Archive for the 'Real Estate Investments' Category
Ignoring the fact that stocks, bonds, mutual funds, and other investments are either over-valued or providing negative real returns, real estate has almost always been the best use of capital specifically because of your ability to leverage your investment.
If used properly, leverage will significantly enhance your return on investment. This is easy to do if you invest in income-producing real estate but much more difficult, if not impossible, if you’re investing in stocks or mutual funds.
The feedback I get from investors across the country is that we are in a seller’s market. Prices are up. Inventory is low. Properties in the hottest markets are selling over asking price with multiple offers. Investors are paying “more than they want to” just to get a deal done. The ratio between rents and purchase price is favoring sellers and squeezing investor buyers out of the market. Another way to describe this trend is that CAP rates are decreasing, or “compressing”.
We are approaching a delicate part of the market cycle where the flood of inexperienced investors is driving prices up to places where experienced investors shake their head and wonder, “How is the winning bidder ever going to make a profit?”
Chocolate cake and real estate. Probably not a combination you think of very often. Unless, of course, we’re talking about chocolate chip cookies and open houses, which every agent knows is the winning combination. Wondering how we can link the two? Keep reading.
Over the past few years, investors looking for single-family rentals have found themselves running into supply issues in certain parts of the county, where institutional investors have scooped up many of the great deals. That doesn’t mean the smaller investor is out of luck; we just need to think outside the box.
When you own income-producing rental property, it’s important to attract renters and keep tenants happy without sinking a small fortune into luxurious upgrades that won’t get you much return on investment. On the other hand, not taking care of your property or offering upgrades will likely cost you more in the long run, as you’ll have a harder time finding and keeping responsible tenants. Luckily, there are some property improvements that are relatively affordable and can increase your rental home value and overall rental income.
When people think of a thriving, up and coming city, they don’t usually think of Houston. People tend to associate the city with the smell of oil refineries, oppressive humidity, and the perennially under-performing Astros.
They should take another look. Houston’s an economic juggernaut.
It’s by far the country’s number one job creator, the home of America’s booming energy industry, is more diverse than New York City (PDF) and lets you stretch a paycheck farther than anywhere else in the country.
Earlier this year Norada Real Estate added a One-Year Rent Guarantee as part of every investment property purchased through their network. The response by investors has been very positive and overwhelming.
A few people made the comment that it sounded, “too good to be true”. In response to those comments, I present the following excerpt from an interview conducted with Robert T. – a landlord with several properties. Rob’s properties are protected by the same policy we provide all our investors. Shortly after his policy was placed, he experienced a vacancy and filed a claim. The following is an excerpt of an interview conducted with Rob in February, 2013.
Demand for U.S. real estate by foreign investors has exploded over the last year. The first reason has been the weakness of the U.S. dollar. That has allowed foreign buyers to invest in U.S. real estate that produces favorably high yields, as well as profiting from the currency trade. These two factors compound to give foreign investors greater returns.
Since 2006 property values in America had declined in many markets by as much as 70%. Now with the ongoing manipulation tactics of the Federal Reserve Bank, Ben Bernanke’s QE to infinity, and suppressed real estate inventory by the major banks, real estate prices have been rebounding in most U.S. real estate markets. That explains some of the reasons foreign investors are taking their capital and placing it in U.S. investment properties.
Investing in income producing property can be the single-most rewarding aspect of getting into real estate. Yet, it also comes with some significant responsibilities including mortgages, maintenance and property taxes. In some cases, annual property taxes can be astronomical for high dollar value properties and regions where the housing market is popular. Additionally, there are some regions where property tax assessments are not handled well, leaving real estate investors and home owners paying far more than the properties are actually worth.
The good news is that there are some ways to reduce your property tax assessment significantly, to offset the costs of ownership. Learn how to deal with property tax assessments the smart way, and reduce their impact on your bottom line.
Wealthy foreigners from around the globe are taking advantage of America’s housing bust to snap up U.S. properties at cut-rate prices — helping local markets rebound in the process.
“We’ve seen foreign investors buy $10 million to $20 million worth of property in a single trip,” says Peter Loewy of Los Angeles-based Teles Properties. “They think this is a good place to park money, and it’s less expensive than their real estate back home.”
A recent National Association of Realtors (NAR) study estimated that foreigners and immigrants who’ve lived here less than two years spent $82.5 billion on U.S. investment property in the 12 months ended March 31, 2012. That’s about 9% of the total paid for all U.S. housing purchases during the period.
