Talk about an amazing reversal of fortune! This may be the most amazing, under-reported demographic fact today.
My prediction for 2014 is short and sweet. “More Federal stimulus ahead causing malinvestment in localized asset bubbles”. I'll say that again but in English this time: “People do stupid things with easy money and there is a lot of easy money floating around. So, when you get some of this easy money don't be stupid with it!”
The current level of prosperity in the US is being fueled by the “wealth effect” which is fueled by massive government stimulus propping up asset prices (mostly the stock market and to a much lesser degree the housing market as well). The prosperity feels real from the standpoint that people are spending money again. However, this is a game of musical chairs and you won't want to be the last one standing.
While tax returns aren’t due until April, to minimize your tax burden the strategy of accelerating rental property expenses should be considered now, according to Larry Nelson, CPA and partner at Kerkock Katter & Nelson LLP. With twenty years of experience assisting rental property owners, Nelson suggests that deducting these expenses this year could be more important than ever, especially if you’re affected by the new Affordable Healthcare Act tax.
In the aftermath of the government shut down, the value of the U.S. dollar plummeted to it's lowest point in eight months. Some economists are expecting the dollar to plummet even further in value over the course of the next few weeks. We’ve read about the effect that this has had overseas, with irate countries, China especially, advocating for the “de-Americanization” of the worldwide economy — but what are the implications for domestic investors?
Last week Blackstone’s Invitation Homes completed the first ever U.S. securitization of single family rental homes (SFR) – and from all accounts the deal was a wild success for Blackstone. Now, this is obviously great for Blackstone – but what does this mean to you, the average SFR investor?
This article is Part 2 of a four-part series on Land Trusts. You can find Part 1 here: Understanding Land Trusts
Investors, attorneys, or CPAs unfamiliar with the use of land trusts often ask me “why would someone consider using a land trust?” My general response is “why not.” When it comes to entity structuring many people prefer to being with the complex rather than the simple. The land trust, contrary to the multiple internet gurus or guest REIA speakers that sing the vestibule of virtues offered by this rudimentary of tools, is simply and nothing more than a title holding vehicle with some interesting attributes. From a legal standpoint, the land trust is a type of “grantor trust” (this is the phrase you should use in states that don’t formally recognize land trusts via statute).
As entrepreneurs find success with their primary business ventures, many search for the right investments for their profits.
Of course, we can and should all start traditional tax preferred vehicles like an IRA and 401k. These are the bedrock of good ‘benefit' planning for ourselves and our employees. I'm also convinced more entrepreneurs should consider rental real estate as an important part of their portfolio.
I realize many business owners shrug off this concept after the recent downturn in real estate values, but let me list a few reasons that may change your mind:
The American Home-ownership Dream is officially dead. Long live the New Normal American Dream: Renting.
According to the latest quarterly home-ownership data released by the Census Bureau, the raw home-ownership rate of 65.0% was unchanged from last quarter and 0.4% lower than a year ago. And on a seasonally adjusted basis (not sure why home-ownership is adjusted for seasons: people who live in a house in the winter generally live under a bridge in the summer?), the percentage of Americans who have a house declined from 65.2% to 65.1%: the lowest since 1995.
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The land trust is one of the most talked about, but least understood, entity utilized by real estate investors. The reason for this is simple, most attorneys or CPAs have never come across the entity in their professional practice. How can this be?
You might be asking yourself: if the land trust is a legitimate entity used by real estate investors all over the country shouldn’t my local attorney know something about it. Unfortunately the answer is no, they most likely wouldn’t have a clue and this is because only a handful of states actually recognize a land trust via statute.
Make sure you read part 1 of the Top 10 Mistakes to Avoid in Real Estate Investing to find out the first 5 mistakes to avoid.
Again, these are listed in no particular order of importance because they are all equally important:
6. Negative cash flow. I’ve never met a single real estate investor in my life that said “I wish I did not have so much positive cash-flow coming in from my real estate investments.” However, I have met countless investors that purchased property with negative cash flows in hopes that the appreciation would counterbalance this negative, only to end up walking away from the property because they simply couldn’t afford it any more. [Read more…]
