Misc News

After completing a successful real estate transaction, do you wish almost half of your hard-earned profits didn’t have to go to the IRS for taxes? Do you ever dream about how many more real estate deals you could do if you could keep all the profit?

Well dream no more. Realizing tax-free or tax-deferred profits on real estate investing is a reality, and has been a popular investment strategy for years.

Government sponsored retirement plans such as IRAs and 401(k)s allow you to invest in almost anything not just stocks, bonds and mutual funds. And all the benefits those plans provide—tax-deductions and tax-free profits—apply to whatever investment you choose, including real estate.

If you’ve been thinking about purchasing rental property but you’ve been trying to determine whether it’s really worth the effort, consider this Return on Investment (ROI) formula for a minute and hopefully it will help you when making the best decision.

There are two separate and independent returns to rental properties.
1. You get a cash flow return while you hold a rental property and
2. You get a capital gains return when you sell the property.

This article will cover the relationship between debt service, return on investment, and net income on the cash flow side. These formulas are standard investing formulas regardless of where you invest or what type rental property you invest in.

5 Real Estate Success Tips To Rent Your House

Renting out your house fast, inexpensively, and to good tenants who will treat your house like it's their own is the fastest path to real estate success.

Here are 5 real estate success tips that have worked for me and that I hope will be successful for your house rentals as well.

#1 Set The Property Expectations

Setting the right expectations with your tenants will pave the way toward success in real estate.

With your renters, enforce the date that the rent is due and send out notices if you have to. If you send out rent statements, do it on the same day each month, make sure that repairs are done promptly, and deposit their rent checks on a regular schedule.

Just Do It

Just get out there and do it. Get your feet wet. Test the waters.

Stop thinking about it, stop making excuses, and Start Doing It.

You Do Not Need Big Bucks

Even in today's market there are lenders willing to do deals.

One option is a hard-money loan where you can finance your property on a short-term basis. Hard money lenders typically lend around 50% to 60% of a property's value and the interest rates can be in the double digits.

But remember, this is a short-term, fix and flip financing strategy.

Why you should always make deposits of rent payments the same day they're received

If you do it right, and follow a few simple steps time after time, managing cash flow is one of the easiest things to do with residential real estate rentals.

Tenants tend to think that if you own a rental property, you must be wealthy, and therefore not paying the rent on time isn't a big deal, since you've got the money anyway.

Clearly nothing could be further from the truth. Putting aside for a moment the issue of "wealthiness", imagine what happens if not one, or two, but all of your tenants takes this attitude!

Here's what one experienced residential real estate property owner that we know does.

I have been searching craigslist ads and was surpeised what i found. I was state hopping and came across Wisconsin and Colorado. I went all th eway to the back as ive been told when looking for properties. Motivated sellers I did find but that is not the news I want to report. I was looking at La Crosse Wisconsin, Appleton, Eu Clair and found houses priced below market value. I also found properties in Colorado Springs and Pueblo the same way. If your looking for properties try those cities. Wisconsin has a low cost of living so you will find the deals. But avoid cities like Milwaukee, Madison, Nothern Wisconsin to big of a tourist trade so property will be diffcult to find. So will motivated sellers be hard to find.

Trying to decide whether you should use a property management company or not? Here are the top reasons why you should hire one.

Rental Rates – Hiring a property management company who is experienced in the area can help you set the right rental rate which maximizes your revenue without turning the potential tenant away.

Collection – Property management companies will take responsibility for reminding the tenants to pay their rent on time, collecting and depositing the payments.

Marketing – Any experienced property manager will know the type of market your property caters to and how to best reach that market when vacancies are available.

Add the monthly rents. Multiply by 12 for the yearly amount. If the cash flow is a projection, you have to account for potential vacancies based on the property history or the percentage for similar properties in the area.

2

Add all other income that produces cash; for example, laundry income. Do not add appreciation (a noncash gain) unless you sold (or will sell) the property that year

3

Deduct all operating expenses. This may include real estate taxes, insurance, repair and maintenance, water and sewer, fuel and electricity. The result is the net operating income, or NOI.

4

Most creditors require the borrower to prove they have an economic or financial hardship preventing them from being able to pay the deficiency.

Creditors holding liens against real estate can include primary mortgages, junior lien holders—such as second mortgages, home equity lines of credit (HELOC) lenders, home owners association HOA (special assessment liens)—all of whom will need to approve individual applications for a short sale, should they be asked to take less than what is owed.

A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens' full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.[1] Any unpaid balance owed to the creditors is known as a deficiency.[2][3] Short sale agreements do not necessarily release borrowers from their obligations to repay any shortfalls on the loans, unless specifically agreed to between the parties. However, in California, legislation was passed to preclude deficiencies after a short sale is approved.