The Power Of Real Estate Leverage February 11, 2009
Posted by minnesotarealty in MN Realty.Tags: minnetonka listings, minnetonka mn real estate, minnetonka realty
comments closed
Do you want to know the best way to use your money? Would you like to learn the basics of real estate investment? Fret no more because you will discover valuable pointers in using leverage and OPM (other people’s money) that makes real estate an excellent tool in investing!
First of all, always make a qualified mortgage professional part of your team of experts; the examples that follow may not be appropriate or even possible for your particular situation. Some people have the goal of receiving cashflow every month to supplement their incomes while others want long-term financial success through investment appreciation.
To vitalize your financial goal, look closely into your options. What’s amazing in the real estate market is the assurance that you are in control. For instance, you have $20,000 to start with. With this amount, you can have either a 10 percent down payment on a $20,000 worth of property or a 20 percent down payment on a $10,000 property. Of course, you will be the one to decide which is better.
There is no right or wrong answer; again, it depends on your goals, but let’s look at the differences. Whenever you make a large down payment it is more likely that you will be able to get cashflow because your mortgage payments will be lower and at the 20% mark you do not need mortgage insurance. So if cashflow is what you desire, larger down payments help you achieve that.
Assuming that for the $100,000 and $200,000 properties, the appreciation is set at 6 percent (Please note that the appreciation rate actually varies depending on their locations, type of property, etc..but for this article, you can well disregard these differences). That translates to these figures: the $100,000 will be worth $106,000 after a year of appreciation and the $200,000 becomes $212,000.
The amount of appreciation for both properties ($100,000 and $200,000) obviously doubles itself year after year. All these and more, but you would not be spending any thereby saving yourself some serious bucks!
In a relatively shorter time, your gain will be sufficient to obtain equity and purchase another PROPERTY so you actually have doubled your properties and compounded their appreciation. On another hand, the cashflow might not be present in the $200,000 property and perhaps there will be times when you have to expend for maintenance costs but look at the greater appreciation and long-term benefits.
Moreover, you get more advantage since debt payments and maintenance costs are tax deductions (using leverage or OPM and getting less monthly cashflow) unlike cashflow that is taxable. In the case of some people who needed monthly cashflow – the solution is simple, your approach can be modified to get what you really wanted. Besides, most people would agree that extra payment every month realizes wealth building benefits in the future!
With these in mind, its not surprising that you chose the better one. Start pooling your team of experts now and make the right choice!
Alexandria P. Anderson is a licensed Minnesota Realtor that uses the Minnetonka Listings to help her clients to find and purchase Minnetonka Realty and other Twin Cities properties.
In Today’s Economy – Should You Buy Or Rent Your Home? February 4, 2009
Posted by minnesotarealty in 1.Tags: bloomington houses, bloomington properties, bloomington real estate
comments closed
Those of us who are conscious of the current economic conditions would say that choosing between owning and renting a house at this time poses quite a challenge. It is very easy to fall prey to others whose opinion seemingly sound “good.” However, we cannot deny that this requires expertise on the part of the information source. In so doing, we can possibly avoid costly or unnecessary mistakes. Preferring the right information source with reference to owning or renting also affords us the chance to anchor our decisions from an authority on the matter.
A good adviser takes into account several factors to help you come up with sound financial decision. One, he must consider your individual situation; and two, he must be experienced enough to back his claims with solid evidence. Since no two people have exactly the same predicament and your case is unique from the others – it is crucial to weigh the costs and benefits of buying versus renting. As the co – author of the book Equity Happens (Russell Gray) puts it, “Do the math!”
Intelligent decision arises when you do careful examination of both buying and renting. Having said that, I will spell out some considerations here, which you might find useful. Moreover, since I am not aware of your current financial condition – I will not belabor you with countless rhetoric anymore. In renting, all you need to add up are the costs of your rent, some additional fees, and other utilities.
For ownership expenses it’s a little trickier. You must add together more items and might need the help of professionals to determine what the expenses will be. The main expenses are commonly abbreviated with the acronym PITI. This stands for Principal (the amount of money you pay toward the principal of your loan), Interest (the amount you pay toward the interest of the loan), Taxes (property taxes you must pay), and Insurance (both property insurance and mortgage insurance, if applicable).
