Expenses While Investing In Real Estate

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Posted by Campbell Stephen

While investing in a property and real estate, one faces many things at a time. It is advisable to get to know about the small things involved in a real estate deal. Expenses during an investment in the real estate are one of such things that are not considered at first. Maintaining a record of the expenses during the investments can minimize the risks. One never knows when the market will vary in terms of the prices. In this case the risk factors and expenses should be considered before making any investments in real estate.

Investors usually sell the stocks at a profitable price and make a real-estate investment. Others belong to the middle class which is gaining a higher income that can be disposed off. The investors usually make the investments in the houses and other properties as their second home. One should always make an investment in the real-estate which can fulfill the financial goals. So there are some points that should be considered while making an investment in the real-estate.

Factors to consider in a real estate investment

Taxation is the main factor to be considered in a real estate deal. A "wealth tax" refers to the investors who already own one house. The tax is not applicable to the wealth below certain amount. This kind old wealth also comprise of jewelry and car along with the extra house. If the extra owned house is put on rent for considerable duration then also it does not come under taxable wealth. For the investors who have put their second home on rent are liable for "Income Tax". Even though the second house is kept vacant and not put on the rent, the government assumes to be on rent and applies the income tax on it.

Leveraging is one more such factor to be considered. The term means taking loan for buying home or making investments. If the loan is taken from housing finance firms, then the rate of interest is hampered with the rise and fall of the market price. The investor may get more loss in the falling market and will get fewer returns in an uprising market. In leveraging the loan can also be taken for buying mutual funds or stocks.

The housing loan is also taken to carry out the tax savings. The housing loans will increase the net income and hence in turn will increase the cash outflow. The real-estate is considered to be an illiquid asset, as it is difficult to resell it and convert into the hard cash. That is why it has major impact on price.

The major expenses that are involved in the real estate are the property values and rents. The investors can check out for the comparison for the property value by investing the prices of nearby similar properties. The insurance factor also turns out to be an expense in the real-estate investment. The seller’s insurance coverage should be checked out before the deal.

Author Description
Stephen C Campbell (MBA, MSc) is an international internet marketer and business consultant, and has published more information about investments on http://www.investinukland.com /

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Flipping Houses: Can A Real Estate Investor To Make Money?

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Posted by Johnson Omar

Most likely the last thing on a real estate investor’s mind these days is flipping a house. The housing market is soft and inventory homes are at a national high. MSNBC recently reported that if all homebuilding were to stop in the U.S., it would take more than 10 months for the nation’s inventory homes to sell out. Times are tough for sure, but that doesn’t mean there is not money to be made.

Flipping houses is a money-making strategy investors have been using for decades. It generally involves purchasing a home and reselling it for more then the purchase price. During the housing boom in past years, flipping was exceptionally easy. Investors could pick up a new or used home and flip it in a matter of weeks for a substantial profit. At that time, the market was sky rocketing. Houses were easy to sell and profits were even easier to make. Now that reality has set back in and the market is trying to straighten itself out, this type of flipping doesn’t hold as many as promises as it did in the past.

Investors, however, can still make a profit flipping houses. Now more then ever there is an opportunity to pick up homes for a bargain and make a return on them. Real estate that has a tax lien or is in foreclosure can be picked up way below cost. Homes can also be purchases at estate auctions and resold for a profit.

Along with purchasing a bargain home to flip, investors can also go the fix it up route. This technique requires the investor to purchase a home in need of repairs. The investor then hires someone to make the repairs or makes the repairs on his or her own. By fixing up the home, equity is added thus increasing the value of the property. In turn, the home can be sold for a profit. The main downfall to this method is it takes more time then if you were to purchase a home at discount and simply resell it at market price.

Now there is a nasty little rumor out there that "flipping" houses is illegal. Fact is that simply isn’t true. Although there is such thing as illegally flipping houses which in translation boils down to loan fraud, investors are well within their rights to purchase a home and resell it for a profit. Loan or mortgage fraud occurs when an investor purchases a home usually dilapidated and makes some superficial repairs. The home is then sold to naive buyers at an inflated price. These types of schemes rely on the collaboration of an investor, appraiser and mortgage broker.

