An ancient philosopher once said “May you live in interesting times”, and we certainly live in interesting times these days! The recession that began towards the end of 2008 and has stretched into 2010 with little signs of lessening anytime soon has made us all stop and think about our investments in many different ways.

When the recession began the first thing that crashed was the stock market. Many people suggested that this recession was fueled by the financial sector meltdown. They were talking mainly about regular banks and also investment banks as well. For whatever the reason, the stock market became a very dangerous place to invest in at the beginning of the recession.

While the stock market has come back to a large degree since its lows during the beginning of the recession, it’s still a rather dangerous and precarious place to keep your money. Or is it?

Once people started digging a little deeper they realized that the financial sector was melting down because the housing sector and the real estate sector had become massively overheated… what we commonly refer to as a bubble that had finally popped. It was the default of thousands upon thousands of mortgages, to a large degree, that caused the banks to meltdown in the first place, which then caused the stock market to crash.

It’s very convoluted and even today we are still not entirely sure which came first the chicken or the egg; the housing market meltdown or the banking sector meltdown, but it doesn’t really matter because the question that remains is this: what in the world can we invest in now that the two main investment industries, the stock market and real estate, have imploded?!

Well that’s a very good question and it’s exactly what I wanted to discuss in this article today.

Some of the best times to invest, historically speaking, are when everybody else is panicking and certainly we’ve seen a lot of panic within the last couple of years. Does that mean it’s time to get back into the stock market or the real estate market? Maybe…

The fact of the matter remains that there are some incredible deals out there in both the stock market and the real estate market. I know many investors who have invested heavily in real estate who are now underwater with their mortgages because the properties are no longer paying off the same level of income that they use to.

This is because of several different reasons including their inability to keep tenants who’ve lost their jobs because of the recession and their inability to refinance mortgages at lower rates because the credit markets are still frozen to a large degree.

What all that means is that if you have money available at the moment, there are great bargain basement deals to be had in both the stock market and the real estate market, you just have to be smart, do your homework, and take advantage of a little bit of luck!

Written By Jason Markum

Investing in the stock market these days can be treacherous and dangerous to say the very least. Many investors are looking for alternative forms of investment to stay away from the stock market. Many of these investors turn to real estate.

There are many benefits to investing in real estate. It is often seen as a hedge against inflation because property values tend to increase at least as high as inflation year after year. With the recession of 2008 to 2010 still raging, and the government printing money like never before in order to fight that recession, any inflationary hedges you can invest in may well be worth your time.

Another reason why investing in real estate is especially nice are the many tax advantages that come along with it. I won’t spend a lot of time talking about that today though.

There is one downside to this form of investing and that is quick profits. For years investors could find incredibly quick profits by investing in realestate, often purchasing a house in the morning for no money down and flipping it in the afternoon for a hefty gain with little to no risk.

Those heady days are definitely over. In fact, many people believe that it’s that exact activity that led to the massive real estate bubble that led to the collapse of the real estate and banking markets that pushed the country into this massive recession that we now enjoy so very much!

These days if you plan to invest in property you can expect to have your money tied up for several years at a time… sometimes as long as seven or eight years before your investment becomes truly profitable. This is just fine for those of us with an eye towards long-term investing anyway but it spells disaster for the get rich quick type of investors… but maybe that’s just as well.

What are the best investments today? Some people suggest that rental property is just about the best bet you can make from an investment point of view. The reason why rental property may be about to take off is because many people have lost their houses in this current recession.

Nobody likes to benefit from other people’s misery, and the fact that many people have lost their homes to foreclosure is certainly a tragedy… but at the same time those people have to live somewhere and most of them have turned to rental properties because they can’t afford or are unable to secure a new mortgage to purchase a home.

This massive influx into the rental market, coupled with falling house prices due to the recession may make now a perfect time to invest in rental property. Just remember that you may be in it for the long haul which means years of answering phone calls at two o’clock in the morning because somebody’s toilet is plugged up or the furnace has stopped working. If this sounds like your cup of tea than rental investing may be just the thing for you.