Owning a home also covers utility expenses plus other maintenance outlay aside from the PITI. In the case of renting, while it is compelling that you only pay the same amount on a monthly basis; you can go back and determine what your previous payments could buy you a home for. Monthly monetary costs are important aspects in deciding what to choose between owning and renting but it is also equally significant to look at the long-term benefits.
In this case, ownership seems to be where the long-range financial rewards are. Renting a house does not guarantee a title even after years of investment. You will also notice that your rent increases as time goes by. On the other hand, the payment or main cost allotted to buying a house practically stays the same even through the years except for some such as utilities, insurance, etc. The good news is that there is a promise of equity from all the payments you have made towards the ownership of your house. In an appreciating market like ours – a wise choice can go a long way in as far as the value of appreciating our home is concerned!
There is a good chance your choice shifts according to your personal feelings and opinion. Simply put, making the best decision towards renting or owning a home involves your subjective feeling. What can be more fun than having a house you can call your own, and enjoying the independence in creating changes with it however you like it! On one hand, you might favor the side of renting if you will give emphasis on other concerns such as having no lawn to mow, or other maintenance issues.
Often, financial consideration plays a big role but also brings into mind subjective feelings over the argument: to buy or to rent a house? To be more specific, purchasing expensive appliances no longer bothers you when you have huge savings from renting instead of owning. Or maybe, the freedom to do whatever you want with your own house appears inconsequential if you will note the massive expenses you shed off just to purchase your home. Either way, the dictum “numbers do not lie” proves that the former is still weightier than the other.
Conversely, this piece wants to point out two important concerns relative to renting and buying a house. One is to seek advice from the right authority to help you identify the best course of action. Next is to examine carefully both the financial and subjective considerations. The gains or benefits usually become apparent on a long term basis. Finally, it would help to bear in mind that we are in a buyer’s market where ownership is deemed favorable over renting.
Alexandria P. Anderson is a licensed Minnesota Realtor that helps people to find and purchase Bloomington houses and other Bloomington properties for her clients’ needs.
Property Investing: Not As Hard As You Might Think January 26, 2009
Posted by minnesotarealty in MN Realty.Tags: minnetonka mn homes, minnetonka mn real estate, real estate in minnetonka
comments closed
Many people think that real estate investment is beyond them. It has such a mysterious sound. Surely, successful real estate investors like Donald Trump were born with a tip sheet in their hand and prospects in the back pocket of their baby jumpers. But the fact is, even those who were born into families of real estate moguls had to start from scratch to learn the family business. They just got an early start.
In fact, now is a great time to start investing in real estate.
Willingness to learn is the other key to success when it comes to real estate investing. In truth, it’s just like any other specialized task you must become familiar with in order to perform well at, but that anybody who is ready to devote time and mental energy can become proficient at. A good example is that of piloting an airplane; the process seems complex, but as long as your eyesight is decent and you don’t have an insurmountable fear of heights, you could learn to pilot an aircraft, and, given time, you could probably develop the skills necessary to work for a commercial airline.
Real estate investing is exactly like flying an airplane. In the beginning, it is a mysterious thing. You may look at the experts and be absolutely awed by what they have accomplished. But as you begin to learn the language of finance and as you begin to learn the markets, you start to understand what those guys are doing. If you make that sort of learning a habit, you will eventually be an expert yourself.
If you start investing in properties, and do it wisely (by learning as you go and by getting advice from the experts) you will soon find yourself making a little bit of money at it. Then you will find yourself making more money at it. Eventually you will make a lot of money from it and wonder when exactly you stopped being a novice and started being an expert. It is a gradual process, like anything else.
If you don’t believe it, take a look at the Rich Dad book series by Robert Kiyosaki. He explains just how easy it is to learn about real estate investing. His adviser and fellow Rich Dad author Ken McElroy, actually outlines a step-by-step process to follow in “The ABCs of Real Estate Investing.”
