xIn last week’s article, we discussed how substantial profits could be made by investing where baby boomers may want to relocate or buy a second home. This seemed to confuse readers since they were thinking that our web site is about preconstruction and preconstruction to them means buying condos…… In this article, I hope to broaden your horizons considerably.

Unlike many people, I have a very broad definition of preconstruction investing which can be summarized as follows:

Preconstruction investing is the pursuit of real estate projects that offer the opportunity to ride rapidly increasing prices over time without the need to put tenants in place to defray costs. Since no tenants are involved, this opens the possibility to making investments in locales that are far removed from where you live.

If you adopt this point of view, then a whole world of “alternative” preconstruction investments opens up to you. Today, we are going to look at one specific type of investment: investing in developing land projects where baby boomers might want to retire or own a second home.

Before we get into the specifics, let’s talk about what all investors want:

• Low risk

• Good investment returns; and

• Minimal use of their capital;

Quite frankly, these 3 reasons are what got me into preconstruction real estate investing in the first place. Now let’s see how these might be achieved on a purchase of investment land that we believe to be VERY desirable to baby boomers.

Suppose we are considering the purchase of a piece of property for speculation of future returns. If, like me, you believe in the impact of the baby boomers, then you will do 3 things to control your risk:

1. Carefully select a land project where you are solidly convinced that baby boomers will want to possess it at any costs;

2. Make sure that you believe that baby boomers will be AWARE of this project in the future do to somebody’s marketing; and

3. Manage your finances and investment portfolio so that if you are wrong and you do take a loss, it is not catastrophic to you.

For the time being, let’s assume that you have met these conditions on a project and now you are ready to analyze your returns and your use of capital.

Now we have to resort to hard analysis. Let’s look at the following ASSUMPTIONS:

1. The land project is assumed to increase at least 25%/Yr in price;
2. We plan on holding the land for 2 yrs and then resell.
3. $200,000 purchase price with $5,000 in closing costs.
4. Annual taxes/association fees of 1%.

If you take a look at the three cases in a spreadsheet format, here is how things might turn out under this scenario.

Case 1: 10% down payment, interest only, all payments made by BUYER.

Case 2: 10% down payment, interest only, all payments made by SELLER.

Case 3: 5% down payment, interest only, all payments made by SELLER.

Cases 2 and 3 require a bit of explanation. There are some early stage land projects available where the developer will take a percentage of your purchase price and escrow an amount that will make your payments for a period of time---- typically 2 years. This means that during your 2 year hold, you would only pay taxes and association fees. To enter this in the spreadsheet, we just show a 0% rate during the holding period.

If you scroll down, you can review the performance of each case. It may surprise you that even under Case 1, where you paid in a total of $48,600 out of pocket, you still see a return on investment of 127%! That equates to 51% annual return on investment. Compare that to what your friendly banker is giving you in your CD.

For many investors, beginning or not, they would prefer not to have to put in that much money so let’s look at Case 2 where the developer has escrowed 2 years worth of payments. In this case, we invest a total of $29,000 with a total, out the door profit before taxes of $81,625 thus providing a total return of 281%. If you then extend that to Case 3, where only 5% down is required, then the return goes off the charts to well over 500%!

xI have learned that investing is all about research. So many people express how risky real estate investing can be, however there can be no risk when you know what you are doing. Risk comes from being unsure.

Thorough research provides knowledge about your market or area of investment. In real estate investing knowing your market is the key. Know the population, employment, good locations, supply and demand for housing and other characteristics about your market. This is better than just assuming that property will go up in value or that you will get someone to rent your investment property.

There are a few ways that you can go about getting this type of information:

1) Speak to your city officials to find out the population projection for your desired investment market.
2) Use the Internet to do as much research as possible.
3) Put together a team of professionals. Realtors, lawyers, mortgage brokers, appraisers, property managers etc.
4) Read your local paper.
5) Tour the area and pretend as though you were a resident there.

There are other ways to find information. This may seem like too much work but would you rather put in less work and create more risk?

Anyway these are just some basics on eliminating the so called risk that may be involved in real estate investing.

John-David Lusan - I started out in the real estate industry working as a Mortgage Councelor. Recently I have been involved in real estate investing.

Costa Blanca, Costa Almeria, Costa Calida, in fact wherever you look on the Spanish Costas Property prices are still rising. From an investment point of view that’s a good thing however, if it’s an affordable Spanish property to use as a home from home in Spain you are looking for the news is not that good, or is it?

