Ontario Licensed Real Estate Agents and Maternity Leave


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Most Ontario real estate agents work solely on a commissions basis. These agents are generally on an independent contractor status making them self employed. The „employed“ rules and regulations in the province of Ontario will for the most part, not apply to self employed real estate sales people who decide on taking a maternity leave.

When a real estate agent, Realtor, sales representative, or Broker, considers her maternity leave situation, she will be thinking about her loss of income, existing and continuing monthly expenses, and possibly the option of not returning to realty sales for a longer period of time.

Here is a typical scenario for an Ontario Realtor who is on maternity leave:

Most likely she was a registered real estate agent in Ontario with a franchise Brokerage. That Brokerage is a member of the Toronto real estate board or depending on their location in Ontario, their own local board. As a board member the Brokerage pays its dues including associations like O.R.E.A and C.R.E.A.. Therefore, all agents in that Brokerage will also be responsible for those dues whether active in sales or not. The agent on Maternity leave, then, will also be paying these dues so long as she remains registered with this Brokerage.

Not all franchise Brokerages are equal, but most of them will have certain common expenses or fees that their registered sales agents must pay as part of their agreement. These fees could be desk fees, advertising fees, franchise and transaction fees, fixed monthly office fees or administration costs etc., etc. Although the real estate boards fee and dues are mandatory whether you are on maternity leave or just not active in sales, some Brokerages may allow non payment or waive some of the listed expenses while the agent is on maternity leave.

An agent on maternity leave may have some legitimate concerns about having to pay for the same expenses she did while in the sales field. Another concern may be the loss of income due to her leave. Still another thought may be the eventual feeling, while taking care of her baby and family, that returning to real estate sales will not be something she wants to do sooner but rather, much later on.

There is a lot of flexibility in Ontario with real estate agents ready to take maternity leave. If expenses are going to be a problem, the licensed agent can opt to resign from her current Brokerage and register with a non board member realty Brokerage. She can park her license with a Brokerage that will not have any of the above mentioned fees and dues applicable. This alone will save the agent a lot of money especially if her maternity leave is extended for an uncertain period of time.

Income while on maternity leave is possible whether the realty agent remains registered with a board member Brokerage or non member Brokerage. She can refer business to a fellow real estate agent or Brokerage and agree to accept a referral fee. As long as her real estate license is registered with a Brokerage in good standing with R.E.C.O., she can continue to earn referral commissions paid to her through her Brokerage.

Although maternity leave is not an option for many agents, it’s good to know that in Ontario, real estate agents who elect to take maternity leave can do so with a little piece of mind. The reassurance that these agents can substantially reduce their expenses and still earn an income by referring sales to other licensed agents, surely becomes important considerations as they decide to become stay at home parents.

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Source by Bruno Francis Cristini

Real Estate Industry of India


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The construction of commercial houses, residential housing, and business spaces, such as hotels, restaurants, theaters, and industrial buildings, namely factories and government buildings, are all covered by the real estate sector. Real estate also involves activities such as the purchase, sale, and development of land. Thus the real estate activities encompass both construction and housing sectors.

The Indian real estate industry, which is currently worth about US$ 12 billion, plays a significant role in contributing to the economy of the country. The real estate industry in India ranks second in the world in terms of generating employment for the people of India and contributing to the Gross Domestic Product of the country. Presently real estate accounts for about 5% of India’s GDP; in the next five years it is expected to rise up to 6%.

The real estate sector of India is flourishing at a fast pace. Over the years the industry graph has shown an upward trend. The industry has shown a growth rate of about 30% each year. The recent surge in Indian outsourcing business houses, including technical consultancy services, medical transcription, and call centers, has constituted about 10 million square feet of growth in real estate.

Today, several multinational corporations have shown great confidence in investing in Indian real estate sectors for its promise to gain tremendous returns on investments in India. Another reason why foreign investors are keen to invest in the Indian real estate sector is the easy and cheap availability of skilled workforce and the considerably low cost of operations. This adds up to higher returns on investments.

The unprecedented growth in the Indian industrial real estate sector is fuelled by two important forces. First, the fast expansion of the Indian industrial sector has created a large demand for manufacturing and office buildings. Second, the liberalization policies of the government of India have simplified the investment process by reducing the need for permissions and licenses for starting any large construction project. The government thus opened the doors for foreign investment in the real estate sector of India, which gave a further push to the development of the real estate industry in India.

