All Posts by Yoshini

Property Management 101

With the main goal of a Rental Investment Property being to make money, tax depreciation and tax deductions will be the main income after the rental payments received.

This is the year to do as much as we can to help your Landlords with their investment property! All of us, no matter what we do for a living want and need to make money and owners of investment properties are no different.

The taxation department and websites as well as your state tenancy agency have some great information and of course your tax accountants can assist. Here are some things to consider claiming and to research further:

  • Costs for professionally managing the property such as property management fees. While it is true that you need someone to help manage your property, it does cost a lot. This can and should be claimed towards your tax return. A professional Property Management company will supply an End of Financial Year Statement to take to the accountant to make claims.
  • Improvements made to your home over the financial year. This could be adding a patio, a garden shed, including security screens or remodeling a bathroom. All of these expenses can be considered by your tax consultant.
  • Insurance premiums to insure the property for both landlord and building & contents insurances. These are necessary expenses so by taking the policy and invoices to claim this will make a difference as it can be very expensive. Things can and will go wrong and no-one can predict what it will be or when.
  • Visits to your rental property can sometimes be claimed. If you are visiting from a long distance, such as interstate, there can be some tax relief for your trip. Your property manager can write you a letter to thank you for your visit, outlining dates. Include the letter and proof of costs with your tax documents and discuss this with your consultant.
  • Asking the tax consultant about Council rates, water charges and anything else that is paid for the property. By being prepared and keeping receipts we can be ready in the event of an audit.

Property managers should ask their Landlords if there is anything that they require from them such as copies of their invoices and how they can assist with arranging tax depreciation schedules or anything else that can make their lives easier. That is why property managers are there, to help their Landlords.

The last tip is that not all property managers are created equally. Speak to other investors, see what they are doing in the community and get a feel for their business. If you are having problems, it may be time to look around.

Real Estate Investing for Beginners

If you have heard about real estate investing, but don’t know where to begin, consider yourself lucky for two reasons.

1. Anyone can invest in real estate.

Anyone can invest in real estate. Some of the biggest real estate investors are high school dropouts or college dropouts. These guys are clearing five figures a month net profit.

My journey as a real estate investor

In 2005, I started researching investment properties in the area of West Palm Beach, Florida. I soon discovered that real estate in South Florida was out of my price range. So, I decided to look elsewhere. I researched North Florida, using a technique that I had learned about in a real estate investing book.

2. Investing in real estate does not require using your own money.

You can use someone else’s money. What do you bring to the table? Your skills and knowledge. In exchange, you earn a percentage of the profit from the deal. Any risk can be ameliorated (lessened) by your research into the deal. In real estate terms, this research is called “due diligence”.

Here is a ten step plan anyone can use to invest in real estate.

1. Find your market

(geographical area, location, close to your current address is preferred)

Finding your market means finding your target area, the geographical location, of where you want to purchase real estate. Ideally, it’s best if you purchase property within a 10-20 mile radius of your home. The closer you are to your investment property, whether it’s a house, mobile home, or vacant land, the better.

Choosing your market will be determined by the amount you can make, known as the Return On Investment (ROI), minus your expenses, when you sell or rent the property. And your ROI will be effected by a number of factors-current market values of the existing properties in this area, upcoming developments planned for the area, proximity to landmarks or bodies of water, crime rates for the area, employment opportunities for the area, and a lot more.

Visit the area at night. During the day, an area with a few abandoned houses or commercial buildings may appear like an opportunity. At night, however, these buildings may be a haven for criminal activity or a camp for homeless people. Talk to the people that live in the area to get a feel for what’s going on there.

2. Determine or choose your investment property type

What kind of real estate property would you like to invest in? Buying a house? Buying a mobile home? Buying land? Buying commercial property?

How would you like to buy the investment property? Buy it outright, or put the down payment on it in order to secure the mortgage? Securing the mortgage of an investment property allows you to save money while, also, getting control of the property.

Okay, you’re probably wondering “but I don’t have the money to buy the property, what about the money?” We’ll get to that.

3. Find five properties

Find five properties (houses, mobile homes, land, commercial properties) investment properties to purchase, rent for profit, or flip for profit.

Research. Study the area where you plan to purchase a property. How? Follow these steps.

1. Search online for “___________ ________ tax assessor” and “_______ _____ tax clerk” and “______ ______ property appraiser”. Fill in the blank with the county in which the property is located. Fill in the second blank with the state.

For example, if you’re searching for an investment property in Gilchrist County, Florida, search for “Gilchrist County, Florida tax assessor” or “Gilchrist County, Florida tax clerk” or “Gilchrist County, Florida property appraiser”.

Research the area. Find out what properties are selling for, how long they’ve been on the market, annual taxes, appraised values, etc.

Study the area. Determine the comparable market values of real estate. Become an expert and this will enable you to forecast, or predict, trends so you’ll understand where to buy and when to buy and where to sell and when to sell.

4. Develop your strategy. Lay out a plan.

* Buy and rent for profit?

* Buy, fix up, resell for profit – buy and flip? You make money when you buy! You can find a buyer before hand by using the internet classified ads and social and classified ads in local newspapers. Find out who’s willing to buy and what they are willing to pay before even making an offer on the property you want to buy.

* How are you going to find the money? We’re getting to that. Once you have an action plan or a plan-of-action, then finding the money becomes easier.

5. Establish a back-up plan.

Just what it says. Set up a plan in the event that everything goes wrong, in case of a situation in which everything goes south. Establish a contingency plan. You’ve made it this far, now make a backup plan. You can do it.