Property prices in the UK are slowing down and it would appear that most of the money to be made from investing in property there has already been made. Okay there are examples which defy the trend and people still turn up the odd diamond, but on the whole investment in UK property should now be looked at in the long term, rather than the short or even medium term. Spanish property investment however, is still turning up diamond studded property bargains.

Spain should not be overlooked when comparing investment property for sale outside of the UK. Countries such as Bulgaria have been getting good press of late for property bargains, but as in all things and particularly when you are looking to invest in property, you should take the time to look at all aspects of that investment.

Property investment for most of us has become a reality, thanks in part to the ministrations of the Thatcher government and their policies towards property ownership.

Whether it has been for a property to use as a home, or another income stream through buy to rent schemes, millions have invested in property. Now the UK slow down has tempted people to look offshore for investment opportunities.

Property in Spain and other places such as Bulgaria has since then become the focus of people looking to invest money. It has long been said that you can’t loose by investing in bricks and mortar, but as many people found out to their cost in the late 80’s, property investment can go down as well as up. Investing in Bulgaria is becoming attractive, but be careful look at it from both sides.

If you intend to invest in property to provide an income through rentals, will Bulgaria do it for you? The short answer is probably not, the short answer to why not is again fairly easy. How many people do you know would go to Bulgaria for a holiday? The answer to that is, not nearly as many as will jet off to the Spanish Costa’s at every opportunity.

Investing in Spain will immediately become more attractive, because while properties are more expensive, by the same token a similar property will generate more income because the rents are proportionally higher. The better choice for investment property will therefore still remain in Spain.

Property to be purchased as a home will obviously be bought with a different set of values in mind. Here again thought Spain in general and the Costa Blanca in particular will triumph. Why the Costa Blanca? The short answer is, property prices compared to the Costa del Sol are very favourable on the Costa Blanca.

Why the Costa Blanca and not Bulgaria? Due to the high density of UK expats living in the Costa Blanca there is more work, more Spanish speak English so the language is not a major obstacle. The other overriding reason for choosing Spain is that Bulgaria is not in the European Union, which in itself can present major problems concerning property ownership.

Property investment and ownership in Spain is still a good bet and for more information on all things investment and property related, contact Diamond Properties on the Costa Blanca: http://www.diamondproperties-spain.com

Diamond Properties have links with major Spanish banks, investment consultants and many other institutions and the information and help they offer is reliable and of the highest quality.

With the United States real estate market growing faster then ever before in history everyone seems to be asking “Where are the preconstruction real estate hot spots?”. Now I could just tell you the best places to invest in real estate are Orlando, Las Vegas, and Miami but that doesn’t make an exciting article. The truth is it depends what kind of investor are you. Ask yourself:

* Are you the kind of investor that is willing to take a bigger risk for a chance of bigger profits?

* Are you the kind of investor that focuses on rental income over flipping houses?

* Are you the kind of investor that prefers to visit the property on vacation or are you never going to see the property?

If you’re the kind of investor that is looking for preconstruction investment real estate that you will be sure to sell at a whim’s notice AND bring you high rental income then perhaps you should look in Miami. Miami has long been a upper class vacation hot spot with it’s gorgeous beaches, exciting nightlife, 5 star restaurants and hotels, and interesting mix of cultures. Although out of Las Vegas, Orlando, and Miami - Miami has been growing the longest which means prices have risen greatly over the last few years, but as long as you have preconstruction in mind this is still a great investment. Those of you that know Miami know that it’s a seller’s market to say the least. Desirable properties usually only stay on the market for a few days and the price just keeps going higher and higher. For many Miami residents, the chances of owning a upscale property in Miami is slim to none simply because of the high price tag. This is the very reason why preconstruction investment properties are doing so well there.

Imagine you’re looking at two identical properties, one is three years old and one is just starting to be built. The one that has been around for three years has an overwhelming amount of amenities (gourmet restaurants, spas, high end retail shops, etc) while the new development doesn’t have any amenities yet. Because of this the price on the new condo (The preconstruction development) is significantly lower and thus more affordable for the investor. Now after this condo development is completed amenities will stop popping up around it and it will then be worth as much as the original condo that has been around for three years.

Some people say that the real estate bubble in Miami is going to pop soon but the fact is it just makes preconstruction real estate even more valuable. When real estate hits such a high mark like Miami has it makes every investor desperate for preconstruction. Why? Because they know the real estate will sell because it’s in such high demand AND they know because they’re buying it in the preconstruction phase that they will be getting it at well below market value.

