Limited Liability Corportations and Foreign Investment in California Real Estate

There is some exciting news for foreign investors due to recent geo-political developments and the emergence of several financial factors. This coalescence of events, has at its core, the major drop in the price of US real estate, combined with the exodus of capital from Russia and China. Among foreign investors this has suddenly and significantly produced a demand for real estate in California.

Our research shows that China alone, spent $22 billion on U.S. housing in the last 12 months, much more than they spent the year before. Chinese in particular have a great advantage driven by their strong domestic economy, a stable exchange rate, increased access to credit and desire for diversification and secure investments.

We can cite several reasons for this rise in demand for US Real Estate by foreign Investors, but the primary attraction is the global recognition of the fact that the United States is currently enjoying an economy that is growing relative to other developed nations. Couple that growth and stability with the fact that the US has a transparent legal system which creates an easy avenue for non-U.S. citizens to invest, and what we have is a perfect alignment of both timing and financial law… creating prime opportunity! The US also imposes no currency controls, making it easy to divest, which makes the prospect of Investment in US Real Estate even more attractive.

Here, we provide a few facts that will be useful for those considering investment in Real Estate in the US and Califonia in particular. We will take the sometimes difficult language of these topics and attempt to make them easy to understand.

This article will touch briefly on some of the following topics: Taxation of foreign entities and international investors. U.S. trade or businessTaxation of U.S. entities and individuals. Effectively connected income. Non-effectively connected income. Branch Profits Tax. Tax on excess interest. U.S. withholding tax on payments made to the foreign investor. Foreign corporations. Partnerships. Real Estate Investment Trusts. Treaty protection from taxation. Branch Profits Tax Interest income. Business profits. Income from real property. Capitol gains and third-country use of treaties/limitation on benefits.

We will also briefly highlight dispositions of U.S. real estate investments, including U.S. real property interests, the definition of a U.S. real property holding corporation “USRPHC”, U.S. tax consequences of investing in United States Real Property Interests ” USRPIs” through foreign corporations, Foreign Investment Real Property Tax Act “FIRPTA” withholding and withholding exceptions.

Non-U.S. citizens choose to invest in US real estate for many different reasons and they will have a diverse range of aims and goals. Many will want to insure that all processes are handled quickly, expeditiously and correctly as well as privately and in some cases with complete anonymity. Secondly, the issue of privacy in regards to your investment is extremely important. With the rise of the internet, private information is becoming more and more public. Although you may be required to reveal information for tax purposes, you are not required, and should not, disclose property ownership for all the world to see. One purpose for privacy is legitimate asset protection from questionable creditor claims or lawsuits. Generally, the less individuals, businesses or government agencies know about your private affairs, the better.

Reducing taxes on your U.S. investments is also a major consideration. When investing in U.S. real estate, one must consider whether property is income-producing and whether or not that income is ‘passive income’ or income produced by trade or business. Another concern, especially for older investors, is whether the investor is a U.S. resident for estate tax purposes.

The purpose of an LLC, Corporation or Limited Partnership is to form a shield of protection between you personally for any liability arising from the activities of the entity. LLCs offer greater structuring flexibility and better creditor protection than limited partnerships, and are generally preferred over corporations for holding smaller real estate properties. LLC’s aren’t subject to the record-keeping formalities that corporations are.

If an investor uses a corporation or an LLC to hold real property, the entity will have to register with the California Secretary of State. In doing so, articles of incorporation or the statement of information become visible to the world, including the identity of the corporate officers and directors or the LLC manager.

An great example is the formation of a two-tier structure to help protect you by creating a California LLC to own the real estate, and a Delaware LLC to act as the manager of the California LLC. The benefits to using this two-tier structure are simple and effective but must one must be precise in implementation of this strategy.

In the state of Delaware, the name of the LLC manager is not required to be disclosed, subsequently, the only proprietary information that will appear on California form is the name of the Delaware LLC as the manager. Great care is exercised so that the Delaware LLC is not deemed to be doing business in California and this perfectly legal technical loophole is one of many great tools for acquiring Real Estate with minimal Tax and other liability.

Regarding using a trust to hold real property, the actual name of the trustee and the name of the trust must appear on the recorded deed. Accordingly, If using a trust, the investor might not want to be the trustee, and the trust need not include the investor’s name. To insure privacy, a generic name can be used for the entity.

In the case of any real estate investment that happens to be encumbered by debt, the borrower’s name will appear on the recorded deed of trust, even if title is taken in the name of a trust or an LLC. But when the investor personally guarantees the loan by acting AS the borrower through the trust entity, THEN the borrower’s name may be kept private! At this point the Trust entity becomes the borrower and the owner of the property. This insures that the investor’s name does not appear on any recorded documents.

Because formalities, like holding annual meetings of shareholders and maintaining annual minutes, are not required in the case of limited partnerships and LLCs, they are often preferred over corporations. Failing to observe corporate formalities can lead to failure of the liability shield between the individual investor and the corporation. This failure in legal terms is called “piercing the corporate veil”.

Limited partnerships and LLCs may create a more effective asset protection stronghold than corporations, because interests and assets may be more difficult to reach by creditors to the investor.

To illustrate this, let’s assume an individual in a corporation owns, say, an apartment complex and this corporation receives a judgment against it by a creditor. The creditor can now force the debtor to turn over the stock of the corporation which can result in a devastating loss of corporate assets.

However, when the debtor owns the apartment building through either a Limited Partnership or an LLC the creditor’s recourse is limited to a simple charging order, which places a lien on distributions from the LLC or limited partnership, but keeps the creditor from seizing partnership assets and keeps the creditor out the affairs of the LLC or Partnership.

Income Taxation of Real Estate

For the purposes of Federal Income tax a foreigner is referred to as nonresident alien (NRA). An NRA can be defined as a foreign corporation or a person who either;

A) Physically is present in the United States for less than 183 days in any given year. B) Physically is present less than 31 days in the current year. C) Physically is present for less than 183 total days for a three-year period (using a weighing formula) and does not hold a green card.

The applicable Income tax rules associated to NRAs can be quite complex, but as a general rule, the income that IS subject to withholding is a 30 percent flat tax on “fixed or determinable” – “annual or periodical” (FDAP) income (originating in the US), that is not effectively connected to a U.S. trade or business that is subject to withholding. Important point there, which we will address momentarily.

Tax rates imposed on NRAs may be reduced by any applicable treaties and the Gross income is what gets taxed with almost not offsetting deductions. So here, we need to address exactly what FDAP income includes. FDAP is considered to include; interest, dividends, royalties, and rents.

Simply put, NRAs are subject to a 30 percent tax when receiving interest income from U.S. sources. Included within the definitions of FDAP are some miscellaneous categories of income such as; annuity payments, certain insurance premiums, gambling winnings, and alimony.

Capital gains from U.S. sources, however, are generally not taxable unless: A)The NRA is present in the United States for more than 183 days. B) The gains can be effectively connected to a U.S. trade or business. C) The gains are from the sale of certain timber, coal, or domestic iron ore assets.

NRA’s can and will be taxed on capital gains (originating in the US) at the rate of 30 percent when these exceptions apply.Because NRA’s are taxed on income in the same manner as a US taxpayers when that income can effectively be connected to a US trade or business, then it becomes necessary to define what constitutes; “U.S. trade or business” and to what “effectively connected” means. This is where we can limit the taxable liability.

There are several ways in which the US defines “US trade or Business” but there is no set and specific code definition. The term “US Trade or Business” can be seen as: selling products in the United States (either directly or through an agent), soliciting orders for merchandise from the US and those goods out of the US, providing personal services in the United States, manufacturing, maintaining a retail store, and maintaining corporate offices in the United States.Conversely, there are highly specific and complex definitions for “effectively connected” involving the “force of attraction” and “asset-use” rules, as well as “business-activities” tests.

Generally and for simplistic explanation, an NRA is “effectively connected” if he or she is engaged as a General or limited partner in a U.S. trade or business. Similarly, if the estate or trust is so engaged in trade or business then any beneficiary of said trust or estate is also engaged

For real estate, the nature of the rental income becomes the critical concern. The Real Estate becomes passive if it is generated by a triple-net lease or from lease of unimproved land. When held in this manner and considered passive the rental income is taxed on a gross basis, at a flat rate of 30 percent with applicable withholding and no deductions.

Investors should consider electing to treat their passive real property income, as income from a U.S. trade or business, because the nature of this type of holding and loss of deduction inherent therein is often tax prohibited. However, the election can only be made if the property is generating income.

If the NRA owns or invests in or owns unimproved land that will be developed in the future, he or she should consider leasing the land. This is a great way to generate income. Investment in income-generating allows the NRA the ability to claim deductions from the property and generate a loss carry-forward that will offset income in future years.

There are many tools we can use to assist our NRA clients in avoiding taxation on Real Estate income property, one of which is ‘portfolio interest’, which is payable only on a debt instrument and not subject to taxation or withholding. There are several ways to fit within the confines of these ‘portfolio interest’ rules. NRAs can participate in the practice of lending through equity participation loans or loans with equity kickers. An equity kicker is like a loan that allows the lender to participate in equity appreciation. Allowing the lender to convert debt into equity in the form of a conversion option is one way that this can be accomplished as these provisions usually increase interest rates on a contingent basis to mimic equity participation.

There are two levels of tax applicable to a foreign individual or a foreign corporation who owns a U.S. corporation.

