Investments can be a great way to get ahead, and more and more people are jumping into the investment property buying market. However, this decision should not be taken lightly. If certain tricks of the trade are ignored, you may find yourself deeper in debt than before. There is a lot to be gained from buying property, whether it be flipping it or holding and renting it out. That being said, first-time investors should consider buying long as it is generally safer than a short-term Forex strategy.

First, take a look at the numbers. You want to make sure that the monthly rental income will cover all the expenses of the property, such as property taxes, insurance, financing, repairs and maintenance, and everything else. When looking at the numbers, remember to be conservative with any estimates you make and always include a 10% vacancy rate. If the property appears to be cash flow positive on a monthly basis, you may proceed with the due diligence process.

The second thing to consider when buying a property is the location. Location is everything, and the general rule of thumb is to buy rental properties in the best neighborhoods you can afford. The neighborhood will determine the type of tenant you can expect, as well as the amount of rent you can be charged. Another aspect of the neighborhood relates to the repair of the upper parts and the degree to which the necessary improvements are made. Avoid upgrading a property so much that it is so much better than the surrounding houses on the block. Keep home comfortable and easy to use. People will choose the neighborhood for a reason, so make sure the house is arranged to fit.

Another tip is when looking at potential homes to buy, look at the property for what it could be, rather than what it is. Spot the property’s potential and keep renovations to a reasonable level. Make sure the vision is reasonable for the work that needs to be done and the price of the materials needed. Remember that hiring professionals to do the work can help ensure things are done right the first time, saving money for things that may need fixing later. Hiring professionals should not be taken lightly either. Be sure to check all references to ensure that all of your contractors have the experience and qualifications to do the job properly and in full compliance with municipal codes.

Once all the hard work is done and the house is ready for a tenant, make sure a screening process is used. Run a credit check, call past owners and references, and verify income and employment. After all the sweat and money that went into the property, it’s only natural to want to keep the bums from destroying it.

The bottom line is that buying a property requires a fair amount of due diligence. Do the homework that goes into being a great real estate investor, and also read up on landlord and tenant rights. It is one of the most important steps to protect the investment. Study the eviction processes and understand all the laws to help keep your profits flowing for the long term.

San Diego is home to millions of beautiful apartments, condos, and single-family homes. Depending on the type of living arrangement you’re looking for and the amount of space you’ll need, you should search for the appropriate San Diego real estate listings to fit your preferences and budget. Here are some of the San Diego real estate listing options you’ll find:

Condo listings. Most condos in San Diego are for sale rather than rent. Buying a condo could be a good financial move for you; Condos are more affordable than houses, but still allow you to build equity and credit. Condos in the San Diego area range in price from around $200,000 to $800,000. Although this may seem expensive, it is much more affordable than most real estate in the area. Additionally, much of the condominium real estate in San Diego is in gated communities, and you can find condominiums in nearly every area of ​​San Diego, from inner north county and north county coast to downtown San Diego. San Diego and the South Bay. And if you have a family, you can still consider a condo; some of them have as much space as a single-family home, if not more. There are also at least 5 schools in close proximity to each condo complex, and some neighborhoods even have a community center that will keep you informed about the types of activities taking place near the neighborhood, including concerts, great restaurants, and theater. events. Some of the most well-known condominium neighborhoods in San Diego include Mission Valley Condos, Cortez Hill, Nestor, and Lemon Grove.

Apartment listings. When you’re looking for apartment listings, set a price range for yourself and decide how many bedrooms you want. Be prepared to pay more if you want more space. Prices typically range from $795 to $2,300 per month, and you can find studio, one-, two-, and three-bedroom apartments within these price ranges. Of course, there are many apartments to choose from in San Diego real estate listings, but surrounding cities like Chula Vista, Oceanside, and Solana Beach can provide you with affordable luxury apartments that are outside of the hustle and bustle of the big city. but close enough so that you can reach the main sporting or artistic events that you want to attend.

House listings. You will most likely have to go through similar procedures to search San Diego real estate home listings as you would in any other area. However, after you’ve searched a few San Diego real estate listings online and by mail, you should contact a few real estate agents in the area to ask general questions about area real estate options for single-family homes, the neighborhood and local demographics. school district information. San Diego real estate offers you a lot to choose from as it is a big city with many options for living. Be sure to work with a trusted local real estate agent who is experienced enough, and schedule a visit to San Diego before finalizing anything; nothing can tell you for sure if you really want to live in a place other than to see it.