Investing is definitely easier than you think, if you follow one simple rule. That rule is simply to approach real estate investing as something you can learn, not as something you think you should have innate ability at. The moguls like Donalt Trump only seem to have an innate ability because they’ve spent so much time and energy learning the business. If you put the same time and energy into learning it, you can make money at it too.
After all, you wouldn’t want to climb into the cockpit of an airplane, fire it up and hope for the best, would you? Of course not. That would be suicide. On the other hand, you would expect to become a good pilot if you went through a prescribed program and logged enough hours behind the wheel. Approach real estate investing in the same way and the sky’s the limit.
Author and Realtor Alexandria P. Anderson helps clients to find and purchase Real Estate in Minnetonka as well as Minnetonka MN Homes in Minnesota.
Property Investing – The Secret Path To Wealth January 12, 2009
Posted by minnesotarealty in 1.Tags: plymouth condos, plymouth mn real estate, plymouth real estate listings
comments closed
Taxes are a necessary evil in our society, and for many it seems natural to grouse about having to pay a large percentage of our earnings to the government while those who have more money seem to be bearing less of the burden than they ought. It’s certainly disheartening that it works this way – as the fortunate shirk their obligations through legal loopholes, the rest have to pick up their slack. It’s frustrating and unfair, and there’s no question that many of the complaints against the upper class are quite legitimate.
Unfortunately, simply recognizing injustices and complaining about them isn’t sufficient to change the ways of the world. The rich will inevitably have money and therefore power, and they will use this power to stack the deck in their favor, particularly when it comes to using tax breaks to keep their money. They will claim that there simply isn’t enough money for everyone to get what they need, all the while cutting corners and keeping their spoils for themselves. This extends to elected officials as well – how many poor politicians have you heard of?
In order to not be one of the many who are getting the short end of the stick, you’re going to have to step up and take the advantage for yourself. It’s true – you can get tax breaks like the rich do. You simply need to know how, and put forth the effort to get them.
Robert Kiyosaki, author of the “Rich Dad, Poor Dad” books, makes the sensible suggestion that those who are not rich but would like to be should watch what the rich do, and then do the same. You don’t really need to watch too closely, however, to learn the open secret of the wealthy – that secret is real estate.
In his book “Cash Flow Quadrant,” Kiyosaki says “One of the reasons I chose to work predominantly in the B and I quadrants are the tax advantages,” The aforementioned “quadrant” is an invention of “Rich Dad,” a diagram consisting on a square divided into quarters, each representing the different ways in which different people relate to money. It’s an unavoidable fact that an individual’s personal philosophy and perspective on the world will affect the way in which he or she behaves with money, and this behavior will,, in turn, decide his or her ultimate financial success or failure.
According to Robert Kiyosaki, the real money is in the business and investment quadrants of the Cash Flow Quadrant.
You know the saying, “If you can’t beat ‘em, join ‘em.” That is good advice, especially if the guys you want to beat are the rich. It’s actually great news that they are getting so many tax breaks. That means that, when you become one of them, you will get those same tax breaks, IF you know how.
The path to riches is actually very simple; all you’ve got to do is start investing, or join the ‘I’ quadrant. If you have a high-paying job, you may be able to do this without leaving the ‘E’ (employee) or ‘S’ (self-employed) quadrants, but Robert Kiyosaki advises that you move into the ‘B’ or business quadrant, devising a system that will make you money regardless of whether you are putting time into it or not.
So, invest – invest in apartments, condos, vacation homes, whatever suits your fancy. This is the true, time-tested road to wealth.
Realtor and Author Alexandria P. Anderson uses the Plymouth Real Estate Listings to help her MN realty clients find Plymouth Condos in Minnesota.
Want To Get Rich? Invest In Property! December 4, 2008
Posted by minnesotarealty in MN Realty.Tags: minneapolis mn homes, minneapolis real estate, Minneapolis Real Estate Search
comments closed
It’s a good bet that, throughout your life, you have received nuggets of financial wisdom from a variety of individuals in positions of authority – your parents, teachers, et cetera. But think back, and consider how many of these people who taught you how to handle your money were actually rich. The truth is that if you’re going to be rich, you should take advice from someone who’s already struck it rich.