The main reason for the government of India to allow FDI in Indian real estate was to make the sector more organized and inject a sense of professionalism into the real estate industry. As a result of the FDI, the villages adjoining the metropolises have experienced an upsurge in the land prices. This in turn has forced several farmers to sell their land and get good money in return.

Thus, the real estate sector in India by riding the back of the overall economic growth of the county is witnessing an unparalleled growth and has brought about several regulatory changes. High industrial growth, favorable demographics, rising purchasing power of people, easier financing options, a sharp increase in global liquidity, looser credit policies, a greater availability of leverage, an increase in mortgage lending, a selective capital account, and consistent growth in equity markets have resulted in an upturn in the real estate investment sector. These along with the government’s relaxation of FDI policies have made the Indian real estate industry an attractive investment option.

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Real Estate Agent Assistant Agreement


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Using an assistant agreement is vital when hiring a real estate assistant. It should describe the working relationship between you and the assistant. The first thing you should consider is whether he or she is an employee or working as an independent contractor. If you choose to have an employee you have to deduct taxes, social security and unemployment insurance from their pay. This involves a lot of record keeping on your part plus the added expenses you incur by having an employee…

So after consideration most agents that hire assistants choose the independent contractor status. You do not have to do any of the withholding. You just have to provide a 1099 form. There is no salary only a commission or fee as payment or services rendered payment. This fee will also be deductible on your taxes as an expense.. It would be wise to check with your accountant to see how to handle the payment schedule.

You should hire an assistant that has an active real estate license because if they don’t have one it will limit them to doing only what an unlicensed person can do. This will make a very big difference because there are many tasks that need a licensed agent to perform. Some of the requirements you should consider when interviewing an assistant would be having computer skills in programs such as Microsoft word, excel or comparable programs. If they don’t have a laptop computer you may have to provide one. Although it’s an expense the investment will prove well worth it.

Let’s talk about what else an agreement should do.

  • Define the work hours
  • Define commission or payment services
  • Explain what duties you expect from an assistant
  • Assist with showings
  • Assist with market value reports
  • Go on market value report appointments with you
  • Set Appointments
  • Do open houses
  • Record keeping
  • Mailings
  • Hand out flyers
  • Place signs for open houses
  • Make phone calls on your behalf
  • Prospecting for new business
  • Review the daily updates on the MLS
  • Preview new listings
  • Meet all of your clients and customers
  • A team player attitude

You must determine a payment schedule of how much, when and how often the assistant should expect payment. Your business growth should have a direct effect on commission increases for the assistant. A confidentially clause is important to have in your agreement. The assistant must know that what goes on between both of you stays confidential. Having this all on paper will set the guidelines. Your assistant will know their job description and their duties.. A real estate assistant agreement should protect both parties.

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Why You Need a Personal Assistant


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Successful real estate agents are experts at multitasking—juggling open houses, taking calls from clients, and coming up with innovative marketing strategies—all while trying to maintain a balanced personal life. For some agents, the demands on their time become too great, and certain tasks fall by the wayside. In order to restore efficiency and ease the pressure, many realtors today hire personal assistants.

Is a personal assistant right for you? If you’re a real estate agent who has yellow sticky notes and to-do lists blanketing your desk, then you might need a personal assistant. If you can’t find important paperwork within a minute or two, then yes, you need an assistant. If your family can’t remember who you are when you walk in the front door, then you definitely need a personal assistant.

What kinds of things can personal assistants do for you? If they have their real estate license, they can handle many of your regular responsibilities such as showing properties, hosting open houses, advertising the business, going over contracts with clients, and accepting payment.

An assistant that does not have his real estate license is more limited in what he can do for you, but he can still make your life much easier. He can see to the daily administrative tasks such as handling contact leads, answering the telephone, responding to email inquiries, as well as general office jobs such as faxing documents and filing papers. These chores often require focus and attention to detail, which can quickly eat up your time; if someone else can take care of them for you, you can devote that time to generating more income, or to spending quality time with family.

If you like the idea of hiring a personal assistant, but only need help on occasion, consider getting a virtual assistant. VA’s can help you with appointments, phone calls, and time management. Some virtual assistants can even help with the maintenance of your website. VA’s are independent contractors, so you don’t have to worry about offering benefits and taking off taxes from their paycheck. You also don’t have to furnish them with office space and equipment because they perform their work offsite, from their home office.