With all the options that San Diego real estate has to offer, you’re sure to find a home, or condo, or apartment that you’ll enjoy. Good luck!

You are starting to panic. You just heard that the IRS has started allowing people to file their taxes. And you still don’t have anything ready.

Which makes today a great day to create your tax binder.

Today, many of his articles are available electronically, so there’s no need to wait for a paper copy to arrive in the mail. And we suggest you put 10 pages in this folder, which can be a paper folder or an electronic one. (If you’re using paper, different colors work best so you can keep things organized, or you can use divider tabs.)

#1. A list of all the W-2 forms you should receive. One from each employer you received a paycheck from.

#2. A list of all the 1099 you’ll get from your gig activities: consulting, driving an Uber, fees, etc.

#3. A list of all the 1099 forms you’ll get from every bank account that pays interest, mutual fund dividends and stocks, stock and mutual fund sales (usually reporting capital gains and dividends).

#4. A list of all the K-1s you will get from partnerships, S entities, LLCs, REITs, etc.

#5. A list of all 1099Rs and W2Ps for all pensions, retirement funds, IRA withdrawals, and 401(k) distributions.

#6. A list of all the 1099 forms you’ll get for unemployment checks, Social Security benefits, and state income tax refunds.

#7. A list of the 1098 received for all mortgage payments. These must also list the property tax paid on each property. (If you pay directly, go to your county’s website and download a record of all payments made this calendar year.)

#8. A list of all the dates you were away from home on business so that per diem deductions can be determined. (If you stayed overnight in a hotel, this is where you check in as well.)

#9. A list of any IRA or 401(k) contributions made during the year. This is also where you enter how much you will make of that contribution before filing your taxes. (It’s the maximum allowed by law, isn’t it? And, if you don’t have an IRA, you know you can start and fund one until April 15, the filing deadline. Noubliez pas!)

#10. A list of all estimated tax payments made to the federal government and your state’s taxing authority during the year. (The normal deadlines are April 15, June 15, September 15 and January 15 of the following year).

Having these lists, and then crossing off each item when you receive or download them, will make it clear when you can start processing your 2019 tax returns.

Home ownership is a relatively rare and peculiar thing in New York City. In a nation made up primarily of homeowners, the city stands out: More than two-thirds of its households are made up of those who rent, rather than own, their homes.

The differences are not limited to property rates either. Like the rest of the United States, New York has its single-family homes and townhomes. It also has condominiums, in which individuals own their apartments while common areas are shared. But, to a degree unprecedented in the rest of the country, New York’s housing stock also includes cooperatives.

Co-op buyers technically do not own real estate at all. A co-op, which is almost always an apartment, consists of shares in a corporation that owns the apartment building, combined with a “property lease” that allows the owner to occupy an apartment indefinitely as long as they comply with the lease. op rules

In many parts of the United States, the rules New Yorkers accept as part of big-city life would be seen as an almost unbearable intrusion. You cannot buy or sell a cooperative apartment without the approval of the cooperative’s board of directors, who often deny that approval and are not required to give any reason for doing so. During the housing recession, some co-ops had an informal policy of blocking sales because they thought prices were too low; Board members who had paid higher prices during the boom years did not want to admit that the value of their own homes had declined. When a cooperative approves a sale, it often also siphons off part of the proceeds through a “reverse tax” it imposes on the transaction.

Many cooperative boards limit the amount of financing a buyer can use. Some, especially in Manhattan’s prince buildings, only allow cash transactions. Some cooperatives appreciate the prestige that celebrity buyers can bring; others loathe the paparazzi and the onlookers they might attract.

You’d think the city would give co-op owners a rest, considering all the hassles that come with this quirky New York institution. But you would be wrong. In reality, the structure of the New York State property tax system penalizes condo and cooperative owners. Your property is taxed at a substantially higher fraction of its fair market value than individual homes. (In most states, tax rates are based directly on fair market value, with possible differences in rates depending on whether the property is a primary residence, a second home, or some other type of real estate. The tax system New York is, by the state’s own decision, description – Byzantine, fragmented and inefficient, as well as one of the most expensive in America.