In the words of Robert Kiyosaki of “Rich Dad, Poor Dad” fame, “It doesn’t take money to make money. I often hear people say it takes money to make money. I disagree. We had no money when we started and we were also in debt. It also doesn’t take a formal education.”
Kiyosaki proceeded to cite the case of Bill Gates: the Microsoft mogul never actually graduated from college, but did that keep him from making his fortune? No way! Diplomas are nice, but they don’t reliably add up to more money.
Robert Kiyosaki says that the only true prerequisites to being rich are that one must be determined and a quick study. Beyond that, it’s all about what you know. One of the first things you need to know about becoming rich is where you fall on the Cash Flow Quadrant.
The Cash Flow Quadrant is an icon taught to him by his best friend’s father, a man to whom he refers in his books as his “rich dad.” It is an illustration of what his rich dad called the four different types of people in relation to money: Employees, the Self-employed, Businesspeople and Investors. Each quadrant comes with its own outlook on the world. The outlook of those in the B and I quadrants are the ones that help make them rich.
One of the aforementioned traits necessary for becoming rich, being a quick study, has nothing to do with going back to school – the subject you must be able to learn about is actually a quite specific one: you must learn about real estate investing. Kiyosaki claims that investing in real estate is the best way to get rich because it ties into so many aspects of modern life – almost every office building or storefront you glimpse while driving down the street, for example, represents money in the pocket of some canny investor.
This isn’t about learning the minutiae of real estate investing and immersing yourself in every technical point and statistic – these things are important and useful for investors, but this expertise can come in the form of a profession that you hire to make these in-depth decisions for you. You only need to understand the subject matter to the extent that you can recognize an expert when you see one.
It is crucial to make the distinction between thinking like a self-employed person and thinking like a businessperson. A self-employed individual, who simply own his or her job, not any sort of business, must be must be present and involved in his or her work to earn a livelihood. The mark of a businessperson, on the other hand, is that he or she can leave town for extended periods of time without having to worry about losing money, because the important functions of the business have been delegated to capable individuals.
However you decide to do it, learning the nuts and bolts of real estate investing yourself or by hiring a qualified person to advise you, it is definitely time for you to move to the I quadrant; that is, if being rich is something you’d like to consider.
Alexandria P. Anderson is a licensed Minnesota Realtor that uses the Minneapolis real estate search to help her clients to find and purchase Minneapolis MN Homes and other Twin Cities properties.
Earn Money Without Working So Hard For It – With Real Estate November 13, 2008
Posted by minnesotarealty in MN Realty.Tags: minneapolis real estate, minneapolis realty, property in minneapolis
comments closed
There seem to be two types of people in the world: office slaves who very nearly treat work as a religion and who are in danger of neglecting the very families for whom they work so hard to provide; and people who have adopted more of a slacker mentality, convincing themselves that money isn’t important because they don’t want to be slaves to the workaday world.
Robert Kiyosaki, author of the Rich Dad book series, has money and he doesn’t agree. “Anyone who says money isn’t important obviously has not been without it long,” he says in his book “Cash Flow Quadrant.”
Kiyosaki should know– he’s been on both sides of the financial fence. In the ’80s, he was so down-and-out that he spent a few weeks living in a car, before moving on to the basement of a friend, in which he lived for almost a year. He and his wife didn’t have steady work, only odd jobs here and there, as they were looking for riches, not security.
Today, Robert Kiyosaki and his wife are millionaires.
While money is important, it isn’t important in and of itself, and that is why Kiyosaki and his wife didn’t rush out to look for the “good” jobs they both could have gotten. It’s important because it provides for your basic needs and, if you have enough of it, it can give you time to be with your loved ones and do the things in life that truly make you happy.
One thing a job will never give you is extra time with loved ones. In fact, it will take away as much of that precious time as you allow it to.
At times it seems like a no-win situation; it takes so long to make the money you need in order to get what you want out of life that you’ll never actually have the time to do the things you’ve always dreamed of. As an employee, this really can be an unanswerable problem; as an investor with money working for you, it’s much easier to keep your priorities in order.