The U.S. corporation will be subject subjected to a 30 percent withholding tax on its profits, when the income is not re-invested in the United States and there will be a tax on dividends paid to the foreign shareholders as well. When the U.S. business is owned by a foreign corporation, whether directly or through a disregarded entity, or through a pass-through entity. The branch profits tax replicates the double tax.

The U.S. has treaties covering the ‘branch profits tax’ with most of the European nations, reducing the tax to between 5 and 10 percent. The 30 percent tax is onerous, as it applies to a “dividend equivalent amount,” which is the corporation’s effectively connected earnings and profits for the year, less investments the corporation makes in its U.S. assets (money and adjusted bases of property connected with the conduct of a U.S. trade or business). The tax is imposed even if there is no distribution.

Foreign corporations are taxed on their effectively connected income and on any deemed dividends, which are any profits not reinvested in the United State under the branch profits tax.

The rules applicable to the tax on the disposition of real estate are found in a separate regime known as the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).

Generally, FIRTPA taxes an NRAs holdings of U.S. real property interest (USRPI) as if he or she were engaged in a U.S. trade or business. As mentioned earlier, this means that the traditional income tax rules that apply to U.S. taxpayers will also apply to the NRA. Obligation to withhold 10 percent of the amount realized on any disposition falls on purchasers who acquire a USRPI from an NRA.

Ownership and interests of Real Estate Property include: fee ownership, co-ownership, leasehold, timeshare, a life estate, a remainder, a reversion or a right to participate in the appreciation of real property or in the profits from real property. For purposes of definition interest in real property would include any ownership of personal property used to exploit natural resources, land, buildings, mineral deposits, crops, fixtures, operations to construct improvements, the operation of a lodging facility, or providing a furnished office to a tenant (including movable walls or furnishings) as well as Improvements, leaseholds, or options to acquire any of the above.

There are several ways in which a partnership interest is treated as a USRPI: A domestic corporation will be treated as a U.S. real property holding corporation (USRPHC) if USRPIs are equal to or exceed 50 percent of the sum of the corporation’s assets. OR when 50 percent or more of the value of the gross partnership assets consists of USRPIs – Or when 50 percent or more of the value of partnership gross assets consist of USRPIs plus cash and cash equivalents. The disposition of partnership interest will be subject to FIRPTA. To the extent that such partnership continues to own USRPIs they will remain subject to this withholding.

The good news is that disposition of an interest in a USRPHC is subject to the FIRPTA tax and withholding but is not subject to state income tax. There is an obvious benefit when compared with the disposition of a USRPI owned directly. USRPI which are owned directly are subject to the lower federal capital gains rate as well as state income tax. If, however on the date of the disposition the corporation had no USRPIs and the totality of the gain was fully recognized (no installment sales or exchanges) on the sale of any USRPIs sold within the past five years Then this disposition cannot be subject to these rules.

Any USRPI sold by an NRA (individual or corporation) will be subject to 10 percent withholding of the amount realized. Withholding applies even if the property is sold at a loss.

The purchaser must report the withholding and pay over the tax, using Form 8288 within 20 days of the purchase. This is to be duly noted because if the purchaser fails to collect the withholding tax from the foreigner, the purchaser will be liable for not only the tax, but also any applicable penalties and interest. The withheld taxes are later credited against the total tax liability of the foreigner.

Instances wherein withholding is not required, are the following:

The seller provides a certificate of non-foreign status. Property acquired by the purchaser is not a USRPI. The transferred property is stock of a domestic corporation and the corporation provides a certificate that it is not a USRPHC.

The USRPI acquired will be used by the purchaser as a residence and the amount realized by the foreigner on the disposition is $300,000 or less. The disposition is not subject to tax, or the amount realized by the foreigner on the disposition is zero.

Estate and Gift Tax: In determining who is an NRA and who is excluded the test is completely different for estate tax purposes. The focus of inquiry will centers around the decedent’s residence. This test is very subjective and focuses primarily on intent.The test considers factors from across the board, such as how long the NRA has been in the United States, how often he or she travels as well as the size, and cost of home in the United States. The test will also look at the location of NRA’s family, their participation in community activities, participation in U.S. business and ownership of assets in the United States. Voting is also taken into consideration.

A foreigner can be a U.S. resident for income tax purposes but not be domiciled for estate tax purposes. An NRA, whether a nonresident alien or non-domiciliary, will be subject to a different transfer taxes (estate and gift taxes) than a U.S. taxpayer. Only the gross part of the NRA’s Estate that at the time of death is situated in the United States will be taxed with the estate tax. Although the rate of NRA’s estate tax will be the same as that imposed on U.S. citizens and resident aliens, the unified credit is only $13,000 (equivalent to about $60,000 of property value).

These may be ameliorated by any existing estate tax treaty. European countries, Australia, and Japan enjoys these treaties, The U.S. does not maintain as many estate tax treaties as income tax treaties.

The IRC defines the following property as situated in the United States: A) Shares of stock of a U.S. corporation. B) Revocable transfers or transfers within three years of death of U.S. property or transfers with a retained interest (described in IRC Sections 2035 to 2038). C) Debt issued by a U.S. person or a governmental entity within the United States (e.g., municipal bonds).

Real estate in the United States is considered U.S. property when it is physical personal property such as works of art, furniture, cars, and currency. Debt, however is ignored if it is recourse debt, but gross value is included, not just equity. U.S.-situs property is also a US property if it is a beneficial interest in a trust holding. Life insurance is NOT included as U.S.-situs property.

The estate tax returns must disclose all of the NRA’s worldwide assets, in order to determine the ratio that the U.S. assets bear to non-U.S. assets. The gross estate is reduced by various deductions relating to the U.S.-situs property. This ratio determines the percentage of allowable deductions that may be claimed against the gross estate.

As mentioned earlier, when real estate is subject to a recourse mortgage, the gross value of the real estate is included, offset by the mortgage debt. This distinction is very relevant for NRAs whose debts are subject to apportionment between U.S. and non-U.S. assets and therefore not fully deductible.

Accurate planning is crucial. Let us illustrate: An NRA can own US property through a foreign corporation and this property is not included in the NRA’s estate. This means that the US Real property owned by the NRA has now effectively been converted into a non-U.S. intangible asset.

And with Real Estate that was not initially acquired through a foreign corporation, you can still avoid future taxation to the estate by paying an income tax today on the transfer of the real estate to a foreign corporation (usually treated as a sale).

An NRA donor is not subject to U.S. gift taxes on any gifts of non-U.S. situs property gifted to any person, including U.S. citizens and residents. Gift taxes are imposed on the donor. Gifts from an NRA that are in excess of $100,000 must reported on Form 3520.46 by citizens and residents, however, Gifts of U.S.-situs assets are subject to gift taxes, with the exception of intangibles, which are not taxable.

If it is physically located in the United States tangible personal property and real property is sited within the United States. The lifetime unified credit is not available to NRA donors, but NRA donors are allowed the same annual gift tax exclusion as other taxpayers. NRA’s are also subject to the same rate-schedule for gift taxes.

The primary thrust of estate tax planning for NRAs is through the use of; the following: Foreign corporations to own U.S. assets, and the gift tax exemption for intangibles to remove assets from the United States. It is very important that the corporation have a business purpose and activity, lest it be deemed a sham designed to avoid U.S. estate taxes. If the NRA dies owning shares of stock in a foreign corporation, the shares are not included in the NRA’s estate, regardless of the situs of the corporation’s assets.

Let us break this down into one easy to read and understand paragraph:

In a nutshell, shares in U.S. corporations and interests in partnerships or LLCs are intangibles and the gift of an intangible, wherever situated, by an NRA is not subject to gift tax. Consequently, real estate owned by the NRA through a U.S. corporation, partnership, or LLC may be removed from the NRA’s U.S. estate by gifting entity interests to foreign relatives.

Ownership Structures: Here we discuss the ownership architectures under which NRA’s can acquire Real Estate. The NRA’s personal goals and priorities of course dictate the type of architecture that will be used. There are advantages and disadvantages to each of these alternatives. Direct investment for example, (real estate owned by the NRA) is simple and is subject to only one level of tax on the disposition. The sale is taxed at a 15 percent rate If the real estate is held for one year. There are many disadvantages to the direct investment approach, a few of which are: no privacy, no liability protection, the obligation to file U.S. income tax returns, and if the NRA dies while owning the property, his or her estate is subject to U.S. estate taxes.

When an NRA acquires the real estate through an LLC or an LP, this is considered an LLC or a limited partnership structure. This structure provides the NRA with protection of privacy and liability and allows for lifetime transfers that escape the gift tax. The obligation to file U.S. income tax returns and the possibility for U.S. estate tax on death remain, however.

Ownership of real estate through a domestic corporation, will afford privacy and liability protection, obviate the foreigner’s need to file individual U.S. income tax returns and allow lifetime gift tax-free transfers. *this refers to a C corporation, since a foreign shareholder precludes an S corporation.

Ownership of stock will not trigger a return filing obligation, unlike engaging in a U.S. trade or business which requires a U.S. tax return

Ownership of real estate through a domestic corporation has three disadvantages: Federal and state corporate income tax at the corporate level will add a second layer of tax. Dividends from the domestic corporation to its foreign shareholder will be subject to 30 percent withholding. Shares of the domestic corporation will be included in the U.S. estate of the foreign shareholder.

