Real Estate Investment Properties - 5 Of The Many Types

Most real estate investments will fall into five categories - single-family residential investment properties, multi-family residential investments, commercial properties, undeveloped land or lots, and real estate investment trusts. To learn about each type of investment property, keep reading.

Single Family Residential Investment Properties

Whether you're purchasing a traditional single-family home, condo, town house or cooperative, these all fall under the header of single-family residential properties.

Typically, the traditional single-family home offers the easiest purchasing and selling process along with a fairly reliable market and rate of return. Buying a condo means you not only get the unit, but also a share of the common areas. However, you'll also be paying for condo association fees each month to cover the maintenance costs associated with the building.

Town homes are simply attached homes - that is, more than one attached to others. Their only stipulation is that they may have to meet requirements about exterior paint colors, gardens and possibly parking. Finally, co-operatives offer a share in the entire building, which includes the space in which you live. Generally, you need to obtain permission from the co-op association if you want to rent or renovate your unit.

Multi-Family Residential Investments

From a simple duplex to a four-unit apartment building, these are all multi-family residential investments typically purchased to provide the investor with ongoing rental income while the property appreciates in value.

The advantage is that these properties provide cash flow which improves with time since the mortgage payments will remain fixed while rents eventually increase. In addition, buyers of multi-family properties with existing tenants can use a percentage of the rental income toward their monthly income statement on their mortgage application.

Commercial Properties

Commercial property includes large apartment buildings (more than five units), industrial space, retail space and office space. Typically, investment in these properties can be complicated and dragged down with bureaucracy and taxes.

If you're considering jumping into commercial properties, hire a good accountant and a very experienced commercial real estate lawyer.

Undeveloped Land

This involves simply buying a plot of land that doesn't have a building on it. The advantage is it often costs less and you don't have to deal with tenants or property maintenance. The trick is finding land in an area where property value is steadily appreciating. So, look for an area where a community is expanding, and then purchase land there.

Real Estate Investment Trusts

Real Estate Investment Trusts (REIT) are private, for-profit companies that let small investors invest in large, commercial, income-producing properties.

Real Estate and Property Services Go Hand In Hand

If you have decided to become a landlord or have a few properties that you own that you do not have enough time to oversee properly; maybe it is time for you to consider hiring a company to take care of your real estate for you. There are companies that specialize in property services. They in action only, take over your duties and maintain your houses, buildings and facilities for you. It doesn't matter what the reason is why you can't attend to them yourself, just know that once you hire a reputable property services firm, your days of being a mediocre owner are over.

There are many benefits to using property services. The first is that it allows you to spend more time investing in more real estate. Instead of having to be localized to one are, you can actually travel to different states and diversify your portfolio. If you decide to move to another state, you don't have to get rid of your properties, you can maintain ownership and leave them in the capable care of a good property management company.

You could use a property services company to increase the value of your properties. This is really great if you have tenants or other entities that are leasing your facilities. By fixing up your properties, you can collect more rent.

You don't have to deal with your tenants yourself anymore. With a property services firm, the only point of contact your tenants will have with you is through the company. This allows you to keep all of your business dealings strictly professional. All correspondence from and to your tenants will be done by the service. This will make your actual business operations much easier for you to handle.

As you may be aware, the task of being a landlord is very liberating since you are self-employed; but it can be challenging, draining and frustrating as well if you manage all of your properties by yourself. One of the biggest problems that can arise out of this type of situation is that you may end up with bad tenants who destroy your property or do not pay their rent. Instead of you making a profit and running your business successfully, you are struggling and losing out on your investment. Instead of throwing in the towel, you need to get a good management company right away.

All of your tenants can be screened more thoroughly, so there is no risk of you getting a lousy tenant. Your property will always be looked after to prevent damage from occurring, so instead of you constantly having to fix things that have been destroyed, if you wanted to, you could make improvements to increase the net worth of your properties.

Before you hire any companies to make over your duties, make sure you know all there is to know about them. Make sure you are comfortable with any agreements you both come up with. Get everything in writing and make sure that you come out on top. After all, it is your real estate they are maintaining.

Is Buying Real Estate and Investment Property Still Worth It?