Kiyosaki has been there. In his words, “Money is important, but I did not want to spend my life working for it.” When standing at this fork in the road, the wisdom that Kiyosaki gained from his time with his “Rich Dad” served him well.
He knew the secret to taking care of a family without having to devote one’s entire life to one’s work, and that secret is real estate investing.
It’s a simple principle; as an employee, you’re working for money, but an investor, money works for you. All you have to do to start out is take some of the money you’ve made as an employer and move it into real estate. This is all it takes to start paving the way to a bright financial future, in which your wealth is constantly growing without you having to lift a finger, leaving you free to live life and spend time with loved ones.
With real estate investing, you truly can have it both ways, making the money you would be making at a high-paying job (and more!) while your time remains free for… whatever you choose! Take care of your family, begin a new hobby, simply live life without stress and worry.
Author and Realtor Alexandria P. Anderson helps clients to find and purchase property in Minneapolis as well as Minneapolis Realty in Minnesota.
With The Right Attitude, Real Estate Can Make You Rich October 31, 2008
Posted by minnesotarealty in Minnesota Homes for Sale.Tags: eden prairie mn real estate, eden prairie real estate, homes in eden prairie
comments closed
There’s got to be a difference between the type of person who strike it rich and the average Joe, but what is it, really? This question is an important one, and it should be given the thought it deserves. There are plenty of easy, oversimplified responses, including, “Their family is rich,” “They won the lottery,” or “They have great careers.” But these factors can’t always be controlled by the individual experiencing them– is wealth really dictated by the luck of the draw?
Unfortunately for these people, however, being lucky isn’t all it takes to become rich. Robert Kiyosaki, author of the best-selling Rich Dad, Poor Dad books claims that being rich has more to do with how much money you hold on to than how much money you have coming in.
Kiyosaki’s father, the so-called “Poor Dad,” is a great example of a well educated man blessed with a great career who was nonetheless poor, because he couldn’t seem to keep any of the money he was earning.
Luckily for you, wealth doesn’t spring from the family into which you were born, or even from the job you work. These red herrings distract from the real determiner or wealth, which is simply one’s attitude towards money and the world.
Whether you ever become rich or not is determined, in large part, by nothing more than how you think.
Kiyosaki’s “Rich Dad” demonstrated the effects that one’s personality and attitude have on the way in which one earns and handles money using a graph called the Cash Flow Quadrant. This graph is split into four quadrants, labeled ‘E,’ ‘S,’ ‘B,’ and ‘I’– “employee,” “self-employed,” “businessmen,” and “investor,” respectively. Not only do these four categories show how a person earns his or her money, claims Kiyosaki, but they shed light on the way in which different individuals view the world.
Are you beginning to see? The people in the four quadrants are not there by chance; they are there because they experience life in fundamentally different ways.
According to Kiyosaki, the people who fit into these four categories are fundamentally different in their thoughts and emotions, and these essential differences drive individuals to behave differently towards their money.
Because of individuals’ innate natures, says Kiyosaki, they are drawn to different corners of the graph. This is because different people have different values, and will treat money differently based on these attitudes. A person who values security above other things will definitely be drawn to the ‘E’ corner of the graph, and the consistency is offers. There’s nothing wrong with that– if security truly is what you desire, a life spent as an employee will be satisfying and fulfilling. It is worth noting, however, that it is highly unlikely that an occupant of the ‘E’ corner will ever become truly rich.
It sounds a little scary at first, but this is actually good news for you. It’s good news because it means that, if you want to get rich, all you have to do is start thinking more like the people who live in the I, or investors, quadrant.
One of the best things you can invest in is real estate. That is what Kiyosaki’s rich dad did, and it made him…well, rich. In order to think like a real estate investor, simply tell your money that you are through working for it. It is time for your money to get to work for you.
Author: Alexandria P. Anderson specializes helping people to find and purchase Eden Prairie MN real estate, as well as homes in Eden Prairie for her realty clients.
