My New Blog

Do You Believe The Dire Media-Predictions?

There will always be cynics and skeptics who will tell you that the real estate market is going to crash - these kind of people have always been around…

Meanwhile, the successful investors are still "in the game" buying and holding onto their properties as they continue appreciating in value.

Here's an example of how (for years) the media has criticized real estate investing…

Dire Media-Predictions:

In spite of all of these so called "predictions", people continue to build wealth with investment properties and save a lot of money on their taxes each year…

If you want to succeed, find someone who is already doing it and model them. You don't need to re-invent the wheel because the wealth-building system that I follow is a proven, tried and true investment-property strategy that WORKS!

The Benefits Of Investing In Real Estate

Interest rates are historically low.  An economic stimulus package is around the corner.  Prices have dropped in some cases.  More people are returning to renting vs buying because of tighteting credit standards, which helps you as an investor.  With all of the mixed-media messages surrounding us these days, it's confusing for people to know where to invest their money (be it stocks, bonds, a 401K or real estate).

In my experience there's no better way to save a bundle on your taxes (while simultaneously building your wealth) than through investing in real estate…

Here's why…

· Huge Tax Benefits - Properties typically appreciate while the IRS allows you to write your properties off as depreciating.

(This one benefit alone allows me to write off thousands every year!)

· Using "Good Debt" to Build Wealth - "Good Debt" is debt that makes you money where as "bad debt" does not, it just makes your further in debt… The benefit of "good debt" is LEVERAGE because you don't need to have a lot of money to get started - you can start with the equity from your home.

· A Balanced Investment Portfolio - You've heard the expression, "don't put all your eggs in one basket", well the same applies to investing. By investing in real estate (in addition to other investments such as your IRA, 401K, stocks and bonds) you will have a stronger and more stable investment portfolio…

· A Personal Retirement Plan - Can we even count on Social Security as a retirement option any more? When managed correctly, investment properties are a very good potential source of passive income for when you retire.

· Deferment of Capital Gains Tax - When you sell an investment property, if you made more money than you bought it for, that's called your "Capital Gains" and Uncle Sam will tax you on that gain. However, the government allows you to transfer that gain into another "like kind" property by using a 1031 tax exchange. This allows you to bypass taxation by deferring the financial gain into your next investment.

· Instant Equity - It's possible to find investment properties that are $5k, $10k, $15k (or more) below market value. When an investor buys properties like this, he or she can instantly use the equity from this for additional buying leverage.

· Long Term Growth - My method for real estate investing is about buying and holding properties for the future because I know that their value will almost invariably continue to increase!

Don't Listen To Anyone That Tells You -
You Can't Succeed By Investing In Real Estate!

Maybe you've seen the late-night TV infomercials on "How to Get Rich Quick by Investing in Real Estate" and thought to yourself, "Is this stuff for real?". In my opinion, most of these campaigns are just designed to sell you a bunch of expensive information - rather than real world investment properties.

The key to winning at the "game of real estate investing" is to surround yourself with positive, forward-thinking people who are already doing it themselves. People who will support your vision for building wealth - and "coach you" to succeed.

You and I have a responsibility to prepare for our retirement by making our money work for us - and buying investment property is one of the most effective, long-term, tried and true ways to do this (provided you make wise investment decisions and manage them properly).

My job is helping regular people (just like you) - to successfully find, purchase, and maintain high-quality, "wealth-building" investment properties - making sure that we carefully evaluate your financial needs first, so that the next investment you make - makes sense for you!

What is the Mortgage Market Meltdown?
This refers to a culmination of factors that has led to massive tightening in credit standards among lenders. This tightening is due to an excessive number of mortgages that are both delinquent and in default. As a result of tighter credit standards and the devaluation of mortgage-backed securities, global investors are shying away from purchasing additional pools of loans, causing over 100 lenders to close and leaving many homebuyers and homeowners unable to locate financing alternatives.

Why should a real estate SELLER be concerned?
The pool of potential buyers will shrink as many individuals find it difficult, if not impossible, to obtain mortgage financing. Experts have speculated that the number of potential buyers will contract anywhere from 15%-30%. Sellers should also be aware that increased foreclosures can depress community values and result in a glut of local inventories, which could further drive down home prices.