Real estate investing is still a great way to earn extra income. The past several years has brought about massive drops in home and investment property prices. This means you can find better deals that garner much greater monthly cash flow. The rents charged have not dropped nearly as much as property prices. For example in Las Vegas, NV property has dropped up to 60% in some areas while rents have dropped only 10-12%.

I recently saw a 4 unit property listed for sale at $195,000 but in 2004 sold for $330,000. This is a massive drop in price and will make for a massive drop in monthly payment. The rents have not dropped nearly as much and this property still brings in nearly as much rent as in 2004.

There is no evidence that real estate is not a great investment even after the housing meltdown. The advantages of owning real estate far outweigh the disadvantages and if you are serious about making money and improving your prospects for the future, you need to start learning the real estate business. You can start as a part-time investor and just get one property, get your feet wet and learn the details of managing property for profit. Once you try it you will realize that most renters are good people and are excellent tenants.

Everyone has heard the horror stories from a disgruntled landlord who has left the business after years or weeks of headaches. Of course they all advise everyone to stay out of the rental real estate business. However, this is not the advice you want to take because most of it is just not true. Typically you will get good tenants if you treat them well and treat your property for what it is: It is someone's home. Your rental property is your tenant's family home. It must be treated with respect and care. Your tenants should always be treated with respect, care and dignity as well. If you treat your tenants well, in turn, they will do the same.

Of course there will be issues with tenants if you are in the business long enough but most tenants want a nice place to live and a good landlord. It is so rare that you will find someone trying to get free ride or who refuses to pay rent if you provide them with a clean, well cared for home or unit.

I have done this in more than one area of the country and have seen it first hand. It is a myth to say that tenants are going to always give you nightmares. I have had wonderful tenants over the years and many have been wonderful people.

You likely will have to address some of your own misconceptions and fears if you are going to enter the real estate business but it is well worth it. It is well worth it because you can set yourself up for a fantastic future. It will be hard work but anything that is worth doing usually ends up being hard work. The rewards of investing in real estate are much greater than the drawbacks.

Atlanta Real Estate And Flat Fee MLS - A Winning Combination To Sell Your Home Fast

I work in the Atlanta, Georgia real estate market, and I can tell you that homeowners are hurting. If you want to sell your house in our city or state these days, you're going to have a really hard time because of the glut of foreclosures and people selling really cheap on the market. If you own Atlanta property, you might want to look into a Flat Fee MLS service to help you enable to sell your home at a very competitive rate.

How Do I Sell My Home Cheaper?

Whether we are talking Alpharetta homes for sale or Marietta homes for sale, no matter what county or neighborhood, it's difficult to stand out from the ocean of single family residences out there. The number one factor in how fast your property sells is the price. Someone is looking for a home in your neighborhood's price range, but unless that price is very attractive, that person is going to have a lot of choices that seem just as good as the next one.

So how do you sell your home for cheaper? Cut out unnecessary costs!

Real Estate Agents Fees Can Eat Up 3% to 6% of Your Home's Sale Price

The typical contract gives the listing agent 3% of the final sale price of your property, and 3% to the buyer's agent. There's a way to cut out each of these, but one is easier than the other.

The easiest approach is to cut out the listing fee. And the best way to do this is to list your property on the MLS yourself. The MLS is an online database of homes for sale that only real estate agents have access to...UNLESS you use a flat fee service that will list your home for you. This means that you don't pay the 3% listing agent fee when your house sells!

Now, is there any worth in having an agent do the listing for you? Maybe...but is it worth $6,000 on a $200,000 sale price? One of the main things he or she will do is put your residence on the MLS. If you can do that for $49 to $399, and put up your own sign, don't you think that maybe that's worth $5,600 on a $200,000 sale price?

Or think of it another way: if you could list your $200,000 home for $194,000 because you didn't have to pay a listing agent's fee, don't you think you could sell your house faster? Of course you could!

For instance, in the suburbs of metro Atlanta, a price range of $350,000 - $400,000 is somewhat typical. In Gwinnett county (which, incidentally, won the 2010 Broad Prize for best school district last week, which is an astronomical plus for selling a home in any residential area), a house that is on the market for $350,000 could immediately knock off $10,500 from the sale price. When a house in a good school district lists for $339,500, while comparable houses are going for $350-400,000, wouldn't you say that house is going to get a significantly larger percentage of traffic and views than comparable homes?