Fractional Ownership is something that has been around for years but has just now hit the investment real estate market ( i.e. vacation homes, townhouses, condos, etc). For years business men and women have been using the fractional ownership technique to purchase everything from private jets to expensive jewelry. Fractional ownership broken down basically means that you and a group of people (often times friends and family) pool your resources together to purchase an otherwise expensive product. This product is then split up evenly among the investors and each investor owns an equal fraction of the investment. With vacation homes that means that each investor has either one or two months to use the vacation home (the number of months depends on the number of the investors). Fractional ownership works very well for the family that wants a nice vacation home to call their own but doesn’t want to spend $400,000 dollars on a place they will only use a few weeks out of the year. If you are only planning on using the vacation home one month out of the year do you really want to pay the mortgage and upkeep costs the other 11 months of the year? Now if your anything like me a big alarm is going off in your head and your thinking that fractional ownership is nothing more then a fancy way of saying timeshare. Well it’s true that fractional ownership vacation homes do share some similarities don’t confuse the two as the same.

Here are some of the major differences between buying a fractional ownership vacation home vs. a timeshare:

1. Luxury - Fractional Timeshares are much bigger and usually a lot nicer. Timeshares tend to be small cheap cookie cutter housing pawned off to unsuspecting tourists by pushy salespeople that don’t take no for an answer. Fractional ownership properties are very classy and are actually worth the combined total of the investment from each investor. This may sound a little confusing so I’ll break it down for you:

Timeshare:

25 investors (each investor buys 2 weeks) x $47,000 = $1,175,000 house

Usually these timeshares are valued well below $150,000

Fractional Ownership:

12 investors (each investor buys 1 month) x $50,000 = $600,000 house

Fractional ownership houses are valued around $550,000-600,000. In fact if you compare timeshare to fractionals you’ll notice that per week timeshares are more expensive for less room and lower class furnishings.

2. Global Exchange - Global exchange gives you the option to exchange unused weeks at your fractional to vacation in multiple vacation spots around the world. Many timeshares offer this as well but the houses and amenities in times are typically much much lower then a fractional. If you’re going to a vacation in Greece do you really want to spend it in a cramped 500 sq ft studio apartment in the bad part of town?

3. Easier Financing - Banks and lenders consider fractional ownership homes to be similar to a second home, so it’s usually easier to finance a fractional over a timeshare. Also, the rates are often time lower on a fractionals.

So now you’ve learned about how much money is in investment real estate and you want a piece of the pie. You picked your city that you want to invest in (Orlando, Miami, Las Vegas, Ft. Lauderdale, Tampa, St. Petersburg) and then it hits you... What investment project or development should you buy, with so many out there how do you choose which project to invest your hard earned cash on? It can be tricky to find the right investment property because chances are after you heard about a project it’s way too late to invest in it. Sure your buddy may have made a "killing" on a pre construction project or development but the ship has already sailed. You need to find a similar project or development that is going to skyrocket in the same way. In this article I will teach you how to find these elusive pre construction investment developments and projects.

1. Contact a reputable investment brokerage and see what they have available. Many brokers like myself focus on preconstruction real estate and because of past dealings, these brokerages will be well informed from the developers on new projects they are planning. This is by far the easiest way to learn about preconstruction developments because most of the time by the time you hear of a pre construction development or project via the grapevine it’s too late.

2. Ask other investors online. There are many real estate investment forums online where you can go in and ask other investors what they think about a certain project or development. You may learn that some developers are constantly changing the developments or projects or you may learn that management company is great at renting out your condo. Information I power and the more people you can meet and talk about investing the better.

***Beware*** Some developers will sign into these forums and act like a fellow investor only to promote their own projects or developments. Don’t just take the word of one person and remember to do your due diligence.

3. Drive around the area you want to invest. I know many investors don’t live by the area they are going to invest but if you can take a weekend and fly down to Orlando, Miami, Las Vegas, Ft. Lauderdale, Tampa, St. Petersburg or wherever you’re going to invest and look for signs for new developments. For example if you fly down to Orlando and drive down rt 27 you’ll see dozens of new projects opening up and all you have to do is call the developer for more information. Often time I will just stop in a gas station and ask if they know of any new real estate developments opening up and you’d be surprised how many times I hear there is one opening up right down the road.

Narrow your search by sticking to key investment cities such as Orlando, Miami, Las Vegas, Ft. Lauderdale, Tampa, or Petersburg. Don’t waste time by searching areas that are not going through a “boom”.