This-making a backup plan-will lessen any worries you have, enabling you to move forward, to take action, to make things happen. Action eliminates fear

6. Determine your exit strategy.

In order to know where you are going, first decide where you want to end up. What’s your end goal? How do you plan to exit this RE deal with a handsome profit, and with all parties (buyers, sellers, investors) satisfied and happy?

7. Present your plan to investor or investors.

Read over your notes and reduce everything to a simple plan of action. Then, write down this plan of action and reduce it to numbered steps… 1, 2, 3 and so on. Set the dates of when you’re going to do what. Make copies of this, both PDF copies and hard copies.

Get everything in writing, signed, in the presence of a notary public.

8. Execute your plan.

Take action. Action eliminates fear.

Start putting your plan into action by taking action.

9. Get people competing to buy your property.

When selling or renting the investment property, gather a crowd by scheduling a specific time. If you want to rent or sell a property, set up a specific time frame in which to show the property, preferably on the weekend. Schedule an open house on Sunday, 2pm – 4pm, gather a big crowd. Get a mortgage broker at the place to, in order to set up mortgages for people who want the place.

10. Put your exit strategy into motion.

Collect rents. Sell the property. Keep records of everything (video, audio, paperwork, keep backup paperwork).

The Ideal Investment

Fact: investments are opportunities. The benefits are immeasurable:

  • growing savings
  • beating inflation
  • earning tax deductions
  • increasing returns
  • and securing Financial Freedom, among many others.

Despite numerous investment options, real estate is prime. It supplies the control and flexibility entrepreneurs and investors desire.

5 Factors Make Real Estate the IDEAL Investment:

I – Income

  • Receive cash in-hand, monthly. Can you envision consistently collecting checks that require little-to-no work? This concept exists, passive income. Investors maintain control over a property’s revenue stream. YOU make the decisions affecting the profitability of your income-producing asset. You’ve officially reached ‘boss’ status.

D – Depreciation

  • Earn more, pay less. Why are the wealthy taxed lightly? Phantom expenses known as tax-benefits; owners write-off property depreciation as an expense. Effectively utilizing ‘loop holes’, in regards to property ownership, grants flexibility. Remember the old adage, “a penny saved is a penny earned”.

E – Equity

  • Increase ownership for free. Is this possible? Yes, with happy tenants. They pay you, you pay the mortgage. The principal balance shrinks as equity rises. Each month you own a bit more of the asset than when you initially purchased it. Get excited.

A – Appreciation

  • Relax as property values mature. How can assets depreciate and appreciate simultaneously? Over time; forced by the owner or the market. Owners appreciate their properties with rent increases, property repairs, home additions, etc. This is termed forced appreciation. Properties also experience market appreciation. Population growth, increased employment opportunities, and area beautification; all assist in increasing value. Competent investment decisions and management efforts not only maximize profit but grow asset value. It’s not 1 way to do 50 things but 50 ways to do 1 thing; in this case, increase profits.

L – Leverage

  • Feel great spending other people’s money. Who could resist? Investors acquire properties through mortgages. A maximum 20% down payment for total control, an exceptional deal. Anyone can prosper from this unbalanced transfer of ownership. Investors also employ current assets to acquire additional assets by capitalizing on built-in and/or earned equity. Yet another way to take advantage of a prime investment.

Many suggest real estate is too risky; others advise avoiding it altogether. As always, it’s imperative to self-educate before pursuing any investment. It’s just as important to factor reserves for unexpected expenses and be prepared with exit strategies if plans falter.

Be eager to grow and make informed decisions. Use money to make money!

Tips To Do Well In Real Estate

A lot of us invest money on diverse income sources such as the amusement sector, stock trading, manufacturing and real estate. Some people vacillate to invest in realty since they believe that it’s a more risky investment. Any investment assessment has some extent of risk, not just in real estate investments. But we can reduce the menace by playing the game by knowing the rules better. However, many investors make faults along the way and end their investment with major failures.

Below are some regular mistakes by many property investors.

  • Absence of a polite plan – Many people start and make a lot of transactions. Then they try to contest up the property with their plan. However the wise thing to do is to buy a property which fits with your accessible plan.
  • Not asking for help – Some people occupy in the realty industry on its own without having any knowledge regarding this sector. Whenever you manage alone, odds of getting conned is higher.
  • Some make important procures without any frontiers.
  • Real estate investment commands some money to be sustained.
  • To make assets without the basic understanding.
  • Some keep only one option. This can be very menacing because there are not any means to calculation.
  • A few real estate investors the make wrong estimations of property.

A few words to help you circumvent the most common mistakes and accomplish success in the property investment.

  • Don’t spend massive cash at first. This will keep you from trailing too much.
  • Pay for real estate only when thinking about their present and future significance. Don’t buy properties that are approximate to get more costly.
  • Join a group. Put a real estate manager, appraiser, legal professional, inspector and a lender to your group. This will likely stop you from making big blunders.
  • Ventures in real estate is often a long-term project. Keep more than one selection available.
  • Acquire property that may sell for different use.
  • Get as much information about this sector as possible. Always be aware about recent market movements and failures.
  • Usually look at the numbers such as income, maintenance costs, rentals, and vacancy rate. It will help you to calculate and estimate the money-making process.

The reality is that if investing in property were easy, everybody would be doing it. Fortunately, many of the struggles that property investors bear can be avoided with due carefulness and proper planning before the agreement is signed.