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What Type of Property Investing Is Right for You? September 17, 2008

Posted by minnesotarealty in Minnesota Homes for Sale.
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Everyone knows that investing in property is a lucrative opportunity for enterprising people to make money. The advantages of entering the Minnesota 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.


Beginning Investors – Listen To The Real Estate Pros September 3, 2008

Posted by minnesotarealty in MN Realty.
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No matter where you are, you will always find people who are pessimistic about money. They will claim that, since it “takes money in order to make money,” there is nothing the average person can do to better his or her financial situation. This kind of cynicism is, in fact, unwarranted, as there is no magical force field separating the world of the rich from that of the average Joe. You shouldn’t listen to the media alarmists and others who constantly claim that the sky is falling – if you listen to the right people, you will hear that anyone can develop the tools they need in order to make money.

It is a common misconception that today’s real estate market is in such an irreparably dire state that one would be a fool to start investing in properties. If this were true, however, why would people still be doing it? Minnesota real estate investors continue to make money every day; if you believe otherwise, you’ve simply been talking to the wrong people.

If this sounds easy, that’s because it is easy – what could be simpler than seeking out someone who has achieved success in the field of real estate investing, and asking him or her what strategies do and do not work. This really is something that absolutely anyone can do. So, you may ask, why isn’t everyone doing it? Well, there are two simple reasons that the vast majority of Americans aren’t out making their fortunes in property investing right now: first, they’ve been listening to the people who claim that making money is an impossible feat. If you’ve been hearing that you can never succeed for your entire life, it’s no wonder that you’re reluctant to try your hand.

They are paralyzed because they have been listening to the wrong people.

The other reason most people aren’t making a fortune on the real estate market, is that it’s just so simple. The people who find great success in property investing are the ones who learn a logical system and stick to it. A systematic approach is reliable, but it’s also dull, and that’s why so many people forego the obvious, proven methods of making money, and get tripped up on complex, esoteric moneymaking scams. These sorts of schemes may seem more fun and dramatic than gradually building wealth through proven methods, but the problem is that they simply do not work.

The media caters to those who want instant gratification and excitement. Think about it; when you pick up a newspaper, or turn on the television, the headlines of the day are invariably gruesome stories of death and destruction, and that’s because that’s what sells. It’s a strange quirk of human nature: the vast majority are all too willing to believe that the world is a harsh, cruel place, where one’s best efforts will always go unrewarded.

Fortunately, this destructive and self-defeating perspective is far from accurate.

If you can break the habit of thinking of life in tragic terms, of convincing yourself that there is simply not enough money to go around, then you will learn to start listening to the right people so you can develop your systematic plan for investing. And what does a systematic plan lead to? Financial success. We’ve established that the media and the majority of their audience are the wrong people to listen to, but who are the right people? The right people are those who have invested in property and profited significantly from those investments. People like me. Wouldn’t you rather listen to someone who can tell you how you can make money, rather than to people who insist on telling you how to stay poor?