Like I said earlier you probably want to just find a trustworthy real estate brokerage that focuses on preconstruction projects and developments for the simple fact that these firms make their money from making their investors happy and the only way to do that is through making them money.

So 2005 is almost over and investors are looking for the best cities for investment real estate for 2006. Well I've been following the industry for almost 20 years and I've confident to say that I can make an educated guess on what cities are going to show the highest real estate investment returns for 2006. First let me start off by saying that no one can know for sure what cities will have the highest growth rates for the new year but with enough experience and knowledge one can at least make a surprisingly accurate educated guess.

Cities to Invest in for 2006

1. Orlando, Florida - While places like Phoenix and California have increased at a pretty steadily rate for 5+ years Orlando has only recently started booming over the last few years and is still my #1 pick for investing. There are many reasons why I feel Orlando is going to grow steadily over the next few years but one of the main factors is that families are flocking to Orlando for vacation and as we all know family vacations ARE NOT effected by economics. People continue to go on vacation regardless if the economy is up or down which is something few industries do. So with that said, real estate all over the United States may level off over the next 5 years but as long as Orlando keeps happy families coming in, Orlando will not be affected by any negative real estate developments.

2. Las Vegas, Nevada - While many believe Las Vegas has hit a plateau in real estate pricing, I believe there is still a good amount of juice left in this little piece of Nevada desert real estate for several reasons. One being that Las Vegas real estate will stay strong because this is not a bargain town filled with tire kickers. For some unknown reason Las Vegas is one of those cities where you go on vacation and forget about the pocket book. The more people that move here the more traditional real estate appreciate, the more people with money vacation here, the more investment real estate appreciates.

3. Biloxi, Mississippi - This is by far the newest city to feel the investment real estate boom. You see as some cities become less attractive to invest in investors ban together and start in another areas and Biloxi Mississippi seems to be this new place. Hundreds of investors are looking at Biloxi Mississippi to be the next Las Vegas and only time will tell if the public agrees with their decision. So you maybe asking "Mark, Why isn't Biloxi Mississippi your number one pick for cities to invest in for 2006?" The answer is easy, this is a VERY new investment town and there is a chance it could flop right off the bat. Only time will tell if this town is worthy for the 2006 investment real estate forecast.

Best state for investing in real estate for 2006

Florida - My choice for the best state for real estate investing for 2006 is still Florida. There is just too much going on here for me to think differently. The state as a whole is still widely undeveloped and the whole state seems to be working together to bring in tourists with quality attractions for people of all ages. The senior citizens love the climate and relaxed way of living and kids love the amusement parks and the beautiful beaches. This is bring in a huge amount of people not only to vacation here but live here as well.

Note: One of the biggest challenges real estate investors face is finding the money to fund those first few deals—even when they have some cash themselves. I sat down and talked with Russ Whitney, internationally known and respected leader in the real estate investment and financial training field, and here is his advice:

Jordan Taylor: I recently heard from a new investor who was buying a property at below-market value and had a 5 percent down payment, but the bank said because it was an investment, the down payment needed to be 20 percent. What would you suggest that she do?

Russ Whitney: She needs to shop around for a different lender. She probably went to a branch of a mega-bank that has very strict rules and the people in the branches do not have the authority to operate outside those rules. Another lender may look at the deal far more favorably.

What's very important to always keep in mind is that when you take out a loan, the lender is not doing you a favor. The lender is going to make money on the deal through the interest on the loan and various other fees, such as points and closing costs. You're the customer, and you should be treated that way.

JT: If the bank is going to make money on the deal, why do they turn down loans?

RW: Because they have to be sure they will make money on the deal. Banks make money on loans that are paid back on schedule, so they have rules and policies that are supposed to help assure that they make good loans. Unfortunately, sometimes strict rules don't allow a bank the flexibility to work with a creative real estate investor. But just because one bank turns you down doesn't mean you can't get the deal funded. That's why you need to look at other lending options.

JT: That's easy for you to say--your name is Russ Whitney and people are probably lining up to give you money. What's the best way for an ordinary person to do that?

RW: I recommend dealing with a good mortgage broker. Their job is to bring borrowers and lenders together, and they only get paid when the loan closes. They are a tremendous resource for real estate investors because they do all of the loan shopping for you, and the lender pays their commission. A sharp mortgage broker will help you structure the deal and then take it to the right lender.

JT: What do you mean by "the right lender"?