So how many foreclosures are there?
According to www.foreclosures.com, there are currently 1,447,451 homes in pre-foreclosure; 832,281 homes are currently set to go to auction; and 1,217,885 homes have already been taken back by the lender. The number of homes in the foreclosure process as of July 2007 is double what it was as of July 2006.

What types of loans have been most impacted by credit tightening?
Subprime and Alt-A have suffered the greatest setback because these borrowers are at greater risk for defaulting. Subprime loans are those loans which have typically been taken by borrowers with poor credit. Alt-A type loans are for borrowers that typically have good or excellent credit but are unable or unwilling to provide documentation for income and/or assets.

What is the impact on the real estate market?
The National Association of Realtors estimates that home sales nationally will decline by nearly 13% in 2007. Median home prices nationally are projected to fall by 1.2% in 2007. According to the PMI Group, Inc., however, many local markets are experiencing price declines well in excess of that, up to a high of 11.44% in Miami. States that have experienced and will continue to face the greatest declines are California, Florida, Arizona and Nevada.

What should sellers and buyers do now?
Sellers should be realistic about home prices - the high prices of 2004 and 2005 are a distant memory. Home prices have taken a fall, and for those with houses currently available for sale, reductions may be in order to generate activity and offers. Sellers should demand that any offer from a buyer be accompanied by a pre-approval from a local mortgage professional.

Buyers need to be pre-approved - and frequently - as mortgage availability can change drastically, in some cases even daily. This is particularly true for those borrowers who have poor credit or are unable to provide income and/or asset documentation. Buyers should meet with a mortgage professional today to seek a pre-approval. They should be prepared to provide income and asset information including: two years of tax returns, including all schedules, W-2s, 1099s, up to three month's worth of liquid asset statements, and their most recent pay stubs.

What types of loans are NOT being impacted by this crisis?
Loans that are offered and treated as conforming type loans, traditionally under $417,000 in most states, although that number may be higher in some states. In addition, government loans including those offered by FHA and VA have not been impacted to date. For these loans, it is typically a requirement that a borrower provide full income and asset documentation.

Does that mean there is a "real" state "bubble"?

There When people speak of the real estate economy, they are using nationally-based statistics. So while the mortgage market tightening will affect some borrowers, it doesn't affect home values in the sense of a "bubble".  The stock market is based on the national, even the world economy. The real estate market is based on local, and, in many cases, micro-local economies. What's happening in Los Angeles does not directly affect what's happening in Jersey city or Bayonne.  With Hudson County offering strong employment, and proximity to New York City and employment, as well as an excellent transporation system, it still offers
a strong value to would-be home buyers. 

There is greater population influx that outflux and this creates strong demand and keeps prices strong. True, certain factors such as interest rates affect all the markets. There really is no broad barometer to measure the entire housing industry in the U.S. Average prices, average new homes sold,
and average homes built nationally have little relevance to your market.

And, within a particular city that is doing well, there may be certain
neighborhoods doing poorly for a variety of reasons, such as over-building of new homes.  Also, the values of million dollar homes dropping skews the average, or the overbuilding of new $650,000 homes, while the average $250,000-$425,000 home that most buyers shop for has not changed significantly/

So while statistics, calculations, and economic factors are relevant, so is common sense: Take a look around and see what's really happening. Talk to real estate agents, investors, and lenders in your area for a better picture of what is going on.  If you are keeping your home for the long term, the current mortgage market is less important to you unless you are planning on selling.

Don't look at broad nationwide, statewide, or even city-wide statistics.
Be concerned with the average prices in the particular neighborhoods in which you buy houses, the average time on the market, and the changes in sales prices from last year to this year.  The most important lesson to be learned from the recent credit crunch, is while teaser rates and ARM mortgages are great,be sure you can pay the note if rates go up, and you are really qualified. Don't buy more home than you can afford, and realistically be prepared to go full-doc and  buying a home can still be achieved.

Investment Home Homebuyers

What are the tips to successful Real Estate Investing?

