Andrew Vaughey, Real Estate Investment Help

Author: Kris Koonar

Real estate is preferred over stocks at least as a short cut to medium term investment. It is wise to pick real estate, keeping in view sale price appreciation in real estate right from the beginning of 1999. As per tracking done by the Office of Federal Housing Enterprise Oversight of the US Department of Housing and Urban Development, the sales price for real estate escalated more than 56% from 1999 till end 2004. During this period there was a corresponding drop in the S&P index in the range of 6%.

Skeptics are predicting a bust in the real estate market, but that is not keeping homebuyers from investing in real estate. April 2006 figures of the National Association of Realtors suggest that in the previous year 7.2 million homes changed hands at a median price of $206,000. This was up 15.1%.

Real estate investing is relatively simple when compared to stock markets. To be a successful investor in stocks you need to understand the technicalities of the stock markets, which are more than the average person bargains for. Most people work through brokers and are unaware of the reasons for their gains, if any, and whether they have received the full amount to which they were entitled against their investment. They have to rely on what they are told by the party handling their stocks, as they are not conversant with the 'hows' and 'whats' of stock market functioning. The same goes for losses suffered.

Real estate investing on the other hand has a more 'hands on' approach, which most people find simple and easy to understand. With a little calculation and foresight, a proper investment strategy can be formulated to make a decent profit with very little personal investment. The bulk is taken care of through suitable and timely financing. An owner occupied investment property can be financed with a 10% down payment. Therefore a $100,000 home can be secured by making a personal investment of just $10,000. A ten percent increase in the sales price in the first year, which is quite reasonable to expect, would get the entire initial investment back. Of course there would be closing costs involved, but they will be deductible as expenses.

There is also another advantage of depreciation as a tax benefit. Under US tax laws, it is understood that the value of a residential house will depreciate to zero in twenty-seven and a half years. However, the value of the land on which the house is built would not depreciate. The value of the construction and the land is understood in the ratio of 80:20. As per these figures, a $100,000 house will generate depreciation (on the $80,000 attributable to the construction) of $2,909.09 each year, which can reduce taxable income from other sources like salary payments etc. to place a person in the lower tax brackets.

A good way of investing would be to find bargain real estate below its real value for say $100,000 and invest $20,000 as down deposit to secure it and add another $2,500 in closing costs. Then, you need to identify someone to clean and paint the property and work for a bank reappraisal for its real worth of $120,000 or above, if it merits more value. The next step is to obtain a 'home equity line of credit' to get back the initial investment.

Author: Eric Bramlett

When you decide to buy a piece of real estate in order to pursue a business as a landlord, you are making an exciting and potentially financially-freeing decision. After all, simply owning property is an excellent investment. In addition, taking this property and turning it into an apartment or other form of rental property can provide for a steady flow of income. Nonetheless, there are several things you should know before you buy that first piece of real estate and enter into the world of renting.

Consider the Maintenance

One of the first considerations you need to make when you buy real estate and decide to become a landlord is the cost of maintenance and upkeep. Remember, you still own the property and, as the landlord, you are responsible for maintaining it. If you are not a handy person or if you simply do not have the time it takes to complete repairs and perform maintenance on the real estate you buy, you will need to hire someone to do this for you. This might mean hiring a property manager, which will cost you about 5% of the gross income you earn from your rentals.

Learn the Law

The laws affecting real estate and rentals will vary from state to state. Therefore, you need to make sure you are aware of the laws affecting you in your state. Although there are some variances in these laws, the basics are essentially the same - your tenant has all of the same rights of ownership except for the right to sell the property. In addition, as long as the tenant pays rent, he or she has the right to live on the property. At the same time, they do not have the right to damage the property in any way.

The law requires that you keep the real estate in a "habitable condition." Although there is a bit of gray where this is concerned, the law is understood to mean that the property must have working locks on its doors and windows, the heat must work, and the roof cannot leak.

Know How to Find Tenants

Before you sink your money into a piece of real estate that you plan to rent out, make sure you have a good idea as to how you will get tenants. In addition, be sure you are clear on the laws when it comes to interviewing and screening tenants. There are several discrimination laws in place that limit the types of questions you can ask a potential renter.

Before you purchase that real estate, set your standards so you know what you will and will not accept from a tenant - and make sure your standards are all legal. Some areas to consider include:

- The price of rent
- Whether or not you will accept pets
- The number of allowable occupants
- The amount of your security deposit
- Whether or not utilities are included in the rent
- Any minimum income requirements you expect from your tenants
- Whether or not you will accept HUD Section 9 participants