Written By Jason Markum

This current recession of 2008 to 2010 has really done a number on the stock market which has forced many individual investors to reevaluate their investment priorities. Many of these investors are starting to look for alternative forms of investing, one of which is real estate.

Now I know there’s been a housing market meltdown that has mirrored the stock market meltdown in many ways, but the fact remains the same that now may be the time to get back into real estate investing. Prices have dropped dramatically, sometimes as much as 30 or 40% on properties across the board in almost every location in America. That’s my way of telling you that there are some spectacular deals to be had at the moment which only promises to get better as time goes on.

Today I want to talk about a few ways to profit from the current real estate investing environment and give you some things to focus on that you may not have thought of just yet.

Today one of the best places that we’re seeing to invest in real estate involves multiple family buildings with up to 10 units. It’s best to invest in these multiple family buildings only in towns that you currently live in. Don’t try and buy two or three of these scattered across the country because with our current economy they may take more attention and more face time on your part to get them up and profitable which means owning one in the town you currently live is going to make things much more easy for you, at least for the time being.

The great benefits of these types of investments is that they’re small enough to be managed by the owner, you. One thing you’re definitely going to want to look into before you purchase is current laws regarding these types of buildings.

Many towns have rent control laws as well as non-eviction laws that make it much more difficult for you to get rid of tenants that aren’t paying the bills. In fact this may be why the current owner has had so much trouble that they want to sell. You can’t make a profit if your tenants don’t pay their rent and you can’t even evict them without spending thousands of dollars in legal fees and many months of time.

But, if you can find one of these rental properties in your area and there aren’t any adverse laws that would affect you, now may just be the perfect time to swoop in and get a deal. Don’t be shy about offering outrageously low prices because many investors are looking to sell at any price to get out from under their mortgages.

Many investors purchased the properties with variable or adjustable rate mortgages back when things were good and are now finding that they cannot refinance those loans because the current state of the economy and the current state of the banking market which is effectively freezing credit for many people.

So there you have one very simple way to profit in real estate, even during a recession.

Written By Jason Markum

I don’t know but you but I’ve had enough of the stock market for now. The recession of 2008 to 2010 has wrecked havoc on the stock market dropping it as low as 30 to 40% only to shoot back up again and then back down again; it’s a roller coaster that I don’t want to deal with anymore.

Which begs the question, what should I invest in if not the stock market? The answer may be real estate. Yes the real estate market hasn’t fared much better than the stock market during the current recession but things may be turning around which means that it might be the right time to get into real estate as we speak.

But I’m not the kind of guy that wants to own a bunch of rental units because I’m not the kind of guy that wants to get telephone calls at three o’clock in the morning because one of my tenants has just discovered that their stove is broke or their hot water heater has gone on the fritz. I’d like to take advantage of real estate investing without all the hassle of… well… tenants!

If you’re with me, then read on because that’s exactly what I’m going to talk about today; alternative forms of real estate investing that you may not have ever thought about.

One form of real estate investing is to invest in real estate investment trusts or REITS as they are commonly referred to. This has been a very attractive form of real estate investing in the past, but these entities are often closely tied into the stock market and that market correlation has dragged down profits over the years during the recession so I’m not entirely sure that they are the best place for my money today.

One type of investing that many people have never even heard of are called mortgage loan partnerships and these may be some of the fastest growing types of real estate investments that you can find today. In addition to being fast growing, they are also some of the safer investments out there which may surprise you, I know it surprised me!

So here’s how they work. These partnerships usually invest in properties that have much higher values than the mortgages that underlying them. Usually for as little as $1000 an ordinary investor can buy a share in a partnership. That partnership then purchases mortgages on commercial properties. The mortgages that are written are written slightly differently than your ordinary mortgage allowing the partnership to benefit from any rent increases on the property over time.

One thing to keep in mind is that there isn’t often a secondary market for these mortgages meaning you often have to hold them until maturity and you can’t really just call up your stockbroker and sell these things if you get tired of investing in them or your financial situation changes.

The stock market may be in chaos right now and the real estate market may not be that much better off but we’re starting to see signs of a real estate turnaround which leads me to think that now may be the perfect time to jump back in.

