Property and Real Estate Resources

It seems as though it does not matter where I am, people are saying the same thing. “How do I sell my houses?’ I was just in St. Louis last week and as I was giving a one day seminar, the biggest concern was the increasing days on market, currently up to 180!

Nearly every investor in the room was sitting on properties and you could almost feel the pain in the room.

Last week I had an investor from New England call about 2 investment properties in Florida and he was upside down by $40,000-$60,000 on both!

My heart bleeds for these people. Not just the investors, but everyone that bought too late and is trying or needing to sell too early. Real estate is not for the faint of heart and you should definitely make sure that you can lose before you begin.

I think so many people see others out there making large profits on real estate investing. What they don’t see are the times they experienced large losses. I have only lost twice, one time it was just a few thousand, which did not hurt too badly, but the second time, it was nearly $100,000 which I could definitely feel in my pocket book. That one is a long story but, you can be sure that I made multiple mistakes, trusted all the wrong people, and eventually, when I decided to get out, felt as though it was the best $100,000 I ever lost. Don’t get me started. The money did not hurt nearly as bad as the loss of the relationships involved.

My point that I am trying to make is that real estate is not a sure thing and many people are losing right now. You should not be buying above 70% LTV period. Real estate is going down, not up and it is not even staying flat. As a matter of fact, it went down 8.5% last quarter which averages out to be $19,600 per house! So, each day you hold on to your house, you are losing money. On average that amounts to $91.65 a day. If this does not frighten you, it should. Days can add up fast and if you are in the national average of DOM that means you will sit on your house for 163.7 days. That totals to just under $15,400 in holding costs alone! Are you willing to lose that much? Plus, while you are holding, your house is going down again.

The chances of you selling at full market value right now are very slim because no one can really define what that is. With a market that is dropping on a daily basis, you must make sure you are accounting for the right price in the beginning or you will hold in the end.

The sexiness of the big payoff with a fast sale is, at least for awhile, gone. Now, you have to really pay attention to your numbers. As I said, I would look at a maximum purchase price as an investor of 70% LTV and then I still want to make sure it can be made unforgettable so I can sell it fast.

So when you are out there now, getting ready to list, sell or even buy, make sure you run the numbers. You must buy low enough to hold for at least six months if needed. Make sure you account for the prices dropping on the property and that you are solid in having multiple exit strategies in case it just does not sell or rent.

One of the biggest mistakes made by most investors is the lack of multiple exit strategies. One of the biggest mistakes made by brokers and agents is over pricing in the beginning.

Both of these mistakes can be deadly in the final sale of the home for the investor, agent and seller.

One of the only few appreciating markets left is Seattle and of course small pockets in various other locations throughout the country. For the most part, the market has stopped or is declining.

So what is the solution? Buy right and learn to sell. All the best paperwork in the world does not help you if you can’t get someone to fall in love with the property.

Remember, according to nearly every financial expert, the markets will decline steadily for the next 2 years. So, if you decide to hold, get the best possible tenant buyer or renter by giving them a property they love…hopefully they will keep it that way. If you decide to sell, buy low and make each property unforgettable.

Property investment is not something we all know how to do. However, when done right, it can guarantee important profits and a capital growth that is maintained for a long period of time. The Internet is the perfect resource to find companies that present investment property offers on a regular basis. They put their emphasis on overseas properties, with locations like Barbados, Dominican Republic and Thailand sitting at the top of the list.

Why should you decide to seek out property investment in Barbados? The answer is obvious. We all know that this is a tourist hotspot, a destination that millions of people seek out ever year. Investment property becomes a pleasure here, as there is an increased demand for accommodations. The tourist industry develops at a fast pace and the opportunities are simply too great to pass them on. For anyone who is looking to make a profit on the real estate market, Barbados like many other popular tourist destinations is a great idea.

Like Barbados, the Dominican Republic or Thailand offer some pretty amazing property investment opportunities. The real estate market is stable and the need for accommodation increases with every day. Investment property becomes an option for more and more people, as they realize the returns that can be offered. They prefer to use the Internet in order to sign up and become members of property investment clubs, thus being informed about discounted properties situated in the above mentioned locations.

We have mentioned that some of the best investment property offers are to be found overseas. However, despite the recent economic changes, the UK real estate market can provide some interesting opportunities for property investment. For someone who is looking for discounted properties, the UK real estate market is a great place. There are many developers out there providing discounts for their properties; other offers are represented by mortgages or distressed sales.

Whether you prefer overseas property investment or you are more attracted to UK real estate, there is one thing that you have to understand. In order to get the best discounts, you need to be in contact with a professional company. The best way to do that is to join a property investment club and ask them to send listings of various properties through email. They have the necessary relations, including with developers, to provide that kind of information without wasting too much effort or time. If you are looking for good investments, then this is the place to start.

Take advantage today of the opportunities presented to you and become a member of property investment club. Check out their offers for investment property and start building a portfolio. You can find properties that were recently built and are now offered at amazing discounts. There are also distressed homes, properties that have been repossessed and those that are found overseas. The offers are diverse and the expected returns guaranteed.

Resource box: Investment property is something we deal with every day. Make sure you pay us a visit and find out more about property investment. Once you are a member, prepare yourself to discover some really great deals!

There are a wide range of opportunities for buying investment property which should satisfy anyone looking to make an investment in property.

When buying investment property you could buy a second home or holiday cottage. This you can rent out throughout the year – albeit with some blank periods – and at the same time watch the value of the property rise over a number of years. You could also use the property yourself for a holiday when it’s not being rented out by other holidaymakers.