RW: Not all lenders are the same. They have different requirements, they like different types of deals. Traditional banks, for example, are very concerned with how much cash you're putting into the deal and your credit rating. A hard money lender focuses on the value of the property and the loan-to-value ratio. Also, different lenders offer a range of terms. Some want the loan paid back quickly, perhaps within a year, others will go for much longer terms. The broker is also going to consider the lender's fees and other policies, and make sure it's all consistent with your goals.

When talking about Rental Property Investments, the term ‘working capital’ has to be understood. There are two concepts of working capital: gross working capital and net working capital. Gross working capital is the total of all current assets. Net working capital is the difference between current assets and current liabilities. It may be mentioned here that though this concept of working capital is commonly used, it is an accounting concept with little economic meaning. It makes little sense to say that a firm manages its net working capital. What a firm really does is to take decisions with respect to various current assets and current liabilities.

The management of working capital refers to the management of current assets as well as current liabilities. The major thrust, of course, is on the management of current assets. This is understandable because current liabilities arise in the context of current assets. Working capital is a significant facet of rental property investments because investment in current assets represents a substantial portion of total investment. Moreover, investment in current assets and the level of current liabilities have to be geared quickly to changes in sales. To be sure, fixed asset investment and long-term financing are also responsive to variation in sales. However, this relationship is not as close and direct as it is in the case of working capital components.

The importance of working capital management is reflected in the fact that financial managers spend a great deal of time in managing current assets and current liabilities. Arranging short-term financing, negotiating favorable credit terms, controlling the movement of cash, administering accounts receivable and monitoring the investment in inventories consume a great deal of time for financial managers.

In the management of working capital two characteristics of current assets must be borne in mind. Firstly, short life span and secondly, swift transformation into other asset forms. Current assets have a short life span.

It is generally best not to have your corporation purchase real estate. If your company is a C corporation, your company will pay tax when the building is sold. In order to get those profits in your hands, you will have to pay yourself a dividend. This dividend is taxed again. So you are paying taxes twice on the gain from the building sale.

If the building generates a tax loss, which many buildings do because of depreciation, this tax loss will offset your corporate income. Corporate income, however, is sometimes taxed at lower rates than individual rates. Therefore, the tax benefit from the building would be less when held in a C corporation.

If the building generates a tax gain, this gain will be taxed as part of corporate profits and taxed again as a dividend when the cash is distributed to the owners. Often, real estate will generate more cash than taxable income. In C corporation form, getting that cash to the owners will involve extra income tax that would not be paid if held individually.

The same principals apply to contributing your rental property to your corporation. You will be taxed twice when you finally sell the property. Any tax benefit provided by the property may be less when corporate rates are less. Taxable income from the property will be taxed twice.

The analysis is different if you have an S corporation rather than a C corporation. However, it is still not a good idea to own real estate in your S corporation. If you change your mind in the future and you want to pull your real estate out of the S corporation, you will immediately subject yourself to tax based on the fair market value of the property. For example, suppose you want to contribute the property to a partnership to develop the property or for other reasons. You will not be able to get the property out of the S Corporation without paying income tax. Additionally, you may not want to subject such a large appreciating asset to potential liabilities that can arise in your corporation.

Buying the building personally is also not a good idea. Your personal assets would then be at risk to satisfy any potential liability that arises from operation of the building. For this reason, many people use a limited liability company to own real estate. You should still have liability insurance. Make sure to discuss liability issues with your attorney.

In addition to liability protection, a limited liability company (LLC) provides maximum flexibility and maximum tax savings for ownership of business or rental real estate

The worst thing an inexperienced or time strapped real estate investor can have is cash!

Every day, new investors come to us with similar problems. They are losing money on their rentals, they are being driven crazy by tenant, toilet and trash problems and they want out!

They saw “everyone” getting rich in real estate, so they decided they wanted in. They took a couple of courses, read a couple of books and they were ready, or so they thought, to buy rental properties for passive income.

Little did they know that fully 1/3 of small property (1-4 units) owners are driven out of the business each year by the same problems they were encountering!

So, instead of trying to decide which antique letter opener to use to open this month’s rent check, they find themselves trying to decide whether shooting or cyanide is the least painfull way to escape their property’s problems.

Baby sitting tenants whose only purpose in life was to make theirs miserable was no fun. Adding insult to injury, they were paying for the privilege month after month through negative cash flow! Sound familiar?

Many had already sold, most taking losses on their once prized “investments.”

It doesn’t have to be that way.

