List Categories | List All Articles | List Articles By Title
Investing in Real Estate Like a Stock
A REAL ESTATE STOCK PLAN
Getting out of the bleachers and into the game!
This report is going to explain or attempt to give the stock market investors a basic one-on-one interview with a real estate portfolio manager who has consistently made a profit on 100% of the investment products that were actively chosen and managed. Never a loss, always tax advantaged and sheltered.
This report will not contain any high-tech, gobbly-gook, stock market charts, graphs, trends, analyst picks, projections, company reports or insider tips. In real estate, you personally have the power to develop and create all of those things yourself and I for the life of me could never trust other people's second hand opinions or publicly disseminated information to get the jump on the herd.
Now if I were a company officer, or majority voting shareowner, or a paid agent of those individuals, I might think differently, for the simple fact that I am getting the jump and I can make some dinero if I know something the majority does not. Overall, people are told to build companies so they can sell it to the public through offering pieces of their company to the public in the form of stock. So I know from the very beginning that the owners of companies are selling me a piece of paper which they say is worth a certain amount of whatever value a dollar is worth at that time.
Let me see if I understand this. I transfer my hard-earned cash and I pay a fee and/or commission to do this, and you give me a fancy certificate and a promise that this represents a solid investment decision. No way!
I've seen people lose their life savings counting on other people's paper promises. I am not comfortable sitting on the sidelines rooting for everyone else to make money for me. Who are we kidding? I would be last in line and get paid after all of them. And just how are they getting paid? Well, I see it as this: They get me to buy more fancy certificate paper, backed by more promises, while at the same time encouraging me to hold onto the previous certificates. All the while, the value in those is slowly liquidated to pay salaries and expenses of the inside corporate raiders of my blind faith and trust.
Boy, am I a skeptic. Let me shift gears here and take everything back I just said because often what I just said is dead wrong and two words will prove me wrong quite often. Those two words are "Blue Chips." Many companies do provide value, dividends and growth opportunities. Who am I to talk bad about the stock market? Don't get me wrong. It's an awesome institution and a complex and intricate financial function of the world's economy. Everyone feels the effects of this juggernaut and many people are afraid to upset the world powers by saying anything that will get the ire up of the kings of Wall Street, so they just clam up and slump into obscurity.
To heck with that attitude! Take control people. Actively manage your own hard assets and get off your *#!, and quit rooting for the other guys out there to make money for you. I'm not saying if you're 60, 70 or 80 years old, that I expect you to go out and start swinging hammers and saws. That's not necessary.
Use your brain at any age to control directly the events that are going to add to the bottom line. With real estate, you can use relatively simple math and your two eyes to see the whole picture. No charts, graphs, prospectuses, opinions or guesstimates. You invest less than ten miles from home in your own neighborhoods so you know all about market activity and current local economic conditions. You know prices and demand for your investment, as the local classified section of your newspaper is an instant picture of your markets fundamental outlook. Your competition advertises its position and you react immediately.
I'll tell you this: I don't stay up late reading small print, trying to find all the loopholes in company reports and federally mandated quarterly and annual filing and disclosure documents. That is a total waste of my time because in the end, nobody makes any promises to anyone. You in the end invest at your own risk; that is made clear.
Even when they catch the bad guys that use fraudulent accounting procedures and cook the books and shuffle assets and count them twice or commit some other white-collar crime, the fact remains that the money is gone and your out of luck.
Well folks, I've never been out of luck and I never will because I decide what is a good deal. I buy my houses below market price, add value to them in a hundred different ways and capitalize on those assets in many different ways. It's hands-on, eyes and ears open, active, direct control. There's no guessing, no hoping, no cheering, voting or scanning for loopholes in incomprehensible legalese boilerplate.
I circulate, select and direct. I negotiate and use my own strategies and tactics. I rehab valuable hard assets and use them to generate income, build equity, access tax-free cash, shelter other income from taxation and lower my tax brackets. Almost everything in my real estate business is deductible, so my gains are my gains. I can defer paying gains with 1031 exchanges and a host of other legal and ethical, easily understood ways to secure my future profit picture. You don't need a license to do this, just a pulse.