Make sure that if you decide to hire a virtual assistant you check out their references before handing over critical information such as credit card numbers and website passwords. You want to know the person as well as possible, so that you can feel good about entrusting them with your business.

A personal assistant isn’t just for celebrities or the very wealthy; it’s for anyone who has a successful business and limited time. If you hire an assistant, you not only rid yourself of some of the more menial tasks associated with the real estate profession, but you can also use your newly acquired free time to garner new business, or simply to take some much needed down time. A personal assistant can help your real estate business run smoothly, and enable you to use your time in a more productive way.

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Source by Joshua Keen

Jaco, Costa Rica Real Estate for Sale


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Current Jaco and Costa Rica real estate for sale features not only charming mountaintop villas and lakeside bungalows, but also luxury beach condos or townhouses. Even more exciting are the countless investment properties (like horse ranches, fish hatcheries, bed and breakfasts, restaurants, condos, resorts) and scenic acreage. Chances are, many Americans don’t think owning a piece of the tropical rainforest, their own hot spring, a waterfall, lakefront property or a plot of land overlooking volcanoes is within their means. However, the taxes and cost of land is so inexpensive right now that anyone who can afford a $100,000 – $200,000 home in the US can afford and find prime Costa Rica and Jaco real estate for sale!

The local government is anxious to bolster the economy with more foreign investment dollars. In fact, a new highway system connecting the airport right to the Jaco Beach area (scheduled to be completed in 2008) is expected to facilitate the tourism and steadily growing population. Not only does Costa Rica trade bananas, coffee, sugar and cocoa with the US, but they also trade citizens. Jaco and Costa Rica real estate is usurped by many US retirees, which made Costa Rica more densely populated with Americans than any other nation in the world.

As previously suggested, in addition to good roads, healthcare, low taxes, beautiful scenery and tropical climate, Jaco and Costa Rica real estate for sale offers affordable prices. For example, $148,500 can get buyers a two bedroom two bathroom plus 1 bedroom cottage, in perfect condition, made out of rare woods. A two bedroom, two bathroom townhouse with a studio apartment is listed at $185,000. For $245,000, a savvy buyer could choose between a brand new two bedroom two bathroom home with a Jacuzzi and deck or a stone French Country three bedroom two bathroom cottage. Private gated community living is also offered in that price range, which is ideal for people who aren’t into mowing the lawn, doing home repairs or dealing with the hassle of home maintenance.

Investors can purchase a 12.5 acre Arenal Springs bed and breakfast with five villas, a swimming pool, Jacuzzi, tropical landscaping, volcanic views and room for expansion all for $2.5 million. For $199,000, home builders can have 16.5 acres of jungle including two rivers, a main road, utility hookups and close proximity to the town of Arenal. Or one can own 30 acres of jungle, pasture, rivers and hot springs near the Tenorio Volcano for $485,000! Situated just around the corner from the Tierras Morenas mountain range, one can find the perfect location amid the wilderness to erect a Thoreau-esque cabin. Or how about owning 170 acres of pristine jungle near a national park with twenty-five waterfalls, public road access and electricity hookups for just $500,000? It’s amazing how much park-like setting for the adventurous at heart one can find just by peeking at listings of Jaco and Costa Rica real estate for sale!

Spanish Colonial luxury estates await for $329,000 and come fully furnished and ready for investors to rent out as vacation property or snatch up for their own retirement. Or an enormous ranch / bed and breakfast sits on the Jaco and Costa Rica real estate for sale list offering six bedrooms, four bathrooms, two living rooms, two lots, lake/volcano views and a long porch for $200,000 or best offer. Central America’s best kept secret is the real estate along Jaco Beach and in the hills of Costa Rica. In fact, visitors from America don’t even need visas to come explore the tropical jungles and investigate what the country has to offer them!

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Source by Adam Morien

Be Careful How You Evaluate Real Estate Data/Statistics: 4 Examples


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In today’s world, we are often over – loaded with statistics, data, etc. Some of these might be relevant and significant, while at other times, they may be over – reaching, misleading, or unnecessary! We often hear or read discussions regarding mortgage interest rates, so – called – housing starts, number of mortgage applications, and the number of houses on the market, etc. Often, discussions focus on seeming to need to label the real estate market, either as a buyers or seller market! While there may be times these are valuable indicators and information, like most data, the skill is in how well one can interpret these, understand them, know what the numbers really mean, and how to use them. Let’s review 4 examples of how statistics are related to real estate, etc.