Furthermore, the foreign shareholder will be subject to FIRPTA, because the corporation will be treated as a USRPHC (upon the disposition of the stock in the corporation). The purchaser of the shares is then required the file a U.S. income tax return with 10 percent tax withholding. Actual ownership of the real estate may be held by the U.S. corporation directly, or by a disregarded entity owned by the corporation or through a U.S. partnership. An LLC that chooses to be taxed as a corporation can also be the corporation.

There are several advantages to foreign corporation ownership:

Liability protection- There is no U.S. income tax or filing requirement for the foreign shareholder. Shares in the foreign corporation are non-U.S. assets not included in the U.S. estate.

Dividends are not subject to U.S. withholding. There is no tax or filing requirement on the disposition of the stock. There is no gift tax on the transfer of those shares of stock.

Disadvantages of using the foreign corporation: A) just like with the domestic corporation, there will be corporate level taxes, because the foreign corporation will be deemed engaged in a U.S. trade or business. B) Possibly the largest disadvantage of ownership of U.S. real estate through a foreign corporation would be that the foreign corporation will be subject to the branch profits tax.

One of the most advantageous structure for ownership of U.S. real estate by NRAs is a hybrid foreign and U.S. corporation. It runs like this: The NRA owns a foreign corporation that in turn owns a U.S. LLC taxed as a corporation. The benefits to this type of structure is paramount to a good tax shield and offers: privacy and liability protection, escaping U.S. individual income tax filing requirements and it also avoids U.S. estate taxes. On top of that it allows for gift tax-free lifetime transfers, and avoids the branch profits tax.

The beauty and benefit of this is that the timing and the amount of this dividend is within the NRA’s control even though distributions from the U.S. subsidiary to the foreign parent are subject to the 30 percent FDAP withholding.

There are many things to consider and several structures available to limit tax liability, preserve and protect anonymity and increase profits of US Real Estate investments by foreign investors. We must keep in mind that each investment presents its own challenges and no structure is perfect. Advantages and disadvantages abound which will require a tailored analysis in light of the individual or group objectives.

It’s really about implementing a structure which will successfully carry the NRA through to his or her END GAME, with the utmost protection from liability and the maximum return on investment.

Commercial Real Estate – Big Profits

Real estate has always been known as the safest of investments.

In fact, real estate investment completed after proper research into and evaluation of the property (to determine actual and future value), can lead to tremendous profit.
This is one reason many people choose real estate investment as their full time job.

Discussions about real estate tend to focus on residential real estate; commercial real estate, except to seasoned investors, typically seems to take a back seat.
However, commercial real estate is also a great option for investing in real estate.

Commercial real estate includes a large variety of property types.
To a majority of people, commercial real estate is only office complexes or factories or industrial units.
However, that is not all of commercial real estate. There is far more to commercial real estate.
Strip malls, health care centers, retail units and warehouse are all good examples of commercial real estate as is vacant land.
Even residential properties like apartments (or any property that consists of more than four residential units) are considered commercial real estate. In fact, such commercial real estate is very much in demand.

So, is commercial real estate really profitable?
Absolutely, in fact if it were not profitable I would not be writing about commercial real estate at all!!
However, with commercial real estate recognizing the opportunity is a bit more difficult when compared to residential real estate.
But commercial real estate profits can be huge (in fact, much bigger than you might realize from a residential real estate transaction of the same size).

There are many reasons to delve into commercial real estate investment.
For example you might purchase to resell after a certain appreciation level has occurred or to generate a substantial income by leasing the property out to retailers or other business types or both.

In fact, commercial real estate development is treated as a preliminary
indicator of the impending growth of the residential real estate market.
Therefore, once you recognize the probability of significant commercial growth within a region (whatever the reason i.e. municipal tax concessions), you should begin to evaluate the potential for appreciation in commercial real estate prices and implement your investment strategy quickly.

Regarding commercial real estate investment strategies it is important that you identify and set investment goals (i.e. immediate income through rental vs later investment income through resale) and that you know what you can afford and how you will effect the purchase.

It would be wise to determine your goals then meet with your banker (or financier(s)) prior to viewing and selecting your commercial real estate.

Also remain open minded and understand that should the right (perfect)
opportunity present itself, your investment strategy might need to be revisited and altered, sometimes considerably.
For example: If you find that commercial real estate, (i.e. land) is available in big chunks which are too expensive for you to buy alone but represents tremendous opportunity, you could look at forming a small investor group (i.e. with friends or family) and buy it together (then split the profits later).

Or in another case (i.e. when a retail boom is expected in a region), though your commercial real estate investment strategy was devised around purchasing vacant land, you might find it more profitable to buy a property such as a strip mall or small plaza that you can lease to retailers or a property that you can convert into a warehouse for the purpose of renting to small businesses.

Beat the Crowd When Investing in Real Estate

We all are thinking about it and some of us are actually taking action and getting their hands on real estate investment properties. The longer the NY Stock Exchanges doesn’t produce desirable returns the more people are starting with real estate investments.

For most of us the obvious choice of properties are single family homes. Although you can invest in real estate without owning a home, most people follow the experience they made while purchasing their own home. This is familiar ground and the learning curve for doing a real estate deal of this type is pretty slim.

Of course there’s a drawback with this approach. The competition is fierce and there are markets where investors are artificially driving up the cost of the properties while completely discouraging first time home buyers. If this is the case, the burst of the real estate bubble is just a matter of time.

How do you avoid these situations and still successfully invest in real estate? How do you get ahead of the competition and be prepared for bad times in real estate investments as well? The only answer I have is commercial real estate.

Why commercial real estate you might ask? Commercial real estate is a solid investment in good and bad times of the local real estate market. The commercial real estate I’m referring to are multi unit apartment buildings.

Yes you will become a landlord and No you don’t have to do the work by yourself. You are the owner and not the manager of the apartment building. The cost of owning and managing the building is part of your expenses and will be covered by the rent income.

Apartment buildings are considered commercial real estate if there are 5 or more units. To make the numbers work you should consider to either own multiple small apartment buildings or you should opt for bigger buildings. This will keep the expense to income ratio at a positive cash flow. Owning rental properties is all about positive cash flow.

With investing in single family homes it is easy to achieve positive cash flow. Even if your rent income doesn’t cover your expenses 100%, the appreciation of the house will contribute to the positive cash flow. With commercial real estate the rules are different.

While single family homes are appraised by the value of recent sales of similar homes in your neighborhood, commercial real estate doesn’t care about the value appreciation of other buildings. The value of the property is solely based on the rent income. To increase the value of a commercial real estate you need to find a way to increase the rent income. The formula on how this is calculated would be too much for this short article. I listed a few very helpful books where you can find all the details.

What’s another advantage to invest in commercial real estate? Commercial real estate financing is completely different than financing a single family home. While financing a single family home you are at the mercy of lenders who want to make sure that you are in the position to pay for the house with your personal income. Commercial real estate financing is based in the properties ability to produce positive cash flow and to cover the financing cost.

After reading all these information about commercial real estate you want to go out there and dive into the deals. Not so fast. First, you need to learn as much about real estate as possible. In commercial real estate you’re dealing with professionals. If you come across too much as a newbie you will waste these guys’s time and your commercial real estate career ended before it actually started. Second, no commercial real estate lender will lend you any money if you can’t show at least a little bit of real estate investment experience.

What’s the solution to this? Go out there and do one or two single family home deals yourself. It doesn’t matter if you make huge profits to start off with. Most newbie investors are losing money on their first deal anyway. If you can manage to show positive cash flow with your single family home deals you are ahead of the pack.

My advice, buy a small single family home in a decent neighborhood and rent it immediately. This will keep your out of the pocket expenses at a minimum and you will have rent income to cover for your monthly expenses. Bonus, you gain experience as an investor and as a landlord.

Here’s another observation I made during my real estate investment career. Most people like to analyze, learn, discuss and analyze some more. They never actually got to do a real estate deal. They love to talk about real estate investments, but never did it themselves.

My approach to real estate investment was simple.

- I bought some books about real estate investment.

- I read every single one of them.

- I put together a simple plan on how I want to get started.

- I started looking for properties.

- I bought my first investment property 30 days after I started reading my first book.

- I made positive cash flow with all of my properties so far.

What is my point? You have to go out there and practice what you’ve learned. The only valid credential in the real estate business is practical experience. Having a couple of deals under your belt, you can go out there and start looking at commercial real estate and even impress seasoned investors with your knowledge. Because you made this experience by yourself and you know what you’re talking about.

Eight Tips For Launching Your Real Estate Investing Career

Eight Tips for Getting Started in Real Estate Investing

Introduction

This article is just the basics for getting started in real estate investing. This is not a how to article but an article that gives you some information about things to do to get started. Everything in this article is tools that can be applied to helping anyone get started in real estate investing. I am going to give you my eight keys to getting started. Nothing is right or wrong but reflects the point of view of the author. Laws and legal practices vary from state to state, and laws can change over time. The author does not vouch for the legality of his opinions, nor is there any intent to supply legal advice. The author strongly encourages the reader to consult with professionals and an attorney prior to entering in any real estate transaction or contract. The author is not a writer but he is a real estate investor. There will be grammar mistakes and errors, so don’t be too critical of the grammar but focus your energy on what is being said. With that said prepare yourself to think a little differently and expand your mind. Let’s get started on an amazing adventure.

