That said, there are some things that you need to be aware of that are unique to using an IRA or other retirement account for real estate investing, because if you don’t comply with certain rules and regulations, you risk exposing yourself to unintended penalties and taxes.

Watch Your Cash Flows
Paying attention to cash flow is critical with Real Estate IRA investing. Remember, the law limits the amount of new money you can contribute to an IRA each year to $5,000 (or $6,000 if you are over age 50.) As any veteran property owner knows, property repairs and renovations can easily exceed many times this amount.

This means you can’t intervene in your IRA-owned property with a massive cash infusion from outside your retirement accounts, no matter how badly your property needs the repairs. For anything over the max $5,000 annual contribution, you will need to pay for it from liquidity you have in the IRA itself, roll the money over from another eligible retirement account, or have your IRA borrow the money.

For this reason, it’s generally best to have some liquid reserves – cash, cash equivalents, reasonably stable securities, or a line of credit your IRA can tap for this purpose. Your checking account won’t do you much good when you have to pay for a $30,000 roof.

Set Aside Cash in Your IRA
Outside of an IRA, the tax code provides a natural means for investment property owners to set aside some reserves. This is part of the logic of depreciation deductions – you’re supposed to set aside the savings to pay for expected repairs, maintenance, upkeep and eventual replacement. But you don’t get a depreciation deduction in an IRA. You need to set aside reserves from operating income within your IRA or be prepared to transfer assets from elsewhere.

Understand Prohibited Transactions
Remember, you can’t lend money to your IRA personally. If your IRA needs to raise cash in a hurry, you can’t be the person to provide it, beyond allowable contributions and rollovers. The same applies to your descendants, your parents and grandparents, and any of their spouses. Ditto for any business entities they control. (The law does not specifically rule out your brothers and sisters, though).

The same people who can’t lend to your IRA also can’t borrow from it, for the same reason (though you can use your self-directed IRA to lend money at interest to whomever else you like.)

Likewise, you can’t do business directly with your IRA, nor can any other disqualified individuals, nor can their spouses or any business entities they control. Some people try to open a property management company, or construction company, and have their IRAs compensate their companies directly for services rendered. This is prohibited by the IRS.

Understand Long-Term Tax Ramifications
If you hold a real estate investment outside a retirement account, and sell it at a profit, you pay tax at capital gain rates. If you held it for more than a year, your capital gain tax will be less than your income tax. However, if you hold the property in a tax-deferred retirement account, you will need to eventually pay income taxes on any gains, rather than the lower long-term capital gains rate. To avoid this, consider using a Roth IRA to hold real estate or capital assets in an IRA. You don’t get a current year tax deduction, and you can’t take depreciation deductions in either case. But any gains are tax free. Additionally, you sidestep the eventual problem of taking required minimum distributions when you get older, which can be a challenge if your retirement portfolio is in illiquid holdings such as real estate.

Don’t Stay in the Property
Ordinarily, rental properties allow you to spend a couple of weeks per year in them without jeopardizing their status as investment properties. This is not true for IRA-owned real estate. You can’t live in the property, even if you’re paying rent. You can’t even stay overnight in the property. What’s more, you can’t let your children, grandchildren, parents, grandparents, or their spouses stay overnight either. If you do, the IRS could consider it a distribution, and impose a tax equal to 100 percent of the amount involved.

Be Careful With Borrowing
Many people are confused by IRS prohibitions on lending to or borrowing from your IRA personally, or pledging your IRA as collateral for a loan, and think that you cannot borrow money for your IRA at all. In fact, your IRA can borrow money. But understand that it’s your IRA that’s borrowing the money – not you. This distinction is crucial. Your IRA can only borrow money from non-disqualified individuals and entities on a non-recourse basis. This means that if the loan should default, the lender can only come after the IRA to collect. Only assets held within the IRA can serve as collateral for the loan. You cannot pledge anything outside the IRA as collateral, nor sign a personal guarantee of any kind.

Stockbrokers, financial planners, investment groups, and other experts offer sound advice regarding investment opportunities. Many outline diversified portfolio plans offering income now, or growth now and income later. Some suggest that now is the time to invest in gold and silver. Others propose an investment strategy that focuses on start-up innovative technology companies, emerging Pacific Rim markets, “financial derivatives” or “alternative investments”. Each has its merits, but they all have one thing in common – they require money.

