Benefits of Flipping Real Estate

Benefits of Flipping Real Estate

The obvious benefit and sought after benefit of flipping real estate is the profit. This is one incredibly tangible benefit, particularly when the profits are large and quick to come your way. Of course there are risks. Most ventures that offer high profit also come with a high degree of risk. Money, however, is not the only benefit that can be associated with flipping real estate though it is certainly the one on most investors’ minds when they get into this line of work.

Let’s talk profit first. Profit is the one reason that most people get into this business. The days are long and the work is hard. This is definitely not the type of work one would ordinarily undertake for the simple love of getting one’s hands dirty. This is real work that leaves you bone weary at the end of the day. However, when all the work is done and you get around to making the sell, you will find that the profit involved in a successful flip is well worth the effort you’ve put into the process.

The good news is that the savvy investor can still manage to make money even when the situation may not work out quite as planned. This is yet another benefit to flipping real estate. If the flip doesn’t work out, there is always the option of leasing to own the property or renting the property out. The profits in these situations are considerable less than a straight out flip but it can prevent financial ruin that is often the risk of a flip gone wrong. The fact that there are options and that you aren’t necessarily left ruined at the end of a bad flip is definitely a benefit. There aren’t many types of investments that allow you the option to save yourself the way real estate does.

One of the intangible benefits of flipping houses is that you are in essence working for yourself. In other words you do not have to punch a time clock or worry about overtime (at least not on your part). This can be a bad thing too if you lack the discipline required to get the job done. However, most of us will view this is a huge check in the pros column when deciding whether or not to take the plunge into the wonderful and frightening world of real estate investing.

Even though this is a business that requires a lot of work in order to turn an attractive profit there is some satisfaction at the end of the day involved in knowing that you are working for yourself and not to make someone else wealthy or in order to punch a time clock. That feeling of satisfaction is one that you should hang onto when the brand new toilet you’ve just installed becomes a geyser. Of course there are mistakes along the way, what other job keeps you on your toes quite like this one?

Real estate investing, house flipping in particular, can be one of the most frustrating types of investments a soul can pursue. At the same time it can also be one of the most rewarding mentally, spiritually, and financially. This is something you should keep in mind when deciding whether or not this is the right path for you.

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Are You Really A Real Estate Investor

By accident, I believe that our industry does us all a disservice. How? By calling us real estate investors.
How many of you call yourselves real estate investors? Lots. How many of you feel a little queasy when you introduce yourself as a real estate investor? (No need to confess you just need to recognize that feeling).

Do you want to know why you may be feeling queasy? I’ll tell you. It’s because of the incongruent language we are using on ourselves. Let me prove it while helping bust the number one fear of real estate “investors”.

What do you think of when you hear the word investor?
I bet it’s “cash” or “credit”. Right? Maybe something that you feel that you don’t have. So if your business card declares you a real estate investor and you don’t have any cash, do you feel funny, or out of integrity, or incongruent? Maybe a little?

On the other hand, what do you think of when you hear the word entrepreneur? The answers to this question usually range from “opportunist” to “opportunities” to “ideas” to “deals”, etc.

The definition of an entrepreneur is someone who uses the time, talent and treasure of other people to realize their idea or vision. Read that again because this a subtle but important point about your real estate success.

The number one limiting belief of real estate “investors” is “I cannot do this business because I have little cash and/or bad credit.” And if your subconscious holds this belief, guess how hard you are going to work to find deals. Guess how many deals your are likely to do. That’s right, you will do ZERO.

Good news! This limiting belief is easily busted.
You are not a real estate investor. You are a real estate entrepreneur.

What’s the difference? Well, entrepreneurs bring the deals to the money. Investors bring the money to the deals.

By DEFINITION, entrepreneurs are not expected to use their own cash. They are expected to raise cash for their deals and projects. That’s what we do. We find the one thing that is much more valuable than the cash which is the deals.

Money is easy. Finding the deals is the part that requires a little work. But most real estate “investors” get hung up in marketing or making an offer because they don’t have the cash sitting in their checking account. They freeze.