If you feel real estate investing is more difficult than stock market investing, I believe you are wrong. It's much safer to the average individual who doesn't have all kinds of crazy options, puts and calls, true insider tip-offs or hours and hours of time to hopefully understand more than the next guy in order to sell your stock to the next person for more than you paid for it. Unless you're accredited, you should be institutionalized.
With real estate, if I buy my investment property with owner occupied, 10% down financing, I am using 90% loan-to-value leverage. I don't suggest you do that in the stock market. If you make a little timing error, your investment career could be over.
So to put it in general terms, $1,000 controls $10,000 and $10,000 controls $100,000. Now if I buy a house that costs $100,000 and I put $10,000 down to control it and the market appreciates 10% the first year, I get my $10,000 back and keep the asset. It becomes a perpetual money machine and I don't have any of my own money at risk.
There are closing costs but they are deductible as expenses. Here is another point. My rich Uncle Sam wants me to provide housing for his citizens to live in, so he let's me take depreciation on my investments to encourage me to rent them out to others. This explains a tax benefit in real estate that helps us common people who actively participate in the management of the investment who are not making over $150,000 a year in adjusted gross income.
For example, if you pay $100,000 for a house, Uncle Sam says that this house will slowly disintegrate to dust in 27.5 years and for non-residential real property, 39 years. The land will always remain so they say 20% of the purchase price was land. So you only depreciate the house's value. In this case, that would be $80,000 and $80,000 divided by 27.5 years = $2909.09 per year for 27.5 years. That benefit can get you in lower tax brackets by reducing your taxable income on other income, such as your regular job or other investments.
Thus, you save today's dollars, and when you sell the house years later Uncle Sam recaptures that amount but it is later on, after your investment has increased in value and the dollar hasn't. Believe me, it helps you a lot more than it ever hurts. A good C.P.A. will use it to make you money now. Note: A 1031 tax deferred exchange can delay repayment of capital gains indefinitely.
Here's how to play a decent game of real estate investment! Buy something at 20% below its market value. This is not hard to do. It may take you, as a new investor, 3-6 months to find it.
You're learning curve will let you acquire under market value property at faster and faster rates from months to weeks to days. It takes practice. Use the book, Magic Bullets, to move fast.
So you find a $100,000 property and you put down 20% (investor rate) as the down payment plus $2,500 in closing costs. The bank loans you $80,000 to buy it. If you're getting older, then pay someone to clean it and paint it. Get the bank to reappraise it for its true value of $120,000 or more. Take out an equity line and get all your money back, tax-free. Now let the tenants pay it off for you while it goes up in value and throws off positive cash flow, and shelters itself from taxation. This is not hard to do - www.magicbullets.com will walk you through it.
I personally believe the hardest thing to do is to hold on to the real estate investments that you do acquire. What people tend to do is get tired or itchy and they sell the goose. When you sell, you do get a lump sum of cash but now you have to go out and find more. This can become like a revolving door. You have to keep going in and out of the market buying and selling again and again. Sound familiar?
If you just buy and don't sell your investments they will grow in value through inflation, appreciation and equity accrual/mortgage reduction. Eventually, you will own them free and clear, and with 4 or 5 houses throwing off $1,000 or more each month, you will have approximately $60,000 a year in retirement income. I know my parents could live on that?how about you?
Then as you get older, sell one, preferably the one you have spent two of the last five years in as your primary residence. The reason for this is because Uncle Sam says that you don't have to pay any capital gains on the sale of your primary residence until you have exceeded $500,000 in sheltered gains.
For example, lets say you just sell one home. You're in your early 60's and you have had the house for 25 years. Lets assume you paid $100,000 for it and it has appreciated at a moderate rate of 5% each year on average. For those 25 years, its present value now would be $338,635.31. That is a capital gain of $238,635.31. You pay zero, nothing, in taxes on your profit, using your exemption up to a $500,000 lifetime cap for married couples or $250,000 for single folks.
The entire $338,635.31 is yours to do with whatever you please. It is 25 years later, so your buying power as a result of 3% inflation has eroded your buying power but think about all the people who have no real estate to fall back on. Ouch! That's no way to live.