1. Average or median price: The first thing to understand is the difference between an average and a median price. Average means one adds up all houses sold in the specific target region, and dividing by the number of sales. Median, on the other hand, is listing all the sales prices, and the one in the 50 percentile, is the median price. Simply stated assume 10 houses sold are reviewed, and 2 are sold at $500,000; 2 at $600,000; 1 at $750,000; 2 at $900,000; 2 at $1 million; and one at $1.5 million. In this sampling, the average price is $757,000 and the median price is $750,000. However, why is this information important, since if the sampling is not large enough, wouldn’t it depend on which specific houses sold, whether there was more strength at the higher or lower end of the market, etc. When pricing is discussed, it’s important to put it into perspective, and see the number of units compared in both periods of time.

2. Housing starts: This refers to number of new builds in an area, but doesn’t it make sense, to also consider how much empty or available land/ property, might be available to build on. Always put all statistics into some sort of perspective!

3. Mortgage applications: Are these predominantly for new mortgages or refinances? Are they conventional mortgages? Might it also be important to look at the term of the mortgages? Shouldn’t we also look at the criteria being used, and how many/ what percentage, are approved?

4. Houses on market: It is generally considered a buyer’s market when there are significantly more houses on market, than buyers, and a seller’s market, when circumstances are reversed? Look at the inventory of houses being offered, and the locales. How long do they seem to be staying on the market?

Like in most things statistics – related, it is important to know and evaluate what things mean, rather than making false assumptions, and/ or speculating. Beware of statistics, because they might turn out to either be your friend, or enemy!

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Source by Richard Brody

Real Estate in Second Life


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Americans love games. Maybe it’s a cultural thing, and of course the passion for games isn’t limited to this country. From the beautiful simplicity of tic-tac-toe to board games like checkers and Monopoly, card games and on up to the sophisticated gaming systems like Xbox and Wii, the quest for entertainment has been a constant.

Grand Theft Auto rolled into stardom with its high-tech portrayal of a futuristic city that mimicked New York, called Liberty City. Names ranging from The Statue of Happiness, GetaLife Building and Rotterdam Tower are obvious tips of the hat to the Big Apple. But Grand Theft Auto is a bit darker and more violent than many gamers prefer and for many the search for a virtual world with nearly infinite possibilities and less crime has lead to Second Life, or SL.

Now with the current near historic real estate and housing market slump, it’s only natural that Second Life, arguably one of the most popular virtually reality games, might be even more appealing to new gamers tired of the gloom and doom of real life real estate.

Second Life started up in 2003 and is owned by Linden Lab. The whole premise of the game is based on virtual real estate, and just like in real life, money can be made by it. That’s real money, converted from the Linden Dollar currency used in the game. If you want to really enjoy the possibilities offered and have some serious fun in Second Life, you have to own land to do it. In reality players are leasing the virtual land, they don’t really own it, but the premise is the same.

A player wants a small parcel of land pays a fee every month, similar to rent. As you move up in land ownership, you pay more per month. The more land you own, the more you can do in Second Life. It’s the ultimate in real estate speculation without the risk. You have to be premium member of Second Life to own land, and the more land you own the higher your monthly fee is to Linden Lab. Players can own small parcels without paying any more than the basic monthly fee or you can opt for your own island. Linden auctions off parcels of land or you can buy and sell with other residents of Second Life.

There have been undocumented cases of residents generating a secondary income or even making their living off of real estate deals in Second Life. Reselling virtual land or renting out parcels can generate a monthly income, as strange as it may seem. If you think about it, besides the monetary aspect, it could become very addictive to some players. You would have all of the excitement of real estate deals, speculation and potential profit or loss without the headaches of insurance, mortgages or taxes. That has to be a major draw for some residents of the virtual game.

The value of land in Second Life can be increased much the same way as in real life. Residents can improve the land by building houses, adding businesses or even landscaping the property. A resident of SL could purchase enough land to develop projects as big as these luxury condos in Chicago http://www.chicagocondodirectory.com/luxury-condos and rent or sell the units for an income.