You need to declare yourself a “Real Estate Entrepreneur.” That’s what I do. At this stage of my life, it’s more fun being the entrepreneur and putting deals together. It’s my form of creativity. It’s my art. Being the investor and putting up the cash is OK but it’s kind of like being the guy that furnished the paint to Michelangelo. Nobody remembers the paint supply guy.

I urge you to adopt 2 new affirmation(s):
I am a real estate entrepreneur.
I am leveraging the time, talent and treasure of others.

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Basics of Real Estate Law

Real estate is such a broad topic. This topic covers almost the whole world and every individual has concerns regarding this.

Like any other things in this world, certain laws govern real estate, the so called real estate law. Nevertheless, to fully understand what real estate law is, it is necessary to define real estate. What is real estate?

Real estate is a legal term that includes land along with anything permanently affixed to the land such as buildings, fences and things attached to the buildings, such as plumbing, heating, and light fixtures. The properties not affixed are regarded as personal property.

Just like real estate, the real estate law is such a broad topic as well. If you are going to discuss it in a very simple way, real estate law is only the law, rules, regulation and other legal matters that governed real estate.

Real estate law entails things like owning real property, the typical restrictions imposed on owning real property, the common forms of property ownership and many others. As said earlier, it is very broad.

In this article, real estate will be discussed through the basics of real estate law. The basics of real estate law include understanding real property, the ownership, the restrictions, and the forms of property ownership. The basics discuss the topic regarding ownership of real estate.

Understanding its basics, you will definitely have the right thought about real estate law.

One of the basics of real estate law is real property. What is real property? Real property is simply the real estate. The real property is used interchangeably with real estate.

However, for technical purposes, some people prefer to distinguish real estate, referring to the land and fixtures themselves, from the real property, referring to ownership rights over real estate.

Real estate also entails about owning real property. What is owning real property about? Owning real property allows you the right to do with the land as you please aside from those subject to restrictions imposed by real estate law.

Owning a real property means you can do anything with it such as use it; give it away; sell or transfer it; use it for a collateral for loan; bequeath it to intended beneficiaries or let it sit where it is without doing anything to it. In other words, owning real property is having total rights on a land and no one can ever question you for it is yours.

In owning a real estate, some typical restrictions are being imposed by law. There are countless laws that restrict what you can do with the real property. It may be federal, state, county and local laws. The enforcement of these laws resides with the various agencies.

The most common restrictions imposed by government are zoning. It is an environmental hazard, public easement, right of way.

If there are restrictions imposed, there are also forms of property ownership. These are joint tenancy; tenancy in the entirety; sole ownership; tenants in common and community property.

In joint tenancy, two or more people own the property at the same time in equal shares. In tenancy in the entirety, some estates have especial form of joint tenancy when the joints are husband and wife- with each owning one half.

In sole ownership, the property is owned entirely by one person. Two or more persons own common tenants’ property at the same time. Meanwhile, community property is only recognized in the estates. It is a special form of joint tenancy between husband and wife, each owning one-half of their properties. Upon death, the decedent’s interest passes in a manner similar to tenants in common.

The basics of real estate are the best information needed in order to understand real estate law. With this basics information, although real estate is very broad, you have the capabilities of understanding it into its deeper sense.

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Rera Dubai – Real Estate Regulatory Authority In Dubai

Many people think that RERA is stand for Real Estate Regulatory Agency. However in reality RERA is stand for Real Estate Regulatory Authority in Dubai. RERA Dubai is the policy-making Dubai Land Department. It is a head agency which forms, governs and authorizes the real estate sector in Dubai.

RERA Dubai was founded on the 31st of July, in 2007 by His Highness Sheikh Mohammed Bin Rashed Al Maktoum, prime minister ruler and vice president of Dubai. RERA is different from the Dubai Lands Department (DLD) eventhough both authorities are involved in issues to do with property and real estate purchases and rentals.