One way or another, Uncle Sam is going to get his cut. Count on it. And so will your state and local governments. That said, as you file taxes there are certain things you can do as a real estate investor to help manage your tax bill, and maximize your after-tax return on your investment.
In order to do so, however, you need to understand the primary ways in which investment real estate portfolios get taxed. You must also have a general grasp of some abstract concepts like calculating your tax basis, as well as the depreciation of capital investments. Hey, if this stuff were easy, we’d all be CPAs, right?
Warning: This article will only arm you with enough information to be dangerous. You can click on any of the links for more detailed information directly from the Internal Revenue Service. This article won’t make you an expert. But you can become conversant with the basic terminology, so you can be better prepared for a meeting with your tax advisor.
The wizards of wall street are back with a new twist.
Certain venture capital companies are promoting a “new” asset class to be sold as securities… single family rental homes!
Remember the last time Wall Street created a new asset class? That’s right, they packaged up single family mortgages and sold them as securities. And, we all know what happens when bad government policy and Wall Street financial experts conspire to take advantage of Main Street… don’t we?
Yes, you’re reading this correctly. Instead of packaging up and selling the underlying mortgage as a security, which led to the 2008 economic collapse, Wall Street is packaging up the rental home itself as a publicly traded REIT (Real Estate Investment Trust). Like a mutual fund, a REIT is a so-called “professionally managed” collective investment scheme that pools money from many investors to purchase securities.
The Phoenix housing market is on fire, driven by strong economic growth, once in a generation affordability levels, and a surge in investment activity that far surpasses the levels during the housing boom. Once considered to be ground zero of the housing market collapse, Phoenix has orchestrated a dramatic turnaround in recent months and has considerably outpaced other distressed markets such as Las Vegas, Riverside, San Bernardino and Sacramento. Phoenix was one of the hardest hit housing markets during the bust, with home values declining 57% from 2006 through mid-2011.
But since the middle of 2011, the housing conditions in Phoenix have markedly improved and prices have begun to rise. Certainly record affordability has helped nudge hesitant homebuyers off of the sidelines in recent months, but affordability is now excellent in nearly every market in the country.
So why has Phoenix experienced such a sharp rebound while many other markets continue to struggle? Improvement in the following market drivers are playing a key role in Phoenix’s recent surge:
So far, I’ve never heard the same commotion in the market and the media unlike earlier this year when the US economy earned an embarrassing downgrade.
Perhaps, with all the Thanksgiving Holiday frenzy and the Black Friday storm that took place, almost everyone doesn’t care a whit about the surging US debt and is just looking forward to inflate personal spending. Well, that isn’t the case in Washington though. Democrats and Republicans are currently at a stalemate as to the best way to reduce the US debt, which now tops the $15 trillion mark from its $5.6 trillion level in 2000 according to usdebtclock.org.
Sales of Freddie Mac REO homes took a dip in 3Q11 compared to the first two quarters of the year as nonperforming loans surged consistently over the previous quarter.
The number of repossessed homes plunged to 25,300, falling by 13.5% quarter-on-quarter (q-o-q) or approximately 30,000 units in 3Q11. REO sales also stumbled from 31,600 in 1Q11, the highest number recorded in the government sponsored enterprise’s (GSE) history.
In 3Q11, Freddie Mac thrust back 24,300 homes into its current inventory while disposing 25,300 REO properties at the same time. At the end of the quarter, the mortgage capital provider has already accumulated 60,000 REO properties on its books, down by 25 percent year-on-year (y-o-y) as a result of newly completed foreclosures.
Real estate is one of my absolute favorite areas in the tax law because there is so much flexibility in how to do things to legally maximize the tax benefits available.
Real estate is also one of the most complex areas of the tax law. This makes it easy to overlook important steps, which can lead to missing out on tremendous tax savings.
I recommend reviewing your tax strategy throughout the year, particularly as it relates to real estate. This makes it much easier to make adjustments timely, minimize oversights and reduce stress at the end of the year and tax return time.
With the end of the year approaching quickly, it is an ideal time to implement a year round strategy to review your tax strategy as it relates to your real estate.
Start with my year-end checklist for rental real estate and adapt it to use throughout the year.
Here are a few items from the checklist my team and I use: