Connecticut Real Estate

Trumbull, Monroe, Shelton, Stratford, Bridgeport, Easton, Fairfield, Westport

Real Estate Investing

Real estate investing profits can be made many ways; most of these ways can be separated into one of three strategies:

1) Cash flow could include buying real estate either single family or multi family units and renting them out.

2) Price appreciation could include buying real estate and holding it long enough to see the value increase over time, fixing up properties and selling them hopefully for a profit or buying property at least 20% below fair market value.

3) Tax benefits could include tax write-offs for your investment properties, receiving non-taxable disposable money from rentals or a reduction in you non-real estate taxes.

The strategy that you pursue should suit your needs, skill sets and the area in which you invest.

Advantages of real estate investing
The bulk of the world's assets are in real estate. There are many gurus out there that contend that real estate is a cure-all where you cannot lose money. Although this is false, there are a number of advantages to investing in real estate. The first big advantage is that it is an extremely expensive product therefore, each sale you make generates more profit potential. The biggest factor in marketability of a real estate investment is supply and demand.

Leverage or the ability to borrow based on the value of the property, is probably the second greatest advantage. It is much easier to finance real estate than any other product. While investing in most assets requires the purchaser to have the full purchase price available for the asset, in real estate investing, one only needs to have a fraction of the purchase price available (like 5%, 10% or 20%) as a down payment. Therefore, real estate, although incredibly expensive, is still easier to buy than say, a piece of industrial equipment of the same value.

Local advantage or knowing your neighborhood better than a real estate investing expert if they were in another part of the world creates an advantage for you in the market place.

Disadvantages of real estate investing
Real estate is an illiquid investment that needs maintenance and taxes to be paid. A balanced investment portfolio has some liquid assets that can be quickly converted to cash to sustain the real estate when its returns are not sufficient to pay its recurring costs.

During a real estate boom, speculators can be prone to make purchases without pre-calculating the costs involved in the purchase and for the ongoing costs of a property. The real estate can then sometimes work against them instead of for them, realizing a loss at resale.

There is no guarantee that values will sustain themselves as society changes; macro economic trends can cause large scale changes during which real estate values do not increase although the society as a whole makes great economic progress.

Other ways to make money in real estate investing

* Bird Dogging: Hunting for good deals, for another more experienced investor. This allows the beginner to learn, find and recognize value.

* Wholesaling: To contract a property with the intention of reselling it quickly at a higher price.

* Assignments: The method by which a right to property or a contract is transferred from one to another.

* Foreclosures: Buy a foreclosure property (after doing your research carefully) and keep it, rent it or resell at a higher price.
     Pre-Foreclosure
     Auctions
     Short Sales

* Vacation Homes:

*Seller Financing:

* Lease Options:

Other real estate investing considerations

* Real Estate Value

     Appraised value is a certified appraiser's opinion of the worth of a home at a given point in time. Lenders require appraisals as part of      the loan application process; fees range from $200 and up.

     Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of      market value, based on sales of comparable properties, performed by a real estate agent or broker.

* Property Management

* Tax Considerations * Income Taxes * Property Taxes * 1031 exchange
The Internal Revenue Service publishes a number of real estate publications. They are listed by number:
* 521 "Moving Expenses"
* 523 "Selling Your Home"
* 527 "Residential Rental Property"
* 534 "Depreciation"
* 537 "Installment Sales."
* 541 "Tax Information on Partnerships"
* 544 "Sales and Other Dispositions of Assets" (1031 Exchanges)
* 551 "Basis of Assets"
* 555 "Federal Tax Information on Community Property"
* 561 "Determining the Value of Donated Property"
* 590 "Individual Retirement Arrangements"
* 908 "Bankruptcy and Other Debt Cancellation"
* 936 "Home Mortgage Interest Deduction"
Order by calling 1-800-TAX-FORM.
IRS Tax Tips - Real Estate

Richard S. Rocco
A Connecticut Licensee
Keller Williams® Realty
132 Monroe Turnpike, Suite 101
Trumbull, CT 06611
203-459-4663
Toll Free: (888) 876-5328