Norada Real Estate Investments

Next 2 Years is Prime Time for Real Estate Investors

by

Real estate investors are likely to be three times more active than other types of home-buyers in their local markets within the next two years, according to a national survey by Realtor.com operator Move Inc.

Market research firm GfK Custom Research North America conducted the survey on behalf of Move from April 11-15, 2011. The survey included telephone interviews of 1,200 U.S. adults, of which about 200 were identified as real estate investors.  Data was weighted by age, sex, education, race and geographic region.

A third of real estate investors are planning to buy in the next 24 months, compared to 8.6% of typical home-buyers — those planning to purchase a primary residence, vacation home or retirement property.  Another 9.1% of typical home-buyers, and 28% of investors, plan to purchase between two and five years from now.

Among the investors, half plan to hold their properties for five or more years while 11% expect to sell within a year of purchase, according to the survey.

[Read more…]

National Economic Outlook (August 2011)

by

Jobs, jobs, jobs! That's what we'll hear from now on through the 2012 election, and rightly so. Although they claim otherwise, Wall Street and the Big Banks are not the essential, indispensable, must-be-bailed-out part of the national economy: it's people with jobs.  Those people account for 70 percent of the economy (the government is 20 percent).

As we've already seen, those people aren't spending very much money these days, needing no more time-share condos, full-size SUVs, leather furniture, and flat-screen TVs. Which means there are fewer jobs for the people who were making those things a few years ago.

The national economy grew at a modest annual rate of 1.3 percent in the second quarter of this year, better than the 0.4 percent of the first quarter, but there is some cause for anxiety: personal spending was flat in the second quarter, after growing between 2 and 3 percent in 2010.

[Read more…]

Bad Debt vs. Good Debt

by

This is an investing concept that’s not often thought about within the context of real estate, but it’s vital for you to understand the differences between these two types of debt.

Bad debt is typically referred to as consumer debt. What makes bad debt “bad” is the fact that it’s not being used on anything that produces cash flow or appreciates over time. Vacations, clothing, iPads, and anything else that doesn’t work for you in generating a return on that debt is considered bad debt.

Bad debt sources usually come from credit cards, but they can also include car loans, store credit, and personal lines of credit. Interest rates are usually high and are generally higher than most good debt sources.

If that isn’t bad enough, the interest you pay is almost never tax deductible. The only exception to this rule might be a qualifying business expense if you can deduct such an expense.

[Read more…]

Investing vs. Speculating

by

It's vital to know the difference between speculation and investing! If you don't, you could make some very bad decisions and lose a lot of money.

Speculation is generally a high risk form of investing. It's done over a very short period of time, ranging anywhere from 1 day on the low end to 6 to 12 months on the high end.

From 2004 to 2006, investors speculated by buying pre-construction properties in Florida, Las Vegas and Phoenix. They'd put properties under contract with builders in these markets, then immediately offer them for sale once the builder finished construction six to twelve months later.

Some investors were fortunate and turned over some nice profits from the appreciation. However, many more were left holding the bag when the market softened and flipping for profit became nearly impossible.

[Read more…]

The Investing Pyramid

by

There are three major areas when it comes to real estate investing.  Each of these can be seen as the corner of a triangle as shown here.

It's important to understand these three major areas and the relationship among them.

The first corner of real estate investing is called creating cash. This is where you use real estate to generate chunks of cash or regular cash flow from your income property.

Chunks of cash represent the type of profit made when assigning a contract to another investor or fixing and flipping a property for a larger profit. Depending on the price point of the properties you’re assigning or flipping, you can earn some good money in a relatively short period of time. This often makes for great supplementary income.

In fact, some investors make a living doing nothing more than using real estate to create chunks of cash. Creating cash in this manner is great, but it rarely leads to true wealth; that is, building up your net worth.

[Read more…]

Understanding the Tax Advantages of Depreciation

by

There's no doubt about it – one of the greatest benefits of real estate investment are the tax benefits the investor receives!  It's entirely legal to shelter income and defer capital gains.  It's entirely legal to minimize taxation and maximize the money the investor keeps on an after-tax basis.

The concept of depreciation (also known as cost recovery) operates on the assumption that physical assets lose an equal amount of value each year due to wear and tear. Another term for this is “non-cash expense.”  In other words, it doesn't really take any cash out of the investor's pocket.  However, it's treated like an expense or deduction when adding up your income.

And the investor gets a great result from this concept – it decreases taxable income and, as a result, lets the investor shelter positive cash flow from taxation. In other words, depreciation (cost recovery) lowers income taxes for the current year and defers them to a later date.

Keep in mind that cost recovery or depreciation does not eliminate income taxes. In technical terms, an annual depreciation deduction is figured on a reduction in basis of the property. This is calculated as the investor’s original cost in the property plus capital improvements. This is then recaptured (added to the investor’s taxable profit) in full and taxed upon disposition or sale.

[Read more…]

What Determines the Market?

by

Most people think of the real estate market as something that's measured like the stock market—bearish or bullish. In real estate, the common expressions for a bull market are “up,” “strong,” “good,” “hot,” and “seller's.” A bearish market is described as “soft,” “bad,” “down,” or “buyer's.” On a daily basis, you'll hear the media use these expressions to describe the real estate market based on facts and figures, most of which are confusing to the average investor.

Let's discuss each of the categories for the numbers you may be hearing and see how they affect the market and, more importantly, your investing strategies.

Most people think of the real estate market as something that's measured like the stock market — bearish or bullish. In real estate, the common expressions for a bull market are “up,” “strong,” “good,” “hot,” and “seller’s.” A bearish market is described as “soft,” “bad,” “down,” or “buyer’s.” On a daily basis, you'll hear the media use these expressions to describe the real estate market based on facts and figures, most of which are confusing to the average investor. Let's discuss each of the categories for the numbers you may be hearing and see how they affect the market and, more importantly, your investing strategies.

[Read more…]

Wealth Protection for Real Estate Investors

by

We live in a “lawsuit happy” society.  Attorneys advertise on billboards with slogans such as “Have You Been Injured?  You May be Entitled to a Cash Award!” Nobody wants to accept responsibility for their own actions.  Everybody is a victim.

It's sad but true… when you build wealth and get rich, you become a target of lawyers, the IRS and everyone that has less than you.  It's not what you make, it's what you keep!  But how do you keep it in today's lawsuit-crazy world?

I became involved in wealth protection around 1990. Many of my clients were real estate investors that were running from creditors after the real estate and stock market crashes in the late 1980s. They came to me for help in holding off the creditors, foreclosures and lawsuits. Unable to recover financially, many of them lost all of their assets and filed for bankruptcy protection.

The clients that made it through the crunch taught me a thing or two about financial survival. They were smart enough to arrange their business affairs in case of a crash. Nobody thinks about bankruptcy, business failure, lawsuits and financial distress when times are good. However, as you will discover in this report, it is the most important time to think about it! You must have a plan for your wealth or you will be destined to fail at this game we call “wealth preservation.”

[Read more…]

U.S. Housing Market Intelligence Report (June 2011)

by

Categories are graded from A thru F:

Economic Growth: D+
Trends were mixed this month, as a few metrics ticked up while the majority ticked down, resulting in a drop from C- last month to D+ this month for overall economic growth.  The employment market improved once again this month, (albeit at a less than stellar pace) and Y-O-Y employment growth has now been positive for nine consecutive months.

Payrolls expanded by 54,000 in May, the smallest gain since September 2010 when 29,000 jobs were lost, while the unemployment rate increased marginally from 9% to 9.1%.  The government continues to slash jobs (29,000 this month), and has now eliminated roughly 850,000 jobs over the last 12 months.  In addition, the average length of unemployment increased to 39.7 weeks (a new record high), and the labor force percentage of those unemployed over 27 weeks rose to 4%.  While still down Y-O-Y, mass layoffs have been trending up over the last several months, rising again this month.

The rate of inflation (both full and core) continued to increase this month, maintaining its steady upward trend that began in Spring/Summer 2010.

[Read more…]

How Much Cash Should You Keep in Reserve?

by

There’s no magic formula you can use to determine how much you should keep in reserve in your business as a real estate investor.  When you rent properties, the four key factors to consider are the strength of the local rental market, eviction time line and cost, the age of the property, and the type of neighborhood.

Strength of the Local Rental Market

The lower the vacancy rates in your area, the fewer reserves you’ll need for vacancies. Your local newspaper or your city’s housing department may have articles or statistics on vacancy rates. You should, at a minimum, have enough cash reserves to pay for one month of vacancy per unit, which is only an 8 percent vacancy rate.

Even in a good market, you’ll deal with problem tenants who may stop paying rent and require an eviction. Good tenant screening will help solve this problem. If you plan to rent properties, you should always, without exception, do a rigorous background check on tenants. This includes reviewing credit reports, employment verification, references, and calling current and previous landlords.

[Read more…]

Blog Posts

Contact

Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

(949) 218-6668
(800) 611-3060
BBB