What about the many baby boomers facing retirement who don’t have the money to invest in real estate or the stock market? The best place for them to invest will be in themselves. Suze Orman, one of the most well known financial planners in America, says to “invest in something that you know”. Why not invest in your business? You own it, you control it, and you know more about your company than you know about some company that trades its stock on Wall Street.

The best thing about acquiring stock in your own business is that you can own 100% of all the outstanding shares, and you determine the value of that stock by the amount of effort you are willing to put into your business. Your investment can be low-risk with a high return.

There are tremendous opportunities available online to folks interested in starting their own business. The internet has opened up possibilities that didn’t exist during the years that baby boomers were developing their retirement plans.

When the economic bubble burst, I realized that my retirement plans had not accounted for the economic down-turn that we are now facing. So I went to the internet to search for ways to generate income. After researching many different ways that I could get into business for myself and replace the income that I lost to the recession, I decided to start my own internet marketing company.

I discovered that there are thousands of people making money with internet businesses. As I got more involved, I began to meet people who were earning a full-time income working at home in their own online business. Once I found someone who was willing to personally help me learn the skills and techniques I needed to master, it didn’t take long to learn how to establish my own successful affiliate marketing business.

Real estate investment is not something that everyone understands. There are a lot of seemingly complicated details when it comes to investing in real estate. However, there are glaring benefits why real estate can be considered a good investment. For one, investing in real estate is almost guaranteed appreciation. When you buy a house, for instance, your invested money is almost guaranteed to become bigger through time. It is also a great weapon against inflation. Real estate does not suffer the highs and lows of economic trends as much. Being a long term investment, it is a good source of stability. Another reason why it is a good investment is that real estate is a basic necessity. Just like food and water, everyone needs a place to live in. Buying a house is always the better choice than renting. Renting may seem more economical, but in the long run, owning a piece of property is still the best choice. Investing in more than one property will give you the competitive edge to dictate the prices on which you want to sell or lease your property in the near future. There are also tax advantages when buying condominium units, apartments, and houses. Long term appreciation is another convincing reason to think of investing in real estate. Buying a property in a good location will certainly prove to be beneficial. Renting out your properties to commercial establishments will earn you the money you invested eventually.

There is such a thing as pre-selling. This means that property developers sell the property significantly lower than its value as compared to when the project is finished. Buying during pre-selling almost guarantees bigger long term returns. Since the buyer is buying at a lower price, in time, his money will become bigger. However, one has to be wary of the reputation of the developer. It is important to do background research on the developers’ portfolio. Before being hooked on the low price, make sure that the project will be finished as promised. Location is also very crucial in real estate investment. Research on the location of your target property. Developers usually know what kind of “environment” their properties lie on in the coming years. Do extensive research on the plans for the area in the next years. Remember, a good location means a more guaranteed high long term appreciation. When a property lies in a place that has a high commercial potential, buyers and businessmen will be more interested in your property.

But those are boasts you can hear from cities and towns all across the United States. Let’s take a look at 3 specific reasons you’ll benefit when you invest in Jewell, Iowa Real Estate.

Tax Incentives

When you build a new home, Jewell offers a 5-year Tax Abatement. That means for the first 5 years you own your home you only have to pay taxes on your lot. Most tax incentives are only offered to new businesses coming into an area but Jewell wants to welcome home buyers as well.

For commercial developers, Jewell will invest up to $1 million into new commercial development for buildings constructed inside the city limits. This is a tremendous investment in your business and it shows Jewell’s dedication to economic advancement. When you relocate your business to Jewell you know the city is there to support you.

Housing Loans

The Hamilton County Down Payment Assistance Program offers 3.5% loans for down payment assistance on home purchases. The program is a 50/50 match and caps out at $5000 but for low and moderate income families the down payment is often the only thing that stands between them and home ownership.

Hamilton County also offers an Upper Story Renovation Program whereby the initiate 3% loans to be used for renovating the upper stories in downtown buildings to be used as apartments. Again, this is a 75/25 match program which reinforces the commitment to county-wide growth and preservation of the downtown business district.

The J.A.D.E. Foundation

Jewell Area Development Enterprises (J.A.D.E.) and the Jade Foundation benefit the entire community. In 2011 they helped 5 local businesses with REGENT grants, they received a $100,000 Main Street Challenge grant, they received a first place award for the 2011 Main Street Awards ceremony for Best Business Success Stories and they participated in promoting several city-wide events.