Written by Jason Markum

With the massive swings in volatility associated with the stock market in recent years, many people look for different forms of investment in order to save for their retirement. Many people choose to invest in real estate primarily as the main vehicle for their retirement planning.

This creates several problems that need to be addressed that deal primarily with timing. Rental properties are great but unless you structure them correctly they may not throw off the right amount of income at the right time for you to take advantage of them when you retire and need the money to live off of. Of course, this could all be taken care of with a few careful steps that you can take and which I’m going to discuss in this article today.

The best forms of real estate investing from the point of view of retirement planning are called limited partnerships. These partnerships invest in a pool of shared appreciation mortgages or sometimes flat out pay all cash for income producing properties. Many partnerships include a combination of the two as well.

I find that these partnerships afford you the largest possible appreciation potential, the best tax gains, all at the lowest risk which is especially nice when you’re talking about investing in them for retirement plans. Because there’s one thing that we can all agree on and that is lowering risk is important for retirement planning. The closer you get towards your retirement, the safer you need your investments to be as I’m sure you are aware of.

There are seven or eight main criteria that most people will agree are the most important for investing with an eye towards retirement. They are…

Safety; will your money be returned to you without being diminished in any way? Income; retirement accounts are required to throw off cash. Growth; you want both the underlying assets to grow and the income that they throw off to grow over time to keep pace with inflation at the very least. Inflation; as I just referred to your retirement account must grow at least as high as inflation every year and hopefully more.

Liquidity; certain real estate investments are very illiquid so you are going to need to structure yours in a way that allows you to liquidate when necessary. Ease of administration; the last thing you want to do during your retirement years is get telephone calls at two in the morning to fix leaky plumbing. Professional management; ditto what I just mentioned about leaky plumbing.

Making sure that your real estate investment conforms to these seven or eight requirements is essential, so before you invest in any sort of real estate deal, go through the checklist I just gave you and ask yourself whether or not the investment fits those criteria. If so then you will have successfully structured your real estate investment for optimum retirement planning.

Written By Jason Markum

If the stock market, with its wild swings up and down and it’s inconsistency and dangerous nature have put you off of that form of investing, then you may be ready to take the leap into real estate investing. The fact of the matter is that real estate investing can be a great way to add stability and growth to your portfolio and at the same time enjoys fantastic tax benefits that I’d like to talk about a little bit in this article today.

It is true that tax reform has changed many of the tax benefits that we used to get from owning real estate, there are still many rather significant advantages in the tax arena that continue to make these investments attractive even today in the crazy housing meltdown that we’re currently witnessing.

One way to take advantage of the tax man with real estate involves past real estate investments. This particular plan is going to be very useful to many people who invested in real estate before the recession of 2008 to 2010. Why is that? Well frankly it’s because many of those investors have lost an arm and a leg since then.

With the bursting of the real estate bubble and the massive drop in housing prices, you would be hard pressed to find a real estate investor who doesn’t have massive losses. And that’s where this strategy comes into play. If you owned real estate that generated losses in previous years then you can invest in new income producing properties today. In many circumstances the new income that is generated today will be offset by those losses that you held in the past from a tax point of view. Be sure to talk to your accountant or CPA or tax lawyer before engaging in this particular tax strategy.

Another strategy is to aggregate your losses from many different tax shelters not just the ones from real estate. Most people don’t realize that losses from a real estate passive activity can usually offset income from any other type of passive activity. And the opposite remains true as well so if you are involved in any sort of passive shelters like equipment leasing or R&D or things like that you can take advantage of this tax benefit.

Finally I should say that many investors look towards real estate investing simply because of the tax shelter benefits. Heck I wrote an entire article about it! But the fact of the matter is that tax issues should never be the overriding reason you make any investment. Instead you should simply focus on the economic reasons of the investment. Is it a good deal? Will it offer significant income? These are the most important factors when it comes to making any investment decision and any tax benefit should be secondary in your mind.

Written By Jason Markum

Investing in real estate can be very very good idea. In fact many people turn to real estate to fund a major portion of their personal retirement accounts because they just don’t trust the volatility that comes with the stock market. Especially during recession times like we are facing today!