The Eight Tips are as follows

1. Desire
2. Goal Setting
3. Learning What To Do
4. Attending a Real Estate Investing Seminar
5. The Billings Montana Market
6. Finding a Mentor
7. Your Real Estate Team
8. Just Do IT

1. Desire

Before we get in to the bolts and nails of real estate investing in I want to talk to you about desire. If you are going to be successful at anything in life including real estate investing you have to have the desire to do it. Desire is defined as longing or craving, as for something that brings satisfaction or enjoyment. Desire stresses the strength of feeling and often implies strong intention or aim. In real estate investing if you don’t have a desire to learn and grow as a human being and really get satisfaction out of it, then real estate investing is going to be hard to do. When I go out and look at a property it brings me a lot of enjoyment. Every aspect brings me joy from talking to home owners, figuring out how I can make a deal work, to buying the house and to finding a good homeowner or tenant for the house. Real estate investing may not be for everyone but real estate investing can offer anyone the financial freedom we all crave for. If you do not have the desire for real estate investing that is ok, it can still help you to live your dreams and help you to get where you want to go in the future.

Why is real estate investing an amazing avenue for anyone to live out all of their dreams? Let me ask you a few questions. Do you have enough money to do anything you want? Do you have everything you want? No debt? A nice house? Great Marriage? The freedom to do anything regardless of how much it costs and the time it takes? If you have all of these things then you are one of the few people in America who does. Most people may be working fifty hours a week and making just enough to pay their bills. In today’s day and age most people are living pay check to pay check never really knowing if they will make enough to pay the bills that just keep piling up. If you cannot keep up with your monthly bills how are you going to plan for retirement or send your kids to college or have time to enjoy life. The answer to all of these questions is becoming financially free. Now it’s not going to be easy everyone will have to get off the couch and out of their comfort zone. Real estate is proven to be one of the fastest ways to get your out of the rat race of the nine to five and begin living the life you deserve to live. Everyone wants something different out of their life. Some dream of traveling the world, spending more time with family, volunteering, golfing, laying on a beach, giving back to the community, or anything that will make them happy. There are thousands of things that make people happy.

Making it in real estate takes a person who has a strong desire to change their lives for the better and think big. Anyone can become a great real estate investor. It is going to take a lot of work and can be a struggle at times but in the end it will be the most amazing feeling ever. The people that make it in real estate investing all have a few things in common. First they run their real estate investing business like any other business out there. Second they get out there and network with anyone and everyone. Some people might be like me and have a hard time talking to other people. If you are that is ok, anyone can learn how to become a people person, it just takes hard daily work. You have to push yourself past your comfort zone. The third thing is that you cannot be afraid to fail. Everyone has failed at something but the most successful people out their learn from their failures. The fourth thing is that you have to put a good team together. I will go into putting a team together in a later chapter. The concept of putting a team together is so that when you don’t know something you have team members that know what to do and can help you with questions. The can also make sure that you are not working yourself to death. You do not want to be the person doing everything in your business. Doing everything is a receipt for failure. You have to put together good people who you can trust and rely on. The fifth thing is that you need a mentor. Sixth and final is the desire to do it. No one can become successful at something if they don’t want to do it and don’t get satisfaction out of what they are doing.

2. Setting Goals

Having goals is one of the most important aspects of achieving what you want in life. You don’t want to just have your goals up in your head you want to write them down and past what you have wrote on the wall somewhere or in the bathroom mirror. You want to review your goals daily and read them out loud to yourself. This way you remind yourself everyday why you are building your business.

How should you start to write down you goals? First off you should think big, and by big I mean HUGE. If your goals are too small you will easily achieve them and have nothing else to look forward too. You should start off by asking yourself the question if I had all the money and time in the world what would I do, what would I buy, how would I spend my time, and how would I spend my energy. Are you starting to write these down? Well you should be. Think about what you want, spending time with family, traveling the world, the best cars, a castle, owning a small country, running for president, having the biggest real estate investing business in your area or in the country. Whatever your dreams and what you want out of your life, write it down. Some of my goals are becoming free, traveling the world, having a Ferrari, having 10 vacation homes all over the world. Right now I am just trying to get you out of your comfort zone of thinking and let your imagination run.

There are several ways to set goals. I have learned a lot of ways you can set you goals and there is no right or wrong way. The best ways that I have found to set your goals is to break them up into two categories. First your short term goals. This should be goals from a month out to around a year. The second is your long term goals these goals are you think big goals and what you see for your future.

For year one I like to first make a list of what I want to achieve this year and I will give you an example of how to do that. For year one you want to be very specific first you want to list what you want your income to be at the end of the year, next how much cash in the bank you want (this is money in your checking account, not assets). Next you want to list how much you are going to give. Giving is a very important, this can be giving to charity, giving of gifts to friends and family, giving to your school or anything you can dream of. As long as what you give brings joy to others who need it more than you. Next list what bad habits you have that you want to eliminate. Weather is be quitting smoking, spending too much on junk, drinking too much, working too much, not spending enough time with family, too much TV, not exercising and many more. We all have bad habits that need to be changed in order for use to grow as human beings. Under each of these bad habits list out some steps that you can take in order to quit them. If you bad habit is being lazy and not exercising enough what can you do to change that. Well you can get a gym membership or a home work out program. Commit yourself you following through with a plan to work out 3-5 days a week. For you to change these bad habits you have to be totally committed and follow through with a detailed plan you set for yourself. After you have your plans in place you should start listing several things you want to achieve or do in the next year. This can be start a successful business, spend time with family, travel to 2-5 places and so on. Now under each of these you should also write a detailed plan on what you need and what you need to do in order to achieve these goals. Finally you should take all of this information you have a write on page on what you see your life being over the next year. Doing this is a great exercise to really see what you want out of life.

Goals Year One

This is what I am going To Do This Year
Income: $500,000
Cash: $100,000
Give: $20,000

Bad Habits that will be changes:

Over Sleeping 1. Go to bed at 11 p.m. 2. Use a timer and set it for 8 hours 3. Set the timer on the other side of the room

Buying things that you don’t need: 1. Going out shopping less 2. If you have the urge to buy something think to yourself is thing item going to help me to achieve my goals of becoming financially free? 3. Tell friends what you are doing, so they can help to stop you.

What I want to Achieve:

Start a successful Real Estate Investing Business: (you should write a detailed step by step plan of everything you need in order to achieve your goal)

Travel: Where do I want to visit? 1. Gators football game (what I need to do it, money, etc)

And last your own page about what you want to achieve using words like I will and only positive words.

For long term goals you don’t need to be as specific right now, but you should list them and under them list a few steps or smaller goals that need to be achieved before you are able to achieve them. With the long term goals always think big. Another good exercise for long term goals is to make a collage of you goals. Put pictures of the house you want on it, places you want to travel, a picture of your family, a number of what income you want in or anything you can think of.

3. Learn

Knowledge builds confidence and destroys fear. If you are starting any kind of business you need to learn the ins and outs of that business. The best way I have found to learn about real estate investing is to read all about it. But once you know it you have to apply what you have learned. Learning and reading is just one step to take. There are thousands of books on the market about real estate investing and everyone has something you can learn from. You don’t just want to read real estate investing books though. You also want to fill yourself with motivational and leadership books. Every successful person that I know if a reader and they all spend at least thirty minutes a day reading something that will teach them about improving their business or helping themselves to become a better person. Some of the best books that I would recommend reading are listed below.

1. Rich Dad Poor Dad by Robert Kiyosaki (read this first and also ready everything in the rick dad poor dad series, great books to start with and will expand you mind)
2. Be a Real Estate Millionaire by Dean Graziosi
3. Flip your way to financial freedom by Preston Ely (this is an E-Book)
4. Four hour work week by Timothy Ferriss
5. The Attractor Factor
6. Short Sale Pre-foreclosure Investing by Dwan Bent-twyford and Sharon Sestrepo
7. Keys to success, by Napoleon Hill
8. Think and Grow Rich by Napoleon Hill
9. How to win friends and influence people
10. Any Book by John C. Maxwell (he has tons of amazing leadership books)
11. Getting Started in Real Estate Day Trading by Larry Goins
12. The E Myth by Michael Gerber
13. How to be a quick turn real estate millionaire by Ron Legrand
14. The Power of Full Engagement
15. The It Factor
16. Anything by Anthony Robins

There are tons more you can read but these will give you a great start. You should also read books on negotiating, sales, motivation, and biographies on American business people.

I hope this list gives you the knowledge it has given me. If you learn and apply what you have learned from these books there is no reason that you should not become very successful.

4. Attend a Real Estate Investing Seminar

Attending a Real Estate Investing Seminar can be one of the best places to learn about real estate investing from some very well known experts. There are several seminars going on all over the country every weekend. If you live in a big city it will be very easy to find one. If you live in a town like Billings Montana you might need to travel a little ways to find one. Now most of the best meeting cost money to attend them. Some range from five hundred dollars for three days and some can be up to $20,000. There are a few that I would recommend. Than Merrill is a great speaker to go hear. I have learned a ton from him. You can find his company online by Google searching him. Also rich dad poor dad has seminars all over the country. I attended one of their seminars in Billings Montana for only $500 dollars and learned a ton from it. There is also Preston Ely, Larry Goins, and hundreds of speakers out there. If you find a great book that you really enjoyed, then just simple search for that person online and see if they are speaking somewhere or offer a seminar close to you.

Another reason I recommend going to a seminar is because they get you pumped up and motivated. I have not yet found anything else that just gets you feeling like you can do anything. When you get back from one of these seminars you will have tons of energy and knowledge. Every time I get back from one all I want to do is going out and do a deal or ten.

