A lot of real estate investment companies want to or need to invite future investors to a “seminar” using a newspaper ad, Tweeter, Facebook, or email. In most cases, a simple phone call would do.
The seminars may or may not offer talks by motivational speakers, or someone well known as an ‘expert.’ The more attractive the speaker is, the more attendance could be expected. These experts are regarded by some to speak words of wisdom regarding real estate investment.
Now, you have to be reminded that a of real estate investment profits can be made by charging exorbitant fees for the seminars. They can sell eBooks, high end investment guide books, reports on self-made millionaires that a lot of investors want to become. They can sell their properties and investments through these seminars by involving hard sell techniques and strategies.
There are some real estate companies who offer these seminars may actually offer up high-risk investments and strategies. This may include getting loans on interest rates considered risky by the experienced investors. Sometimes, they can make suggestions on seeking loans which can be highly disadvantageous.
These companies may also offer their potential investors a sightseeing tour to the site they want to sell, even to the point of flying them over the site. That is considered to be another form of pressure on the investor. They are made to make a hasty decision to commit to a deal, again, a risky action for there is a glossing over of the usual details which on better circumstances would be avoided at all costs.
Be very careful when you are asked to attend some seminars although there are a lot that are quite beneficial for the investor can have the first option of buying low for a high end property. There are times when the seminar could turn sour when they find that they have to pay for the chartered flight over the site.
90% of the homes bought in the US are bought on a mortgage loan. This is because no regular family will have the cash to buy the home outright. However, having a mortgage on a property is not all that bad, it is simply considered is a modern way of life. However, one should also consider getting an insurance policy on the mortgage to protect the home owner against any unforeseen event which may affect their financial stability and their capacity to pay their monthly amortizations.
There is an insurance policy that homeowners can take which can be taken out on the mortgage itself. This means that there will be extra costs to be paid for the insurance which can be considered steep by some people. However, if given the choice of protection versus foreclosure, then the costs of the insurance should also be considered an investment, not a luxury.
The insurance acts much like a life insurance and in fact, some people argue that they should just take the life insurance instead of this one. They have a point and they are justified in their conclusions, however, this insurance on the mortgage will not take care of the funeral and other death benefits, this will take care of the problem of the mortgage if the principal borrower dies or has an accident and gets incapacitated.
The insurance is an investment which will prevent the foreclosures, if ever they do happen, and it will take care of the payment of the amortizations. In fact, there are some policies which, upon the death of the principal borrower, would pay in total the mortgage leaving the heirs and beneficiaries with a cleared from mortgage home.
Most banks now include this mortgage insurance for the principal borrower and are included in the amount of the monthly amortization fees. This insurance may be offered by an in-bank insurance policy or by a private insurance company. This is also the bank’s way of protecting their interests regarding foreclosures. This way, they do not have to deal with the foreclosure costs if in case something drastic happens.
One of the most important things that homeowners are taught by their accountants is that when they buy a property, they need to protect their assets for these can be sold in case of any financial difficulties. A home is a real estate property investment which must be protected by all means, and this includes hiring a contractor to do the tasks.
One major mistake that people make when they are improving on their homes is their need to save on money overrides their common sense. Many people are distracted with the idea of DIY jobs as a way to save money, what they do not realize is that only the work and costs of the contractor jobs will be tax deductable.
When you DIY the improvements, any money spent on materials and labor will not be admissible to the IRS, in fact the costs would be considered a luxury cost. However, if you hire a contractor, the labor and cost of materials can all be validated and deducted.
Also, only contractors can do a great job, at least better than the DIY projects. They are more systematic and they know what materials to use for a particular improvement or addition. Anything they do will be documented, and that includes the plans and execution of the improvement. This means, that these plans can be attached to the current plans on the property and if it is sold to another buyer, the costs of the improvements can be added on to the selling price.
In fact, even the plans made by contractors who are tasked to make improvements on the garden, if any, can also be added to the price of the property. The labor and material costs can also be tax deductible. If you don’t hire the contractor, no matter how expensive the materials are, none would be considered tax deductible.
As a homeowner, you should know what home improvements can affect your tax payments. Talk to your accountant on what can be deductible or not, for the accountant can advise you on matters regarding your real estate investment, which is not considered a ‘dead’ investment.
There will always be another group of American retirees every single year. And every year, these retires seek to invest in real estate for their homes or even second homes. Unfortunately, most retirees find that their money is not worth the value that it should have had if they had retired before the economic crash. Also, there is now a new trend in real estate investment, the retirees choose to invest outside of the mainland and opt for the greener pastures of other countries.
