Real Estate Investing is the craze today with people involved in the Carlton Sheets program spending money on courses to find out how they can make money in no money down real estate investing. This article hopes to help you create some sort of mental picture of five key principles that can help you make more money with real estate today.Principle #1- The money is made in the purchaseReal estate investing is like value investing in stocks and you want to purchase the real estate during a period of a real estate slump. The reason for this is so that you can get a huge capital appreciation when the real estate market heats up again.Spending time doing real estate valuation is critical since if you cannot satisfy yourself on the maths that is a viable proposition, there is no way that your real estate investment would be a good one.Principle #2- Monitor Cash flowReal Estate investment typically have a monthly rental income which then is used to pay for mortgage instalments and other problems with the building like a roof leak. You would thus have to keep a close watch on interest rate hikes since they can potentially erode any calculated return on investment quite quickly. Once you have enough cash coming in, it is suggested that you then keep some of it in a rainy day fund in case some of the rental tenants do not renew their property and then take the rest and consider investing in another real estate investment property.Principle #3- Leverage on other people’s timeRemember that no one can do everything, so the key is to focus on what you do best. If your strength is in negotiating deals, spend time looking for property and then get professionals and contractors to handle all the rest of the deal for you. Similarly, if you are good at decorating property, then find deals and focus on the interior design of the property. By focusing on what you do best and getting other people to do the rest of the work, you are leveraging on their time and you can then make more money from each new real estate investment that you undertake. Spend your time to build your team of advisors and employees who work for you and you will see your profits start going up. Remember that by rewarding them financially, you will get a group of dedicated people helping you make more money from your real estate investment.Principle #4- Learn how to use leverage with a good rainy day cash balanceDid you know that many real estate investors started off with very little money to invest? Even large real estate developers like Donald Trump have learnt the power of leverage when investing in property deals. You want to leverage as much as you can so that you can control property worth many times more than what you own. Remember however to keep a rainy day fund containing a portion of the rental payments so that you can hedge yourself against a possible period where unit occupancy of your real estate investment is low. Leverage when used well can make you lots of money but if managed badly, will bankrupt you. Thus planning your cash flow and learning how to use debt is critical before you start serious real estate investment.Principle #5- Spend time networking with real estate professionalsDo you want the latest real estate investment deals? The best way to learn of them is to break into the local real estate professional group and make friends with them. Learn some real estate investment lingo and spend time making friends with them because they are your eyes and ears on the ground and they can tell you about recent developments and changes in rental, property and infrastructure of their geographical location. Having the first player advantage is what many large real estate investors have and by spending time to network with real estate brokers, you will substantially close the gap.In conclusion, spend time looking at these five principles and determine how they can be applied to your real estate investment and you might start seeing an increase in your real estate income.By Joel Teo 2006 All Rights Reserved
A little-known real estate investment vehicle in the U.K. is the real estate investment trust (REIT). In this article, we’ll discuss this method of property investing and present some information you might find useful if you’re considering investing in a REIT.REIT BasicsThe first thing to know about a REIT is that it’s a way for corporations to buy investment real estate in way such that their corporate income taxes are reduced or eliminated. REITs are required by law to distribute 90% of their income, a fact that makes them very attractive to real estate investors. REITs are similar to mutual funds for stock investments, except that they function with real estate rather than stocks. Since mutual funds are safer investments than buying individual stocks, REITs are safer investments than buying individual pieces of real estate property. They’re great ways to buy investment property without all the risk and expenses associated with direct ownership.Types of REITsREITs are similar to corporations in that they can be held publicly or privately. If publicly held, REITs can be listed on public stock exchanges in the same way shares of common stock in corporations are listed. There are 3 types of REITs: equity, mortgage and hybrid. Equity REITs involve ownership of and investment in real properties and their income comes primarily from the rents charged on these real estate investments. Mortgage REITs involve ownership of and investment in property mortgages. Their income comes from the interest they earn on mortgage loans. Hybrid REITs generate income from both real estate investing and making mortgage loans.Features of REITsIn the U.K., real estate investment in REITs is governed by the Finance Act of 2006. The legislation became effective in January of 2007. At that time, REIT status was granted to 9 property companies in the U.K. Key features of REITs in the U.K. include the following:The company must be located in the U.K. and must be listed on a recognized stock exchange.A single person or entity cannot hold the majority of the shares in the company. A single person or entity cannot hold more than 10% of the shares.The property-letting activities of the REIT must comprise at least 75% of the company’s overall business activities, including both income and assets.Investors must receive at least 95% of the REIT’s net taxable profits, but the REIT must withhold any applicable taxes.Reasons to Invest in REITsProperty companies that convert into REITs will benefit substantially from both the tax exemption and the increased ability to generate income via the stock market. Investors benefit because they gain access to the asset class property investing with its significant dividend returns. REITs also provide good diversification, a must for any serious investor. So, if you’re looking to introduce some diversity into your holdings, consider the real estate investment known as a REIT in the U.K.