For the past 15 years, the state has offered relief to cooperative and condominium owners, both in the city and in its suburbs, where most of the rest of New York’s multi-family housing is concentrated. This relief came in the form of a tax cut that directly lowered tax bills for most condo owners. Cooperative owners could only benefit indirectly, because cooperative property taxes are paid by the cooperative corporation, rather than by unit owners. Most of the co-ops pocketed the money from the abatement, but since the abatement helped defray building maintenance costs, unit owners still benefited.

Now, however, the state has tightened the eligibility rules for the abatement in a way that will likely fool many misguided homeowners into paying state and municipal income taxes that will cost far more than the abatement is worth.

On the other hand, the new rules will likely mean more business for New York probate lawyers. Given the way the New York Legislature operates, aggressively seeking maximum revenue while doling out favors to well-connected interest groups, these by-products of abatement reform are likely no mere coincidence.

As The New York Times reported, Gov. Andrew Cuomo signed legislation earlier this year that will restrict co-op and condo reductions to owners who declare the units as their primary residence. (2) If you own a co-op apartment in, say, Manhattan as a second home, you’ll pay a higher tax rate than if you owned a private home of equal value in Riverdale or Jamaica Estates. Those detached houses do not need to be primary residences to qualify for your favored tax treatment.

Owning a cooperative or condominium through a trust or limited liability company also does not qualify, although the city may make allowances for trusts whose beneficiaries can show they use the home as their primary residence.

Many second-home owners probably realize that filling out a form or making a phone call is a small price to pay for a tax break that could be worth a few thousand dollars a year. It’s a move I’m sure many will regret.

The property tax exemption can be changed or canceled at any time. However, under New York’s draconian income tax policies, it is very difficult to relinquish membership in New York’s highly taxed club of “residents.” You can try to get out, but they put you back in.

Suppose you have a house in Connecticut and an apartment in Manhattan. If you claim your apartment as your primary residence, New York State and New York City will treat you as a resident and you will pay income taxes to both on all of your income. If you still spend most of your nights in Connecticut, that state will treat you as a resident as well. At most, each state will give you credit for the taxes you pay on wages earned in the other, but all of your investment income will be taxed by both states and the city.

It gets worse. Let’s say you move to Florida, sell the Connecticut house but keep the New York apartment. Perhaps you spend most of your time working from your new home in Florida and only come to Manhattan occasionally for meetings or to visit friends. Having already declared New York his domicile, the Empire State will continue to treat him as a resident even if he is there only a few days a year. The state tax dispute adjudication system is heavily biased in favor of the tax collector. The only reliable way to get rid of that New York address will be to get rid of the New York home.

Owning a condo in your own name will ensure that your estate must go through the New York probate process. His will then becomes part of the public record. Many property owners place their properties in trust or limited liability companies to avoid the cost and public exposure of probate. New property tax cut rules will lure some unsuspecting homeowners into New York’s probate system. In addition, owning real estate outright will also attract some out-of-state owners to New York’s estate tax system.

Should you ask for the reduction under the new rules? Sure, if you’re a die-hard New Yorker you could never imagine living anywhere else. In that case, take what the law gives you.

Everyone else: watch out. You may not want to look a gift horse in the teeth, but if the horse is made of wood and someone leaves it outside your castle gate, think very carefully before bringing it inside.

Sources:

1) New York State Department of Taxation and Finance, “New York Property Tax System”

2) The New York Times, “Tax Cut Changes Affect Many Unit Owners”

After reading and enjoying “Enough is enough!” by Peter Walsh, I bought his previous book, “It’s All Too Much.” I enjoyed this one too. The book’s subtitle is “An Easy Plan to Live a Richer Life with Less Stuff” and I found that to be exactly what this book was about.

I think one of the most important lines in the book comes near the end when Walsh writes, “Getting organized for the sake of getting organized is a waste of time. Getting organized because it helps you live a richer, less stressed, happier, more peaceful”. more focused life, now that’s a goal worth pursuing.

Walsh offers practical advice on how to get rid of things, but also words of encouragement to live a life that fulfills you and not one that is burdened and stressful by having too much. Walsh instructs him to think about the life he really wants, including the home that will enrich his life and be a pace to live in, not just store stuff.