Those considering Florida real estate investing may find it beneficial to work with realtors familiar with the state. Many realtors specialize in selling bank short sales and foreclosure homes and can assist investors with locating discounted properties.

Due to the fact that many Florida residents have lost their home to foreclosure there is ample opportunity for investors to generate income by offering long-term rentals. Once homeowners lose property to foreclosure they are usually forced to become tenants until they can qualify for another mortgage loan.

Although Florida has been hit hard by foreclosure there are still plenty of opportunities to generate cash flow with investment property. Since Florida is one of the world’s most popular vacation destinations many investors seek out beachfront homes. However, it can be beneficial to scout out homes in Orlando and Daytona as these areas are home to tourist attractions such as theme parks and motorsports racing.

Central Florida

Orange County, home of Orlando, offers a multitude of good real estate deals. Orlando has gotten a bad rap of having high incidences of crime. There are a few areas which fall into the high-crime area and should probably be avoided. These include Kissimmee and Pine Hills, along with homes located on Orange Blossom Trail or International Drive where most of the major tourist attractions are located.

Safe areas around Orlando metro include: Oviedo, Dr. Phillips, Altamonte Springs, Baldwin Park, and Winter Park.

Central East Florida

Volusia County is positioned on Florida’s central east coast and encompasses a variety of beach towns, including Daytona Beach. Daytona offers nearly year-round racing excitement with NASCAR, Formula One, Grand Am, and motorcycle races hosted at Daytona International Speedway.

The racetrack is nearly within walking distance to Daytona Beach International Airport. The immediate area consists primarily of retail stores and hotels, but several residential communities are positioned within a 5-mile radius.

It is important to first determine if properties are located in communities governed by homeowner’s associations as HOAs often prohibit short-term vacation rentals. It can be advantageous to work with a realtor when seeking investment properties in this area. Popular locations include Williamson Boulevard, Clyde Morris Boulevard, and Tomoka Farms Road.

South Florida

Investors often shy away from the Florida Keys for fear these properties are cost-prohibitive. Although some homes are priced higher than other locations within the state, there are still good deals to be found. Investors should plan on keeping a watchful eye over property listings within the Florida Keys because these homes tend to sell quickly.

Key West is a favorite location for many investors because visitors are willing to pay higher rental rates when escaping to paradise. Homes in this region can be a bit pricey, but with patience and perseverance, investors can locate discount properties.

The median cost of a 2 bedroom/1 bath seaside cottage in Key West is $185,500, while a 3 bedroom/2 bath pool home hovers around $500,000. Investors who purchase property in Key West tend to generate a higher level of cash flow because people who rent beach homes in the Florida Keys tend to have higher income.

1. Formulate a Team

There are a lot of important things to consider before purchasing an investment property: down payment, tax liabilities, market conditions, general banking and trust account handling, landlord-tenant laws, lease preparation, contract formation, and the list goes on.

You can take the time to do the research yourself or you could consider hiring a team of professional to assist you. To handle all these issues you may need to consult an accountant, a lawyer, and a sophisticated realtor… OR you could hire a property management agency- the right agency will be knowledgeable on tax topics, the local market, accounting, and lease preparation and execution. You could, and many people do, manage a single property or a few properties on your own, but if you want to maximize success then you should plan to spend considerable time researching all of these areas before signing that purchase offer.

2. Determine YOUR Location

I say YOUR location because that is often most important to your investment decision. Are you going to invest in your local community or are you going to invest in another area? If you buy in your locale then you may be able to handle the management yourself. If, on the other hand, you are determined to purchase outside of your area (usually beyond a 30 mi radius) then you need to consider the implications of being a long-distance owner.

Local owners have the ability to tackle all aspects of your property management. You can consult with YOUR account, YOUR realtor, YOUR banker, contractor, plumber, etc. Maybe you prefer the DIY approach to maintenance- no problem a quick trip over to your property is usually not much of a hassle.

Long-distance owners need to be aware that the DIY approach is virtually impossible. You will need to find trustworthy experts to consult for your professional services including your contracting. Often times long-distance owners will need to rely upon management companies to do their bidding. This is a crucial decision since your manager will be the one negotiating contract and lease prices on your behalf. It is absolutely imperative that you find a management company that you can rely on to keep an open line of communication and one that you know will hit the ground to track down new tenants and keep your investment in tip-top shape.