These seminars will also provide you with several opportunities to purchase amazing real estate investing tools, software or learning material at a fraction of the cost. Believe me when I tell you all of the low priced seminars try to sell you something. But a lot of times what they are trying to sell is some really good stuff.

Another reason to attend a seminar is to network with other investors and build relationships with them. You can meet other investors who you can partner with on a deal, sell a deal too, people who will provide you with deals and so on. You should have hundreds of business cards made up and try to give them all out. You never know how much one business card you hand out can make you.

5. Learn About the real estate market in your area

Most real estate investors start their career off my investing around where they live. This is why I do my real estate investing in Billings Montana. You can venture out when you have more experience. The reason behind this is because we feel more comfortable with the areas and know the areas better. It is also easier to get local real estate information that we need. Investing in your local market is also cheaper to start out, there is less travel costs, you can see what you are buying and it may give you a feeling a comfort.

First you have to decide which part of town is the best place to invest in. This can be determined by what kind of real estate investing you choose to do. I have not gone over the types of real estate investing but some include rehabbing (fixing up and selling), wholesaling (finding deals and selling them to other investors), buying to rent, and there are a few others. These are the real estate strategies that I use for the most part. When looking at the market you need to see where other investors are buying their houses. Most of the best deals will be found in low to middle class neighbors hoods. By low I don’t mean drug infested war zones, what I mean is blue collar safe neighbor hoods that might have somewhat older houses and houses that are not on the higher end price side. Now you can find deals in the higher priced neighbor hoods but most will be in the low to middle income neighborhoods. When looking where others are buying ask local realtors, other investors or appraisers.

When talking with investors ask them several questions such as what neighborhoods they prefer, what type of houses they buy (3 bed 2 bath), and what they do (rehab, rent, wholesale). You should not look at other investors as competition but try and work with them.

There are different types of markets such as appreciating markets, flat markets, and deprecating markets. Appreciating markets are markets that there is no enough houses or a very high demand for houses which causes the price of houses to go up. The reason there is a high demand for housing can be because of job growth, a very appealing area, or several reason. Flat markets are markets that have no or very little growth. This means that there is not a lot of demand; buy just enough to fill every ones needs. Depreciating markets are where there is a lot more houses than people to fill those house. This causes house prices to start going down. This can be because of a large employer leaving the area, a natural disaster or just over building. There is an old saying buy in a bust and sell in a boom. In depreciating markets you can pick up several deals, while in appreciating the house prices are going to be much higher and harder to find great deals. The deal will still be out there you just have to know where to find them.

Learning your market is another key to becoming successful. Real estate Brokers and experts in your area can be the best source of information for you. Learn to use them to find out what kind of market you are in. If you are in Billings Montana we are in a pretty stable market. Billings Montana has not seen the ups and downs that other markets have experienced. I will have to say that I have been noticing a little bit of a downward trend but not much. Once the first time home buyer credit is over with we might see a little more decline. Every market can vary by neighborhood, so make sure you know you market well. I have seen the same houses just one mile apart selling for totally different prices.

6. Find a Mentor

Having a mentor to help you can be your biggest learning experience. Mentors can help you with any questions you may have, walk you step by step through the investing process, give you moral support, you learn from their proven system, and also network you with others in the business. Every successful real estate investor that I know says they owe a lot of their success to the mentors they have and had in their lives. I have had one of the best mentors around, my father. He is teaching me something new every day and pushing me to become successful.

When trying to find a mentor I would suggest network with the investors at your local real estate investors club meeting. There is a real estate investing club in Billings Montana that meets once a month. You can find information about real estate investing clubs in your area by searching for REA or real estate investors club then your area in Google. When you go to the meetings ask around who the biggest investors are. Then ask if you could get together with them sometime and discuss real estate investing. Ask them if they would consider working with you to get their career going. Offer your services as a bird dog. Bird dogs are people who go out find deals or leads about deals and give them to other investors. A bird dog gets from $500 to $3000 dollars depending on the deal. Make sure that you have a bird dog contract signed with the investors saying that if you find them and deal and they buy it that you get paid a certain amount of money. Being a bird dog helps you to build credibility with the investor and they are more likely to mentor you if you have something to offer them. If you would like to contact me with a question go to my web site Big Sky Property Solutions LLC.

7. Your Real Estate Team

Building an effective team can make your life as a real estate investor a lot easier. You are only one person and cannot do everything or be an expert in every aspect of real estate investing. Going at a project alone can become one of the most frustrating experiences you will ever encounter. Many people have become frustrated and quite real estate investing because they try and juggle too many things. Make sure that when putting a team together you provide everyone with win-win opportunities. When someone knows that working with you is going to make them money they will put you as a higher priority on their list. But you have to prove it to them that you are the real deal.
People to have on your real estate investing team include

o Real Estate Agents ( find the top agent for volume of sales in your area and other agents who work with real estate investors)
o Real Estate appraisers (find an appraiser that has done a few hundred jobs or more and make sure they carry errors and omissions insurance)
o Real estate contractors (good rehab crews that can get the job done in a timely manner, have 3-5 crews and on every deal get 3 estimates done. Ask for referrals from them and make sure they are licensed)
o Real estate attorneys (every investor needs an attorney, they can help to protect your assets, make sure you find one that works with investors)
o A property management company (can manage your properties and will give you leads on property they are managing that might come up for sale)
o Title companies (take care of the legal process and make sure there are no liens against the property you are buying, choose one that does hundreds of closings a year)
o Home inspectors(charge about $400 but will give you a great inspection and could save you thousands in the long run)
o And your Mentor

All of these people can help you in various aspects of real estate investing. You might find that there are a couple others that are keys to your business but this is just a list of a few.

8. Just Do it

There is no better phrase out there then JUST DO IT! Once you have learned all you can networked with investors in Billings and learned real estate investing strategies there is nothing left to do but get your feet wet. There is no better learning tool out there then doing a deal. Once you have completed that first deal you will know what to expect and find out that it is not as hard as you thought it would be. You will have learned what you did right and what was frustrating. Take that experience and ask yourself what would have made it run smoother. Apply that to your next deal. Then the next deal will be easier and it keeps getting easier as you go. I will say that every deal is different from the last but that what makes this business fun. You have to be creative and always keep on learning and growing with your business.

The average person never uses what they learn. Don’t be average apply your knowledge. When going out and doing your first deal act like you have done 1000′s of deals. The fastest way to change a habit is to act like it is true.

Five keys for success
1. Specialized Knowledge
2. Tools of a professional
3. Have the mindset of a winner
4. Mentors
5. Money and the knowledge of leveraging it (you don’t have to have millions to invest in real estate, there are many strategies out there to use other people’s money, or no money at all)

This is going to conclude this article about getting started in real estate investing. I hope this gave you some ideas about how you can get started. I didn’t give you any strategies at this point but look for some in upcoming articles. These are simple steps you can use to get started. If you read this article thank you for listening.

The Keys to Success to Investing in Real Estate

Most real estate professionals flunk within the first few months of trying to create a business enterprise out of real estate investing. The trick begins with a beneficial marketing plan and then practicing a disciplined effort to the marketing plan on a even basis. There is a lot more required to succeed, and you will encounter more tips, tricks and unique real estate marketing techniques in this article.

Is there anyone in your town that doesn’t recognize that you buy homes or that you are a real estate professional? If so, you aren’t performing as well at marketing or rendering real estate investing information about your real estate investing business enterprise as well you could be. I find out real estate investors telling all the time that they aren’t receiving seller phone calls and subsequently aren’t receiving the leads they need to find the real estate business deals they require to earn a living. I say increase the marketing and the sellers will Call. Not only that but if you are canvassing the world (or at least your area) that you buy problem real estate holdings, eventually you will be acknowledged for what you do and sellers will telephone you strictly on your reputation. this is what is called cost effective marketing.

One real estate professional was in a home, garden and hardware store a few calendar weeks ago and went past a couple of guys in an aisle. A conversation was heard while he walked by, I overheard one state, “That is the real estate man”. Now I had never known either of those men and have no idea who they are but that experience lets me acknowledge that I must be doing my business at letting the world to recognize my business is buying real estate in that area. There are many ways to let the area know that you are in the real estate investing profession and getting information out there that helps people realize you buy foreclosures, distressed real estate, do real estate short sales and have got a lot of real estate information and experience to flip properties. Some methods are cheap and some are more expensive. You are going to have to attempt many things and acquire a feel for what brings about for you the best results in your region to get the calls you require to transact real estate deals. I have tried many forms of marketing methods for real estate commercial enterprises of all varieties and have come back to a few that consistently create enough leads for me to purchase the 2 or 3 real estate holdings and houses I want to purchase every single calendar month. They are as follows:

Classified Ads

The classified advertisement in the most prominent newspaper in the region is by far the heaviest producer of leads for local real estate investors that I have determined. I understand it is costly and I understand there are instances it does not generate phone calls but if you are going to persist in the real estate investing business sector just place it in there and leave it. Get used to it making up part of the toll of performing the real estate business. You may expend about $350.00 a calendar month for my 4 line ad and that is the commercial range. I’d consider running it 365 days a year to constantly cue everyone that you are a real estate professional and you purchase real estate in their region.