The opening chapters of Part One, The Clutter Problem, provide a starting point for looking at your home to determine if you’re a clutter addict and what excuses you’ve been using for not getting organized and taking control of your things. Walsh then has you imagine the life you want to live and determine what your ideal home would be. Once you’ve established this basic foundation and are motivated to do something about your clutter, move on to the second part of the book, Putting Clutter In Its Place.

The first step of the second half is the kick off. Walsh helps you tackle surface clutter and get your junk removal started with a quick and dirty sweep of clutter from it. He offers practical tips and suggestions for overcoming the things that may be bogging down your home and his life. He combines this with motivational words to help you get started and stick with it. He then tells you how to chart all the rooms and areas, or zones, of his home in order to devise a plan to systematically clear and organize his entire home.

Walsh then includes specific chapters on various rooms, such as: the master bedroom, children’s rooms, living and family rooms, home office, kitchen, dining room, bathroom, and finally, the garage, the basement and other warehouses. Each of these chapters includes hints and tips to help you maximize your space and become more organized and less stressed about things.

The final steps and final chapters provide maintenance strategies, a cleaning checkup, and new rituals to keep your home tidy, stress-free, and a place to enjoy life.

The material in this book is neither shocking nor entirely new. You can find some of the same tips and similar strategies in other organization books. However, Walsh presents the information in an informal, motivational style that is pleasant to read. I put Peter Walsh up there with my favorite cleaning and cleaning expert of all time, Don Aslett.

I’ve never been as messy as some of the people Aslett and Walsh write about, but maybe that’s because I periodically read books on decluttering and organizing to help me stay on track. I admit it, my biggest weakness is the mess of papers that sometimes accumulates too much, and then I have to take the time to sort and get rid of things. Every time I read a book like this, it not only helps me help others, but it also makes me a little better at organizing myself. The motivation shot works.

If clutter and stuff are a problem, I highly recommend “It’s Too Much: An Easy Plan for Living a Richer Life with Less” by Peter Walsh. It’s easy to read, motivating, and full of practical solutions to clutter and stuff so you can enjoy life more, and that’s what life is really all about. It is not like this?

You have many house styles to choose from when building your own house. One of the most famous styles is the hiker. A labyrinthine house is all on one floor. This style became very popular after World War II as soldiers returned home and housing became more affordable. The ranch house has been around for years but is still very useful and will remain for years to come.

The ranch-style home has many advantages and several disadvantages. You’ll want to understand this before you decide to build a ranch-style home.

The ranch house takes up more lot space than a two-story house would for a house of the same size. This means you will have less yard. Many people consider this a disadvantage, while others consider it an advantage. It depends on how you look at a small yard size. If you don’t like gardening and playing outside, then a smaller yard is an advantage. If you like to work outdoors, then it can be seen as a disadvantage. Most neighborhoods have parks and schools nearby, so a large yard is not needed for recreation.

Another plus for a hiker is the lack of stairs. You may not consider it an advantage now, but what if your sick mother came to stay with you or if you had a new baby? These people have trouble with stairs and it may be to your advantage to have the whole room on the same floor.

Also, a promenade is usually rectangular or L-shaped. This means that most places are very close. Getting around quickly is much easier on a hiker. If you want to stay away from children for a few hours, you can consider it a disadvantage.

Another advantage of the hiking-style house is that the rooms tend to be larger and the floor plan is very airy. With the kitchen, dining room, family room, and bonus room on the same floor, you can create larger rooms that tie into other rooms. Some people enjoy this type of floor plan because it’s easier to attract more people into the home for parties and entertaining.

The hiker is also cheaper to build in some circumstances. As you add floors to a building, so do the complexity and design issues. The basic rambler has a very simple design, so no special engineering or materials are needed. This allows the house to be built faster and cheaper.

This also means that maintenance is cheaper. If you’ve tried to wash the outside window on the second floor, you’ll understand. Hanging siding is cheaper on a walker and most other maintenance activities. You won’t have to have a very tall ladder to hang your Christmas lights if you only live in a one-story house.

Heating and cooling costs tend to be cheaper compared to other homes. The entire roof can be insulated and the air is kept on one floor. Two-story homes often have multiple units to service the different floors. The heat will rise and you will have to constantly try to cool the upper floors or heat the lower floors. Maintaining a single insulated floor is much easier and cheaper.