Another great example is Buckhead, an upscale neighborhood inside the perimeter of Atlanta and closer to downtown. Prices here range from $350,000 at the low end to $800,000 at the upper end (before you start getting into ultra luxury homes). If you have a home that is priced at $500,000, you are going to see more foot traffic and interest if you can advertise that it's a $500,000 home priced at $485,000. The psychological impact of bringing down your home from the $500,000 range into the $400,000 range should not be discounted, plus a $15,000 savings? Fantastic, IF your Buckhead home was priced competitively to begin with at $500k. And what kind of buyer response do you think you would get if you advertised that you could offer another $15,000 discount to people who buy without an agent? A $500,000 home for $470,000? Outstanding!

Let's say that you decided to aggressively pursue buyers without agents, through your own advertisements, local real estate clubs, etc. Now you could offer the same house for $329,000 - $21,000 less than your nearest contenders. That's a phenomenal deal for any home buyer. You benefit in two ways: your house will have much more to offer than the competitors in the same price range, which draws in people looking in the under-$330,000 price range. And if you specifically advertise that you are giving greater savings so that people know you are offering a $350,000 valued house at a 3 to 6% discount, you can draw in a large number of people looking in the $350,000 price range.

Now, getting rid of the buyer's agent commission is tougher, because buyer's agents actually look at the MLS and bring prospective clients to your home. That 3% fee is what makes it worth their while to drive clients to your house and show them the property. If you are really motivated, you could work overtime (open houses, signs in high traffic areas, approaching real estate clubs, online and print ads, etc.) to find your own buyers instead of going through a buyer's agent...but I don't necessarily recommend this approach. You cut out too many good leads. If you do decide to go this route, you must totally commit and be very motivated to make up for the leads that buyer's agents would otherwise send your want.

If, however, you find a buyer without a buyer's agent, jackpot! You've just eliminated that extra 3% fee. If you sign with a listing agent, though, in their contract will be an item guaranteeing them the entire 6% - even if they didn't do any work at all! So, remind me...why would you sign with a listing agent, when you can get the vast majority of what they do for a reduced price of $49 to $399?

Producing Cashflow With Real Estate Investment Properties

Producing cashflow is one of the primary reasons people invest in real estate. In order to maximize profits and minimize expenses, investors need to analyze all scenarios that can occur. These include property prices, rental income, or profits produced from selling the realty.

Finding real estate that produces cashflow can be challenging; especially in today's tumultuous market. Although there are plenty of discounted properties there is much more to real estate investing than buying houses below market value.

Investors often seek out short sale and bank owned houses because distressed properties are priced lower than homes listed by private sellers. Furthermore, bank owned foreclosures sometimes qualify for grants such as those offered through HUDs Neighborhood Stabilization Program.

Although investing in distressed real estate can be a profitable strategy, investors have to carefully weigh the pros and cons. First and foremost, a vast majority of bank owned homes require repairs and renovations. Investors will need to conduct due diligence and acquire estimates for repairs to determine an accurate cost of the property.

Another consideration is figuring out how long it will take to return the home to livable condition. If it takes several months to restore the property, investors will lose out on cashflow that could have been acquired from renting or selling the house.

Investors should also calculate which strategies will produce the highest amount of cashflow. Investment properties can be sold, rented, or traded using 1031 exchanges. Making use of 1031 exchanges is a preferred method for reducing capital gains tax. However, these kinds of transactions require hiring a Qualified Intermediary to oversee the transaction and handle finances associated with it.

Although selling houses isn't as easy as it used to be, there are plenty of people ready and willing to buy a house. Investors can list their properties through realtors or as for sale by owner. They can offer owner will carry financing or enter into lease purchase agreements.

Using creative financing strategies can produce greater amounts of cashflow as long as the deal is constructed properly. People that need owner financing usually have bad credit that prevents them from obtaining a bank loan. Therefore, investors need to investigate buyers and validate they can meet financial obligations.