By the same token, Linden reserves the right to add more land to the game under the Acts of Linden, which can suddenly decrease the value of land by increasing the supply, should the market get out of hand.

There also used to be a First Land program to entice new players. You could join with a premium account and get a small parcel of land without having to pay a monthly fee. This practice was shut down in early 2007, however. And just like in real life, there are abandoned parcels of land that are thrown back into the rotation and come up for auction.

There are also other factors at play in Second Life that mimic real life, such as obnoxious neighbors. Some residents have been accused of creating offensive parcels of land in an effort to lower the value of neighboring parcels and force sales. To try and limit disputes, Linden started allowing covenants in 2007. A covenant basically allows anyone owning a region of land (which is supposed to hold up to 100 residents) to set rules that have to be followed or else loss of land will occur. This keeps residents who rent or own within that region from defacing property.

Of course with any type of land rush, you’ll find real estate agents and Coldwell Banker was the first company to jump on the Second Life bandwagon. The company set up shop in the virtual world in 2007 and purchased a large amount of land tracts on the mainland of SL. Its plan was to divide up the land into 520 units, with half being for sale residential homes and the other half as rental property. Coldwell planned to market the homes(which buyers won’t be able to customize or change) well below the going rate on SL and also offer everything from helicopter tours to information on real life condos, houses and property.

Coldwell Banker was not only the first large real estate company to join SL, it was the first to actually put a real life property up for sale on Second Life. Complete with a three dimensional replica of a $3.1 million estate located on Mercer Island, Washington.

With the popularity of virtual home tours and the power of the Internet growing, coupled with the housing market slump of 2008, Second Life may become an escape and even an investment for more people.

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Source by Kelly Brandon

Communication Skills Are Necessary in a Real Estate Agent


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One of the most important skills you should look for in your selection of a real estate agent is his or her communication skills. A real estate agent’s ability to effectively communicate with all parties involved in a transacation can effectively make or break a deal.

At the top of the list of communications traits to seek in a real estate agent is listening skills. Yes, communication involves not only the effective transmission of information, but most importantly the receipt of information. A real estate agent should ask you questions, and then listen (which means internalize and digest) the information that you are transmitting to them.

Common questions which the real estate agent should ask include queries as to your financial situation. This is important so that the real estate agent can effectively guide you in the right direction when it comes to your need for both purchasing and selling a home.

Communication also involves you, however. The most effective communicator is unable to provide much assistance if you do not provide them with the information he or she requires. A good real estate agent will know how to obtain this information from you, by asking key questions regarding important topics that you might not have considered to volunteer but which are nevertheless crucial for the agent to do his or her job.

Questions asked may include the time frame for buying or selling a home, the amount of down payment you have available, whether or not you are a first time buyer, and of course questions about neighborhood, school and other requirements.

Effective communication is also required with respect to the other parties involved. Your real estate agent should not only be able to communicate well with you, but equally well with the other parties to the transaction. The ability to calmy communicate one’s way through glitches in closings and financial negotiations benefits all of the parties involved.

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Source by Catherine Nguyen

Want to invest in Real Estate? 7 Questions you MUST Ask Yourself BEFORE you Buy Another Real Estate Investment Course


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You’ve heard that investing in real estate can be very lucrative.  Before you get started, here are seven questions to ask yourself.

1.       Is this a hobby or a business?

Ask yourself why you want to invest in real estate.

–          Do you want another income stream

–          Do you want to build equity in a house

–          How many sellers and buyers do you want to speak with each day/week/month

–          How much time do you have to invest in real estate

–          Are you working a full time job

–          Are you retired looking for additional income

–          What do you want to do with your time?

If you want to build a real estate investing business, then you need to treat it like a business. 

Are you going to be a landlord?  Then you need to determine how much time you want to spend collecting rent, maintaining the property, making repairs, answering tenant calls late at night, etc.

Or have a property management company handle the tenants and maintenance?  Then you need to determine who you will hire to manage your property and how much you will pay them.  Typically a property management company will charge one months rent to locate a tenant and then charge 8%-10% of the monthly rent for collecting the rent and answering all calls from the tenant.  You still need to set aside a reserve fund for maintenance.