Over the past few or so years I have watched many “real estate investor” ads come and go. Most folks put them in for a many or even just a couple of calendar weeks and then remove them or try just placing them in on the week ends. Real Estate Marketing just simply does not work this way. Put your real estate ad in the paper and leave it in there. It will more than make up for the price, trust me, and you will see after you finish your first deal. If you are distressed because there are real estate investors ads from many other investors in there, don’t be. They are there because they are getting responses. Just be sure to and actually answer your cell phone and keep it on all the time otherwise you’ll be squandering money.

When a fresh ad for real estate investor information shows up in my newspaper, I will always call on the advertisement. 9 times out of 10 I get a message device or answering service. This is a significant turn off to somebody who needs a resolution to their real estate trouble now. They want to speak to a person who can quiet their anxiety over their current issues with their home and tell them everything is going to be ok. Your answering device won’t do that, they need a human being. As for what to put in the advertising, you will have to work on this one. I have tried various idea and the one I have now hast not changed for over 4 years. I haven’t switched it because I get responses. My ad is:

We Pay CASH FOR HOMES In 24 Hours! Any area, price or condition Call xxx-xxx-xxxx

Now I have had other real estate professionals jockey for place and interchange their ad copy to be leading of mine in the column but it has not made whatsoever difference, at least as far as I can discern. Don’t worry about those things, just get the advertising out there and leave it. It could possibly take a bit of time, perhaps a several weeks to get going but sellers will telephone. As soon as you have your classified advertising running, then you should start working on your other marketing techniques right away. If you only go through one idea a week, within a few weeks or a couple of months you will have a significantly powerful real estate purchasing process.

Ads in the “Freebie” Papers

You might also run advertisements in the freebie papers in your local region or the region you want to conduct real estate investment deals. These are the “Thrifty Nickel”, or whatever they are named in your region. We run both a column ad and a display in this newspaper and expend about $175.00 or so a calendar month for these ads. They pull in seller leads reasonably well and have always rationalized the costs. Remember that these guys are usually open to talking terms on your rates and you will probably get a better rate if you commit to a longer advertising agreement.

Bandit Signs or Road Signs.

Bandit signs are great. They are some of the best lead producing tools around. I have yet to put out a bunch and not be bombed with calls right after I arranged my marketing. I just don’t position them out that often. I might place out a few to a half dozen or so a calendar month and the ones that continue and don’t get taken down continue to pull in phone calls. At an average price of less than $4.00 per sign, they are one of the greatest real estate marketing and advertising values available. Check the net for sign manufacturers for discount signage costs. I use 18 x 24 signs and set them at high traffic crossings around the town I wish to purchase houses in.

I also position a sign in the front yard immediately after purchasing any house. I have purchased several homes in the same regions as a result of marketing this way.

You can either use wood stakes or the wire stakes with your signs. I like the wood stakes because they do not bend like the wire ones, in addition, they are more less expensive and you can find just about any reasonably sized stick of wood or stake at your local hardware store for a really good value. Just get long lengths and trim down to fit. Then just nail the sign to it with the roofing nails with the orange or green plastic tops or you can use screws. There are many variants on what the wording on the sign can say. Keep in mind that traffic will be moving so you want to keep your message short and simple so it may be read. Plus your telephone number must be big, large and easy to read.

If you search the sign advertisement content, you will discover that it is same resemblance my paper ad. I like to brand my advertising because I believe that helps with identification that is probably why the two guys noticed me as a Real Estate Professional..You want to have contrast, so a white sign with dark blue letters usually is the best draw. Some folks swear by black on yellow or black on orange. Again, I say it’s not what or how you say it rather simply that you’re out there marketing and placing out signs that counts. You’ll build a ‘brand image over time if you stay logical with your real estate marketing endeavors. When dealing with bandit signs, be sure that your local code enforcement laws are aware of them. In some areas or counties they can lax on them but a few miles down the road in another county or city, they can be super strict and will ticket you in a minute, pull the signs down and lead off looking for your next posters to go after you again. Some retail merchants in high tax areas can’t put out any A board signage without having them sized and then fined.

Flyers and Bulletin Board Postings

Flyers and related collateral are another cheap way to get the word out that you are a real estate investor buy property, foreclosures or distressed properties. Just create a flyer with any one of the free on-line flyer software internet sites telling people that your are a real estate investor and how to get in touch with you. Make copies for few cents apiece and you have some really inexpensive real estate marketing and advertising. It really is that simple. Then place these flyers on every bulletin board in your Town or region you would like to buy your property, foreclosure or distressed home.. I also recommend that you place some of them in those plastic sheet shielders so the rain won’t ruin them and put them up on phone poles around neighborhoods I like to buy property in.. While not as prominent as the bandit signs, on poles actually in the neighbourhood they still attract phone calls. I carry a file with me in my automobile and put them up whenever I stop at a grocery store or major discount shop or really wherever. Some of the other area to put them are:

· Laundromats
· Taped to the inside of telephone Booths.
· On the counter of any business organization that will let you place them at.
· Bulletin boards at any local or major rebate store (lots of traffic)
· Grocery store bulletin boards
· Fax to Mortgage agents, call first
· Fax to Real Estate Agents, call first and they may get a lot of these.
· Take them Door to Door in target regions
· Employment centre Bulletin board
· County Courthouse or public office Bulletin board

These are just a few illustrations. Any place that will allow you to set one is a good place. You can never let too many people know that you are a real estate investor and are in the foreclosure market.

Imprinted and/or Promotional Items

Optimum Real Estate Investor Marketing Ideas – These no-lose ideas are sure to get you top hits on leads and calls for your Real Estate Investing occupation.

These are some of my favourites and most fun. While they are not the top producers of leads or the least costly, they will sure position you apart from the average investor.

Pen Knives – These tiny Swiss army knives are the neatest things. They are actually key chains etched with your content, mine being: WE BUY HOMES – All cash or take over payments within 24 hours! Call xxx-xxx-xxx I assure if you give one of these to somebody they will hold on to it it and if they conceive of selling, they will think of you. They are about $1.75 each.

Key Chains – I give these to all my buyers with the keys to their new house on them and leave them all over the place. They come in the shape of a house or #1 or whatever style you like and have your message on them. You can guess what mine says. Cost – about $. 25 cents apiece.

Pens – I use these all the time. Whenever I sign a sales receipt or anything I leave my pen. I cannot tell you how many outcries I have gotten off of these things and since I often need one, I always possess one to give away. My attorney even has a supply on his closing table. I possess two types printed. One for sellers says “We Buy Homes!” and one for buyers says “Everyone Qualifies”. Cost – about $.26 cents per unit.

Coin Holders – These you hardly find anymore so everyone is surprised when I have them. I leave these things everywhere. Mine are bright yellow with blue letters and my message. Cost – about $.30 cents apiece.

I leave all of these promotional items everywhere, on the top of gas pumps, on end-cap displays in grocery stores and in department stores. I look at it this way, if I give away 100 pens, 50 knives and 50 coin holders a month, that is only a little over $100 bucks a month. That is still cheap advertising. And with the money you can make in a real estate deal, it is ‘no cost’ marketing strategy. You can get any of these promotional advertising products at many major promotion marketing manufacturer, and you can find companies online as well.

Business Cards

I order business cards by the 1000′s and you should as well, there are a lot of great places online that can print up nice (and cheap) cards for you and that specialize in real estate as well. As for business cards, well, they are cheap, mine are about $50.00 for 2000, and I pass them out and leave them everywhere I possibly can. I leave my cards everywhere, in pay phones, on restaurant tables, my kids even have their own supply to pass out. Try to get a box a week out. The card doesn’t have to be fancy, in fact the simpler the better. My card is bright yellow with blue letters and says:

WE BUY HOUSES Foreclosure? Need Repairs? Bad Tenants? Divorce? CASH IN 48 HOURS! OFFERS MADE ON ALL CALLS! XXX-XXX-XXXX

Car Magnetics

Magnetics are one of those things where you spend once and get use for a long time. Mine cost about $75.00 and are yellow with blue letters. They say:

WE BUY HOUSES! FA$T CA$H XXX-XXX-XXXX

or

SELL YOUR HOME FAST WE PAY CA$H XXX-XXX-XXXX

I have gotten several deals from these signs. Remember to order a smaller set for the back of your car/truck. People have more of a chance to read the message when they are riding behind you.

Clothing

I like golf shirts and oxford dress shirts with my logo on them. There’s plenty of adverting houses that will help you design a logo if you don’t have one or use the one you already have. There is no charge for set up and all items ordered include your embroidered logo free.

I pass custom imprinted hats out to everyone I know who wears one and have given away many shirts as well. They really look nice and present a nice image for your business.

Invest In Belize Real Estate

There is no denying that Belize real estate is really one of the hottest forms of property investments available today. But before you acquire the title of your very own Belizean land, there are some important things you have to know in shopping for a suitable piece of property.

First off, when diving into Belize real estate, take note that there are six major districts. There is Belize district where the largest city of the country is-Belize City. It also covers other islands such as Caye Caulker, Goff’s Caye, English Caye, St. George’s Caye, Ambergris Caye, and Caye Chapel. Next, the largest district is Cayo district, where the capital city of Belmopan is.

There is also the Corozal district which is located in the northernmost part of Belize; and the Orange Walk district in the northwestern side with significant towns like August Pine Ridge, Guinea Grass, San Felipe, San Jose, Santa Cruz, Santa Martha, and Trinidad.

Next, there is Stann Creek district is home to the port of Big Creek, Plancencia, Mullins River and the Garifuna village of Hopkins. Last is the southernmost district of Toledo with the towns of Monkey River Town, Silver Creek, and San Pedro Columbia.

