WE CAN HELP YOU GROW YOUR REAL ESTATE INVESTMENT PORTFOLIO
The idea of owning Investment Real Estate seems to be gaining in popularity as investors tire of the ups and downs of the stock market. Not everyone has what it takes to be a landlord. But those who do may find rentals to be a good way to build wealth.
Summit Realty has been helping people build their wealth in real estate for over 20 years, with extensive knowledge of, and experience in, the real estate investment markets of Eugene/Springfield and the outer Lane County communities. We bring real estate investors and real estate investment property opportunities together, with a smooth transition into managing them. We work as Buyer's agents and have a highly credible team. We look for additional investors continually so that we do not miss good opportunities.
One might ask "how does real estate investing stack up against other investments - for instance the stock market." A recent article in The New York Times quoted, "In 1980, the Dow Jones Industrial Average was at 830. In 2004, it ran between 10,000 and 10,500. Rounded off, that's about a 1,100 percent gain. So, on the surface it looks like you would have done better in the stock market - however it does not take into account the ability to leverage your initial housing investment.
There are, of course, other factors to consider in comparing housing leverage and capital gains. Obviously, you have to pay the mortgage each month over the 30 years. But home buyers receive income-tax benefits because of interest rate and property tax deductions. Also, property investors can depreciate their assets to minimize tax burden.
A particularly considerable factor to weigh is the volatility of the investment. The same New York Times article goes on to say that the housing market is nowhere near that of the stock market in general, and of individual stocks. While losses are possible in housing, very rarely will you confront a complete wipe out, which is always possible in the stock market.
Buying property is an investment over which the investor has substantial control. You can add a bedroom, build a deck, enjoy ongoing restoration projects and you will be adding value to your investment - you can't paint your stock or control the people who run Enron.
Residential Property Investments
Residential real estate investments can be extremely rewarding. But there are some concerns that should be addressed before acquiring any investment property, and some special considerations when considering an investment in residential real estate in particular.
When investors decide to acquire rental properties, they must first decide what they want to accomplish, and over what period of time. The same criteria that are used in any sound investment strategy or financial plan should be used in the rental housing business.
It is very important to understand that owning and operating rental property is not just an investment, it is a business. Before you purchase any property you should have a plan for how you intend to manage it. You can learn to do it yourself or get assistance by taking courses and joining investor websites. You can also hire a professional property management company to operate your business for you.
A real estate investor always needs an exit strategy, preferably more than one, when he or she buys property. You need to have a vision showing when you will sell, if you will take the money and pay taxes or complete an IRS 1031 tax deferred exchange. Is your plan to have enough money for retirement? Are you going to pay off the property or refinance it and use the proceeds to buy another investment?
Managing real estate investment properties includes financial, cash flow, and real property management. Getting good financing, determining cash flow requirements, and maintaining the physical building all contribute to the success or failure of a real estate investment.
It makes sense to invest in property. With the guidance of a knowledgeable real estate and financial consultant, and the assistance of a qualified property management team, you can steadily grow your investment property portfolio. Let us show you how to make your property work for you.
Tax Deferred Exchanges
How to Complete a 1031 Tax Deferred Exchange
What is the purpose of a 1031 exchange?
A 1031 tax deferred exchange allows you to roll-over all of the proceeds received from selling real estate as an investment property into the purchase of one or more other like-kind investment properties. At closing, proceeds are transferred to a third party--called a facilitator or qualified intermediary--who holds them until they are used to acquire the new property. Exchanges Allow You to Delay Capital Gains Taxes
Capital gains taxes are deferred if all of the exchange funds are used to purchase like-kind investment property.
The deferment is like getting an interest-free loan on the tax dollars you would have owed for a cash sale. More equity is retained, and that helps you move into properties of higher value each time you perform a 1031 exchange. Single-Family Rental Homes
First-time property investors have good reasons to start with these homes
When it comes to real estate investments, single-family homes are likely the best choice for first-time property investors.
As perhaps the most widely available form of housing, the single-family home is most coveted by buyers and renters. As such, the investment is easier to finance, refinance, manage and liquidate, when compared with larger, multi-family property investments. But residential property investments require up-front cash, financial feeding, management and maintenance -- especially during the early years.
Unless your down payment is at least 20 percent or more, the rent you can charge usually won't begin providing positive cash flow for several years after your purchase. Although because of the current housing market and the drop in market value, and rents remaining the same, it has become more feasible for investors to buy property that will break even or sometimes even generate cash flow.
Because the investment saps rental income, you can't use all of your rental income to qualify for investment property mortgages. The exact amount of rental income you can use to qualify depends on the lender, the property, your down payment, other financial obligations, outside income and other loan qualifying factors. From the start, an investment property will cost you more to finance than an owner-occupied home. Property with potential:
To maximize your return, shop for investment property much in the same way that you'd buy your own home. Consider fixer-uppers that don't need major upgrades. Buy the cheapest home in the best block or buy into the cheapest neighborhood in the best community. Buy in areas where demand for housing will eventually exceed supply. And if possible, buy in a down market to later enjoy the equity-building benefits of an upturn.
Unless you have the knack and the time to manage tenants and property, your costs will include hiring a property manager. Along with advertising vacancies, screening tenants and looking after maintenance, a property manager can also help you project how much you can charge for rent, make sure you perform required disclosures and fill you in on renters' and landlords' rights, and the worse case scenario - Evict! Accredited Buyer’s Representative (ABR)
A buyer’s representative (or buyer’s agent) is an advocate for the buyer--not the seller--in a real estate transaction. Real estate laws and regulations vary from state to state but, buyer’s representatives usually owe full fiduciary (legal) duties, including loyalty and confidentiality, to their buyer-clients and keep their best interest in mind.