Maybe you don’t want to be a landlord and you want to wholesale property.  Then you need to develop a buyer’s list of buyers who have the cash to purchase the house.  You will still need to work with sellers to locate properties, get it under contract.  You then need to get your wholesale buyer to sign the assignment of contract.  And you have to make sure you follow up with the closing agent to make sure the deal is funded by the wholesale buyer and the deal closes.  You will get your assignment fee once the deal closes.

Here are the questions you need to ask yourself.

–          Do you want to be a landlord

–          How much time do you want to put into real estate investing

–          Do you want to build a business or just make some extra money once in a while

2.       Do you want to work directly with sellers?

There are many investors who want to get into the real estate investing business who don‘ t have prior sales experience.  Yes, you can call homeowners directly and negotiate the purchase of their home, it is possible.  It’s even easier when you are speaking with a motivated seller.  I mean a seller that is really motivated to sell, not someone who wants to sell, wants full price for their home and just doesn’t want to wait for the all cash buyer that will pay retail price. 

Are you someone that wants to help these motivated sellers?  Do you have it in you to hear their stories over and over?  Some of these sellers will break your heart and you will want to help them.  You have to make sure that you only work with those that you can help and make a profit for yourself.  Just because someone is willing to deed you their house does not mean it is a good deal. 

Think about a situation where the seller has two mortgages, judgments, and liens on the property.  Yes, you can work this as a short sale and get the liens removed and negotiate with the lender to get a smaller settlement for the payoff of the mortgage.  You need to decide if you want to put in the time and effort it takes to negotiate the short sale and get the liens removed.  I have seen investors in the short sale negotiation process with the lender for anywhere from 2 months to 18 months.  Do you want wait months to close the deal?

You need to decide if you want to work directly with homeowners or have someone handle this for you.

3.       Do you want to work directly with buyers?

Once you have a house under contract, it is time for you to find your buyer.  The best thing you can do is to build a buyers list before you have a property.  Find out where the buyers want to live, and then go find a house in that area.  It is much easier to find a house for a buyer than it is to find a buyer for a house.

Do you want to take calls from the buyers?  They call at all hours, while you are having dinner, before you wake up in the morning, when you are driving to work, etc.  Are you willing to drop everything you are doing to take a call from a buyer?

4.       Where are you going to get the money?

This is one of the biggest concerns of all real estate investors, where to get the money. 

Yes, you can buy a house with little of your own money.  Some of the techniques to do this are:

–          Buy the house subject-to the existing mortgage

–          Have the seller carryback the financing in the form of a note

–          Lease/Option the house

You can also build relationships with other people who have money, such as

–          Private lenders

–          Hard Money Lenders

–          Mortgage Brokers

The biggest money concern that you never hear about is where to get the money to market your business.  You can buy a house subject-to the existing mortgage.  But how do you find that house?  You have to continue to MARKET, MARKET, MARKET. 

Marketing costs money.  That is what most of the gurus forget to tell you.  You hear all about how you can buy a house with no money down or little money down.  What they don’t tell you is that you have to spend money on marketing to find the house, and money on marketing to find the buyer. 

Before you get started, put together a marketing plan so you know how much money you need to get started.

5.       Do you want chunks of cash or cash flow?

What is the reason you want to invest in real estate?  Are you interested in getting chunks of cash? Cash Flow?  Or Both?

What you want out of real estate investing will help you determine what type of real estate investing you want to get into.

If you are looking for chunks of cash, you have a couple of choices.  Consider wholesaling or rehabbing (fix and flip).

If you are looking for cash flow, consider landlording, selling a home with seller financing, or be a private lender.

6.       Where do you want to invest?

  1. It’s easiest to start local since you are familiar with house values and have access to local experts to answer your questions.

7.       What is your plan to learn more about RE investing?

The most successful real estate investors are those who keep up with the changes in the industry and are constantly learning new techniques. 

One of the best things you can do is find a local mentor, someone who is making money investing in your local market.  Ideally they should be investing in the area that you are interested in.  If you want to wholesale properties, find a local investor who is wholesaling properties.  Not only will you ask them to mentor you, but they may buy some of your properties from you.

If you are interested in commercial real estate, then you shouldn’t spend your time with an investor who deals only with single family homes.

Always continue to learn about Real estate investing.  There are many gurus that travel the country teaching real estate investing.  Ask the people at your REIA whose products they have purchased and whether or not it helped them in their business. 