Why do you need to know these districts if you are interested in Belize real estate? It is for the simple reason that location is one of the major factors which guide land values. The distance of the property from tourist attractions, major cities or famous landmarks affect the price of the estate you are interested in.

Also, the importance of knowing the strengths and weaknesses of these Belizean districts will allow you to assess the availability of utility infrastructure such as communication, water and electricity. You would not want to be trapped in a Belize real estate with low accessibility key utilities.

In buying properties in Belize, take note that the Department of Natural Resources charges a fee for each transaction. There is also a 5% selling consideration which will be given to the Government of Belize as transfer tax or stamp duty. For foreigners, registrations and fees will amount to USD 7.50, while for citizens, it is BZD 15. Regardless of your citizenship, 1-2% of the selling price will be used as lawyer’s fee for the legal services rendered such as drawing up contracts, deeds and other transactions.

In shopping for available properties in Belize, you can either check them up over the internet, newspapers, and agency brochures. Once you see a property you are interested in, remember that there are restrictions on land ownership for non-Belizeans nationals. One of which is that government approval is obligatory no matter how big or small the land you are buying. This should come from the Ministry of Natural Resources. Be sure that you cover all the basic restrictions before signing up your contract.

For the registration and title of your most coveted Belize real estate, take note of the three different systems they use: Registered Land Act system, Conveyance system, and Torrens system. The system that you will use depends where your property is located, so determine where the property you are interested in fall under since you have to abide by the law.

Obviously you will need to do a good job of research on each piece of property that you are considering to purchase. Much of the real estate business in Belize is unlicensed by the government. As a result finding a reliable and honest agent is critical. In addition finding a good real estate attorney is very important in assuring that all your interests are protected. Never the less investing in Belize real estate is a very good idea.

Security of Buying Real Estate in Belize

We are always asked why Belize Real Estate is a secure investment than in other countries. It is quite simple by saying that unlike other countries where the value of real estate is affected by current market trends, real estate in Belize maintains its market value and are sold at those values. Not just so, compared to other Caribbean countries, real estate in Belize is sold cheaper. Despite the current global economic conditions, Belize remains to be the main interest for investors and retirees. San Pedro Ambergris Caye for instance, continues to be the number one hotspot with constant development taking place on the northern part of the island. One cannot forget to take into account other parts of the country such as Corozal, in the Northern part of Belize where travelers from Europe, USA, and Canada enter our country via Mexico in search of Seafront properties that are easily accessible by road.

On the western part of the country San Ignacio is the second largest town in the country where there is a high volume of tourist traffic. Majority of the tourists that go to visit San Ignacio end up falling in love with the countryside, that they end up investing in real estate, whether it may be a acreages, riverside or mountain top. When investing in Belize Real estate and planning on retirement, many can be assured that there is a retirement program that is available to them. Incentives that are granted to these retirees are exemption on import duties on all personal belongings such as furniture, automobiles, boats and RV’s when moving into the country. Many retirees have fallen under the impression that under the retirement act, they are not entitled to work. Not so, you are eligible to work.

Placencia is also one of the fastest growing areas for real estate purchasing by foreigners, mainly Americans and Canadians. There are still reasonable prices for residential beach and main road properties. Besides Placencia having a newly built twenty-six mile road, it is also presently building the second International Airport in the country.

Recently there has been an increasing demand for high end, fully furnished residences for foreigners who frequent the country and stay anywhere from two months to a year. An investment in a high end apartment building is sure to be a secure investment in Belize City or San Pedro Ambergris Caye.

So whether your interest is in the mainland or on the islands of Belize, you can be sure that for the dollar that is paid on any piece of Belize real estate, the value of the property is not to decrease. More so, the values of property in Belize are increasing in value on a yearly basis.

Advantages of Real Estate Investing

Investing in real estate is as advantageous and as attractive as investing in the stock market. I would say it has three times more prospects of making money than any other business. But, But, But… since, it is equally guided by the market forces; you cannot undermine the constant risks involved in the real estate. Let me begin discussing with you the advantages of real estate investments. I found the advantages as most suited and really practical.

Advantages

Real Estate Investments are Less Risky

As compared to other investments, less of misadventure is involved in a real estate property. I will not get away from the fact that just like any investment you make; you have the risk of losing it. Real estate investments are traditionally considered a stable and rich gainer, provided if one takes it seriously and with full sagacity. The reasons for the real estate investments becoming less risky adventure primarily relate to various socio-economic factors, location, market behavior, the population density of an area; mortgage interest rate stability; good history of land appreciation, less of inflation and many more. As a rule of thumb, if you have a geographical area where there are plenty of resources available and low stable mortgage rates, you have good reason for investing in the real estate market of such a region. On the contrary, if you have the condo in a place, which is burgeoning under the high inflation, it is far-fetched to even think of investing in its real estate market.

No Need for Huge Starting Capital

A real estate property in Canada can be procured for an initial amount as low as $8,000 to $ 15,000, and the remaining amount can be taken on holding the property as security. This is what you call High Ratio Financing. If you don’t have the idea as to how it works, then let me explain you with the help of an example. Remember that saying… Examples are better than percepts!

Supposing, you buy a condo worth $200,000, then you have to just pay the initial capital amount say 10% of $200,000. The remaining amount (which is 90%) can be financed, against your condo. It means that in a High Ratio financing, the ratio between the debt (here in the example it is 90% Mortgage) and the equity (here in the example it is 10% down payment) is very high. It is also important to calculate high ratio mortgage insurance with the help of Canada Mortgage and Housing Corporation (CMHC). If needed, you can also purchase the condo on 100% mortgage price.

Honing Investment Skills

A real estate investment, especially when you buy a condo for yourself, will be a pleasurable learning experience. It gives you the opportunity to learn and when I went ahead with my first real estate property, I was totally a dump man. Ask me now, and I can tell you everything, from A to Z. Necessity is the mother of all inventions. I had the necessity to buy the property and so I tried with it, and I was successful. I acquired all the knowledge and skills through experience of selling and purchasing the residential property. Thanks to my job. It gave me the experience to become an investor.

Not a time taking Adventure

Real estate investment will not take out all your energies, until you are prepared and foresighted to take the adventure in full swing. You can save hell lot of time, if you are vigilant enough to know the techniques of making a judicious investment in the right time and when there are good market conditions prevailing at that point of time.

You should be prepared to time yourself. Take some time out, and do market research. Initiate small adventures that involve negotiating real estate deals, buying a property, managing it and then selling it off. Calculate the time invested in your real estate negotiation. If the time was less than the optimum time, you have done it right. And if you end up investing more time, then you need to work it out again, and make some real correction for consummating next deals. You have various ways and methodologies, called the Real Estate Strategies that can make it happen for you in the right manner.

Leverage is the Right Way

The concept of leverage in real estate is not a new one. It implies investing a part of your money and borrowing the rest from other sources, like banks, investment companies, finance companies, or other people’s money (OPM). There have been many instances where people have become rich by practically applying OPM Leverage Principal. As I had discussed under the sub head – No Need for Huge Starting Capital, the high ratio financing scheme gives an opportunity of no risk to the lenders, as the property becomes the security. Moreover, in case the lender is interested in selling the property, the net proceeds resulting from the sale of the property should comfortably cover the mortgage amount.

Now consider a situation, where the lender leverages the property at too high ratio debt say 98% or even more, and all of the sudden the market shows a down turn, then both the investor as well as the lender. Hence, greater is the mortgage debt, more is the lender’s risk, and it is therefore necessary that lender pays higher interest rates. The only way out to ease the risk from lender’s head is to get the mortgage insured. Two companies authorized to insure your high-ratio mortgage debts are CMHC (www.cmhc-schl.gc.ca), and GE mortgage Insurance Canada (gemortgage.ca).

Letme explain you with the help of an example… supposing, you are buying a real estate property worth $ 200,000 at three mortgages, with the first one of $100,000, the second of $75,000 and the third one of $25,000. Possible percentage of interest rates charged can be 3%, 5% and 7%. The last mortgage amount of $25,000 will be accounted, as riskiest; as it would relatively be the last mortgage that you will pay when you finally make a selling deal.

On the contrary, if the first mortgage representing almost 90% of your property price is insured against getting default or as high ratio mortgage, then in the above example, the basic interest rate would be 3%.

Let me explain you the leveraging concept by taking another example.

Supposing, you are buying a real estate property worth $200,000, and made down payment of 10%, equitable to $20,000, while financed the rest amount of $1,80,000. Over the year’s time, the value of your property appreciates by 10%. In this case, what would be the total return that you’d incur on your down payment of $20,000? It would be 200%. Yes 200%. Putting in simpler words, the down payment of $20,000 made by you has an appreciation of 10% over it, i.e. (10% increase of original home price of $ 200,000), 200% return on your down payment investment of $20,000.

On the contrary if you invest all the money in buying the property of $200,000, and in wake of appreciation of 10% over the year ($20,0000 would then be accrued to as 20%.

Synonymous with leveraging is pyramiding, where you borrow on the appreciated value of your existing property. Pyramiding applies the principal of leverage that enables you to purchase even more properties. This appreciated value over the real estate property in some selected areas results in accumulation of rich financial virtues.

Real Estate Appreciation

An appreciation is an average increase in the property value over original capital investment, taking place over a period. There are some neglected real estate properties that have an appreciation below the average mark, whereas, some of the properties located in maintained geographical areas, showing high demand, have an above average appreciation. In such centrally located and high demand areas, the average appreciation can reach up to 25% in a year. I will discuss appreciation in the chapter on real estate cycles. For now, for general understanding, appreciation is what goes up.