The aim and objective of RERA Dubai is to set policies and plans in the real estate sector in Dubai in order to grow foreign investments. RERA is a part of Dubai Land Resources Department. The authority has its own financial and administrative independence with full legal authority to regulate the property sector in Dubai.

RERA Dubai also tell people on regulatory acts while purchasing the realty in Dubai. State resources can be in security department until the establishing up is complete. The estate can be broken but only later a particular commendation according local planning. The land given cannot be either purchased nor traded till the scripted instruction of His Highness Sheikh Mohammed Bin Rashed Al Maktoum is acquired. Tallying to the policy of confidentiality the Dubai Land Department don’t publish any info about its customers. Data relating the land conditions could be provided while the Dubai Land Department studies the condition of Land relations.

Associate the guidance of the declaration by RERA Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum of the Dubai principal plan 2015 to promote economic development and government modernization and allow substantiating growth and successfulness for all sectors, Dubai has provided great strides in placing the standard for the world in several sectors. This residential area and marketplace is the exceptional address for all the authoritative and reliable information regarding the Dubai real-estate sector.

RERA is set to model a pure international real estate approach system which factors the ‘old and the new’, the ‘customary’ and international ‘best practice’ approach. RERA main goal and objective is to ensure Dubai real estate practices and practitioners are raised to the highest condition known world wide for quality service, practices and simplicity of making out business in Dubai.

The Dubai Real Estate sector is attracting top talent from around the world and millions of dollars of Foreign Direct Investment(FDI). This unforeseeable development and interest at a international scale, provides Dubai authority to present a new concept of an on-line, virtual, real estate residential district.

The RERA Dubai website is at www.rpdubai.ae but rera.ae & rera.gov.ae can get you to RERA Dubai also.

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Why Real Estate is Your Best Investment

Using Real Estate to Control Risks

Real estate allows you to control your risk because you can actively participate in the decision-making process. Passive investments such as stocks dont give you this opportunity. Movements in investment real estate values are less erratic than in the stock market. Most people dont understand the economic forces influencing the market. Since real estate is less volatile, its easier to control and to understand. A real estate investment is tangible. You can touch it, youve been exposed to it all your life, and you can identify with it. As a result of this familiarity, you are better able to understand it.

Effectively Reducing Your Taxes

Real estate ownership,especially midsize apartment buildings, continues to be the most popular form of investment because of its potential for substantial tax savings. Since you are able to actively participate in the management of real estate, the Internal Revenue Service (IRS) currently allows qualifying individuals to write off up to $25,000 per year against salary and other income. No other investment gives you this capability. In addition, you can defer paying income taxes on profits indefinitely by using tax-deferred exchanges.

Leveraging That Works

Real estate is the only major investment that gives you the ability to acquire ownership with very little money down. This degree of leveraging allows you to amplify profits by using other peoples money. The more assets you are able to control, the more opportunities you have to succeed. The degree of leverage is calculated by dividing the total purchase price of the property by the amount of funds used to purchase it. Thus, if a down payment of $10,000 plus a $90,000 loan is used to purchase a property, a 10 to 1 leverage ratio has been achieved. The greater the leverage, the more equity will increase or decrease with the change in value of the property.

Why Real Estate Investments are a “Smart” Way to Become Wealthy

Over 50 percent of the wealth of the world was in real estate in 2000. In the United States, real estate accounted for 48.2 percent of the wealth (of which residential real estate represented 36.7 percent). Equity investments (stocks) amounted to 19.3 percent and bonds 21.1 percent.

Real Estate Versus All Other Real Estate Investments

In the past 20 years, multifamily income properties have delivered the highest average total investment returns of all real estate types. With a built-in hedge against inflation, its no wonder that multifamily real estate has out-performed all other types of real estate investments with relatively low risk. Based on supply and demand over the next 10 years, residential income will out pace all other types of real estate investment. Strong demographic and financial indicators along with changing lifestyles should continue to positively influence apartment investments.

With an average unleveraged rate of return of 10.2 percent over the past 20 years, residential income property has proven to be an attractive low-risk investment. From 1990 to 2000 residential income investment provided a more consistent higher total average rate of return than all types of properties and with less variance.