Although the European Union and Asian countries were also affected by the economic crash in the US< their real estate were not affected as much as those compared to the US. In fact, Spain’s President just announced that the real estate industry in that country is on the road to recovery, thanks to the numerous investments made by people from other countries.
Take for example the real estate in Barcelona, a picturesque city by the bay on one side and the Pyrenees Mountains as a background. The interest on the Barcelona real estate has been steadily growing especially as the market prices and interest rates are still low for now. However, this would soon change for the better and soon, the prices will increase. More and more Americans are trying to buy on the current prices, hoping they could still ride on to the affordable prices.
Another country that is also popular amongst the American real estate investors for vacation homes and second homes, are those in Cyprus, Greece. The island offers the investors low prices and interest rates, and an open-arms attitude to foreign investors. In fact, they have even managed to change some of their laws regarding foreign investors which are welcomed by all.
Some of those who seek to purchase the foreign real estate do so as long term investments. The buyers or investors act as landlords and rely on the monthly rents their tenants pay them. The money they receive is usually directed towards paying off the monthly amortizations and maintenance of the homes.
Most of the American real estate investors weigh their options well before they make commitments. If they have to invest outside the country to get money from their retirement money, then they will do so. How that affects the future of real estate industry in the US is something which will have to be seen.
You have heard of how tricky some sales people can be when they want to pressure you into making an investment immediately for a limited offer that would normally take you days or even weeks to make a final decision on.
You need to ask the right questions if you feel pressured, so do not get pressured, instead check on what you are investing on. This is the only safe way you can avoid making hasty and highly regrettable investments.
If you do receive an invitation to a seminar, do not hesitate to do your own research on this company and the site they want to sell you. If you feel that after the research the investment has potential, then go and seek another opinion before you decide to finally attend the said seminar.
You also have to be careful when friends and family ask you to join them in their bid for investing. You may get involved without really knowing what you are investing in and you don’t know what you are investing on. Again, seek out another opinion, research on the property or company. Ask for information on the status and ranking of the real estate company that seeks to rid you of money.
Research if any legal action has been taken on that company that invited you to the seminar. If they have history of foul play or anything that is out of the ordinary, do not attend, neither should you invest.
If there is information on tax avoidance on your invitation, do not hesitate to ask the IRS about details. They would only be too happy to give you their sound and legal opinion on the matter which may oppose that of what the seminar offers.
Try not to commit to any investment when you are at the seminar for the atmosphere of excitement brought about by the incessant talk of salespeople could cause confusion. Take a step back, do not make a commitment, and do not get pressured. Do not let them pressure you into making a hasty decision. And then again, ask for a second opinion from someone who has experience on these matters.
If you do not like to invest in real estate alone and wish to join a group instead, then that is very possible and it can be beneficial for you. The real estate investment groups offer a solution to the investment on real estate if you do not like to deal with the many duties of being a landlord. Here, you don’t need to get woken up in the middle of the night should there be a problem with the heater in one of your tenant’s space.
In this type of investment, a company can buy or construct apartment blocks and condominiums which can permit the investors to purchase the properties through that company. This will make the investors join that company and become a group.
Even if you are only one investor, you can own one or many apartment and condominium spaces but the company that operates the investment group as a whole will get to manage the units. This takes care of the issue of maintenance, advertising, marketing, viewing of the units and the interviewing of the potential tenants. A percentage on the monthly rents can be taken as a management fee by the group.
There are several kinds of real estate investment groups. Regarding the standard type, the lease will be in the name of the investor and the rest of the units can pool together some part of the rent as security against the occasional vacancies. This means that despite the vacancies, you still get enough profits that would be enough to pay for the mortgage even if the unit that you own is without a tenant. This quality of the real estate group will depend entirely on the company which is offering the investment. Hypothetically, this is a safe type of investment if you want to enter this field of investment in real estate. Groups can get weak to fees similar to those investing on mutual funds.
Real estate trading is something which the general public may not be aware of. This type of real estate investment is like day trading on the exchange floor. This is totally different from the usual buy, hold and then sell type of real estate investments.
There is the technique called ‘flipping’ properties. This happens when a property is priced low but belongs to a very hot market. Here the real estate trader buy the properties with the full intention of only holding them for a short term, or less than one year, and then selling them for a higher price and eventually make a profit.
Usually, the ‘flippers’ will not make any home improvements made on the properties that they bought. The property has to have an intrinsic value for it to make a profit without any remodelling or else the ‘flippers’ will not even buy it.