First determine the niche you want to work to get started.  Learn everything you can about that specific niche and create income in that niche before you move on to the next niche. Don’t get distracted by the „shiny ball“ syndrome.

Real Estate investing can be very lucrative.  You need to create a plan, continue to educate yourself, and continue to market for sellers and buyers. 

Immobilienmakler Heidelberg

Makler Heidelberg


Der Immoblienmakler für Heidelberg Mannheim und Karlsruhe
Wir verkaufen für Verkäufer zu 100% kostenfrei
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Source by Heather Dunlop

Holding Investment Real Estate – LLC, Trust, Or Both?


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The Issue: How to Hold Property in California?

Countless individuals invest in real estate every day. Some dream of becoming the next real estate mogul, while others simply wish to supplement their salary with additional income. Whatever your motivations, owning investment properties can produce big rewards, but also big problems. This is why it is important to hold title to your property in the most beneficial way. The internet is saturated with various posts and articles touting the most effective techniques to manage your property. It can often be a daunting task weeding through the mass of information in an attempt to discern what advice is reliable and what advice can get you into trouble. Our goal here is to provide a succinct and clear summary of the safest and most important strategies for holding investment property in California. We hope the result will be a valuable starting point in considering the best ways to both protect you as the owner/landlord from liability and also guarantee the best treatment of your assets.

The Risks of Owning Real Estate

As stated above, while property can be a valuable investment, there are also significant risks. One of the biggest risks is lawsuits. From common slip and falls, to environmental contamination, landlords and owners are easily exposed to legal judgments. Landlords have also been successfully sued by victims of crimes — such as robberies, rape, and even murder — that occur on their property on the theory that the landlord provided inadequate security.

Options for Holding Real Estate

Faced with the risk of lawsuits, it is crucial that you do not own investment real property in your own name. (The only real property you should hold in your own name is your primary residence.) Thankfully, there are several ways in which an individual can hold property other than in his/her own name. These include as a corporation, limited partnership, limited liability company („LLC“), trust, and many others. While there are many options, when it comes to real estate investment, LLCs are the preferred entity by most investors, attorneys and accountants.

For many reasons, few investors hold investment real estate in C corporations. A corporation protects the shareholders from personal liability, but the double taxation of dividends and the inability to have „paper losses“ from depreciation flow through to owners make a C corporation inappropriate for real estate investments.

In the past, partnerships and limited partnerships were the entities of choice for real estate investors. Limited partners were protected from personal liability while also being able to take passed through tax losses (subject to IRS rules–you’ll need an accountant or attorney to sort out the issues of at-risk limitations and so on) from the property. However, the biggest downfall with limited partnerships was that someone had to be the general partner and expose himself to unlimited personal liability.

Many small real estate investors also hold property in a trust. While a living trust is important for protecting the owner’s privacy and provides valuable estate planning treatment, the trust provides nothing in the area of protection from liability. However, although a trust provides no liability protection, it should not be overlooked, as it can easily be paired with an LLC.

1. Benefits of a LLC

LLCs appear to be the best of all worlds for holding investment real estate. Unlike limited partnerships, LLCs do not require a general partner who is exposed to liability. Instead, all LLC owners — called members — have complete limited liability protection. LLCs are also superior to C corporations because LLCs avoid the double taxation of corporations, yet retain complete limited liability for all members. Furthermore, LLC’s are rather cheap and easy to form.

A. One LLC or Multiple LLCs?

For owners of multiple properties, the question arises whether to hold all properties under one LLC, or to create a new LLC for each additional property. For several reasons, it is generally advisable to have one LLC for each property.

First, having a separate LLC own each separate property prevents „spillover“ liability from one property to another. Suppose you have two properties worth $500,000 and they’re held in the same LLC. If a tenant is injured at property 1, and wins a $750,000 judgment, he will be able to put a lien on both properties for the entire $750,000 even though property 2 had nothing to do with the plaintiff’s injury.

On the other hand, if each property had its own LLC, then the creditor could only put a lien on the property where the plaintiff was injured (assuming that they cannot pierce the corporate veil).

Additionally, many banks and lenders require separate LLCs for each property. They want the property they’re lending against to be „bankruptcy remote“. This means that the lender doesn’t want a problem at a separate property to jeopardize their security interest in the property that they’re lending on.