In 2006, the Department of Housing and Urban Development addressed loan fraud by creating new regulations to detour flipping within the Federal Housing Authority. Now, the seller must own the property for more then 90 days in order for buyers with FHA backed loans to qualify for the purchase.

In short, house flipping isn’t the money maker it once was. The good news is, when done right, you can still make money doing it.

Author Description
Omar Johnson is a successful Real Estate Investor and author of the home study course The Real Estate Investor’s Guide To Finding The Motivated Seller for more info http://www.findingthemotivatedsellers.com

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Bankruptcies surge despite law meant to curb them

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AP Enterprise: Bankruptcies are surging despite law that made them tougher and more expensive

Mike Baker, Associated Press Writer
Monday April 13, 2009, 6:40 pm EDT

RALEIGH, N.C. (AP) -- The number of U.S. businesses and individuals declaring bankruptcy is rising with a vengeance amid the recession, despite a three-year-old federal law that made it much tougher for Americans to escape their debts, an Associated Press analysis found.

"There's no end in sight," said bankruptcy lawyer Bryan Elliott of Hickory, N.C., who is working seven days a week and scheduling prospective clients a month in advance. "To be doing this well and having this much business, it is depressing. It's not a laugh-a-minute job."

Nearly 1.2 million debtors filed for bankruptcy in the past 12 months, according to federal court records collected and analyzed by the AP. Last month, 130,831 sought bankruptcy protection -- an increase of 46 percent over March 2008 and 81 percent over the same month in 2007.

Bob Lawless, a professor at the University of Illinois College of Law, said bankruptcies could reach 1.5 million this year and level off at 1.6 million next year -- around the same time economists expect an economic recovery to begin.

Congress voted in 2005 to make bankruptcy more cumbersome after years of intense lobbying from the nation's lenders, who complained that people were abusing the system. Before the move to change the law, bankruptcies were running at what was then an all-time high of about 1.6 million per year.

The tighter requirements initially appeared to work, with bankruptcies plummeting from a record-shattering 2 million cases in 2005 -- a total that reflected a rush to file before the new law took effect -- to 600,000 in 2006. But now bankruptcies are booming again.

"You wouldn't get this large of a rise without serious problems in the economy," said Lynn LoPucki, a UCLA law professor who researches bankruptcy.

The bankruptcy rate is climbing as well. In the past 12 months, about four people or businesses for every 1,000 people in the country filed for bankruptcy, according to the AP analysis. That is twice the rate in 2006, and close to the average of about five for every 1,000 in the decade leading up to the change in the law.

Lawless said the shame of bankruptcy may have eased somewhat in recent years, but added, "It's still a very stigmatizing, traumatic event for most everyone who files."

Previous recessions also drove people to bankruptcy court, though those increases were more moderate. Bankruptcies went up 19 percent amid the economic contraction in 2001, and about 15 percent during the recession of the early 1980s, according to the Administrative Office of the U.S. Courts.

Bankruptcy is considered a lagging economic indicator, since it is generally a last resort. The filings compiled by the AP illustrate the places where the economic meltdown has hit hardest.

In March, bankruptcy filings jumped the highest across the West. In Arizona, filings rose 91 percent from a year ago. They were up 84 percent in Idaho, 82 percent in California and 79 percent in Nevada, though those were trumped by Delaware, home to many large corporations, which saw a 127 percent jump.

Emory Clark, an Atlanta bankruptcy attorney who has been in the business for 25 years, said he is seeing more affluent people, many who have lost their jobs.

"There's something about human nature or American culture, but people hate filing for bankruptcy," Clark said. "It really is a stamp of failure. Nobody wants to come in here and pay us money to file. They are forced in because of circumstances."

Kathy Stevens of Vista, Calif., opened a tea and coffee boutique in August 2007, and it grew steadily. Then enrollment started to fall at a nearby mom-and-tot gym her customers frequented, and her business took a hit. The gym finally closed in the fall.

Stevens and her husband spent more than $35,000 to keep the boutique afloat, drawing on their own money and donations from family. After working from 6 a.m. until almost 10 p.m., seven days a week for months on end, Stevens realized her store would not survive. The couple filed for bankruptcy two weeks ago.

"You feel bad, because you never set out to do this," Stevens said. "We're trying to put it behind us and lick our wounds and move on."