If they had taken the time to study real estate and acquire knowledge of triple net leases, trusts and equity shares, among other advanced techniques, they could have avoided most of their problems.

Like Robert Kiyosaki, the best selling author says, if you do not have the knowledge to make money in real estate with no money, you will only lose the money you have, investing without the knowledge.

Fortunately, there is an easier way for the new or passive real estate investor to acquire high yielding investments without spending years and/or thousands of dollars on courses to obtain the required knowledge.

The solution is Turnkey Investments that produce high yielding passive income. You can buy them with your signature alone or if you do not have good credit, with seller financing in most cases.

With a turnkey investment, a knowledgeable, experienced real estate professional pre-packages the investment and sells it, ready to go, to you.

The property is occupied, producing positive cash flow monthly and there is a profit built into the buying price, along with an upfront cash payment to you in many cases!

Most importantly, there are no management, repair or maintenance problems for you to contend with. The tenant is contractually required to handle those issues himself!

All you have to do is to (add water and stir!) purchase the property and supply an address where you want your checks mailed!

These pre-packaged investments make passive income a reality, even making out of state ownership feasible.

If you have a high enough FICO or credit score, (680+), you can buy the investment with just your signature, no money down!

Over the last 20 years, land prices across the UK have increased by almost 10 times. This means that UK land investments have proven a wise choice over the last few years. As a result, the value of UK land is increasing almost by the day and the availability of prime UK land is becoming scarcer.

Returns from Land Investments

UK land investments have proven to be highly rewarding, as returns on investments in undeveloped plots of land have outperformed those from stock market investments. Investors can expect a major windfall if their plot of land is granted planning permission.

If one considers that agents for UK land investments are offering 0.12 acre plots of land for sale in certain areas for £10,000, and similar sized plots in the same locality with planning permission can sell for well over £100,000, it is clear to see the possible return on such an investment. In addition to the potential returns from a speculative UK land investment the land owner can actually utilise and enjoy the actual amenity value of the land whilst they wait for planning permission to be granted or for their land to be re-zoned. In addition, the actual land is likely to increase in value in real terms. This is because even agricultural land is currently increasing in value at a greater rate than real estate.

UK Land Investments Group

As specialists at investing in land, UK Land Investments Group (UKLI) source and purchase the very best strategic land, with real development potential. The highly professional team at UKLI believes in offering the very best land to clients and helping to improve standards in what is rapidly becoming a rapidly growing land investments industry. UK Land Investments always work hard to ensure that their clients feel well informed at every stage of the way.

Buying and selling real estate has become one of the most popular forms of investing over the past decade and it is catching on for a reason. When it is done right the pay off can not only be huge but it can be quick. While typical investment strategies can take years to significantly pay off, real estate can increase the investor’s fortunes in a very short time.

The other thing that is exciting about the world of real estate investing is that it is more of a hands on investment. Unlike the stock market where you are pretty much putting money in to somebody else’s business in which all sorts of people are making the decisions, real estate is generally an investment where each play is your own. That said, there are real estate investment groups where you can buy in to someone else’s venture in order to gain a smaller share.

There are all kinds of different ways to make money on the real estate market. The one that seems to be more popular, at least in the one that is discussed more in the popular culture, is what is usually referred to as flipping. This is the practice of buying a property with the intention of selling it right away at a higher price. When it is done right the return on the investment can be huge, depending on what kind of property was purchased.

People are turning to this practice because it is an investment that keeps paying for itself. While slower growing investments are generally left alone until the money is finally needed for something such as retirement, the money gained on something like a flip can be immediately reinvested into another property. If the first cost a hundred thousand and was sound for a hundred and thirty, for instance, the investor can now easily acquire a property worth that much more. Once that property is flipped, the return on investment will go up again and then another even bigger property can be bought.

The big draw here, as you can clearly see, is that if everything is done successfully, after only a few properties are sold, you can continue to make investments almost entirely out of your profits.

Because of this it is easy to see that the potential pay off of real estate investments done right can far outweigh the actual risk; and, be sure, there is a risk. Generally these initial purchases are done with help from a bank. If something goes wrong along the way—property values could, in theory, drop quickly, or there just may not be anyone willing to buy—the investor is stuck with potentially all of their money tied up in a property.

If that were to happen the results are obvious. However, if the investor is willing to go into it slowly, start small and put the effort in to researching the market, then the risk is greatly diminished. Real estate is something that many people are getting in to because, when done right, it just seems to be paying and paying and paying.