Minnesota Townhomes October 7, 2008
Posted by minnesotarealty in MN Realty.Tags: Minnesota first time home buyer, Minnesota first time home buyers, MN first time home buyers
comments closed
Now is a wonderful time to look for your next home! So many places are available at unusually low prices, and townhomes in Minnesota are no exception! Minnesota townhouses are a great option to think about if you are thinking about purchasing. What advantages do townhouses have over typical stand-alone houses? For starters, there’s generally less exterior maintenance to worry about since two of your four walls are shared with neighbors and are interior. If you don’t need much yard space you can find many townhomes that have minimal grass to mow, especially if you have a deck or patio. Sometimes the lawn-care is even included in your association fees and you don’t have to worry about it at all! Many great extras are included in townhouse communities, like swimming pools, gyms, playgrounds, tennis & basketball courts, etc., and are for exclusive use by only those living in your association.
Minnesota townhouses can be a financially good decision in addition to all the great amenities. You can typically buy more square footage for your money when purchasing a townhome…or you can get the same square footage for less money! Use that saved money to improve the home–how about updating the kitchen or turning the basement into a game room?! Put us to work finding great Minnesota town homes to fit your lifestyle. You might be surprised at what quality and convenience you can get during this buyer’s market– let us show you!!
Alex Anderson is a licensed Minnesota Realtor that uses the Minnesota MLS to help her clients to find new homes. Specializing in Minnesota First Time Home Buyers she can help you to find real estate that’s perfect for your needs.
What Type of Property Investing Is Right for You? September 17, 2008
Posted by minnesotarealty in Minnesota Homes for Sale.Tags: bloomington houses, bloomington properties, real estate - investment
comments closed
Everyone knows that investing in property is a lucrative opportunity for enterprising people to make money. The advantages of entering the real estate business include paying less taxes and being able to make more money without actually lifting a finger. The prospect of putting your money to work while you sit back and relax is certainly a tempting one, and this is why so many seek a piece of the action.
Striking it rich as a real estate investor doesn’t happen overnight, though. One needs to learn the ins and outs of the business, learning everything there is to know about real estate. A good place to start is to simply ask, what is real estate?
Well, real estate is made up of parcels of land, and includes any structures built on said land. The prices you will pay for pieces of real estate are largely dependent on how the local market is faring. As an investor in real estate, you will find ample opportunities to pay less in taxes than others would. In regard to exactly what type of investing you will do, you have quite a few options.
Investing in an REIT or a Real Estate Investment Trust means that you are the owner of either parcels of real estate, mortgages on pieces of real estate, or some combination thereof. This type of investment has quite a high yield along with some tax benefits, and its liquidity means that you can easily convert it into cold, hard cash.
A partnership in real estate is just what it sounds like; investors may elect to partner with other people or organizations in building new structures, or making money off extant ones. Appreciation is another great source of profit for property investing partnerships, even when you’re dealing with undeveloped land. Tax benefits and growth potential make forming a partnership another great option for investors
The rental of vacation property is pretty self-explanatory. Your vacation property is one that is used for recreational purposes and is not your primary residence, the piece of property on which you live.
Rental property is another common choice for those looking to make money in real estate. Everyone has dealt with landlords, so this type of investing doesn’t take much explaining. Do, however, mind the differences between residential and commercial rental properties.
Even raw or undeveloped land can afford the canny investor a chance to make money off appreciation on its value, and this type of investing also provides the aforementioned tax benefits.
Learning about each type of investing out there is a great idea, since it is up to you to determine which path will be the most advantageous for you personally, in light of your personal strengths and talents, in addition to what you want to gain. Whichever way you go, though, the decision to invest is a good one; as well as compounding your wealth, it keeps more of the money that would have gone to taxes in your pocket.
If you spend more than 750 hours each year on property investing, you should seriously consider becoming a real estate professional, as this will allow you to claim almost unlimited tax deductions, while not taking advantage of this opportunity will cost you deductions. To qualify for these enhanced tax benefits, however, (in addition to the previously mentioned 750-hour requirement) you will need to be participating in your duties as an investor, rather than hiring others to do everything for you.
Alexandria P. Anderson is a licensed Minnesota Realtor that helps people to find and purchase Bloomington houses and other Bloomington properties for her clients’ needs.
