs and benefits. It often leads to small lives built around limited dreams.
When it comes to retirement savings, we all do wish for the same amount of investment freedom that we usually get with our other investments. Traditionally, most of the financial institutions offer limited investment options, starting with stocks and bonds to mutual funds and CDs only.
For some investors, the goal is to own properties “free and clear,” that is, with no mortgage debt. While this is a worthy goal, it does not necessarily make financial sense.
For example, consider a $100,000 property that brings in $9,600 per year in net income (net means gross rents collected, less expenses, such as property taxes, insurance, maintenance, and property management). The $100,000 in equity thus yields a 9.6 percent annual return on investment ($9,600, the annual net cash flow, divided by $100,000, the cash invested).
Taxes rarely make for exciting reading material, but if you own an investment property, there’s at least one set of IRS regulations you absolutely will want to understand: 1031 exchange rules. Why? Because normally when you sell an investment property for more than what you paid for it, you’d have to pay a hefty capital gains tax.
But with a 1031 exchange, you get to defer paying those taxes if you reinvest the proceeds in a new property, making an “exchange” rather than a sale. It’s just that this transaction is subject to some strict regulations, so you’ll need to follow the 1031 exchange rules to the letter.
Here’s what you need to know to pull it off.
Three things you can take to the bank:
- Politicians will bend with the wind,
- Property taxes will never decline, and
- Rising home prices will increase low appraisals.
It’s no surprise that complaints that appraisals are once again killing too many sales are once again on the rise this summer.
Surprisingly, most of us chronically overlook our most valuable asset, which is our own self!
So how do you invest in yourself?
The first often ignored step is taking the time to figure out what your ideal life looks like, financially, occupationally and otherwise, so that you can design your investing, and you finances in general, to complement your long and short-term objectives.
Here are 21 ways to compress the distance from where you are now to financial freedom:
- Earn more, and save more.
- Spend less – thus reducing the amount of passive income you need to become financially free.
- Leverage other people’s time, other people’s knowledge, other people’s relationships, other people’s money, other people’s deal flow.
- Use leverage to create positive arbitrage.
- Start a business in parallel to your W-2 job so you can earn – spend – tax, rather than the job trap of earn – tax – spend. Read more »
Robert Kiyosaki coined a timeless piece of wisdom in the form of this quote:
“Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.” ~ Robert Kiyosaki
It is quite often the case when people make a lot of money but find it difficult to keep it with them. Taxes, inflation, market movements, and mismanaged investments are among some of the common culprits.
There are many reasons to invest in Kansas City, MO – one of our client’s favorite markets.
Well known for its contributions to the musical styles of blues and jazz, the city is also well known for its Kansas City-style barbecue. And with over 200 fountains the city has been dubbed the “City of Fountains”, allegedly having the second most in the world, right behind Rome.
With real estate, people often don’t understand how an investor is paid. I mean, stocks historically provide an annual rate of return of about 10% and are low hassle. Comparatively, real estate values historically only return about 5% annual appreciation…and with more hassle! Right? So then how can real estate be a good investment? Once you know the answer to this question and act, wealth creation begins. I’ll start showing you how right now.