Under the 2005 law, Congress imposed higher fees on those seeking bankruptcy and began requiring credit counseling sessions and a means test to assess debtors' ability to pay what they owed.

Lawless, the Illinois law professor, said his research found that the law simply increased the cost of filing by 50 percent and led many more people to cling to false hope longer.

Many filers take a credit counseling class just a day before turning to the courts.

Also, the law's test of a person's ability to pay off debts appears to have failed at one of its goals: steering debtors from Chapter 7, which allows people to sell off their assets to repay what they can and start again debt-free, and into Chapter 13, which places the filer in a repayment plan that can last for years. Chapter 7 cases accounted for 69 percent of all filings in the past year, compared with 71 percent in 2004.

Lawless argued that only a tiny number of people were abusing the system before the 2005 shift, and that the law punishes those who genuinely need help.

"The point of the bankruptcy system is to give the honest but unfortunate debtor a fresh start," Lawless said. "The fact that people are waiting longer to file shows just how mean-spirited the law is."

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Bankruptcies surge despite law meant to curb them

Thank you for visiting the official blog of TheRealEstateDealer.com. If you are new here, you may want to subscribe to our RSS feed by clicking the link in the upper right-hand corner of this page that says, "Subscribe to this Blog". Thanks for visiting us!

AP Enterprise: Bankruptcies are surging despite law that made them tougher and more expensive

Mike Baker, Associated Press Writer
Monday April 13, 2009, 6:40 pm EDT

RALEIGH, N.C. (AP) -- The number of U.S. businesses and individuals declaring bankruptcy is rising with a vengeance amid the recession, despite a three-year-old federal law that made it much tougher for Americans to escape their debts, an Associated Press analysis found.

"There's no end in sight," said bankruptcy lawyer Bryan Elliott of Hickory, N.C., who is working seven days a week and scheduling prospective clients a month in advance. "To be doing this well and having this much business, it is depressing. It's not a laugh-a-minute job."

Nearly 1.2 million debtors filed for bankruptcy in the past 12 months, according to federal court records collected and analyzed by the AP. Last month, 130,831 sought bankruptcy protection -- an increase of 46 percent over March 2008 and 81 percent over the same month in 2007.

Bob Lawless, a professor at the University of Illinois College of Law, said bankruptcies could reach 1.5 million this year and level off at 1.6 million next year -- around the same time economists expect an economic recovery to begin.

Congress voted in 2005 to make bankruptcy more cumbersome after years of intense lobbying from the nation's lenders, who complained that people were abusing the system. Before the move to change the law, bankruptcies were running at what was then an all-time high of about 1.6 million per year.

The tighter requirements initially appeared to work, with bankruptcies plummeting from a record-shattering 2 million cases in 2005 -- a total that reflected a rush to file before the new law took effect -- to 600,000 in 2006. But now bankruptcies are booming again.

"You wouldn't get this large of a rise without serious problems in the economy," said Lynn LoPucki, a UCLA law professor who researches bankruptcy.

The bankruptcy rate is climbing as well. In the past 12 months, about four people or businesses for every 1,000 people in the country filed for bankruptcy, according to the AP analysis. That is twice the rate in 2006, and close to the average of about five for every 1,000 in the decade leading up to the change in the law.

Lawless said the shame of bankruptcy may have eased somewhat in recent years, but added, "It's still a very stigmatizing, traumatic event for most everyone who files."

Previous recessions also drove people to bankruptcy court, though those increases were more moderate. Bankruptcies went up 19 percent amid the economic contraction in 2001, and about 15 percent during the recession of the early 1980s, according to the Administrative Office of the U.S. Courts.

Bankruptcy is considered a lagging economic indicator, since it is generally a last resort. The filings compiled by the AP illustrate the places where the economic meltdown has hit hardest.

In March, bankruptcy filings jumped the highest across the West. In Arizona, filings rose 91 percent from a year ago. They were up 84 percent in Idaho, 82 percent in California and 79 percent in Nevada, though those were trumped by Delaware, home to many large corporations, which saw a 127 percent jump.

Emory Clark, an Atlanta bankruptcy attorney who has been in the business for 25 years, said he is seeing more affluent people, many who have lost their jobs.