No surprises here. You can actively manage your own properties for years and if you do it right and use my methods of acquiring tenants, you just might get lucky and get a lifetime tenant. I'm not going to let you say that it's impossible because I'm going to agree with you that it's probably not going to happen.
Here's what the statistics say (no charts or graphs). People move on average every 5 years so you should reasonably expect to have at least 5 different sets of tenants.
That's fine because every 5 years, you can update your properties appearance and raise the rent to match current market conditions. Long-term tenants always seem to keep you from achieving a true market rent if they stay for 10-15 years, and they do stay. I see it all the time and I still get market rent?you'll see!
The figure that says people on average move every 5 years applies to you too. If you get itchy to move or sell, then do the following: Don't sell anything! Just use equity lines to acquire your next, nicer house and don't move further than 10 miles away from your investments. Even the pros blow it on this one.
If you pay attention to what I just said, you should retire comfortably, with more money than the average person ever needs. You have a choice.
I will use a true story to illustrate my point. My wife's uncle bought 2 ½ acres, in what his buddies from his telephone company job used to say was no man's land. He bought it for $15,000 in 1972. He financed his 3 bed/2.5 bath/2 car garage, ranch style, block home construction for an additional $32,000, for a total of $47,000.
Well, he sold that house in 2001 for $365,000. He paid no commission (I showed him how) and he paid no capital gains. That's a real life story of a $318,000 tax-free gain or profit on a $47,000 investment. He did hold it for 29 years but he has no money worries and lives a life of ease and comfort. So my point: Collect a few houses and don't sell them. That is the Magic Bullet of this story!
I'll admit to you that I've shorted the stock market a few times and never lost on stocks either, but there are way to many closed-door conversations that I'm not allowed to listen to. I have a feeling that there is a reason for that. Can you guess what it is?
I learn more, make more, have more, do more and help more by actively managing my investment from less than ten miles away. I know all the players and there are no closed doors. My business associates are true friends, who help each other make money by providing excellent value for our customer's dollar, and that customer is my tenant.
My rentals are superior to my competition, to the degree that my wonderful tenants remain tenants for life, or they buy it from me if I decide to sell.
Rental real estate is a rewarding investment. It is not just the money; it's the value that you personally deliver.
I choose to live with purpose, passion and desire. I can't do that in the stock market. How can I help you personally by investing in stocks?
Author Biography: Dan Auito is a dual-licensed real estate agent and appraisal assistant. In addition to being a 20-year veteran of the United States Coast Guard, Dan has also founded a non-profit drug prevention corporation, a real estate consulting group and is the author of "Magic Bullets in Real Estate." This 300-page power-packed book comes with a website that further supports its readers.
Please visit with the family at http://www.magicbullets.com we look forward to seeing you!
Real Estate Investing - The Marvel Of Home Depot And Lowes
Repairing a rental home (or your own home) use to require running down to the local hardware store or to the nearby building supply house. After several stops around town, you found everything you needed to solve your maintenance problem.
Feel At Home Faster After You Move
Moving to a new community can be a great adventure, if you go with the right attitude and a sound strategy for settling-in. Incorporate these tips into an action plan, and you'll stay focused, organized and proactive-just what's needed to put roots down fast.
How I Became a Real Estate Investor
Recently I closed on the sale of two homes. They were located about a mile apart and had comparable market values.
Home Selling: Making It Easy On Yourself!
It's a dream for many to buy and take ownership of a home. It's something one aspires for in their lifetime.
Property Investing Secrets 7
Property Investing Secrets:How Buying Real Estate Is Like Planning a Trip to the Greek IslandsOne you start property investing, one important tip is to press the flesh with the real estate agents in the areas where you plan to buy. Because property investing is a bit like buying a holiday package, you must separate yourself from the rest of the investors by giving the real estate agents the information they are looking for in your first face to face meeting.
Real Estate Investing: Infomercial and Mentoring Scams
Flipping through late-night infomercials recently, I saw two real estate get-rich quick schemes, and I couldn't help but wonder why people still fall for those old scams? Has anyone really talked a seller out of his home for no money down with owner financing lately?Real estate infomercials do great harm to beginning investors, who waste hundreds of dollars on old information. Worse yet, those beginners soon get discouraged and miss out on the true (and profitable) adventure of real estate investing.