With real estate they get income in the form of rents, and they also get steady appreciation in the form of property price increases over time. These increases usually keep track with inflation or increase greater than inflation which makes them especially attractive for retirement type planning.

But there is one thing you have to understand when investing in real estate and that is the passive loss rules. Almost all rental real estate activity has been categorized by tax reformers as passive activity. What this means is that losses from those passive activities can only be used to offset passive activity income only. You generally can’t use it to offset portfolio income such as interest or dividends or capital gains and you certainly can’t use it to offset other income such as salaries and wages.

So what exactly does passive mean? Basically it means that the investor doesn’t participate in managing the investment in a day-to-day manner. You aren’t out there fixing broken plumbing or stoves in your rental houses, for instance. Your main job is to supply the money to buy the thing to begin with and that’s pretty much all you have to worry about… that’s what passive means.

There are some exceptions. If you ARE primarily managing rental real estate and you have adjusted gross income that is under $100,000 or so then some of your real estate income may be allowed to offset some of your non-passive income. This may have been phased out though by the time you read this article to be sure to check with your accountant or CPA or tax attorney before hand.

Of course, if you don’t lose money on your investments; and really that’s the goal anyway isn’t it, then you don’t have a whole lot to worry about when it comes to offsetting passive income losses and if you have most of your retirement income dragged into real estate then that probably means that you don’t have significant stock market holdings which means you won’t have much dividend income or capital gains income either so at some point this may be come a moot point to you but it’s still something that you need to keep in mind and it’s something that all real estate investors should be thoroughly schooled in before making any types of investments whatsoever.

Investing in real estate can be a fantastic way to save for your retirement. Just make sure you know all the tax rules backwards and forwards so that you don’t get walloped by the big bad IRS…Because the last thing you want to do is spend your glorious retirement years arguing with the tax man during a yearly AUDIT! With a little careful planning, you can make sure that doesn’t happen.

Written by Jason Markum

One thing that I like about investing in the stock market are dividends. Of course in order to get those dividends you have to worry through the massively nauseating swings up and down that the stock market is famous for that can wipe out your portfolio before you know it. I like the income that dividends produce, but I don’t like the risk involved in earning it.

If you’re like me then you may be looking for alternative investment opportunities that are not dependent on the stock market but are still geared towards someone looking for income. Fortunately real estate investing may be just the thing for you.

Luckily, these days, real estate investing doesn’t necessarily mean owning a bunch of small rental units and worrying about fixing broken toilets on the weekends. In fact there are many forms of real estate investing that are better suited to producing income and I’m going to talk about them in this article today.

One form of real estate investing is something that is called a participating mortgage loan. These funds hand their investors capital to other real estate investors, which is quite interesting. In return those investors pay a fixed rate of interest plus a share of any future increase in their cash flow from the properties that they own as well as any appreciation in the underlying property.

This is possible because of the type of mortgage that you create which spells out that the investor will pay a basic interest rate as well as increases in future cash flow of the underlying property.

While the interest that you will earn on these deals is a nice bit of income, what you should be especially interested in is the possibility for future increases in cash flow from the appreciation of the underlying properties themselves. That’s where some of the real money comes into play and that’s what makes these types of investments especially attractive and exciting.

What happens is that properties are leased out. Over time those leases expire and when they do new tenants are usually found who sign new leases. The trick is, over time those leases will call for more and more rent as I’m sure you have seen yourself if you’ve ever rented anything in your life. Whenever your lease expires and you have to re-sign your rent always goes up. It is this increase in rent that can transfer over to you the mortgage owner in these particular deals.

Of course it’s not all a bed of roses, you still have to be careful with who you select to loan money to. Never invest in a participating mortgage loan given to somebody who doesn’t have a solid track record of property management under their belts.

But just like any other investment you have to do your homework and if you do your homework correctly then these investment vehicles can be a fantastic way to take advantage of income producing steady real estate gains without the hassle of managing the property yourself; because who really wants to get woken up at 3:30 in the morning because your tenet’s toilet exploded?! Not me and now, not you!