This type of investment is considered a short term investment and is not encouraged by the government. If the flipper gets caught in the middle by not being able to sell the property as early as they can, the investors would not have enough money to pay for the mortgage for a long term period. This could lead to a lot of losses which the real estate investor cannot afford to lose. If and when they can eventually sell the property, they might have to do it on a loss if the market is not going for them.
Then there are the second class flippers. These flippers make money when they buy well priced properties and add on to the value by remodelling them. This could lead to a long term investment depending on how long the improvements are going to take. The only downside to this type of investment is that it can take a lot of time to complete and this will only allow the investor to purchase one property at one given time.
When you are asked or invited to a real estate seminar you can consider this invitation as either something that you wish to attend for you will learn a lot or you can get wary for you may lose a lot. Here are some of the red flags on real estate seminars which you have to be observant so that you can avoid making a big mistake.
- There are some real estate investment companies who will invite their potential investors with legitimate looking invitations or even news articles.
- When you do attend the seminar, everything seems to be going smoothly and according to how you expect it to be until you hear words to the effect of avoiding tax payments, money transfers to foreign banks or the use of the RRSP eligibility as a lure.
- Be very wary when you are being convinced of earning profits too tall to measure involving no risks. Remember, any investment always has room for one form of risk. Also, the incomprehensible income is sort of too good to be true. Trust your gut instinct.
- Do be careful and do not get lured into the money trap when the seminar offers loans that can cover the real estate investment and future investment seminars. There is no such thing as a blanket fee.
- If they claim that they have a secret which they are willing to disclose, think. Why should they want others to know their secret to success if they don’t have an ulterior motive?
- Do not get swayed by salespeople who talk too fast that you can no longer hear yourself think and then make you sign on paper that you are going to make an investment on the promise of getting freebies and other tempting stuff.
- Usually, the salespeople will make you feel rushed and you can feel pressured into taking out your check or credit card to make an investment on something which is too good an opportunity to miss out on. If you get lured into this, you can rest assured that you will be missing out on a lot of details which could make you hesitate or avoid it under normal circumstances.
- Red flag the seminar if it only talks about get rich quick schemes.
- Be wary of free seminars for this will eventually lead you to a future seminar which you have to pay through the nose.
Real estate investments mean having to deal with a lot of properties and could be very profitable if the investment is right. As this type of investment can literally be traced back to the dawn of mankind, it is not surprising that Wall Street and others similar to it has embraced this type of investment to realize profits. A whole lot of profits.
An REIT or real estate investment trust can be created if a corporation or a trust gets to use the money of an investor to buy and maintain or operate properties which have the potential for income. The REITs are usually purchased and then sold off on the major exchanges on Wall Street and others similar to it just like it were another shares of stocks.
The corporation has to pay 90% of the profits which could be taxed in the form of dividends in order that it maintains its REIT status. With this, the REIT can avoid the payment of a corporate income tax while a normal company can be taxed on the profits that they earn and then they can decide if they could distribute its profits after taxes in the form of dividends.
This is similar to paying a regular stock dividend. The REITs are considered a sound investment for those who play on the stock market and want to earn a regular income. This is much different from the basic rental real estate investments, the real estate investment groups and real estate trading.
This will allow investors to go into investments considered non-residential like malls, parking lots, or offices. These are considered to be very liquid in terms of cash and there is no need to hire a realtor to help the investor cash in the investment that they made.
Some real estate investors will purchase properties so they could rent them out to tenants. In short, they become landlords. The investor, or the owner (landlord) is the one who will have the responsibility of paying for the mortgage, the taxes and all the costs involved in the maintenance of the property.
The landlord should charge the tenants the amount which should be able to pay for the costs of maintenance and something extra which would be considered as a profit. However, there are some investors who only charge so much that would be enough to cover for any costs for the length of time that it takes to pay off the mortgage. Any rent made will now be considered as profits by the real estate investor. The property could also have the chance of getting its value increased.
There are downsides to this type of real estate investment. The downside is the time that it takes to make the investment pay off and of course the work that is needed to make all the improvements and maintenance on the property. Also, there is always the big chance of getting bad tenant, one who does not pay on time, one who does not maintain their rented space, and one who may cause damage on the property. And then there is the chance of buying a property that is not located in the best areas and which could only get a low rent price.
The difference between real estate investments compared to that of any other types of investments is the time that is needed to get back the profits and of course there is the maintenance to consider. Other investments do not need maintenance costs. Stocks, bonds, and other investments can simply be held in the brokerage firm that you hired where it can increase in value. Consider that when you enter this type of investment, you are like a doctor who is continuously ‘on call’ and any emergencies, be it in the middle of the night, you have to deal with.