An increasingly popular method of buying investment property over recent years has been to invest in buy-to-let properties. These are properties in towns or cities and rented by locals who can’t afford to or don’t want to buy their own property to live in. As a buy-to-let landlord you hope to maximise your rental income by renting out the property for large chunks of time at once – a minimum of six months, and you hope for much longer. Your rental income should cover your mortgage outgoings and other expenses to bring you a net income, and, of course, the property should go up in value over a reasonable number of years.

Popularised by a number of television programmes, buying investment property that is need of renovation or redevelopment has also become a well-known way to make money in recent years. The theory here is that you buy a property in need of repair or modernisation, do it up, dress it up and sell it on for a nice profit. The dangers are that your renovation budget will be stretched so much that it will eat into your profits, and the time taken will also be “dead” time when you still have to make mortgage repayments on the property with no income from a tenant.

Another way of buying investment property is to buy off-plan.

This is where you literally buy a property from a plan, before it is finished, possibly before it’s even been started. You would look for healthy discount on the purchase price so that you can maximise your profits when you sell on. Buying investment property off-plan overseas has also become popular as the initial investment is often a lot less, though the purchase process can be more complicated.

Investing in commercial property is another way of buying investment property, where you buy a property and rent it out to local business. Such premises can include offices, shops, warehouses, factories. Commercial tenants tend to less hassle than residential tenants, and they stay longer and review rents more often.Buying investment property can also involve buying a business with the property. For example, when you buy a bed and breakfast property or even a hotel, you are buying the property and the business that goes with it. You might end up with a bigger property than in other circumstances but, of course, you will have to share it with other people.

Another way of buying investment property is to buy freeholds of large buildings divided into units. These can be cheaper than other property, but might only yield smaller ground rent from leaseholders.

When you buy at auction you are buying investment property at a cheaper price than when sold at an estate agents – or at least you hope you are. You may end up with a bargain, and the process is quicker, but the adrenalin of the auction room can tempt you to go beyond your limit. This is not for the faint of heart, and experience can teach you a lot.

Whatever way you decide to go about buying investment property, you should understand your reasons for doing it, and be clear about what you want to achieve. Indeed, with some of these options, be aware of what you’re getting into.

For any non doms looking at ways to hold assets abroad without being liable to the £30,000 annual charge, identifying overseas investments that don’t crystallise income can be crucial. One way of avoiding having any income at all is to use an offshore investment bond. This is a type of insurance based product (but with minimal insurance cover) which allows you to invest into an offshore fund.

If you invested in a UK bond the fund manager would be subject to tax on the fund profits. However an offshore bond would be free of UK tax which allows your investment to grow at a higher rate.

Pros to using an Offshore Bond

The key benefit for non UK domiciliaries though is that offshore investment bonds don’t generate income and therefore there is often no income tax charge during the lifetime of the bond. It’s usually only when you sell it (known as ‘encashing’ the bond) that there is a UK tax liability.

This is attractive for non UK domiciliaries if they’re otherwise subject to the £30,000 charge for using the remittance basis of tax as they could instead invest in an offshore bond and just opt for the arising basis – saving themselves the £30,000.

Providing they hold overseas investments via the offshore bond they’ll avoid generating any income and therefore there would be no UK tax liability. This is a neat way to sidestep the £30,000 requirement.

Offshore investment bonds also allow withdrawals of up to 5% of the initial investment per tax year which aren’t classed as income. This means that you can extract cash from the bond free of UK tax.

You may have heard of this referred to as a 5% exemption. Strictly speaking it’s not though an exemption as it only postpones any charge until the maturity of the bond or subsequent disposal.

Having said that if your circumstances change so that you are non resident or not otherwise liable to tax the 5% extractions would operate as an effective exemption as at the time the deferred charge arises no tax would be payable.

Many non doms have been looking to use offshore bonds to hold assets abroad and avoid the £30,000 tax charge. They could therefore invest funds into an offshore bond and simply opt for the arising basis of tax. They wouldn’t lose their UK allowances, wouldn’t need to pay the £30,000 tax charge and there would be no tax on the bond as any extractions would be covered by the 5% allowance. They’d then ensure that they had left the UK for the later disposal of the bond and avoid UK tax in full.

Cons of Offshore Bonds

You should however be careful. If you’re UK resident at the date of the ‘disposal’ of the bond you’ll then be subject to income tax on the gain made under special tax rules. This means that you could be taxed at rates of up to 40% on the gain made (subject to relief). By contrast as a UK resident if you’d invested in overseas investments directly you’d have the annual exemption and the much lower CGT rate of 18%.

The other drawback is that the current finance bill is drafted very wide in terms of defining a remittance. So you’d need to watch out if you were looking at transferring cash from overseas bank accounts which consist of untaxed income or gains to an offshore bond.

The finance bill states that there is a remittance where two conditions are satisfied:

Money or other property is brought to the UK, or is received or used here, by or for the benefit of you, your wife or partner, children or grandchildren aged under 18: or

the property is, or is wholly or partly derived from, the income or capital gain,

In the case of a bringing your 5% withdrawals into the UK Condition 1) is satisfied the question would be whether 2) is met. In particular whether the remitted cash derives from the overseas income or gain (directly or indirectly).

The Revenue use tracing rules to trace gains through different investments so there could be a case for arguing that the cash remitted although not taxed as capital constitutes a remittance of the earlier income or gain. This would then mean that the earlier income or gain would be taxed on a remittance of cash from the offshore bond even if you had opted for the arising basis.

Therefore whilst offshore bonds can certainly be effective in terms of deferring income to allow the arising basis to be used (and therefore avoiding the £30,000 tax charge) you’d need to be careful if you used untaxed income or gains to purchase the bond. Ensure you take detailed advice on the latest provisions in the finance bill.