By Jason Markum

You should have seen my stock portfolio within the last few years! Whew! The stock market is up, the stock market is down, the stock market is sideways and anything else you can think of… it’s a roller coaster and yes I realize that we’re in the middle of a recession that has been going on from 2008 through to 2010, but that doesn’t make it feel any easier to watch your life savings fluctuate so wildly from day-to-day.

Those wild fluctuations have convinced many people to get out of the stock market completely and to instead focus on other means of investing, particularly real estate as it has been a solid income producing asset for many many years, the current recession notwithstanding.

But I find that many new investors don’t know exactly what to look out for when it comes to investing in real estate so I thought I would write a quick little article today to give you a heads up and show you certain things that you can look for when evaluating a new real estate investment.

First you must always review the underlying properties of the investment very carefully. If the investment is fairly substantial, hundreds of thousands of dollars or more, it’s always a good idea to find an expert to personally inspect the property as well as the community for you. There are a million things that you won’t know to look for that they will so it’s essential that you find someone that you’re comfortable with that you can develop a good working relationship with.

Besides hiring somebody to inspect property for you, here are some things that you can look for yourself.

First look at the acquisition cost of the property. This will include both the land as well as the buildings and try and break it down on a square foot basis. After you find a square foot number, compare it to other properties that have sold recently in the same neighborhood. How do they compare?

Next look at the type of construction. Is it a wood frame property or a brick property? Does it have any amenities like a pool or fire places or landscaping. Next look at the underlying mechanics of the building itself such as heating and air-conditioning as well as plumbing and electrical and insulation and the quality of its roofing. Knowing whether or not these things will need upgraded or updated is essential before making any type of investment.

Finally look at the occupancy. Is the building full of tenants? Are the tenets fully paid up with their rent? Is anybody behind on rent and if so how much and for how long. Next take a look at the applicable city laws because some towns have laws against evicting tenets that may make it difficult for you to turn a profit on your investment if you’ve got spend extra money on massive legal fees just to get a paying tenant into the building.

There are many different things look for when getting into real estate investing but hopefully these few things that I have explained to you today will set you off on the right foot down the path towards real estate investing profitability.

Written By Jason Markum

I didn’t need the whole world to tell me that we were headed into recession in late 2008 to know that it was probably time to get the heck out of the stock market. Wild swings up and down may be fun for some people, but I like my investment returns to be a little more steady and a little less risky.

That makes real estate one of the most perfect solutions that I could ever hope to find. If you are like me and have had it with the wild swings of the stock market and are looking for something a little more dependable, then real estate may be right for you too.

But with real estate investing you have a whole new set of things to learn before you can even think about getting started. So today I thought I would write a short article and discuss several ways to analyze real estate investment in order to determine whether or not you should invest in it. Many of these analysis methods are mathematical in nature but you don’t have to have an advanced degree in mathematics in order to put them to use yourself.

First I want to talk about the gross rent multiplier. This is the sales price divided by the gross annual rents and it will tell you the number of years of rent that you will have to get in order to equal the sale price of the property. In this case you want a gross rent multiplier as low as possible.

Next calculate the debt conversion ratio. This is just basically the net operating income divided by the annual mortgage principal plus interest payments. Just to make that clear what you do is add your interest payments to the annual mortgage principal and then take that number and use it to divide into the net operating income. So it looks like this: Net Operating Income / (Annual Mortgage Principal + Interest Payments).

The DCR will show you the ability of a project to service its debt obligation. A lender will usually want you to have a DCR that is at least 1.25 which means that the net operating income will be a least 25% larger than the principal and interest payments.

Next you should calculate the overall return on capital. This is simply the net operating income divided by the total investment. It will measure the productivity of your investment and is generally more reliable than the gross rent multiplier in most cases.

Finally you should calculate the cash on cash return which is just cash flow before taxes divided by your initial investment. A lot of investors will use the cash on cash return ratio as an indicator of how productive the equity will be in a given project. If you’re going to be primarily concerned with the cash flow that your project throws off then this is a good number for you to take a look at.

Hopefully this list has been helpful to you but you should realize this is far from a complete list and there are many other things you should calculate before investing in real estate. Hopefully this list will get you off on the right foot though.

Written By Jason Markum