In short, many people find the hiker to be a boring design. Others think that it does not look as good as other houses. You will have to decide what best suits you and your needs. The hiker can have costs, benefits and detractors. However, it has been very useful for years and will continue to be used for years to come.

We’ve all seen the ads on TV or on the radio; in fact, you may also see them on billboards as you drive to and from work. These ads are for quick cash loans, also known as payday loans. When it comes to getting a quick cash loan or payday loan, many people are misinformed. This misinformation often ends up costing you and others in the same situation more money than you can afford.

Personal loans or quick cash loans are highly sought after because they are fast. Unlike applying for a loan with your local bank or most online lenders, you usually get a response by the end of the day. With most traditional lenders, it can take up to a week to be approved or denied for a loan. There are many people who cannot or do not want to wait that long. If you are one of those people, you are likely to seek help from an establishment that offers quick cash loans or payday loans.

As mentioned above, the biggest advantage of getting a quick cash loan or payday loan is that you will have the money in your hand, often immediately. Another popular advantage is that many credit establishments do not check your credit. This means that even if you have bad credit, you may still be able to get one of these loans. Instead of checking your credit, the lender may decide to look at when your next paycheck will arrive. You are often required to repay the borrowed money with that check. That is why quick money loans are also commonly known as payday loans.

The biggest disadvantage of payday loans or quick money loans is the amount of interest that you will be charged. Each lender is likely to charge different interest rates. Unlike the interest rates charged by most banks, you will find that the rates on these types of loans are sky-high. It is also important to examine the term of your loan. Most traditional financial lenders have a term of at least one or two years. With payday loans and quick cash loans, you often only have a few weeks to make a payment.

If you must get a payday loan or a quick cash loan, it’s important to make sure you’ll be able to repay the loan in the right amount of time. If you can’t repay the loan on time, it’s recommended that you don’t even get it. This is because the late fees charged on payday loans or quick cash loans are often more than you can imagine. With interest rates and late fees, you may even pay twice the money you received up front.

A quick cash loan or payday loan may seem like your only option, but for the most part, it’s not. Before getting a quick money loan, you are encouraged to talk to your friends or family. You may find that someone you know would be willing to temporarily lend you the money you need. It is recommended that you avoid payday loans or quick money loans at all costs. However, if you do need one, you should proceed with caution and use your best judgment.

While short sales generally tend to hurt homeowners’ credit scores less than foreclosures, these transactions are a matter of public record and have some impact on homeowners’ credit history. Exactly how much damage a short sale does to homeowners’ credit scores depends on a number of factors. One of the most important of these factors is who handles the transaction. Savvy real estate agencies and foreclosure firms with experience negotiating short sales can often reduce the damage done to their clients’ credit scores. Individual homeowners and real estate agents with no experience in foreclosure transactions tend to have much more unfavorable results.

Duration of Mortgage Default
Each late mortgage payment adds a black mark to the homeowner’s credit history, and the longer the sale transaction drags on, the more late mortgage payments will be posted to the homeowner’s credit. Sales that are completed quickly tend to inflict less damage on a homeowner’s credit. This is the main reason to find a professional foreclosure agent who can expedite the sale.

Deficiency Waiver
Whether or not the mortgage lender decides to forgive the homeowner the “deficiency” or the remaining balance of the original loan greatly influences the impact the sale will have on the homeowner’s credit. Loan companies may choose to accept a short sale but still hold the owner responsible for the deficiency, sometimes to the point of suing the owner. This can cause great damage to the owner’s credit.

However, expertly executed foreclosure transactions will take precautions against the lender going after the homeowner for the remaining balance. Smart real estate agents and companies often include protection against “deficiency judgment” laws within the short sale negotiation.

How does a short sale affect my credit history?
Short sales, like foreclosures, remain on an owner’s credit history for seven years. However, the impact this has on your credit score can vary greatly, depending on the factors mentioned above. Sales completed quickly and without a deficiency judgment could result in the restoration of good credit within 2-5 years. In less fortunate cases, a good credit restoration can take up to seven years.

Find a short sales expert
Whether your Michigan short sale home is handled by an experienced foreclosure company or agent greatly affects the impact this transaction will have on your credit score. When looking for a foreclosure company, be sure to research the company’s track record and references. Foreclosure agencies like Sun Law Group have a proven track record of completing foreclosure sales quickly and expertly, providing homeowners with the best possible outcome.