Are you looking to acquire some property for pennies on the dollar? You probably won't score your dream house, but you can definitely find some great deals that can quickly be flipped by attending tax deed sales.

A tax deed sale is simply where the county forecloses on the property owner for non payment of real estate taxes. The process for administering tax deed sales varies widely by state and even by county. In Ohio for example, tax deed sales are done as Sheriff Sales, which is the exact same department that does the mortgage foreclosures. In Arkansas, there is a state office called the Commissioner of State Lands that handles all tax deed sales. In other states, tax deeds sales are at the county level with either the Treasurer, the Circuit Clerk or the Auditor handling the sale. As you might imagine, it is very important to understand your local regulations.

The tax deed bidding process is determined by local regulations: some jurisdictions require the minimum bid at the auction to be the appraised value or a fraction of the appraised vale of the property. Other jurisdictions use the taxes owed as the minimum bid.

Here's where it really gets interesting. If the property does not sell at the initial sale, some jurisdictions allow for the state or county to sell the property with no minimum bid no matter what is owed. For example, in Arkansas, I have bought property from the Commissioner of State Lands for as little as $25. Read that again. It is not a misprint. Not $2500, not $250, but $25! I sold the property a month later for several hundred dollars. Does that kind of deal happen every day? Of course not! But it does happen.

So, how do you find these kinds of deals. If you don't know the regulation in your state, call your county money person, whether its called the Treasurer or Tax Collector and ask what the procedure is for delinquent taxes. They should be able to tell you when the next tax sale is. Then call the appropriate department and find out what the procedure is for the properties that do not sell at the initial auction. Are they sold at another auction? Are they at a list somewhere that you can buy straight off of? Be persistent and you will soon find the pot of gold.

I recently worked with an investor who withdrew from buying a great one bedroom condo that he was going to use as a rental. He withdrew because he was going to have negative cash flow the first few years that he owned the property.

What really surprised me about the situation is that the investor was buying the condo with a no-money-down loan and despite putting none of his own cash in the property; he still expected to break even right from the start!

This is kind of like buying a cow for the milk, but not being willing to feed her!

The same goes with buying small rental properties, (the kind of properties that an average person could afford).

If you were to make a 30% down payment on a rental property, (the kind of down payment the banks might want on an investment property) you would likely get a small amount of positive cash flow right from the start.

However, if you buy an investment property with a small down payment or no down payment, you should expect to have to “feed” the property during the first few years of ownership. This is not necessarily a bad thing.

Consider the purchase of a $200,000, single family home with 4 bedrooms and 2 bathrooms that could be rented for $1400/month.

Here is what could happen when you make a large down payment, and what might happen when making a small down payment or no down payment:
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Example #1: A large down payment & positive cash flow:

“Joe Investor” makes a 30% down payment ($60,000) when buying his $200,000 rental home. This leaves Joe with a mortgage of $140,000.

At a 6.5% interest rate, Joe’s monthly payment with taxes and insurance would be about $1110 (PITI). Let’s assume maintenance and vacancy costs of $170/month. Joe’s total monthly cost of owning the property would be $1280/month.

The difference between the rental income of $1,400 and the expenses of $1280 gives Joe $120 in monthly positive cash flow.

xInvesting in real estate business sounds like some guaranteed formula for consistent cash flow. This notion, no doubt, has been prevalent over the time. But aspiring agents often overlook the fact that there cannot be any gain without bearing some amount of pain. Investment in real estate business requires some serious thought on part of the investor because without his dedication and hard work, fruitful results would be an anathema.

For those venturing into the field of real estate, it is important to follow some basic guidelines. The concerned person should use his prudence with regard to the choice of the real estate. He should be imaginative enough to plan out sales strategies even of unused or abandoned properties. He should always be on the look out for properties that have the potential of developing into popular commercial or residential centers in future. In a way, a real estate agent is thus like a treasure-hunter always on a hunt for precious treasures.

Another simple but important point to remember is your attitude towards your business. It has become quite common for most of us to consider this business as a child's play. Many of them consider devoting only one or two days of the week enough to bring profit to their business. Such a casual attitude towards your real estate business will hardly end up bearing fruits. On the contrary, you can find yourself sunk in deep losses as well. So its advisable to the beginners to pay proper attention to their business and work hard to enjoy the gains that this business can deliver.

It is not really necessary to make huge investments while beginning your business. But you should invest soundly and have the patience to wait for the desired results. Real estate business is not some instant reward formula where you can get huge rewards with minimum investment. Always remember, if you want to gain, you must be prepared to lose.

