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Real Estate Tax Incentives

Lower Your Taxes

Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit.

For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating the rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming the tenant doesn't pay them). These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed the amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation. Buildings naturally deteriorate over time, and these "losses" can be deducted regardless of the actual market value of the property. Because depreciation is a non-cash expense -- you are not actually spending any money -- the tax code can get a bit tricky. For more information about depreciation and various tax alternatives, ask your tax advisor about Section 1031 of the U.S. Tax Code.

Have a Positive Cash Flow

There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow. Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow -- whether it be pre-tax or after-tax -- requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea.

Use Leverage

One of the most important factors in determining a solid investment is the amount of equity you are purchasing. Equity is the difference between the actual worth of the property and the balanced owed on the mortgage.

Benefit from Growing Equity

While investing in real estate is relatively complex, it is often worth the extra work. When compared to other financial investments, like bonds or CD's, the return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it's time to sell or refinance. Determining the proper amount of equity may require the assistance of a real estate professional.

posted by 22347 @ 10:41 PM 0 comments

Championship Betting Review - 5 February 2006

Reading saw off rock-bottom Crewe to set a 31-match unbeaten record for the second tier of English football. Reading have not lost a league match since their opening day defeat against Plymouth and even at 2/5 will have had plenty of support from punters. Crewe managed to take the lead after 14 minutes but found themselves 3-1 behind at the break, with Reading edging the match 4-3 at full time.

Leeds United maintained their position in third place with a 2-0 victory over Queens Park Rangers. Leeds, who had won their last three fixtures at Elland Road, could be backed at 4/6 and goals from Richard Cresswell and Paul Butler sealed all three points.

Aki Riihilahti marked his first start for Crystal Palace since September with the winning goal against Cardiff City. Palace, at 4/5 took the lead after 70 minutes and an equaliser for Cameron Jerome was disallowed for an earlier foul.

Preston were the only play-off team to slip up, being held to a goalless draw at Stoke. North End, now unbeaten in 22 matches, will have disappointed backers at 7/5 after Paul McKenna missed a penalty with three minutes remaining.

Luton let an early lead against visitors Hull slip, with the Tigers winning at large 10/3 odds. Keith Keane gave Mike Newells side the lead after eight minutes but Hull fought back with goals from Stuart Elliott, Daryl Duffy and Jon Parkin to lead 3-1 at half time. Chris Coyne headed in a second for Luton with four minutes left to set up a tense finale.

Managerless Leicester edged out of the bottom three with an unlikely 9/5 win over play-off chasers Wolves. Matty Fryatts goal in the 70 minute earned the Foxes their first back-to-back victory of the season and their first home win in six attempts.

Sheffield Wednesday boosted their battle against the drop with a win at Millwall. Frank Simeks goal secured a win for the Owls at 2/1 and sees them four points clear of relegation.

On Sunday, the Old Farm derby between Norwich and Ipswich produced an away win at tasty 11/4 odds. On loan Jonatan Johansson opened the scoring on his Canaries debut after 33 minutes but Jimmy Juan equalised five minutes later. The match ended in controversy as Danny Haynes appeared to use his hand to bundle in the ball although the goal was officially given as a Gary Doherty own goal.

posted by 22347 @ 7:18 PM 0 comments

Gift Ideas from the Heart

Gifts should come from the heart, not your pocketbook! Coming up with gift ideas on a budget may seem difficult at first. Put some thought into your gifts and you will be rewarded not only with lower costs but more practical, useful, gifts for the recipient.

Giving gifts from the heart, instead of the pocketbook can relieve a lot of stress during holidays and special occasions. Gifts thought out carefully and directed towards an individual's needs and interests are much more appreciated.

Giving the gift that "Keeps on Giving" is easy if you choose a gift that reflects the recipient's interests or needs and is useful to them. Consider gift ideas you can make yourself. Hand made gifts are almost always lower cost than store bought alternatives.

Some Tips to reduce expenses, and relieve stress:

• Avoid compulsive buying.
• Stay organized and calm - If you do your research, you'll know when it's a bargain.
• Shop early - I know you always say you will. This time DO IT! Buy gifts one by one as you come up with good gift ideas and good bargains!
• Make a list and check it twice! It always worked for Santa!
• Plan ahead - Include gifts and holidays in your budget's variable expense account. You'll have the funds when you need them.
• Stay within your budget - it is possible.

Here are just a few great low cost gift ideas....

Give someone who spends a lot of time in the kitchen a personalized apron and/or a cookbook! Or create a basket with kitchen tools, recipes, mixes, spices, etc.

Magazine subscriptions can be purchased for as low as $3.99/year.Give a gift that "keeps on giving" all year long! You can find magazines on just about any topic.

New or gently used books.

Family photos or personalized photo albums make great gifts for relatives or friends.

DVDS/Videos - You can never lose with this one. Everyone loves a good movie! Buy when they're on sale throughout the year.

Create a personalized gift basket based on the person's interests or needs.

