Investigating Your Local Real Estate Market

Although everything starts at the regional level, you need to fine-tune your perspective and look at your local real estate market, too. All of the same types of economic data that you collect on a regional basis are important in evaluating your local real estate market. MJOi With real estate investing, deciding where to invest is frequently more important than choosing the specific rental property. You can have a rental property that meets the needs of the market, but if it's located in a...

Using Real Estate Investment Trusts

Real estate investment trusts (REITs) are for-profit companies that own and generally operate different types of property, such as shopping centers, apartments, offices, warehouses, hotels, and other rental buildings (see Figure 4-1). These property-holding REITs are known as equity REITs. Some REITs, known as mortgage REITs, focus on the financing end of the business they lend to real estate property owners and operators or provide credit indirectly through buying loans (mortgage backed...

Covering Common Real Estate Investments

Keeping your investments close to home Looking at residential properties Getting to know commercial real estate Studying undeveloped land M f you lack substantial experience investing in real estate, you should avoid more esoteric and complicated properties and strategies. In this chapter, we discuss the more accessible and easy-to-master income-producing property options. In particular, residential income property, which we discuss in the next section, can be an attractive real estate...

Getting a Jump On Foreclosure and REO Competition with Short Sales

Savvy real estate investors know that the best properties are the ones that aren't exposed to the open market where the competition has a chance to drive up the price. They also know that the best deals can be made with motivated sellers and there's not much stronger motivation for a house seller than to know that they'll soon lose their property to foreclosure and find their credit ruined. These homeowners don't have any equity, and the existing debt on the property exceeds the current loan...

Making sense of a commercial lease

Commercial leases are much more complicated than residential ones. Thus, the commercial real estate investor must have a thorough understanding of the contractual obligations and duties of the lessor (landlord) and lessee (tenant). The analysis of commercial leases is typically called lease abstraction. A lease abstract is a written summary of all the significant terms and conditions contained in the lease and is much more than a rent roll. Although a good rent roll covers the lease basics...

Final closing statement

Just before your transaction is complete and escrow is closed, you receive a closing statement from the escrow officer. Besides the actual purchase price, there are several expenses incurred in the process of purchasing real estate that must be worked out between the buyer and the seller. For example, the seller may have paid the property taxes for the balance of the year, and the buyer should reimburse him for the amount attributable to his ownership period after the close of escrow. There are...

Selling now reaping profits later Installment sale

An installment sale is the disposition of a property in which the seller receives any portion of the sale proceeds in a tax year following the tax year in which she sells the property. The time value of money indicates that it's generally better to have the use of money today than in the future. Knowledgeable real estate investors seek ways to minimize or defer the taxes that they need to pay. One way to accomplish this goal is by using the installment sale method within specified IRS limits,...

Shopping for Mortgages

Financing costs of your real estate investment purchases are generally the single biggest expense by far, so it pays to shop around and know how to unearth the best deals. You may find that many, many lenders would love to have your business, especially if you have a strong credit rating. Although having numerous lenders competing for your business can save you money, it can also make mortgage shopping and selection difficult. This section should help you simplify matters. Many sources of real...

Paying for condo hotels and timeshares

Timeshares, a concept created in the 1960s, are a form of ownership or right to use a property. A more recent trend in real estate investing is condo hotels, which in many ways are simply a new angle on the old concept of timeshares. A condo hotel looks and operates just like any other first-class hotel, with the difference that each room is separately owned. The guests have no idea who owns their room. Both timeshares and condo hotels typically involve luxury resort locations with amenities...