3. Title Transfer and Commercial Insurance

This area might not always pop up on the ‘investment property top five list of things to consider’ but being married to an attorney this is one area that I feel is overlooked. Often times investors do not consider the implications their investment properties have on their personal assets until they have expanded their portfolio to multiple properties.

Without going into specifics, you can imagine where I’m going with this topic. For example, a tenant slips and falls on the sidewalk in front of your property because your maintenance person or snow removal company didn’t adequately clear the ice. Who’s liable for injuries stemming from this fall? You, individually? Your homeowner’s insurance? Your maintenance person? With damages for personal injury lawsuits increasing on a daily basis this is a topic worth noting.

First decide where you fit in:

Home owner desiring a sale
Home owner desiring cash flow from a sale
Beginning investor with no cash desiring to make money
Experienced RE investor
Landlord with a current portfolio

Understanding where you fit in will help you determine what strategy to use in order to make mortgage notes a valuable investment for you. If you are a home owner simply desiring to sell your home then seller financing is something you should look seriously at. The next thing you need to think about is simply whether you want to hold the note as an investment and receive payments long term or if you want to sell all or part of the note to get a lump sum of cash. The answer will be different for every seller. If you decide you want to keep the note as a cash flow investment then it really only needs to satisfy your needs. it is still a good idea to do some research and find out how to structure a good note. If you are planning on selling the note then you definitely need to be sure and create a note that a mortgage note investor will be interested in.

If you are a beginning investor or desire to be an investor but you have no experience then you definitely need to think about things differently. If you are looking to make money with mortgage notes, know this. It is a lot of hard work.What you need to first accept is that you are talking about becoming an entrepreneur and running your own business. Recognize that running your own business is at least 10 times harder than working a job for somebody else. You must accept this and accept complete responsibility for that and then go about learning the business. You need to know all you can about the note business, how to market it and how to make sure your potential customers are satisfied. That may involve helping the home owner understand how to best structure a note or how much to expect from the sell.

If you are an experienced RE investor who already has properties and wishes to begin investing in paper then you will already have a good foundation and just need to add some additional insights to expand your business. You may need to learn more about lending rates. You will need to research the paper side of the business a bit. Know that you can turn any deal you own into a cash flow note deal. I would suggest that anybody thinking of investing in notes on a level that involves their creation, make sure the note is created in such a way that a current mortgage note investor would be interested in buying it if the need ever arose. Make sure there is a significant down payment and the rate should be above the going industry rate.

If you already own cash flow properties in the form of rentals you might want to consider the idea of seller finance for some of those properties or others you find. With this mortgage note You will have the same benefits of cash flow as you do from the rentals with the added benefit of a more responsible tenant. they will be more likely to take care of the property because they are buying it from you. They will likely take better care of the maintenance and they will be responsible for taxes and utilities and all other fees. Read more about the Mortgage Notes Business today and find out how to make it work for you.

But like any other realty market, some properties in the country give a very good return, while others produce lackluster results, at best. You may not lose your money by blindly investing in any property in the country, but you may lose the chance of earning a very good return. It is, therefore, advisable to wisely choose a property from booming Costa Rica realty market.

3 most-attractive Costa Rica real estate options you should not let go of

Manuel Antonio Real Estate

Manuel Antonio is, perhaps, the most sought-after tourist destination for people coming to the country because of its nearness to Parque Nacional Manuel Antonio (Manuel Antonio National Park). This is the biggest drawer of visitors from abroad, so a property bought in the vicinity of the Manuel Antonio village will fetch high return on investment. In the recent months, demand for investment properties in Manuel Antonio has witnessed a significant surge. Although the national park is the smallest in the country, its biodiversity is second to none. This is an ideal investment destination also because it is not as over-exposed as San Jos, which has Pos Volcano National Park, the most visited national park in the country, in its vicinity.

Quepos real estate

The reason behind shooting demand for Quepos real estate is its proximity to Parque Nacional Manuel Antonio. It is the closest town to the national park. The small town of Quepos had traditionally been lazy. It was a town of plantation workers, fishermen, and merchants, but the fate of this little town, which is only 7 kilometers from Manuel Antonio, changed when visitors from outside came flocking to the neighboring national park. It is at the time, one of the hottest realty markets in the country.

Costa Rica luxury real estate

Luxury is always sold dear, and Costa Rica is not an exception to this rule. If you can spare money to invest in million-dollar villas then you should look for luxury segment. This segment pays a huge dividend, but its not suitable for those who want to enter, buy, modify, and sale the property in a jiffy. You need to have patience to make a killing in Costa Rica’s luxury real estate market. Manuel Antonio is a fertile ground for such properties.