• Personal Care - fill with hair, nail or skin care products
• Crafter's Supplies - yarn, ribbon, paints, paint brushes, glues, projects, knitting or crochet supplies, drawing pencils, etc. Just take a walk around the craft store for more ideas.
• Food - This one is timeless! Bake a favorite recipe that you know the recipient is crazy about. Add a variety of cookies, fudge and candy. Homemade baking mixes and quick breads. If you bake yourself, it's a nice touch to add the recipe with the goods. Use decorative stickers or tie on with pretty ribbons. Baking mixes can be put in jars with decorative tops. Always include recipes for uses with mixes! Be considerate of those with health concerns or who are dieting. Include healthy varieties of the above or add fruits, nuts, and diet specific goodies.
• Personalized Totebags or T-shirts - Great for kids or adults! This one is a favorite of mine. Create a unique design and/or saying on your computer that suits the person. Print onto transfer paper specifically designed for this purpose (available at most office supply or craft stores. Usually comes with instructions.)

There's nothing more appreciated than a personalized gift. And, everytime it's used, you think of the person who gave it to you. It gives you a feeling of importance somehow. Shows that the giver "really" had you in mind when the gift was made or purchased. And, it's likely to be a gift that doesn't get tossed in the closet, attic, or basement, after you leave!

posted by 22347 @ 3:56 PM 0 comments

Where is the Profit in Your Deal?

When we see Donald Trump on TV, we see a guy who is living the high life. Money, women and fame - all thanks to real estate. By media standards "The Donald" is a rich, successful real estate mogul. But, even he would have to admit that sometimes, he makes more money doing television than in real estate.

Whether you want a nice positive cash flow each month, ora cash profit on a quick resale, the only honest and ethical way to get there is EQUITY. Equity is the property value over and abovethe total amount owed on the property.

You may think that an investor who owns say, 50 houses, is probably very well set financially. He he might be...butif this investor has refinanced his properties to take all thecash out, or he paid too much to begin with, he may find himself on the brink of foreclosure or bankruptcy if vacancy rates climb.

One the biggest dangers I see today is the incredible paceat which home owners and investors are pulling equityout of their properties. (or worse, buying properties that havelittle equity to begin with)

Many investors are buying properties without even understanding how crucial equity is to their profitability.And homeowners who get 125% loans on their homesare asking for a foreclosure.

Regular readers know that I harp on the idea of keepinga minimum of 20% equity in every property you own. And the best reason to take lots of cash out of a property isfor the purpose of paying down debt on other real property.

Every week I get calls from investors who are desperate toget a fix on why they are losing money on a deal. The numberone reason I see over and over, is a definite tendency to take too much cash out of a property, which can kill yourpositive cash flow.

It's not flashy, it doesn't sell as well as telling someone theycan make $10,000 by next week, but buying, holdingand accumulating equity is the absolute bottom line rule forsuccess if you are a small investor. I don't want to burstany guru bubbles, but the facts are the facts.

Let's take my mom for example, who happens to be one of my favorite investors and also by far, the most conservative oneI know. She owns 5 houses all paid for free and clear. All are rented for an average of $525 per month. (Her location is Cedartown, GA., relatively low cost compared toAtlanta)Her personal residence is paid for too.

Mom is bringing in $2,625 per month in rent. Taxes and Insurance will get about $600 of it, leaving $2025. Over 12 months thatis $24,300. Not too bad. Added to other income and investmentsthis makes for comfortable, reliable retirement income.

On top of that, her passive income will increase over time as her rentgoes up. And, she is earning a solid 5% per year appreciation in thevalue of each property. Some of her houses have doubled in valueover the past 12 years. In terms of equity, mom is worth a prettygood chunk. In a good market, I'd guess about $800,000 justfor those 5 houses and her residence.

She took about 15 years to do it. Nothing fancy, just classic real estate investing. Anyone could do the same thing easily in10 years or less. But Mom knows that even when a property isowned free and clear, there are still unexpected events and coststhat will eat into your cash flow.

She represents the vast majority of the conservative, "never-been-toa-seminar-in-my-life", types who make up the bulk of the real investors out there. Some have 5 houses, and some have 75. I once workedfor a guy who had about 150 income properties. He was debtfree and had untold wealth in his equity. He had spent 30 yearsbuilding this portfolio, buying good deals as he came across them.

Like Mom, he also is careful to save money, avoid wasteful spending, andkeeps his equity in tact, so that his cash flow is in a safer range.

Equity gives you breathing room when the unexpected strikes. You might have a tenant that skips out on you, or a tree falls on the roof andyour deductible is $1000. Practical real estate investing requiresequity for long term safety and security.

In contrast, many of the best known real estate gurus have been broke and even filed bankruptcy. They could have used more equity.

Many people don't know that real estate guru Robert Allen, the author of "Nothing Down" and "Creating Wealth", which ignited the investing boom in the early 1990's, went bankrupt in July of 1996.

It appears that his no money down deals loaded him with too much debt. When interest rates went down and the rental market gotsoft, there was not enough real equity there to pay the bills.