You Make Your Equity

As you gradually pay your mortgage debts, you are creating your equity. In other words, you would be reaching to original house price on which you have no debt. Your equity is absolutely free of percentage increase in appreciation. From the investor’s perspective, in real estate market, equity is the amount that is free of debt and it is the amount that an investor holds. When you sale your property, then the net money you get, after paying all the commissions and closing costs, becomes your equity. Lenders don’t want to take risk by allowing a loan on over 90% of equity. Therefore, in this manner, the lenders take the safety measures in wake of their loan being defaulted.

The Federal Bankruptcy act says that all the first mortgages of over 75% of the appraised or purchase value must be covered under high-ratio insurance schemes. However, there are certain conditions, wherein, CMHC offers the purchasers of real estate property qualifying the insurance, a mortgage of up to 100% of purchase price over your principal house value. In the wake of an event where borrowers want more money from the lenders, they would ideally settle for second and the third mortgages.

Low Inflation

Inflation is the rise in the prices of the products, commodities and services, or putting it another way, it is the decrease in your capacity to buy or hire the services. Supposing, a commodity was worth $10 a decade back, will now cost $ 100 as the result of inflation. For people who have fixed salaries feel the real brunt of the dollar, as the inflation rises. In Canada, the inflation rate varies and it varies every year. There was a time when Canada had a double-digit, but it was controlled to single digit, after the regulation of policy.

If we analyze closely, the land appreciation value for the residential real estate is 4% to 5% higher than inflation rate. Therefore, when you invest in real estate, then you are paying mortgage debts in high dollar value. Now as you are getting more, salary to pay less amount than the amount that you had paid in the original mortgage.

Tax Exemptions

You get various tax exemptions on your principal and investment income property. The tax exemptions available in real estate property investment are more than available in any other investment. In other investments, you lose terribly on the investments in your bank in the form of inflation and high taxes therein, but in real estate; you don’t actually have such hindrances.

Various tax exemptions available are:
•The interest receivable from your bank account, term deposit or guaranteed Investment Certificate (GIC) is completely taxable as income. A little math here will do the magic work for you. Supposing, if you get an interest of 8% on the deposit, and the on going inflation rate is 5%, the Real Return Rate will come out to be settled at 2%.
•You get completely tax-free capital gain on principal amount of your residential real estate property.
•You have the opportunity to ward off principal amount of your residential real estate property against the home expenses incurred by you.
•You can easily ward off the property depreciation against your income.
•You can cut the expenses incurred in real estate property investment through your income
•Tax rate reduced to approx. 50% of the capital gain.
•And many more

Net Positive and High Income is Generated

If taken in right direction and played seriously, a real estate investment can be your virtue making endeavor now and in times to come. You will not only be having additional assets building in your favor, but also with positive cash flow, your real estate property value will increase automatically.

High Return on Investments (ROIs)

Real estate investment gives you potentially high ROIs before and after the taxes levied on your income. In fact, investing in real estate gives you high ROIs after the taxes.

Demand for the Real Estate Increases

As a natural instance, when the population of a region increases, the total usable land decreases, and this provides the impetus for high real estate prices. There are many communities that can or cannot have growth and development regulations, thereby, resulting in limited land available for use. Therefore, the real estate prices of the area shoot up. Remember housing is the necessity of an individual and therefore it is much in demand than any other single commodity taken. Furthermore, there are people who purchase additional houses for their recreation, recluse or as a past time. This in turn increases the demand for land.

5 Essential Features That Make Real Estate Investing Profitable

Every now and then persons trying to make up their minds where to put their money ask me if real estate ventures are more or less profitable, compared to other businesses opportunities around.

My response is always that apart from its potential for yielding significant profits, investing in real estate often confers long terms benefits.

I discuss five such advantages below:

1. You Can Refurbish (to Enhance the Value of) Real Estate
After you buy a stock, you hold it for a period of time and hopefully sell it for a profit. The success of the stock depends on company management and their corporate success, which is out of your control.

Unlike other conventional investment instruments, like stocks, for instance, whose rate of returns, depend on third parties (e.g. company management), real estate investments are directly under your control.

Even though you will not be able to control changes that may occur in demographic and economic aspects, or impact of nature induced changes, there are many other aspects that you can control, to boost the returns on your investment in it.

Examples include aspects relating to adding repairs, or improvements/enhancements to the physical property and tenants you allow to live in it.

If you do it right, the value of your investment will grow, resulting in increased wealth for you.

2. Real Estate Investing, When Done Right, is Proven to be Profitable Even During a Recession (like the one we’re in right now)
It has on several occasions, been used to effect a bail out, from financial setbacks, such as those that many have experienced during the economic downturn happening in Nigeria today.

A considerable number of clients have confided in me that due to the present economic situation, they are not sure of profitable channels to invest their money. Some of them are done with bonds and treasury bills, but are in dire need of a new investment.

We had extensive discussions, and based on my expertise as a real estate consultant, I recommended landed property investment, as the most suitable and secure alternative channel of investment.

This is because, even if all businesses crumble, land will always appreciate greatly. Then to drive my point home, I ended by sharing the following apt quote, by a former American president:

“Real estate can’t be lost, nor carried away, managed with reasonable care, it’s about the safest investment in the world” – Franklin Roosevelt.

Not surprisingly, the client chose to take my advice – and signed up: it was the obvious, common sense thing to do!

3. Real Estate Investments Are Immune to Inflation
In other words, investing your money in ownership of viable real estate can protect you from the harsh effects that inflation usually has on other conventional investments.

This is because the value of real estate generally tends to rise in positive correlation with inflationary pressures. This is why property values and rental rates go up with rising inflation.

The nature of real estate, therefore affords owners the unique advantage of being able to adjust the rates they offer, to match inflation.

Monthly rents for example can be raised to compensate for inflation – thus providing a cushion effect against inflation induced losses that other monetary investments suffer.

4. Real Estate is Uniquely for Being Universally Acceptable as Collateral, Towards Securing Funding from Banks
Today, real estate in form of either building or lands, with proper titles (i.e. Certificate of Occupancy – aka “C of O”) is the most recognized and accepted form of collateral in Nigeria – and some other parts of the world.

It has the unique feature of being able to protect the interests of both the borrower and the bank (that’s doing the lending), so that funds can be released i.e. after due verification, and terms and conditions are agreed.

This is one of the key advantages a private C of O has over the global C of O, because the former (i.e. private C of O) is what will be needed by the intending borrower, in the event of any future financial dealings with bank in Nigeria.

5. Real Estate Investing Allows Use of Other People’s Money
In other words, you can do it even if you do not have enough money. You just need to know how.

This is possible because real estate is physical property or what is called a hard asset. That is an attribute that makes it attractive to financiers i.e. people with money to invest.

This is why many times real estate products are bought with debt – unlike conventional investment products like stocks which are NOT tangible, and therefore perceived as being more risky to invest in.

So real estate investment can be done using cash or mortgage financing. In the latter case, payments can be so arranged to allow payment of low initial sums, provided by you or a willing third party.

Those payments will be happening on landed property which will continue increasing in value throughout the duration of such payments – and indeed beyond. That further inspires confidence in the minds of those financing the acquisition, that their investment is safe.

Little wonder that real estate investing has continued to prosper for so long!

[A WORD OF CAUTION] The listed benefits notwithstanding, I still tell prospective investors that due diligence is a crucial requirement for succeeding.

Whether you do everything yourself or use industry professionals like me, it is imperative that you exercise caution and arm yourself with relevant information and education.

This is something I advice my clients to do all the time, so they can make good decisions in investing.

The importance of the above cannot be overstated, especially in Lagos where quite a number of individuals, have had their fingers badly burnt, because they failed to take the needed precautions.

Belize Real Estate

One thing guaranteed with Belize, you are sure to find diversity and something that would cater to your individual needs and tastes. In Belize you can find tropical islands, citrus groves, beach front condominiums, Mayan ranches, Caribbean private islands, or eco-friendly, solar-powered rainforest rest houses. Whether for business or pleasure, or even for both, you can find a real estate for you.

Real estate in Belize is exponentially cheaper than that in the United States of America and Europe. And with a fraction of prices in these countries, at Belize, you can get a piece of property overlooking the beachfront. Island living or owning a ranch is no longer a dream in Belize.

Acquiring a real estate in Belize is a great investment. Appreciation of properties has remained strong and steady through the years, and resale value is always high. There are no capital taxes and inheritance taxes and the currency exchange rate is stable.

In purchasing real estate in Belize, you can rest assured that the area is free from racial discrimination and that crimes rates are very low. And with the tropical atmosphere, you can easily relax and relieve yourself of life’s daily pressures. The political situation is very stable, and there are no sudden changes in laws since Belize is a very traditional country. Advanced infrastructures are set up throughout the country, providing you with state-of-the-art telecommunication systems and postal systems. The general population is fluent in English, so you do not have to readjust your lifestyle just to fit in the Belize community.

In Belize there is a good population of expatriates which makes assimilation much easier. In this country you can find Mennonites, Ketchki, Mopan Mayas, Garifuna, Creole, Chinese, Taiwanese, Indian, Middle Easterners, Guatemalan, Honduran, Italian, North American and British. Places like Ambergris Caye, Placencia, Corozol, and the Caye District are areas always attractive to expatriates.