Property market in Costa Rica has grown to this extent also because of the ease with which foreign investors can invest in the country. For an American investor Costa Rica’s real estate market offers a fabulous opportunity, and the safest real estate investment in foreign country. When contemplating the investment options, one should never let the above described property investment options go out of sight.

Here are some of the cooling measures governments had put in place to tackle this sensitive issue of providing affordable housing for their own citizens.

Let us first take a look at land scare Singapore, an obvious hotspot considering her small size, political stability and attractive demographic. Foreign institutional and retail investors from around the world as far away as USA, Canada, Europe, Middle East, and neighbouring countries like India, China, Indonesia and Malaysia are flocking to this island state to snatch up the private properties.

Prices for leasehold condominiums located in the sub-urban area can easily cost $1 million. To retard the escalating property prices and to pacify the outcry from the citizens, the Singapore government reacted swiftly with these latest sets of cooling measures, effective 1 December 2011.

1) Foreign investors will be subjected to a 10% stamp duty in addition to the current 3% of the property price.

2) Permanent Residents buying their 2nd or more property will be subjected to an additional 3% stamp duty from the current 3%.

3) Singaporeans buying their 3rd or more property will be subjected to the additional 3% stamp duty.

Real-estate prices have gone up so much that some analysts in this island state are expecting prices to fall by as much as 20~30% from end 2012 to 2013. But having said that, this is subjected to the economic developments coming from U.S, Europe and China.

Next, let us look at Malaysia. This country is separated into two portions by the sea. Peninsular Malaysia lies south of Thailand, and is bordered on the west by the Strait of Malacca. Across the South China Sea are Malaysia’s eastern states of Sabah and Sarawak.

Malaysia is a relatively large country and thinly populated. The highest concentration of property investment is in the capital. Contrary to Singapore, there are no restrictions on foreigners owning landed properties, though foreign investors are subjected to the following set of regulations.

1) A foreign-owned levy 11,000 Malaysian Ringgit

2) Minimum property price is 500,000 Malaysian Ringgit

3) Not permitted to own Malay reserved land

4) Own up to a maximum of 2 properties only (If there is intention to own a 3rd property, application for approval has to be submitted to Foreign Investment Committee of the Economic Planning Unit at the Prime Minister’s Department).

The newest project located on the southern part of the country is expected to be the next economic power state for the country with its close proximity to Singapore. The Malaysian government had already invested millions of dollars into the development of this project and is expected to spend millions more, considering the sheer size and economic importance of the area.

There is More to Real Estate Investing Than You Might Think

Investing in RE is more than just buying a house that is undervalued. Sure an undervalued home can be a good investment, but it sets the individual up for quite a bit of risk. Instead, a better way to make a real estate investment during a down market is to purchase multi-family units. Apartment buildings provide numerous streams of income from one property. That said, there are a number of benefits to multi-family properties.

The Many Advantages of Multifamily Investing

The biggest advantage to purchasing a building with multiple units is that there will almost never be a time when all the units are empty. This means that even in the event that a tenant decides to move out, you will still have revenue coming in from other tenants to help pay for the mortgage on the building. Of course, there is no guarantee that the units will always be filled, but it is less risky that investing in a single unit building. The law of averages works in your favor.

Now you might be thinking that with a property that has multiple units, there are also many more things that can go wrong. Along with more units come more upkeep and maintenance issues. But this problem can be solved by hiring a handyman service. By leasing a unit to a handy-man and not charging any rent, the building will stay well maintained, and you can avoid the cost out of pocket costs.

What about the Fact that Multifamily Real Estate is More Expensive?

Some might say that the downside to purchasing a multi-unit property is the price tag can be a bit higher than on a smaller single family residence. While this can be a detriment to those who are having trouble getting a loan, it is not always as big a deal as you might think. Many lenders will count signed leases as income, allowing the person purchasing the building to qualify for a much larger loan. You can also go in with other investors on a multifamily property, cutting down on the size of your initial investment.

Decrease Risk by Hiring Real Estate Investment Advisors

It’s true that there are no guarantees with any investment. But there are ways to lessen the risk when investing in RE. Having a little business sense, and hiring the right real estate advisors will help a person learn how to mitigate risks and how to properly purchase, manage, and profit from multi-family properties.