Remember investing guru Robert Huff? Well known in the 1980's, he wound up in bankruptcy too.

There are many gurus and investors who like to argue that equitysitting in a property is money that is not being used. I understand their point, but I respectfully disagree. Taking equity out of a property also creates a situation in which that property requires more cash flow to sustain the costs. Then, when unexpected vacancies, higher taxes, or bad tenants come along, the investor is left with too much debtand not enough income to support that debt. The result can be catastrophic for the over-leveraged investor,some gurus have discovered.

Even "The Donald" has been broke. His restructuring of massive debt on his New York City properties during the late 1980's was the basis for his "comeback" to real estate glory. He got into a hole about 100 feet deep and then managed to get himself out. The book he wrote about the experience was a best seller that made him famous.

Mom probably won't be writing any books, but if she did, she would caution Mr. Trump not to be over leveraged. She will probably never be as famous as "The Donald" but what 'cha wanna bet she has more equity...

posted by 22347 @ 2:22 PM 0 comments

How to Get Prospects to Return Your Call

How effective are the messages that YOU leave for your prospects? Your prospects form an opinion about you and your company every time you contact them. In fact, the messages you leave on their voicemail or e-mail may be a determining factor in their decision to call you back and consider doing business with you. So make a good impression!

The Voicemail Message

Recently, I had the experience of shopping for a car. Unfortunately, I didnt have the pleasure of buying one. Although I knew the exact car I wanted and was ready to buy, not one car salesperson was willing to give me any personal attention.

To begin, I followed a get a quote tool that was available online and filled in exactly what I wanted in my next car: the type, the color, the features, and even additional comments. I couldnt have made it much easier for a car salesperson to sell me a car that I already knew I wanted.

With the five requests that I sent online to different car dealerships in my area, I received five phone calls within 12 hours of my request. All of them went directly to my voicemail.

Here is the basic script to four of the messages I received:

Hello, this is (insert name of salesperson) calling from (insert name of car dealership). Please call me back at (insert telephone number that I have yet to call).

BOOORING! And talk about impersonal! Did they even read my request? Do they even know what kind of car I am interested in?

When a prospect goes out of their way to contact you in regards to a sale, the last thing you want to do is leave them an impersonal or automated message!

Whats the purpose of a voicemail message?

There is only one objective to leaving a voicemail: get them to call you back. Be creative! Use humor! Show them you are different from the competition!

Distinguishing yourself from others DOES NOT mean telling your prospects how great and wonderful you and your company are. DONT tell them that your company is the biggest, the best, that it always puts the customer first, has a 99.6 percent customer satisfaction rate, was the first to do something, or how long youve been in business and how many awards your company has won. In fact, dont tell them ANYTHING remotely similar to anything on that list!

True Story: While attending college at Bowling Green State University I made a significant observation: all seven pizza companies in town printed voted #1 pizza in town right on their pizza box. Why? The same reason you tell your customers how great you arebecause you think people actually care.

How do you differentiate yourself from the competition?

Your prospects know what they like and what they want. They dont want to dance around with you or play games. They want to be treated like an important customer and not like the next sale towards quota.

So try leaving a message that is actually to the point. Try to sound like a human being and not a salesperson. Leave a message of value, where you tell your prospect something they might actually want to know. This will entice them to return your call. (Want more examples? Send a blank e-mail to voicemail@tomrichard.com)

The e-mail message

After sending in my online quote requests for a car, I also received an automated e-mail. I know that youve probably received one sometime in your life, too. Theyre easy to spot as soon as you open the message: a letter full of misspellings, asterisks and exclamation points; sent from a nameless person promising to give you an incredible deal on a sale.

These types of e-mails almost always end up in the trash folder. Why? Because theyre garbage, and you know it! So, why are you using this garbage to reach your prospects?

Voicemails and e-mails should always be sent personally from a real human being, with the intention of creating a relationship with your prospect. Get to know your prospect so you will understand them and discover their motivation for their interest. When you know why they are interested, you will find out how they will make the decision of whether or nor to buy from you.

Be persistent!

Although all five dealerships reached out to me within the first 24 hours of my inquiry, not one person has followed up with me since then (with the exception of automated e-mail blasts, like I mentioned).

A clear and simple way to separate yourself from the competition is to be pleasantly persistent with your follow-up. You are NOT creating a favorable impression with a prospect if you cant take the time to contact them on a personal level after your first attempt.

When I sent out my initial online inquiries, I was ready to buy a car. I took the first step to contact five different car dealerships in my area. However, the impersonal and ineffective follow-ups of these dealerships have reminded me of why I dont like purchasing a car, and now I am considering keeping my old one.

I didnt make the sales process difficult, the follow-up system of the car dealerships did!

So consider this: is your follow-up system killing your chance of making sales? Do you send messages to your prospects? Are they personal? Are they effective? Remember, the point of the follow-up is to establish a relationship that will eventually lead to a sale. So be personal, be persistent, and be happy youre changing a prospect into a customer!

posted by 22347 @ 12:38 AM 0 comments