Although 10.2 percent is a great rate of return, it wont get me on the dance floor. What will get me dancing is the rate of return using leverage. A rate based on a 25 percent down payment (leverage) works out to be over a 20 percent rate of return. This type of return definitely gets my feet moving.

Three Advantages Apartment Investments Have Over Other Types of Real Estate

Apartments should remain well ahead of other major property types because they are generally more stable. Three important factors account for this stability:
They are less dependent on business cycles for occupancy than any other types of real estate investments. It doesnt matter if interest rates and home prices are high or low, apartments are generally more affordable.
Apartments have shorter leases; thereby offering greater protection from inflation than the long-term leases associated with other properties. That is, rents can be negotiated more frequently.
The pool of tenants is much greater for apartments than other types of properties. This ensures a more consistent occupancy than industrial and commercial properties, which usually have only a few tenants to choose from.

The Building Size That Gives You the Greatest Profit Potential

When investing in apartment complexes, try to find the right building size that makes the best use of your time and gives you the greatest profit potential. Single-family houses and small apartment units do not always work because of the competition and property management problems. Managing property on a day-to-day basis may not be for you. You could spend just as much time on a four-unit building as on a 40-unit complex and not make nearly as much money. In fact, because owners of smaller properties usually become emotionally attached to their property, you tend to spend more time with them telling them that they made the right move. Larger units are the domain of the institutional investors, and you cant compete with their availability of funds. After making many property transactions, you may find, as we did, that mid-size apartment buildings are the right niche.

APARTMENTS-THE COMING BONANZA FOR YOU

Supply and demand play an important role in residential income property value. The demand for rental property is increasing because the number of people entering the rental market is increasing steadily each year. At the same time, construction costs, stricter zoning ordinances, and environmental factors are limiting the new construction of residential income property. Together, these trends bode well for investing in residential income property.

Because the 1997 tax act allows joint owners to exempt capital gains of $500,000, more and more people are selling their homes, saving their money, and moving into rental property. It is estimated that the demand for rentals is likely to increase over 10 percent during the next 10years. Residential income property offers one of the best protections against inflation. In fact, a study reported by the Journal of Financial Economics found that residential real estate is the only investment that offers a complete hedge against both anticipated and unanticipated inflation.

People always need the three basics-food, clothing, and shelter. As the population grows, the need for shelter grows along with it. The hedge against inflation with residential rentals is greater because, unlike long-term commercial leases, they are generally on a month-to-month basis. As prices increase, apartment owners can increase rents more rapidly with month-to-month leases than commercial owners who have long-term leases.

Low-rise developments or garden apartments, midsize apartment buildings, in suburban communities account for more of the buying and selling transactions than luxury apartments (which have a much smaller market). Seven out of ten millionaires made their money in real estate. Shelter is not only vital, but its often the greatest part of a persons net worth.

A midsize apartment is one type of investment that is a source of security and stability. Every investment has peaks and valleys, including rental real estate. But over the long-term, it always comes out on top. The key is knowing the right time to buy and sell. That is the golden rule in investing. This book will give you the knowledge you need to invest at the right time and right place.

REAL ESTATE: THE SHOCK ABSORBER

Real estate generally outperforms equities because of its higher yields, greater price stability, and downside protection even in a recession. When stock markets are down, real estate holds value and produces a positive return. Real estate is less prone to booms and busts than in the past. Residential income-producing real estate is now stronger than it has been in many years.

SUMMARY

Since apartment investments can be seen and touched and are not an abstract form of ownership evidenced by a piece of paper-they are investor friendly. People can identify with doors and windows, bedrooms and bathrooms, and floors and roofs. They dont feel that the market is being manipulated by programmed buying and selling. They feel they have control over their investments.

Shelter is one of the basic necessities of life. You cant comfortably sleep on gold, silver, or stock certificates, but you can stay warm and dry with a roof over your head. There will always be a need for housing. And midsized apartments fit the bill.

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