Seller financing is in high demand due to the number of foreclosed homeowners. Once a person has the black mark of foreclosure on credit reports they won't qualify for bank financing for several years. Private financing can bridge the gap and allow them to buy a house while repairing their credit.

Investors normally don't carry the full amount of the sale price. On average, investors cover half the amount and require buyers to pay the balance with cash. When buyers obtain bank financing for the balance the bank becomes the first lien holder and investors have the second mortgage lien. This can place investors at risk if buyers default on either loan.

Lease purchase option agreements are a good choice for investors that aren't comfortable providing financing. People that enter into rent-to-own contracts tend to make excellent tenants. Not only do they pay rent on time, they also take better care of the property. There is also less chance of them skipping out without providing notification.

Both strategies provide opportunity to produce cashflow immediately because buyers provide a down payment to secure the property. Oftentimes, investors can retain down payment funds if buyers default on the agreement.

It's always best to work with a real estate attorney when entering into lease purchase or seller financing contracts. The process for these methods differs by state so it's important to have contracts reviewed by lawyers.

These are a few ways for investors to profit with real estate investments. Although the market appears bleak there are still plenty of opportunities to make money with realty. Those who take time to learn how to capitalize on market trends can build a strong portfolio that provides consistent cashflow for years to come.

Why You Should Buy Your First Real Estate Investment Property Today

When it comes to real estate, there are plenty of people out there that are unaware of the many tax advantages available for real estate investment properties. One of the most popular ones is that of the 1031-Exchange. For those of you unfamiliar with this, the 1031 Exchange is actually a section within the United States IRS Code which states that certain eligible properties may be exchanged for properties of equal or higher value without having to pay any taxes on the transaction.

This tax treatment of trading properties for larger ones is an absolute god-send for the serial real-estate investor. Imagine having the ability to regularly trade up one investment property for a larger one every time you had the resources to be able to upgrade? Well, that is very well possible thanks to this very important IRS provision! Larger properties mean generally higher rents allowing you to increase your annual cash flow, so it is definitely a good idea to trade up for bigger properties whenever you get a chance.

Other tax advantages for rental property owners include tax deductions on interest expenses, depreciation expenses, repairs, travel expenses, and insurance costs.

Interest Expense:
Any interest expense on a rental property is tax deductible. This means deductions for mortgage interest payments, and interest on credit cards for expenses that were used in a rental capacity.

Depreciation Expense:
As a real estate investor, you have the opportunity to claim depreciation on your property as a deductible expense by deducting a portion of the value of your property over the span of a couple of years. While this tax deduction provides the investor with immediate benefits, this benefit is eventually returned to Uncle Sam when the property is sold. This benefit is lost primarily because depreciation serves to reduce the total cost basis for the property, so any capital gains are taxed from the lowered cost basis. This concept is known as depreciation recapture.

Repairs:
Any repairs on your investment property are a deductible expense in the year that you pay for the repair. This means things like painting rooms, and replacing faulty lighting. Any improvements to the property, on the other hand, are not deductible.

Travel Expenses:
Real Estate owners are eligible for tax deductions every time they have to travel for their rental activity. This deduction could be broken down one of two ways: either as actual expenses (receipts may be required), or the standard mileage deduction (which is currently 56.5 cents per mile for the 2013 fiscal year).

From the above deductions, it should be clear that there are plenty of tax advantages available for real estate investors! If you haven't already, it's definitely a good idea to start claiming all the above deductions you are eligible for. They may very well make a difference between losing money on a property versus earning a profit.

By: Ketul Kothari

Costa Rica Real Estate! Great Property Bargains Are Still Available

There are currently many misconceptions about Costa Rica when it comes to property prices. The news and media are currently leading many people to believe that the prices of real estate in this country are getting out of reach for most people. After living here for a few years I have found that there still is plenty of great investment opportunities available. The issue that most people were faced with is dealing with real estate agents. Many real estate companies are in the business to make money and they want you to look at the properties in which their commissions are the highest.

