Andrew Vaughey Investment Option

Author: David Gass

Entities that invest in different types of real estate or real estate related assets such as commercial complexes, shopping centers, offices, and hotels are known as real estate investment trusts or REITs. These entities first came into being in the 1960’s to give people a chance for investing in large-scale commercial properties.

The internal revenue code has a list of conditions, which a company must fulfill in order to qualify as an REIT. Below is the list of these conditions.

1.It must be structured as a corporation or a business trust.

2.It must be under the control of a board of directors and officers.

3.It must have a minimum of 100 shareholders.

4.Shares should be fully transferable without any problems.

5.The company must invest 75 percent of its total assets in real estate.

6.It should generate 75 percent or more of its gross income from investments in real estate or mortgages in real estate.

7.Another condition is that it should pay 90 percent or more of its taxable income to its shareholders in the form of dividends.

REITs may be held publicly or privately. If they are publicly held they must be listed with the SEC.

Types
There are three kinds of REITs: equity, mortgage and hybrid REITs. Below are descriptions of each type.

Equity REITs: This is the most common kind of REIT. This kind of entity owns or invests in real estate and makes money from the rent it collects.

Mortgage REITs: This type of REIT typically lends money to owners or developers and invests in financial instruments that are secured through mortgages. Their main revenue is interest earned from mortgage loans.

Hybrid REITs: These are a combination of the other two types of REITs.

Advantages of REITs
1.Investing in these trusts has the advantage of buying a physical asset and the prospect of increased returns due to appreciation in the rent. The market value of the properties is another benefit.

2.The income generated by the property is shared among the shareholders and reassures them of their rights to the property.

3.Even a person with an average income can own real estate without large down payments or any hassles.

4.Only one level of taxation is applicable to income earned from REITs as the entity can avoid corporate taxes.

People invest in REITs by purchasing shares or by investing in mutual funds specializing in real estate. People investing in these trust have a much more liquid investment. Most of these trusts possess a 7 percent to 10 percent dividend yield, making it profitable.

Investing in REITs is a way to buy stock from a reputable and established entity. Only invest in these trusts after carefully analyzing all aspects and understanding all risk factors involved.

Author: Joel Teo

Have you tried your luck at foreign exchange, bonds and stocks, but to no avail? Are you perplexed as to what to put your money on? Consider real estate investment, as several people have turned into millionaires through shrewd investments in real estate. By means of this article, we will elaborate four common real estate investing tips, which would help you realize significant profits via property investment. Be it a newbie or a seasoned investor, these tips are sure to be of help to one and all alike.

Real estate investing tip #1 - Perhaps the most lucrative investment technique is to buy a run down property, fix it up, and then sell at a significant profit. Since the property is shabby, you might be able to acquire it for a low price. However, you must ensure that the cost incurred in the repair is restricted to a minimum so as to guarantee a profit. You can do this by making sure that the basic amenities are in place, without going overboard with the renovation. Such a buy-fix-sell scenario demands excellent property valuation skills and a rather frugal attitude while renovating.

Real estate investing tip #2 - Purchase properties that are about to face a foreclosure. A property typically faces foreclosure when the homeowner is financially distressed and is unable to repay the loan. Another common reason for foreclosures is dissolution of marriage with the abandonment of the house by either of the couple. Such a distressed property can be bagged for a low price by an articulate investor, who can convince the homeowner to sell the property prior to the foreclosure sale. Then the investor may sell the newly bought property at a significant gain.

Real estate investing tip #3 - Locality is a paramount aspect in real estate investment. Two similarly built houses may have varying valuations if they are situated in different locations. So, you must be abreast of the hot locations in your concerned region. If you are just about to start you real estate venture, I suggest you look for places that offer high rentals. Purchasing a property in such a region would result in a healthy monthly source of income.

Real estate investing tip #4 - Ever heard of Warren Buffett? The acclaimed stock investor made billions through a contrarian’s approach to stock investment. You may take a contrarian’s view to real estate investment as well. For instance, you may buy a property when it is out of favor with the majority of investors. That is, acting in opposition to the majority opinion. A contrarian’s approach is not a sure shot path to real estate success. Moreover, it’s complicated and therefore beginners are advised against it.

All in all, there are several avenues that you could realize profit in real estate. However, it is imperative that you be prepared to put in extra work hours, especially at the beginning of your real estate career. Putting your shoulder to the wheel is what’s required to make substantial profits in real estate.

Author: Joel Teo

Land Banking is on the rise today as an alternative investment medium with profits and principal to be returned to you after three to five years depending on when permission is given to develop the land. This article will give a quick introduction to the concept behind land banking and how it can fit as a part of your real estate investment portfolio.

Real estate investment horizons or in laymen terms, the time taken for you to recover the amount that you invested may take anything from a month if you flip properties to several years if you are talking about longer term investments. Land banking falls within the second category and qualifies as a longer term investment and returns however can be as much as four to five hundred percent of the initial sum that you invested into the property.

What typically happens is that the developer bids for land that is not developed and then puts money to buy the land. Note in some jurisdictions there is usually some time lag of a few years before the city gives the go ahead for the developer to start building the development on the land. So the developer then sells the property to another company who then sells the property to investors who buy units.

Three to five years later, the plots approval comes in and the developer then purchases the property from the investors at many times the price and then you can exit from your investment. Spend some time quizzing the land banking agent about what type of exit time frames is he looking at and find out the returns and compare it against the rest of the returns that you are looking in other types of real estate investments. Always balance the risk of loss and reward mentally so that you can make a rationale decision when faced with a high powered real estate investment sales pitch.

In conclusion, this is a long term investment with the unknown factor of when the land is given the green light to be developed further. Real estate investment thus may be slightly more risky than other types of real estate investment. That said, it is submitted that land banking can be used as a longer type form of real estate investment that you can add to your real estate portfolio.