Should I Invest in Real Estate While Running an Internet Business?
Of course you should. I practice this for quite a while and I never looked back.
San Antonio Texas Real Estate
The San Antonio, Texas real estate market is still going strong even after several years of growth.San Antonio ranks as one of the most affordable cities in the nation to purchase a new home.
How to Attract Clients in Residential Real Estate
Doesn't it seem like everyone you know has a friend, relative, or acquaintance that is a realtor? How could anyone, especially someone new to the industry, possibly achieve success when faced with this much competition?The answer begins to appear when you consider the following questions: How many licensed real estate agents have the talents required for success in sales? How many have been trained in effective selling techniques? How many know how to prospect effectively? How many know which questions to ask to determine the factors that are most important to each prospect's buying decision? How many take their profession seriously and are willing to put in the effort and hours that are required to build a successful business? How many of them regularly sell multiple houses per month? The 80/20 rule definitely applies to residential real estate. In fact, some statistics suggest the ratio is more like 90/10 (where 90% of home sales are made by just 10% of realtors), with the vast majority of home sales by the top 1%!So, how can a novice realtor attract clients? By building his or her credibility and relationships.
Late Mortgage Payments Sabotage PMI Cancellation
There's something you should know about PMI!Private mortgage insurance is commonly referred to as PMI. If a buyer makes a down payment of less than 20% of a home's value the lender will insist that a premium for PMI be added to every monthly payment.
The Best Way To Get Real Estate Listings
The Real Estate Industry is HUGE and is a golden opportunity for real estate agents. National average home sales exceed $200,000.
Real Estate Investing - Books,TV Infomercials, and Seminars
Real estate investing has become popularized today because of real estate investing TV infomercials and traveling seminar circuits. But real estate investing has not always been so popular.
From Foreclosure to Forbearance - The Art of Negotiation
As an active real estate investor you probably already know that the most important phase of your investment is when you buy the property. Most of us are getting the bargains in the foreclosure market.
Stay Motivated With REI Till The Deal Comes
I know many investors step into the game of real estate investing with high hopes of landing the deal that will turn their financial situation around and yes some do and this is not for you - this is for the investors still looking for that first deal!The best way starting out in this business, staying motivated and sticking to real estate investing has to do with one big factor!Keep your JOB - Yes you may be "Just Over Broke" but real estate investing comes with no guarantees of doing a deal in 30, 90, or 120 days as a matter of fact deals come and they go. real estate investing has its good times and it's bad times!You need a source of income and without it the likely hood of failure will soon follow!Having a stable income is the number one goal to having financial well being and your mental and emotional well being also.
Real Estate Inspection - Do Your Own
Why should you do your own real estate inspection? To get a better deal. It isn't necessary to learn building codes, and you probably should use a professional inspector in any case.
The Real Estate Bubble Fallacy
There has been a lot of talk lately about the "Real Estate Bubble", and a lot of folks are asking the question: "When it is going to burst"?They are saying that the market just can't sustain this level of growth and appreciation much longer, and I heat them say that it is inevitable that it must come crashing down soon. People are worried.
Buying a Home in Westminster
The city of Westminster is centrally located in the Denver metropolitan area. Its easy access to amenities in both Denver and Boulder really coax investors into buying a home in Westminster.
Small Town Stone House with a Long History
As a native Midwesterner, the first thing I noticed when moving to the Delaware Valley was the enormous number of fieldstone houses. Frankly, I'd never seen such a thing.
What is a Predatory Lender?
Several months ago, the 3,000-member California Association of Mortgage Brokers (CAMB) created the first real definition to describe the abusive lending practices of predatory lenders. According to the CAMB, predatory lending was described as "placing consumers in loan products with significantly worse terms and/or higher costs than loans offered to similarly qualified consumers in the region for the primary purpose of enriching the originator and with little or no regard for the costs to the consumer.
Home Selling: How To Set The Right Asking Price
Many homes remain unsold for a long time because they're over-priced. Pricing your home right is essential if you want to sell your home in quick time.
home | site map
All articles are copyright to their owners.
Note: this website lists articles, We do not Write Articles !