Archive for category Real estate – An Overview
Getting Started in Residential Real Estate Investing
Posted by admin in Real estate - An Overview on February 17, 2011
Residential real estate investing is a business activity that has waxed and waned in popularity dramatically over the last few years. Ironically, there always seem to be a lot of people jumping on board with investments like stock, gold, and real estate when the market’s going up, and jumping OFF the wagon and pursuing other activities once the market’s slumping. In a way that’s human nature, but it also means a lot of real estate investors are leaving money on the table.
By understanding the dynamics of your residential real estate investment marketplace, and acting in opposition to the rest of the market, you can often make more money, as long as you also stick to the real estate investing fundamentals.
Real estate investing, whether you’re buying residential or commercial property, is not a get-rich-quick scenario. Sure you can make some fast cash flipping houses, if that’s your bag, but that is a full time business activity, not a passive, long term investment. The word “investment” implies that you are committed to the activity for the long haul. Often, that’s just what it takes to make money in real estate.
Why Most Real Estate Investors are Doomed to Failure
Posted by admin in Real estate - An Overview on February 16, 2011
Let me start by saying that, sure, real estate can be a good investment. Real estate provides a hedge against inflation. And real estate often amounts to a forced saving plan. But most of the people who’ve jumped onto the real estate investment bandwagon over the last few years are going to fail. Here’s why:
Ignoring Returns on Investment
When you compare bank accounts, you know that 5% interest means more money in your pocket than 2% interest.
Real Estate Investment Trusts
Posted by admin in Real estate - An Overview on February 15, 2011
Royalty trusts, in Finance, are classic flow-through investments vehicles. The trust, like a mutual fund, holds a portfolio of assets, which can be anything from producing oil and gas wells to power generating stations to interests in land. The net cash flow, i.e. the total cash flow minus revenues, is passed on to the unit-holders as distribution.
The purpose of a Real Estate Investment Trusts is to reduce or eliminate corporate income taxes. In the United States, where they are generally more widespread as investment vehicles, Real Estate Investment Trusts pay little or no federal income tax but are subject to a number of special requirements set forth in the Internal Revenue Code, one of which is the requirement to distribute annually at least 90 percent of their taxable income in the form of dividends to shareholders.
Real Estate Investment Trusts are, therefore, a special type of royalty trust. They specialize in real property, anything from office buildings to long-term care facilities. For illiquid assets like real estate, closed-end funds of this type make good sense. Open-end or ‘mutual’ real estate funds are subject to new money and redemption problems, entirely absent in closed-end trusts. The first Real Estate Investment Trust was introduced in the United States in 1960. The vehicle was designed to facilitate investments in large-scale income-producing real estate by smaller investors. The US model was simple, enabling small investors to acquire equity interests in vehicles holding large-scale commercial property.