Besides for those who face some problems initially, approaching an experienced real estate agent is advisable. These agents are skillful enough to convince the prospective buyers of the plus points of their purchase. As such, one can always learn some important business tips from them. Beginners, therefore, should never hesitate to clarify whatever doubts they have on their mind. They should remember that the only obstacle on their way to success is their attitude and effort. Ultimately, they will reap the benefits of their own toil.

It is common knowledge that many Americans are finding that investment property in Mexico may provide an interesting option. Is buying property for sale in Mexico still a good way to reposition equity from appreciated domestic property?

Trends show older people and retirees are looking for inexpensive places to live and enjoy the rest of their lives and are finding places like Mexico very attractive. Should you be the one who sells or rents this property to Americans? Is this a good way to put some of your appreciation from your property in the United States to work? We will explore some factors for you to consider:

Overall, the appeal of owning investment property in Mexico is evidenced across the country. For example:

In the last couple of years there has been a land rush in the Riviera Maya, a small idyllic slice of Mexico's Yucatan peninsula. It is this combination of beautiful beaches (or other geographical features) with inexpensive cost of living this bringing Americans by the hundreds to this place and many others.

From the long-time artists' enclave of San Miguel de Allende in the hills of central Mexico to fast-growing sports-fishing and beach communities of the Baja peninsula to Puerto Vallarta on the Pacific coast, there is plenty to lure a sun-seeking retiree.

No place has boomed in recent years like the state of Quintana Roo in Mexico's far southeast corner. Anchored by the high-rise resort destination Cancun at one end and cosmopolitan Playa del Carmen an hour to the south, Quintana Roo is the country’s fastest-growing state, with over a million residents. An estimated 1,500 to 3,000 American citizens live there more than six months out of the year, along with a few thousand more Canadians, Europeans and South Americans.

The hottest section is near Tulum, just down the beach from a massive Mayan fortress overlooking the Caribbean. While the area retains a funky 60's vibe (there's a nude beach--unusual for conservative Mexico), in the past several years some swanky hotels and real estate developments have been launched.

Indeed, with more than 70 million American baby boomers expected to retire in the next two decades, many without adequate pensions or health plans, some experts predict a vast migration to warmer--and cheaper--climates. Often, such buyers purchase a property 10 to 15 years before retirement, use it as a vacation home, and then eventually move there for most of the year. Developers are increasingly taking advantage of the trend, building gated communities, condominiums and golf courses and are selling directly to the retirees and to those wishing to hold the property as part of their real estate investment portfolio.

On the negative side, there are a couple of factors to keep in mind:

First, if you are planning on using investment property in Mexico as a repositioning strategy, remember you cannot use the popular 1031 exchange approach because the rules limit replacement properties to domestic replacements (i.e. land in the United States).

Also, many land-seekers are encountering a variety of obstacles with the investment itself, including skyrocketing real estate prices and confusing laws. Under the Mexican constitution, foreigners are allowed to own land outright anywhere except within 50 kilometers (31 miles) of the coastline or 100 kilometers from a national border. Within the restricted zone, they can hold the property in a trust, or fideicomiso. While they don't officially own it, they retain the right to use it and sell it for a renewable 50-year period. For example, in Tulum, several miles of virgin beachfront are claimed by an ejido--a form of communal ownership that's fairly common in Mexico. Under current law, ejidos can be "privatized," subdivided and sold, subject to unanimous approval by ejido members and time-consuming government approvals. Until that happens, foreigners are blocked from buying pieces of it.

Finally, if you're interested in investment property in Mexico, experts say there are a few basic steps to help avoid heartache. First, ask a prospective seller to provide three documents before proceeding with any negotiations: 1) a copy of the title, known informally in Spanish as an escritura; 2) a certificate of freedom of liens and encumbrances; and 3) the latest tax statement for the property. These documents will help establish that the seller really owns the property free and clear. Second, hire a reputable attorney before signing any documents. The nearest U.S. consulate can provide a list of attorneys in good standing. Third, arrange for title insurance. In recent years major U.S. players such as Stewart Title and First American Title have gone into business in Mexico and there is a thriving locally based industry, as well. For a cost of about $5 per $1,000 of property, a title insurer will protect a buyer against prior liens by tax authorities in the event that somebody else claims title. Finally, make sure to place the property in a fideicomiso, or trust. Fees run around $1,000 to $1,500 up front, plus about $400 a year, but that is offset by the very low property-tax burden