Why Invest in Real Estate

"Why You Should Be Investing Your Money In Real Estate"   As entrepreneurs find success with their primary business ventures, many search for the proper investments for their profits. Of course, we can and should all start traditional tax preferred vehicles like an IRA and 401k. These are the bedrock of good 'benefit' planning for ourselves and our employees. I'm also convinced more entrepreneurs should consider rental real estate as an important part of their portfolio. I realize many business owners shrug off this concept after the recent downturn in real estate values, but let me list a few reasons that may change your mind: 1. Gain more leverage. Real estate is one of the few investment vehicles where using the bank's money couldn't be easier. The ability to make a down payment, leverage your capital, and thus increase your overall return on investment is incredible. Also you earn a hard asset thats insured and secured unlike stocks and other investments not insured. 2. Grow, tax-free. Buying rental property based on speculation of its value is a dangerous tactic since cash flow is the key. However, appreciation over the long-run is certainly realistic and at the least you should be considering a tax-deferred strategy. In the future, you may even consider a 1031 exchange, charitable trust, or an installment sale to lesson your tax liability further. 3. Tax free cash flow. It's no secret that because of depreciation and mortgage interest deductions (if you leverage your capital), your cash flow should be tax-free. That's right! The far majority of the time an investor will never pay taxes on their cash flow and can wait for capital gains on the sale of the property in the future. 4. The tax write-offs against your other income. Depending on your classification as an Active Investor or Real Estate Professional and your income level, there is a good chance your rental property will not only give you tax-free cash flow, but an overage of tax deductions you can use against your other income. With that said, this is something you want to discuss with your tax professional before investing so your expectations are realistic. 5. Increased tax deduction strategies. Rental property affords investors with another incredible opportunity to convert personal expenses to potentially valid business deductions. Don't forget that rental real estate is a business. This means that travel expenses to check on your properties and payments to family members who manage your properties (such as students away at college) can be deductible and increase the tax benefits when it comes to cash flow and the future sale of the property. 6. Rental real estate is a forced retirement plan. Americans are terrible savers. We lack the self-discipline to put a monthly deposit into our IRA, SEP or 401k as small-business owners. However, buying a rental property is a significant commitment that you are required to commit to and maintain. You will always be grateful in the long-run when you don't give up on it and build future cash flow and wealth. I meet with a lot of successful entrepreneurs, and almost every one of them has taken profits from their businesses over the years to invest in rental property. Based on this fact and the list above, I have consistently urged my clients to buy at least one rental property a year and already have many clients with rental properties earning them money they never imagined they'd have. The best part is this is LIFE LONG INCOME that will never go away and that the real key to creating a solid and secure and wealthy retirement.   --Today's blog courtesy of DJ Thielen, Fortune Foreclosures. The far majority of us will never get rich overnight. It takes long-term investing and a diverse portfolio to build true wealth. Don't forget real estate as an important part of the equation

Happy Investing!

Have a Dream

In honor of today's Martin Luther King, Jr holiday, I will focus on the value of a dream.

When you were little, what did you want to be when you grew up? The world was full of possibilities then, and the idea of becoming an astronaut, an actor, astronomer, paleontologist, or president did not seem so far-fetched. It did not matter that you had absolutely no experience or training. It did not matter that there were parts of that dream in which you were not proficient. It did not matter that the road to get there would be long or challenging.

When you dream, you open yourself up to possibility. Your mind says "yes" instead of all the reasons it should say "no."

Most of us give up our dreams too soon. The reality of life steps in. Friends and family are not always supportive. Some people will even suggest that your dream is impossible, stupid or hopeless. Adulthood comes with responsibility, bills, jobs, family, mortgages, loans, etc etc etc. It is easy to get discouraged.

When did you stop dreaming? Why did you stop dreaming?

I would argue that when you stop dreaming, you stop growing. What dreams are you holding on to?

It is never too late to dream.

Successful people hold on to their dreams. They pursue them with vigor, despite the objections of others, despite the obstacles and barriers that are thrown in their path. They believe in the possible, and move forward with faith that it can and will be done. They find resources to make their dream a reality, and associate with others who also believe and can support them. And they will grow in their capacity to accomplish their dream.

What are your dreams? If you want to be successful in real estate, I assure you that you will have to work hard, that you will have setbacks, and that you will also have spectacular rewards if you stick with it.

If you want to own a business, I guarantee that others will doubt you - you may doubt yourself. But there are others who have been successful in your industry. Find them. Copy what they have done. Show up and be present every day.

And whatever you do, don't give up on your dreams....

Happy Investing!

Survival Investing

My latest read on financial planning is: Survival Investing: How to Prosper Amid Thieving Banks and Corrupt Governments by John R. Talbott. It is very entertaining. Here are a few of my favorite quotes from the book:

The US debt stands at approximately $14 trillion….As a matter of fact, although the US government spends $3.5 trillion each year, it brings in only $2.1 or $2.2 trillion in tax revenues….

Ben Bernanke and the Federal Reserve have printed or wired to their banks an additional $2 trillion of currency or excess reserves. This has dramatically inflated the existing currency base of approximately $1 trillion. In essence, Bernanke has tripled the amount of currency and reserves outstanding….If the United States prints more currency and produces the same amount of goods and services, by definition the price of those goods and services…will have to increase, there will be price inflation

So our current and projected debts are one reason that you should greatly fear unanticipated inflation in the future, and you need to protect your investments from it.

What’s causing our deficits and driving us to bankruptcy? It’s the corporations and banks that are looting our government and paying Congress to stand down.

Was no one else shocked to see that in a world of huge government deficits, the government’s response was to increase stimulus spending and to propose tax cuts?....the United States and Europe arrived at the silliest conclusion of all. In a world overwhelmed by debt, the governments of the world decided what was needed was more debt. They lent more money to the banks…to troubled countries…even to individuals who were upside down and underwater….

I think it is time for smart investor s to move from securities, stocks and bonds into real assets. By real assets I mean gold and other commodities:  land, houses, office buildings, apartment buildings and even small businesses. There are many advantages in moving your assets from financial securities to real assets….[primarily because] you’ll free yourself…from dependence on corrupt bankers and self-interested stockbrokers and financial advisers….It makes no sense to spend your productive time analyzing stocks and bonds….regardless of how much time and effort you expend, you can never match the effort of the thousands of Wall Street analysts and traders who do this full time.