When you moved into your home, you may have been faced with boring white walls. What’s worse is if you were blinded by horrible colors. When you need to make a change to the walls of your home, there are some interior painting tips that will come in handy. Likewise, after a while, you may need a new look of house paint on the exterior. Exterior painting is more difficult due to the height and scale factor, so it may be wise to hire professional painters. However, helpful tips for exterior residential painting are also provided here.

First, prepare your room to paint the interior. Remove furniture, spread out a drop cloth, remove electrical outlet covers, and have a stepladder handy to reach the roof with your roller. When painting over already painted walls, you will first need to sand them down so that the paint will adhere to the surface. If you’re not sure which home paint color you’ve chosen now that it’s in the room, you can do test swatches on different areas of the wall to see how light affects it. Leave it overnight to dry and view it in different types of light. As you paint, roll over any drip marks, smears or streaks that appear to help achieve a more professional appearance.

House painting tips should only be taken by those with exterior painting experience. Otherwise, leave it to the professional painters. Preparation is the most important part of residential painting. You need to repair and wash all surfaces, remove cracked paint, patch nail holes, seal seams and corners, cover dark spots with blocking primer, and sand down shiny surfaces before you can begin. Don’t forget to remove window screens and all light fixtures and cover everything else with drop cloths as well. This preparation, which must be completed long before the painting process can begin, is done by professionals if you simply want to hire qualified painters to do the job.

The colors of your surroundings can affect how you feel in a room. That’s why many homeowners do interior painting. Exterior paint is also important because the condition and color of the paint on the exterior of your home says a lot about you. In general, residential painting is something that takes practice and a bit of hard work, but the end result is almost always worth it.

That is a question we all ask ourselves today. Because? Due to the many stock market investors who speculated in real estate, the problems surrounding subprime lending with the resulting foreclosures and bank failures, and falling home prices.

If the late Dr. David Schumacher, my mentor for the last 10 years and author of the now famous book The Buy and Hold Strategies of Real Estate, were still around, I know what he would say because he said it during the last recession in 1990-1995. He would tell us not to worry. This is only temporary and part of the normal real estate cycle.

Create bargains that can benefit you. This cycle has been going on since Montgomery Ward began offering $1,500 homes through its catalogs. As sure as the sun rises and the seasons come and go, real estate will make those who own it rich over a period of time. I would add that now is the best time to get great deals on real estate.

The Real Estate Cycle

Real estate is still the best possible investment. It always has and always will do well in the long run.

This is the fourth real estate cycle I’ve been through and none of the downturns were fun. However, if you are patient and look to the long term, your real estate property will increase in value more than any other investment. Don’t treat real estate like you would the stock market, worrying about the ups and downs.

Since 1929, real estate has risen an average of five percent a year; if you stay away from the obvious unappreciative areas like Detroit, it’s more like seven percent a year. At that rate, the properties will double in value in 10 years with compounding. Add in a 28 percent federal tax break plus state tax deductions, write-off of rental property depreciation, and eventual loan repayment, and you have a strategy rich people have always used to accumulate wealth.

pinball machines

In the last 30 years I have seen many pinball machines being bought, repaired and sold. I don’t know many who have a lot of net worth or are rich due to investing. It is simply a very risky way of making money.

The ones that have prospered are the ones who are in it for the long haul and patiently watch their property values ​​increase over time. This past recession was created by speculators who switched at the same time, putting too many properties on the market for sale and rent. I guarantee that in the long run, you will always regret selling any property you ever owned.

buy and hold

Since time passes anyway, the buy and hold strategy is a great way to get rich. Dr. Schumacher has experienced at least five real estate cycles and has done extremely well, acquiring a final net worth of over $50 million.

You simply cannot go wrong buying an affordable condo, townhome or single-family home in a good location where there is work. Make sure you have a fixed rate loan, make sure the cash is flowing, keep it for 10-20 years, and have a property that has doubled or even quadrupled in value. When you need to retire, simply refinance with cash out to live on or to supplement your retirement pension.

For example, the first property I bought for $75,000, a townhome in Lake Arrowhead, CA, is now worth $650,000. My first oceanfront condo, which I bought in Long Beach, CA, in 1982 for $112,000 and used as a residence, is now worth $500,000. The one-bedroom condos I bought in Maui, HI in the late 1990s for $80,000 are now worth $400,000. Houses I bought around the same time in Phoenix, AZ for $75,000 are now worth double. I could go on and on and on.