Statistics show that most American’s, upon reaching retirement agent, did not save enough money to live a comfortable retirement lifestyle that is similar to the income and lifestyle they enjoyed during their working years. If you started early enough, you can enjoy living in your home mortgage free and investing in a home of your own provides you with a sound real estate investment in its own right. However, what if you need to have steady cash flow coming in at all times and your retirement savings, 401k plan, Social Security and other sources do not provide sufficient income? Consider real estate investing as a sound strategy for your long term cash flow needs. It, over time, has proven to be a safe investment, that offers tax advantages, leverage, and income. It is a “long term view” and is not to be viewed as “quick cash” with quick turn around times. Best of all, you do not need a lot of money to be a real estate investor. It uses the concept of “OPM”, using “Other People’s Money” , i.e: leveraged and borrowed money, by which to create steady cash flow and wealth for yourself and your loved ones.

Lower Your Taxes

Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit.

For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating the rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming the tenant doesn't pay them) These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed the amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation. Buildings naturally deteriorate over time, and these "losses" can be deducted regardless of the actual market value of the property. Because depreciation is a non-cash expense -- you are not actually spending any money -- the tax code can get a bit tricky. For more information about depreciation and various tax alternatives, ask your tax advisor about Section 1031 of the U.S. Tax Code.

Have a Positive Cash Flow

There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow.

Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow -- whether it is pre-tax or after-tax -- requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea. Please see our services under the Landlord Page, where for a small fee, we will do some of the screening work for you.

Use Leverage

One of the most important factors in determining a solid investment is the amount of equity you are purchasing. Equity is the difference between the actual worth of the property and the balanced owed on the mortgage. There are some cases, where you can buy a 3 or 4 family house with as little as 5% down, and that is excellent use of leverage!! However, most 6 family homes or above, will typically require 20% down or more of the negotiated sales price.

The key to real estate investing is to not fall in love with the property, and treat it like a business. You are not falling in love with a mutual fund or bonds, so your perspective needs to be the same when dealing with investment properties. You may initially be nervous so please read some great resources for investing via these web sites: http://www.reiclub.com/ as well as http://www.legalwiz.com/ and other sites like: http://www.creonline.com/ as well as http://landlord.com/.   Check out the article on this web site on the "Handy Man Special Page", as we as the article on buying Bank REO properties.

Benefit from Growing Equity

While investing in real estate is relatively complex, it is often worth the extra work. When compared to other financial investments, like bonds or CD's, the return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it's time to sell or refinance. Your perspective in buying an investment property is to buy it with enough built in equity up front. A substantial amount of equity needs to be gained in the acquisition.  The idea is to buy a good deal of your profit upfront.  In today's market, if you are able to buy a substantial amount of profit upfront,
you are not completely betting on appreciation over time.   If you hold properties long enough history tells us that properties  should appreciate, but why not reduce the risk.  The question then becomes  "how do I find properties that represent my best opportunity for built-in profit?"   Real estate investing is competitive and working with real estate pros, such as myself,  that spend much of their time in finding properties with built-in equity is essential.
The U.S. Census Bureau reports that over the past 35 years the average price
of a single-family home in the United States has appreciated an average of 6.73 percent
each year.  Even with downturns in the market, over time, real estate has always gone up.
But why not reduce some of your risk and buy as much of your profit as possible on the purchase?  Remember, you make your profit when you buy, not when you sell. When you sell, you are merely harvesting your profit, but profit comes from buying with some built in equity in the first place.  You should also have an exit strategy for your property up front.  All savvy investors understand this principle.

Your decision to buy an investment property is both a sound financial decision and a commendable achievement. As your real estate agent . . .

· I will lead you through every step of the exciting home buying process.

· I will help you define your "wish list" of features you want in your investment home, your neighborhood and your school district. That which is attractive to your tenants will keep you the landlord, never vacant.

· I will walk you through the mind-boggling financial details associated with buying a home, including understanding the various mortgages and home buying programs available to you. I will walk you through some special programs that are specific to investors only. It is difficult in today’s market economics to buy investment property that have positive before tax cash flow. I will work very hard to help you locate properties with positive cash flow. This will take time and looking at many properties.

· I will monitor all new listings and alert you to new houses as soon as they are put on the market. Any serious investor will want to see the numbers first, and then visit the properties in question. I will only show you properties that have upside potential to limit visiting hundreds of properties unnecessarily.

· I will help you do a solid cash flow analysis to show you properties that only provide solid cash flow.

· I will help you negotiate with sellers in a “win-win” situation for both you and the seller.

· I will eliminate the stress involved with buying a home or mixed use property by putting my years of real estate experience to work for you.

Finding the perfect home is my business. Contact me today!