"There's something about human nature or American culture, but people hate filing for bankruptcy," Clark said. "It really is a stamp of failure. Nobody wants to come in here and pay us money to file. They are forced in because of circumstances."

Kathy Stevens of Vista, Calif., opened a tea and coffee boutique in August 2007, and it grew steadily. Then enrollment started to fall at a nearby mom-and-tot gym her customers frequented, and her business took a hit. The gym finally closed in the fall.

Stevens and her husband spent more than $35,000 to keep the boutique afloat, drawing on their own money and donations from family. After working from 6 a.m. until almost 10 p.m., seven days a week for months on end, Stevens realized her store would not survive. The couple filed for bankruptcy two weeks ago.

"You feel bad, because you never set out to do this," Stevens said. "We're trying to put it behind us and lick our wounds and move on."

Under the 2005 law, Congress imposed higher fees on those seeking bankruptcy and began requiring credit counseling sessions and a means test to assess debtors' ability to pay what they owed.

Lawless, the Illinois law professor, said his research found that the law simply increased the cost of filing by 50 percent and led many more people to cling to false hope longer.

Many filers take a credit counseling class just a day before turning to the courts.

Also, the law's test of a person's ability to pay off debts appears to have failed at one of its goals: steering debtors from Chapter 7, which allows people to sell off their assets to repay what they can and start again debt-free, and into Chapter 13, which places the filer in a repayment plan that can last for years. Chapter 7 cases accounted for 69 percent of all filings in the past year, compared with 71 percent in 2004.

Lawless argued that only a tiny number of people were abusing the system before the 2005 shift, and that the law punishes those who genuinely need help.

"The point of the bankruptcy system is to give the honest but unfortunate debtor a fresh start," Lawless said. "The fact that people are waiting longer to file shows just how mean-spirited the law is."

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Short Sale Real Investing

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If you want to be a competitive vendor in the market of real estate, you must know the technique of short sales. The main advantage of this technique is to allow discount to real estate investors from the lender.

What are short sales in real estate investing?

A short sale process comes in the picture when lender accepts a discount on mortgage in order to avoid a possible bankruptcy or foreclosure auction. In this method, instead of buying the property from a seller itself, you have to purchase the corresponding property from the lender. As an advantage you will get a handsome discount on that property. For instance, suppose a home owner facing foreclosure, has an existing mortgage of $400,000. Then you offer to the lender directly for $300,000, which may be accepted as a full payment loan.

The question arises here that why they are willing to accept this kind of deal and give discounts? Well, there are two main reasons behind this deal. First reason, banks do not want bad loans to be written on their books or record because bad record hinder the growth of the banks. Therefore, whenever banks get the opportunity to sell the property without any huge loss, they will sell it. Second reason, lenders know that if property goes to auction, they will pay heavy loss because if the property goes for auction, there are so many fees involved in it. Thus, they would give discount and finished it. It is the best time to jump in the short sale process of real estate and invest in it since the foreclosures are increasing rapidly.

Lenders’ willing to give discount

Almost every lender offers discount. Market is inundating with lenders, who are willing to give discounts. It might be possibility that you find lender who dose not provide any discount but it is rare. Only two or three lenders in many may not offer any loan or provide small discount.

What kind of property is best for investing in short sale?

According to shrewd investors in short sale investing system, the best property for investing is the houses that requires lot of repair and renovation because on these kinds of properties, lender will give you a huge amount of discount to investors. Properties that are leveraged are also very good for investing. Most experienced investors are willing to invest in over leveraged properties.
Properties having large amount of second mortgages are also recommended as gold because second mortgage can be eradicated at the foreclosure auction.

Important step while dealing in short sale

There are many steps required to take while dealing in short sales. But the most vital step is to getting the deed of property. Most of the investors forget this essential step while investing in short sale. It might be the case when, homeowners change their minds, and want to back out from the deal as they scared or in other case, they want to do negotiation again. If you have property deed then you could easily escape from the trap, otherwise you might get in trouble by bearing heavy losses.

Article source: ContentLog.com

Author Description
Stephen C Campbell (MBA, MSc) is an international internet marketer and business consultant, and has published more information about investments on http://www.investinukland.com /

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MakingHomeAffordable.gov

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The government set up a website to help people who are behind on the payments. The name of the website is MakingHomeAffordable.gov.

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