What are your options?

What are your options for creating wealth today? The options are to buy real estate and build wealth or buy no property at all, struggle hard and have nothing to show for it.

1. You couldn’t do anything. The 25 percent who don’t own a home end up without assets when they retire. They have a car loan and owe an average of $9,000 on their credit cards. Those who do not buy rental properties may be forced to work after age 65 to supplement their meager retirement income.

2. You can try to depend on your retirement. The chart above shows that you shouldn’t rely solely on your retirement income to support yourself, because you won’t. Those on Social Security or most retirement programs end up living below the poverty line and are forced to work until they drop, so that’s not a solution. Other investment options aren’t doing so well either.

3. Invest in the stock market. We are definitely in a slowdown (I refuse to believe that we are going to have a recession), so the stock market is not going to do well for several more years.

4. Invest in gold and silver. They have already made their career; it is doubtful that they do much better. Gold and silver are used as hedges against inflation and a weak dollar. It looks like oil prices are going down and the dollar is getting stronger.

5. Invest in real estate. Those who invest in real estate almost always do well. The graph below shows how the top one percent of income earners have acquired their wealth. As you can see, the vast majority have invested in real estate.

Don’t think short term

Real estate is not designed to be considered in the short term. Right now, real estate values ​​are going down in many cities, but going up in many others. It’s a terrible time to sell and pull out any capital. Only about five percent of the properties are for sale. Most homeowners and investors are simply holding on to their real estate and waiting for the next upward appreciation cycle.

The four biggest mistakes people make in real estate

Real estate always works well when bought correctly. It’s people’s choices and sometimes greed that spoil an almost perfect investment.

MISTAKE #1. Buying a property that is more than one can afford

Often people are lured away and buy a house that they cannot afford. They struggle all their lives just to make the payments. So if they have an illness, job loss, or divorce, they’re in big trouble.

MISTAKE #2. Buying properties that do not generate cash flow

When rental properties are rising rapidly, everything looks desirable and people buy rental properties that do not generate cash flow. That can often lead to disaster with large negative cash flows when the market weakens. Cash-flowing properties are a no-brainer. They are great no matter what. These are

the ones you want to buy and hold. Eventually they will be paid.

MISTAKE #3. Refying too much off

When prices are rising, one is tempted to take out the maximum amount allowed on an equity line on one’s home or do a cash refinance on a rental property. That’s dangerous if you can’t make the payments or support the negative. It’s like abusing credit cards, which often ends in bankruptcy.

It’s especially disheartening when values ​​fall below the loan amount, as is happening with many homeowners right now. One should not be discouraged, they will eventually return to their original value and then exceed it, usually within 2½ to 4 years.

MISTAKE #4. Get the wrong loans

We’ve all seen the problems with subprime loans. Those with low incomes were not the only ones who used these loans. Some bought million-dollar houses on a bet that they would increase in value. Five-year ARMS options also became popular, but they caused big problems for investors when they were reset. Loans like these need to be refinanced as soon as possible. The same is true for adjustable rate mortgages. Fixed rate loans are the only type of loan suitable for anyone who plans to keep their property.



The second quarter of 2008 shows good news

Sales increased in 13 states, especially in the hardest hit states (California 25.8%, Nevada 25%, Arizona 20.5% and Florida 10%), a strong sign that the market has bottomed out and it’s getting back to normal.

Additionally, 35 US cities show an increase in prices from the first to the second quarter. Yakima, WA, pink 9.9%; Binghamton, NY, pink 8.7%; and Amarillo, TX, was up 7.2% over the prior year.

Conclusion

It’s never fun to be in a down cycle and watch the equity in your home and rental property fade away. Don’t be discouraged though, this is just part of the real estate cycle.

These low cycles are always a good time to pick up more properties at great prices, but be sure to keep a reserve for unforeseen problems (like illness or job loss) so you can still make your payments. Be sure to buy good properties in good locations, priced below area median, in markets with good job growth.

Properties will return to their appreciation of more than 7 percent and then you can watch your wealth accumulate once again.

Then do not worry. Real estate is still the best long-term investment.