2. Benefits of a Trust

As stated above, an LLC may be used concurrently with a trust to provide the best protection and estate treatment for your property. There are many types of trusts, but the revocable living trust is probably the most common and useful for holding title to real estate. The major benefit from holding property in a trust is that the property avoids probate after your death. As many are aware, probate is a court-supervised process for transferring assets to the beneficiaries listed in one’s will. The advantages of avoiding probate are numerous. Distribution of property held in a living trust can be much faster than probate, assets in a living trust can be more easily accessible to the beneficiaries of the trust, and the cost of distributing assets held in a living trust is often less than going through probate. [Note: One should also be aware of other ways to avoid probate. For instance, property held in joint tenancy with a right of survivorship automatically avoids probate whether or not the property is in the living trust. Consult an estate planning attorney for more advice regarding probate matters.]

3. Use Both an LLC and a Trust

Because an LLC and a trust both provide significant benefits to the owner of real property, a smart investor should consider using both a LLC and a trust to adequately protect himself and his property. Utilizing both a trust and a LLC creates the best combination of liability protection and favorable estate planning. To accomplish this, the owner should hold the investment property in a single member LLC, with the living trust as the sole member of the LLC. Here, the trust is the owner of the company and holds all of the interests of the LLC. This form of ownership gives you an added layer of protection from the LLC as well as the additional estate planning benefits of a trust.

A. Costs

For the most part, the costs of forming and maintaining an LLC and trust are rather minimal. For an average LLC, the costs are simply nominal filing fees and an $800 per/yr fee to the state of CA. While simple incorporations may be done on your own, it is strongly advised that you seek the advice of a knowledgeable attorney so that no mistakes are made. The same may be said for forming a trust. A little money now is worth the price of avoiding big problems in the future.

B. The CA LLC Fee

While the costs of forming a LLC are generally small, there are additional fees that may be imposed on LLCs in California depending on gross profits. The California Revenue and Taxation Code Section 17942(a) includes an additional fee on LLCs if total gross income (i.e. rent) exceeds $250,000. „Total gross income“ refers to gross revenues (not profits). Under this Tax Code Section, the amount of the fee is determined as follows:

1. $0 for LLCs with total gross income of less than $250,000;

2. $900 for LLCs with total gross income of at least $250,000 but less than $500,000;

3. $2,500 for LLCs with total gross income of at least $500,000 but less than $1,000,000;

4. $6,000 for LLCs with total gross income of at least $1,000,000 but less than $5,000,000; and

5. $11,790 for LLCs with total gross income of $5,000,000 or more.

Although the fee is relatively small, one must consider that the fee is assessed against gross revenues, not profits. This means that the fee is due whether or not your property is profitable. For a property with high revenues but narrow profit margins, the fee would reflect a higher portion of the property’s profitability than it would on a property that is highly profitable. For example, a company that owns an office building with revenues from rent totaling $1 million, but a mortgage of $995,000, would actually operate at a loss after the $6,000 fee was imposed. Furthermore, the fee would be particularly irksome for those companies that foresee incurring losses in their early stages of development.

4. Limited Partnership: a Possible Strategy if Gross Receipts Exceed $250,000

For the vast majority of investors, the CA LLC fee should not dissuade you from forming an LLC. If, however, the impact is severely detrimental, there are several potential solutions that may be explored. A competent attorney or accountant may be able to work with you to avoid this fee. One method may be to form a Limited Partnership. The partnership should be set up with an LLC as the General Partner (assuming liability) and the owner(s) of the property as the limited partner(s). By forming a limited partnership with an LLC acting as the general partner, the landlord can likely avoid the higher fee imposed on an LLC while still protecting his/her personal liability. While this may be a possible solution, it is strongly recommended that you consult with an attorney or accountant regarding the best course of action.

While there are risks associated with real estate, with intelligent decision-making and thoughtful preparation, real property can be a valuable investment. The first step though, is to make sure that you have adequately protected yourself and your property. We hope that this article helps property owners begin to discover the various ways in which one may hold investment property, as well as the protections and benefits provided by such ownership.

Immobilienmakler Heidelberg

Makler Heidelberg


Der Immoblienmakler für Heidelberg Mannheim und Karlsruhe
Wir verkaufen für Verkäufer zu 100% kostenfrei
Schnell, zuverlässig und zum Höchstpreis

Source by P. J. Javaheri