When purchasing property in a foreign country it can be difficult to know who you can, and who you cannot trust. This tends to lead people to rely on what they are familiar with so that they can protect their investment with the use of someone else's knowledge. It is important to understand that it is not always necessary to use a real estate agent to find a very inexpensive piece of property or home to purchase. Many people in Costa Rica are not in a hurry to sell their property and nor do they really understand the fact they have to pay a real estate agent to sell their home or business. When faced with this proposition of commission, many choose to just wait until someone comes along so that they can deal with them directly without having to pay. This is a great benefit for you the buyer to take advantage of. But, where do you start?

Self-employment is very popular in this Central American country. Many men and women do miscellaneous types of odd jobs to support their family. They are very good at this though their income is very low. By asking around you can find some of them that are trustworthy to help you in your cause. You have to be careful because they do have a tendency to try to take advantage of people from other countries just for the chance of making money. On the other hand there are a few that are very honest and will do almost anything to help you. These men and women know people throughout the country and keep close track of anything for sale. It doesn't matter to them if it's a cow, chicken, car, or a small piece of property that is located on the Pacific Coast. You can hire these people to find a home or business for sale in which you will pay pennies on the dollar in comparison to what a real estate agent will charge you.

Probably, more than 90% of real estate construction in Costa Rica is composed of cement and cement blocks. The reason for this varies from place to place, but in general this is because they believe that cement foundations and walls will handle earthquakes better than wood construction. The use of insulation is almost nonexistent and in most places unless located on the coastlines, is not needed. If you are one that likes the idea of being your own general contractor you can build a house very inexpensively here. Typical construction costs through completion for a normal three-bedroom home can be around $30-$40000. Property costs can range from $1000 per acre on up.

To wrap this up in a nutshell here's where you might begin. Plan a trip to visit Costa Rica and reserve some time for looking at real estate. Upon arrival find yourself a copy of the Tico Times newspaper if you speak English, or the country's largest Spanish newspaper named La Nacion. If your cell phone does not work here then you can find one to rent that is very affordable. Many of these phones come with unlimited minutes for around $10 per day. You can rent a car by looking in the newspaper with full coverage insurance and unlimited mileage for around $35 per day. This amount is far below the rates you will pay from most chain car rental outlets. Contact the people that have real estate in which you have an interest and find out if they speak your language. If not make a note to call them back when you have someone that can interpret for you. The newspaper will also possibly help you find someone to assist you with your Spanish if needed. Ask many of the people you run into if they know someone that can help you communicate while you are here, and that they are trustworthy. Make sure that they come with good references so that you don't have to be concerned with theft.

Some of the places you might check to find someone to help can include local large and small grocery stores, your hotel, furniture and white goods stores. Make sure to ask each and every person that you call from the classifieds if they have any ideas also.

The majority of Costa Rica's population is hard workers though the pay is usually around two dollars per hour. If you buy a home, small farm, or ranch in the country, you can hire a person or a family to take care of you and your property. For much less than you can imagine they will clean your house, cook your meals, take care of your yard, and watch your property while you are gone. Most Costa Ricans are very interested in learning English or another foreign language if it involves making an income. Basic things are usually very easy to express to them even without the use of Spanish. There's always someone nearby that does speak English, French, German, and sometimes even Russian.

By using some of the methods discussed in this article you'll be able to possibly find a piece of property, or a home, in which you can buy for the right price. This procedure will not produce results as quickly as a realtor but you won't go broke so quickly either.

Some final notes of caution! When visiting Costa Rica never allow anything you own to be out of sight. Theft rates for foreigners are exceptionally high. As long as you carry what you have with you the chances of something going wrong are very small. Do not leave things of value locked in your car or in your hotel unless you have someone watching them for you. Do not wear expensive jewelry on public streets and always keep a tight grasp on anything you wish to keep. Does this mean that you have to be concerned about your physical well-being? Typically there are only problems with theft. Rarely are people ever mugged or molested in any form. If you feel uncomfortable in an area then you should leave it.

There is real estate in Costa Rica that is still available and will be for many years into the future that could be no better described than Paradise. The weather and the clean air alone is plenty enough for most people to want to stay here forever. Make sure that you find a good attorney that comes with many references from the locals, and also from people in the area that speak your language. Use this attorney to make sure that the title of this property you have an interest in is clear and free of liens or outstanding past-due bills. The legal system in this Third World country is not the same as it is in the US and other more advanced countries.